francine: bets on a third straight cut from the fed climb as u.s. data paints a picture the eu gives boris johnson a one-week to revise his brexit deal or risk a humiliating delay. and bob dudley steps down after years of the company. the chief executive retires by the upstream division had. good afternoon if you are watching from asia. this is "bloomberg surveillance."

there is a little bit of a lift to the market. if you look at the stoxx 600 gaining 0.3%. jobs reportg at the and whether that means the fed will have to cut a little bit more support the u.s. economy. that's after the energy weak in russia where annmarie hordern did a great panel to figure out if opec cuts will stay in. the euro is on the back of a little bit of brexit news. there was a brexit delay or even the possibility of a no deal. coming up, we speak to the oil minister of the biggest opec producer. don't miss our exclusive interview with nigeria's new petroleum minister. but get straight to bloomberg first word news.

obviously is retiring after full-year results in february. the upstream chief replaces him. he cap's a 40 year career with bp with nine as ceo. xi jinpingp says should investigate the biden family for remarks -- the remarks coming after reemphasizing his call to the ukraine president. was just as bad as in ukraine but offers no evidence. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: it has been a gloomy week for the u.s. labor market, the lowest since 2016. there was a small drop in hiring

plans and the worst services index in years. what fed speakers made of this. >> you have idiosyncratic factors affecting the labor market. >> trade uncertainty has been very important for the weakness. i talked to so many business executives who have indicated that there is just a good deal of uncertainty. >> if you do look at the cyclical part, it is correlated with tightness in the labor market. >> we want to get monetary policy commissions to keep it going at a sustainable pace. we have not seen the increase in business investments we expected on the heels a very aggressive strong tax cuts. those are just some of the fed presidents commenting on

a weakening economy. we look ahead to the u.s. payrolls data where dani burger has more. dani: it is really hard to remember a more highly anticipated jobs report. the trade war manufacturing thession is permeating to american economy and already companies have been struggling with a shrinking pool. what we get is a push to down a medium estimate for private payrolls to a gain of 130,000 last month. in 2017mmed the country temporarily closing businesses. or we can go back to 2013. willesides those two, this be the weakest projection in seven years. in manufacturing, it has been at the heart of some of these this chart here

is a rolling three month reading. has the pain from this spread more broadly into the labor market? already, the fears of that has started to take the form of traders pricing in an 80% chance of a rate cut. so let's say the jobs data comes in even worse than expected. that could change the probability to a near certainty for a cut. and perhaps again in december. happens, that would completely reverse all four hikes in 2018. francine: dani burger with some of the things to watch out for. coral --s now is the is the co-portfolio manager. you focus on high yields in europe about one of the things that gets disturbed by the economy. makess the one thing that you nervous about the market we are seeing? >> there is a loss of volatility

throughout the market. you talked about very significant macro factors and interest rate environment. those are the things we cannot in real certainty. we are looking at every individual name we have in our portfolios assessing the health of the company. we are interested, of course, in the macro economy and how it can affect our companies. the market is in an extremely interesting place right now. it is torn between confirmed fundamentals, skepticism, and cautiousness entering the markets. thealso being torn by central bank is stimulus and assuaged by what policymakers can do to stimulate the economy. there a danger the

central bank is doing things that not only weakens the economy but affects some of your investments? >> it's quite possible. at oaktree, we are always focus on corporate fundamentals. that is how we construct our portfolios. we do have concerns about the long-term impact that stimulus weakening quality of credit are in for a long time, we have been noticing increasing erosion of investor and leverage in the system and within some companies. pass our job to really through those companies to make sure the ones we are invested in withstand any economic environment for -- environment. bubblee: what is in a right now? should anything be signaling alarm signals? >> i don't feel that way.

if you are doing your job well, there is plenty out there. at the and of the day, we are high-yield investors investing in companies with cash flow generation. it is a very simple equation. there are plenty of companies out there that can do that. as long as we have done our work and credit selection, we can construct portfolios of good quality defenses -- defensive companies. at oaktree, we believe everything is about picking out the losers from our portfolio. one of our great mottos is to avoid the losers. francine: how do you identify the losers? >> you need a good team and experienced analysts. you have to give them resources everyols to look through single name in detail. what is the ability to generate

cash, sensitize it for different economic situations, and can it commit to interest payments in refinancing? itis quite simple but involves skill, experience, and resources. francine: thank you very much. coming up, donald tusk is unconvinced jean-claude juncker called unproblematic. the eu turns negative on boris johnson's brexit plan, but is there hope in parliament? that's up next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash in new york city. job cuts are coming as soon

as this month. that is what we work told staff. that the layoffs will be handled quote as humanly as possible. they declined to comment. .ore jobs cuts hb/is as much as 60% of its workforce as part of a broad restructuring to reduce costs and boost sales growth. they expect reductions to save about $1 billion by the end of fiscal 2022. and as her's management division axure's cut -- management division plans to cut in investment and noninvestment roles. , theto hong kong government is banning facemasks in protests. protesters could face one year in jail for wearing one. this is an attempt to quell

months of violent unrest. the move is controversial, in part because it evokes emergency rules for the first time since the city left british rule. boris johnson has been given one week by the european union to revise his brexit plan. this is after main european institutions broke kremer to criticize him. jean-claude juncker described the proposals as problematic, finallyat they might get support of the parliament but the premise of looks like he may have the opposite problem. agreement at home but no deal in brussels. joining us is our reporter from brussels. if the eu were to agree with it, with that infringe upon a lot of their red wines -- lines? hughes said that he was able

to get the concessions theresa may could not, arguing the deal should go through. but the more he moves away from that agreement, you get more questions in brussels. european officials have more time to look at proposals and still say it is not looking good. they have questions about the vat connection and the single market, but pulling out of the customs union applies -- implies that will be checks. the big question here is the vote of the british assembly would get, keep in mind they have not set -- sat for 900 days. is that, in europe ultimately, this is going for another delay that will not be ready. the most likely scenario is that there will be a request for more time but the problem is that is is a binary choice boris johnson says he will not take they will

leave deal or no deal, but he has promised to comply with the law and that is coming one or the other. thanks very much. still with us is madeleine jones from oaktree. i don't know how difficult it is to look at politics day in and just wait to you see what happens and then look at high-yield investment you would like? thise problem with any of is that predicting and forecasting is almost impossible for the outcomes and the ways of outcome is so varied that making investment decisions around the u.k. is extremely difficult is what anyone running capital into the u.k. will face. it is very hard to do. while we would like to invest in the u.k., we are taking an extremely cautious approach. any macrosame with

forecasting and we don't believe at oaktree that people can call these geopolitical events or dramatic fundamental shift consistently write all the time. so for us, it always goes back to fundamentals. francine: are there companies in the u.k. that you would be willing to look at or that you are looking at you are just waiting for the macro and political uncertainty? yes, there are investments we take in the u.k. and we have investments in our portfolios now they are in sectors which we believe are very defensive. they are especially not exposed to retail or consumers. we are very worried about that. so we would make a selected decision, but it has to be extremely robust and able to withstand the variety of outcomes we could see. francine: when you look at the flipside in europe, where do you see the most value? we were talking about loser

companies, once you don't want to be in, but because you look at companies specifically, is it special regions or industries that you see a pattern with? has been a great year for showing why you can't take a top-down view by sector and geography. areas that certain are cyclical. autos, industrials, anything exposed to global trade has done quite poorly. but outside of that, looking at the underperformance over the last 12, some of those fit into those categories but a lot of them don't. it is really idiosyncratic and you hear that being phrase around the market, idiosyncratic risk. so investors do not have tolerance for it. rightre very cautious now. as soon as investors see a sign of weakness, they're happy to sell bonds out.

it creates opportunities on the other side, but going back to the core of credit analysis, it has to be done company by company. top-down will not protect you from that idiosyncratic risk. francine: coming up, we speak with the oil minister of the biggest opec producer outside the middle east. don't miss our exclusive interview later on. plus, the future of sportswear. we bring you our interview with the chief executive of sportswear giant adidas. this is bloomberg. ♪

