. the u.s. placed on a report that -- the impeachment situation, chris expects to hear very soon from the whistleblower and complaints. president trump demands to meet his accuser. if the prime minister plans to lay out his brexit vision. they are overshadowed i allegations of sexual misbehavior. -- by allegations of sexual misbehavior. welcome to "bloomberg surveillance." i am francine lacqua. these are your markets.

the stoxx 600 are flat. the focus is on trade. i would like to point out euro-dollar is the one we are watch out -- we are watching out for after some pretty concerning news out of germany. that was the employment figures. coming up on bloomberg surveillance, we will talk about the outlook for u.k. assets. what happens next in the bond market. let's get to the bloomberg first word news. viviana: prime minister boris johnson denies he broke the journalist -- groped a journalist 20 years ago. the year overshadowing conservatives party -- ifservative parties -- brexit gets delayed he will not resign. >> i have undertaken to lead the

party at a difficult time. i am going to continue to do that. have a responsibility to do that. i think it is our job to get brexit done on october 31 but to move the country on. viviana: donald trump is calling for the impeachment inquiry to be questioned. he demands he meets the anonymous whistleblower. u.s. house speaker nancy pelosi telling cbs news she is asking president trump to cooperate. ,> under your oath of office speak the truth and let us work together to have a unifying experience, not a dividing one for our country. do not make this any worse than it already is. viviana: over to israel, that is where benjamin netanyahu is making an effort to form a government after elections this month produced a parliamentary stalemate.

recent talks with his rival ended without a deal. his party says that netanyahu may return his mandate to the president if he cannot break the deadlock. sebastian kirk is on track to return as chancellor. his partya projecting one over percent of the vote. the party tripling its share. negotiating a deal might be a tough task. neither seem willing to compromise. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. francine: think you so much. let's kick it off with trade. plans -- it current is in response to bloomberg reports that the administration is looking at ways to probe into china. it is coming to a time where

china is going to continue opening up its market. joining us now, jean-luc. what have the chinese said? >> it has been pretty restrained so far, about 30 or 40 minutes ago, we had a spokesman from the chinese foreign ministry give the most direct comment about the news. -- thathasize they financial cooperation has been good for both current -- both countries. said that sort of thing would cause a lot of instability and goal markets. francine: what impact might this have on trade talks that a schedule for next week in washington? john: so far, i think the chinese have not indicated that this changes their strategy going into next week.

the goal was to go for the october holiday. he should be meeting around the 10th or 11th. the chinese want to -- want a deal if they can get it. this was -- this most recent news is nothing has been decided. until they can tell us something more concrete, the chinese are going to operate on the early acknowledgment on what the americans want to do. francine: think you so much. -- thank you so much. joining us is holger schmieding. we have quite a lot to get to. the oj's -- boj's author coming out with news right now. throughame time october, gdp by ranges cutting its maturities. the boj tweaking in this world of growing uncertainty.

what does it mean for central banks? holger: if it is really fix, if we have some certainty, what it would mean is the global economy would start to rebound in a couple of months. that would mean the pressure on such a banks to ease further, especially in europe. great sigh ofar a relief from central blanks -- banks around the world if the trade situation were to be resolved. francine: doesn't look like it will be resolved? -- does it look like it will be resolved? can you find a long-lasting resolution? holger: i would be surprised if we have a lasting resolution within the next few months. it is quite possible. they seem to be far apart. to investment in china,

possible restrictions, the situation remains complex. the best fit is that there will not be a clear resolution. francine: what does that mean for the global economy? holger: that will mean that global trade will likely continue to stagnate or even contract for the balance of the year. the same will go for global manufacturing. there will be a drag on global gdp growth. europe, trade and manufacturing -- by and large, was to the economic news over the next six months will continue to be worse. francine: we are seeing some repercussions. germany possible labor market improved this month and that seems to be adding or easing concerns. germany is getting much worse. holger: germany at the core is getting worse.

manufacturing was the -- which is the core of the economy continues to get worse. we can see manufacturing orders on the weak side. the labor market is somewhat different. we have some spillover from manufacturing, but not very much. companies even if they have a birth -- have work orders to work on. having had the shortest of skill , they want to hold on to their workers. the labor market is somewhat detached from the less fortunate situation in manufacturing. francine: holger: thank you so much. coming up, we will ask if your area government -- for more fiscal stimulus. from private investigators. the unlikely scandal rocking the

world of swiss bank. to theead to the bank -- break, we are seeing live pictures from paris. that is ahead of the ceremony. ♪

francine: economics, finance, politics, this is burke surveillance. let's get to the bloomberg this is flash. viviana: we begin and hong kong, that is where ab inbev's asian deal enjoyed a strong debut. --weiser rising the budweiser enjoying the rise of shares. it has also -- it is also vindication for the beer maker. in july, it called -- it pulled the offer back.

of the in the wake scandal over surveillance of the banks former head. we have learned the board is john-john -- the board is set to meet today. -- bob dudley is preparing to leave the company within a year. 2010ok the helm after the deepwater horizon crisis and he led the energy giant for almost a decade. shares have climbed. bp declining to comment. that is your bloomberg business flash. francine: ecb president says he can do more but needs help from fiscal policy. -- he repeated his call for government to help euro

area inflation. holger schmieding is still with us. holger: not much has happened recently. the various countries are doing what they want to do anyway. francis cutting taxes a bit. italy is looking at ways to be forced to tighten fiscal policy. germany is looking to combat climate change. that is all happening but there is not significant acceleration. francine: there is a lot of pressure from germany. they are the ones who can afford it. if they wanted to have a big fiscal stimulus package, where would they put it? --ger: spending package is that germany should open the tax to spend more on infrastructure. it is wrongheaded.

we have seen recently is the rise in prices for public construction projects has reached 5.9%. germany is spending a lot more money, 8.5% year-over-year on public construction. most of that is going into rising prices, rather than raising the volumes of its. this is pressed in the significant boost in prices. --ncine: will climate change which we are seeing in these packages. are they going to put more money in green and prevent going to send off the u.s. administrations calls for more stimulus? holger: germany is spending at the point that there are significant sums involved.

germany would spend these amounts over a number of years. the immediate stimulus would do something about the economic downturn now and spend the money. that is what is physically impossible. anyway, germany is responding in its own interest to do more, but it takes years most of the money to be spent. francine: will they increase? will that change? if there was a recession, 95%. today we have good news out of unemployment. a lot of the previous data -- holger: germany is not physically neutral. coming out of the various plans we know for the future, germany would have a fiscal stimulus over 5% of gdp next year and probably the year thereafter.

germany is spending. in 2020, it will cut taxes. none of this adds up to the big runoff used for late this year for next year that a lot of observers are asking for. it is a slow motion stimulus. francine: which is not what people want. how will mario draghi navigate this? ecb --ll the holger: there isn't much the ecb can do about it. ecb will have to focus on their own turf, monitoring policy. after that, they are close to the limit to what they can do. cutting interest further would not do a lot of business to credit growth. finding more assets to purchase is something they should and

would only do any real emergency -- do in a real emergency. francine: what will mario draghi be looking for? we understand the positions. is that will -- is that what people will focus on? these: mario draghi for famous words, whatever it takes within our mandate. he single-handedly defused the euro crisis and gave governments time to fix it. the rest, we have debates. we all know that from the bank of england, we know that from the fed minutes, that is not unusual. francine: thank you so much. holger schmieding from berenberg stays with us. next, president trump speaks out. he demands to meet the whistleblower. we will get all the latest next.

this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua. let's get the latest on the impeachment inquiry. president trump was out and forced to make their case to the american people. this is after congressional democrats started a official investigation. >> that whistleblower will be allowed to come in and come in

without a minder from the justice department or from the white house. we will get the unfiltered testimony of that whistleblower. >> i am defending my client. this is not about getting joe biden in trouble. this is about proving that donald trump was framed. >> speak the truth and let us work together to have this be a unifying experience, not a dividing one for our country. don't make this any worse. of the unitednt states is the whistleblower and this individual is a saboteur trying to undermine a democratically elected government. francine: joining us now is stephanie baker. i don't know if you call it what are we but expecting this week? >> we have had conflicting messages. adam schiff said he an agreement

with the whistleblower to come in and testify in closed session. the whistleblower's lawyer says discussions are ongoing. there is about -- there's concern about safety especially considering trump's comment that he wants to meet with whistleblower. the new york times reported it was a cia gent. many people think it is unlikely that a lot of people don't already know who it is. there's concern about how do you protect his identity. particularly republican members of the committee. francine: and terms of what we are looking at, are we looking at evidence. do we know? stephanie: we have the rough transcript of the call.

