francine: the euro rises after the ecb's stimulus package. the qe controversy. governor central bank tells us that the action was possibly a mistake and that christine lagarde can change. and the white house is considering an interim china trade agreement to delay the tariffs. ♪ francine: this is "bloomberg surevillance." good afternoon, i'm francine lacqua in london. we are seeing a little bit of a lift to the target -- market.

gaining onope 600 is the back of a dovish ecb. but if you look at market reaction, it was taken positively and then they had a bit of a wobble. 1.190 and the german bond took the brunt of the swing as mario draghi was talking. , more from our exclusive interview with the austrian central bank governor. he was talking about the ecb and some of the non-consensus out there. that's coming up shortly, but first, let's get straight to bloomberg news. >> we begin with details on the proposed interim trade deal. u.s. officials discussed a limited agreement that would delay and roll back some u.s. tariffs. this is an exchange for

commitments on intellectual property and agricultural purchases. president trump says he is open but prefers a lasting arrangement. >> i would rather get the whole deal done. we have taken in billions of dollars of tariffs. i would rather get the entire chinese done. and we are going to do a deal, let's get it done. >> in focus last night in the democratic debate, the relationship with china. joe biden invokes the legacy of barack obama as he challenged the left-leaning policies of bernie sanders and elizabeth warren. he said that if washington does not act, beijing will make the rules. >> the problem is not the trade deficit, the problem is they are stealing our intellectual property and violating the wto. dumping steel on us. that is a different issue of agricultural products. in addition, we are in a position where if we do not set the rules but are going to find

ourselves with china setting the rules. >> the chances of a u.s. recession before the election now adds 75%. that is according to jeffrey gundlach. he says the odds have risen based on changes in the yield curve. yields on to your treasuries are exceeding those on ten-year in august he for flipping back this month. -- before flipping back this month. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thanks so much. mario draghi has delivered his final stimulus package after overcoming an unprecedented result -- revolt from the center. he sounded the alarm over the growth outlook of the euro area. remain tilted to the downside. we still think the probability

of a recession with the euro area is small but it has gone up in view of the weakening economic outlook and the continued prominence of downside risk. governments with fiscal space should act in an effective and timely manner. we have a mandate. we will pursue price stability and we don't target exchange rates. period. , we have this morning is being to one of the dissenters of the stimulus package, the austrian central bank governor. in an exclusive interview, we asked him if he thought the decision to ease was a policy mistake. very intensive but also constructive discussion at the council. everybody listened to the others. which onea discussion tries to take the arguments of the others seriously.

it was a push back, but it was a constructive one in which one tries to come up with a common solution. >> what was the disagreement about? essentially, it was about the question of how effective will a further monetary easing be? is it somethg morewe have started to reach the end or is there still effectiveness? i think this was a major reason why a push that took place. the question of monetary easing moving further into negative territory's, will it have an effect on economic outcomes or are the risks already higher than the benefit that emerges? of furtherevel decreasing the deposit rate.

what will be the effect on the market interest rate compared to the alternative of doing nothing? guidance, how much bind theessary to future president or how much should leave her freedom. these things were discussed in an open manner, but these alternative arguments i contributed to did not prevail. >> would you say members of the council left thinking they had made a policy mistake? >> i'm sure the idea across the bind of some. it deftly crossed my mind -- the mind of some. it definitely crossed my mind. but as things change, policy may change. not tomorrow, but i would not think it is there for the next decade. >> and when you look at the and when you look at the

market reaction, the market seems to think we are headed to qe infinity and the fact that christine lagarde will join will not make any difference. has she been locked into a dovish tone or is there room to reverse some of the policy? >> this is a hope, not knowledge, i hope we are not locked in. i hope there is room to discuss in the future. my take is that she comes from a different environment and has a different way of acting. i don't think she is a weak person who will say i'm not allowed to do anything. francine: that was the austrian central bank governor robert holtzmann joining us. joining us now is hans redeker. you were moved on the back of what mario draghi was saying and then corrected. -- how do the markets take what was said yesterday? the differences when we

did see other easing conditions announced, this time, we are getting into a tiered system. we were arguing yesterday morning that when you introduce a two-tier system, you are acknowledging the limitations of your current policy toolbox. thisher words, and you see commentary, where is the reversal rate? where is the interest rate level? we are living in an environment where people are thinking in terms of building up a pension. when you see that your savings are not providing you with yields, you may have to save more. at that point, you have the reversal rate kicking in, especially for aging societies.

then you have to think aboutand. you basically have to say, ok, i will cut interest rates. impactfulhowever less because i need to protect the banks. francine: the question is, the markets did they under react to what mario draghi was saying? hans: no. i do not think they under reacted. when you analyze monetary policy , you have to think about the impact. when you are looking at is the exchange rate. you may be looking at bonds. but when you look into the equity market come at you get a different impression. we should never forget there have been moments where the central bank was introducing more stimulus and increasing the size of the balance sheet when that was going into a direction

that meant credit easing. it meant positi news for shares and the euro. instancelook at, for the euro rally we have seen, that came because spreads came down. that came down because of credit easing. but it wanted to bring in an additional topic to the debate. that is the two-tier deposit rate which means you have more money being placed with an ecb deposits which comes at low cost compared to placing within the interbank market. you have negative yields on your deposits. so what you do with the system is take money away from the interbank market and liquidity is what makes the exchange rate. therefore, it was not a surprise whatsoever to see the euro going up.

you have to take the euro into account. asking what is interbank liquidity. it is riding the exchange rate. in yesterday's news was a two-tiered deposit rate. saying there will be less interbank liquidity as you put more money in the ecb and so the euro goes up under those circumstances. the other point i would like to make is that the debate he has provoked here. it is going into the direction of fiscal policy. citing examples saying others have been more successful than us, the difference is coordinated fiscal policy. francine: he has been saying that for a while, we will see if finally countries understand what christine lagarde can do. hans redeker stays with us. still to come, we will talk brexit and the pay economy with the chancellor of the exchequer.

that's up shortly. this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg surevillance." let's get back to the ecb and monetary policy. hans record is still with us. -- redeker is still with us. what does it take for germany to finally get spending? know, in 2008 and 2009, after the great financial

itsis, they made unconstitutional to take debt levels to the lower levels and they have therefore established the blacks zero. balancedo keep things or have a slight surplus. but the environment in which you as thei would describe environment where germany is grating far too many savings and does not have domestic opportunities. so you oversupply capital but you have no opportunity. when you get as a result is that bond yields are falling. so it is a problem in your pension, but you need to break that. the political infighting in germany right now is to spend more. how ugly will it get? hans: the debate has started and it's typical german, you have started to defend themselves. you have seen it overnight,

saying to stay where they are, we are committed to this policy of taking debt levels lower. but there is a deeper political debate, not necessarily within the current government parties, but in many opposition parties which is talking about green investment which is willing to take more fiscal risk and stimulus. now, the question is what is going to happen with the next election? so as soon as you get the green party getting involved, the fiscal situation of germany is going to change. point number two i would like to make is that it is not just about fiscal spending. it is about fiscal integration, it is about the banking union. that is what we have to learn. francine: our question of the day, go on to mliv. suffering help and

-- end the ero suffering? hans: i think it was euro positive. you need to look at interbank liquidity relative to where the money is part. liquidity isk going to become tighter and that is creating a euro reaction. that, people may have ideas about where fiscal policy is going to be. we have to a policy mix taking place where you take down the significance of monetary policy and the significance of fiscal policy. and i repeat, fiscal integration , we need to get further on the banking union. francine: thanks so much. hans redeker staying with us. coming up, trump says he is open to an interim agreement. could the u.s. and china find a compromise? more on that next, this is

bloomberg. ♪

>> we have got a guy in the white house who has been a radical on trade policy constructing policy by tweet. we have to let the chinese know the chinese know that president trump has pursued an arbitrary and haphazard trade policy. >> our trade policy in america has been broken for decades and

it has been broken because it works for giant multinational corporations and not much for anyone else. >> i agree that this trade war is hurting american families. >> when i first got into this race i'm are president trump stopped and said he would like to see me make a deal with xi jinping. i would like to see him make a deal with xi jinping. is it just me, or was that supposed to happen in april? francine: that was the democratic presidential candidates hitting out about the trade war. sticking with trade, u.s. officials have discussed offering china a trade deal. the interim agreement would delay and rollback tariffs in exchange for chinese commitments on intellectual property and agricultural purchases. president trump said he would be open to it but would prefer a lasting agreement. >> it's something people talk about. i would rather get the whole deal done.