>> we are concerned about a global trade war that could move into a currency war. large global companies trade in different currencies. if you start having a war on who can devalue the currency of the most, it will be a loss for all. a currency war will have devastating effect on the global economy. not just ours, but all global companies will suffer in that environment. that is the single point i worry about the most. francine: do you hedge against currency swings? >> we can't hedge on the road . -- on the revenue line. are you concerned about the trade war? >> we are less concerned about asia.

but we believe that our industry is better positioned than most because our price points are less exposed to a recession. we still believe we will do relatively better than most others. year, youearlier this struggled getting products in the u.s.. is that fixed now? >> we were in a situation where we were under capacity. it willhird quarter, probably be the last quarter where we have significant issues. it's not a bad situation to be in and not ideal. francine: how much do you manufacture in china? we manufacture and 95% of their products in asia. andof products in china 22-33% of revenue in china. we have quite a natural hedge position. if a trade war is starting to

will be an irritation but not a devastation. thewe don't believe sporting goods industry is that impacted. our hight are impacted r&d related industries. we manufacture t-shirts. francine: that was the ideas ceo and you can catch the full conversation later on this month ceo and you can catch the full conversation later this month. thank you to dani burger who brought this to my attention. it is a look at u.s. high-yield bonds that just don't show an economic slump is coming. this would push some of the data and nervousness we are seeing. if you look at high-yield bonds and the spread and yield gap, it is nowhere near confirming the u.s. recession signals.

what does this tell you about where you want to invest? , ihaving not seen this chart don't know whether it is a leading or lagging indicator. but i would say it represents the market is very torn. still good value there, good companies that can generate cash. .ut it is fragile and you see that spiking around. we have certainly seen this dispersion of spreads in europe increasing. are at the high quality end of the market which has reduced its spread but then the weaker areas, you can arrange quite significantly and there is real volatility in the spreads showing that as soon as investors see a slight deterioration and company performance, they are very happy to sell the bonds.

an interesting dynamic has been evolving with easy capital money. paper been able to place and coupons unless couple of years. so as soon as investors are worried, they will sell it to get the next marginal buyer. you have take prices down quite significantly. there is that volatility when there are cracks in companies and price volatility is very significant. francine: thank you for joining us, madeleine jones from oaktree. up next, the latest on the impeachment inquiry as trump asks china to investigate joe biden. that's next. this is bloomberg. ♪

♪ francine: pessimism on the fed

climb as data paints a bleak picture ahead of today's job report. the e.u. gives boris johnson one week to revise his brexit deal. bob dudley steps down. morning, good afternoon if you are watching from asia, this is bloomberg surveillance, i am francine lacqua. >> good morning. i want to start with the chipmakers. apple. they are said to have told her chipmakers they are increasing production by as much as 10% for the new iphone. cook talking to a local french newspaper about a growth in the smartphone. a lot of positive news for the

tech giant. bp up more than .5%. bob dudley will resign. there is a new ceo in place. the market seems to like the new choice. thant line insurance more -- down more than 2.5%. authority is saying competition is not working for consumers in motor and home insurance. trump onceresident again called on ukraine's president to reopen an investigation into joe biden and called for china to do the same. >> china should start an investigation into the bidens. what happened to china is just about as bad as what happened with ukraine. francine: this after the house of representatives began an

inquiry into impeaching trump into allegations he asked ukraine's leader to give him dirt on his political opponent. let's bring in jody snyder. ukraine,aring from saying the country is reviewing all cases related to president trump's call and the prosecutor saying nobody called to influence him, the prosecutor on the probe. that feels significant. what specifically was donald trump's message about investigating joe biden? >> this comes after the phone call in which president trump asked the ukrainian president to investigate joe and hunter biden, his son, for activities in ukraine. and speakingident to reporters publicly, this was not a phone call, basically said

china should look into the bidens. reminiscent of the 2016 election when he said russia should look into hillary clinton's emails. of course, she was running against him for president of the time. the president is basically trying to get foreign governments to help him investigate, to look into his rival. the question will be what does this mean for that impeachment inquiry that house democrats has begun into president trump? three house committees are looking into the ukrainian phone call and how it was treated after the call was held, what "y" did in terms of handling the call -- what the white house did in terms of handling that call. francine: our president trump's accusations about hunter biden

consider to be based on evidence? jodi: they are not. in the ukraine situation, hunter board of aas on the gas company there in the so-called corruption allegations that president trump has made have been found to be baseless, including through official documents. in the china case, bloomberg reporting has showed hunter biden did not make millions of dollars as president trump has claimed in any deals. the question will be is there political fallout potentially for president trump or for former vice president biden running for president in 2020? even if the allegations, the president's accusations are found to be baseless, just having them out there, could they do political damage? francine: thank you so much.

let's get straight to the city.erg news in new york here is viviana hurtado. viviana: one week after the european union's message to boris johnson to improve his delay, the or risk a negotiator is saying the plan falls short. both the hard-line and pro-e.u. sides seem to be united, uniting around the deal. over to hong kong, it is official, the government is banning facemasks in protesters. protesters can face one year in jail for wearing a mask. in move is controversial part because it invokes emergency rules for the first time since the city left british rule. in india, the reserve bank cut rates for a fifth straight time. this is a move to aggressively -- economic growth.

the policy of committee voting for the cut. one member voted for a 40 basis point reduction. a painting depicting british members of parliament as chimpanzees sold for nearly 9.9 million pounds. it had a presale estimate of 2 million pounds. a painting famously shred itself. this time, no monkey business. global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you. let's focus on global risks for investors. he says trade is declining. kevin, ased to welcome

global managing partner. great to have you on the program as we try to figure out what the world will bring and how a chief executive navigates this new world. what you get asked the most? >> people worry about the long-term structural changes what that means for their supply chains. in many respects, it has been the underpinning for a lot of ceos who have thought about crafting businesses across the board. structural changes not just through tariffs but something that has been halfing for a long time. knowledgeppening to to fairly fundamental things that are getting lost. you look aten long-term structural change, is that the way work? is it robotics? ai? kevin: here is the thing, it is

all of the above. one reality every ceo is dealing with is the factor business is undergoing profound change. oft of that is because autumn is asian and digitization. it is also changing the nature of the workforce. more women in the workforce, younger people in the workforce. it iss profound stuff and affecting every business. if it is i don't know easier to adapt if you are a small business or a large business because you can weather the storm and you have more leverage and spending power. kevin: first and foremost, as , weworld regionalized is have less goods across and more within regions. if you look at asia-pacific, roughly 60% of goods flow in that region.

situation were regional supply chains matter. why is that? you need to be near the market and speed matters. as you look at that landscape, we start to rethink how will i ensure i have my manufacturing capacity where i need it? trade,e: given the yesterday we had tariffs on europe, it could go somewhere else, how difficult is it to move and change your supply chain every time? ofaking to a chief executive a big beverage company, if they could redo some of the bottles in the u.s., other companies it is two to three years. kevin: it is difficult but it is happening. one of the trends i have seen is the unthinkable is now the thinkable. people are asking where they put their manufacturing location.