now what the focus will be on is trying to speak to some of those other white house officials shared concerns. trying to get those individuals in for depositions and testimonies in congress. hasn the fact that trump already accused some of those individuals who remain unnamed of being spies and traitors, i think that is going to be a huge battleground going forward. francine: what does it mean for the republicans? they are sitting on the fence. are they still supporting the president? stephanie: the vast majority have. we have seen little cracks. one or two republicans here or there expressing concern about what trump was reported to have said. what you now see is a concern pushback from republicans saying he did nothing wrong. there was no quid pro quo that was proven in the call

transcript. but i think that will be the focus going forward from the white house officials that we are expressing concern. was there a quid pro quo? was there pressure to withhold aid to ukraine? in exchange for ukrainian political leaders pushing ahead with this investigation into joe biden. francine: thank you so much. let's get back to holger schmieding. i don't know -- gdp or forecasting what will happen before the 2020 election. holger: it will probably not have a direct impact on gdp. we are usedresident to some interesting noise from the white house. i don't think this will materially affect u.s. consumer confidence spending or any major investment decisions. the real thing about this is it

highlights and adds to the deep political divide in the u.s. then, of course, there's the long-term risk. it may drown out the more moderate voices in both political camps, potentially leftg -- helping a more candidate like elizabeth warren theing the -- claiming nomination. francine: hoag, thank you so much. spies, threats and private investigators. it is the scandal rocking the world of swiss bank. up next. ♪

francine: still open for business, the was placed on report could block chinese companies from listing in

america. the impeachment situation. congress expects to hear very soon from the whistleblower. president trump demands to meet his accuser. boris's battle, the premise does plan to lay out his brexit vision are overshadowed by allegations of sexual misbehavior. everyone.ng, we are getting a little bit of breaking news out of u.k.. revised from the previous estimate. want 23.ment it is not let's get back to holger schmieding from berenberg. the data is not telling us anything huge. is it just brexit? is no deal still a basic scenario? -- best case an area? holger: we think in the end

there will be a deal but it will not be achieved now by the end of october. there is also some chance of remain. we put the risk of a no deal around 35%. significant but not the most likely scenario. francine: holger, thank you so much. to -- it has want been higher the entire morning, up 2%. this is their plan to acquire dover pharmaceutical. moving on, home serve, the biggest gain or on the stoxx 600, up more than 2.5%. it has been one of the best stock picks in this home service sector. the downside, down more than 1.5% as they withdraw its intended appointment of dominic

leroy. this comes down to an investigation of her selling shares. francine: let's get the latest on the stories, the threats rocking switzerland's second largest bank. -- that could shape its path for use. a board meeting today is likely to see the chairman decide on the fate of the executives implicated in the surveillance. , patrick joinss us. what more do we know about the timeline? patrick: good morning to you. the timeline is the board will meet today and then this evening, they are going to continue -- going to communicate that decision and discussing who was responsible for hiring these spies. i know this question sounds

strange but was it justified? observinga reason for this guy? were they worried it might hurt the business? francine: do we have any idea how this will pan out? patrick: the first indication shows that he is going to be absolved by this. the board is leaning toward, this is not necessarily the best chapter in the history of credit suisse but there was a reason for hiring these guys. it was justified to hire people to look into what they thought it was doing because they were worried he may have been poaching the relationship managers from credit suisse to his new employer, ubs. credit suisse and ubs our archrivals.

ship is oneevelyn of the top moneymakers for the bank. francine: david mirror is one of the biggest shareholders. whatever happened -- overall, how often do people spy? do we know if this is something that happens regularly in banks across the world? is this something you never heard of? patrick: we have looked into it somewhat. there was a spine case at deutsche bank, the most famous case and there were implications after that. it happens more often than we realize. it just never comes to light. people don't find out about it. public.t made the press were all over it. the idea that thugs following a

banker through zurich, through a very safe place freaked a lot of people out. francine: thank you so much. patrick winters. let's get straight to the bloomberg first word news. viviana: the u.s. has no current plans to stop chinese companies listing on american exchanges. this denial after a bloomberg reported on friday that the white house is exploring limits on u.s. investments in chinese companies. aging vowing to continue opening up its markets to encourage high-level trade talks. a european government needs to spend more to counter the global economic slowdown from ecb chief, mario draghi. he is urging members to commit to closer fiscal ties. they quote him as saying, we need a common euro zone budget.

a war with iran could bring down the global economy. the --bensalem on saiz mohammed bin salman is saying -- he does add he prefers no military pressure on tehran. region represents about 30% of the world energy supplies. about 20% of global trade passages. about 4% of the world's gdp. imagine all of these three things stopped. this means a total collapse of the global economy. go over to hong kong where this weekend, these images of smoke and violence continuing for the last several months as police using water cannons and water -- and rubber bullets. protesters set the entrance to the train station on fire.

tomorrow marks the 70th anniversary of the people's republic of china. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. andcine: u.k. politics boris johnson is fighting serious allegations about his past behavior. the prime minister is attempting to focus on brexit in hopes -- conference in manchester. speaking yesterday, johnson suggested he would not provide the event if brexit gets delayed. >> i am going to continue to do that. it is my responsibility did that -- to do that and i think it is our job to get brexit done october 31, but to move the country on. francine: let's go live to anna edwards. what is the very latest?

plenty. boris johnson seems likely to focus on the big messages they are trying to give here. as you walk into the exhibition, you see a big sign saying, "it brexit done." -- get brexit done." of course we want to talk about brexit and the rest of the u.k. media wants to talk about these. we have heard the questions being asked about the extent of the relationship between boris johnson and american entrepreneur. allegations that he assaulted a female journalist. this is newer. his office reported to deny that. that is where the u.k. meter is focused. brexit, a big topic of conversation. the chancellor here talking about if we do have a no deal brexit which could be in the

cards despite the actions of those who are trying to prevent that from happening, if we do have one, the government will bring through a big physical response. francine: are we closer to a brexit deal? anna: yeah, big question. difficult to answer. we heard from boris johnson and he said he was costly up -- cautiously optimistic. detailsalking about how around the iris backstop would be coming from the government after the conference. we had to wait longer. we had talk about the possibility of a no deal brexit, being ready for it. -- that isving us part of the focus. we are also watching what is going on in westminster.

and thel story opposition parties will be meeting today to try and work out what they do. sittingnt is still while this conference takes place in manchester. francine: anna edwards there. brexit when you look at and we were talking about u.k. gdp and the fact they want to focus. fromtimeline do you see now until december? it is a one million-dollar question. are we going to have an election? holger: at the moment this seems the most likely outcome that we will have an election by the end of the year. oppositionif the including the rebel tories get their act together we could have a very different scenario. we could have them leading a andrnment, opening johnson

scheduling the new referendum on brexit for spring next year. we would need those people to and asether and agree, long as corbyn insists on him being prime minister, it is pretty difficult. if the opposition gets its act together, we are probably heading for elections after the temporary brexit delay which will happen on the 19th of october. francine: what happens to sterling in this kind of scenario? probably sits back for a while. with the u.s. trade-china situation, i would not take a strong position at the moment. all of these uncertainties. sterling is underdeveloped anyway. francine: the fourth quarter starts tomorrow and we will look --ad and asking investors

and ask if investors should be optimistic. this is bloomberg. ♪

francine: this is "bloomberg surveillance." global equities ending slumping 20 basis points in three months. arepean stocks -- investors hearing up for volatile. aheade third quarter look -- fourth quarter look ahead, here's a dani burger. >> they have outperformed these past three months, gaining 2% beating out other developed market and emerging-market peers. investors getting defensive

heading into the next three months. reports more than one billion euros listed in europe and that is the most popular style out of any of them. there a um is at a record. this defensive play comes amid some important events happening. a brexit deadline, a key ecb decision and speaking of brexit, we saw sterling seeing more than 3%. political risks here but one of the big shadows that is supposed away over markets is the what the economic picture is doing in europe. it is falling behind the rest of the globe. -75 is the reading. this by itself doesn't mean too much. i will take you into the charts to show you the comparative picture. the global reading briefly turns positive. when this is positive, it means that the economic data is largely in line with what

analysts expect. you can see white, europe, the trend is slightly lower. there has to do with the weak manufacturing sector. a lot of data hitting today. this underscores the unfriendly macroenvironment. francine: thank you so much. commit to slightly expansionary budget. the commitment from the minister of finance came ahead of today's meeting where the government will lay down spending measures. he says anytime you have a negative effect -- holger schmieding from berenberg still with us. we talked about deficits especially what germany can do. what is your take on italy? government isew on track and will keep italy on track. the very good news about the

