francine: the federal reserve cuts for a second time this year but dampens expectations for faster easing. the fed offers up to $75 billion of extra liquidity. will it be enough to calm nerves? banks respond. the boj calls for an october review. switzerland, norway, and the bank of england all decide on policy.

francine: good afternoon if you are watching from asia. this was a couple of days after the news from the saudi attack on the infrastructure of saudi aramco. bank raised its benchmark rate to 1.50. they had flagged they would raise rates. wereeason why people questioning whether they would do it is because the world economy is more uncertain than a couple of months ago and you see a lot more dovishness from the ecb and the fed. toit is quite difficult raise interest rates in this kind of environment. euro-dollar at 1.1, and because it has been a very big week in oil, we have a look at the oil price. norwegian krone on the back of

raised, having a significant move to 9.85. , we speak to the governor of the norwegian central bank. don't miss that interview just after 10:30 a.m. london time. let's get straight to bloomberg first word news in your city. >> new sanctions against iran are coming. this is from president donald trump in response to the attack on a key oil facility. michael pompeo is in the kingdom to coordinate reactions to the strike. riyadh says the attack was quote unquestionably sponsored by iran. the saudi defense ministry displayed pieces of drones of missiles it says was used in the strike. over to the u.k. and the final day of hearings in the u.k. supreme court for the prime minister's suspension of parliament.

his lawyer promised the government will put out a statement on what it will do if it loses the case. the potential to derail boris johnson's brexit strategy or even cut short his premiership. and only 1000 investment banking jobs lost in london because of ,rexit according to a report contrasting with estimates of tens or hundreds of thousands of positions shifting to the eu. downirm says it is partly to some firms still waiting for clarity on brexit. and one of warren buffett's deputies started her own form -- firm. she has been an advisor to the oracle of omaha. reports street journal for new venture will be a platform to acquire and build companies. and a one-day walk-off was called off by british pilots, instead looking for meaningful talks. they say they are halting industrial action to prevent serious action to the brand.

tuesday's strike force them to scrap almost all flights. the airline put the cost at about 40 million pounds a day. 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: fed policymakers have lowered the main interest rate for the second time this year. jay powell says moderate policy moves should be sufficient to sustain the expansion, but the overarching story was one of division on the fomc with updated quarterly forecast showing officials were split over the need for further rate cuts. the door open to an extensive series of cuts but stressed that this was not what officials were expecting. speaking after the decision, he touched on a series of issues from money markets to negative rates. >> we are not on a preset

course. we will be making decisions meeting by meeting and we will try to be as transparent as we can. ,f the economy does turn down then an extensive series of rate cuts could be appropriate. it's not what we expect them a but we would certainly follow that path if it became appropriate. i don't think negative rates would be at the top of our list. if weak spirits under episode of pressures, we have the tools. it is certainly possible we may need to resume the organic growth of the balance sheet earlier than thought. i think we are watching carefully and will come a time when we suspect we have done enough. but there may also come a time when the economy worsens and we have to cut more aggressively. we don't know and will be watching carefully. for more isining us

our global fx and bonds managing editor and for the hour the chief executive and coke executivet -- chief and a manager specializing in european credit. so we will also talk about greece and opportunities in the periphery countries. the first, how many cuts do you need for the economy? >> that is one of the questions on everybody's mind. is it insurance against the global repercussions? is it that the economic slowdown will wide or is it to support the economy? that is where the split come from where you have half policymakers looking at the domestic economy and half looking at the global environment and see weakness. francine: what does a policy mistake look like? is it too tight or too loose? >> at the moment, the market is

worried rates are still too tight. you see the reaction we had after the decision, we had a flattening of the yield curve and higher two-year interest rates. that is a sign of the market is a little bit worried the fed is not doing enough to revive the economy or keep it going with its current policy. what policy good at is understanding these nitty-gritty things that freak out the markets. yesterday, we're talking about the repo rate. well,ething does not work you see this extra anxiousness. are we any wiser into why this is actually happening? >> i think the market has confident view of why it is happening, but what the fed will do about it is impossible to know. we did not learn a lot from powell and no is a sense of complacency.

-- and there was a sense of complacency. of tryingte actions to help things in particular to the tensions in the money market quite enought spare cash for everybody and many bonds on the other side of the equation. what powell said give us the impression that he is likely to continue with the overnight repo he has been offering, but that will be on an ad hoc basis and is not a firmer plan of what to do next. youcine: you are so happy came the day after the fed because you have been dying to talk about repo rates. on a serious note, to look at dollar strength? do you worry that what is happening actually impacts investment in europe? thing is that it is a type of divergence of policy.

it's true that europe was more accommodative than the fed over the last few years. people ask about politically influenced insurance policies, but what is important for us is value in the private markets. it is where free financing is available in the public market. clearly, the divergence of the continents makes the europe ones very attractive. if the u.s. goes into accommodative policy, which i do not think they will massively, then it could change the balance of attraction. francine: does it make you worry you have zombie companies staying alive because of ultra cheap money getting even cheaper for longer? , you worrylipside there's something fictitious in

the markets? andrew: there is a massive amount of liquidity already available and we saw it last week after the ecb cut. there is a further compression in the areas of the market where there is still some value left. we can expect a similar kind of pattern and we were talking about further contractions in the environment. so yes, some companies may end up finding themselves at cheaper to where theed fundamental values would come in. francine: on dollar strength, where does it go from here? >> the president would like it to go down. the fed is not doing enough to make that happen. the central banks around the

world are doing nothing to help the moment. positioning might be the only thing that holds them back. they are already in the trade looking for further gains. it would not have progress quite so quickly. francine: one question we are is to all of our guests check out our market live blog. this is the question. attractives are most after the fed cut? andrew: the public market. the tighter the public market becomes, and those fed cuts ,ontributed cheaper and further although the rest great bonds and so on, if you were able to create those pools of assets in the private environment, that is

where the attraction is. so generally speaking, all of the private lending strategies are becoming more attractive. if we had to say we don't see much value left on the public side. that would be the answer. paul dobson, our global fx and bonds manager. and as always, our guests stays with us. stay with us, plenty coming up. the boj these policy unchanged. the s&p says no change and norway hikes. we bring you the very latest on a busy day for central banks. plus, the athens stock exchange has been one of the year's best performance, up 40%. but how has the greek economy been faring? we speak to the head of the

helen market exchange. this is bloomberg. ♪

francine: this is "bloomberg surveillance." bank it raised rates by 25 basis points in moment ago. we will spend a little bit of time figuring out how difficult this environment is for a small, open economies like norway to have to raise rates while everyone around them decided to cut. sewall have a look at us to

whether this is a race to the bottom or if they otherwise would have disappointed in the markets. but first, let's get straight to a bloomberg business flash. >> american a jeweler tiffany is planning more stores in china to attract greater local demand. in an exclusive interview, the chief executive tells us to cope with the trade war, he is streamlining operations. >> this affect on mainland china is beyond our control what we want to do with it. ,ot just by increasing prices so we will not act on old inefficiencies. microsoft says they are buying back as much as $40 billion of its stock. software maker is also boosting its quarterly dividend.

and microsoft has been a massive buyer of its own shares. its market cap remains at more than $1 trillion. and helios towers confirms plans to lift -- list on the london stock exchange. they are a sub-saharan african mobile phone operator and hopes to raise around $125 million to fund expansions across africa. francine: thank you so much. let's they would central banks. today is big day for monetary policy. the bank of england remains stuck in the mire that is brexit. boe officials are free to keep interest rates on hold as is widely expected. we will see whether that is the case at noon today. moments ago, we heard from norges bank. will speak to the governor shortly. s&p -- snb unchanged

and we expect no changes from the south african reserve bank. are our guests. i am looking at norges bank, this could've taken traders by suprise. how much courage you need to raise? >> good for them. they told us they would do it. they teased a little bit in the last meeting a little on the global uncertainty. but when it comes down to it, growth is solid and consumption is strong. , they arehe tightness managing to do so without killing the economy, good for them. isething to keep in mind that they place a greater emphasis on financial stability than just growth and inflation

than some of the others. also, maybe a lesson for some of the over dovish central banks. francine: i was going to ask you , this is an economy stirred by oil investment. i also want to bring up kroner because it has gained quite a lot. what does this mean for central banks? question as the small, open central banks. it does show that they impacts the economy. there has probably been a modest depreciation priced in, obviously that has turned around. but the currency for a lot of central banks is perhaps that the margin is the instrument of monetary policy. what is 10 basis points going to do in terms of investment. overall, what are the growing global risks you worry about?