we have taken in many, many billions of dollars of tariffs. i would rather get the entire chinese deal done. if were going to do a deal, let's get it done. francine: hans redeker is still here. given the slowdown and the concerns of a recession. jeffrey gundlach says there is a 75% chance of a recession. is that contingent on having or not having a trade deal? i think the trade development is super important for the global outlook. they ares well as materializing so there is a slowdown coming for manufacturing from the supply side. you have being interrupted. the strata as situation is not entirely settled, as long as you have uncertainty difficult to get cap x back on track.

but what the current debate will deal a about the mini type of short-term compromise, it could mean that if they are planning to restructure, it may delay the restructuring so that they wait and continue to employ. you have tight labor market conditions and that is going to provide some wind into the sales of the economy -- sails of the economy. we also think the trade talk seems to 50 -- follow the cycle. activity, the equity market going down, you have a reaction to that. francine: it shortens the cycle. so the recession is earlier than it would be. hans: yes, the recession comes

earlier. but what i wanted to say that of have an iteration economic activity responding because you are offering a compromise to win a little bit of breathing space. improvement. as soon as the improvement comes, he returned to the original position. francine: cap monetary policy placate that? monetary policy placate that? does it have the tools to keep the economy on its feet? hans: i have been expressing that as well. i am very critical of monetary policy. there is one exception to that, in the united states. here, it is monetary policy which matters. the reason we have seen a divergence taking place and global profitability declining.

courts in brazil, for instance, offering less of a return. at the same time, funding costs have been going up. meant that led many dollar-funded entities to a restructuring and deleveraging process that contributed to economic weakness, meaning the dollar was too expensive for many. francine: thanks so much. coming up later, we will be speaking to the u.k. chancellor of the exchequer. we will talk to him about brexit and trade. this is bloomberg. ♪

. francine: the euro rises after e.c.b.'s similar package. the q.e. controversy.

austria says there was possibly a mistake. >> it crossed my mind. my take is things have changed and policy may change not tomorrow or after tomorrow but i wouldn't think now but for the next case. francine: a deal before the deal. the white house is considering difference to delay the tariffs. i'm francine. emery: i want to start with the european bank, the biggest gainer. the banking sector up 1.5% and comes after the e.c.b. unleashed new stimulus yesterday. also to the upside today, auto parts and autos in general are

doing well. it's up more than 3% and could be on trade optimism. faurecia gets half its revenue from the u.s. and china. and i.m.i. runs over 2.5%. risks to earnings are seen over the short term. francine: let's get to new york and the news with viviana. victoria: viviana: there may be chinese commitments ton intellectual property and purchases. president donald trump would be open to it but prefers a lasting arrangement. president trump: it's something people talk about. i'd rather get the whole deal done. we've taken in many billions of tariffs, i'd rather get the entire chinese done.

if we're doing the deal, let's get it done. viviana: warnings have been declared for the bahamas that was just battered by hurricane dorian. different models have it moving to florida or the gulf of mexico. after record setting numbers, europe hoping to become the first carbon neutral continent. over the next two days, officials are meeting to flush out the plan. ursula says protecting the environment is the task, a moral, human obligation. global news 24 hours a day, on air and on tiktok, powered by more than 2,700 journalists. francine: 60's the leading candidates challenging president trump for presidency

next year debate everything from health care to criminal justice reform. this was the first time frontrunners joe biden and elizabeth warren and bernie sanders all shared the stage on the same night. listen to the highlights on one of the big topics, health care. mr. biden: i share with obama all eight years. bernie: you have to defend the fact that today not only do we have 87 million people unsured or undersured, defend the fact that 500,000 americans are going bankrupt. elizabeth: let's be clear about health care and let's actually start where the vice president did. we all owe a huge debt to president obama who fundamentally transformed health care in america and committed this country to health care for every human being. >> what you support and i support, vice president biden is you declare them to opt in and i would not require them to opt in and they automatically would be enrolled and wouldn't have to buy in and that's the

big difference. barack obama's division was not to leave 10 million people uncovered but wanted everyone covered, my plan would do that and yours would not. joe: they do not have to buy in. joe: you just said that two minutes ago. you said two minutes ago they would have to buy in. joe: they can't afford it. are you forgetting what you said two minutes ago? i can't believe you said two minutes ago you said they had to buy in and now you're saying they don't have to buy in. you're forgetting that. francine: joining us now on the debate is our senior writer. morgan stanley is still with us. thanks for sticking around, hans. what we were expecting is we would see joe biden fighting which we kind of didn't really get. >> we didn't and it was a surprise how they didn't take each other on. there was a little back and

forth on their health care plans but she really dodged the bullet and kind of stayed above the fray. she embraced this obama legacy in a similar way to joe biden. she knows she needs to play to that base. the really remark annual thing -- remarkable thing is biden got through without major gaffes and there were rambling moments which we know biden is like and not surprising and a bit reassuring for the supporters of biden he held his own and came out a little more combative and he was the sort of target of a lot of firing because he is the frontrunner but i think he came out of the nightstanding tall. francine: will he still be frontrunner, what is the race looking like now? stephanie: it really is boiling down to a race with biden and either warren or sanders. there are other moderate candidates in the race that could replace biden in the case of a major gaffe or misstep but

i don't see that happening in the near future. we're still months out, so anything can happen. it's still up for grabs but i expect the field will narrow and will have to to qualify for the next democratic debates and the candidates are pulling at and 2%, amy clobe char castro will struggle to make that debate. francine: take a listen to the former federal congressman, o'rourke. >> we'll take your ak-47 and not allow it to be used against any other americans anymore. francine: he had more standout moments. stephanie: gun control is not a major dividing line and it shows how much the democratic party shifted on this issue, that they're talking about what would have been a few years ago

radical plans, licensing requirements, taking away assault weapons, buying back guns, you know, i think everyone -- i think there is more consensus within the democratic party on that issue than on, say, health care, medicare for all where the real dividing lines fall. francine: thanks so much. stephanie baker, our senior writer. hans, you look at everything going on with the political side stephanie follows day in and day out. is there a market implication or is it too soon? hans: i think we have to see who is going to become the presidential candidate as far as the democrats. we have to watch what the program is off that democratic candidate, especially on the economy. it is going to be middle of the spectrum program or a left leaning program, a possibility of one or the other candidate

for the democratic party is more on the left-hand side but that actually means when that is clear, we see then how we are getting into the election campaign, then i think it is becoming effective. there's a moment it's not impacting moments whatsoever but what is currently affecting the markets is the popularity rate of the president where the president's popularity rate goes down, it seems the president is asking for compromise in respect to china and other issues. that's the effect for risk. francine: let's see whether we should look a it the other way, whether markets are affecting the race, if you look at polling, but hard to tell, as long as the economy stand and we don't go to recession, is president trump a two-term president? stephanie: obviously and why we've seen him strike this deal with china because the main headwinds facing the u.s. economy is the trade war and he needs a strong u.s. economy going into 2020. i don't think that necessarily

means we're guaranteed victory if we're still at strong economic growth but will face pushback because of all these other issues the voters dislike, the chaos, the disruption, the foreign policy, you know, have yourism he's engaged in does make it harder for the democrats to win in the face of a strong economy but have plenty of other things to attack him on. francine: thank you very much. stephanie baker, senior writer and back to hans and others saying there is a 75% recession. coming up we'll speak to the u.k. chancellor at 11:00 a.m. u.k. time and talk about brexit and trade. also coming up, help from an unsuspected source. could huang ari take them out of on the 31st and talking about a victory.

