>> the world's two ggest ecom f trade talks. the white house is weighing a currency pact with china. boris johnson goes face-to-face with ireland's varadkar. with weeks to go, can they bridge the divide? and with of the euro area split over stimulus, bloomberg is told that it is time for policymakers to unite. if you are divided, you tend to lose games. if you are united you tend to score and win. ♪

nejra: welcome to "bloomberg surveillance." francine lacqua is in helsinki at the nordic business form. first, let's check in on the markets. european equities turning negative of the stoxx 600. the 10 year yield moves lower after jumping i've basis points yesterday. so a little bit of risk off in terms of equities and yield. but the weaker dollar suggests there might still be optimism out there. conflicting headlines ahead of the trade talks. francine lacqua is at the nordic business forum. do not miss her interview with the ceo and founder of zuckerberg media. that's coming up just after 9:30 a.m.. and later, francine will speak to finland's economic minister

just after 9:45 a.m. u.k. time. let's get first word news. to force kurdish militants away from the region, turkey has launched a military incursion into syria. four years them and kara -- for ankara has fought and says it will not allow the kurdish proto-state on the border. when asked what president trump would do if turkey wiped out the kurds, he said he would quote wipeout turkey's economy. fed minutes showed that several officials push for a stronger signal on the path of easing. you will remember that in the september meeting, the fed reduced rates by 25 basis points. how describes that as an insurance cut. boris johnson and leo varadkar are said that set to hold last-ditch talks for a deal.

only three weeks are left until the u.k. leaves the eu and the atmosphere has turned sour. the two sides blame the other. if the leaders cannot reach some form of agreement, talks could collapse entirely. rugby world cup matches have been canceled, including the key england-france game due to the expected impact of a typhoon. tornier organizers are not ruling out further disruption. it is the first time ever matches have been canceled. 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. nejra? nejra: thank you. drama teaching and nba uproar, trade talks between the u.s. and china are set to resume. the u.s. is looking at rolling out a currency pact as part of a

partial deal and sources say this agreement see next week's tariff agreements suspended. it comes as a team of chinese negotiators arrived in washington to resume trade talks with robert lighthizer. let's get the latest from selena wong who joins us from beijing. great to have you with us. markets have been whipsawed by the conflicted headlines. how much have expectations actually changed? there has been a dizzying amount of news. same is thatthe the likelihood of a broad trade agreement is close to none. but the possibility of a partial deal has increased, especially following reporting that the white house is considering rolling out its currency impact -- pact. also, reports that the trump administration is allowing

companies to resume selling to huawei. this somewhat improve the outlook and follows reporting that china is still open to a partial trade deal despite the increased tensions we have seen around human rights, hong kong, and visas. , wen a best case scenario could see additional tariffs suspended, china agreeing to saidssions, and that being , we would still see industrial and economic policies off the table. any of those substantive discussions, probably off the table. nejra: it's interesting. and the past, we got the sense that beiji wted a rollback of existing tariffs. from state media about to be get the sense that china would be pause on with simply a

the increase of tariffs? >> there is certainly incentive on both sides to just stop things from getting worse. that is kind of the base case pause on the increase ofscenario, actuale scenario. both sides are feeling economic pain. we have heard from state media that expectations are low given that the areasf confct have rapidly increased. we heard from the global times that china is used to washington's old tricks of exerting maximum pressure all simultaneously increasing optimism. china is ready for the worst-case scenario and any types of bargaining washington puts forward. both sides are preparing for the worst-case scenario and it is still unclear that washington would agree to an incremental deal. nejra: thank you so ch. joining us for the next 40 minutes is the european economist at barron bird. -- berenberg.

what sort of impact might a trade deal have on business and consumer confidence? or will businesses be preparing for the worst-case scenario? partial were getting a trade deal, this would definitely be a step in the right direction. obviously, we have been going up the escalation ladder and down a little bit. know them a we have been here before quite a number of times, so i would not get too excited by this news. i'm happy not to be a traitor today because it is going back and forth. but if we get in this direction, a giant be the start of but i wouldidence not start doing that now. nejra: if that confidence

doesn't start to recover, where would you expect that to happen first? florian: especially those countries that are most affected by the trade war. so it would be the u.s. and china, but obviously look at europe, which has been suffering badly. germany and ily. you would expect these economies to do better if there were some partial trade deal. but it would be too early for that. that would be a game changer. nejra: in terms of china as well, they are preparing for a worst-case scenario. do you expect more stimulus? florian: it depends on how the trade talks go. but so far, the authorities have been edging out stimulus measures as the trade war has escalated. successfully, they have navigated the rough water.

this news about a partial trade deal is unfounded and it escalates further, we would expect further stimulus. whether this is more direct with consumption and infrastructure them before, which was via credit channels, that is an open question. but something that is an option. nejra: florian from berenberg stays with us. coming up, our exclusive with the bank of england governor. that interview is next. this is bloomberg. ♪ gornor.of finland that interview is next. this is bloomberg. ♪

nejra: economics, finance,

politics, this is "bloomberg surveillance." let's focus on the euro area's economic slowdown and the increasing division over how to respond. speaking to bloomberg, the ecb policy member says the split does have an impact but it is national have differing views. it has some effect on the policy impact because of communication and forward guidance. it is such an important part of making policy these days. but at the same time, it is natural that there are different views and positions in regards to the economic outlook and also monetary policy stances. i, myself, a product of democratic culture and football teams. i value team play and communication. if you are divided you tend to

lose games. if you are united, you tend to score and win. >> the results of the stories today suggest more division with mario draghi not listening to advice from the committee. what does that mean for markets? how should they interpret it? the story was greatly exaggerated and misunderstood in the sense that the monetary policy committee does preparatory work but certain sensitive issues, such as resuming qe and net asset purchases, is definitely for the governing council to decide. extraordinary in this sequence of events. >> there is so much pushback against negative rates. there seems to be a council that is split. do you have an urgent policy

review? olli: it is something to discuss and something christine lagarde will decide. my reading is that she has me to start a strategic view of our monetary policy framework. i find it important to analyze the long-term trends such as lower net full rates of interest or an aging population. how do they affect the operating conditions? and what kind of conclusions should we draw? our mandate is enshrined in the eu treaty. but for instance, the definition of price stability targets. i would find this kind of discussion important and it would also enhance common understanding of our monetary policy strategies and improve

consistent communication by the governing council. nejra: that was ecb governing cancer -- counselor olli rehn. to the ecbook ahead meeting, we'll get that later today. ,e also spoke to bruno le maire welcoming the agreement of the new euro area budget. bruno: the agreement we found yesterday is a major step in the right direction. be supporteded to by the french president. now, we know that it will be a reality by 2020 and should enter into force in 2021. berg florian from baron

u berenberg is still with how hopeful are you that the baton can be passed? florian: if you just look at the one country that has the biggest fiscal space, germany, i would not be too hopeful. the central bank can probably not do much or much more than just focusing on its home turf. obviously, it would make the job much easier for christine lagarde if she would reach out ,uccessfully to angela merkel emmanuel macron, and all of the policymakers that can press the button on fiscal policy and win them over to a more growth-friendly stance. i think that would lessen the pressure on the central bank, especially in the ecb and across the world.

it would especially bridge the gap that we have seen emerging within the governing council. nejra: you went to frankfurt earlier this week. what did you learn there? bruno: it's interesting -- florian: it's interesting because the debate is a bit different outside. currently, germany is doing relatively badly when you just look at the industrial sector and production. but if you talk to the average thaten, they do not feel big swing in sentiment and production. them all ofoyment those stats are still relatively good. we are still close to full employment in germany. so the debate about the ecb is a completely different one. how much should the ecb actually due to boost the economy or limit the downside risks? fascinating it is

to see the different views about the stance of the ecb. nejra: that is fascinating. recently, we have started to have conversations about the spillover of manufacturing pmi into services. do you still see a resilient labor market? florian: so far, the impact from industrial weakness is a relatively limited. i think a week ago we had a labor report which showed employment was still growing. yes, the growth has slowed down. but it is still positive. in this regard, the spillover seems to be increasing but at a relatively slow pace at the mormon -- moment, meaning there is not much support within the in the coalition to boost the economy in a quick and fast way.

