nejra: boris johnson urges supporters and rivals to back his brexit deal, but can he win over the parliament the defeated theresa may three times? and china's economy grew at the slowest pace since 1992 as recent events take a toll. renault slashes profit forecasts about putting blame on the deteriorating local economy. shares tumble. welcome to "bloomberg surveillance." francine lacqua is in washington

for the imf meetings but let's get a check on the markets as investors digested the data out of china earnings will be coming through in europe. we struggle a little bit and stoxx 600. cable is coming off a five-month high. a lot of concern going into this weekend and what parliament will vote on in terms of the brexit deal. we are talking about potential rate hikes. coming up, we hear from the vice president of the european atmission that 1130 time -- 11:30 a.m. london time. and still to come, we speak to bank of england governor mark carney at 5:30 p.m. london time. definitely not want to miss. all of those conversations from the imf world bank annual meeting. let's get first word news in new york.

>> we begin with the cease-fire in syria. -- the u.s. and turkey agreeing to a break in hostilities to allow kurdish fighters to withdraw. once the cease-fire takes affect them a donald will remove this week's sanctions, but u.s. senators from both sides say the deal does not go far enough. reluctant to cut rates any further. that is the bank of italy's governor. he says he did not support all of the elements of the latest package. he cautions negative rates are quoted unconventional tools. but adds that banks so far have coped well. rates aree interest not a good idea, according to some. asset purchase, according to some, are not a good idea. case, the balance is

clearly positive. plunging after the french carmaker slashes outlook for revenue and profit. it is blaming the deteriorating economy weighing on auto demand. revenue for this year will drop 3-4%. they previously saw sales in line with last year. inflation is moving up in just a bit, but no real signs have taken off. the latest from john williams who says the fed's actions have cap to the economy on track but he was cagey on the outlook for policy. forpoke to the bank international settlements general manager about the risks for monetary policy. >> we are reaching a point where anetary policy can generate small benefit in terms of economic growth but it might generate the probability of less growth in the future if we fall into financial instability in

the future. >> in catalonia, spain, separatist leaders are promising a new push for independence. it is a challenge to spain during the 10th week of violent protests. separatist leaders have called for a general election -- general strike today. we spoke to the minister about the political crisis. 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. back to you. nejra: thanks so much. here is how some of the key players reacted to boris johnson's last-minute deal with the european union. >> a great deal for our country and for the u.k.. it is a good deal for our friends in the eu. i will say that our objectives have been met. >> i am happy that we reached a

deal. >> we have a deal which allows us to avoid chaos and the utmost fear of conflict. thanks to this deal, we can't avoid this hard quarter, including custom checks. >> there will be no hard quarter between north and south. the economy will continue to develop. >> it means that we in the u.k. can come out of the eu as one united kingdom. >> it is for the british parliament to make a decision it is a long-standing parliament with a long tradition. >> the extraction having been done, the building now begins. anna: that is brussels, now to u.k. parliament. the british prime minister now

has less than 36 hours to sell his deal. nejra: compromises mean the loss of 10 votes from the dup, a party which usually backs his government. that makes winning a majority tomorrow look even tighter. let's get more with our bloomberg opinion editor. , theoining me for the hour head of g10 fx research and strategy. yesterdaya column that says has foster finally overplayed his hand? and if you lose this weekend come it would not be the end of the world. why? >> boris johnson has made a clever to way that. it is possible-- two-way bet. it is possible to get foster on board. that might be saturday's vote. let's acknowledge there's an opportunity he might seek a vote after that. if you can't get the dup on board, he may be able to cobble

together enough votes to get the deal through. if you can't, he would then go to the electorate having struck a deal, having momentum behind him. the blame would, as he had planned pretty much since the leadership campaign, be placed elsewhere. from the johnson's perspective, he would like a deal to go through on saturday. political advantages to him having gotten this far you can if the dup does not join him. nejra: i will come back to you in a second, but i want to ask, where is the flaw for sterling? uptrend,und in the there could be a volatility given the binary risk ahead of the vote on saturday. that said, even if parliament were to reject a deal, it will open the door to a brexit delay and article 50 extension, new it's -- new elections. and is highlighted, the tory

parted will be headed towards an election and crucially having a plan how to do it. that could convince a number of voters that have been flirting with the vote -- the idea of voting with the brexit party to decide to really rally behind boris johnson. themuld ultimately allow a slightr brexit with delay. either way, the way it looks for the pound, we could be getting to a deal one way or the other. but more importantly, no deal brexit is off the table. so the pound is in an upward trend from here and we could see some retracement of the recent gains. parliament rejects the deal, but i think there will be buyers. ultimately, we see the pound higher from here over the longer term. closer to the longer term value.