loic: we saw it recently, geopolitics is at the top of the list. leverage is at the highest in the past 15 years, especially now with more than 3.5 times leverage on investment grade issuers close to seven on high-yield issuers. times,re quite high in so the implied consequences of increasing leverages and a pmi around the globe slowing down and still in positive territory. i would say the slowing down of growth can be a consequence of the trade war. obviously, the volatility that we see on some of the core natural resources. francine: we will talk more about these geopolitical risks.

our guests both stay with us. up next, saudi arabia displays missile evidence which they say is proof of iran's involvement in the aramco attacks. we get the latest next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get an update on the aramco attacks.

the saudi military has displayed what it claims are parts of iranian drones and missiles. officials say the strikes were unquestionably sponsored by tehran and-- by trump says more sanctions are coming. >> there is plenty of time to do dastardly things. it is easy to start and we will see what happens. francine: let's get straight to riyadh. to a busy 24 hours of international diplomacy which trump finished by bringing up extra sanctions. what happens next? >> it has been a long night here. you mentioned the press conference and a lot of evidence was presented. 18 drones, seven crews missiles, some video. but one thing did stand out. though they said it is likely to have been iranian-sponsored, they gave himself a little bit of wiggle room when comes to potential diplomatic efforts.

all eyes are going to be on the secretary of state who has been meeting with the saudi's and without a meeting with officials from the uae. -- will be meeting with the uae. he says that what iran has done is threatening behavior that will not be tolerated. talking abouteen is that there is currently a ned, coordinated response coming at some point. francine: thank you so much. our anchor has been keeping us up-to-date with what is happening in saudi. up next, brexit continues. we also get retail sales next. this is bloomberg. ♪

♪ francine: a moderate move. the federal reserve cuts for the second time this year, but dampens expectations for faster easing.

the dollar jumps. let's do it again. the fed offers up to $75 billion of extra liquidity, stepping into the repo market for a third day. ill it be enough to calm nerves? central banks respond. the boj calls for an october review after rates have changed. switzerland, norway, and bank of england all decide on policy. this is "bloomberg surveillance." we have a little bit of news out of the u.k. for the month of august. we had a gdp that was not too bad. we are just getting retail sales and it is a little worse than expected. it has fallen 0.2. i don't know whether it is having that much of an impact on pound. theill have plenty more on pound, but first, let's get straight to what's moving in your markets with our biggest

movers. >> let's keep it in the u.k.. i am looking at u.k. retailer next, down more than 4% this morning. you can blame it on the weather. they are saying the autumn sales are due to a slow start. that could be due to the fact that we have had some warm weeks in the u.k. the start of september. celotmittal down more than 3%. at one point, it dipped below $90 per ton. some concerns about china's outlook as demand softens. swatch to the upside this morning, up more than 1%. swiss watch exports rose 1.5% year-over-year. yesterday, swatch and reac ichemnot were cut to sell. today, some good news in terms

of export numbers, francine. francine: annmarie hordern with the domain movers. let's get straight to the bloomberg -- with the main movers. let's get straight to the bloomberg first word news. >> the u.s. federal reserve cutting interest rates yesterday by 25 basis points again. jerome powell singh moderate policy moves should be sufficient to sustain -- saying moderate policy moves should be sufficient to sustain extension. he admitted weakness in global growth and u.s. trade policy are weighing on the economy. >> trade developments have been up and down. in any case, they have been quite volatile. we see those risks as more heightened now. we will be watching that carefully. we will also be watching the u.s. data quite carefully and we will have to make an assessment as we go. >> the fed making it clear it does not want u.s. money market rates to spike again. it will inject cash into the system for the third day in a row. jamie dimon shrugging off the

turmoil. he says it is not a significant problem and will only be a problem if the economy weakens. norway's central banker delivering a rate hike. it also puts it at odds with most other global central banks. economy is to cool an stoped by oil investments. norway's benchmark rate is at the highest level in almost five years. global news 24 hours a day and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thank you so much. the case over boris johnson's decision to suspend parliament reaches its final day in court today. areprime minister's lawyers due to reveal what his government will do if it loses. that outcome could immediately restrict his brexit options and him.mine there is no news conference this

time around. still with us, simon wells from hsbc and loic fery from chenavari investment managers. retail sales worse than expected but the economy seems to be holding ok. simon: yes, a pretty much wipes out last month's rise. you like all the other u.k. data. food ahead of the previous deadline. that started to unwind, driving some weakness. the u.k. consumer a bit of a microcosm for the challenges the bank of england and we all face. consumer confidence is very weak. the income picture, the job picture is very strong. we see retail sales moving around within that. it has softened to a slower underlying trend. on top of that, the household savings rate is very low. that would be another sign of confidence. it's confusing. francine: it is confusing. it is fairly confusing if you are setting rates as well.

how do you set rates? whether it be the initial shock to a system but then inflation would be something you would not be able to -- you have the fed sort of taking out insurance cuts, it says, against potential downside risks. the ecb possibly doing the same. the bank of england is facing the biggest downside risk of all and yet it is holding firm. we know why. there is political calculus involved but economically, the bank still has a dilemma. unit labor costs rising 4%. on the other hand, you have huge risks and weak activity data. it stands panda metal -- pat in the middle. francine: when you look at the health of the u.k. economy to brexit, what does it mean for is investments either on the continent or on the u.k.? loic: obviously, the combination of brexit concerns, slow in

retail, and a question mark on make itnagement might one of the best brexit related investment opportunities. yield has actually widened quite significantly. some investors may find some value at some point. of course, everybody is waiting for clarification. when it comes to more broadly, increasingmbine leverage, accommodative bank policies, it's probably time for asset locators to focus more on tail end strategies. had strategies -- tail head strategies.

this should be focused on probably areas of the market were leverages highest. francine: if you are investing in this country, do you have to take a view on what the chances of a no deal brexit are on october 31? loic: i think most people at the moment have a very muted investment volumes -- have very muted investment volumes as far as u.k. assets are concerned, unless they are extra cheap or the fundamentals are really supported. i think most people are waiting for clarification on what will happen next. it's the same for those seeking to invest in plants and so on in the u.k.. it is a bit of a wait and see approach. everybody knows brexit is creating massive investment opportunities in the u.k. francine: what about the flipside? i know you are invested in the southern european countries. if there is a no deal brexit, does that impact your

investments there? past few years, there has been a huge slowdown of those investment volumes. surely, we are talking with ip's. we see value in some brexit related investment strategies focused on co-assets. obviously, u.k. pensions. brexit is also offering those u.k. pensions to match some of those liabilities. francine: thank you so much, both of you for joining us. simon wells, chief economist at hsbc, loic fery. can stocks sustain their positive momentum? we will speak to the chair of the hellenic capital market commision. we know where the president stands, but what about the challenges? we will also break down the climate policies from the 2020 democratic contenders. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." i'm francine lacqua here in london. we are just getting a bit of breaking news. it was a big day and it is going to be a big day for central bank monetary policy. we are expecting boe at 12 noon. qatar just seconds ago said it will cut its deposit rate by 25 basis points to 2.25%. qatar has also cut its lending 4.50.to 5 i don't know if that is in the wake of global central bank easing. that is probably dollar linked as well. qatar has had to endure quite a big blockade.

we will get plenty more on qatar but let's get straight to the bloomberg business flash. in new york city, here's viviana hurtado. >> one of warren buffett's deputies is starting her own firm. she has been an advisor to the oracle of omaha and has helped the take -- the company take care of struggling businesses. her new venture will be a platform to acquire and build companies. american jeweler tiffany is planning more stores in china. it wants to attract greater local demand to offset a fall in chinese luxury shopping overseas. in an exclusive interview, the company's chief executive telling us to cope with the trade dispute, he is streamlining operations. will only affect mainland china. it is of course beyond our control, but we want to deal with it, but not just by increasing prices. so we will not act on [indiscernible] ♪