recent 16 months in italy is the five stars, the leading party of the government, have transformed from a motley collection into a responsibly good faith, centerleft party almost. they are not going to pick a fight. means they will probably be allowed to get away by the markets in brussels with slippage or little fiscal easing. francine: the easing, will it 02 growth? italy needs to grow -- will it go to growth? italy needs to grow. how does italy structure itself so that grows? needr: italy would not fiscal policy much. it would need very different structured policies. those are partly in the labor markets and very much in the administration. resolve its long to

commercial dispute in italy which is a reason why foreigners are conducted to invest in italy. for the time being, italy goes up and down with the global cycle, but it does so around a long trajectory to get out. italy would need more the remley style reforms that we had a few years ago. this government doesn't seem to be willing to go down that route yet. francine: what does the fed do hear from here -- fed do from here? holger: the u.s. economy is still doing fine. it is slowing down due to the impact of the trade war on u.s. and global manufacturing, but the u.s. economy could do much worse than that if the trade war to get much worse. the fed would take out one final insurance late this year but they are after --

francine: that is what? a stronger dollar? holger: the dollar is fairly strong despite the recent fed easing and a huge u-turn in the fed. global -- if eventually six month from now we get some resolution of the u.s.-china trade resolution, then i think global risks would rise and that would lead to more normal value dollar that would lead to lower dollar than we have now. now it is staying roughly where it is. francine: holger, thank you so much for the update. growxt, hong kong protests as tomorrow is the 70th anniversary of communist ruled china. we'll get the latest next. ♪

francine: france remembers. it is his official funeral. a military escort through the streets of paris. thatve been touch saying 30 heads of government will be present today including vladimir putin including victor orman. including the german next chancellor will be there, mr. jean-claude juncker. story, the hong kong police used rubber bullets, tear gas and water cannon on sunday as they clash with

demonstrators in one of the most violent days of protests. we will get to that but we understand the credit suisse -- the alleged spy allegations. i don't think the monday meeting , the meeting of the board, has happened yet. stand that the board is -- we have more of the story. we will get patrick back online. one of the biggest shareholders on friday.uisse back to hong kong, back to the protests. let's get to karen leigh. as we look to the 70th anniversary of china under communist rule, what will he see

the next couple of days? karen: this is a huge week in china and in hong kong. we have been waiting for this long time. the 70th anniversary of carmina's party rule -- of communist party role. we have gotten underway. xi jinping is visiting mao mausoleum. tomorrow there's going to be a large military parade. there's going to be massive peasantry attended by -- mass pageantry attended by many people. francine: karen, how many more protests are we expecting? a pretty violent weekend here. clashes between police and protesters evolved fairly quickly in the day over the weekend.

it really set the city on edge for what we expect tomorrow. we expect people to come out while the sat -- while the syllabuses are happening, almost like a split screen. they are expecting a fairly significant turnout. we do expect it to be significant. we expect people to try and send a message. francine: karen leigh, thank you so much. bloomberg surveillance continues in the next hour. we will be talking to pimco chief executive officer. we will talk about -- this is bloomberg. ♪

♪ francine: the u.s. plays down a report it could chinese

companies from listing in america. the impeachment situation. congress expects to hear from the whistleblower whose complaints started the inquiries. president trump demands to meet his accuser. boris's battle. prime minister plans to lay out his brexit vision at the conservative council are overshadowed by allegations of sexual misbehavior. i'm francine lacqua in london. tom keene in new york. there's a data point in german ace adjusting the economy is better than expected when it comes to labor market. we looked at boris johnson and the fact that he is in a pretty difficult situation. there's a lot of talk and rumor about sexual misconduct, and we look at the impeachment process and what happens there next. i would also point to credit suisse. we've been following the story over the past five minutes. we understand the board is backing the chief executive ahead of that meeting today.

--t is the latest boom luke that is the latest bloomberg scoop. we will be joined in the next hour on china and their 70th anniversary. francine: let's get straight to the bloomberg first word news with viviana hurtado. ? the head of the viviana: viviana: --viviana: the head of intelligencee committee is expected to hear from the whistleblower. president trump wants adam schiff investigated for treason. saudi crown prince mohammed bin ar with iranrns w could bring down the economy. he says he prefers non-military action. kong cleaning up from a

weekend of protests, bracing for more. demonstrators throwing gasoline bombs at police. they responded by using tear gas and water cannons. the city is preparing for bigger protests tomorrow, when china marks the 70th anniversary of communist rule. british prime minister boris johnson isn't just fighting to get a brexit deal. he's also battling for his credibility. johnson facing allegations of sexual impropriety. he's been forced to deny he groped a journalist at a lunch about 20 years ago. plus, johnson is rejecting allegations he had a sexual relationship with a businesswoman and authorized a taxpayer-funded sponsorship for her company. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. francine: thanks so much -- tom: thanks so much. one been ages since i did

screen. futures up 10, dow futures up 96. that's about all i got. some curve steepening all in all. francine: when you look at my data check, basically questions about what happens next in the world economy just because there is this latest escalation in trade rivalry between the u.s. and china. i'm looking at treasuries slipping a touch. euro-dollar 1.0932 after we had some that are data out of germany. overall, the vix a little elevated. tom: i'm changing my bloomberg right now. wework, absolute collapse. i was going to get to china. we will get to that with liz economy. near an 11% yield. this is the price of the six year wework paper.

it is down to the lows, and extraordinary failure for mr. all of wework. francine: i have a very vanilla chart, euro-dollar, but thanks to dani burger for bringing this to my attention. it is the end of the third quarter, and if you look at what it's done, falling to the nearest level since its inception in 1999, euro-dollar's trading range in the third quarter picked up to match its level this time last year. we will have a look at what that means for european data. the u.s. has no current plans to stop chinese companies listing on american exchanges. that's according to a treasury official, and response to a bloomberg report that the administration is looking at ways to limit flows into china. it comes at a time when china is too opening its market

foreign investment. joining us from beijing is our bloomberg greater china editor. how has china responded to this thus far? beenter: so far, it's pretty restrained. about 90 minutes ago, the chinese foreign ministry gave its most upfront response to that news. it emphasized financial cooperation has been for both countries. it emphasized that any sort of forced uncoupling would be bad for american and chinese companies. it would hurt consumers, citizens of both countries, and because a lot of international disruptions to global markets. francine: what do we know about the impact this could have on trade negotiations. they are expected to meet in d.c. and a couple of weeks. the chinesere delegation has probably factored in this probability going forward, but as of now, they are not showing any signs of change.

he is stillr liu scheduled to go to washington, may be on the 10th or 11th. publicly, this move has not been determined by the trump administration. no decisions have been made. until something has been announced, i don't think the chinese are going to act on it. tom: what is the theme of the 70th anniversary from beijing? the 70th anniversary of an ever large china has a different cast in each and every city, but in beijing, what of the -- in beijing, what is the tone? john: the tone is one of confidence and strength. that is what xi jinping and the communist party want to project. it is important because china is facing lots of challenges at the moment, trade being one of the louder ones. they want to show the country that the communist party has done a great job. francine: thank you so much.

bloomberg's jon l -- bloomberg's john liu. balls, us is andrew 's european managing director. expect a don't baseline recession, but if you are going to get a recession in the u.s., global recession is going to be via the impact of trade uncertainty, trade disputes, the impact on manufacturing, the impact on corporate profits. the consumer is hanging in for the most part pretty well, but the risk of spillovers, we saw pmi's coming up which are going to signal the weakness in the manufacturing sector, and on this site affiliate -- on this side of the atlantic, germany is in recession. it's hard to know how to read

this latest development in terms inthe negotiations, but october and december, lots of reasons around the possibility for a mini deal, the possibility for escalation. francine: it seems we are getting closer to a deal, we are not, it is getting better, it is getting worse. what if there was a shock? is there a data we are not understanding the full repercussions or the snowball of these trade wars? impeachment problems for president trump, does he escalate on the international side amid that kind of domestic scrutiny, i think that is a risk. the second thing is we just published our cyclical outlook. we called it windows of weakness. it's a weak time for the global economy, the trade, the politics.

if you had a shock coming at a time when next year, we would rowth, itty weak g is easier to push into recession. tom: what do you do with a price of fixed income investments? do you just bring in duration to an almost near cash level, or is there a way to be opportunistic given doubles of weakness? andrew: i think duration is a difficult one. if we are going to avoid recession, the level of yields looks too low. moreevel of yields looks attractive in the u.s. compared to the global alternatives, but the level of yields is pretty low. that said, you do have elevated recession risk. you do have the potential for a grab for duration, as we have seen this year. overall, you stay pretty neutral to what your new could -- to

what your neutral allocation is in. we don't want to have big underweights here. tom: we've got much to talk about on fixed income as well. as we mentioned china, we are thrilled to begin a look at 70 years of the communist party in china. we do that with elizabeth economy, with the council on foreign relations. her book, "the third revolution," absolutely definitive. this is bloomberg. ♪

♪ >> that whistleblower will be thewed to come in without

justice department or the white house saying what they can or cannot say. >> i'm defending my plan the best way i know how. it is not about getting joe biden in trouble. this is about proving that donald trump was framed. rep. pelosi: honor your oath of office to the constitution of the united states. speak the truth and let us work together to have this be a unifying experience, not a dividing one for our country. don't make this any worse than it already is. >> the president is the whistleblower here. the president of the united states is the whistleblower, and this individual is a saboteur trying to undermine a democratically elected government. tom: an extraordinary weekend in these united states of america. anyway you look at it, back-and-forth, it's just been every moment a change. sunday afternoon, i think there was a change in the news flow.