what we are seeing in germany is that we get slow-motion stimulus, as i would put it. you have got a number of investments to mitigate the climate change to get out of coal, but it is not the big tax cut you would expect from a u.s. president or u.k. prime minister. nejra: while we wait for fiscal policy to take the baton, in terms of limits for the ecb, ol li rehn says you still have time. how much do you have? florian: 12 months, nobody knows for sure. it depends on how the ecb is structuring its purchases. more heavily tilt towards corporate bonds and obviously, this would give it more headroom. but probably around the end of next year we would need to see

either higher issue with limits limits, unsecured bank bonds, or equity. if the ecb would stick to its guidance of purchasing bonds until we get sustainably towards its 2% target. nejra: varadkar -- florian hense from berenberg stays with us. canon jerome powell make a promise that will bind his successor in the future? we discuss that next. this is bloomberg. ♪

nejra: this is "bloomberg surveillance." i'm nejra cehic in london. we are seeing euro strength trading about 1.1. it is a story of dollar weakness. perhaps there is optimism around the trade talks. european equities telling a different story. we have seen weakness intraday. howfed has started debating far the rate reduction campaign should extend. the minutes from the fomc september meeting show officials generally agree the downside risks to growth had increased somewhat.

florian hense from berenberg is still with us. ,n your reading of the minutes what is your expectation in terms of further rate cuts? are we getting more beyond october the if we get one in october? florian: maybe not october but rather december but i think we will get another. it did not seem the fed was precluding that. even though they were trying to stress that market expectations, and what the fed actually sees, are quite different. expectations from the number of further rate cuts, but it looks likely we get another one. then the fed would be on hold for next year. nejra: on hold because of the strength of the u.s. economy? florian: yes. the economy seems to be fine. we have had some poor ism numer

-- numbers, yes, but it looks as though we are converging around 2%. at that rate, the fed would not need to boost the economy the on another rate cut. obviously, if we don't head towards the escalation of the trade war, we may move even further away from potential rate of 2%. nejra: florian hense from berenberg stays with us. up next, we bring you stocks on the move with including lvmh. shares are soaring on rising luxury sales in china. this is bloomberg. ♪

nejra: talk thursday. economiestwo biggest

, and investors break. boris johnson goes face-to-face with islands never cut, with three weeks to go, can they ridge the divide? the split over need for calling fors, policymakers to unite. communication.ly if you are divided, -- if you are denied it, that if you are united, you can -- nejra: this is "bloomberg surveillance." let's get breaking data out of the u.k. month for month and year on year, the number coming in worse than expected. month on month for industrial producti, you see an unexpected drop, so -0.6 percent is what we see. -- a drop ofn of

1.8% versus a drop of zero point 8%. manufacture production, similar story in terms of a miss on the number month on month. -0.7%. exposition -- expectation was growth at 0.7%, and year on year we are seeing a drop of 0.7% versus expected 0.4%. the gains that we are seeing generally in g10 today are a story more of dollar weakness let's get to first word news with viviana hurtado. viviana: what is all the fuss about? this is from olli rehn he rejects new reports about division at the european central bank, and a financial times ignoredmario draghi revised -- ignored advice about restarting qe. >> i think this started with reports that were greatly exaggerated.

on the monetary policy committee, they do preparatory work. qe, assuming that asset purchases. deal is a partial trade the latest policy of the u.s. is examining with china. we could see a tariff increase suspended or this could be the first phase of an agreement with beijing. it would be followed by more negotiations on core issues such as intellectual property. 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. thank you so much. let's check in on this morning's stock movers with annmarie hordern. hansenave kristin plunging from 11%, i with

earnings that missed the lowest estimates, so under pressure as well. phillips down 8%. the dutch provider of hospital goods. a profit warning saying they will not meet profitability goals. one reason why is the site of higher tariffs. and lvmh, the luxury goods maker, of more than 4%. they are defying economic headwinds from the trade war to the economic protests -- to the hong kong protests per this is a bellwether unit for the luxury space. those numbers come in 19%. analysts are looking at more than 15%. how lvmh isow you doing across all of its peers. it is up more than 40%. beating s&p 500 global luxury index as well as being one of their main rivals. lvmh,rent owner of gucci, they were not noticing the high-performance due to dior and

louis vuitton. louis vuitton has a new menswear designer who used to work with kanye west. they are introducing new products for hot ticket items for women, and now they are doing so for men. nejra: annmarie hordern, thank you so much. now to brexit and u.k. prime minister boris johnson will hold private talks as they try to explore whether the two sides can find room to compromise. florian hense is still with us. -- is it anion extension until october 31? florian: that is the base -- that is the base case. that is a good sign varadkars meeting today. -- rathercally varic having a lunch, i would suggest

to johnson to have a couple of beers with varadkar to talk about this issue. johnson probably should have done that a couple of weeks to months ago. the base case is the extension beyond the 31st of october. nejra: i like that you say they should sit down for a couple of beers. i am not sure that would change the intractable issues, but your expectation is what in terms of the irish border, or perhaps the u.k. election? florian: it looks very likely that we are going to get some sort of electoral vote, whether an election or a referendum. more likely we get a new election because four new before new -- referendums are held, we would need to majority in parliament, opposing brexit, to get it back together, and decide on ousting .ohnson, tabling a referendum

and if jeremy corbyn insists on being the interim prime minister, that would then call a referendum. that will be tough for a number of conservatives which have shifted to the other side. case,ew election, base and a possible win for johnson obviously. that keeps up the risk of a hard brexit. nejra: how painful could this be for the u.k. economy? industrialke production and manufacturing numbers are coming in worse than expected. staggering is still to me how well the u.k. economy it is very much the u.k. consumer that keeps up the u.k. economy above the water. if we were heading for brexit, i think the u.k. would very likely ofe a recession by a number percentage points, i think. that is not the scenario, at

least short-term, for which the u.k. should be going. because it would have ripple effects to so many parts of the economy. nejra: in your outlook, you talk about the fact that a hard brexit could deepen the euro zone's woes. we talked about a very brief clip because the -- are we talking about a very brief blip because of the euro zone's other problems? florian: as it is facing the trade war headwinds and we are seeing a slowdown in china's economy anyway, it is not a very good time for the euro zone. it may just be a blip, but it could be more protected because confidence is already shattered. of then add the risk hard brexit materializing, that would make things worse, possibly gdp declining over a couple of quarters. nejra: great to have you with us

today, florian hense. think you for joining us on the show. francine lacqua is at the nordic forum today. ofh the ceo and founder zuckerberg media, randy zuckerberg. that is next. this is bloomberg. ♪

nejra: this is "bloomberg surveillance." i'm nejra cehic and london. generally brought dollar weakness against g10 in today's session is due to optimism ahead of trade talks. equities perhaps not come as we have seen weakness in european equities, but overall study with

the 10-year treasury heading lower. viviana: fidelity investments will now offer zero commissions for online buying and selling of u.s. stocks, etf's, and options. it will also provide higher deals for cash balances, better trade execution. fidelity is the fifth major industry player in the last month to make some sort of zero commission offer. -- pg&e isia, pt any expanding the biggest blackout ever in preventing wildfires. 3 million people may lose power, most of them in northern california. the blackout could last six days. pg&e is trying to prevent its equipment from igniting fires. it faces $30 million in liabilities for igniting wire fires that wildfires last year. -- wildfires last year. anda: executive jamon -- entrepreneurs across 40 countries are networking and

learning how to grow their companies at the annual nordic business forum. francine lacqua joins us from helsinki. great to see you, fran. hi. francine: we had a great conversation with the central bank -- the head of the central bank of finland. and now randi zuckerberg, not only the executive of zuckerberg media, but she is a best-selling author and has published work on the impact of social media on society. i'm delighted to be joined by you at the nordic business for them. thank you for your time. randi: great to be here. thank you. mediane: what part of the is your company focusing on, and why do you see value in that? randi: it is a great question and it is always shifting. even three months from now, my answer will be different because the landscape is changing so much. we are doing a lot with audio video, asting, live

lot with theatrical because i have noticed that is one of the one remaining areas that people will pay, kind of that experiential content. those are a lot of the areas that i am playing in right now. of course, i love the written medium, but it is funny, it is interesting since he how much the landscape is changing. francine: what about short-term video, the shorter videos that you look at -- snapchat, instagram, things like that. randi: i love short-term videos. but what is interesting to me is the rise of longform. two years ago if i got up stage on a conference like the nordic business forum, i would have advised everyone to make the contact short -- their content shorter, shorter. today i would tell people to go in-depth and longer. i think there is more of an appetite for that diving deeper into things. on broadway right now, the 40 shows, three of them are seven hours long.