>> a one-day walk out later this month called off by british airways pilots. instead, they are looking for meaningful new talks over pay. the pilots association saying it is stopping industrial action to prevent serious damage to the brand. last week forced british airways to scrap almost all fights, which cost about 40 million pounds per day. that is your bloomberg business flash. francine? francine: the days of turmoil in greek financial markets are not ancient history. greece remains a most indebted country. there are strong signs -- remains europe's most indebted country. there are strong signs of -- we have learned the government wants to help greek banks reduce bad debt through an asset protection scheme. markets rose yesterday on the news and the government is in talks with regulators to get this approved. joining us now for an exclusive interview is vassiliki lazarakou , she is the chair of the

hellenic capital market commision. still with us is simon wells from hsbc and loic fery from chenavari investment managers. chenavari has huge investments in greece, which we will get to a second. thank you for joining us. when you look at the hype surrounding the greek markets, what needs to be done to get the most out of this positive momentum. vassiliki: first of all, let's agree all that looking into the greek markets right now, we think from the analysts and interested that was shown, that we are speaking about positive momentum, as you mentioned. so yes, this is the case. we see within the falling of the interest rates, also with the amount of national companies that want to invest in greece, high-security pensions and higher education. the greek government is elaborating an action plan for boosting the economic activity. regulators, on the other hand,

what does the regulator have to do? the regulator, because i am speaking as a regulator of the greek market, must ensure that there is transparency and compliance in alignment with all eu regulations and directives. i want to make a parentheses, that the greek market from a regulatory point of view provides the same guarantees as the european market, because we all have a harmonized eu legislation. regulator has to make sure that transparency is there, compliance is there in alignment with regulations and we at the same time have a financial greece ready for tomorrow's challenges. francine: let me ask you about the challenges. there is a world economy that could be turning for the worst. what's the impact that could have on some investments in greece, including banks? we had the story of greece offering up to $10 billion -- 10

billion for banks to clean up. how crucial is that? vassiliki: very crucial for greek banks to use this scheme and cleanup there balance sheets to handle the npl's. this is a major issue we need to handle in greece. i think we are proceeding. we are in the process of doing this. this is a positive step. plus, at the same time, i agree with you. we all needed to take into account the whole worldwide environment and what greece has to do is make sure that it provides a safe environment for investment. francine: you have been bullish on greece for a long time. you just told me you bought the sixth largest bank in greece. what do you need it now pray to be a good investment -- what do you need now for it to be a good investment?

we think greece today has gone through what you see in emerging markets usually. 25%contraction is offered -- over 25%. there has been plenty of structural reforms, of course, more to come, but there are plenty of structural reforms which we think have been highly supportive of the investment case. over the past three years, we have significantly allocated capital to that country. we see opportunities coming from the -- decline. that is a strong entry point for all asset-backed strategies. we also see opportunities from the legacy assets in the banks. if we follow the targets that have been announced and the reduction that is expected by 2021 -- francine: in terms of bad debt? loic: yes, in terms of bad debt.

roughly you have 20%-20 5% of the assets of the country -- 20% of the the assets country that will be changing hands in the next few years. you needed a lot of expertise to navigate those opportunities. we think greece, having rich investment grade status, 10 year yield now [audio drop] -- 2007, growth bouncing back. there is some fundamental strength obviously coming from a low base. i think what's crucial to sustaining it is a continuation of fdi's. that could get a virtuous cycle in confidence and further down the line, given the ecb is in

indefinite qe mode, we cannot rule out an eventual entry of greece into the qe program, which would be another bone to the -- boone to the debt trajectory. francine: as a regulator, what do you worry about? there must be something you wish they could do quicker. vassiliki: of course. we have priorities. how we are going to deal with all the changes as regulators. we want to make sure that we have a supervision which is efficient. on the other hand, we need to make sure that we are dealing with everything that supervision has to do. one of our priorities is to set --the prudential supervision increase. ii, how the mifid market participants implement mifid ii. we needed to leverage technology

-- we need to leverage technology. we need to make sure that we are also proposing foot forward, pragmatic proposals regarding law.tments of the issues regarding the financial tools, new products, but new products that are attractive but at the same time save for investors. francine: thank you so much. vassiliki lazarakou there, the chair of the hellenic capital market commision. our thanks also to loic fery and simon wells from hsbc. we know what president trump's position on climate change is, but what about his 2020 rivals? we will break down policies from the democratic contenders next. this is bloomberg. ♪

♪ >> we will address the catastrophic crisis of climate change and transform our energy system away from fossil fuel. >> we will make sure we get to

net zero greenhouse gas emissions no later than 2050, that we are halfway there by 2030, that we mobilize $5 trillion over the next 10 years to do that. >> by 2028, cut all carbon emissions for new building. by 2030, carbon emissions from cars and by 2035, all carbon emissions from the manufacture of electricity. >> we saw at the g7. the leaders of some of the greatest powers and economies in the world are sitting to talk about one of the greatest challenges in the world, climate change, and there was literally an empty chair where american leadership could have been. francine: those were some of the democratic presidential hopefuls speaking on climate change. bloomberg as part of climate now. let's look at the politics of climate change. three years ago, the issue barely featured in the presidential debates between donald trump and hillary clinton. a new poll finds two thirds of americans see climate change as

a crisis or serious problem. that increases amongst americans who identify as democrats. we have covered the trump's climate policies in detail but as we look towards 2020, where do the democrats stand? >> thanks very much, francine. we are looking at the positions of the top 10 democratic presidential candidates, those pulling highest according to -- polling highest according to real clear politics. virtually all have spoken out about the powerful interests of companies,fuel notably senator elizabeth warren and kamala harris. nearly all agreed that fracking should be banned on public lands, with julian castro stepping back from his pro fracking position. when it comes to carbon emissions, most agree they should be paid for, but only pete buttigieg going as far as to call it a --

amy klobuchar and andrew yang have spoken out about reducing co2 emissions. he said there should be -- they said there should be economic incentive. the paris climate accord is a top priority for most. beto o'rourke says this should be done on the first day of a presidency. supporting the electric vehicle market is another that many support. joe biden says that is a good way to create jobs. nuclear power divides many. we have bernie sanders calling for all existing power plants to be shut down, but others saying that we need to look at new technology. francine: thank you so much. "bloomberg surveillance" continues. ♪

♪ francine: a moderate move. the federal reserve cuts for the

second time this year, but dampens expectations for faster easing. the dollar jumps. let's do it again. the fed offers up to $75 billion of extra liquidity, stepping into the repo market for a third day. will it be enough to calm nerves? central banks respond. the boj calls for an october review after leaving rates unchanged. switzerland, norway, and bank of england decide on policy today. this is "bloomberg surveillance." i'm francine lacqua here in london. tom, we are on day three of a hearing on brexit. a lot of the focus will be on the fed. against thewent grain and decided for this one everybody else is using. -- easing. tom: it's a really idiosyncratic story in norway.

it's absolutely fascinating to see that rate increase. look at this news from oecd as they come out with their look forward. francine: that's something we will spend a little bit of time on. we needed to speak to the chief and little bit later this hour. norges bank's governor speaking at oslo. it will be interesting to see the factors pro hiking and against hiking. we will spend a little bit of time on norway. let's get straight to the bloomberg first word news in new york city. >> federal reserve chairman jerome powell is stressing the outlook for the u.s. economy is solid. he says moderate policy moves should be enough to sustain the expansion. after fedaking policymakers lowered their main interest rate by a quarter percentage point. the bank of england probably will not join the global easing.

today, the boe's policymakers will vote to keep interest rates unchanged. many central bank watchers believe they will stick to the line rate hikes will be needed. that is only if the u.k. leaves eu an orderly fashion. by tomorrow, president donald trump will have details on the new sanctions on iran. the president says they will be "very significant." the administration responding to the attack on saudi arabia's biggest oil facility. mike pompeo blaming the attack on iran. he is in saudi arabia to meet leaders.kingdom's in the uk's supreme court, the final day of a challenge to prime minister boris johnson's decision to suspend parliament. one of the judges wants a written statement on what the government would do if it was the case. global news 24 hours a day and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

this is bloomberg. tom: thanks so much. the oecd report really something. us.ence boone will join not much nuance to the data check. down, and then up as the press conference proceeded. last 24l -- in the hours. the resiliency of equities yesterday afternoon, 14.13. that's a less fearful statistic than 24 hours ago. gives it up a little bit but strong dollar of the fed meeting. stronger boris sterling. francine: i am bringing -- stronger boris johnson sterling. francine: i am bringing a big shopping bag because i am coming next week to new york.