"the new york times" a few days , on mr. schiff, "many men were's of congress don't understand how to conduct a hearing -- "many members of congress don't know how to conduct a hearing. iff is really, really good at this, both in backing statements that are so synced and impactful and also in said a former federal prosecutor." stephanie lows a lot about this. i was thunderstruck by the tone of mr. schiff in the testimony with the vice admiral the other day. he is a former u.s. prosecutor -- that he is a former u.s. prosecutor is a huge deal, isn't it? stephanie: i think it helps the democratss cas -- the democrat''

case tremendously if he is leading it. focusing on the rough transcript, which provides plenty of evidence in and of itself that trump was using his office to put pressure on a foreign leader to dig up dirt on his chief political opponent in 2020, if you can keep the rest of his committee focused, i think that is his challenge, to make sure that there's not a lot of grandstanding. if you can hire some people to provide some focused questioning, i think that will help tremendously. tom: there was a point when mr. manafort had to attorney up. do you see any indication that anybody directly involved with the president on your trip -- on ukraine is attorney-ing up? stephanie: there had been some reports that white house officials were looking at whether they needed outside counsel. right now they are covered by

the white house counsel, but that could easily change as the inquiry grabs on -- the inquiry drags on. the other issue they are potential he interested in is does trump need to take on additional counsel, and how does rudy giuliani deal with this. he is now effectively an essential witness in this case. francine: what body of evidence are we looking at, and what will we look at? is there a change in tune from the republican party, or are they still neutral or not weighing in? stephanie: i think the additional evidence is to what extent they are able to bring in some other white house officials to testify about what they learned of trump's actions, particularly around this withholding of military aid. i think this is the area where there is not a lot of clarity. we know he withheld the aid. we don't know what kind of discussions were taking place around that.

where they in conjunction with this call to the ukrainian dig upnt zielinsky to dirt on joe biden? right now i don't see any republicans breaking rank. there are a few expectant ones, mitt romney being one. for now they are defending the president's behavior, which is quite remarkable. mitch mcconnell saying this phone call is not an impeachable offense. whether or not, as more information comes out, that will shift remains to be seen. francine: thank you so much. stephanie baker there, who has been covering the trump administration from the very beginning. we are just getting some pictures out of paris. good morning for those of you listening on bloomberg radio. thousands have lined up yesterday in a queue that wound around the memorial

complex for the official day of funeral for juckes iraq -- for jacques chirac. some 30 heads of state will be putin, including vladimir , including the hungary and , jean-claude juncker of the european commission. ♪

♪ viviana: you're watching

"bloomberg surveillance." cing a suisse fa crucial decision on management. the chief executive is implicated'in surveillance of the bank former -- is implicated in surveillance of the bank's former wealth manager. brewingf budweiser rising. the beer maker raised $5 billion in the second biggest ipo of the year. that gave the unit a $45 billion valuation. the deal was put on hold in july for lackluster demand. another big-name has fallen in the retail apocalypse. fashion chain forever 21 filing for bankruptcy protection, with liabilities of up to $10 billion. the chain has more than 800 stores globally and plans to close most of the stores in

europe and asia. that is the bloomberg business flash. francine: thank you so much. let's get straight to the ecb. there's a lot of talk about what negative rates do for banks. there's also a lot of talk about the legacy of mr. mario draghi, who will step down november 1, replaced by christine lagarde. there's a beautifully written piece in bloomberg opinion saying that there are troubles at the ecb, and they are not draghi's fault. thats basically saying draghi's legacy would be marred by these policy divisions, but should be centered on his courageous actions to save the euro zone. let's get straight to andrew balls from pimco. when you look at the concerns surrounding what draghi's legacy is, it goes to the heart of the european problem. you have an ecb that can fix or spur the country to do what they

need, which is probably fiscal policy. andrew: the ecb is the european institution, one that can act effectively, so all eyes tend to go to the ecb because the fiscal side is not coordinated, not well organized. i agree with mohamed's point. i think he's right that the current kind of noise about draghi's legacy, the fact that he was able to stabilize the euro zone, he said in an interview over the weekend that now the need for coordinated fiscal policy, and i think most economists would agree with that. the problem is the political dimension in europe. chair is not a monetary policy expert, but somebody with great political experience. francine: will christine lagarde be able to convince countries that they need to spend

fiscally? andrew: i think the answer is probably no. i saw a reference to "waiting godot." if it gets bad enough in terms of european recession, you could have some fiscal response, but all of the signals are that germany is very reluctant. other countries agree and germany should do it is fine, but you need the germans on board. tom: clearly, you are expert on this. "force"the mechanism to anybody within the european experiment to do anything fiscal? i'm not aware of actual mechanism to persuade. andrew: there are mechanisms on terms of the excessive debt. the question is whether they work or not. persuading a country which has the fiscal room to use it is a very difficult one.

mario draghi said this in his interview over the weekend. there's a fundamental problem with the monetary union without a fiscal union, or at least fiscal coordination. europe tends to advance during periods of pain in crisis, not relative stability. but you see germany, even amid a german recession, with great reluctance to use fiscal policy, and also constitutional protections put in place in the last few years to try and prevent active fiscal policy. francine: thank you so much. we will be back with andrew balls from pimco. coming up, we will talk about the u.k. and brexit. this is bloomberg. ♪ from the couldn't be prouders

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geopolitics and international relations. with our first word news, here's viviana hurtado. viviana: we begin with those geopolitics shaking up the markets. president trump calling for the democratic heading the impeachment investigation to be investigated for treason. he's also demanding to meet the anonymous whistleblower behind the probe. chiff says the congress will hear from that whistleblower soon. trump administration downplaying a revelation about limits on u.s. investments in chinese companies and financial markets. last week, bloomberg reported the white house discussed delisting chinese companies from u.s. exchanges. the u.s. treasury department says there are no current plans to stop chinese companies from listing in the u.s.. kurtz isa, sebastian on track to return as chancellor. the conservative environmental group could agree

on a coalition, that would send a signal across europe. still, it may not be easy to form a coalition government. in israel, prime minister benjamin netanyahu will make a last-ditch effort to form a government. elections this month produced a stalemate. talks to form a unity government ended without a deal. global news global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. francine: thank you so much. time now for u.k. politics. forrest johnson is fighting a series of allegations about his past behavior as the -- boris johnson is fighting a series of allegations about his past behavior as the conservative party is holding its conferences in manchester. johnson suggested he wouldn't resign in the event that brexit gets delayed. we will have plenty more on

that. go live to the conservative party conference, where withberg's anna edwards is claire walker. over to you. much.thanks very you mention some of the spending pledges. claire walker, genders of commerce coexecutive director -- chambers of commerce coexecutive director, has been speaking about this. you heard about investing in road and bus infrastructure and the like. i'm guessing you welcome that. what would you like to add? welcomeabsolutely some news from the chancellor. having some more detail, seeing which roads will be invested in, and also the critical issue that may have -- the critical issues that many of our members talk about. it is good to see digital infrastructure as well.