or it could get higher, still. therese, do you agree that no deal is now off the table? >> it is for now. it has receded to a very small probability here. the thing to say is to never underestimate the power of momentum in politics. morris johnson has momentum behind him. on an election, he will get some of those brexit party voters. however, they have also been bidding for labor leave of voters. i think he will win some and lose some. nejra: we talked about cable and where we see that going. a lot of people are saying euro-dollar to get a lift on positive news. but what happens to eurosterling? valentin: from a valuations point of view, 1.04 is where sterling will stabilize some not far from here even with a deal. the main driver is the fact that

the euro will also benefit from any potential resolution. fact being, the engine of the eurozone economy, germany, has been suffering disproportionately. because of the trade work but also brexit given the exposure to the u.k. economy. if that risk of bates, you could argue -- abates, you could argue that could help the economy. they could also argue for less monetary stimulus and given that we have some underway come it could bode well for the currency from here. euro-dollar higher on the back of that, so both regaining ground against the dollar but also the yen and swiss franc could be in the cards. i was just going to say in terms of getting this clear in our head of what deals my past or not, we have been talking about referendums and

all that, how you think this will play out over the weekend? therese: the chance of them attaching an amendment that seeks a referendum has receded. those who want a second referendum think they would have a better chance after the attempt to pass a deal fails. the big hurdle after saturday is implementing legislation. to bere is a lot of work done between now and the point where we say we have a deal that is signed and approved by parliament. as here we areng speaking in positive turns about the economic outlook and i can't remember the last time i came on here and did that. [laughter] nejra: therese raphael, thank your much. valentin marinov from credit agricole stays with us. we will keep you up-to-date over the weekend. anna edwards will lead a special coverage from sunday 7:00 p.m. u.k. time. plenty coming up.

china's gdp records its slowest growth since the early 90's. we focus on the world's second-largest economy in the next. plus, the $2 trillion ipo is off. saudi aramco is set to postpone its ipo again. we bring you that story later in the show. this is bloomberg. ♪

♪ nejra: economics, finance, politics, this is "bloomberg surveillance.". viviana her tonto in new york -- hurtado in new york.

ipo,amco has delayed its depending on market positions. it is to give bank analysts and a time to incorporate third-quarter results. aramco didikely show not suffer a material financial get from last month's attacks. tech companies should not be the arbiters of truth, according to mark zuckerberg. network doesocial not fact check political advertisements because that is not its role. at a speech at georgetown university, he added quote evil should be able to see for themselves what politicians are saying. that is your bloomberg business flash. nejra: thanks so much. turning to china and its economic growth slowing, gdp rose from a year ago. it's the slowest pace of growth since the early 1990's. it comes as demand at home this week and the trade war drags on exports. valentin marinov from credit

agricole is still with us. we did see a bright spot in industrial production. bloomberg does see momentum continuing to slow. would you agree? valentin: the data confirms the need for further stimulus in china. it is something we continue to expect. this is also why we expect growth to rebound into year and. -- end. we expect officials will meet a 6.2 growth target for the year. partly confirming that you is the latest in the trade tensions-- that view is the latest of the trade tensions, unless something terrible negotiations. we think those concerns will continue to update -- abate. the latest data out of china has shown signs of improvement. theof that corroborates

case of that consolidation may be in the cards going into the fourth quarter and years and -- end. nejra: and you reflect that constructive view how? yuantin: we tend to use doxies -- proxies and the euro-dollar itself, which is quite exposed to the outlook for the chinese economy. the renminbi outlook remains challenging but, in my view, that reflects the deterioration in the chinese balance of payment more than the resilience of the economy. , butwe expect a slowdown it will be managed and we are not expecting a hard landing. see,eaker yuan we first next year, should continue to support the economy. if only because it is offsetting negative impacts from the tariffs put in place by the u.s.. nejra: we have got pictures of