crude is actually pretty much study so we can move on. . the yen is something to keep an eye on. it has risen the most in three weeks after the boe leaves rates unchanged. there is no news conference from the boe today, tom. tom: we will keep moving forward on the education and the understanding of these persistent repo efforts. ofther one this morning about 75 billion large. this is the chart, at about 2% roughly with a spike in december and the recent lesser spike. what's critical here, francine, this is the new york fed. that is a typo. my fault. my eyes are glazed over from the fed meeting. fed" is the new york fed. we are really back to where we were over the last number of weeks. says research i have seen

there will be a new persistency here to the new york fed coming in. this is something new for all in economics. francine: fed policymakers lowering their main interest rate for the second time this year. jerome powell says moderate policy should be sufficient to sustain the u.s. expansion. the fed chairman touched on a series of issues and concerns in the money markets to negative rates and risks on the horizon. chairman powell: we are not on a preset course. we are making decisions meeting by meeting and we will try to be as transparent as we can as we go. if the economy turns down, a more extensive sequence of rate cuts could be appropriate. we don't see that. it's not what we expect but we would certainly follow that path if it became appropriate. i do not think we will be looking at using negative rates. if we experience another episode of pressures in money markets, we have the tools to address those pleasures -- pressures.

we not hesitate to use them. it is quite possible we will need to resume the organic growth of the balance sheet earlier than we thought. we are watching carefully. there will come a time, i suspect, when we think we have done enough. there will also be a time when the economy worsens and we would then have to cut more aggressively. we do not know. we will have to watch things more carefully. francine: joining us now is michael bell and david riley from bluebay asset management. thank you for joining us. how much insurance does the u.s. economy actually need given the strong data? >> i think jay powell did a pretty good press conference. i think the fed are on track for a midcycle adjustment. i think what they are signaling basis points of rate

cuts is going to be appropriate to keep the u.s. economy on a broadly stable path of around 2%. i think they have done enough. i think the market pricing for a major rate cutting cycle is too much. francine: do you agree with that? mike: i focus very much on the labor market. you are starting to see some cracks coming through in the labor market. retail sector, for example, is now on year on year declines in employment growth for the retail sector. w below the surface cracks in the labor market. the manufacturing sector is weak , the consumer is holding up pretty well, which is obviously relying on it healthy labor market. ratenk if the unemployment starts to crack and we actually see companies firing people over the coming months, then the fed are going to take rates down

close to zero. if the labor market holds up, i think we are probably close to done in terms of what the fed is going to do. tom: this is a chart, incredibly important and a candidate for chart of the year. china gdp and the ugliness of 2000 when we were above 6%, and horrific number. boy, what a change. ng' glideoyce cha paths. statistice oecd 5.7% released moments ago. thisabout, -- mike bell, glide path forces jerome powell to be central banker to the world, doesn't it? mike: i think it's important to understand how the shift that has happened in china has had such a significant impact on global growth. it's not just growth is slowing down, but the composition.

the fact that you see this weakness in the growth of that would normally support europe from china, capex investments, infrastructure investments, and industrial production slowdown. that is leading to a slow down you see in europe. isin, the consensus view that it is concentrated in manufacturing but the services sector will hold up. when you look at the new future business expectations for the german economy on the service sector, again, that weekend quite significantly last month. to me, it seems like the risks are rising somewhat. tom: david riley, frame what we heard from mr. powell yesterday. will the oecd look forward, which is clearly for a global slowdown. clearly are in a lower for longer interest rate regime globally and for the fed. something jerome

powell has been highlighting is that there has been a big shift by the fed in terms of expectations for rates. coming into this year, it was expecting to be rating rates by tsitsipas -- raising rates by tsitsipas basis points. now at -- by tsitsipas basis points -- 50 plus basis points. i do not think we are in a situation where we are going into a global deflationary downturn. that's what was being priced in august. that outlook is not quite as bad as that, although i think you are right to highlight that we are having to adjust to a world where china is becoming kind of growth and that will be a painful adjustment for europe and parts of emerging markets as well.

francine: thank, both. coming up, we speak with oystein olsen, the norges bank governor. look for that interview at 5:30 a.m. in new york. this is bloomberg. ♪

♪ francine: this is -- >> this is "bloomberg surveillance." let's get the bloomberg business flash. chinese consumers are not spending oversees the way they used to. tiffany's plans on opening more stores in mainland china. they want to make their shanghai flagship store its most important outlet worldwide after its new york fifth avenue location. shares of microsoft higher

today. they unveiled a $40 billion stock buyback. microsoft also boosting its quarterly dividend by more than 10%. so far this year, the company's stock is up 36%. microsoft market value remains at more than $1 trillion. a desperationng bid to overturn u.s. law. it put the chinese telecom giant on a blacklist. the lawyers for the company will be in u.s. federal court arguing the law is an unconstitutional awei out ofdrive hu the country. that is the bloomberg business flash. tom: thank you so much. good morning, everyone. bloomberg surveillance in london , in new york it is the central bank derby. the fed yesterday, norway bank and we will speak to the leader of norges bank in a bit with a rate rise. and then there is the united kingdom, all of that coming in

stark contrast and the recent moments with the oecd really leaning in on the quantification of no deal and brexit. and us is david riley michael bell. oecd is quantifying no deal brexit. ita quantifiable -- quantifiable? >> i think it's hard to say exactly how negative it would be. it would be a significant negative shock for the u.k. economy and indeed for the u.k. economy -- european economy. i think it would put the u.k. economy into a recession and the risk of a recession in europe would go up quite significantly. tom: i know governor carney is going to say first, do no harm. he has a bank of england meeting today. how does he prosecute monetary policy given the swirl of brexit? >> i think they are in an almost impossible position and will

therefore stare where they are with the rates on hold. i think with rage growth picking up to around 4%, -- wage growth picking up to around 4%, if it were not for the slow down in the economy you see from some of the surveys, you can make an argument for putting rates up were it not for the brexit uncertainty. even services and construction in the u.k. look somewhat weak as well. i think that will leave them caught between a rock and a hard place and therefore on hold. francine: do you agree with that? >> yes, it is odd. the bank of england is the most -- least interesting monetary policy meeting we have going on at the moment. they have a very little to say or ability to do anything. i actually do think the chance in the near term of the u.k. leaving without a deal on the 31st of october is actually relatively small. parliament has taken action to effectively ensure that there

will be an extension. i think really the focus going forward is going to be an extension followed by a general election. tom: that will be interesting. we will have full coverage of the bank of england here. that's what we do at bloomberg, we cover central banks. mr. bell of j.p. morgan, mr. riley of bluebay asset management with us and we will continue. boy, has it changed. that is the global debate on climate change. in america, it is a heated and political debate. the president very vociferous in his thoughts. let us listen to those of the democratic party on climate change. >> i refuse to postpone any longer taking on climate change. we will address >> -- senator sanders: we will address the catastrophic crisis of climate change and transform our energy system away from a fossil fuels. >> we will make sure we get to

net zero greenhouse gas emissions no later than 2050, that we are halfway there by 2030, that we mobilize $5 trillion over the next 10 years to do that. senator harris: -- cut allwarren: by 2028, carbon emissions for new buildings, by 2030, carbon emissions from cars, and by 2035, all carbon emissions from the manufacturer of electricity. >> the leaders of some of the greatest powers in the world sitting to talk about one of the greatest challenges in the world, climate change, and there was literally an empty chair where american leadership could have been. ♪

♪ francine: this is "bloomberg surveillance." tom and francine from london and new york. it is a big day for monetary policy. first, at 12 noon in london time , ble officials are expected to keep rates on hold. we heard from the norges bank, which hiked by 25 basis points. we will feature the governor, oystein olsen, later this hour. are also expecting no change from south african reserve bank. let's get back to our guest, mike bell from j.p. morgan asset management and david riley from bluebay asset management. david, you are a pretty big holder of credit in southern europe. does this change anything? the fact that we are going into

further negative territory in europe and there is a further global easing cycle and everything could be turning when you look at the police he forecast. david: you know, we have had and continue to have an active overweight position in the so-called eurozone periphery. that includes italy. we have seen a significant rally both in yields and spreads. i think that can kind of tighten. it's not about negative rates. i think the key take away from the ecb meeting was in terms of qe and it is open-ended qe. i think it is unambiguously positive, particularly for european governments and the periphery. it is really saying that the risk scope generally across europe for fiscal expansion. draghi has been calling for that. i think it has still got some room to rally but has come a long way. francine: how do you deal with the search for yields? you could have artificial prices.