20% of all decisions on where goods are made actually relates to it. it is less of a factor. where you put your r&d, that is a more important decision. chaintion that the supply is somehow fixed over time is gone. people are rethinking what they do. francine: what are some benefits? kevin: the reality is many people could benefit. the immediate benefit is to move faster and give consumers what they need more rapidly. that is a benefit for the consumer. there is the reality that if you look at the plants in countries that benefit, it benefits the local industrial base. francine: is everyone moving to indonesia? kevin: we have seen vietnam and places in southeast asia benefit with some of the manufacturing plants get relocated.

over half of all consumption will eventually be in asia and china will be a huge part of that. you are seeing people locate in china for china and in asia for asia. that is the biggest change will see over the next few years. francine: thank you so much. coming up, something else tied into the global picture. , don't miss our exclusive interview with nigeria's timipre sylva. this is bloomberg. ♪

♪ is bloombergs

surveillance. let's get straight to the news. viviana: job cuts are coming as soon as this month. we learned executives held a meeting and said layoffs will be handled as humanely as possible. the company looks to cut costs. they are declined to comment. bps chief executive is retiring. the -- by replaced by pinard looney. bernard looney. volkswagen in talks with other manufacturers on sharing technology. it is part of an effort to spread development costs. the carmaker declined to comment on who expressed interest on the new platform. the move is part of volkswagen's plan to dethrone tesla as the

leader in premium electric cars. apple reviewing a recent decision to reject the hong kong app designed to track police activity amid increasingly violent protests in the city. helpsveloper said it users avoid potentially dangerous areas. apple said it was rejected , enablest facilitates and encourages an activity that is not legal. that is your bloomberg business flash. francine: with less than three months until the new decade, what are the global risks investors should watch out for. before about how companies had to look at their supply chains. are we underestimating women in the workforce and the impact of robotics and the misplacement of workers? kevin: yes, we are in danger of doing both. if you look at women in the workforce and link that

automation, men and women will be equally affected. women willand 21% of see their jobs displaced. the difference is when it comes to new jobs -- there will be more jobs created than lost -- what is required are computer and science skills and a familiarity with technology. unfortunately, women are not as well positioned in those departments and there is a real danger is that what could happen is the gender gap that exists gets exacerbated. francine: is that all over the world or in certain countries? kevin: it differs. news piece for women -- many of the jobs, how do we ensure that women have those skills to take those jobs?

conversely, clerical jobs, women take over half of those jobs, we will see significant disruption. the women who lose out for those that requiresy, real effort. francine: that means what? different education? retraining? who will do that? andn: the science technology subjects, it is vital we see men and women follow those subjects. the rescaling of workforces and that is where the private sector will have to work with the public sector to get that done. government has a role to step in and share that those tasks get done. isthis point, the disruption to come and people are looking at it rather than acting. francine: if you wait, you will

be behind the curve. kevin: one thing we know about technology is waiting is not a good answer. it is hard to catch up. i think at this point there is a risk that people are not acting fast enough to pick up with some of the changes that are happening. take for what will it companies to start investing again? we look at macro trends, there is uncertainty regarding geopolitics. executive still want to spend and reinvest. kevin: a couple things work in the favor of reinvesting. in times of uncertainty, winners are made or lost. you could see the companies that made the right calls during some of the previous changes. they were the ones who one in the long term. this is a good time to look at your portfolios and look at some of the changes you should have

made in the past or could not make in the past. this is also a good time to pick up some talent that will be displaced. in this time of change, there are opportunities to be had. francine: that seems counterintuitive. if you are looking at a downturn, to start hiring people. kevin: we are talking about a shift, a transition. you need to have the right skills, moving out of some places and into others. francine: who is getting this right? are there industries who are better prepared? kevin: some of the industries at the front end had to get it right. if you are in retail, you can't sit and watch. you have already seen what is happening. some companies have made these investments and are getting back to the front. francine: two chief executives worry about central bank policy

or do you worry that a lot of them will face funding shortages if interest rates go up? kevin: chief executives worry about what the control get nervous about what they can't. bank, it is a different conversation than if you are on main street here. the truth is they worry more about making sure they are prepared for any of these eventualities. it was said years ago that i fivessfully predicted -- of the last two recessions. people worry much more about that and how their planning is going but i don't think they're ready to say they can control this and they have a set course of action. francine: thank you so much. i enjoyed the conversation.

up, it has been a busy week for changes in some of europe's biggest companies. we will talk about hong kong invoking some colonial emergency powers for the first time in more than a half-century, banding facemasks for protesters. , that isy in hong kong coming up next. this is bloomberg. ♪

♪ factorsve idiosyncratic that affect the labor market. it is not just the labor market. >> trade uncertainty has been very important for the weakness in manufacturing. i speak to business executives, manufacturing executives who have indicated there is a good deal of uncertainty. >> it is certainly correlated with tightness in the labor market. >> we want to get policy

position to keep the economy growing at a sustainable pace. >> everyone has been more cautious. we have not seen the increase we have expected on the heels of strong tax cuts and corporate tax reform. francine: those were some of the comments we heard ahead of the u.s. jobs data today. morning,with news this bob dudley will retire in march of 2020 from bp. scandal, the chief operating officer resigned on tuesday and it is but a busy week for ftse companies in the u.k.. giant imperial brands chief executive is leaving in metro bank is anchored by two it's outspoken american founder.

we will have plenty more on changes at the top, we will have a look at your markets. today is a big day for data in the u.s. and that will give us more of an indication about what happens over at the fed. we are also looking at hong kong. we will have team coverage throughout the day. we saw some pretty big powers, hong kong invoking emergency pairs to ban masks at protests. this is bloomberg. ♪

♪ francine: payroll pessimism.

picture.ts a bleak down to the wire, the e.u. gives boris johnson one week to revise its brexit deal. bob dudley steps down after 40 years with bp. good morning, everyone. this is bloomberg surveillance, i am francine lacqua. jobs are suddenly at the forefront and what everyone wants to know about the strength of the u.s. economy. >> it is way more important than normal. it will be extraordinary to get the data. the data will last three or four days. it will really signal this is a key jobs report. francine: we will have plenty more on that. let's get over to bloomberg

news. viviana: in the first time in more than a half-century, hong ,ong invoking colonial powers banding facemasks for protesters, making it easier for police to identify them. >> it is not an easy decision to legislate, to ban masks. but given the current situation, this is necessary. viviana: it was said that violence is destroying hong kong. , headline for boris johnson has one week to revise his brexit deal. if not, johnson faces a humiliating postponement. steelwere signs johnson might finally make it through british parliament. another development in the admitted -- in the impeachment

inquiry into donald trump. house democrats release documents that showed two diplomats tried to make a deal on the president's behalf for the ukrainian president to investigate joe biden and his son. make a refused to statement. apple reportedly has a problem. demand for the iphone is stronger-than-expected. apple told buyers to increase production by as much as 10%. that would add up to 8 million units. global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado, this is bloomberg. tom: there is some nuance to the data as we await the jobs report. negative futures right now, the

euro with a little bit of strength. yen well under 107. 30 year bonds, i will show a chart on that in a moment. francine: i am looking at european stocks, they are gaining. investors focusing on the job number in the u.s. about what the fed will do. government bonds, you mentioned .t, treasuries crude oil near $53 a barrel. we will also have a look at the pound. we yield often. look at a price chart. this is the price of the 30 year

bond. up we go off the trump election and the flatness there to a lower yields. we are very close to breaking through the late august, early september low yields. francine: i am looking at the gloomy week for the u.s. labor market. , the worst u.s. services index in three years. i think tom said it perfectly, there will be a focus on the u.s. jobs number because the manufacturing data we saw in the u.s. how much of a slow down is the u.s. economy experiencing? is important.ket is the have seen so far domestic side of u.s. economy has been relatively strong. in the jobeakening

market. important for expectations and the currency market. the currency market is dependent on the relative performance of domestic demand conditions in conjunction with central bank policy. economy on the. domestic side has been strong. less than has been what we have seen in other places. what happened to the 30 year bond yield? that has been due to an inflow of capital. it has been driven by a significant inflow of capital into the united states of america. all of that has left what we call an unstable equilibrium. it drives the u.s. dollar higher the time when the global economy

is weaker. premium equity risk staying elevated but the cost of low bond yields, the higher u.s. dollar. it is going to tighten global funding conditions. francine: how do you see the dollar from here until the end of the year? index, webloomberg had to imagine a new high on monday and we have given up some of those gains. it is in line with a significant repricing at the front end of the u.s. curve. what used to be a 40% cutability of rates being in october has become an 87% probability. assume we is going to are not in a midcycle economy. the market has to deal with the

idea this is a late cycle economy and a late cycle economy has anticipated returns that will decline. that is especially bad for economy. about, sevenalking or eight years ago the that was inollar -- economy with significant funding external flows coming in. look at where the australian dollar is nowadays. tom: i want to congratulate morgan stanley on an exceptional view of a tepid economy and its caution about a bull market that is a little bit fragile. oft are the ramifications synthesizing all of morgan stanley's work if we break down the low yields? if we see yields breach the first week of september lows.