eu leaders gathering for the summit. yesterday, we saw that deal reached between the u.k. and eu. in europe, how much of a lift could the euro get from a positivity out of china? valentin: with euro-dollar at 1.12 this year and ultimately heading towards 1.2 at the end , part of that very gradual move will reflect the move that both the chinese and eurozone economies will finally experience some consolidation and growth. at the same time, we remain a relatively bearish. bearish. relatively the key theme will be slower growth but also cyclical convergence whereby the u.s. growth rates will ultimately start converging to the still

rather low growth rates, especially economies like the eurozone. we expect what we call policy convergence with the fed forced to ease aggressively. this will be in contrast with the out -- with the proactive ecb now that mario draghi's era is coming to an end. this gives us differentials and a higher euro-dollar. nejra: if that translates broadly into dollar weakness, it will be most pronounced against what other currencies? valentin: given it is happening against weaker global growth, you could make the case for the unwinding dollar carry trade. where japanese and swiss investors have been piling onto unyielding u.s. assets. with growth conditions deteriorating, it may not look as appealing as it used to. stock market valuation may play a role. dynamic, itof flow

is really in the unwinding of the dollar carry trade by eurozone, or indeed, japanese investors driving euro and yen closer to the fair value. as low as 98 in the case of dollar-yen over the medium to longer term. that is our view. nejra: 98, well. valentin marinov from credit agricole stays with us. coming up, we speak to top newsmakers. first, we hear from the vice president of the european commission, pierre moscovici, eu commissioner for financial affairs. and later, we speak to bank of england governor mark carney, particularly interesting as we heard from the deputy governor putting rate hikes on the table. that's all in washington. this is bloomberg. ♪

nejra: live pictures from brussels of the eu leaders summit. they to after getting a deal with the u.k.. now on the agenda, the long-term budget, climate change, and turkey. speaking of which, the lira rallied on news of a temporary cease-fire.

turkey agreed to halt military action for 120 hours to allow kurdish forces to withdraw. it was announced by mike pence after hastily arranged talks in ankara. valentin marinov from credit agricole is still with us. we have definitely seen the lira catch a bit of a bid. would you want to join that rally or be cautious? valentin: cautious. it is an important development but not a major one. the military conflict could still escalate from here and the threat of -- as president trump put it to destroy the turkish economy is still there. that said, the backdrop for high yield currencies like the turkish lira has improved. we hope the brexit deal will be ratified by parliament tomorrow. if not, no deal brexit has been taken off the table. that is one of risk less.

trade war concerns have been abating. that is lifting some currencies. overall carry demand for risk to continue to recover. the turkish lira could be among the beneficiaries of the demand for high-yielding currencies. that said, given the geopolitical tensions the turkish lira carries with itself , they offer good yields like the mexican peso or russian ruble. but turkey does have that baggage, if you wish. nejra: valentin marinov from credit agricole stays with us. coming up, can an orderly brexit mean a rate hike for the u.k.? that is the view of the senior boe policymaker. we discuss that next. this is bloomberg. ♪ everyone uses their phone differently.

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his brexit deal but can he win over the parliament. hitting the brakes, china's economy grew at the slowest pace since 1992 as the trade war takes a toll. concerns, slashing the forecast and putting the blame on the deteriorating economy. third quarter results shares tumble. let's get a check in on the biggest stock movers as we're in earning season. here's emery. hi, emery. on the upside, one of the biggest gainers this morning is getting up some 18%. the estimates beat the highest estimate and stock is having its best day since april. as you just mentioned, plunging, down 7% and cut their outlook and didn't meet expectations and has to do with weakening sales of yogurt and

in europe, water. republican you a slash -- and they say what they need for auto space. you see here the auto sector is down 1.3%. we're climbing up and down more than 2% and top of renault and what they're doing, take into effect we had a weaker than expected chinese print on the g.d.p. number and put pressure on the numbers, too. >> let's go to viviana. viviana: the economy is growing the slowest in 30 years. g.d.p. rising 6%. bloomberg economics says it may decelerate further. investment growth dropped. one bright spot, industrial output beat estimates. south africa central bank governor says the country has a chance to hang on to the last