francine: that is longer than "surveillance." randi: there is more of an appetite for deeper content. francine: are you respecting a huge wave of's consolidation -- of consolidation at some point? randi: i think there has to be. it is smart to do that because niche topics are the kinds of things where you can have a subscription model or a client who is willing to pay, but at the end of the day, it has to consolidate. we cannot support an ad-driven marketing trouble for thousands marketing model for thousands -- marketing model for thousands. our people interested in beautifully produced content like netflix is doing? do they want that kind of stuff or user generated content? it is shifting back and forth. francine: there is so much

content -- apple, netflix, facebook. where does it end? randi: every day, hundreds of hours of video gets uploaded to youtube. every day there are over one billion posts on facebook. who is out there listening to your content if everyone else is constantly making their own content? francine: is it going to go down? will it be oversaturated? what kind of content will be -- will we be looking at? randi: i think there will be a layer of cure ration like in museums. with so much content, it is going to be exhaustion. so i think people are looking for experts to tell them what to watch. the pendulum is almost shifting back again to the bigger need for expert voices in news, in different areas because people are now bombarded by so much that they kind of want to be guided a little, like you would curate a collection out of a

museum. but i also think that people want more high quality content again, so it is interesting because when first starting in social media, it was how many eyeballs you could get on things. now it is the metrics that are shifting back to engagement and depth. francine: are the next three years going to be critical as to who survives and who does not? randi: absolutely. come and his will have to make sure they are playing in all the new spaces. that is why we are talking about audio so much at zuckerberg media. that is one of the only faces at the moment where there are more people listening to podcasts than there are podcasts that are regularly updated. there was a brief window about blogging like this 20 years ago. that window is gone. anyone todayuggest to watch a new blog. the world does not need it, it is impossible to get notice. but podcasting is a beautiful

window. companies that are nimble enough to see those opportunities will get in and survive. francine: looking ahead to the 2020 election, how should companies look at the election differently? it is -- randi: it is so fragmented. there are so many candidates, so many people who have passions about different issues and topics. gone are the days where you had a few sources that were the go-two places -- where the go to places. media covers have to think of 30 armses as 20 or media companies. any have to be -- it is excitingly creative and stressful time to be the head of a company for sure. francine: you have done so much on gender diversity and female in the workplace. what is more difficult, being a

woman in tech or in entertainment on broadway? randi: that is the question of the time. i always said that my biggest aset would be that i had ."n's name, "randi, because they would not know. i am at least seeing in silicon valley the rise of many more female investors. once women start to control more of the money, they are going to use that to turn around and invest in other women and change the system a little. so that is what i am interested in, but there is quite a long way to go, especially as i am here talking to you, i am just three months after having a baby, and i have been back at work for quite a while. city likein a helsinki and think about nine months, and i realize we have a

long way to go. for joiningank you us today. randi zuckerberg, the chief and founder of zuckerberg media. not only will we have more from the nordic business form, we beld be joining -- we will joined by an economic affairs minister. that is next. this is bloomberg. ♪

nejra: this is "bloomberg surveillance." that's get to francine lacqua in helsinki for the -- let's get to francine lacqua in helsinki for the nordic business forum. played --earlier we we spoke with olli rehn. he said the story was greatly exaggerated let's get straight to the minister -- katri kulmuni , leader of the finnish center party. thank you for speaking to bloomberg there are a lot of headwinds on trade, on the limit of monetary policy. what worries you the most about the economic strength of your country and of the euro zone? thank you for the possibility to participate.

european --d by the from the global policy prospect. our country, likewise, where we had a lot of export and we depend on the markets staying developed. we know currently that the globally,n economics, isn't too high. requires a lot of activec decisions and policies related to trademark issues. is it to how difficult combat climate change while at the same time focusing on economic growth? katri: it is a huge debate and one of the biggest of our time. i am somehow also optimistic in the face of climate change, while it is a huge threat, but thee can combine

legislative and regulatory framework with the business -- while the business is crucial to making new ecological improvements and advances -- if we can combine those two things to combat climate change, i have no doubt that we can also give back to climate change and stop it, actually. francine: what roles do businesses need to play in combating climate change? katri: definitely with investments related to development and innovation p the --ority of it comes from economic development is crucial. businesses need the opportunity to spend money. it has always been the case that business wants to have the best technology. in the european countries can offer the best, most climate friendly economy, the other regions would follow.

francine: if european countries did fiscal policy -- and i don't know if that is what you are asking them now -- how much easier will your job be? katri: of course the possibility -- the basics and the rules must course wed, and of hold responsible policymaking for all the countries. but then of course it constantly requires that we have investments related to infrastructure, to boost our economy. francine: do ministers across the euro zone need to be more careful about social cohesion when implementing policies? because we feel that backlash of populism? katri: i think it is the professionalism to deliver things. pass.ld be an easy one to

no doubt we have done everything on a domestic level, and that is how i think it is good. but then of course, climate likewise, we can only deliver things related to competitive climate change if everyone on the board -- i would so thatking about it everyone understands what we are doing. francine: minister, thank you so much for joining us. that is katri kulmuni, the finish affairs minister. we will talk about finland. this is bloomberg. ♪

>> the world's two biggest economies finally sit down for trade docs. -- trade talks. prime ministers boris goes -- the-face with rio split for more stimulus. olli rehn tells us it is time for policymakers to unite. good morning, everyone. this is "bloomberg surveillance ." the nordic business forum in nelson:, and tom keene is in new york. we will have a lot of time to focus on what is happening in china. and about our interview with olli rehn. first, let's get to the lumber first word news with viviana hurtado. viviana: trade talks between the u.s. and china resume. bloomberg has learned it is part of a partial deal that the white

house may roll out a previously negotiated currency agreement with beijing, plus a tariff increase set on chinese goods for next week may be suspended. to syria, that is where turkish forces are beginning the second day of their attack on kurds backed by the u.s.. striking almost 200 targets. turkey wants to push back turkish militants who -- kurdish militants who guard the border area. donald says the u.s. will not stand in the way of an attack. it is a last-ditch effort for boris johnson to get a brexit deal. today he is having lunch with his irish counterpart. the site is a secret location in northwest england. the sticky point is whether there will be custom checkpoints . to finders may -- need common ground or there may be a no deal brexit.