we'll talk about that next. this is bloomberg. ♪ ♪

francine: this is "bloomberg surveillance." we're continuing to watch the trade concern and what happens with the u.s. and china. we had understood there could be some kind of interim deal. this is the bloomberg scoop between the two nations. now the editor of the global times, this is party politics or at least we sometimes take it from china. we also understand that soybeans and pork are to be exempted for this additional tariff. for the moment, i guess there's a little bit of a market reaction, maybe a touch, these futures are gaining more than

they were five minutes ago than after the latest headline suggesting there's a little bit more easing of tensions between the two nations. now let's get straight to the bloomberg business flash in new york city, here's viviana hurtado. viviana: u.s. chipmakers urged president trump to ease sales to huawei. they encouraged prompt action for sales that don't implicate national security concerns. trump had promised to loosen restrippingses on the huawei licenses after meeting with ping in june. the company which help protect and distribute content, price shares above an already increased target and now valued at $4.4 billion. uber sold a bumper number of junk bonds and offering as a public company and the drive share company raised $1.2

billion compared to sales of 50 million and help uber fund its expand of a plan to the footprint. billionaire carl icahn is headed to the sunshine state. the 83-year-old will move to avoid new york's higher taxes and join fellow wall street migrants like pepper and paul in the state, 1-7 with no personal income tax. francine? francine: thanks so much. officials are worrying boris johnson could persuade johnson to veto a brexit delay and could help the prime minister out of his bind and create the risk of a no design brexit. parliament will try to stop him to allow london to crash in the e.u. our executive editor. a simple but hard question, is what we know about boris

johnson actually wanting a deal or a no deal exit? >> it's hard to be inside boris johnson's brain. it's hard and depends on who you talk to. there's been mood music around the possibility of a deal. > the d.e.p. softening the red line and a island only arrangement might unlock a teal and possibly a reaction to the markets. as well the question about hungary is very if interesting. there's been a story with this brexit president and when you think one option is off the table it comes back again. and when no deal is legislated against by the parliament in comes victor to say europe can veto this so the possibility of no deal comes back. but it might mean a deal coming through parliament but a bit more likely and we're seeing a positive reaction to that. all the noise aside, we still

have no idea. and all the options revoke article 50, no deal, or a deal is still on the table. francine: i'm trying to find a one month charge for sterling. is the market too complacent about it because it seems we have discounted the possibility of a no deal and the pound strengthens at reports we possibly could seek some kind of agreement on the backstop? >> what we're seeing in the market the past week, sterling up the past week, one of the best performing currencies but is the assessment of probability. you have to think where is the probability westerning no deal, a particular harsh out come but the start of the week and often we have a adjustment in between. what we've seen is a minor adjustment in the profitability but you have a situation the market was looking for a downside and you're looking at volatility and the u.s. saying

you looked as well which is a volume taret shot. that is a pretty good chart. a few days ago we had people talking about that volatilityy and that is like volatilityy markie making that statement. and you get a little bit of a shift in the probability and all of a sudden that volatility is collapsing. now why an additional sector playing here, you need to look at volatility from a perspective of modern liquidity and when you have other examples around and where liquidity is there and means it's very difficult for volatility to stay high and therefore you get this reaction. francine: david, in terms of the time line the next two

weeks, for the moment parliament is suspended and we have the supreme court decision next week. is that the most significant thing we're expecting? >> that's the big thing is this ruling and of course the government coming out strongly we think it will go our way. the scottish governments, what do they do if they lose, does government get recalled next week? we don't know the answers. we're in completely unchartered territory. stepping back from that decision, you think what johnson is making, it does fall into his campaign tragedy about it's the will of the people versus the establishment. in some ways it may be helping him in his mess toig the general public, look, i'm getting brexit done regardless what the government and policy say. francine: if they agree to a

extension, what does the report acting hungry if he asks for a extension. is that lawful? feels not great. >> absolutely within the rules of the game. victor can say hungary, you're not going to support us. he's not alone. a lot of countries had enough over his endless wrangling. the french said we don't want to top doing the extensions. but some of those pictures have a reaction and if we force it through the hungarians or the french, will they pull the plug on the process and up conflict what would be a big economic blow to some of the other members of the european union and that's the question. francine: will we see more volatility as we get to the supreme court ruling and the e.u. meeting october 17 and 18? hans: next tuesday will be a big risk event with the supreme court ruling. but besides that, i think we

have to think about valuation of the currency and we have to to k of the upside relative the downside in materialing and maybe 115 is a possibility but when things are going well you think 145-150. and that is against u.s. dollar so that means you have symmetry in the marketplace and means more people on the long-term horizon. let's say you're a real estate guy and have been so far operating in hong kong and you're saying maybe now should i diverse? we have seen headlines a couple weeks ago, $4.6 billion coming our way in the u.k. property market. those guys are long-term and have to change it into sterling. it doesn't make a difference you change to 123 or 120

because they think yeah, sheep exchange rate and relatively sheep assets. francine: finish off? francine: that's what i wanted to say. maybe an underlying bias in the market for sterling purchases to come through and so attractive to be here. phillip: thanks so much. francine: we're getting breaking news out of italy, the italian finance police have arrested nine people in the probe of the collapse of the bridge last year. they're still conducting seizures and searches related to the probe. we did understand, of course, they were looking into it. it's almost one year and three weeks since 43 people were killed on the bridge gaster. it was interesting to see reports mid august showing some parts of the bridge had not been maintained for 25 years.

that was under the responsibility of atlantia which shares are down 25%. later this morning we'll speak to the u.k. chancellor at 11:00 a.m. u.k. time and talk to mr. david about brexit and trade. this is bloomberg. .

francine: the equities are having their moment in the sun chief value stocks registered their best run since 2002 or this quick reshuffling or prolonged change? with more is dani. >> the crowded momentum trade is finally broken. it's this basket here and include as lot of safety bond proxy stocks that have been popular for yields as low as they were. this is what happened over the past week, momentum. investors flee out of it losing more than 7% year to date. meanwhile what gets attention is value, gaining more than 5% it continues to gain today and

these are cheaper unloved stocks really have been overlooked so far this year it. can this rotation continue? to answer that you have to look at the drivers behind this. to a larger extent what has driven the resurgence of value is bond fields coming up from as low as we've seen them. you see u.s. 10-year yields in blue and value in white, not a surprise a lot of banks live in this index. what happens over the past week when value reboundses with yield, momentum, the most popular stocks crash and quite the reversal of the mean and heard a lot of calls and could continue if yields do what they do. francine: thank you so much, dani.

♪ francine: the euro rises with the bond yields after e.c.b.'s

stimulus package. the q.e. controversy, austria's central bank governor tells us drug actions possibly were a mistake and christine le guard can change tech. a deal before the deal. the white house is considering a interim trade agreement to delay the tariffs. good morning, everyone. good afternoon if you're watching from asia. this is "bloomberg surveillance." francine lacqua in london and tom keene in london. a lot will be spoken over draghi's word and found it underwhelming and the word reversed mid conference. tom: i like what you say mid news conference. yesterday story showing the division mad aim le uard inherits in november. francine: let's get to the bloomberg news with viviana.

viviana: president donald trump said the u.s. would consider a interim trade deal with china but he'd rather have a permanent one. bloomberg has learned administration officials might offer a limited agreement with china and would roll back tariffs for the first time. in exchange, china would make commitments on intellectual property and farm product purchases. last night 10 democratic presidential candidates squared off for another debate. frontrunner joe biden taking his share of shots but for the most part rivals went easy on him and candidates attacked president trump's policy on trade towards china. >> the problem isn't trade deficit but they're stealing our intellectual property and they're dumping steel on us. that's a different issue than whether or not they're dumping agricultural products on us. in addition to that, we're in a position where if we don't set the rules we in fact will find ourself with china setting the rules.

viviana: a much-anticipated clash between biden and warren, it didn't happen. bank of japan officials see a need to keep a lower limit on government bond yields and bloomberg learned some of them don't think yields should fall below .3%. japan's central bank wants a target level around zero, part after pledge to stimulate the economy. and billionaire investor carl icahn leaving new york for florida to avoid higher taxes. we've learned he is moving his home and business. florida is one of seven states without a personal income tax. new york's top rate, by the way, is almost 9%. global news 24 hours a day on air and tic-tock on twitter and power bid more than 2,700 journalists and analyst in more than 120 countries. tom: great you had that icahn story. this is a huge deal for those of you worldwide in connecticut and the tristate region, a huge deal the number of people considering moving to florida.

let's consider a data check now, equities bonds, currencies and commodities, after the tumultuous, nice and quiet. the dow over 27,200 and futures with a further steepness in the curve and it's a little bit but i'll take it. euro-dollar. next screen please as well with the exemptions headline coming out here certainly will not hurt the markets. euro-yen i'm watching carefully and we've seen stronger euro about an hour off of the press conference. the dow there's a level with a higher level now. francine? francine: tom, i'm looking at markets actually ticking higher. we have more news from the china news agency and add the farm products to the tariffs exemption and also was tweeted out by the global times editor. i think a lot of the market uptake happened 15, 20 minutes ago and that rst was reported

so we're seeing for the moment a little easing of tensions between the two countries. i don't know whether that holds but for the moment is actually having a little bit of impact at the margins on markets. overall look out for bonds extending their retreat and look at euro extending the rally with government bonds retreating in the wake of european central bank moving to support growth, tom. tom: let me show the euro path. this was extraordinary and were in radio during that extraordinary press conference. here's the moment we get a stronger euro and then the euro just gets clobbered along with the idea it was mario draghi to the rescue. francine, i thought it remarkable in the afternoon to see this move up here over the bloomberg news article indicating the dissent within the e.c.b. is absolutely a historic day for central banking yesterday.