5g is really affecting rural and local productivity. however, there are some big intersection projects such as heathrow that still have question marks, and we would like to see more information on those. anna: high-speed rails and new runways of interest. roads willve which be resurfaced and all to the conference halls behind us. deal talk about the brexit . be someems to uncertainty, but what are members telling you they are concerned about when it comes to no deal? claire: we have been consistent on calling for the government to avoid a messy and disorderly brexit. we would like to see a negotiated exit from the eu. we believe that would be in the best interest of the economy and the businesses we serve. businesses are still lacking the

certainty they need to plan. there are issues that need to be addressed in terms of a no deal exit for business. 31 of those are at amber or red still. this is going to cause real problems for business. anna: anything across the northern ireland border into the republic, these are key areas of uncertainty which you just don't have answers at the moment. claire: absolutely. no answers and some of those areas. many businesses there simply do not have any information on what is planned for to 31 days ahead. many businesses are making the decisions about moving operations overseas or setting up different offices, but they might not be the right thing for the u.k. economy as a whole. we are seeing investment

dropping and business uncertainty. anna: some who want to push for an exit suggested a clean break that would be easier to achieve than the lingering uncertainty of brexit. what would businesses say about that? claire: i think there are some that believe that, and i have some simply. it is three and a half years on -- and i have some sympathy. it is three and a half years on from the referendum. we have to negotiate lots of little deals, and that would be far more complicated than a negotiated exit and transition period for businesses to adjust to change. business can adjust to anything, but a number of different outcomes from a new deal exit would be hugely complicated. anna: i was looking at research z, one investor this morning, suggesting the u.k. is

headed into a long stagnation. would that be to overplay or underplay the u.k. economy right now? claire: it has been a really difficult quarter one. quarter two, we saw evidence of stockpiling. quarter three, we are seeing brexit and the global headwinds impact the economy. we really do need to see many things from this government. we need to see a strong plan to have a negotiated exit at the party conference this week. we also need to see the chancellor working on , very important to all of our members. we also need to see his plans for boosting the economy and taking off some of the upfront costs for businesses. anna: we saw at the end of march that some businesses did stockpile. that had an impact on numbers. do you sense that businesses are taking this deadline just as seriously? i think some businesses,

particularly the larger ones and those that trade internationally, will have maintained the level and the seriousness around this deadline. some businesses may have made an investment around the march deadline, and they are a little bit concerned or skeptical about how much investment they put in for this october deadline. there's a mixed picture. what we are encouraging is for businesses to prepare for all scenarios. we need to make sure that businesses are supported to do that. anna: surely if you are running a warehouse business in the that you may be one group has no negative things to say. clay walker, chambers of commerce coexecutive director, here at the conservative conference in manchester. francine: that was anna edwards in manchester. later this hour, dominic grieve. hour,l also speak -- this

dominic grieve will also speak with anna. when you look at brexit probably of a no deal, of a deal, and a bit just being postponed and going to election, what does it all mean for the gilt market? s are atandrew: gilt very low levels. i don't think they have looked particularly attractive. there's a lot of uncertainty. it is pretty likely that unless you are going to have a surprise and have a deal that only boris johnson could agree -- that not only boris johnson could agree with the europeans, but the not ament would vote for, lot actually happening. it looks likely that you are to have an election, and then a question of whether one side would have a majority or whether we would be stuck in this hung parliament type situation. francine: overall, are we expecting money to come back into assets once brexit is dealt

with, or does it just have to do with pound level? andrew: it depends how this is going to play out. i think if you could have something along the lines of the may deal, the reformulated may deal, gilt should be higher in terms of yield and the pound should be higher. you will have risk premium priced in for that. at pimco, we try not to have a big position one way or another because i don't think anyone has a particularly good read on how this is going to play out, other than the likelihood of an election. tom: people in global wall street, i think you've got a terrific perspective across the channel, not only year tenure in germany, your time on the continent, but working for "the financial times." what are your thoughts on the vibrance of united kingdom wall street? andrew: two things. the first one is if your comparative advantage is being

a business center on the edge of europe, this is not a great situation to be in. the second point is there's lots for london as a financial center over many years , not just the last 20 or 30 years. overall, the impact is relatively limited, but a lot of uncertainty, including one way or another, when this is sorted out, the extent to which you can continue to have such a leading financial market off the edge of europe. i think for banks, it probably means more cost, more inefficiency. but there are good reasons historically why things have been done here in new york and the other financial centers -- have been done here, and new york and the other financial centers.

already a fairly concentrated banking market. germany, europe, you need banking consolidation. it's a bit like our earlier discussion on fiscal policy coordination problems. it's hard to do cross-border bank mergers in europe, and you have a lot of national sentiment in terms of bank regulation, even with the role of the ecb. you can see why that would be needed. in the u.s., the u.s. has massive numbers of banks as well that are scoped for consolidation, but there are institutional rigidities across the different markets. francine: thank you so much. injure balls from pimco -- andrew balls from pimco stays with us. we are looking at leaders joining emmanuel macron for a frenchservice in the

the viewingay after for jacques chirac.

♪ francine: this is "bloomberg surveillance." tom and francine from london and new york. we were talking about brexit and the probability of a no deal. andrew balls of pimco is still with us. i also want to talk about the probability of recession in the u.k. andrew: it is quite possible. germany is already in recession. it is not hard to have a recession in europe. u.k. a little bit elevated, the same in the u.s. as well.

you do have these uncertain outcomes in the u.k. if you had the most chaotic form of no deal brexit. that would be a recession. at the moment, i think the bigger issue for u.k. growth is global growth and global trade growth slowing everywhere. francine: what does it mean for inflation? inflation expectations are sliding. are you putting any inflationary hedges? andrew: no. one thing the u.k. has been good at is having inflation close to target. i don't see deflation risks in the u.k. if you did have the most chaotic sterlingif you had weakness, that could push inflation up. interestth, very low rates, pricing and a lot of risk premium for recession, and brexit, but deflation risk is probably one thing we don't have to worry about at the moment. tom: it is a theme for october. i will let you know november

1 if we all survive it. but it seems like fiscal impulse works when rates are at or below the zero bound. can we make the assumption that fiscal impulse will work with their it is in the united kingdom were in germany -- will work whether it is in in -- will work whether it is in the united kingdom or in germany? andrew: when using about the risks to policy, there is not a lot more that can be done. negative clear that policy rates do more good than harm. but yes, there is a role for fiscal policy. low interest rates and such levels, your regular framework in terms of return on the funding rate is pretty favorable. i don't think it is an answer to

all of the problems. you need higher productivity growth in the whole sector. in terms of countercyclical policy, when you have such limited benefits to further monetary efforts, i think there is a role for the fiscal, clearly, as mario draghi has laid out as part of his last days as ecb chair. francine: andrew, thank you so much for joining us. he is andrew balls from pimco. violence returns to the streets of hong kong as demonstrators clashed with police for a 17th week of unrest. metrotrators set ape station ablaze. this comes ahead of tuesday's holiday, marking the 70th anniversary of communist rule in china. joining us is our bloomberg senior international at her -- international editor. re: expecting further protests -- are we expect in further

protests to be even worse this week? reporter: there's an air of tension in hong kong this evening, looking at what might occur tomorrow. it was a very violent, chaotic week of clashes in hong kong. demonstrations started off peaceful, but then we had two evening's of real clashes between police and demonstrators. some demonstrators setting fires at subway station entrances and .hrowing bombs at police police responding with tear gas, pepper spray, rubber bullets, and water cannons. it was already a tense weekend. looking at tomorrow, there is going to be a big celebration on the mainland for the 70th anniversary of the people's republic of china coming into being. of course, a lot of people in china are very frustrated with the chinese government, saying that they are afraid they're going to risk the autonomous

status here in hong kong under the one country, two systems rule. they are concerned about that, and obviously about the party in beijing. tom: thank you so much. greatly appreciated. too short a business with our jody schneider in hong kong. stay with us. worldwide, this is bloomberg. ♪

♪ francine: tom and francine from london and new york. let's get straight back to the conservative party conference in manchester with anna edwards. anna: thanks very much. francine lacqua, thank you very much for that. i am joined by dominic grieve, former attorney general, and a key mover in the most recent working topments, try and stop no deal at the end of october. we heard from the government a few noises that they think maybe there are holes in the been act, and they can still get a no deal brexit at the end of october. are you concerned about that? dominic: always vigilant, but i think the act has set a purpose,

and i am very mindful of the fact that the government puts out information either for the purpose of trying to destabilize the people who are promoting the act, or possibly as part of their negotiations. i think it is robust. vigilant, and perfectly aware of the fact that you can find loopholes, but we've identified one obvious one, act. is a more contentious we have to look at something else, and at the moment, i don't see what else could be done to if the prime minister doesn't offer a deal to the european council. anna: is a vote of confidence coming? if so, how quickly? dominic: i see no reason to have

a vote of confidence. does what is necessary -- the ben act does was his -- does what is necessary to prevent no deal happening on 31 october. one possibility is that we have a general election. that is very much dependent on whether jeremy corbyn is on having one. forget about the political parties, which should be secondary. we typically find in mid-december we are facing exactly the same issues of a divided parliament with no majority. the better course would be to have a second referendum. anna: but do you think we at some point end up with a government of national unity? dominic: that might be a way of holding a referendum. of course, once the referendum is held, there would have to be a general election.