what is the significance of that? the decline in american bond yields are not driven by capital inflows in america. it might be driven because americans are increasing their savings. and is a fundamental change under those circumstances you would then see a relationship returning of the interest rate differential and the u.s. dollar. you would see lower bond yields are going to undermine the u.s. dollar. bullishwas our most this year. to 107.from 114 the u.s.e bad for dollar, it will be bullish for bonds in the u.s. because of the

anticipation of america in need to build up domestic savings. it is a fundamental change compared to what we had before. francine: we had a global manufacturing recession and when will that hit the consumer? because of trade -- imagine running a company in brazil. you see your earnings going down. betweens mismatch assets and liabilities. created negative business on manufacturing. the global cycle has been brought to much lower levels. weaknessanufacturing

number three is the labor market. tom: thank you for that briefing. he is with morgan stanley. vicinity of the , thehour, jonathan ferro national economic council director. stay with us, this is bloomberg. ♪

♪ china should start an investigation into the bidens because what happened to china is just about as bad as what happened with ukraine. reported, the

president of the united states yesterday joining us with a washington view from singapore. balletthe impeachment playing out on the pacific rim? >> i think there is a lot of concern right now about how this will impact china because donald trump said the word china on the white house lawn, talking about how they should investigate biden. know andand i everybody watching this should know, frankly, that there are trade talks coming up next week in washington and those are just going to be in the absolute center of the geopolitical risk world. this is hanging over all of that. concern a lingering about whether or not -- it had stayed separate, whether that will get dragged in to the china trade play. belief there any

whatsoever that we can get something done next week on trade talks? optimism thats something partial is the best way i can say it. a full deal, no. i think best case scenario i have seen is interim steps. francine: talk to me about ukraine. we heard from ukraine's top prosecutor earlier on that all cases involving joe biden and his family are being audited. what are we likely to find out? derek: it depends on what is being audited. i know that is a weaselly way to answer that question but i have to do that this early in the process. i don't know if that is good or bad for joe biden. it depends on what is being reviewed. it could be a third way of kicking the can down the road,

saying we will take a look at it at some point in some way. the centrality of ukraine to donald trump's administration cannot be overstated because the central issue in the impeachment inquiry the democrats are dealing with in the house is the donald trump went to a foreign leader to try to get dirt on a political rival. that is what is in the transcript and in all of the other stuff that adam schiff, the intelligence committee, etc., etc., are trying to look up. francine: very quickly, when you look at what he brought up about china, how is that being taken in parts of washington? too early to tell. stuffk all of the china is hanging on what happens next week. i think we have been in this pregnant pause point ahead of

those talks and i still think -- you know how big i am on tangible stuff. the tangible thing is whether any of the tariff things that are supposed to be happening, if they stay on track after the talks are thickened pushed further. that is what we are waiting for. tom: thank you very much. i want to show one chart. this has been percolating. they are looking at better iphone manufacturing, iphone production. this is a long-term 30 year chart. you can count all of the times that it is said the iphone was dead and finished. francine: i am looking at the latest, saying the boost would add 8 million units to what

apple had initially planned. apple potentially raising output by 10%. this is bloomberg. ♪

♪ watching --u are viviana: you are watching bloomberg surveillance. job cuts are on the way at hp.

16% of itsut up to workforce. that could be as many as 9000 positions. hp facing a number of uncertainties. of bp is stepping down. in dudley will leave february. bp for 40 been with years. 2010ok over as ceo in after the deepwater horizon catastrophe in mexico. the trump administration is trying to quell criticism and the midwest. the epa will announce plans to aid corn-based ethanol and soybean-based biodiesel. that is the bloomberg business

flash. tom: some things have moved and some things have not. one thing that moved is fed expectations. let's listen to some fed officials. >> you have idiosyncratic factors that affect the labor market and affect the inflation rates. >> trade uncertainty has been very important for the weakness and manufacturing. i have spoken to so many business executives, manufacturing executives who have indicated there is a good deal of uncertainty. >> it is certainly correlated with tightness in the labor market. >> we are seeing signs of the economy flowing and we want to get policy positions to keep the economy growing at a sustainable pace. >> everyone has been much more cautious and we have not seen the growth we have expected on the heels of aggressive tax cuts and corporate tax reform. tom: managing the message.

let's get some good perspective. fed is all great, but in speak it is wrapped around the animal spirit, nominal gdp. regimein a new dollar where it is finally the real gdp terminal value and the new nominal gdp terminal value? >> animal spirit, it is so different than where we used to be two years ago. moved intospirit has in alignment of cautiousness and cautiousness is driven by several factors and the result is you are postponing your investment decisions, we are currently seeing that in our data.

we see their plans are lower. what are the implications of that when you're investing less? you will have an impact going beyond the supply side of the economy. didn't we learn at school that supply creates demand? the opposite is true, too. where is the labor market? labor market conditions are turning the other way, too. we have heard repeatedly the talk about a tight labor market condition. we should not forget that labor market tightness is a late cycle thing. it has been written about the late market cycle and that is a market where the cost of labor is increasing at a faster pace,

relative to the activity in the labor market. we will have a shift between employment and the cost of labor and that is generally not positive for risk appetite. francine: are we going to see a recession because of that? >> we could talk about the from the yeark 1999-2000. thatve dollar strengths the asian economies have to deal with, latin american is going down. -- a lot of things are currently happening in that could lead to dollar overvaluation and in equity market in america that was booming. there is one major difference between the two.

at least we have investment activity in the u.s. it is an important point. are dated images that show the tension into friday in hong kong. the important announcement that masks are banned. 1922is an ordinance from that has been put in place. this is bloomberg. ♪ from the couldn't be prouders

to the wait did we just win-ners. everyone uses their phone differently. that's why xfinity mobile let's you design your own data. now you can share it between lines. mix with unlimited, and switch it up at anytime so you only pay for what you need. it's a different kind of wireless network

designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you buy an eligible phone. call, click, or visit a store today. you we welcome all of worldwide as we look at the world information and hong kong is front and center enter the

jobs report that we will see at 8:30 this morning. andt now, hans redeker kallum pickering. i will cut to the chase. europe has become japan and america will become europe. is that feasible? do you go with that sequence? is that possible? you mostly sickle -- cyclical problems in europe, an area that is overly exposed to global trade witches suffered a lot as a result of a weakness in global demand. way,e risks go the right the trade tensions between the u.s. and china don't completely blow up. we avoid a hard brexit. your get back to 1.5% by next year. above japan.nd

for the u.s., it is losing some steam. the fiscal stimulus is wearing off. overall, i see japan as mainly an isolated issue. if europe and u.s. get the policies right, they can definitely avoid the pen outlook. tom: my great insight yesterday josh said, look, is the one great to to be more harmful to the u.s. than an outright recession where everybody goes hysterical and clears the market? modeling aberenberg sub 2%? is that worse for america? >> growth is always better than a recession. probably from a market point of view, growth, with little in -- inflation, is not about outcome. look at the last 10 years. we worry about about the risks, not enough to tip us into an

outright recession, and the slow growth needs we never quite build up the excesses which lead to a full-blown recession. of course we always want to avoid a recession but growth little bit below 2% in the u.s. we can live with that so long as the fed is helping us out. francine: word you see the best value when it comes to currency pairing? put my money on the japanese yen. fate. become accredited first of all, japan goes in demographics compared to demographics one nil. you are saving a lot, or capital exporter the yen becomes weaker. , asset your pension fund management start to shrink of you have to import capital. we have seen the yen strengthening, entirely driven from the rate side, bond yields in america falling and elsewhere, too, and the