if the global economy turns and you have these small, exporting countries such as italy and spain, how will they be impacted? david: clearly, europe as a whole is vulnerable to global manufacturing, global trade. tom was alluding to developments within china as well. that's clearly been part of the story. but i do think that nonetheless, you are in a situation where you want to be close at this point in time to central bank liquidity. we are getting that from the ecb. i think it means lower rates, flatter yield curves and tighter spreads. i continue to like european credit whether it be corporate credit or sovereign credit within europe. european growth outlook clearly is not great but i don't think it's falling off a cliff either. tom: david riley, how chronic can negative rates be? do they just go on forever? you are living this day to day

at bluebay asset management. do you just assume it's forever? never, --l, never say or, indefinitely into the future. i do think negative rates have kind of reached the limit. i think one of the reasons why we saw a little bit of backup in yields after the ecb meeting is that i think mario a drug -- mario draghi alluded to that effect. at the e -- fact. at the ecb, they are acknowledging that there is not much further they can go. we are reaching the point of monetary is josh and -- monetary exhaustion. does this mean we will have negative rates indefinitely? too early to call. if we move into a more fiscally -- era, we will cut out of this negative rates environment. tom: what did you learn with the repo crisis at of the united states? there is a big debate about the

organic balance sheet growth. is that a follow on to the negative rate experiment? highlightl, it does that one of the consequences of having a fiscal expansion and in the u.s. we still have a fiscal expansion. the u.s. deficit is blown through its targets. . i think it will be $1 trillion this year. the central bank needs to accommodate that, the fed needs to accommodate that by putting more liquidity into the market and that may mean a bigger balance sheet. francine: all right, thank you both. up next, we will talk a lot more about central banks. we will also be speaking to the reserve bank of india governor. he will be speaking to bloomberg exclusively. this is 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. ♪ bloomberg "surveillance," the day after the fed, bank of england today. now, our first word news.

viviana: u.s. federal reserve chairman jerome powell making it clear policymakers do not need deep rate cuts, the fed cutting by a quarter of a point. they say it should be enough to keep the expansion going. donald trump wants bigger cuts and tweeted -- the bank of japan stopping short of following the fed in adding to stimulus immediately, but next month they will review. saying theythe boj have more flexibility than other central banks. ecb, i thinko the the boj has more room to ease than the ecb has. we have different options toward monetary easing. sayana: 83% of economists the boj's next move will be to add stimulus.

the u.s. attorney general william barr circulating a proposal for expanded background checks for gun buyers. president trump has not stated what efforts he will back. he has questioned whether they would be affect of. -- effective. exporter's largest oil is looking to buy fuel, scouring for cargo after the unprecedented attack on its fuel. 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. francine: thank you so much. we are just getting news out of the ecb. at 3.4 billion ltro,in the long term p

their policy tool to target long-term refinance operations. we were trying to figure out what that meant for's. -- four banks. it is hugely important, giving an indication of how many -- how healthy banks are and how many loans they are giving. i am looking through the headlines. tom: lots to watch, lots of central-bank action on global liquidity. i want to color for our global audience, the washington post always has covered the zeitgeist. made in iran and laid out by saudi arabia was the debris of drones. this is the debate in america. we would like to forward the debate with yousef gamal el-din

.ie leadership listen washington?om golnar: they will listen mikeully to the language pompeo and donald trump are using. both of them have gone short of saying they think iran is directly to blame. they have not said they are make anykind of countermeasures or counteroffensive. the language has been interesting. they have said they are convinced iran is behind this his do not believe the hout

are responsible, but have fallen short of saying these attacks emanate directly from iranian territory. iranians will look out for signs of additional sanctions and what they could target. in america, there is the phrase just do something. is there a feeling in saudi arabia of just do something? yousef: to a certain extent, but trying to be rational. key takeaways from the press conference, it has been a long few hours as we heard the analysis of the saudi government as they portray the story and what went on. andlanguage was careful they left themselves diplomatic wiggle room for the future. secretary of state mike pompeo

saying this amounts to an act of war, and yesterday while in saudi arabia, saying the kingdom has a right to defend itself and threatening behavior will not be tolerated from iran. he is on his way to the united arab emirates. francine: what are we talking about here? does this escalate? is this potential war? is this what traders should be looking at or is that far-fetched? yousef: there is a scenario where you have a surgical strike , sort of a response equivalent to the attack that occurred at the saudi aramco plant. saudi arabia has been conducting airstrikes in some parts of syria close to iran. that could include iranian backed groups, but there has not in an outright attack on iranian sovereign soil which could be an escalation. the other prism you could look

through is proxy warfare, just more conflict in other parts of the world between iranian backed forces and those backed by the gulf. us: yousef gamal el-din with golnar wille -- join us in the next hour. it folds into an elevated geopolitical oil premium as well. adjusted aorgan commodity stance over what we have seen the last week? mike: not too much. what is clear as this comes at a difficult time for the global economy. ,ith oil prices where they are whether the global economy can hold up and the effect should be manageable. theprices will spike into $80 to $90 a barrel range.

the hit to consumer confidence would be potentially quite meaningful for the global economy. given that we have elevated consumer confidence at the moment propping up global growth, any oil price shock that escalated from here would be serious. francine: are we on the brink of recession? the oecd has had to revise downward their forecast. mike: it ultimately comes down to, can we see the consumer remain healthy because the manufacturing sector is arguably in a recession? it is the consumer propping the global economy up and it comes down to the labor market. we are starting to see a few signs of cracks. the three-month average of payroll growth has slowed from 250,000 to 150,000. when that gets around 100,000, that is the level you will start to worry it is rolling over to

where it a more serious downturn. francine: do you worry about a global recession? how does that change your investment attitude? david: we cannot discount the potential for global recession. i differ with mike. we think the u.s. labor market is in a strong stance and we do not share the view that job growth is to be expected. month is000 jobs per enough for unemployment to continue to fall. the oil move has not done enough to have a meaningful impact in terms of the global outlook. ever since we have had some tensions within the hormuz strait shifting out of the golf, we have been seeking oil exposure outside of that particular region.

i don't think it is a tipping point. , and oneomes a hot war cannot discount that completely, and escalation, then we get a huge negative supply shock and a risk off and we are into a potentially different world. i think recession risks are being somewhat overpriced and that is why we have a bit more risk on now. tom: david riley and mike val with us. -- mike val with us. -- bell. he is cutting a different path than each and every other central banker, mr. olson of the norwegian central-bank, an important and timely conversation. this is bloomberg. ♪

♪ this is bloomberg "surveillance." norway's central-bank is breaking further away from the pack and a decision most economists were not expecting. level in highest almost five years. joining us as the norges bank governor. thank you for speaking to us. this is going against what everyone else in the world is doing. his the economy -- is the economy viewed towards the global downturn? thet is not affected by international downturn. that is the background for the decision to increase the policy

rate one step further, is that overall there is robust growth in the economy, unemployment is very low, at the target or slightly below when we looked forward. there is a time to make one further step, one cautious further step towards a more normal policy rate. then we have adjusted downwards the policy path, the path for the policy rate looking forward. that is exactly on the background of events, increased uncertainty, and slower growth as we see it internationally. francine: what does it take, what will it take for you to start rethinking your plan? we present a policy path,

path for the interest rates. that is never a promise. it is conditioned on the state of the economy as we see it now. if things are getting better, it an operation on the if it policy rate, but goes in the negative direction, internationally especially, we always react in monetary policy on new information. francine: we have seen such use on oil pricesews with what happened with saudi arabia. does that change your view? >> the oil markets and oil price in particular is always an important variable for the economy. it was a terrible event that happened on the weekend.

we saw the price of oil reacting immediately, but then coming down afterwards. so far, it hasn't changed. it didn't change the decision, and so far has not changed the overall picture we see. we obviously follow the oil market and future development of the oil prices closely. tom: it is wonderful to have you with us. so many people look at norway as a success story. your fiscal stimulus, the oil economy, and all the other good things, and then there is your currency depreciation. euro-norway and trade-weighted norway. it is an ever weaker currency. is this your fundamental reason for the defense of higher interest rates?