myself would be favorable to this, willing to support a government of national unity, and i think potentially the numbers are there to support it, but it is very much dependent on whether the labour party leadership are prepared to back it and accept the reality, which is that it cannot be led by the leader of the opposition. he has a highly partisan agenda, which is in my view, incompatible. anna: what is their involvement? what is the price of their involvement if it had to be led by jeremy corbyn? dominic: i think it would be impossible to bring about a government of national unity. anna: how often does this happen? is this part of being a member of parliament? dominic: you certainly do get them. we tend to get abusive emails rather than once suggesting we ought to be killed, which this

one was. they usually come as a direct result of some other thing that is going on. in this case, it was the extra near decision by somebody in number 10 downing street to tell the mail sunday that a group of us were being investigated for colluding with foreign powers in drawing up the benn act, which is a complete load of nonsense. a foreign draft legislation, and furthermore, foreign money, which is also seriously wrong. anna: thank you very much, former attorney general here at the party conference. this is bloomberg. ♪ nce. this is bloomberg. ♪

tom: this morning, beyond quiet markets. coal under $1500.

we worked bonds as well. it is october, 12 months trailing the s&p. the colossal too big for -- shift -- democrat from hollywood that he will choreograph impeachment theater. seven years on, mao and china, in this hour, elizabeth account -- economy on the council on foreign's relations. this is tom keene in london. francine lacqua, loaded suitcase got back to london as well. anna edwards is in manchester. is there anybody there on a working day with parliament open? quite a lotere are of people there. heking about strategizing, has started his election campaign by offering money and pledges to certain parts of the economy, but he is mired in

controversy about sexual misbehavior in the past, so it makes for an awkward conversation at the conservative party conference. tom: it is october, which means to october 31, the beginning of q4 p here is viviana hurtado. viviana: the head of the u.s. house intelligence committee expects to hear very soon from the whistleblower at the center of the impeachment inquiry. congressman adam schiff saying it all depends on how quickly security at the office can be completed. meet the demanding to whistleblower. saudi arabia's conference is warning that iran -- war with iran could bring down the global economy. minutes hetold 60 prefers nonmilitary action to stop iranian ambition and is denying ordering the murder, the brutal murder of saudi journalist jamal khashoggi.

for myng is bracing demonstrators throwing gasoline bombs at police. they responded with tear gas and water cannons. tomorrow, the city is preparing for bigger protests. that is when china marks the 70th anniversary of communist rule. for this by minister boris johnson is not just fighting to get a brexit deal. he is also battling for his credibility. johnson facing allegations of sexual impropriety. he has been forced to deny he groped a journalist at a lunch about 20 years ago. johnson is rejecting allegations he had a sexual relationship with a businesswoman and authorized a taxpayer-funded sponsorship to her company. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am vivianatries, hurtado. this is bloomberg. surveillance reality -- i'm an idiot, i thought i was october 1. i'm corrected.

i guess it is september 30. there is a leap year. let's do a data check. equities, bonds, currencies, commodities. one screen -- get out there -- futures are up 10. dow futures up 80. let's move on. francine: let's move onto european stocks. they are also fluctuating. i think investigation -- i think investors are struggling as to how they should look at the trade escalation reach in china. the euro moving sideways, we had a much better than expected jobs number out of germany. belowti falling for the $56 a barrel. to it.t us get right it is extraordinary. you can see these sunday shows on bloomberg radio. that is a great service sunday afternoon. let us view the debris of sunday. >> that whistleblower will be

allowed to come in and come in without a minor from the justice department or the white house to tell the whistleblower what they can and cannot say. we will get the unfiltered testimony of the whistleblower. >> this is not about getting joe biden in trouble. donald trump being framed. truth and let us work together to have a unifying experience, not this dividing one for our country. do not make this any worse than it already is. thehe president is whistleblower. the president of the united states is the whistleblower, and this individual is a saboteur, trying to undermine a democratically elected government. tom: mr. miller sets us up nicely for a morning must-read. let's look at it right now. this is from eli lake of

bloomberg opinion. always interesting. inflating oil pieces, sovereign to the country, is what despots and dictators do. the president has given his impeachers more ammunition. he goes on to say the argument is not that they are wrong, but that they have breached his confidence. us.shepherdson is with also joining us, martin shanker, -- marty started, our schenker, to get us started on .u the polarity is extraordinary. toseems to be getting coalesce around chairman shift in the house intelligence committee. the difference from mr. nunez in fresno to mr. schiff and hollywood is a lot more than 231 miles. i get the percentages at the polls, but how polarized is the country? is it fresno to hollywood? >> it is extraordinarily

polarized. there was polling a few months ago that said a majority of the nation is not for impeachment. 50/50 looks like it is depolarization we see in the intelligence community -- committee is reflected in the polarization of the population in general. tom: what does our team think for this week? particularly i am interested in people like billy house, who are knee-deep in what is going on in congress. >> you are going to possibly get the whistleblower, the deal with the whistleblower, to come in behind closed doors. tom: but how do they keep a secret? you've got to be kidding me. what is he coming in with, the code of silence? marty: we don't really know. subpoenast, there are that have been issued for mike pompeo documents. there may be other subpoenas issued this week. so the democrats are taking a

strategy of getting this done deliberately but with all deuce speed. what do we note -- marty, what do we know about the body of evidence? is it phone calls, things on servers? what should we be looking out for? marty: you had the whistleblower report itself, which was deemed credible by the officials in the intelligence community. and a lot of the democrats are arguing donald trump's transcript of that conversation with ukrainian president is enough to get an impeachment charge issued for this president. and everything else they do beyond that is just buttressing that case. francine: ok, where are the republicans on this? there is a slight shift in the polls. are they still supporting the president? marty: yes, they are supporting the president. there are some republicans who are saying, in the senate intelligence committee, that they want a full investigation.

many are reserving judgment, but the core of his support in the gop is pretty solid at this point. tom: know we will do what it is so rare to do at bloomberg surveillance, try to get off our geopolitics, domestic politics. we will struggle with that from ian shepherdson. do we not talk about politics? >> i guess there are other things to talk about. thank you for not doing brexit. tom: i want to know the state of the american economy. i believe i am told by october 1, by my entourage, it is tomorrow. we dive into q4. are we diving into a slowing economy echo >> well, -- a slowing economy? >> well, diving is strong. we are slowing. get off the surveillance trapdoor for mr. shepherdson. >> politics is a problem because

the trades were uncertainty is the only drag on the economy. it is becoming a big drag on everything. differingonfidence is -- is dipping. tom: are we affording deflation? ian: only at the margin, and that is getting smaller because of lower manufacturing depressed around the whole world. when you're factoring prices are rising in the u.s. because of tariffs, and more in the pipeline. this is a slowdown against a background of inflation, actually increasing a little higher, which potentially makes it more interesting for the fed next year. markets think that any side of slowdown -- i do not think the fed will be able to do that. schenker, we get started on an eventful monday as we dive into q4. we are thrilled to bring you elizabeth economy. she is with the council on foreign relations, but that barely describes her contribution, i should say, to

the western world's understanding of china. with the 70th anniversary of what mao wrought, elizabeth economy, we will do that in this hour. in france, jacques chirac has died. the ceremony, bill clinton is in attendance. ambassador jamie mccourt is there as well, representing the united states of america. this is bloomberg. ♪

tom: bloomberg surveillance. francine lacqua in london, i'm tom keene in new york. we have ian shepherdson with us, as we look at the american economy and the linkage to all

that is going on. we are thrilled with the momentous week. we have with us elizabeth economy, the council on foreign relations. she is star fellow, the ofection -- the director asian studies one of our foremost authorities on what is away from how we go to china, which is the airport and the fancy hotels, and shanghai, hong kong, and beijing. thank you for joining us at how xi'sile is president leadership right now? elizabeth: i think it is an important question to ask right now. he has a massive amount of institutional power on top of the important committees and commissions are he has basically limit ofhe two-term the presidency so he can serve a life time.

he is facing a lot of headwind right now, slowing china's economy, pushback against the nelson road initiative, obviously the new york-china trade war, and the massive protests that have been going on for more than three months in hong kong. tom: what is the intelligence that we have, the mystery? through thet mystery of domestic china -- is our intelligence good about the xi government? elizabeth: it is really difficult to get a clear read on what is taking place within the halls through the elite compound in china, where chinese leaders live and work there at but we do have some sense that there have been -- there has been some pushback within top leadership of some of xi's overreach. some of the other senior leaders have not been happy with some decisions he has made that has brought negative attention to bear on china. there are broad-based movements -- environmentalists, feminists,

lgbtq, oops within the entrepreneurial class, intellectuals -- they have been arrested for corruption, or than 600,000 just last year. there are many pockets of significant discontent in china. xi jinping, when problems emerge, all of them go to him. francine: overall, we worry about the stability of china. elizabeth: at this point in time, do we need to be worried about the stability in china? authoritarians an regime, and we do not have a perfect read into all the policies of the country. is it possible that at one point in time we could wake up and find out that xi jinping has been pushed back to the second line, that he is no longer the preeminent leader? it is possible. as a former student of the soviet union, who would have predicted gorbachev, the select -- the collapse of the soviet union? very few people. we can never just ignore the

possibility that there could be a significant political transformation change within china, but at this point i do not think the stability is in question. francine: what does this all mean for the world economy and the chinese economy echo ian: it is kind of a problem because xi jinping's personal position is perhaps not as robust as it might appear from the outside. weak int be seen to be negotiations with the u.s. we have two sides of butting heads against each other. neither of them at the moment looking to blink, so we have a stalemate which i think is going to extend beyond the election next year. i would be quite surprised now if china were willing to do a , if someone would be willing to sign. jp morgan modeling a sub 5% of gdp. it is a tendency, a trend.