francine: certainly was. i have a chart that tries to track exactly what happened since early 2018. this is after jeffrey said the best signal of a recession is not the yield curve but an inversion of curing and going away. it's something to keep an eye on and actually something we're tending to see certain yield curves. this is the u.s., the 210 and 30 and 10-year and five-year inversion. you can see whether we read too much into that and need to be careful but certainly an interesting, interesting conversation. on to. c.b. mario draghi delivering his stimulus package after overcoming a revolt from some measures. the e.c.b. president sounded the alarm in the outlook growth. >> there is the outlook that remains tilted to the down side. we still think the probability of a recession for the euro

area is small but it's gone up in view of the weakening economic outlook and continued prominence of downside risk. government with fiscal space should act in an effective and timely manner. we have a mandate. we pursue priceability and we don't target exchange rates. period. francine: joining us now, the chief economist and peter dixon from global equities commerce. thanks for joining us. he mario draghi conference was underwhelming or could have had more fire power with the intent the e.c.b. did but was it the assent that put his credibility, i don't know but made the markets underwhelmed a little bit. >> it explained the appreciation of the euro of a the press conference ended. personally i have very little

sympathy for the dissenters. the reason i say that is it you're a central bank governor and uncomfortable with the decision you speak to your domestic treasury who has not delivered the fiscal stimulus and means mario draghi and when he's succeeded by le guard won't have to explaining the stimulus. the domestic dynamics between central banks and treasuries is something we need to look at rather than pick up the subtleys whether the e.c.b. would divide us. francine: put in a simple manner. does it mean we'll get fiscal spending or what needs to happen for germany to start pending? simon: there are needs to increase the spending capacity and god knows they have the room to do it. what to spend the money on? the german government would say

a big splurge. you look at infrastructure, and governments across europe have more to do on making chair economies more resilient to making themselves to climate change. it's a slow process in order to get the german government to change its mind but the reaction to the monetary easing i think is generating a backlash across large parts of the industrialized world to negative rates might be the trig they're forces the government to do something. tom: maybe the commerce bank will publish this today, tomorrow or in the last day. and there have been companies that tried to figure out how many bonds are out there and how long affinity is and the answer is affinity looks shorter than anybody thinks. do you have any kind of handle on when the e.c.b. runs out of stuff to buy? >> yep.

we would say with regard to germany at the current pace of purchasing you'll run out of space probably the end of q-1 next year as regard to the euro zone as a whole on the urent mandate. we can't go beyond next year. there's a limit to q.e. and will be raise may in the first half of the fourth year raise it to 34% instead of 33%. tom: how restrained is christine le guard when she takes over in november? simon: this is part of the discussion, the austrian bank did a fascinating interview with bloomberg this morning which indicated there were a number of governing council members who were concerned she and they would be pinned in and making it state dependent rather than time dependent in

their forward guidance and is a concern from a respectability standpoint but i look at it from the other standpoint which it made the inflation target more credible at least the equitable than tiing it to a time scale. francine if mario draghi didn't succeed, what can madame le guard do differently? i'mon: certainly her background in the i.m.f. and french government she will have more traction and is optimistic. but the thing to look at is whether the german manufacturing data -- the german manufacturing section is in session. does it start to pull over? the tolerance of a budgetary

against the backdrop would be challenged and if it happens in the fourth quarter we may see a fiscal loosening on policy. francine: thank you. up next we hear from the u.k. chancellor, sajid javid and ask him about brexit and the trade relationship with the e.u. and meeting maria from the in hill sinky. this is bloomberg.

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♪ tom: queen victoria street in new york and london, we welcome all of you worldwide and all sorts of news and dynamics but global wall street picking up the pieces off of draghi.

i want to show how the sausage gets made at bloomberg. bring up the screen. it's a little hard to see but you get the idea of what happens at 11:53 a.m. down here, these are color coded by me, is the first headline and correa, france and the histonian governors as well and bloomberg economics puts out its story after 11:53 a.m. francine, the bombshell story yesterday after draghi and this is two or three hours after draghi. forget about the happy talk, the massive dissent we saw. francine: the massive dissent and the fact we found out about it. i imagine people keep it closer to their chest. bloomberg spoke exclusively to one of draghi's hawkish colleagues, the austrian central bank governor and asked whether the president made a policy mistake.

>> the question how effective will further monetary easing in this various area be? is it something we start to reach the end or is there still effectiveness in it? i think this was a major reason why a pushback took place to question whether quantitative easing moving further into negative territories will have an effect on the economic outcomes or are the risks already higher than the benefit that emerges or at the level of decreasing further, the deposit rate, what will be the effect on the market interest rate compared to the alternative of doing nothing or on forward guidance, how much is necessary now for the future president coming in and how much one should leave her freedom there. these things were discussed in

the n manner but arguments as contributed did not prevail. >> would you say some of the members left thinking maybe we made a policy mistake today, we shouldn't have done this? robert: i'm sure this idea crossed the mind of some people and did cross my mind but my take is himself with change there is forward guidance and policy may change not tomorrow or not after tomorrow but i wouldn't think now but is there for the next case. tom: an extraordinary interview with austria watching the hundred year piece as well. also listening to peter dixon and simon. in the debris of yesterday, draghi went after the esteemed academic from deutsche bank and has been on this show and other

locations has been scathing about negative rates. is the negative rate theory forever damaged -- or has the negative rate experiment now after months and quarters and ears of reality? peter: it has diminishing marks of return the further you go into negative interest rates. actually, it's not just the private sector thinks that, you see a series of e.c.b. stock paces and suggests while there is stimulus of impact there's a diminishing impact the further you go in negative interest rates, forward easing, forward guidance buys you time. it's an expensive way of buying time but provides a window for some of the changes the e.c.b. government wants to see from governments and whether they squander the time or use it will determine whether the

detracting is a failure or a success? tom: do you change your view on the equity markets after the ballet we've seen on fixed economics the last 24 hours? simon: i think we spoke about this on radio a couple days ago and continue to give a slightly cautious view when it comes to equities. but i think i'm less cautious now for the simple reason we're in an environment where the central government is saying interest rates will remain negative for a awful lot of time to come. the diffident on stocks is looking attractive and would our investors want to set out on these circumstances. i wouldn't want to become a buyer but have become mo optimistic. francine: thank you both, peter and simon. stay with us. we're getting breaking news on the china trade spat yesterday. president trump said he would be open to a interim trade deal

with china but would prefer a lasting deal. in 20 minutes or so we're getting a little news. the tensions are easing. china is adding farm products to the stairives exemption. seems like they're getting a buildings they are than a little worse. this is bloomberg. ♪

>> we've got a guy in the white house who has been erratic on trade policy and conducts trade policy by tweet, basically borne out of his fragile ego.