the significantly weaker currency levels that we foresaw in june is already a factor affecting the recession -- the decision and future outlook of the policy path. that is fact. you are right, if the currency markets have not given us any de-evaluating international levels, we have had to react differently. tom: within negative interest rates, i understand the fair play of central banks. we could have this ephemeral thing with lagarde, draghi, et byera, how affected are you the negative interest rates of

your brethren to the south? >> in spite of what i've just said, we are definitely affected by the very low end persisting low -- and persisting low interest rates internationally. we did not go negative on the policy rate. theave not entered into territory of unconventional policy measures either. you will see that very much in light of what you just briefly commented in that we have a special economy. the oil industry has been an engine and that is still a case. we have significant room for maneuvering and monetary policy. we have not needed to go into that territory. the banks for the countries are still in a much difficult situation. francine: governor, overall, i

don't know whether you are uneasy about -- this was a courageous move given what is going on around you -- is there too much easing around you? do you feel like there is too much dovishness from global central banks? >> i think all central banks, intothose which have gone this unconventional monetary policy realize if it prevails, there are negative effects of rates being negative, and also regarding unconventional measures. i would not characterize the monetary policy of other countries, especially our big neighbors in the south, the euro area, has been in a much more difficult situation then we have. tom: governor, thank you so much. we greatly appreciate it,

governor olson, the norges bank governor. i cannot say enough about the timeliness of that interview given the depreciation of the norwegian currency, chronic and extraordinary over the last six years. we will have another theersation here with governor of the reserve bank of india, more than timely. stay with us on economics, this is bloomberg. ♪

♪ you are watching bloomberg "surveillance." raising 648 billion dollars in its u.s. ipo. shares were priced above its targeting range. bloomberg learned the company took -- turned down a takeover offer, feeling that over time it would be worth more as a public company.

be onuckerberg appears to a charm offensive in washington, saying he will meet with policymakers and talk about internet regulation. facebook is under increasing scrutiny over its practices. tom: thank you for the update on datadog, another ipo. another chart off that interview with the governor of the bank of norway, the appreciation of the norwegian currency, the giant success of norway, and then off depreciation in trade-weighted corona. -- krona. bluntriley, one a instrument -- what a blunt instrument is currency depreciation. you have huge chronic moves like

norwegian krone, how do we look forward to 2022? david: i think things like what the norges bank have done creates opportunities. we did think they were going to raise rates and we think the , soency had got oversold the norwegian fundamentals justified higher rates and that would support the krone as well. today we have seen the bank of indonesia cutting rates. what you are getting is a dispersion to some degree, which provides opportunities if you can get idiosyncratic risks within your portfolios and think globally rather than being narrowly focused. tom: i want to go to the work of your colleague john norman as well.

what is the jp morgan indocin craddock measurement? -- idiosyncratic measurement? would i would say is i don't think we will be in the world where central banks will go in different directions very long. it is a binary outcome where growth holds up and binary risks go away, in which case central banks may reassess the need for cutting, or growth will rollover and you will see a synchronized move across the board. i don't think you will get idiosyncratic moves in different directions much longer. francine: are you expecting a recession in the next 18 months? mike: the risk is rising. i am not sure it is the base case, but the risk has gone up.

six months ago, a lot of the key indicators looked globally ok. today, only the manufacturing sector is flashing red, but others have slowed to a level where the risk of an economic downturn has increased. that is being priced relatively fairly in tragedy markets -- treasury markets but not equity or credit markets yet. tom: we need to thank our team in oslo for that interview. we will go to lawrence boone, oecd. -- growth sub 6%. ♪

♪ this morning, i will go in search of sense and/or vision on

the road to october 30. chairman powell suggests this is a data dependent fed. the market suggests lower rates are in order. repo and repeat. the fed will provide a hat trick of liquidity. it is about organic growth of the balance sheet. your a great bull market, usual autumnal wall of worry. this is bloomberg "surveillance." day three as the supreme court turns, does everybody break out white wigs and make a decision? francine: they will make a decision, but we don't know when that third day will take place. and thet the government lawyers for the prime minister to lay out at they will do in case there is a ruling against it. in case it was found that

proroguing parliament was unlawful and they had to return straightaway. i am looking at pound trading sideways because it is boe day. we have that decision in one hour. tom: the first word news in new york city, viviana hurtado. viviana: jerome powell is stressing the outlook for the u.s. economy as solid and moderate policy moves should be enough to sustain the expansion, speaking after policymakers lowered their interest rate a quarter of a percentage point. a gloomy economic forecast from the oecd, saying trade conflicts have sent global growth momentum tumbling. the oecd cutting almost all the forecasts it made just months ago, seeing growth at 2.9%.

by tomorrow, donald trump will have details on this sanctions against iran, saying they welby significant." mike pompeo blaming the attack on iran. he is in saudi arabia to meet with the kingdom's leader. it is u.k. supreme court, the final day of the challenge to suspend parliament. -- of what theen government would do if they lost. 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. bonds,uities, currencies, commodities, plus fed, pre-bank of england. an odd market, equities, and

nice lift yesterday. s&p still above 3000. the euro, a little elevation after the big dollar strength. oil lifting. the vix 14.25. the dollar index pulls back from legit dollar strength yesterday. francine: markets overall are calmer than the last three days. and the on geopolitics 10 rate decisions we are getting today. forecast andtheir is seeing the weakest global growth in decades. that is not spooking the markets, and euro-dollar. pound, two things happening, boe later and the third day of a hearing to see whether parliament was wrong in proroguing parliament. tom: the oecd report is

different than usual. lawrence boone will explain sub 6% china gdp. repo rate december, and our recent ugliness, and we come right back to where we are with round three today of a normalization for the new york fed. francine: mine is a simple but elegant chart just looking at market pricing between now and january. the economists are telling you how much insurance one economy needs because data was pointing to a rosier picture, and markets clamoring for the rate cut. we will have to see how jay powell navigates that. , richardeed to review miller and michael mckee in that press conference yesterday, highlights of chairman powell. >> we are not on a preset course.

we will be making decisions meeting by meeting and we will try to be as transparent as we can. if the economy turns down, a cuts are expected. we would follow that path if it became appropriate. i don't think we will look at using negative rates. if we experience another episode of pressures and money markets, we will not hesitate to use the tools. we may need to resume the organic growth of the balance sheet earlier than we thought. we are watching carefully and there will come a time when we have done enough, and there could come a time when the economy will worsen and we have to cut. we will be watching carefully. tom: joining us now, tom porcelli. ira jersey has gone three days with no sleep on this repo issue

, ira jersey and his team have been outstanding. i have got to go to porcelli on qt toift of qe to organic growth. do you agree? tom: no one can disagree with that. that is mechanics. tom: the conservatives want the balance sheet to get back to where it was. senator warren would say the same thing. it is literally impossible. the fed has assets and liabilities, and the asset side is shrinking because of the runoff of all the securities they bought. the problem is the liability side of the equation, the currency.

currency is relentlessly growing , and because you have this relentless growth, you need to shore up your assets. the fed will have to start to buy assets again. it is a foregone conclusion, not a debatable point. it will not be another qe. market, therepo blowup this week, ira jersey, what did you learn about the and three, is 2, this a permanence to the new york fed? ira: the new york fed will eventually have to implement a full allotment repo facility, a daily buffer instead of doing these one-off operations, which are of a set size one thing that happened on tuesday is when the fed did their first operation, no one was ready for it so they

had to delay the operation. it worked the way that one would expect, which is we have balance sheet constraints. the fed is the only balance sheet elastic enough to fund the dealer community in this time of stress, and it has worked. if you look at where the repo market is likely to open this morning, it is more in the normal range given where short-term interest rates should be. francine: does it mean that we have dealt with this? are there likely concerns that will come to the forefront again? ira: there will be concerns that come to the forefront periodically, usually at quarter and year end. what is unusual is when it happens. there is a lot of technical reasons. reducing the amount of money market fund available to reduce dealer balance sheets as part of it.

a number of things occurred on the same day. will it happen again? maybe. the regulations that have been put into play since the crisis have contracted how big dealers and bank balance sheets can expand and contract when necessary. this has -- is impacted heavily by regulations. the fed has to be the lender of first resort because they are the only balance sheet that can expand on a moments notice. --ncine: where do you see from jay powell and what we heard yesterday, we don't know what comes next. are the markets expecting too much from the fed given the data points? know.: i think -- i don't if the market knows what to expect from the fed. i think they looked at the dots yesterday and assumed the odds were low to get another cut.