5%, is a 5.5 percent, or a 5%, how do you bring that into the united states economy echo ian: the trade -- the united states economy? and through europe as well, u.s. a drag on the this is still primarily a domestic services economy. we are not dependent on china. europe does better than china and the u.s. does better. but we cannot overstate the importance, it is very important in manufacturing and farming. for most people, most days, it does not make that much of a difference. tom: i did a thing the other day , where mao began the communist

revolution, that is an example that the city did not know, no one knows in the western world. tell us where mao began the revolution. how are they faring in the slowdown? elizabeth: broadly speaking, the chinese have begun to feel the pinch of the u.s.-china chain war.- u.s.-china trade an estimate of one point one million people have lost their jobs. we have seen slowing down auto sales throughout the country. real estate markets in those third and fourth-tier cities that you're talking about is poor, it is weak. there are knock on effects that people do not appreciate. real concerns around environmental impact, so china has had to pull back on some of its ambitious environmental targets with regard to air pollution. he premier has said that needs to establish a new leading group, the most important governing body to address the

issue of employment, in large part because of the trade war and the slowing chinese economy. there are a lot of moving parts in china, and a lot of pressure being brought to bear on the chinese leadership that we may not be fully aware of. francine: ian shepherdson, how is pboc doing in all of this? do they have a pretty good handle on the risks? to: the risks are very clear the downside. i am sure they are happy with the pmi that came out over the weekend, which suggests may be the economy is hitting some sort of floor at this point, but i don't think they can be relaxed that a real recovery is underway, and that is what they need to have against this background of mounting political chaos. they need that domestic economic engine to be growing, more quickly than it has been. progress has been made. there's probably more easing in the pipeline. they cannot be confident yet that they are doing enough, so we need to keep an eye on activities. there is no way they will do

less easing going forward, and i am hopeful they will see some consistent recovery. for now, they are still very nervous. this has been a longer hall than they expected. here we are approaching the end of the year, and i think at this point, they would have been much more confident six or nine months ago about a more solid recovery. it has not happened. what we are learning is that in this massive over indebted economy, they get a smaller bang for the buck. they need to do it more and longer. i think they will because they do not want the trade war to affect the economy in a bigger way than it already has. francine: thank you very much. both of them will stay with us. in the meantime, we are looking at pound. boris johnson not backing down from his brexit plan. the u.k.ear from chancellor of the exchequer,

crafting a response if britain leaves the european union. this is bloomberg. ♪

francine: this is "bloomberg surveillance." just getting some headlines from the spokesperson of the pie minister of the u.k., boris johnson. he is telling reporters that the u.k. government is considering suspending parliament for a queen's speech. we understand there are media reports of that, plan for

october 14. meeting just before the queen's speech on october 14. he expect further talks with e.u. on brexit this week. anna edwards, who joins us from manchester. we know that the chancellor has also been saying if there is a of aal, -- how much conversation is away from brexit , doing some of the things that boris johnson has done in the past? a lot of controversy swirling around this conference that when underway over the weekend. amen -- an american entrepreneur who benefit from the money when he was in london. also horace johnson was forced

to deny of -- allegations of sexual obligations. the government would rather be talking about get brexit done with a big slogan hanging over this. but it is interesting to see a lot of talk here, and in westminster, about the extent to wash the been act, which ago,ht by rebel mps weeks it is back in a holden blocking no deal to the end of october. tom: we will continue with elizabeth economy and ian shepherdson. this is "bloomberg." sometimes your small screen is your big screen.

and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. keep what you watch with you. download the xfinity stream app today and get ready for xfinity stream tv week.

watch shows like south park and the walking dead october 7th through 13th. tom: the end of the third quarter, and into the fourth. francine lacqua and london, tom keene in new york. a little bit of risk-on lift to the market. in new york city, here is

viviana hurtado. viniana: president trump is calling for the democrat heading the impeachment of the investigation, -- the impeachment at investigation -- the impeachment investigation, adam schiff, to be investigated. the trump administration is downplaying the revelation about u.s. investments in chinese companies and financial markets last week bloomberg reported the white house discussed d enlisting chinese companies from u.s. exchanges. u.s. treasury department saying there are no current plans to stop chinese company from listing in the u.s. sebastian kurt is on track to return as chancellor. the 30 read -- the 33-year-old people party is the conservative of our mental group could agree on a coalition, sending a signal across europe that it may not be easy for him to form a government. in israel, benjamin netanyahu

will make a last-ditch effort to form a government. elections this month produced a stalemate, between netanyahu and his rival party ended without a deal. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am vivianatries, hurtado. this is bloomberg. francine? tom? francine: violence returns to the streets in hong kong as demonstrators clash with police for a 17th week of unrest. the demonstrators set a subway station entrance a blaze and through -- and threw petrol bombs. joining us from hong kong is karen leigh, bloomberg's greater china editor. i know it is a late day for you. when you look at some of the demonstrations from yesterday that were extremely violent, how is hong kong bracing for the october 1 protest? karen: this is a weekend that

got a lot of people -- people have been waiting for a number of weeks to see what is going to happen over this very sensitive few days. this weekend marks the anniversary, the previous pro-democracy in the city, on -- and tomorrow marks the 70th anniversary of comedies -- of communist party rule in china. we saw a really violent images. we saw police fire what they said were hundreds of rounds of tear gas. more than 100 people were arrested. asple are looking at that meeting on a metric of what we can expect tomorrow. tom: four years ago, five years ago, 10 years ago if there was a 70th anniversary in hong kong, would anybody show up to celebrate what mao wrought? karen: it is an interesting question. we saw five years ago come out

in this pro-democracy movement and it got a lot of attention. the violence in that movement was much less than what we have seen in the last few months with clashes between police and protesters becoming increasingly aggressive. when you look at the 70th anniversary and you look at the headwinds that xi jinping is facing, economic slowdown or the protracted trade war with the bring in then you really sensitive politics around the hong kong protests, it is really a crucial moment for them and a crucial moment for china to step up. they have this mass pageantry planned. there are tens of thousands of people expected, fireworks. tom: thank you so much. really appreciate it. york, ian new shepherdson of patheon metro economics. elizabeth economy. i was trying to explain,

christmas day day of 1989, it was an endless protest, and all of a sudden, boom. weekend after weekend of protests. how do you envision this ending? can you frame it at all? elizabeth: there are a couple of potential paths forward. chief of honghe kong, carrie lam, sits down and demands that the protesters have made -- giving amnesty to 1500 or so people who have been arrested, the protesters. acknowledging that the protests were legitimate, that they were not simply riots. withdrawing the extradition bill, which she has already done. really thelt one is demand for universal suffrage. but even that, quite frankly, you look back a decade, they had agreed that there would be direct elections of the next chief executive.