pg&e in california expanded the biggest blackout ever in preventing wildfires. 3 million people may eventually lose power, host in northern california. it could last six days. pg&e is trying to prevent its equipment from igniting fires. it faces $30 million in liabilities for wildfires the last two years. 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. tom: thanks so much. equities, bonds, currencies, commodities. let's get started right now. nice move to the market, flat all in all after huge gyrations yesterday. morning,e screen this but a persistent euro strength over the last number of days. oil has beenurkey, remarkably stable, 52.62 on west texas intermediate. francine? tom, i'm looking at

european equity markets, and they are kind of trading sideways now. investors are turning their focus to meetings between the u.s. and china are in had contrast reports from the talks and we saw were volatility in asia, but that seems to have died down a little bit. treasuries edging higher, i am looking at pound because it is the thing to watch, when varadkar meets with boris johnson. tom: very good, francine. we are watching the news flow in washington right now this early in the morning. not much coming up. we are watching turkey, the united kingdom, and china. patrick armstrong, chief investment officer, joining us now is brendan murray who has really been working on the trade story, leading all our trade coverage from london. give me an update on what our

trade team sees right now. are we still going to go through the day tweet to tweet, single headline to single headline? >> absolutely, tom. things will be changing within the hour. we have seen a lot of jockeying ahead of the talks. china has come in with an offer to buy agricultural commodities. the u.s. side, based on our reporting, looks like it will want china to sign up for some sort of currency deal, so just exactly how it plays out, we don't know yet, but there has been interesting signals already that there may be something of a mini deal in the works. maybe not a sure thing, but they are going to try to get through some sort of mini deal. tom: tell us the difference between technical talks and high-level talks. the media loves to throw around these phrases. what is actually the difference between the grind of your beat and the idea of the fancy people

showing up with flags in the background? >> exactly. a lower level chinese delegation has been in washington for several days already, trying to hammer out the fine print. things really where start to matter, especially when you're dealing with a translated document, trade agreements are often hundreds of pages, if not thousands of pages long. by the time the high-level folks come in, most of the issues are already worked out. what we will see over the next two days, ambassador lighthizer and the chinese premier try to come to some agreement on those bigger issues. the u.s. what does actually want? there is this talk about a currency pack. concretely, what would that give the united states? brendan: that would give the u.s. something in writing that says if china starts to cheapen

its currency, try to gain an advantage in international markets through a weaker yuan, that the u.s. would have some recourse -- or the u.s. would say, some enforceability -- to call china to account for that. so china and every other major economy has made sort of vague agreements at the g20 level, but the u.s. wants to get on paper between the u.s. and china. china looks at that as a sovereignty issue and will not give that up easily. what does this all mean for markets? first we had talks -- we had reports that the tariffs could be delayed, and then we had reports that the leaking could be cut short. are we going to see two weeks of volatility until we have a little bit of a better idea of what the trade war means? : if i am donald trump, ma not want to truth -- i

may not want the truth. it may be three weeks. you may not want to get the truth before that. you do get a number of false starts with these things, lower level parties agreeing, and then when it gets to the higher level who can sign the deals, there is a disagreement on what those terms mean. it was a like completed deal, and then china did not agree to the enforcement mechanisms. there will probably be a lotta volatility, soundbites. i would avoid trading the tweets because that does not give you an indication of where trade is going. tom: where is trade going? can you make a conclusioon this if there is a partial deal? if it is a partial deal, can you place bets in advance of that? patrick: i am think -- i think we are getting close to that partial deal. but i do not think that all-encompassing deal is even possible at this point.

there are big picture issues that cannot be addressed. it started to look like the china trade deal was about the deficit with the united states, and it has moved on. china is a strategic threat, and those issues are not resolvable. if we get a true delay of some of the tariffs that might be imposed in a couple weeks, that would put some support under markets, but that is does not -- that does not turn around the trend of global trade, which is negative. you can be more efficient with technology in wealthier countries, but also the populism in bringing manufacturing home, those trends are going to disappear. i think we will see headwinds trading differently in the coming quarters. tom: brendan murray, thank you so much for your tireless work, culminating today in these important talks. the headline just out now, turkey-backed syrian militants enter east of the euphrates, the

critical zone far from damascus this is way out toward the euphrates and toward northern iraq as well. we will have much more on turkey coming up across surveillance today. an important interview, robert kaplan of the dallas fed. please look for that in the 8:00 hour. this is bloomberg. ♪

tom: we have a little bit of a news issue here, a technical issue with viviana as well. we welcome all of you worldwide in london and helsinki. the last time we were here, francine and i were looking at

mr. trump and mr. putin, as they met in an historic moment. francine? i remember, tom, we were on a rooftop. i believe that was in july when president trump was meeting with president putin. a lot has happened since then. this morning we went to speak with olli rehn. he is also the governor of the bank of finland. he has played down reports that mario draghi ignored internal invites that internal advice -- internal advice on the downturn in stimulus. mr. rehn: it has some effect because communication is such an important part of the making of monetary policy. but at the same time, it is natural that there are different views across the economic

, and i myself am a ,roduct of democratic culture so i value team play, teamwork also in communication. if you are divided, you tend to -- if you are united, you tend to win games. there was a story suggesting were division with not -- with mario draghi not listening to advice from the committee. how should markets interpret it? rehn: i think this story was rightly exaggerated and misunderstood, and misunderstood, in the sense that the monetary policy does proprietary work. but certain issues such as resuming qe, resuming net asset for thes is definitely

governing council to decide. so i found nothing extraordinary .n this ,rancine: that was olli rehn bank of finland governor. let's go back to patrick armstrong. patrick, i guess the concern is that if the markets smell weakness from the european, and it does not listen to the committee, do they question whether next time around they will not do enough? patrick toe it raise that question, and i think it is not just the -- patrick: it raise that question. and i think it is not just the ecb. the question about future cuts and how much division that would create, a point for monetary policy, negative interest rates, quantitative easing are meant to be shock and awe type of reasoning, getting on a recovery

trajectory, we are almost using these things chronically now. not even almost, we are using them chronically. rightly so,estions, that central banks are debating right now, the efficacy of these policies, the consequences now approaching greater than the benefits. you have consequences for pension funds, for favors, and you're having as first savers, and you're having limited boosts , limiting marshall -- limiting partial returns. i do not think it is surprising. i don't think we should draw conclusions about the direction of monetary policy necessarily, but in the long-term there are big questions about these policies now. if we do but, patrick, not have fiscal spending from countries around the euro zone, how disappointed will the markets be? what exactly are they pricing as? patrick: i don't think the markets are expecting a big

stimulus out of the euro zone. if they get into a steep recession, you will get the fiscal response. right now with the slow borderline technical recession in italy and germany, that is not enough of an impetus to create the fiscal stimulus that the economy is screaming out for. i do not think the market is pricing it. it is something that is needed, useful, and it would be much more stimulate of to the economy than monetary policy that is pushing on a string at this point. francine: patrick, thanks so much. patrick stays with us. coming up, we speak with the finished trade minister. in an exclusive interview, we will ask him about u.n. and china and how europe can respond. this is bloomberg. ♪

tom: good morning, everyone. "bloomberg surveillance" from new york, and francine lacqua fromelsinki today. we are following here into the seven-hour time delay with new york, the turkish area, the news flow that is coming out, all focused on day two of what operation -- what the operation will bring as well. francine lacqua from helsinki. francine: thank you so much. i am delighted to be joined by ville skinnari of finland.

we are talking about the trade war between the u.s. and china. does the u.s. want a mini deal, on currency? thank you for joining us. we follow this day in and day out, probably hourly. is the trade war going to get worse for it gets better between the u.s. and china? finland, as the chair of the u.n. emphasized, is a rules-based system and the multilateral world order. obviously we are concerned here in finland, here in europe, about the current rules and the tenseness see and what we feel. but the european union, finland committed tovery continue the trade agenda. with the u.s.. but obviously we are ready to defend our interests if and when necessary. but obviously according to the

world trade organization's rules. francine: is there anything we can do to alleviate these tensions, and if yes, what? ville: i think the key word is dialogue. we have to keep up dialogue. and i believe we are not finished. we need to be. europe needs to take leadership. europe is the largest free trade zone in the world. i believe there are certain feasible elements, certain narratives that we can go further, and finland and myself, we are very active now as having the presidency of the e.u., to build up the dialogue with washington and at the global level. next week i am in africa. francine: if you look at the industries affected by the trade war, are there a couple that need the most relief?