>> we have to let the chinese know president trump pursued a haphazard trade policy that's had victims on both sides. >> our trade policy in america has been broken for decades. it has been broken but it works for giant multinational corporations and not from much of anyone else. >> i agree with whose to say this erratic haphazard trade war is hurting american families. >> when i first got in the race, i remember president trump scoffed and said he'd like to see me making a deal with pi in, g. i'd like to see him make a deal with ping. was that me or was that a deal to happen in april? francine: joining thousand talk about that pretty entertaining debate, is our bloomberg senior writer stephanie baker. what stood out yesterday spite the widen versus faden

-- versus biden. stephanie, there were no major gaffes and there were rambling moments but he proved he could hold his own in a debate with donald trump and we didn't see this fight with warren which is surprising because she has been the one rising in the polls and they did spar over health care but beyond that you got more attacks from either side of the candidates pulling in single digits trying to take on biden, you know, trying to steal his moderate mantle and it's unclear but didn't look like there were any standout moments to help him do that. tom: steph, let's look at the mug shots, liberal, progressive, whacko, progressive, liberal, liberal, liberal. stephanie, help me, did we reidentify progressive or liberal? do we understand where the left

is? is a search for moderation to beat the president? stephanie: you have candidates like kamla harris try to position herself as more of a mad rit. i'm not sure that really is going -- moderate. i'm not sure that is really going to work. you have beto o'rourke who had been a liberal but came back strong and proposed to buy back assault weapons and you had julian castro make this failed attack on biden, you know, over his age which i think that was his attempt to have a standout moment but a lot of people think that could backfire because it looked a bit nasty. so i think it still is -- i watched this as a fight for the soul of the democratic party by the moderates personified more by biden and the more left wing warren and sanders. either way it goes, trump will

try to position this is a fight against they're all socialists and would be harder to do that against biden. tom: i have eight more questions but we're out of time. stephanie baker in london perusing the difference between liberal and moderate. talk about the conversation of the day, david westen with ed rendell of washington, and he had "the washington post" essay, i believe it was yesterday, absolutely scathing about the senator from massachusetts. an important conversation in our 12:00 hour. this is bloomberg. stay with us. ♪ devices are like doorways

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and if someone trys we'll let you know. xfi advanced security. if it's connected, it's protected. call, click, or visit a store today. tom: good morning, everyone. "bloomberg surveillance" from london, from new york. someina plans on making

trade concessions to the u.s.. beijing will encourage companies to buy american farm products such as soybeans and pork. thosehina will exempt u.s. products from additional tariffs in the coming weeks. ist year, president trump planning a middle-class tax cut. he said it would be very substantial and inspirational, but he did not give details. during an election year, it come back tax cut would face a nearly impossible battle in the democratic congress. administration is set to strip california of its power to regulate automobiles greenhouse gas emissions on its own. the state is allowed to set tougher standards than the federal government. california'ss

apartment that automakers sell more electric cars every year. over to capitol hill, u.s. house investigators want to talk to employees at boeing. they are looking into the boeing 737 max crashes. criticize congress from making the matter public while saying it will continue to cooperate. 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. this is bloomberg. thank you. let's get more on the trade war and an update on these headlines breaking in the last couple of minutes. china to buy a certain amount of pork and soybeans. let's get to our chief asian economics correspondent. does this mean we could front an interim deal?

>> i think it certainly adds to this emerging case that both sides are now willing to show a bit of goodwill toward each other. perhaps there is a bit of a push towards some sort of interim deal. on china's side in the last hour does indicate china is willing to come to the table on the agricultural products side of things. francine: does that mean we will have a formal deal in the coming weeks? >> it would certainly bode well for the talks that are supposed monday.n this

andsury secretary mnuchin trade representative light house or -- lighthizer next month. we are talking about some exemptions on some products, perhaps increasing purchasing agricultural goods, that we have aroundved big sure items industrial strategy. removence the u.s. to all tariffs immediately. there is still a long way to go. tom: it seems like we're back to square one after a ballet of one year. story thismberg morning, intellectual copyright and intellectual rights. intellectualnk the copyright debate to pork or soybeans? >> certainly what they have done

is to have made some progress on the ip front. they passed a law earlier this year to detect ip. officials have said it is in their own interests to have whichr ip protections, spurs innovation in their economy. we talked about shifting mood music and pork prices, china's economy is under pressure on some fronts. manufacturers are feeling pain. pork prices are going through the roof. that is hurting consumers. there is a case for both china and the u.s. to cut a deal. tom: very good. thank you. sorry, i was looking at euro-dollar. we will have reporting through the weekend.

protests seem to be a little lighter in hong kong with a holiday this week in our coverage is -- this week. forth one go back and the interlinking on trade. how do you interlink the trade withe to what we have list with mario draghi? >> the euro econo is suffering in the backwash of the trade deal. badlyy being particularly affected. the euro zone economy is slowing. that is largely the result of this trade problem. i think as you look on a wider basis, global trade growth has slowed significantly. that is a u.s.-china problem. what the u.s.-china

debate encapsulates is backlash against globalization. that is starting to hurt economies such as europe that feels as though it has to take additional stimulus steps. the imf would be messaging improvement in productivity, more liberal economic capitalist enterprise from europe. we are not hearing that. qe this debate is about is infinity and fiscal solutions. no one is talking about big changes in european capitalism. >> we had a speech along those lines two to three months ago, and that was designed to try to shift the debates on from an intellectual starting point of being uncomfortable with qe infinity. whether it has been successful

in broadening the discussion from german members of the ecb to the need to allow centers of production to move more efficiently around the eurozone, do levels of structural reform to make it more convergent. there are voices, significant voices but isolated voices. there is no concerted campaign astake that third arrow being very isolated in the dialogue. francine: how would europe cope with extra tariffs on the german carmakers? >> germany and the broader impacted by aing bilateral trade war between the u.s. and china that triggers rerouting global supply chain. there is one area that remains of interest to investors.

that is whether in an environment where china is uncomfortable with its trading relationship with the u.s., it looks to reroute into europe, so your enemies enemy becomes your friend. whether that translates into export orders, we have not seen the data yet. we may see it throughout the year. francine: if we were to have tariffs on german carmakers, would we get fiscal stimulus from germany? >> it would be a good opportunity to flip the policy mix. one thing germany fears is that all of a sudden europe as a whole starts to come to donald trump's side. they have tried to dodge out of the way and allow china to take the brunt of this. there will come a time when trump does start to get heavy.

ecb is more or less out of ammunition. it needs something else. fiscal stimulus may be the next arrow to be taken out of the quiver. tom: an extraordinary 24 hours. peter dixon and simon french. there are any number of good conversations today. quite frankly, timely for the continent of europe and all of developed economies, the chancellor of the exchequer working with prime minister johnson. look for that in an hour or so. this is bloomberg. ♪ ♪

francine: this is "bloomberg surveillance." tom, the eu officials are worried boris johnson could persuade hungary to veto a brexit deal. that would dramatically increase the risk of a no deal brexit. merits,us now is david simon french, and peter dixon. david, the question is whether the law parliament passed of not allowing no deal brexit could be overruled or ignored. david: throughout this whole process, we have seen more options become more or less likely. we thought no deal was off the table. orban toup but viktor say it is not as simple as that? he has the power to veto that

extension. suddenly it is back on the table as a possibility. that is ignoring the fact that mr. johnson says they might ignore the law completely. as always, we are still very uncertain. we have this big supreme court hearing next week. that will be the big focus. that is about the suspension of parliament. another opportunity for mr. johnson to be on the wrong side of the law. francine: if we look at sterling, it improved on media reports from the u.k. that there could be some agreement on the backup. david: this suggestion, and we the been hearing mood music last few days that maybe there is some deal to be had over northern island. suggestione original all the way back in the process. it was rejected by the dup because it breaks up the integrity of the united kingdom.

both sides are denying it. number 10 saying they are committed to the single market in the united kingdom. enough that markets this morning say there is the risk of a deal. all this talk about vetoing the hungry, maybemy that means parliament is more minded to vote for a deal towards the end of october. tom: what you have been discussing, particularly with go into the we can sing the prime minister ship of boris johnson has been a resounding success? is he the first one to really make people blank in this brexit debate? david: it is an interesting question. calling it a success, it has certainly been the most eventful start to any premiership. every day there have been headlines that have been unheard

of. lying to the queen, on the wrong side of the law, going to jail. this is not ever happened before in anyone's memory. it has presented mr. johnson as the man who wants to get brexit done come what may. headlineschaotic playing to his favor in the country at large. that he isuggestions not as dependent on the dup as m rs. may was. his majority is long gone. she needed their votes to get through parliament. to come is a vote through parliament at the end of october, those 10 votes are going to be important, but he has a much bigger mountain to climb. david: -- tom: what is parliament like now? is it empty?

are people still there checking their mail? david: it is certainly not empty. are around, certainly the opposition mp's. they are focusing on next week. the opposition are hoping the government are going to lose the supreme court, and the supreme court is going to back up a scottish ruling saying this was illegal. does the government have to recall parliament, or is it the case of closing the stable door after the horse has bolted? is both sidesw are continuing to plot. we heard from the speaker this is plenty of time for them to cause a lot more mischief for boris johnson. he said yesterday he is good to be coming up with all sorts of clever tricks to hold the prime minister was a feat to the fire.