it was only when beijing put in the little wrinkle that it would have to approve the top three candidates that things deteriorated. i think there is room for negotiation. obviously the other path forward would be much more violent. tom: even a hack like me knows that this is not culturally on a -- culturally, hong kong is on a different plane than beijing. it is enormous. elizabeth: chinese banks have something like $1 trillion worth of assets in hong kong. they use the hong kong court. multinationals use hong kong as a launching pad into mainland china, and the hong kong stock exchange has many enterprises, big state owned enterprises, and private enterprises listed on it. the integration of the economies is quite significant, but if you were to ask me would beijing be

willing to let hong kong burn over the next year or two and just slowly transition to a focus, absolutely. it cannot tolerate a separatist economist movement in hong kong. thisine: elizabeth, at point, what do protesters actually want? is it maximum disruption that they want, or is there anything that -- what would quell the protests, is what i am elizabeth: trying to understand? elizabeth:i don't think -- is what i am trying to understand? elizabeth: i don't think the protesters are seeking disruption. what they are trying to do is keep the focus on hong kong and keep the world's intention -- the world's attention on hong kong. keep the world focused on protesters and their demands. i think they are probably not

the ones supporting this type of violence that we have seen over the weekend. they really tried to keep the protest peaceful, but they want carrie lam to acknowledge their demands, to respond to their demands, and to begin a path forward to universal suffrage. in the meantime, they want the international community not to sell the hong kong police riot gear. they are encouraged by the u.s. move with the democracy and human rights act with hong kong. which says that if they are not given autonomy under the basic law, the u.s. will not recognize hong kong as a separate entity. there are a lot of things going on. but by and large, protesters want to sit down with carrie lam and make progress on their demands. francine: what does this mean, ian shepherdson, when you look at the trade concerns, the trade war between the u.s. and china? is hong kong a distraction for china, or do they need a trade

deal because they are dealing with hong kong? ian: my guess is that the agenda has moved in beijing right now, and that -- and that trade is no longer at the top. this is an exit and show's threat -- this is an existential threat. problem and itus paralyzes the decision-making process. to be seen to be weak in this negotiation with the u.s. since the people the signal in hong kong that he will for. he cannot be seen to full. is very hard to imagine that xi jinping could do a deal when he is currently facing by the end of this year, a 30% tariff on intermediate goods and a 15% makes look like -- i think the signal it sends

in hong kong and elsewhere in china, whether civil unrest, it is too much for xi jinping to bear. so an extended sale, and that means for the u.s. economic perspective, uncertainty is bait -- is dragging down his and capital spending plans and hiring plans, and that will only get worse. with fiscal stimulus in an economy that could be roaring quite strongly, it is instead being hamstrung by politics. this is no longer just a domestic political story. this is now geopolitics on a grand scale, and not an obvious out short-term. tom: elizabeth economy, down past the gelato stores in the french quarter part of zhang -- part of hong kong is the commonest party museum. it is extraordinary. what is the state of the ccp right now? are the people of the economist party in any ray related -- in

any way related to the generational shifts in that museum? elizabeth: that is one of the things xi jinping has tried to do really from the first minute he took power in 2012, to connect the current china to the past. tom: did he succeed? -- ineth: i think in any a better way than anybody anticipated. he really has gone back to the mao era. much of what he has done is reminiscent of sort of a mao-era politics, sort of a deepening role of the party into chinese society come into the chinese economy. the mass campaigns, the cult of personality, very much reminiscent of mao. speaking for those of us in the united states in the west, what he has done is relatively unattractive. we would not look back at the mall period with -- the mao

period favorably. francine: thank you both. elizabeth economy, director for asia studies at the council on foreign relations, and ian shepherdson. we are looking at what is happening in france. , former president jacques chirac's coffin lying in state. tributeistening to a through piano. ♪

francine: this is bloomberg surveillance. tom and francine from london. we are looking at the impeachment process after a lot of news anchors spoke to various television stations on sunday. it is important to see what you are watching for this week. we will bring you the latest. chinese markets closed tomorrow for a seven-day national holiday for the people's republic of china. it turns 70. in the late decision, the central bank expected to cut rates for the third time in five months. the reserve bank of india is expected to cut on friday. the decision comes as the country grapples with the negative output gap. it is jobs day. payrolls are expected to have risen by 145,000 in september, steady at 3.7%.

tom: let's look at the ending q3 chart and into q4. it is a single best chart. i do not think it is chart of the year, but it's in -- but it is important. on spx.go, we are up 2% the dow with corrections, yellow, bear markets in red. ian shepherdson, it is a trending market. how do you link your economic view at pantheon with our belief in corporate earnings, the mystery that is out there about what corporations will do? ian: i am worried about corporate earnings. this is a perfect storm coming with slower growth. perfect storm -- a stormette with slower growth. tom: stormette? lines squeezeop on corporate's. margins,a squeeze on

plus of course, tariff pressure. plus, i also think the fed is not going to be as easy as markets think. you put it altogether and you have a much more favorable earnings environment, coming off 2018. it was never going to happen this year because last year was boosted by tax cuts. the slow down i think is looking to me more or less endless. i don't really see a recovery for earnings in the near future. coupled with the uncertainty of the trade war. that strikes me as toxic. francine: what are you expecting the fed to do, an insurance cut in december? or is that overblown? ian: i think that is a bit overblown. i am not saying it is out of the question, but at this point i think it is a 30% or 40% probability. growth is not rolling over at this point. i am also concerned that the

inflation that we will see from consumer goods tariffs is likely to be fat bigger than the fed expects. we have these tariffs that have not begun to work through yet. they may be underestimating a bit of inflation risk. the growth numbers will not be terrible, so that maybe they should hold for a little bit longer. i don't think the case is very compelling. clearly the committee will be split down the middle internally as well. tom: ian shepard with us, pantheon economics. to do itone it -- time again -- let us look at bitcoin and consider the joy. sloped matters. up there 20,000. down we go. what a recovery. that gives you the scale of the recent rollover. down,, maybe 11,000 on reaching 8000 this morning. stay with us. this is bloomberg.

where else are you going to get logged bitcoin? ♪

viniana: you are watching

bloomberg surveillance. let's get your broo bloomberg business flash. elon musk is planning for a next-generation rocket. these basics company will use a starship to take humans to mars. for a best run in eight years. since july it is up almost 6% per that marks cole's fourth gold's fourthrks straight rally. a trade dispute has investors moving into gold. ittbank group is back where started. in february, after a $5 billion back announcement, violation inging attempts to go public, they are hurting softbank. that is your bluebird business flash. francine: the chairman of credit suisse is facing a crucial

decision on judgment. on management. deep risk at the top of the swiss bank. the chairman will determine who knew about it. credit suisse investigators have been honing in on the role of the coo. he has gained support of the board. joining us now is a calmness. what i just read is that bloomberg understands. we are expecting a formal judgment or a formal decision on what executives will go and which ones will stay. how unusual is it to have a case like this at such a big bank? >> the risk, the feud that has emerged -- the rift, the feud that has emerged between the ceo and one of his top lieutenants is something the bank would have preferred not to have in the newspaper headlines. we still do not know exactly what type of surveillance will be used, what does it entail.

we have to assume it was perfectly legal to begin with, and then something must have gone long -- gone wrong. itncine: how difficult is from the outside to figure out exactly what happened? i think we really have to wait for the company to come through with its assessment, not to mention also that there is, i think, still potentially a with anor posing altercation. we need to learn those facts. tom: breaking news, something important as we look at the transaction report for aramco. saudi arabia downgraded come outlook stable. do not know what to look -- -- saudi arabia downgraded, outlook stable. do not know what to make of that. are on the streets of

a bowl ofying expensive soup. the -- >> ubs is still a much larger wealth manager, but the two are long-term archrivals in the at aess, and this comes difficult time for wealth managers generally. -- enjoyed over the last few years is somewhat tempered going forward. you have lots of geopolitical risk forcing clients to do less with our money. there is a lot of legitimate competitive tension between these two firms and what managers generally -- and you anchor why losing a top would be concern for credit suisse and why they would do with anything within their means clients from going

and potentially staff. tom: how is it looking in europe? elisa: it is looking tough with the interest rates declining further. there could be more cost-cutting. strong pressure on the top line and for the bottom line. tom: comp -- francine: how much does that have to do with negative rates? elisa: this is prolonged pain. the banks are hoping to feel the end of it, and when they came into this year, there was the potential for risk going in the other direction. tom: very good. thank you so much. very much appreciated, helping us out on banking. the news keeps coming as it does on september 30, the end of the third quarter. some adjustments were made. in this case, fitch moving saudi arabia down to a. this is less an oil story and more a story of their physical

state. they make very clear they see a fiscalt of this year's deficit, six .7%. francine, that is an ex ordinary -- 6.7%. francine, that is an extraordinary jump. francine: we will have a look at that and everything happening in the german economy with some better than expected figures, tom. tom: we will see that in the jobs report on friday as well. francine and i dash into the fourth quarter. coming up, jon ferro and i will continue the discussion on bloomberg radio. this is bloomberg. good morning. ♪

♪ alix: the u.s.'s financial

battle with china. the u.s. denies report that they would block chinese companies from listing. credit suisse's board backing the ceo after the investigation into a spying scandal. a close as investors prepare for event risk into the end of the year, from fed to impeachment to earnings. welcome to "bloomberg daybreak" on this monday, september 30. what a wild third quarter it was. here's how it looks to be settling up in the markets. s&p futures modestly moving higher. a little bit of selling on the margin, but nothing to write home about. euro-dollar a little weaker. you got better employment data out of germany.