and what are they? ville: it is always quite industry to define certain cases. but obviously we see negative industries,rtain but also certain products. but all in all, we really have to work on the rules-based system. we really have to work on the multilateral world order. that is the most important thing, and now it is time for europe to take leadership as well. it seems there are a lot of politicians that do not believe in those institutions anymore. is in honestly, wto crisis. wto needs to be reformed. but it is very much now up to, also for us, for europeans, to be proactive, but also i think

it is for all of us to see the importance at the global level of wto. we need the rules-based system. we need the rules. we have seen situations where wto is very important. and therefore it is very important now for our discussion, and also here in europe and also for the new commission, which is going to commence in brussels. i just came back from brussels last night. i think that we all have to understand that, yes, we are in crisis, we have to find new ways, new paths, to get over it. francine: looking at my watch, 21 days until brexit. how worried are you about a no-deal brexit? as far as finland, as far as the e.u., we obviously are ready for all kinds of alternatives. but once again, the e.u. wants to make a deal, and we are ready

to work 24/7 for that. our hard brexit happens, we are obviously ready for that alternative. and yes, the impact is negative, negative for finland, negative for europe,egative for the global value chains. and talking about supply chains, if there is a no deal brexit, how quickly and some of these be rerouted? much disruption could we see? obvious theret is will be a lot of challenges in global value chains. if we think about finland, for instance, nordic countries, we are a very strong country for export, for instance, and therefore we are very concerned. but obviously i think it is in our interest, in all parties'

interest, to maintain relations with the u.k., and to continue. the u.k. has been an important partner, not just in trade but in overall, the political environment. francine: thank you very much for being with us. .ille skinnari tom: images from turkey and syria. the northern border, along to the east, the breadbasket of syria, which is now in turmoil, to 2.6rom 1.6 million million individuals. stay tuned for turkey on the ground. this is bloomberg. ♪ everyone uses their phone differently.

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we are monitoring every number of stories. right now, patrick armstrong is with us. the russian central bank has just made the statement that even they will see lower inflation. their inflation has lifted up 4% to 5% and they will be depressed down. what is the persistency of negative interest rates and the ability of positive interest rates to grind ever lower? that is a big question -- patrick: that is a big question and we might be at a turning point when there is a real , pension funds, punishing savers, zombie companies. negative rates create a quick boost to the economy but should not be designed as a long-term answer to structural issues. that is how it is being used

now. tom: you go to the most important issue, not that it has been fraud or pretend, but the transmission mechanism of negative interest rates has been blocked as the only effective way. are you predicting next year we will see the reality of negative interest rates drift down to ever smaller retailer investors? patrick: i don't think you will get much benefit to small retail investors. measures, so mario draghi has said it as many times as he can, we need fiscal stimulus to complement monetary stimulus. the united states, powell has talked about that are alternatives to negative interest rates. the time it gets close to zero, it will be other radical

policies. turningwe are at a point and you can see that from the discord within the ecb, from the vergence is of the opinions of the fed, and the bond markets pricing in low negative interest rates -- negative interest rates. there are going to be new policies needed. i don't think negative interest rates will be a structural policy with us forever. francine: are we putting too much emphasis on fiscal stimulus? we know it is good and could help, but the timeline of fiscal stimulus taking effect if you are building roads or infrastructure, will take at least 18 months. patrick: if it is on infrastructure, i think that is a reasonable timeframe, government, fiscal stimulus in the euro zone.

mmt is being talked about in the u.s. and helicopter money is something the ecb may start to endorse. that will be more and -- effective. it may not be looked on favorably in germany and they may not want helopter money. vouchers where they are forced to spend, that can destress the economic situation. there is no inflation, no economic growth, lots of savings, and negative interest rates are not provoking the right outcomes to address the things that are making big headwinds for the euro zone economy. francine: if you have fiscal stimulus, even germany decides to do more bonds and other stuff, but if you have trade concerns and risks to the downside globally, can it kickstart european growth? anything -- patrick: anything is

positive. the united states is running a trillion dollar deficit and the euro zone would probably growing -- probably be growing similar to the united states. we would put european growth past u.s. growth right now. 0.9%.one will come in at if you put fiscal stimulus on with no government multiplier, that puts european growth where the u.s. is. there will be debate and discussion on the right model, being very prudent, or brooding deficits which is the u.s. approach. there has to be a bit of give-and-take on both sides. i do not think we will see shock and all from jerk -- awe from germany. it has to get the helicopter money to be effective in europe.

tom: patrick armstrong, thank you for being with us. i would note the markets are turning, the turkish lira lower. we begin with the white house and how it will consider a partial trade deal with china. bloomberg learned part of that could be a courtesy packed that was already reached. -- in germany, a person has been arrested in a suspected anti-semitic rampage. killed outside a synagogue on the holiest day of the jewish calendar. the shooting seems to be motivated by extreme far-right use. in hong kong, protests have pushed the city to the brink of its first recession since the global financial crisis. the economy has contracted for the second quarter in arroyo and

the hong kong government may unveil stimulus. -- donald trump pressed his then secretary of state rex tillerson to urge the justice department to drop charges against a client of rudy giuliani. tillerson refused. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: thank you so much. we are doing everything we can to get up to speed on the fractious politics on the region of the middle east. this is one image we are seeing in day two of operation peace spring. comment from our chief.

a safe zones, a buffer zone, 20 miles from the euphrates river and east. will this be an extended refugee camp? endgame forthe turkish policymakers led by erdogan. a buffer zone or a safe zone inside syria will be about 20 miles deep and will stretch from the euphrates river north of syria all the way to the iraqi border. we a talking about 400 kilometers. that is about 300 miles. when and if that buffer zone is created, turkey wants to resettle one million refugees, syrian refugees. context,ut things into turkey is home to about 3.6 million syrian refugees that have fled the war that has been

going on eight years. tom: what is extraordinary, the show theportant but camps that hold the family members and the actuality of islamic state members. to dote seems to be what with the islamic state camps. we have any idea what will happen to those? and people camps being held in them, isis family members or militants themselves, oflly makeup the focal point kurdish lead syrian democratic forces claim there are about 12,000 militants in the prison and tens and thousands of family members. be able toey may not

contain all those militants in those jails should turkey see areas closed to those facilities. we do not have evidence that has resulted but that is what is happening now, but on the other hand, the turkish president has been downplaying the threat. francine: u.s. senators including lindsey graham to have slammed the incursion and threatened to punish ankara. is this something president erdogan is worried about? onur: he might be worried about this, because this bipartisan bill you mentioned that was proposed by lindsey graham and others in congress really raises the fear there might be a repeat of what happened last year.

just to provide a reminder and context, turkey and the u.s. came very close to the collapse in their relationship over an american pastor being held in turkey over charges. things got so bad, the turkish government members came under sanctions and this triggered a run on the lira. the currency was almost one third of its value, and that eventually tipped turkey $720 billion economy into its first recession in a decade. unemployment and food prices soared. it was a bad year for erdogan. we saw the outcome earlier this year. this could be a source of worry if it results in other diplomatic showdowns between the u.s. and turkey. tom: thank you for your time, and for your team, for your coverage.

coming up on "balance of power tom: we will drive forward -- "balance of power," we will drive forward the conversation about the president. this is bloomberg. ♪

♪ surveillance."is i am francine lacqua in helsinki. u.k., boriso the johnson will hold private talks with his irish counterpart later today as they explore whether they can find room to compromise. still with us is patrick armstrong. after that tense phone call

boris johnson with angela merkel, is that it or is there hope of reviving something? the e.u. and u.k. have red lines and it is difficult to mismatch them to find an agreement that is different from what theresa may found. patrick: very difficult. these are probably the leaders soh the most to lose, probably ireland will be hit the hardest and a no deal brexit, u.k. second hardest. the best alternative to a negotiated agreement, what boris johnson has done is credibly put that a no deal is a plausible outcome the u.k. could live with , and that might provoke movement from the e.u. i don't think we will get a deal in the next 10 days before we have to write the letter. is primey outcome

minister or supreme court writes the letter on the 19th, but there might be some give in the meantime that let's boris johnson save face, because they are working toward a deal after there has been a new election. francine: have we not gotten rid of the risk of a no deal? has parliament gotten the risk of no deal because of various court rulings? onur: it seems to me -- patrick: it seems to me, but boris johnson and his cabinet saying they are walking away october 31. they say they will obey the law and they will leave october 31, do or die. i am not sure exactly what that means, if he has a trick up his sleeve, something that happens before then. twole were talking about weapons. most likely that letter gets

written and there is an extension followed by a general election. tom: i have a brilliant chart of some ford of consensus. as we can see, moving down -- 1.11. 100 does a guy like you have a level of no deal sterling? patrick: it might overshoot and get close to parity. i don't think it stays there long, but fx overshoot in the short term. there will be a massive selling of sterling and the boe will have to do something proactive, so there will be emergency measures pushing interest rates as low as they can. there will be outflows on sterling. probably read trenches back toward the 1.10, 1.15 -- read trenches back toward the 1.10roh finance minister laid around --

later on. he will be asked about trade and tax digitiza

♪ you are watching appleberg "surveillance." reversing course on hong kong. the company pulled the plug on an app that showed police activity. apple sayss. the health scare around vaping changed its calculus, prudentil will calculate smokers.