investment grade credit rating and adds policymakers must move on necessary reform. and they're about to deliver the rating on south africa on ovember 1. >> moody's has raised issue of the south african leaders. they say what must be must not d so moody's venture into those issues. viviana: the separate leader pushing for independence and calling for a general strike. it's a challenge to spain in the 10th week of violence in the street protest coming after jail terms were handed down to the leaders for a failed bid of independence in 2017. >> i hope we can engage in a much more instructive place.

catalan has to focus on itself and with the spanish government the last 16 months tried to engage with dialogue within the law and with the catalan authorities and hope we can continue talking in the future and violence goes down as much as possible. viviana: the spanish economist speaking to us. bloomberg, powered by more than 2,700 journalists and analysts in more than him 100 countries. this is bloomberg. >> central bank and global financial leaders are in washington for the i.m.f. annual meeting. francine lacqua was there and sat down and talked about the economy and weather. e.c.b. has the firepower to deal with any shock ahead. >> the trade is on a downward trend and is at the lowest

owth rate, so in this time the turbulence in trade restrictions are it. francine: because of trade or political concerns or something else or is it a downward trend? >> i think in the end it's the uncertainty linked to both, that delayed investments and direct effects in certain economies like china for example which clearly had the major impact especially on our european experts. on the other hand, the geopolitical risks are not easy to define. we are seeing the brexit which has been very cyclical. and now we are on the rise, better prospects and at the same time we have the middle east which is contributing to worsening outlook. so it's complicated but it's

the uncertainty that is having a major tech and you see in the p.m.i.'s and obviously the main effect has been on manufacturing in germany and italy. the risk is that there is spillover to other countries and spillover to the service sector, something we already are starting to see. francine: markets are worried central banks don't have the firepower, especially in europe, to deal with the crisis or possible eventual crisis. do you refute that? ignazio: we have the extremes to intervene but it would be better if there were policies in which interaction with the iscal policy produce quicker results. on the other hand there's been also a dispute about the instrument that we use and would be better to dissent,

we've seen somehow to have spelled out the names of those in the account and now we're in a cacophony and is not a good thing and we should talk about at least but in the end overall there was almost a unanimous request of having a package and easing monetary policy, the kind of instruments we used, negative interest rates according to some are not a great idea, the asset purchases according to others are not a great idea. overall, i think we should evaluate both the pros and cons of all this because there are both pros and cons, in my case the balance is clearly possible. francine: there are media reports of the divided council of the european central bank, is that true and make monetary policy less effective? ignazio: there is something that is a possibility because then there is a presumption in the end something will give but

i don't think so. i think we have a very serious debate internally and in the end, also those who in the past objected to our monetary policy decisions concluded that after all, it was not bad to take these decisions and i hope it will be again the case now. francine: can banks deal with further negative rates in urope? ignazio: yes, the banks can deal. up to now there's been a neutrality of these negative rates because the margins have been compensated by the ncreasing loans. "do not encourage going in the direction and see that very unconventional, too, banks can keep the situation as it is, we can maintain a very easy stance but we have to be careful of the possible negative effects

especially because at the end, i think there would be lower bounds to the positive rate and then if profits may be affected, then the consequence on loans might be visible. >> that was bloomberg's francine lacqua speaking to the bank of italy governor. we're extending gains here on sterling. valentin is with me in the studio and also joined by bank ofening landed reporter david goodman who sat here on set with us as well. welcome, david, thanks for sticking around, valentin. i want to ask you about the sterling move because earlier i said where is the floor for sterling if the vote doesn't go through and i neglected to ask you if you think the vote will go through. you actually think it will. valentin: there is a chance of it happening especially from the labor m.p.'s show up to support the deal because i think people have had enough of the whole brexit to and from

and i think there is a decent chance of actually the parliament backing the deal and could see cable at 136 already next week. the move could be quite brutal, quite aggressive and we've been there before and the markets are still relatively speaking rather short. that is the big risk so from a trading perspective you don't want to be selling the pound here and as more people adopt that mentality it drives the price and the pound continues to appreciate. >> you wonder perhaps some people are getting onboard and sterling getting a lift today. declines ing did pair saying if boris johnson gets his brexit deal tomorrow rate hikes should be on the table and the view of the bank of england deputy governor and told bloomberg the bank's guidance a smooth brektity would mean gradual increases and says that view continues to be valid. david goodman with me here.