dollar-yen to decline. what we have not yet seen is potential increase in the risk .r declining risk appetite 65% of the gdp. it has to pay its pensioners. i think the yen is going to go soo a structural strength, not only cyclical factors are driving the currency. that, number one. number two, when you guys are talking about europe becoming a second japan, you have to think about people i tried to get an explanation of what is happening in the bond market. ergo you say we've seen that story before ,ergi it must be japan. when you look into europe and you look at their investment gdp ratio, do you guys know europe doesn't does more than the u.s. relative to gdp? saying europelly

is a bad case and america is a good case, and i think that is not like that. significant current account surpluses. the byproduct of that is our balance sheets are strong. where's the balance sheet of the united states of america? i remind everybody their debt relative to gdp isn't 47 point 1%. that is high. you can only find two other countries where that is higher and that is new zealand and australia. tom: hans redeker -- >> and you know what happened to those currencies, right? tom: thank you so much. and kallum pickering, thank you. now we move to hong kong. karen, thank you so much. a photographer and videographer on twitter at bloomberg businessweek just took in images of a fairly quiet street. it is evening there. do these protests begin tonight

or do they await saturday? tom, they are underway and actually began while carrie lam was still speaking here this afternoon. people are starting to gather in the city center close to our offices. they've occupied a couple of streets near us already. these protests are expected to go on into the night. i expect they will get bigger. people have called for a show of defiance over the weekend, number of protest plan including one that is masked. we thought for a couple of days this might be announced today. if it was, it would serve to fuel protester anger despite the fact the government thinks it will quell protest. we will be watching to see what kind of turnout we get from if this is something that will fuel people's anger enough to keep -- get them out or keep them home. , morere these younger organized protesters or are the protesters the people of hong kong?

>> this has been student-led so far. we have seen these figure protests where one million people of come out and it is elderly, children, everybody. this is bigger than something we have seen in recent weeks. it is a big step by the government that has not been enacted in more than 50 years. this affects everyone and hong kong. you could see a slightly different demographic than we have seen in the recent, smaller protest where you get the harder corporate line protesters who are more willing to take police on. , karenank you so much lee, and hong kong. we will have more reports through the day. right now new york city, first word news. >> north korea's most provocative missile tested years won't derail the first nuclear talks in eight months according to president trump. you may remember kim jong-un's government test fired a missile from a submarine. north korea has been pushing the

u.s. to ease sanctions had returned -- in return for backing off its new groep program. a big jump in the number of bacon related lung injury cases vapingthe u.s. -- -related lung injury cases across the u.s. with a number of deaths rising to 18. officials say that may be the tip of the iceberg stop they have not named a single product or substance that is responsible. a record amount for work by the street artist known as banksy. this picture selling for more than 12.2 bullion dollars as of -- in london.don global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more 120 countries. you are watching "surveillance." ♪

francine: this is "bloomberg surveillance." tom, exclusive interview in the middle of last month, oil trusses jump the most on record after devastating own attacks on a key saudi installation. less than three weeks later, wti crude is trading more than 4% below the price on the eve of the attack. my next guest is the oil minister of the biggest opec producer outside the middle east. him, andsed to welcome edgers minister of state for petroleum resources. minister, thank you for giving us a little bit of your time. first of all, sit in moscow at energy weeks, you will go where opec says in terms of production. do you think the group is going to need to make deeper cuts to present -- prevent a surplus

next year? >> we can't to that far yet. definitely, we have our next meeting in december. in that meeting will decide. it will all depend on how things are going. things cannot be predicted. we left in september and then saudi arabia happened and of course everything changed. but if we need to make deeper cuts in december, we will make cuts. francine: i understand it is difficult to predict but you have speak -- have spoken to the saudi minister in the russian oil minister. they leading toward more cuts? >> of course everyone agreed in opec we need to stabilize the markets. we cannot allow prices to just plummet down. if things are going southward, we will have to do more cuts and we are ready to make that sacrifice. francine: so leading toward stabilizing the market at any cost? is that how you would describe it? as opecxactly, but ministers, we also have to

guarantee some margins for our investors. francine: what effects from the saudi arabia tax are we feeling now? do you have customers that could not get supply from saudi arabia that are coming to you? >> no, not at all. i think we are totally back now. the saudis have put the attack find them very quickly. very commendable. francine: what is nigeria's current production? >> year to date, 2.1 million dish crude oilnd only we do about your to date 1.8 million barrels. if you're looking at daily production, yesterday our production was 1.6 million barrels. francine: you're not producing more than those figures? if you look at some of the opec data, it suggests you are about 180,000 barrels. >> we had some overproduction in

august. but we are committed to cutting down and we cut down in september. and we're going to fully comply in october. francine: in november as well? >> yes, from october we will fully comply. going further than that, we're carbone and south sudan on them to comply as well. francine: there's been a lot of talk of oil licensing. are you still going ahead with that? >> that is very much on the table for next year. francine: first quarter? and what kind -- >> i can't say that yet, but it will be within next year, hopefully. francine: is that to raise more revenue? >> part of it, but also to expand the space in a jury. there is been no bid round since 2007 and we think it is due for us, a bid round in nigeria. francine: are the people and companies in lead positions?

is it too early to talk about it or -- >> it is too early. francine: when will it be -- a couple of months before the round goes ahead that will have more news on it? >> i will talk to you later. francine: i hope you'll come back on bloomberg to talk about that. when you look at the outlook for oil prices, i know they are extremely predict -- difficult to predict, but what is your base case? >> like you said come into so extremely difficult to predict, especially these days because things happen in the market doesn't react easily. a lot of things are changing. but we believe prices will remain where they are. francine: where they are now? >> where they are now i think we will stabilize on that for quite a while. francine: also through 2020 you think? >> well, 20/20 is quite far for

us to talk about. like i said, we will look at all of the events and if we need to cut, we will cut. more, wed to produce will produce. francine: what is your biggest producer now, that the world e-cig downturn and that could lead to a recession worldwide and therefore impact the demand for oil? >> i can't say that, but the outlook is not very good for next year because of the issues around the industry, but we believe things overall will be stable. francine: what is your take on given nigeria's reliance on crude for revenue, how will the cuts impact managers ability to fund the budget given some of the fiscal concerns? balancing act.a you have to balance between low oil price and balance between higher prices. so for us, we have to look at

what benefits are small. we believe where you cut and when oil prices at least stable, it helps us to predict better. francine: minister, ecuador has announced it is leaving opec as of next year. a lot of the newest members have come from africa. are you reaching out to other countries to try to join the group? >> it is a sad thing that ecuador left. i really believe it is better for them to stay on. they have taken that decision. i can't really say so much about that. we're getting a lot of -- a lot of people are approaching opec to join. we feel verys, comfortable. francine: you are comfortable that arrangement will hold? something that would have seen difficult in years ago. >> we believe it will hold because it is mutually beneficial to all of us. francine: in this is to counter shall production in the u.s.? what forces have made this agreement possible and have made

it to stay possible? >> u.s. production is also part of it, but we don't really see that as a threat because that is a flash in the pan. we believe it has peaked, i mean. we will only see the downward trends of u.s. production from now. francine: minister, how is demand coming from some of the asian customers? is it strong or should we worry about oil demand? >> well, it is still strong, strong enough that with all of the trade wars and so on -- i mean, we are not singing the same numbers as we saw before. we are still optimistic that things will work out very well next year. francine: minister, thank you for making the time and coming here in london. joining us for an exclusive conversation. tom: thank you. let me do a data check stop this

is the jobs report. we have the pulsing you see before a wide set of economic data. don't forget jon ferro speaking to mr. kudlow and the 9:00 hour. euro stronger, little bit of dollar weakness as well. and point out west texas with a lift after yesterday. coming up later today after the jobs report, jonathan ferro. this is "bloomberg." ♪

this is "bloomberg surveillance." work.re jolt for we the comedy told employees jobs cuts will take place as soon as this month. about 2000 jobs could be eliminated. that would be 16% of their headcount. some of those cuts could be jobs in business units that may be spinal. united airlines is ramping up efforts to fill a looming gap in the number of pilots. united is offering new financial perks to pastor career advancement. the airline figures must have its pilots will retire over the

next decade. it needs to recruit about 10,000 flyers to make up for that. that is the bloomberg business flash. francine: boris johnson has been given a week by the european union to revise his brexit plan. unconvinced.s signs the proposals might finally get the support of u.k. parliament. the prime minister looks like you might have to oppose problems coming the opposite problem to theresa may. no deal and brussels. kallum pickering is still with us. you have three or four options open. which is the most likely come extension? >> it seems the most likely scenario. do you can you enter these tunnels of negotiations and then you end up with something after the 17th, 18th of october that the eu can agree to and then parliament can pass, but that is not my base case.