smokers tend to be charged higher premiums. the parents of louis of utah --ugging off -- louis v tall sales of fashion and leather goods rising 19%. hong kong is a key shopping destination for chinese consumers. shoppers are buying high-end fashion elsewhere. that is the bloomberg business flash. francine: thank you so much. finance, france's minister warned the e.u. would hit the u.s. with sanctions if a settlement was not reached over airbus. >> growth less than expected. to press for startmr. erdogan yg a tradeu want to add war between the course we that he thought mr.that on the s will not have any other choice

mystery. but to also take measures at the earnings,nues and european level. they are both mysterious as they russiare is still some time sof come up, aren't they? patrick: they are, and reporting season has not been good for the s&p. recession, and the biggest risk is 2020 guidance may come down. revisee seen analysts 2019 earnings. you have not seen not on 2020 numbers in this quarter will guide and those numbers are optimistic. tom: the key question is where is the guide differential, the earnings line or trade adjusted, the revenue line, and economic slowdown adjusted? what is your suggestion on what guidance will be on revenues? patrick: revenue will be flat and profit margins falling a little bit due to the tariffs and the trade war.

thes a risk for me to throw whole kitchen sink at this and take a bath. say the profit margins are due to the trade war, not our fault, let's move on, so earnings are taking more of a hit and companies guiding down with a bit of an excuse now. francine: where do you see value? you look at company, dutch company by company, but is an industry group valued? patrick: health care is trading below the s&p multiple. multiplesing at the and the 2016 election, so there is political risk with health care because if democrats come of there would be a lot damage to profitability for health care.

growth getting above fnp -- s&p growth and discounted -- tom: patrick armstrong. we have our news bureaus, geopolitical news, focusing on the markets. we are thrilled to bring you ibrahim or bari. ♪

♪ tom: this morning, boots on the ground as operation peace spring begins. u.s. -- syriayria airspace is not u.s. airspace. of stocker a construct market -- constructive stock market, david pearl on your next value play. the president and the speaker,

it is a constitutional crisis. this is bloomberg "surveillance." tom keene in new york, francine lacqua in helsinki. what is the tone in finland on all going on in europe? francine: this is a small open economy. you talk about trade and the economy, and i had a conversation with the governor of the bank in finland, who was down talking the division within the governing of the central bank and hinted it could hurt policy transmission. he was at pains to explain it pushing back against some of the formal central bankers saying the ecb was wrong because they could not see a spiral of deflation. he said the ecb has done the right thing and wants to make sure they continue to do the right thing. tom: moving towards december 12

and the first meeting with president lagarde. viviana: we begin with trade talks between the u.s. and china, they resumed today. deal, the partial u.s. may rule out a previously negotiated courtesy agreement with aging. the two sides have not had face-to-face talks since july. warplanes and artillery striking almost 200 targets. turkey wants to push back kurdish militants who control the area. considersgovernment them a security risk and donald trump says the u.s. will not stand in their way. a last bid for boris johnson to get a brexit deal. he is having lunch with his irish counterpart.

the sticking point is whether there will be customs checkpoints. the leaders need to find common ground or there may be a no deal brexit. in california, bankrupt utility pg&e expanded the biggest blackout ever aimed at preventing wildfires. power,on people may lose mostly in northern california, and could last for six days. faces $30 billion in liabilities for wildfires the last two years. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: equities, bonds, currencies, commodities, just a turn of the market. moment with the turn we are seeing. we are tangentially watching oil

off of the news on the syrian border. francine: i think it is smart looking at lire. what also i am looking at is renminbi. that moved on the back of this possible trade agreement when it comes to some kind of currency packed. european stocks are struggling for traction. they are down a touch now and were up a touch an hour ago, and it has to do with this meeting between the u.s. and china. we had contrasting reports which had volatility in early hours. tom: we will keep up with the news flow and now we will dash to the markets. we are benefited by heber hammer bari. -- ebrahim rahbari. wonderful to have you today.

you sat down and what you brought up is something i noticed, foreign-exchange is the global ms. paper of the system -- litmus paper of the system, and it seems measured in calm. ebrahim: one of the most common questions we face is why is it not moving as much as rate markets? fx tends tonswer is move in two situations, if you changes idiosyncratic in the g10, and when the world is so extreme in the good or bad, the response is different across countries, and we are not there yet. flowshat have capital done? is there still lie flow to the u.s. as a bastion of last resort? ebrahim: yes, the u.s. is the safest place to put your money, but it is taking a hit.

last week seeing an impact through the ism survey, so we are seeing some skepticism whether the u.s. can stay insulated. francine: where do you see dollar from here, given the trade uncertainty? is it all down to what the fed does, and will the fed have to deliver one or two more cuts? ebrahim: overall, the outlook for the dollar is constructive. the u.s. is still in a relatively better spot, a bit more resilient against the downward forces on the growth side, and it is important unusually the dollar benefits from a carry advantage. it is expensive to be short the dollar. we are now seeing manufacturing in the u.s. below 48 and historically the dollar has not had traction in the couple of months after that.

in the very short-term, we are mostly neutral but have not seen the dollar peak in this cycle quite yet. that is despite the fact that we think the fed will continue to ease, driven by incrementally weaker data. remarks, their communication has been neutral, but there is more weakness to come. we think the fed cuts two more times. that is not really the main driver of the dollar from here. it hasn't been for the last 18 months. francine: now we understand there is a possible talk, or the u.s. is looking to sign a currency packed with china. what impact would that have on the renminbi? ebrahim: futures have been a major driver of the renminbi, so to the extent that that partial extensions,eans no

it would cap wear dollar china would go now and that has implications. the u.s. and china have some interest to keep dollar upside contained, but it is still open whether they will get there. we think we are closer to the final innings than the earlier ones in terms of these issues, and trade will play a role. i am not convinced we will get much. here.brahim rahbari in excess of two standard deviations. we are watching at grind to further weakness, 5.8863 at a lire that enjoyed seven five and a half, six years ago. on turkey and syria. later today is the dallas fed

president, mr. kaplan in the 8:00 hour. this is bloomberg. ♪

♪ viviana: this is bloomberg "surveillance." new problems for boeing, involving older versions of the 737. jets will5% of the have to be temporarily grounded. they have cracks in the structure connecting the wing to the fuselage. shares following -- following the most in years, the dutch company warns it will miss profits. phillips reported third-quarter profits that missed estimates.

fidelity investments will offer zero commissions for online buying and selling of u.s. stock etf's and options and will provide higher yields and better trade executions. it is the fifth major industry player to make some sort of zero commission offer. tom: so glad you had that story. today ian "the wall street "the wall today in street journal" there are three ads that everything is free, revelation in the securities business witnessed by the different firms like fidelity and schwab. these images are exceptionally important for all worldwide, mr. erdogan of turkey. 02 has served longer to 20 then another time and place. a divided turkey, his elections

have been quite close. it has been about a turkish rekindling an of ottoman empire of another time. there is no one better to speak to than steven cook of the council on foreign relations. thank you for joining us. what is the messaging of mr. erdogan to his diehard supporters and those against him in turkey? how does he convey to a divided turkey his mission and plan? steven: one thing about the turkish incursion into syria is it is unifying in turkey. have becomeees unpopular as the turkish economy has faltered. beginning with the president's operation, the turks are in the process of pushing syrian refugees out of the country.