-- prime minister's feet to the fire. francine: is the market is pricing the possibility of no deal? hearing that the law could be broken, or hungry could veto an extension. >> i think it is spot on so far as there are two avenues towards no deal that are possible. i think the movement on sterling towards the u.s. dollar is based largely on speculation. there is a lot of assumption. to be able to compress the subtleties and feedback loops in all of this means a short pithy statement of where we are at can almost never be done until we have passed that moment. you can only write it retrospectively. i don't think the sterling momentum theme will be continued.

francine: there we go, shadow to our headline writers, who have been doing a great job on the brexit bulletin. to sterling,ds there is not a lot of upside. with the numbers have revealed is simply that the extension of the risk stream has been moderated slightly. i would put fair value at somewhere around 1.50. when you are trading at around 1.20, that is a fair bit of risk premium. markets are uncertain and on edge. tom: the gloom crew has been crushed this september. peter dixon optimistic on the markets. merits asch and david always. this is a real treat, mitt romney has driven a lot of the

debate on europe and draghi and all of the challenges of trade effects on europe. his colleague meredith sumter will join us. look for that in the next hour. this is bloomberg. ♪

>> you are watching "bloomberg surveillance." let's get your bloomberg business flash. raising $525 million in its ipo after pricing shares above and already elevated target range. at sale valued the company $4.4 billion. the company noted one of its risk includes negative publicity from white supremacists using its network. the maker of alternatives for dental braces, in their debut, shares sank 28%. that makes to the first u.s. company to raise more than $1 its openingon

day take a fall. credit suisse going its own way. other firms are urging investors to reduce their holdings. equitysuisse says markets will benefit from the new prospects of a u.s.-china trade deal. that is your business flash. francine: thank you. from now on that credit suisse change in stance on equities, we are back with peter morgan. it is now a good time to get into equities. try to be neutral. >> i think it is. you will not get a huge bank for your buck. were her the chris we skies saying the possibility -- the credit suisse guys saying the possibility of a trade deal causing pick up to be had.

francine: what is the state of the market? are we going to see bubbles? does that mean we're taking too much risk in certain parts of the market? >> i would agree that global equities do not look expensive. if you get some of the trade concerns alleviated, you would expect a rally heading into the presidential election. going further than that, i was struck by the democratic debate last night how much consensus there was on the democratic side to be hawkish on trade. anybody who was hoping for a cessation in the white house in a renewed global consensus on the rules-based system is barking up the wrong tree. longer-term, you look at all the indicators in terms of spare capacity, consumer confidence

late cycle, you are picking up the end of this rather than expecting a big repricing higher. that some point buried in all of the draghi debate was the chance of inflation in the economy. i would come uph 2.2% nominal gdp. can corporations do revenue growth in that environment? >> it is starting to become tricky. problem thehe eurozone has is that firms are finding it difficult to get prices to stick. there is limited sense that we are going to get a huge boost to earnings over the next 12 months. you might continue to get reasonable dividends. reason for buying equities is that you're getting better dividend yields than you

are returns on fixed income. it is not a strong conviction to buy it. this has been a hugely constructive hour, especially off of draghi. thank you. a long, long day in london. we will drive forward in conversation, drag it over to america. kevin cirilli, i think he got a little bit of sleep after the debate. i think he talked to mr. sanders among others. kathy fisher will join us from bernstein on all of this and the stock market. 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. tom: this morning, after mario draghi delivers a non-bazooka

stimulus, europe adapts to the new reality. qe infinity may be two years, and then what? christine will pick up the pieces in november. bear market gloom. in houston, it is so last evening. can we move on? let's move on to october. debate in ohio, who will be on the stage? i am tom keene with dueling throat infections with francine lacqua. i got it from her or she got it from me. we are really not sure. francine, there is a shift in china. francine: there is. there is breaking news on brexit. boris johnson will meet the eu president in brussels for talks on monday. if you look at brexit and all of

the various composition we have, a little bit of pounds strength. in al show you sterling minute on the back of media reporting that they could find an agreement on the backstop. you also have rumors that boris johnson would ask for an extension of the eu while at the same time getting one of the countries to veto an extension. mr. johnson will meet mr. juncker on monday. we will speak with the chancellor of the exchequer in a bit. the other news, lifting the markets on china, pork, soybeans. here is our first word news. >> that is where we begin, china making some trade concessions to the u.s. china encouraging companies to buy american farm products such as soybeans and poor. those goods will be excluded

from additional tariffs. the trade war has gone on for more than a year. democrats squaring off last night in their third presidential debate. front runner joe biden battling his rivals over health care. all the candidates taking shots -- presidentto donald trump, especially on trade with china. >> donald trump in office on trade -- president donald trump, policy, he remindf that guy in the wizard of oz, when you pull back the curtain. >> a much clash between biden and senator elizabeth worn did arren did not ow happen. fed tosts expect the leave the range for their benchmark rate for an extended period between 1.5% and 1.75%.

carl icahn leaving new york for florida to avoid higher taxes. he's moving his home in business. florida is one of seven states without a personal income tax. new york's top rate is almost 9%. 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. this is bloomberg. tom: thank you. i want to show the johnson impact on a meeting with mr. juncker. we see it with a sterling lift. francine knows this, out of the 1.20, we get to 1.23 with strong pound sterling. let's get to the data check. there is the lift. i am going to suggest most of that is off of china.

1.1103. on to the vix. kathy said she would not show up on set unless the vix is under 14. we have heard today. watching yields worldwide. all is good on a friday. francine: all is good. this is what i am looking at. we are seeing european stocks gaining a bit more than they were 20 minutes ago. has is because china announced these tariff exemptions. there is some talk that things are getting easier between these two countries. wework.tting news on . willerstand that we co begin marketing shares to

investors next week. tom: it is a long way until next week. bring it equity and then do bonds, and the mathematics is difficult to say the least. we look at ecb within the european sphere in the last hour. this hour, we bring it over to the ramifications for the world and america. we say good morning to all of you. 8:30 pick up the debris at yesterday. here is the present of the european central bank. >> the rights around the euro area growth outlook remained tilted to the downside. we still think the probability of a recession for the euro area is small, but it has gone up. the continued prominence of downside risk, governments with fiscal space should act in an

effective and timely manner. we have a mandate. we will pursue price stability. we don't target exchange rates. absolutely extraordinary to see that yesterday. fromus now, kathy fisher bernstein. we have a little bit to talk about. in washington, meredith joins us from eurasia group. let me cut through the .xcellence of your mitch ramen what did he say about what was yesterday?frankfurt >> certainly the view from eurasia group on this is there is no surprise that you would see the european central bank act in this way. from a politics first perspective, mario's move takes

political weight off of christine lagarde as he sets up 2020, looking at the global economy write large. -- writ large. tom: trading range august with a huge bull market breakout. draghi actions of mario and others, including the chinese news this morning, does it reaffirm a bull market? >> i would not call it a bull market. we are still in a long-term bull market. investors know the economy has slowed down. there has been a significant deterioration in the global economy. trade is having an impact. we still don't see a recession. growth economic environment. these signs are having a positive impact.

as you are managing money, whiplash is to be expected. the market is reacting quickly to good news and bad news. francine: what looks uneasy? there is a rapprochement between the u.s. and china. two markets overreact or under react? >> i think the market is pessimistic. this is causing markets to become a little more upbeat, but there is still simmering anxiety under the covers. ist we're looking for now ongoing bouts of volatility where people are ready for more bad news. i'm not expecting huge drama in , but of long-term pullback we should expect more short-term volatility. the markets have been quite called in recent years. -- calm in recent years.

why are china and the u.s. getting closer? are they worried about their economies? is it a game, one step forward, two steps backwards? >> i think certainly that president trump following the august we had in the u.s., he is watching the markets. he is becoming more cognizant of the growing pessimism of u.s. voters as to his handling of the u.s. economy and particularly the u.s.-china trade concentration. comes even before tariffs hasnche of been felt. by chinese met counterparts who are not optimistic that they are going to reach a full term comprehensive deal with this president. they are also incentivized to

l canhat kind of mini dea be reached to he's some of that immediate economic pressure as beijing looks to mitigate the pressure coming from washington over the long term. going back to the prior discussionr marks right to be limited in their optimism? we would say yes. markets are rightly focused on the limited gains of what would likely be a mini deal reached in october. the long-term deal does remain elusive. tom: that gives us october, and then november as well. bernstein with us. we will drive forward the conversation in our next half hour. in the last number of hours, we have seen china relax on tariffs

towards those meetings meredith mentioned next month. we have seen news on the brexit front, boris johnson to attend with mr. juncker. a speaker of the house to be appointed november 4. did i get that right? francine: well done. next, we will hear from the u.k. chancellor of the extra for speaking from the euro group meeting of chancellors in helsinki. this is bloomberg. ♪ ♪

all stand with barack obama eight years, good, bad, and in different. defend the fact that not only today do we have 87 million people uninsured and underinsured, you have to defend the fact that 500,000 americans are going bankrupt. >> let's be clear about health care and start where the vice president did. we all owe a huge debt to present obama, who fundamentally transformed health care in america and committed this country to health care for every human being. >> what i support is you require in, io opit i -- opt support that they would automatically be enrolled. barack obama's vision was not to leave 10 million people uncovered. he wanted every single person in this country covered.