my base case is we are heading for an extension and depending canow this rebel alliance organize itself, that will decide whether we have an election first or perhaps we go straight for referendum. my best case would be an extension followed by an election. tom: is great to know the rebel alliance is there. who is the death star? is it brussels or something i don't know? maybe the people of the united kingdom that seem to be supporting boris johnson more and more? which is it? >> good question. out first and then the death star. my bet is what you have in the u.k. is a parliament that wants to get brexit off the table but once to avoid a hard brexit and pretty much all costs. one little silver lining in all of this noise is the checks and balances in this parliament's new be stopping a hard brexit. that is the key issue. the problem is what parliament seems to be able to agree to is

far away from what the eu is willing to agree to. and if boris johnson strikes some compromise, the question is whether or not the euro skeptic wing of his party and port of entry allies, the dup, then can back whatever the revised deal is or whether they view it as just another capitulation by the u.k. to the eu. i think we're heading for an extension. or markets, this is a bad situation because we are once again pushing back the debt horizon. tom: you are a great student of this. have you figured out where the irish border is in the last 24 hours? any idea where the irish border is? >> the problem with the irish border is it is an extremely sensitive issue and the u.k. and the eu did not approach this delicately enough from the start. and you have some very strong misconceptions about how the regulatory and customs framework currently exists and how it

could exist going forward. what i noticed is the u.k. in the eu seem to be arguing past each other. with the eu insists on is some insurance policy for if the eu and u.k. cannot find a solution to the irish border once a transitional period is over. what boris johnson seems to be trying to do is get the eu to --n up now to what the final the final version of the future agreement on the irish border would look like. the eu is going to insist there is an insurance policy just in case. yes, you have these funds, mr. johnson, but what if they don't work when the eu? francine: and given plans have not worked out in the last two to three years, a lot of people would have sympathy with that point of view to certain respect. what does this all mean for the economy? >> u.k. economy at the moment is completely schizophrenic. on the household side, things look ok. wage growth is up 4% year-over-year, employment is

doing ok, consumer confidence is a bit off because of the uncertainty but holding up ok. the business side of things looks pretty bad. business investment probably a good 15% below where it would be if the pre-referendum trend had continued. industrial is weak. underneath a subdued trend growth rate, what you have is a huge amount of volatility induced by the brexit horizon getting pushed back and forth you see in the trade data and the stockpiling data. tom: kallum pickering, thank you. the foreign minister of the united kingdom saying hong kong political dialogue is the only way to a resolution. we will continue with reports from hong kong. it is jobs day. stay with us. ♪

everyone uses their phone differently. that's why xfinity mobile lets you design your own data. you can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. all with millions of secure wifi hotspots and the best lte everywhere else. it's a different kind of wireless network, designed to save you money.

switch and save up to $400 a year on your wireless bill. plus, get $250 back when you buy an eligible phone. that's simple. easy. awesome. call, click, or visit a store today. , is america still jobs

making machine? michelle meyer from the banc of america still to come. house democrats and republicans. story. kong, a movable from years ago. it masks will be worn only for an "legitimate need." what will the state look like come monday? good morning this is "bloomberg . this is "bloomberg surveillance." from new york and london. francine, will there be protests on brexit? we went to manchester and brighton, now what? francine: there are protests and across the country. some are better than others and some are bigger.

a lot will happen in parliament. we have an odd situation where theresa may tried to put her deal through and parliament was against it and now you have boris johnson trying to get it before seeing whether the eu would agree. he has seven days to come up with a plan the eu would then look at. tom: let's go to first were news. kong is opening emergency powers. the government banned a face masks on protesters which makes it easier to identify them. it is the latest attempt to quell demonstrations. >> it is not an easy decision to legislate to then mask but given the current situation in hong kong, this is a necessary decision. viviana: lamb also telling

reporters the violence is destroying hong kong. the deadline from the european union boris johnson, he has a week to revise the deal. comingl -- ultimatum just as signs they might make it through british parliament. apple has a problem it hadn't counted on, demand from the new iphone is higher than expected. apple told suppliers to increase production by as much as 10% which would add 8 million units. apple is higher in premarket trading. another development in the impeachment investigation into donald trump and ukraine. house democrats released documents that show to top american diplomats tried to make a deal on the president's behalf investigateeaders

biden. ukraine refused. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. tom: about a jobs day data check. the last couple days, features deteriorating in the last 20 minutes. a little bit of curve flattening of the recent steepening. never did i think i would be looking at it like we've been doing. texas a 50 handle on west from 20 on the vicks. again i am watching which will i am watching which will be important off of the jobs report. francine: looking at european stocks, fluctuating but higher. they are pretty much flat.

jobstors focusing on the number and bonds edging higher. tom: let's begin with a chart that sums up the correlated dynamics of the last number of days. this is not the yield. this is the price of a 30-year bond. lower price, higher yield and up we go with the great disinflation. -- frame ite it anywhere you want. saw in thet what we end of august and september. joining us is michelle meyer of banc of america. she came to international with her analysis of the housing market. what does the housing market say right now? data has been better and it is largely a

function of lower interest rates . i would be somewhat skeptical to argue this is now the second lift in the housing market. to you modeling a sub percent economy? are.lle: we in q4, we think it will switch -- slipped to 1.3%. seeing bleed into the services side. recessionan outright but it is a sub trend growth action for a few quarters. francine: what is one thing you would look at 2.2 a significant downturn in the u.s. economy? is there an indicator? market, lookk at at the shape of the spread curve and the volatility. the labor market that is

important and what matters is the evolution of the data. what you are seeing now on the labor market is job creation is slowing and the work week is coming down and temp hiring is down. those are the early stages of the business market becoming cautious. you are not yet seen signs of firing. if that changes and if jobless claims spike higher, that is a good indication we are going from a sub trend to an outright recession. we are not there yet. francine: when do you think we could get there? are we going to see a sign #michelle: throughout this recovery -- a significant sign?

michelle: in both cases in the past we avoided the outright recession and emerged stronger. it takes a policy response which arguably we are seeing. or starts to simmer down and we get resolution, that would be a pretty big support for the economy. if that doesn't happen and it gets worse, then you worry about repealing. we use the bloomberg terminal and this is what we look at and what matters is the 130 is where we were supposed to be eight years ago. to 130, sub down 150 run rate. the subthe run rate in

2% economy? michelle: that is a good point and when you think about the level of job growth, you have to consider what is that level relative to the breakeven or trend in the labor market? we think the trend is 120,000. we are on the upper end of the range of estimates. there is some pickup cyclically. workplace participation has increased. tom: if we have a run rate at 120 or 130, what does the unemployment rate do in the new economy? michelle: the unemployment rate has been below what most people would consider the natural rate of unemployment. the labor market is starting to reach levels where you could see upward move in the unemployment rate. it is alll ok but

about the direction. when you see the unemployment rates come off of low levels and edge up, that is a sign of something breaking in labor market. we are still above trend but something to look out for. tom: great summary. after the unemployment report, how about the political spin? there is no one better to do that then mr. kudlow. we have a conversation with lawrence kudlow in the 9:00 hour. it is jobs day. this is bloomberg. ♪

investa should start at

that is what happened with ukraine. , an president trump extraordinary thursday for the nation. whatever your beliefs are, it has been exceptional. it does help to get back to first principles and we can do that with our bloomberg opinions reporter. his book. fan of he goes right after the word the president were -- used the other day, treason. it spells out the meaning of only one crime and that was done to prevent politicians from abusing it, just as the president has been trying to do. it is the central feature of american exceptionalism but newfangled and artificial reasons have been the great engines by which violent

factions usually reap the .lternate malignity emily wilkin joins us. i can go through the litany of what we have seen in the last five to six days. what do we look forward to the sunday talk shows? emily: it was interesting to hear the comments on china. at this point we begin to look for how lawmakers will respond to this and particularly how republicans will respond. homest of them, they are with their districts and constituents and not in washington. they are getting feedback about how lawmakers are feeling. tom: i love that they are getting feedback. the one is the dreaded s word, subpoena.