one of the reasons for creating this buffer zone, to resettle syrian refugees. it looks from the pictures you are showing that he is speaking to the justice and development, his party's membership and core conspicuously -- constituency, and is messaging about the military incursion. to your expertise on the arab spring and the syrian catastrophe of the last decade plus, what is the likelihood a beleaguered kurdistan will link up with mr. assad in damascus? anden: they are quite weak have few places to go. withhave someplace to go bashar al-assad. he has said the turkish incursion is a grave violation

of syria's sovereignty, and one can expect that the syrians will any to help the kurds in way they can, whether it is funneling weapons or directing turkish forces. what is the outrage in your washington? do they have a power or is it more imagery? steven: that seems to me it is a bit late. republicans have expressed their outrage. legislation has been brought forward by lindsey graham and preventn hollen to two -- to prevent turkey from buying military equipment, but this is a day late and a dollar short. turkey is already in syria and they are pushing the forces to batter isis back from the border.

people are being killed. any congressional action will be merely symbolic. the president has essentially given them a green light to do this. francine: what does it mean for terrorism in the region? steven: this is the big issue. syrias.'s allies in called the people's protection unit, known by their acronym ypg have been watching isis fighters and their families in makeshift prisons along northeastern syria. away frome drawn those prisons to fight the turkish military, it is likely those isis fighters will find their way to freedom, regroup, and threaten the region. it is not as if isis has actually been defeated, despite what president trump has said. this group remains ideologically

committed. it has undertaken operations in syria and iraq, and its leadership remains intact. thecine: given that turned u.s. took on foreign policy with syria, if you are an ally of the united states, would you be worried about their commitment to you? this isabsolutely, and a longer-term implication of the president's abrupt turnaround on syria. it comes a couple of weeks after a suspected iranian attack on saudi arabia's oil processing facility, which the united states responded in the most minimal way. if you are an ally of the united states or they come to ask for help, one would think they would think twice given that american

commitments, the word of the president is not good now. --: shirley you will join us surely you will join us later on bloomberg radio. indonesia seems miles away from anything we are talking about. the arch demotion is mr. erdogan speaking, shifting from looking to europe and looking to the middle east south across the islamic landscape. do they want to look back at mr. erdogan? does the arab and is lonmin world, do they want to take in mr. erdogan? steven: they see themselves as natural leaders of the muslim world and there was a moment in theimmediate up rides where stock was up tremendously and toogan was seen as someone

help them transition to more democratic societies and prosperous economies. arguably 2013, the turks have outworn their welcome. totalitarianism has taken a shine on what people call the turkish model, and arabs believe turkey has much to answer for when it comes to the killing in syria. tom: we will continue this discussion, steven cook. . those arethe cfr issues of mr. erdogan. stephanie baker is serving us and reporting on the moment, bloomberg overnight with an extraordinary story on ukraine. this is bloomberg. stay with us. big mistake be the for the u.s. and a big mistake for ukraine.

see is why i don't want to on the journalists. ♪

♪ she has many abilities and one of her credibility's is teambuilding. that is something we are to have on, all working consistent policymaking and communication by the governing council. i value team play in

communication. divided, you tend to lose gains. if you are united, you tend to win gains. francine: to talk a little bit about ecb, we are back growth ebrahim rahbari. ofyou look at the concerns the ecb, there are so many reports saying the governing council is divided. does it mean they are coming at the end of their tools, or is it more difficult to see what to do next with no fiscal stimulus? ebrahim: for the time being it means they are sort of paralyzed. the government's comments -- governor's comments were correct. we are at the end of draghi's tenure, so it will depend on the leadership president lagarde

will show. for the next couple of months, we should expect very little new information and guidance from the ecb. next year that might be different, because if the slowing trend continues, it a policy --rior require a policy response. worry about aou divided governing council for the european central bank, and what does that mean for europe? ebrahim: i do worry. we have a situation where policy stimulus has been lacking. if you look at the u.s. and china, whenever the data we can, we can expect a policy response weaken, we can expect a decisive policy response. a decisive easing by the ecb would be a reason to be bearish

ledeuro, while the ecb has some of our investors to think there is a little bit of upside. we think there is further downside on the euro because there are things the ecb can do, and the data will probably take the lead to push the euro further down. fedcine: is the ecb and the , are they focusing too much on what the markets want? ebrahim: perhaps i am biased, but i don't think they are necessarily focus on what markets are saying. there is an important discussion, when you take the signals for the future, both the ecb in the fed are trying to look around what gives you leading information, and markets are the best place to look. it is a noisy signal, but if you don't want to just know the state of the economy today but in six months time, the markets are the best place to look. tom: mr. erdogan's first

appearance, speaking to the assembled in ankara, going after the usual. egypt, mr.a and mr. s.e.c. is a murderer -- mr. assisi is a murderer of democracy and threatens to send europeans to syria. ♪

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this is bloomberg "surveillanc" present erdogan of turkey speaking. troopsay, turkish mounting an assault on the northern part of syria, as the u.s. also threatened sanctions that came from key allies of president trump.

we have the un security council trying to also say they will look into this ground incursion. a lot of things going on. we will listen to president erdogan, and he is still delivering the news. he hit back at countries that criticized turkey's military advance, and warned the european union against labeling the operation as some sort of invasion. tom: we will continue to cover this with huge news flow. mr. zelensky, speaking forthright about the u.s. and ukraine relationship. ukraine will not support any presidential candidate and take no sides in the u.s. scandal. let's move on to the domestic. feldmano to noah

writing in "the new york times," an extraordinary essay of the moment that we are in. "the united states is facing a genuine constitutional crisis. that is an extraordinary -- constitutional crisis." that is an extraordinary phrase. he goes on to look back, "mr. nixon would not budge and neither the special prosecutor know the court was willing to back down. what what happened? a good guess is that mr. roberts would stand up to the -- for the clear constitutional precedent." it is the strongest part of to have noah feldman and jonathan bernstein. what is the summation of where someone like feldman says it is

a constitutional crisis? is, in that we are moving in uncharted territory. the constitution does not specify how impeachment is to be constructed, and donald trump and his supporters are seizing on that ambiguity to sow confusion. tom: within america, there is confusion. crisis andity of a then the judiciary. init perceived that way washington? marty: there is a lot of news around the supreme court with the two new appointees, and how loyal they would be to the trump presidency and a constitutional question about which branch of government takes precedent. i think at will wind up there.

tom: what do congressional reporters say about the strength and endurance of speaker pelosi? marty: she is the leader orchestrating this impeachment event. there are a number of members who think the trump challenge to vote for an impeachment inquiry is putting nancy pelosi in a difficult position. , butan allow such a vote then that makes it look like the process is being controlled by the white house and not the house. she is treading a very delicate line. francine: we understand with the white house blocking cooperation, nancy pelosi will speak to senior democrats on a call scheduled for friday. what will be decided? whether she puts the vote to the house or not? marty: that will definitely be a point of discussion.

my own view is the house, if it wants to keep control of this process, should spell out what steps they will take and in what order, and not take the bait of the white house to have a vote of the entire house for impeachment. she has got to keep her aggressive members in line who want to go full bore, have the vote, and impeach this president. francine: thank you so much, marty schenker, chief content officer for bloomberg. we will have plenty more on the impeachment process and what is happening in ukraine and turkey. viviana: in hong kong, protests have pushed the city to the brink of its first recession since the financial crisis. the economy has contracted for the second quarter in a row. hong kong's government may unveil stimulus measures. france says there is still time

for the u.s. and europe to avoid a trade war over airbus. the wto ruled airbus got a legal aid and the u.s. imposed tariffs on billions of dollars of european products. we spoke with the french finance minister. >> i strongly believe this is not in the interest of the ited states to add a trade war between europe and the u.s. to the current trade war between the u.s. and china. i am in favor of settlement, but as all e.u. members and as the open commission, the american administration must be aware that if there is not a settlement, europe will not have any other choice but to retaliate and put sanctions. viviana: next week, u.s. tariffs will take effect. the u.s. will consider a possible trade deal with -- partial trade deal, with talks

scheduled with china today. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: as we speak foreign rahbari,with ebrahim we now have david pearl with us, a wonderful shot, particularly with the value of cash flow, and we will not talk about stocks now. is freight adjusted the epic view? david: you have to have a view about the trade war. tom: an opportunity? david: we think it is an opportunity because both sides are motivated to come to a settlement. economy hasemy -- been clearly affected, but they can hold out as long as they want.