my plan would do that. your plan without. >> they do not have to buy them. >> you just said that two minutes ago. you said they would have to buy in. are you forgetting whau said two minutes ago? are you forgetting what you said just two minutes ago? i cannot believe you said two minutes ago that they had to buy an, and now you are saying they do not. tom: do i wish we had the united kingdom's six week or four-week campaign for a general election? there was debate three. right now in houston picking up the debris, kevin cirilli. i need a headline. i know the washington post does the analysis, winners and losers. who won? far more importantly, who needs to adjust as they go to ohio and debate four? kevin: if i could put the

audible gasp that was in the debate hall during that exchange between julian castro and jill biden, that -- joe biden, that would be the headline last night. repeatedlyasked whether or not he went too far. that was the general thinking among the chattering class in the campaigns. he was defending himself. i'm not sure it resonated. if you are waking up in beijing or around the world, the debate last night, forget about the personalities. we have another year of this. the policy last night was on full display. approach,he populism onde negotiations very much full display in here to stay in the democratic party. i caught up with senator bernie sanders after the debate. here is what he said. 3:00t by doing tweets at

in the morning. you need a comprehensive approach to trade, which involves the workers of this country, which involves the environmental community, which involves family farmers throughout this country. the debate on trade still very much alive in the democratic party. classoes the chattering matter in all of these debates for the 20 counties you have tattooed to your brain that matter the first tuesday of november 2020? kevin: that is such a great question. it is still incredibly early. if you look in terms of those 20 counties that are driving independent voters across the country, you are right. what is more of a driving factor are the economic data numbers we talked about daily.

when you crunch those numbers even further, who those folks blame has become a polarized issue. i was struck by the performance of elizabeth warren. a disciplined performance. the lower tier candidates, buttigieg, booker, kamala harris, close chart, they have inaccelerate their pace terms of whether or not they can make this a four-way pace. hetro, i'm not sure delivered last night. francine: we were all expecting elizabeth warren to go after joe biden. it did not happen to the extent people were saying it would. why? kevin: first of all, it was a marathon three-hour debate. it is hard to put it into

context the first 20 minutes. those first 20 minutes of the debate was a stark contrast on medicare policy from biden, warren, and sanders. you saw a bit of an exchange. it was interesting to see biden go after sanders and call him a socialist. also really driving home the question of how one elizabeth warren pay for her policy? she is going to be asked the question of whether taxes would increase for the middle class for her proposal. the first 20 minutes, i thought it was a good preview of where this race is headed. tom: thank you. amend, the document to widely expected by wall street. transaction has not gone well. they will be on the nasdaq.

that is a big victory for the nasdaq. they will make changes to their governance. everyone knew that. we work says no member of mr. newman's family will sit on the board. they commit to adding another director within the next year. they are talking about a league independent -- a independent director. maria wasmoments ago, speaking to the chancellor of the exchequer come in here is what he said about brexit. >> we want to have a general election. i hope it comes sooner rather than later. when it comes to that election, the conservative party does not need an alliance with any other party. you asking about the brexit party. we will not be having an alliance with the brexit party or any arrangement at all. >> i want to ask you about that deal. he said many times this is do or

die. when we speak to your counterparts, they would argue we have not seen anything new for weeks. can you still get this deal done? >> negotiations are ongoing. there is a lot of working done on both sides. i am feeling increasingly optimistic. people understand we need to end this. we plan to leave on october 31. we will leave with a deal. now, a no is a deal deal outcome, eventually there will be some kind of deal. it is in everyone's interest that we struck a deal as soon as we can. >> let's talk about that no deal scenario. you have said you need to leave. the prime minister has made it clear this is do or die. what if we get to that point where this is no deal brexit? many would tell you if you look at the law, would it be legal to leave without a deal?

>> we are a country that is proud of always following the law. we are proud of the rule of law. we will be making sure that all laws are followed at all times. at the same time, it is right for us to say you have a policy to leave on october 31 that is what we plan to do. we will have to see what happens when we get to the european council. when the prime minister gets to the council meeting in october, he will not be asking for any kind of extension. he will be hoping to strike a deal wh his partners. that was bloomberg speaking with the chancellor of the exchequer. he was saying the conservatives will not have a packed with the brexit party. let's get back to kathy fisher and meredith sumpter. it is incredible that we are 45

days away from brexit, and we are still questioning whether no and all thehe table ranges of possibilities. >> absolutely. eurasia group came up with an updated base case. our base case is we are heading towards early elections. most likely in november rather than before the october 31 deadline. there is increased speculation to angles is going hard for a deal. probabilitythat low for a deal to two primary reasons, the distance between london and brussels remains too great on the backstop issue for there to be substantial progress ahead of the council meeting.

even if boris johnson did get a deal agreed to with brussels, we have low confidence he will be able to get it through the commons. torys lost several members. us. kathy fisher with things get soft. poor prices ugly in china. prices ugly in china. we see the dup with the beginning of an amendment. when you frame investment, when you look at investment, there is this foundational thing that life goes on after brexit. do you still have that? >> yes. i think that is part of what we are seeing. investors are getting more realistic about the situation.

they recognize interest rates are not magic bullets. changes the way things have been operating, but it does not mean the world comes to an end. that is what everyone is trying to grapple with. how do you invest in a world that is different but still moving on? tom: is this because of the ballet of brexit? >> you are raising a theme that is very broad base. how they are adjusting to change is the question. you are seeing many companies adjusting into significant disruptions in their industries or external factors. francine: how will be eu deal with a possible no deal brexit? >> when we talk to clients about this, we remind them when you look at the impact of no deal

brexit, it is going to be dramatic, but the actual exposure of the eu and the u.s. to that no deal brexit is somewhat more limited than many investors think. areg back to the themes, we in a disrupted world order. this elevation of chaos, much of it coming from developed market economist, that have been the bedrock of stability for global markets, that is going to be the new norm for some time. thoseve to find where negative investments are going to give you returns. francine: thank you so much. we will come back. this is bloomberg. ♪ bloomberg. ♪ here, it all starts with a simple...

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a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. tom: we have moved on to a story in america, i know it is a story

in london as well, and that is wework, amendment number two to of 1933.securities act it is a changed tone. it is a humble company. the tone is completely boilerplate and straightforward versus the touchy-feely we saw a couple of weeks ago. francine: you made a good point, we still have to wait to see how softbank reacts to this. we will have more reaction throughout the day. let's get straight to bloomberg first word news in new york city. to ease tradeving tensions with the u.s. before the two sides continue talks. to exclude pork and soybeans from additional tariffs. year, donald trump

is planning a middle-class tax cut. he said would be substantial and inspirational. a trump backed tax cut would face a nearly impossible battle in the u.s. congress. the democratic house is unlikely to back legislation that would be a victory for the president. two luxembourgas for talks with european council president jean-claude juncker. large gaps remain between the two sides. 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. this is bloomberg. tom: thank you. they meet in helsinki. interviewsed set of and conversations. javid ofaking to mr. the united kingdom minutes ago.