explain the power of a subpoena. is it where they have to give up documents or appear? asked for aess has number of white house administration officials current and former could testify and have asked for documents from the white house as well as other agencies. at this point, the trump administration does seem to be blocking those requests and telling officials they don't have to come in and testify. this week we heard house intelligence committee chairman adam schiff saying that for those lawmakers who do not coming in for documents are not turning over, that strengthens the democrats' that the jump administration is trying to obstruct -- the trump administration is trying to obstruct them. francine: where is the republican party in all this? as more things come out, will they speak out?

to be seen.remains most republicans are defending president trump and saying we should be looking into the bidens rather than trump. we have not seen too much of a shift there yet but as more and more information begins to come out on what the trump administration has done, there were a number of text messages showing that people within the trump administration were putting pressure on the ukrainian president that if you wanted to have a meeting with president trump he would need to announce he would investigate the bidens as well as the 2016 election. tom: we shall on the wall chairman neil who has been low the radar with house ways and means. that is an important committee. will we conflate the impeachment discussion with the president's tax returns? emily: i have not heard anyone compare the two yet. a lot seem to be talking about

whether it will precede other priorities. the question is, will impeachment suck up all of the oxygen in the room and will they be able to get anything done? francine: thank you so much, emily wilkins of bloomberg government. government -- hong kong unrest continues. we will go there next. this is bloomberg. ♪

>> you are watching bloomberg surveillance i'm viviana . i'm viviana hurtado. job cuts on the way at hp. 16%computer maker will cut of its workforce which could be as many as 9000 positions, part of a broad restructuring design. hp faces a number of uncertainties. sales falling. the ceo steps down. ceo ofepping down, the bp. bob dudley will leave in february and be replaced of the head of the upstream division. dudley has been with bp for 40 years. he took over in 2010 after the deepwater horizon catastrophe in the gulf of mexico which cost them billions in penalties and

compensation. that is your bloomberg business/. -- bloomberg flash. kongine: the hong government is banning facemasks after months of unrest. they are invoking emergency powers for the first time in decades. you are seeing a number of pictures with masks that are usually used to protect against colds and flu. i don't know what is band and whether this is in defiance. said executive carrie lam although the move was necessary did not mean hong kong was under a state of emergency. joining us is in. an. how has this been taken? >> there are protesters in the streets outside the office in central hong kong.

for the past day there have been rumors of this coming and the reactions were pretty harsh from the outset. calls for a judicial review and there is hope from opposition lawmakers they may be able to stop this. midnightinto effect tonight and will be in place for the weekend protests that are expected. francine: we heard from carrie lam earlier announcing the government will invoke this emergency ordinance giving the government much more leeway. are we expecting protests to increase? worth going back and realize how significant it is to invoke emergency ordinance. since not been invoked

1967, over 50 years ago. seem like a ban may small, temporary measure, but it is just one part of a large, broader process that they are able now to get into. they can detain and arrest people and they have not ruled out any other measures. ideai am fascinated by the of beijing through carrie lam using a 97-year-old colonial rule to try to bring order to hong kong. what is the symbolism of the utilization of colonial law in this fragile time for beijing? one of the things people have pointed out over the past few months is that the emergency powers have always been available. no one has used them for 97 years.

outt of people have pointed that the british colonial government, even though they had -- even though they were also brutal in putting down earlier protests and riots in the 19 1960's, the police force did reprimand those who went over the line and in some ways carrie lam's government has been more strict than the colonial government which had to balance things locally since they were an alien power but there was also parliament in london that they work accountable and carrie lam is not. tom: one final question. we are past october 1, do you and the team in hong kong look at it now as a different regime that beijing has moved on from the anniversary celebrations? iain: there was obviously in the

months, a bit more leading up to october 1, people thought beijing would try to quell the movement so that they weren't embarrassed and that raised worries of troops in the streets . that did not happen but you did see some of the worst violence and an 18-year-old protester was shot. there is no real milestone. the district and local elections that come up in november, there might be moved to animate the protests towards trying to get a more democratic representation. at the moment, it is not clear. it will be protest against this mask long and more extreme measures potentially from the government if they choose to invoke more hours under emergency law. tom: thank you and all of our team for your reporting over the last number of days. it will be today and through the weekend.

imagine if there wasn't a brexit and the turmoil of washington which story worldwide would be front and center and you have to believe it would be hong kong. michelle wire is waiting patiently with us and we will move forward with the discussion of jobs day. what do we have coming up on brexit? front and center and boris johnson seven days to get back with the e.u. with his puzzle. i know you have -- his proposal. apple up in free-market trading that it is raising iphone 11 output. hp down after announcing it is cutting up to 16% of its workforce. this is bloomberg. ♪

>> we have a video sink attic factors that affect -- we have

idiosyncratic factors that affect the labor market. >> trade uncertainty has been important for the manufacturing. i talk to so many business executives, manufacturing executives who have indicated there is a good deal of uncertainty. correlatedinly is with tightness in the labor market. thee are seeing signs of economy slowing and we want to get monetary policy to get it growing at the same pace. >> everybody is cautious and we have not seen the increase in business we expected on the heels of very aggressive tax cuts and corporate tax reform. tom: what matters on jobs day is data and then we will get the fed speak and see what the bond market does and test august and september new low yields. and bloomberg

economics. there is bias in september. what do you mean question carl: september payroll tends to come in below the average leaving the consensus to overestimate the number. the bias is 40,000. we could be looking for a weaker number. the saving grace is there will be additional lift on the temporary census hires that we saw impacting last month, 15,000 last month. if you want the real rate look at private payroll. to the three month moving average and that is what you have to do. michelle: we all know the volatility on a monthly basis. if we look at the moving average, a sizable slowdown running 140,000 or so on a trend basis. this time last year we were in excess of 200,000. the labor market is fine and there has been moderation which

is consisting and that is what matters and is showing a new trend of lower job growth. tom: given the focus on risk to markets will focus on that. carl: every month there are different factors and the main focus in the jobs report at the moment, we are worried about the risks of an economic stall or slowdown. the leading indicators and concurrent indicators like the pace of hiring which is what matters. the focal point today will not only be the total payroll number but any signs of this contagion effect from the manufacturing and trade sectors into the broader economy, including services like warehousing and transportation. we have had plenty of episodes in the past where the manufacturing sector has slipped into contraction and the broader economy has been fine, certainly not excellent but muddled

through. we have to either risk that conditions are deteriorating more efficient -- we have to i the risk that conditions are deteriorating. tom: is there anything else you would be looking at? templle: the work week and hiring is another one that tends to move early in the process, where companies are starting to think about their workforce. as carl said, looking at the breakdown by sector matters. manufacturing jobs have not contacted yet. they have slowed and the survey suggests they contraction is -- the contraction is coming. bleed into theto more cyclical parts of the services sector. looking at the breakdown is quite important. tom: this is about the momentum in the labor economy. when you look at the back and

forth dynamics, you mention it has bled into the service sector. what are the tea leaves that show you the bleed? michelle: you want to look at the cyclical parts of the , focusing onr broad professional business hiring would be one good indicator. the retail sector -- we know they are trying to center the structural challenges for retail and there has been a steady contraction. that is an indication they are getting worried that consumer demand is weakening. tom: is amazon and retail employment? carl: it would be more in technology and some of the other categories, warehousing, couriers. tom: what are you looking for? carl: watching for the contagion effect. if we can make through 8:30 and not see a significant contagion