i think that was the first market reaction we saw. he presented a positive outlook without any real serious hint to, we are going to continue this process. i think the market, people looking for cuts are in the minority, but we have a slightly different take. i think the dots are completely confusing and need to go away. what we need to consider is, who are the voters within the dots? if there are seven people looking for a cut, we think most of them are voters. the hurdle is quite low for the market to get a cut. tom: you have a jewel at rbc capital markets. what have you learned from him, dovetailing finance into your world of economics? tom p.: this picks up on the

story, one of the things mike has been pretty clear about is this notion of a standing rp facility. take is the problem with a standing rp facility, while that can alleviate pressures in theory, in practice will not work that way because of the same stigma as the discount window. that is one of the bigger problems for the fed. what mike would tell you is the real problem, and one of the reasons why this stress happened is for a practical reason, regulation. the balance sheet is so expensive and the banks can harp away when the see these dislocations in the market. one way to fix the problem is within the leverage ratio, exempt treasuries. tom: you are so inside baseball. we will come back, tom porcelli

with us. the only way we could get ira jersey on this early is to show one of his famous charts. we will do that later in the hour. thank you so much for you and your team. we will explain forward the challenges of central banks of asia, with the reserve bank of india governor, mr. das. this is blue. -- bloomberg. ♪

♪ this is bloomberg "surveillance." chinese consumers are not spending the way they use to, so tiffany plans on opening more

stores in china. they want to make it shanghai store the most important after its new york location. huawei making a desperate bid to overturn a knee -- u.s. law that put it on a blacklist. lawyers will argue the law is an unconstitutional attempt to drive huawei out of the country. it, theyress passed cited cyber exploitation by china. francine: let's get an update on the aramco attacks. the saudi military has displayed what they claim are parts of iranian drones and missiles. president trump says new tank -- sanctions are coming. wallbank. is derek

are delighted to be joined by ghosn armand to bali. if you look at how iran will take this, do they find this humiliating? is there a chance extra sanctions will push them over the brink? golnar: because the question is, what is there left to sanction? trump tweeted he would substantially increase sanctions , and the sanction campaign by the united states, this maximum pressure strategy is not working the way the u.s. administration hoped. we have seen further instability in the persian gulf region and we have seen attacks on tankers, seizures,t oil vessel whether it is britain or iran.

these sanctions will probably be symbolic. we know that for now, so far, they have not changed anything in the calculus of the iranian state system at all. i don't think the iranians will be too worried about what the sanctions will include. francine: from where you sit, do we have any inclination of what the sanctions could look like? derek: it is a little bit too early to say. the point made about what is left to sanction is important. rouhani might not be at the u.n. because the u.s. might not give him a visa. the u.s. is the host country and usually provides visas. there is a question of whether they will do that. trump says more stuff is coming. we will have to wait and see. the u.s. is figuring out its

response. senior officials are in or on the way to saudi arabia to figure out what they are going to do, and the aramco attack, which the u.s. says iran was behind directly or as a proxy, has changed the calculation in saudi arabia and the united states about what needs to be done. tom: what is the response in tehran? in the beautiful, historic cities to the south of tehran, about this attack? are people in the streets celebrating? are they against the attack? what is the street response? golnar: i have been in our london office the past few days, but i have been speaking to friends and contacts in the country. i am not getting a sense that people are reacting in a

significant way in either direction. i think people have generally been concerned for a long time. maybe fatigue has set in. people are more worried about the day to day economic problems they have to deal with as a result of the sanctions, and there is a sense within the political echelons, this is a manifestationect of this idea that we have heard from the president that if iran is banned or blocked from exporting its oil, no other country will be able to export its oil. this is a clear manifestation of that if the iranians are behind it. they have been denying consistently any involvement in this attack. tom: i have got to get out in front of our interview with

lawrence boone of the oecd. is there an understanding we will see sub 6% china growth? derek: that is a tricky one. there is an understanding that it will slow in some frame. i am not sure there is a consensus on sub 6% at this point. tom: this has been wonderful, and golnarank, motevalli. upon the share buybacks, it has been a great bull market. what does 40 million get you these days? particularly where we lose scale of the size of a company. with microsoft, let's go through the beauty list. days roughly of ebit daw, 4% , 4% market cap.

not bad. this is bloomberg. ♪

♪ bloomberg "surveillance," francine lacqua in london, tom keene in new york. i want to throw up a chart, i am still making it.

porcelli of rbc capital markets. microsoft and is the challenge is to fedex. you worry about gloom in the market. fedex is a logistics market -- nightmare and you forget about the boom that is microsoft. tom p.: it is astounding. all anyone seemed to talk about yesterday was fedex. microsoft makes this announcement and all i heard was crickets. they are a materially bigger company. the buyback saying, i get it -- thing, i get it. they also raised the dividend. tom: double-digit raise. tom p.: that is what microsoft thinks about the backdrop, but no one wanted to talk about that. we within the

economics of regulation of these titans? tom p.: i am more hands-off philosophically. let's talk about that over a beer. tom: i like that. this.: what i would say is conversation we are having, it is good for the asymmetry. tople are more inclined latch onto the negative than the positive. tom: it is a great all market, to say the least -- bull market, to say the least. francine waiting for london. lawrence boone to provide nuance on the global slowdown. this is bloomberg. ♪

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substantially more action, so the fact that the fed is disappointing based on market expectation. >> it is hard to say this is a dovish situation in which they have cut. i preferred those -- the way it has been characterized as risk management, as an insurance cut. this is the second payment on an insurance policy. >> we were expecting more in terms of the dots. >> the fed is not as accommodative as i would like it to be because my inflation forecast is running below 2% for the next three years. too think the fed is way preoccupied with the inflation expectation. it has changed the way they are operating and they have moved towards and expectations based way of looking at the economy rather than sticking to the same macro variables they used to

look at. it is confusing. tom: really interesting yesterday to see scott minard and jeff rosenberg. there venn diagrams were not on the exact circle. there are some distinct different views going forward. francine: interesting looking at the market commentary. chris rupp key captured my imagination when he said how much stimulus does a strong u.s. economy need? we did not have much guidance from jay powell and what the market is pricing in, it will be an interesting dynamic. let's get back to tom porcelli. on the u.s. consumer hold and hold tight and continue spending if the world economy is getting worse? tom p.: the u.s. consumer

literally is in absolutely fantastic shape. the short answer is yes. people have to be mindful of a couple things. it is easy to say labor markets are tight and some would say they are lagging indicators. that is completely off base. jobless claims are the leading indicator. let's move away from that element, because i see continued wage pressure and that will be enough to propel consumption. one thing that is underappreciated is the level of saving in the united states. savings is significant. we talk about net private saving in the united states which sits at about $1.8 trillion. digress, just indulge me. this is something that is underappreciated. i think there is a threat of

talking ourselves into a recession. let me be clear, that has actually never happened in modern-day economics, but it is reasonable to wonder about that. and they that happens consumers steps to the sidelines. there is a massive difference with the consumer stepping to the sidelines of their own accord versus being thrust into the sidelines because jobs are destroyed. there is an underappreciated idea. ideas, if the consumers steps to the sidelines they can step back in as long as it does not come with job devastation. news, bloomberg's share buyback is the name of the program. we talked about microsoft, a smaller amount but nevertheless profound. target with a $5 million share

buyback microsoft with about one 40r free cash flow is there million dollar buyback. target does not have the cash cushion that you see from the notno let -- microsoft does have the cash cushion that you see from the technological giant target. viviana: the bank of japan stopped short of following the fed and adding stimulus, but next month will review the economy. the head of the boj saying they have more flexibility than other central banks. , the bojed to the ecb has more room to ease than the ecb has. we have different options toward monetary easing. sayana: 83% of economists the boj's next move will be to add stimulus.