-- with aeaks to profound impact on all of europe. we saw that yesterday. good morning. >> good morning. we are in helsinki. european finance ministers meeting after that huge ecb meeting yesterday. i am joined by the finance minister of lithuania. i know you don't like to comment when it comes to monetary policy. that package we saw yesterday from mario draghi, did that surprise you? is it just a little too much? policy, monetary policy has its limits. we see we are in a new territory for a while. we should be very cautious because of unintended consequences.

we should remember that the national governments have their for structural reforms. of measures on how to deal with the economy in this cycle. >> it was a difficult decision for mario draghi. rates,u look at negative we are actually pricing in another rate cut. how do you make money? whether itsnsider levels are clear or not in this case. we have macro tools to prevent any unintended consequences. if the european central bank uses its mandate to the fullest

which would use our powers at the national level as well. >> mario draghi said it is time for fiscal stimulus. you just met with the german finance minister. are they willing to put that surplus to work? terms,king in general the european union and eurozone, they have fiscal space. it is ok to use it in this cycle of the economy. if we look deeper into the question, we can see that across the european union, across the eurozone, we have very different situations regarding the fiscal space. we cannot say that each country should use that fiscal stimulus because one country can have withems with these growth

that stimulus approach. i think each country should find the way forward. >> we have heard this for many years now. we need to get spending. we are not seeing it. why is that not happening? >> for me to comment on the germanys on behalf of would be just speculation. country,ak about my what we are doing now. we are focusing on structural reforms. we are observing what is being done by the ecb. say that our economy is growing around 4%. of course, we prepare ourselves for lower growth. the main focus is on social

reforms. >> today we heard from the .rench finance minister he does not like this idea. did you talk about why the is such a big problem for europe. >> it is a new phenomenon. are everywhere. this, it is about not about innovation. it is about power and competition with the central bank. player can become one of the most powerful players in the finance system. can it compete with the euro?

the issue is that the europeans don't want to see more american technology. about the think it is competition. .t is about power making theefore final decision, we should consider the possible effects of competition or innovation on the monetary system and on the financial system. >> thank you for joining us. that was lithuania's finance minister. the conversation is all about fiscal stimulus. francine: thank you so much. maria with those great interviews. doubting whether it was the right call from mario draghi. more onhave plenty

europe, on brexit, and we are trying to figure out the impact of no deal brexit on europe. any insight into what happens to currencies? tom: on currencies, it has been a stronger dollar against everything. cutan kite is it -- it can your way. -- either way. he is right on top of this. kathy fisher with us from bernstein and meredith sumpter from eurasia group. this does affect every multinational. multinational. does it just affect november earnings and beyond? >> dollar strength has gone on for quite some time. we don't have a strong call. it makes sense that the dollar

relativelyrong and situation at this -- relative rate situation at this juncture. most interesting call to see a huge body of wall street wrong on a weak dollar call. deutsche bank yesterday came out and said euro bottom. can we get to that strong of an inflection point? >> quite possible. what we are watching from the white house is the interesting divisions along qe. there are signs that whether

political limits are being , thatd within the ecb would make fiscal policy the next frontier. all sites will be on christine lagarde. the region,across or diplomatic skills, once she gets into a position, it is going to be a focus point for her as to how she gets some of these governments across the line. when you look at france and the new coalition governments in italy. the netherlands looking at 50 billion euro investment program, there are some possible good omens that some of these country governments might either have the space or the wherewithal to do more. tom: we will see on fiscal policy. kathy fisher has stayed invested.

let me do a data check right now, which continues the confounding for the gloom crew. we are above 27,000. euro-dollar stronger. sterling lifting off the news of the last hour. stay with us. this is bloomberg. ♪ ♪

tom: lots of breaking news in this hour. we can do this with meredith sumpter of eurasia group and kathy fisher of bernstein. what a summer it has been. what a 2019. yellow is corrections.

the gloom of the bear market, and down in may and august. enjoy trading range in august. is it really a breakout? have we broken out of the august malaise? >> it is shortsighted to say there is a breakout in the short term. there are cyclical trends we are dealing with. no matter what happens with the short-term trade issues, the trade issues are not going away under either party. trade issues are going to be with us for some time. a slowing global economy, lower interest rates for longer. these are things we have to adjust to. there are going to be ups and downs. we should not look for some major change to the market. tom: the bedrock theory is low interest rates, slip the cyclical, meaning i can enjoy it a higher multiple of cash flow

earnings on the market. are we going to price in higher multiples because of what draghi and the rest have wrought? >> if interest rates were the only things that matter, the japanese stock market would have been soaring. lower interest rates are supportive of multiples, but what happens to earnings growth, all these things will matter a great deal more than where interest rates are going. tom: i cannot convey how important that is about japan and the fact that they are not trading out to record highs. francine: we have been talking extensively on this program about europe becoming more like japan. are we underestimating when you look at negative rates the impact this has on society, especially in europe, the changes we will see within france and germany?

it is a great question. when we were talking earlier about how to help clients make the right investment decisions, rather than focus on the short-term, you have to focus on those countries that are preparing their societies to be meaningful contributors to the 21st century economy. that is making investments in their workforce, making smart ys and smart investments in society. you have to look at those countries that have a commitment to long-term vision and are building toward that vision. francine: where do you put germany? what will it take the german government to start spending fiscally? >> it will be a challenge for the german government in the near term. we are not likely to see that response until sometime next

year, in part because we placed a 55% probability the grand coalition is likely to break up, perhaps even by the end of this year. that is going to cost germany to iod where theyer are going to have to find a new leader post merkel that can make those kinds of decisions and get stimulus through germans parliament. tom: thank you. much more coming up. in america, we have to get the markets open, and of course work off elevated futures. hour, two hours, ari rend of finland. this is bloomberg. ♪

>> you are watching "bloomberg surveillance." let's get your bloomberg business flash. raising $525 million in its ipo after pricing shares

above and elevated target range. the sale valued the company at $4.4 billion. the company helps protect and distribute website content. possibleny noted negative publicity for allowing was pharmacists to use its -- white supremacists to use its network. it was surrounded by a lot of buzz. forever 21 is set to close at least 100 stores. this is part of a plan that includes filing for bankruptcy. the chain is working on a deal to get $75 million for its restructuring. forever 21 operates more than 800 stores in the u.s., asia,

europe, and latin america. uber sold $1.2 billion in junk debt bonds. they praised the bonds at the yield of 7.2%. francine: we are reminding all of our viewers the news from saying it plans to make changes to its proposed governance structure and no members of the chief executive's family will sit on the board. votewill also change high stocks from 20 votes per share to 10 votes. joining us from berlin is our bloomberg opinion columnist. how will softbank react to this?

>> very interesting question. k isounds like wewor desperate to go ahead with this ipo, announcing this morning a series of changes designed to make investors were comfortable with this controversial listing. they clearly had feedback from investors, not all of it good, and they have announced these changes to put to rest some of the more controversial aspects of the lifting. it remains to be seen whether this will be enough. it is not the government's changes that were -- governance changes that were disturbing, also the cash burn. francine: when will we know how much this is valued and whether it will start making money and getting rid of debt? roadshow is yet to kick off.

receivedhas yet to be until we know whether we will get to the starting line of the ipo. these governments changes -- governance changes may be enough to give investors confidence that there will be sufficient oversight of the board. know members of the ceos family will not be sitting on the board. they will also be returning any profit that mr. nyman made personally from purchasing buildings and renting them out to we work. sting out some of the of this idea for potential investors. whole have not read the s1a, but it seems like it is a radical tone change. it is amazing the difference in tone paragraph to paragraph.

tell us about the position of the underwriters. have they not been terminated, or is there a confidence in jpmorgan and goldman sachs? >> they are very difficult. but have to make changes, at the last minute, it is very unusual. this is a company fundamentally controlled by the ceo. he has had to give up a lot of background. the advisors months ago were telling him this company could deliver huge valuation when it goes to market. now perhaps we will not even get half of the last valuation. that would be a huge disappointment. the fact that they are going ahead with it anyway suggests wework really needs to do debt.po for equity and that means this ipo has to go ahead, and that means giving

serious concessions to investors. tom: it has been an extraordinary 24 hours. i don't know what else to say. francine, i want to emphasize the article at 11:53 a.m. yesterday wall street time where bloomberg showed dissension in the ecb. it is extraordinary. francine: have plenty more interviews from central bankers that made the decision with mario draghi. then we will get brexit. boris johnson will go to brussels on monday to speak with jean-claude juncker. this is bloomberg. ♪ ♪

♪ david: trading on hope. president trump considers a

cease-fire in the trade war with china, and china responds by saying they will import u.s. soybeans and pork. outgoing ecb president draghi points,all of his and markets wonder whether more baby beaded -- whether more may be needed. up onatic candidates gang biden, and health is front and center. welcome to "bloomberg daybreak" on this friday, september 13. it still is pretty lucky, at least in the equity markets. s&p futures are up. the euro is up against the dollar. the 10 year yield, the bonds generally tend to be selling off. the 10 year is no exception. crude is up just a tad. it's time now for the global exchange, where we bring you today's market moving news from around the world. joining us from hong kong is in