into service sector, the next thing is personal income growth, jobs times hours times average earnings. that gives us a good proxy for the personal income trend middle to late cycle and spending will be highly correlated. if spending is holding up we have confidence consumers will pull us through. grown -- i am going to try to get carl to stay with us for three hours. michelle, nice job on the economy. viviana: donald trump says the most provocative missile test in north korea will not derail talks. they will talk in sweden. aey test fired a missile from submarine. north korea has been pushing the u.s. to ease sanctions in return for banking -- backing off the nuclear program. a big jump in the making -- they

vaping deaths. two to 12.m they say it may be the tip of the iceberg and they have not named a product responsible. a record amount of work for a street artist. a painting depicting numbers of the -- members of the parliament as chimpanzees sold for five times the presale estimate. no word who the buyer is. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. viviana: i'm viviana hurtado. this is bloomberg. francine: thank you so much. boris johnson has been given a week by the european union to revise his brexit plan. president donald trump said he was unconvinced and was described that the proposals might be getting the support of

the prime minister. tomay have the opposite side theresa may. joining us is edward evans who is our brexit editor. thank you for joining us. there are a million ways this could go. boris johnson if he doesn't come up with a proposal and he would therefore have to ask for an extension or could he push a no deal through? is hardest no deal for him and the most detrimental. there is pressure to get a deal. that is the landing zone for a deal. it includeses, darling their irish constituency under the bus essentially. francine: with the e.u. ever do that? edward: that is the question.

boris has gotten closer to that in london and he needs votes in parliament to get it through. the difficulty is on the customs issue. they may end up a northern only backstop. that may be the only solution. whether they can get to it, we will see. tom: i am baffled by the calendar. on the 14th, the queen is not speaking to parliament but what is the date calendar to halloween? edward: watch for the summit on the 17th or 18th of october. there has to be a deal on the table by then. the eu leaders will not negotiate on something at that summit. it will be the run up to that. there will have to be a debate on brexit in parliament possible

johnson could try to put the deal through parliament without putting it to the e.u. to put pressure on. the current date is the summit in brussels. tom: did jeremy corbyn have a good day yesterday? edward: the policy on this is deeply confused. he stuck to his guns about protections for labor and environmental status. his position on the backstop has flipped and flopped. both parties are deeply split on brexit. tom: congratulations on a clarity week on reporting on an unclear brexit. we will continue with michelle meyer. john farrell has lined up -- jonathan ferrell has lined up a stunning amount of people to comment on the jobs report. this is bloomberg. ♪

zones zone -- allianz job works cuts will be cut. jobs will be cut in the business unit. hillsor a beverly property bigger than disneyland. allen's and it is back on the market. it is cut to $110 million.

the broker handling the site said it could be broken up for a gated community. right to michelle meyer. this is a chart i get a huge response on. it is bathed -- wages and benefits less a flat 3%. the wage disinflation you see, we come up and we rolled over. how big is the rollover? michelle: it is hard to get too excited by it yet. it is one quarter of weakening. when you look at a broad range , it is prettyes clear that at a minimum wage earning has stalled. year and 2017,

we had a sizable acceleration and has been moving sideways if not slightly down. tom: the barbell strategy upper haves are getting their fair share and everyone else is flat on their backs? michelle: when wages were rising, it was more concentrated in the upper income and more skilled in the bottom started to came up -- come up. morearted to be minimum-wage type jobs that have seen a pickup. something that i think is important to getting a more sustained expansion is the lower workers what they make they tend to spend faster and you need to be the income -- have the income growth spread. francine: how many people don't look for jobs anymore? is that number increasing?

michelle: it is not increasing but the fringe labor force has been constant. it was coming down for a while because you were seeing labor force expansion and some on the fringe were able to find jobs and be successful entering the labor force. it has been fairly constant. there is still some slack out there and evidence of mismatch in the labor force where you have people who have been unemployed for a long time and skills have depreciated. they are not matching where the job opportunities are. that speaks to frictions in the labor market. francine: overall, how will the consumer behave? what does it take for a consumer to spend less? apart from wages come when you look at negative headlines from traded concern, does that factor in? michelle: the consumer has been the factor of growth. look at the second quarter.

you had consumer spending in excess of 4% on an annualized basis. if it weren't for that, gdp would have been weaker. picture for consumer spending. i am concerned heading into the fourth quarter because you start to see some change in sentiment. wages matter. they are still ok but are not accelerating. you are seeing slowdown in job creation. sentiment failed meaningfully in august and september in part from what was happening around headlines and the stock market. i do not think you will see a big contraction but you could see slowdown from extraordinary growth and consumer spending in the middle of the year. let's bring up a second chart. it is the single best chart. your inflation and my inflation.

there and all of the viewers and listeners say baloney it people like you. they are on the redline. chairman powell is on the redline and you are on the white line. discuss. what you are alluding to is there are a lot of different measures for inflation. we focus on corporate inflation but that is just one measure. the clevelandt cpi as you suggest or even just headline inflation which has energy and food prices. they will tell a slightly different picture. some are accelerating at a faster pace but the part of the inflation basket that is most cyclical that the fed has ability to control their monetary policy has been very

subdued and that is where the focus is. that is where you want to think about the future inflation. at 8:30, what do you look to tell merrill lynch advisors what to do. michelle: the good news is i don't have to tell them what to do i just show them what it looks like and they make the decisions. look at overall job creation, what wages are doing, and look at the trends. not just one number. if it comes in very weak, then you want to look at the average. if it is on the upside, it doesn't mean we're out of the woods. tom: you are supposed to say ro and tomthan fer keene. francine: i will be watching. for the shuffle and reshuffle, bp chief executive dudley will

step down and be seceded. operation -- operating steppedof credit suisse down. cooper leaving after a nine year tenure. metro banks as goodbye to vernon hill. some of the changes at the top. we will delve much more into some of their stocks. this is bloomberg. ♪

[chanting] tom: it is an early friday evening in hong kong and a mystery into tonight and the weekend and the protest of a changed hong kong. october 1 is the seventh anniversary of the chinese experience has come and gone. many people mass,

with medical masks on. true masks have been banned. let's listen to a moment -- for a moment to the protests. [chanting] on to the move corporate news that we are monitoring on hong kong. faceine: a briefing on the mask has become a symbol of resistance on some of the protesters who feel -- fear retribution if identified. the band starts later tonight over there. apple telling suppliers to increase production of the iphone 11 by 10%, stronger than

expected demand. the new increase in production would add up to 8 million units. apple is higher in premarket trade. we are joined by our bloomberg opinion columnist. if this were true, it would be a big win for apple. >> yes. we often see reports in either direction. cycle, often i think this is what i have heard, shoe will create a green option risk. i would imagine this is saying that we need the capacity this time around. in previous years, they may have said they needed it. it is the kind of story that things are going well but the idea that it is a massive uplift we have to take with a little

pinch of salt. francine: when you look at apple and tom had a great chart, will apple go into something we don't know yet? alex: it will in a few years. they are working on things pertaining to augmented reality and some smart glasses. we don't know how this will manifest itself or when. the pivot to services is something which will hopefully move shareholders to underpin the value. lineupthe blue product will not likely be massive. we have seen some coding in the new ios which looks like it will have some widgets to find keys but nothing significant. quote the still under

plan? people are buying these things off of the monthly plan. -- as it pertains to stickiness, that stuff is important. there are handsets that are technically as good or better but it is a lot harder to train them in because people have invested in the apple ecosystem. tom: thank you so much. right now, lawrence

♪ alix: job cuts are coming.

hp cutting 16% of its workforce. tellse pop -- we work employees to brace for cuts. the market turns more pessimistic on reflation. investors price in cuts from the fed as u.s. equities underperform. welcome to "bloomberg daybreak" on this friday, october 4. we made it to the end of the week in what was a kind of insane, whippy week. s&p futures rolling over within the last hour and change, now down by 0.4%, giving back that third day selloff reprieve we saw. euro-dollar also climbing, up 0.2%. cell u.s. equities, sell dollar story into the jobs numbers, although still buying a little bit of bonds on the market. yields down by about one basis point.