in the u.s., economics matter in the election and the u.s. economy is growing but has been impacted. manufacturing have -- has slowed. consumers remain strong at the next round of tariffs will impact them. tom: corporations adapt. do you have an optimism that corporations can adapt to the revenue pulldown we see of any global slowdown, trade slowdown? david: they can. it depends on how domestically oriented they are in the u.s. as marv and/export economy. they have changed the supply chains. they have moved away from china and this is probably permanent. moved 75% ofowned their manufacturing to mexico. not every company can do that and are moving to southeast

asia, but this will be a permanent change given the geopolitics. companies are adapting. they will cut costs. it depends on whether the consumer remains strong in the u.s. because that is driving economic growth. how elastic is the supply chain? you say some of the supply chains or manufacturing hubs will not come back to china if there is a fixing of the trade war, but some must. how long will that reprocess be? it will be years, because the higher you go in technology, the harder it is to move. semiconductors go through china, although they are not the end market. they will take a long time to move to other countries. lower tech, clothing, shoes, apparel, will be much quicker. that has happened as we speak. francine: what industries will

suffer from this the most? david: it has already hurt technology, particularly semiconductor companies, industrial companies who deal with china for the supply chain. those are the two that if there was a minor deal, would get the biggest pop today. those are the most affected by this technology issue with china, and even though we might not solve it, a lowering of tensions will have a positive effect on the stoxx. -- stocks. an adjustment for multinationals? ebrahim: there is an adjustment underway. we are seeing a clear reorientation to price up the risks of deglobalization. , onennect a few topics

additional risk is we are facing a big election in the u.s. next year. away from trade, the work of kevin hassett and others shows the election and the u.s. will more likely imply a recession then the average year. just the and certainty related to the u.s. election, may be an uncertainty shock. back, and wecoming will speak with david pearl about investment. coming up, much more on bloomberg today, huge news flow. better than good airlines earnings. a number oft experiments they are working on. mr. erdogan continues to speak. terrorists so far have been killed in the syria

operation. we will continue to watch from ankara. this is bloomberg. ♪

♪ >> we are hoping and working for ordered brexit, but are preparing for the worst. >> we think the whole brexit is bad news for the netherlands, for europe, and will turn out to be bad news for britain as well. we have to respect the voice of the british population. i still think that the best is ase is a brexit that easy as possible. >> jean claude juncker expressed

himself clearly, we must not play games and find solutions. francine: it takes two to tango, tom and i know that. prime minister boris johnson his irish counterpart gear up to have lunch. let's get back to david pearl and ebrahim rahbari. talk a little bit about pound. is it still binary, or have markets discounted the possibility of no deal? ebrahim: it is somewhat binary, but the circumstances have changed. 1.20,e been in this cable one .25 range, and the true no deal risk are quite small. when we look at sterling, we see fairly asymmetric risk. the base case this we will run extension and then an

election, but there is the risk of a resolution. sterling is like a call of some resolution of the brexit process that gives an upside. charte can do single best , david pearl can do this with us. ,e will go to a serious chart great bloomberg article on october 31 on employment in london. there is a chart to 1.11. we may get to 1.11. is that a wealth destruction for the united kingdom if we get the outlier of a 1.11 sterling? is it a devaluation of the pound? ebrahim: it would be, and what is tragic for the u.k. is the devaluation of sterling does not do the u.k. good. exports have not done good out

of devaluation. it is now pretty cheap and consume in london. tom: this is absolutely opportunistic. how do you play this likelihood? david: british stocks are interesting now. downtic have been beaten and will do better after brexit, so there is optionality. tom: would you like to give names? david: homebuilders, real estate , local, domestic companies in particular. tom: francine? francine: overall, how do you trade pound? do you trade against dollar or euro or something else? ebrahim: we prefer to look at it against the euro because the brexit volatility is most clearly expressed that way. any other currency will have significant other drivers so

euro-sterling. we still see serling -- sterling upside. tom: only we can do this on "surveillance," bring the chart up here. , where itro-sterling has been trading range because of the urodynamics. are you suggesting --euro dynamics. are you suggesting we roll that over? ebrahim: the euro side has some downside but in sterling, we see an upside risk. we have not quite had the breakthrough towards a resolution and we think we will get out of that range in a few months. watcho you see a swiss shop? our team in the control room would not know euro-sterling if it hit them over the head, and they nail it with a

"surveillance" banner. ebrahim: very impressive. tom: seriously, brings up a serious point that the media is cable, cable, and euro-sterling is a huge part of what we talk about as well. we will drivei, home this conversation on radio, and david pearl will stay with us. ,ater today, jennifer nason head of jp morgan investment banking operations. in helsinki and new york, this is bloomberg. ♪

♪ erdogan in ankara, right here is the leadership of ukraine over lunch with reporters. the "surveillance team -- "surveillance" team wishes for burgers as elegant as this. there is no burger in helsinki like we are seeing in kiev. francine: looking at the

pictures, thinking it sounds "ke an looks like bloomberg surveillance." it looks like it is made-for-tv. i don't know if that infers a closeness to another world later. away from the burgers in kiev, let's get to the bloomberg business flash. course: apple reversing on hong kong, pulling the plug on an app showing police activity in the city, saying it could endanger police and people who live there. they have been embroiled lately. in the state of california, bankrupt pg&e expanded the largest blackout preventing wildfires. 3 million people may eventually lose power, most in northern california, and will last six days. pg&e is trying to prevent

equipment from igniting fires, as they faced 30 billion dollars in liability from wildfires over the past two years. tom: an important headline from "secure"an, turkey to northern secure area -- syria to the iraqi border. this has been widely reported. as wes, david pearl, and look at the news flow, let's settle back to the core principles. this is the bits and chart. -- ibbotson chart. dow,is proxy, i use the the slope matters, the agony of the depression in the 1920's, and up we go. we have been on this path, so many reasons not to participate. are we there again? david: no.

equities are still attractive relative to fixed income, and income is an issue with low rates, so finding stocks that are reasonably valued with good income is a very good strategy. the market has already discounted a lot of this in the usual areas, so the best stop for utilities -- they are overvalued now, so they have run. so have reits. you have other areas and you have to be a stock picker. we can find more economically sensitive stocks that have fallen way far behind. tom: the heart of the epic approach is to avoid financial engineering. it is tossed around in the media, financial engineering. is there a lot going on now, or is it rare where there are opportunities to look at? david: it is not that common because the cost of capital is so low.

companies can borrow money and if you look at private equity returns, it is the leverage that makes the return. we are in an easy environment to lever things up and you do not have to do a lot of restructuring. we prefer companies with good profits, and there are so many examples where the market is not as excited about that as they are about growth or safety. tom: it has been an extraordinary news flow. we greatly appreciate david pearl. francine: we are looking at pictures of the ukrainian president and he is just briefing reporters. ands a little bit of a q answer session over what appears to be burgers. refuted anyst -- suggestion he was blackmailed by donald trump and is talking about the friendliness, or the

fact that he will remain neutral in the u.s. election for 2020. tom: we are monitoring as washington awaits mr. erdogan with his first comments, speaking in -- this is bloomberg. ♪

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♪ pres. trump: the question is do i want to make a deal. if we make the right deal, i would love to do it. i thing it would be a great thing for china also. alix: trade deal confusion. china will leave talks today early. the u.s. opening up a currency packed as part of a partial deal. the fed's next move. a divided fed timbers expectations of a rate cut.

we speak exclusively to dallas fed president robert kaplan. and pg&e's meltdown. power is out for 500,000 californians while the company is dealt a blow in court, losing exclusive control of its bankruptcy. welcome to "bloomberg daybreak" on this thursday, october 10. i'm alix steel. ernie's coming out now -- earnings coming out now. delta down by 0.6%. a bit better than they had guided. they were looking at the top