u.s. attorney general william barr is circulating a proposal for expanded background checks on gun buyers. president trump has not decided what steps he will back. he has questioned whether background checks would be effective. the world's largest oil exporter looking to buy fuel. saudi arabia is scouring the markets for cargo after the unprecedented attack on its oil facility. aramco bought diesel and aviation fuel. 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. francine: intensifying trade conflicts have global growth momentum tumbling toward lows last seen in the financial crisis. governments are not doing enough to prevent long-term damage

according to the oecd report. we are delighted to be joined by lawrence boone from paris, the chief economist at the oecd. thank you for giving bloomberg your time. are we heading slowly towards a recession? lawrence: actually, what we are saying is we are heading slowly towards lower growth, and the biggest risk we see to these projections beyond the number you have quoted, as we remain strong -- stuck at a low level of growth. that is largely due to the uncertainty that has been created by the trade conflicts all over the world, and starts affecting investment and consumers. our message is to hold this uncertainty and leverage on the low rates which remain visibly invest quite a while, to

and to get the world out of this low growth venture. francine: you basically say it is up to governments to do more to get us out of this, to fiscal spending. do you think in europe this will come? tom p.: as you know -- lawrence: as you know, we have been arguing for this for quite a while. we are seeing some governments moving. two days ago, the netherlands published a draft budget with close to 1% gdp fiscal support, and very much geared towards investment. i think we are seeing signs that this debate is not only hitting us, but starts being implemented. boone,wrence

congratulations on a profound report. daye chang was on the other and she models a china gdp sub 5%. 2020, you view finally break the 6% level. what is the significance of oecd modeling at sub 6% china gdp? i think china is a very important subject to raise when we discussed the protections. what we are seeing for china is that first, it is slowing down progressively, which is good because it is re-a balancing of toward a move consumption oriented economy. impact on countries that use to export a lot of capital goods to china. it is moving in terms of

product. we know that the chinese government is supporting this soft landing with some fiscal and monetary measures, but it is a bit uncertain. tom: as we speak, the president of the united states is using his second favorite vehicle, a conversation with fox news, to talk about the need for america to catch up with a lower interest rates of other central banks around the world, those with a slower economy. would you define for our audience, are we in a race to the bottom where it is a race to see ever lower interest rates to outdo each other on a relative basis? let me make this clear -- we have been calling and recommending more accommodative

monetary policy for the main advanced economies, and it is good that is what we are seeing, which gives predictability and visibility for the rates which will remain low for some time. what we are saying even more vocally is that governments should leverage on those rates, to invest in much-needed infrastructure. globally, there is a need to invest for about 6 trillion in network infrastructure, and that is urgent. it is the time for governments to act. francine: how does the dynamic oil prices, given what has happened in saudi, change your outlook? lawrence: the first thing i would say about oil prices is the situation obviously runs the risk of elevating uncertainty.

as uncertainty is undermining investment and growth, that is our main concern. when it comes to the oil price and the impact over the last few days, and prices have come off so at this stage it looks ok. rise pere to see a $20 barrel, that would have some impact. growth less and a quarter percentage point of inflation. it impacts emerging-market economies. we don't need this uncertainty and shock. tom: lawrence boone, congratulations on a nuanced report from the oecd. we just showed the left in oil inces -- left in oil -- lift oil prices.

let's listen to chairman powell in the press conference. >> mr. trump has been a vocal critic of you and your colleagues, recently calling you boneheads and has called you a terrible communicator. how do you respond to these criticisms and any regrets to have so many press conferences? >> i don't. i am not going to change my practice of not responding to comments by elected officials. i will just say i continue to believe the independence of the federal reserve from direct political control has served the public well over time, and i assure you my colleagues and i will continue to conduct monetary policy without regard to political considerations. ♪

♪ good morning, bloomberg "surveillance." it is an eventful day. tom porcelli a number of years ago was acclaimed at rbc capital markets for saying, what is really wage growth? our single best chart was the chart of the year three or four years ago. we have seen a nice recovery as compared to what we all feel, not tom porcelli's fancy inflation, but take wages and benefits and subtract 3%. we just rolled over as well. the recent literature is it is all about benefits. wages are not going up because benefits are taking it up. is that true?

tom p.: that is not. wages are performing nicely. in the small business survey, they are having a hard time finding qualified workers and that is an old story. labor markets are tight. we just had our industrials conference, rbc did, and it was fascinating. downtened in on large-cap to small-cap companies and they kept highlighting the same thing. they cannot find the bodies. theory 101,ice raise the wage and see what comes out? tom p.: it is happening, even something as simple as average hourly earnings continues to perform well. costne asked about input at an industrial content -- conference and i was waiting for

someone to say some commodity. instead she said, input costs are significant. wage pressures continue to build. that was the comment. it was interesting. i don't want to harp on this too much because it is an old story, but wage pressures remain and we expect that will continue. francine: is wage the most important thing? say theynsumer, as you are in finding -- fine shape, but when wages start going down it will be consumers? tom p.: not necessarily. the comment you made is important. we have to make a distinction between what do we mean, wages going down? if wages are in negative territory, something big and pernicious is going on, but if wages slow, that is a totally

different dynamic than wage pressures going down. when you look out over the course of the next year, labor markets still remain incredibly tight. i cannot say this any clearly, that is a high conviction call. we think wage pressures will continue to build. as far as when they start to slow down, we have to keep in the what i said early on, consumer is sitting on a boatload of savings. that goes along way in acting as a buffer. if you have a recession, you have a recession. it is important to know the state of the consumer balance sheet. it is really good. tom: it is the most interesting debate, on climate. in america, hugely polarized to say the least. let us listen to various and

sundry democratic candidate. >> i refuse to postpone any longer taking on climate change. >> we will address the catastrophic prices of climate change and transform our energy system away from fossil fuel. >> we will make sure we get to net zero greenhouse emissions no later than 2050 and we are halfway there by 2030, we mobilize $5 trillion to do that. 2028 cut all carbon emissions for new building, 20 30, carbon emissions for cars. >> we saw it at the g7, the leaders of some of the greatest economies in the world sitting to talk about one of the greatest challenges in the world , and there was literally an empty chair where american leadership could have been. ♪

♪ francine: this is the third day of the hearing to see whether the prime minister and his government wrote the law when

they prorogue parliament. , defending the prime minister, they say the prime minister must know the ruling before committing to any action. we are interested to know what the prime minister would do if the ruling is against him and the government makes a filing in the case. this is what the qc mom just posted. he posted just about six pages. tom: there is a set of headlines coming up, but one is extraordinary. the government of mr. johnson says another prorogation as possible after court defeat. our senior officer on prorogation is guy johnson and with us is marcus ashworth. these are extraordinary events

within a nation without a constitution. how does a supreme court act without a constitution in the next 24 hours? guy: we do theoretically have a constitution, it is just unwritten. there is a lot of ambiguity around these actions. it is difficult to say what will happen if the court rules against the prime minister. willhe follow those rules, another prorogation be possible? the government argues this is outside the limits of the legal sphere and as a result of which, it should not be ruling on this. it is more ambiguity around boris johnson and his plans, which remain shrouded in mystery at this point. francine: it feels like the government is going down fighting and the government set a new prorogation would be possible and in accordance with

the ruling. this could change, because it is open to interpretation, that the government could suspend parliament again even if this court defeat means he was wrong in proroguing it first time. you,let me ask both of what is it like to have sir john major at the court testifying against the government? i am trying to think of jimmy carter or barack obama testifying in legislature against president trump. how original is it to see sir john major in court? marcus: it is quite ridiculous he is doing this. this is the supreme court trying to decide on the supreme court. roleuld possibly take a which it is not designed to do. this is theoretically a political democracy ruled by

law. rules itpreme court has the powers to over turn the executive, these are what the three -- the judiciary, the legislative, and executive. this is a testing moment and all of this is about one ruling and whether he did it for the wrong or right reasons. it does not mean it changes the right to suspend parliament. francine: guy johnson and marcus ashworth. the boe is coming up with a decision. poundund is steady as the -- the boe is expected to hold. ♪

♪ >> this is a time of difficult

judgment, and as you can see, disparate perspectives. alix: a divided fed delivers a hawkish cut. bank of england now on deck. the oecd downgrades global growth forecasts as u.s. cfos get more worried about a recession. fisher of dartmouth tuck school of business will join us for more. "elcome to "bloomberg daybreak on this thursday, september 19. but if is on hold, brexit uncertainty persists, inflation idly weaker. we did see inflation moving a touch lower. uncertaintyhat if persists, inflation will likely be weaker. also, it was unanimous, unchanged for a bank rate cut. there were no dissenters.