david, great work on this. of course what dave says kind of conflicts from what we heard from other policymakers who are decidedly more dovish, what was the reasoning here? david: what is interesting here is ramsden hasn't changed his mind. his argument, the same argument the bank used in the previous hikes was the speed limit of the economy has been hit by brexit and the potential grade is lower and means if you do get a deal it can stoke investment again and exceed the limit and means more inflation. >> it's interesting because with a brexit deal going through we discussed with valentin he says is quite likely this weekend if sterling moves higher it takes the pressure off in terms of inflation but is it because he really sees domestic wage pressure picking up? avid: yes, and the bank sees a

inflation before which is their reaction but he flags the wage growth at 3.94% now and really is quite high than in the last few years. >> valentin, do you think that this could actually happen? you're quite positive on the brexit process if we see rate hikes how quickly and aggressively could it come through? >> there is a signal they'll hike once per year to redeas the developments in the economy. they may well revert to that mode assuming the brexit risk goes away. i should also highlight there's a lot of pentup demand in the u.k. economy because business investment has been crushed down by the brexit uncertainty so there's more clarity on what's going to happen again really from here and could be a case domestic demand will pick up and should support product prices, wages, and all of that could indeed create a fundamental mix and that will be conducive to more rate hikes from here and i wouldn't say

that would be aggressive, which calls for aggressive moves from the bank of england and also because we're in a environment the e.c.f. eased policy and fed is in an easing cycle and would be difficult for the b.o.e. to separate from the rest unless they want a stronger pound and that will then equate unwarranted tightening in the u.k. financial conditions. we don't want to put together but you could make the case where moderate gradual increase in rates could be on the table assuming the brexit uncertainty goes away before long. >> it's not easy being the lone hawk. thank you, david goodman and valentin. the world's biggest i.p.o. is off for now, bloomberg learned audi aram co-is not offering again. this is bloomberg.

♪ >> this is bloomberg surveillance. let's get the bloomberg business flash with viviana snoofment viviana: despite a slow economy, there is a strong credit demand in china. the online finance giant is controlled by a billionaire. it says the private sector is thriving due to the advent of new technology such as online lending and mobile payments.

>> we're looking at the members and experiencing long term goals. and with the domestic consumption of the china economy. viviana: renault plunging after the french carmaker slashed the outlook for revenue and product and blaming the deteriorating economy weighing on auto demand and revenue drops to 3% and renault saw 2019 sales in line with last year. the finance chief of the london stock exchange is retiring as it looks to complete the akeover of refinitive about to close in to 2020 and the news better than third quarter results clearing revenues and leaving growth at the lch business. nera

[nera: the world's biggest i.p.o. is off. saudi aramco is postponing the buy for three weeks. joining us is our reporter in london and valentin is with us as well. good to see you again. what's the reasoning for the delay this time? >> item all about the valuation. we've seen this story before last year and i feel i'm having deja vu. the delay will give the wall street bankers working on the i.p.o. a bit of time to incorporate results into the impt p.o. assessment of the valuation. looks like they're still not at the $2 trillion target the shareholder wants which is the royal family and m.b.s. requires that $2 trillion valuation and where is the valuation? if you look at exxon and take their dividend deal and put it against aramco you have a valuation of 1.5 and most analyst expect it below that including bloomberg bell intelligence which said it is

more 1.1 and has everything to do with the valuation of the company. nera: in these earnings we're factoring into the valuation they'll show the impacts of the attack on the aramco facilities was limited? viviana: that's one thinking, aramco has wanted to save space keeping the i.p.o.. and another tacks have not affected the financial results but may have impacted the sentiment of the investments, tribeka partners says it's one of the greatest assets in the world you wouldn't want to pay me to be there given the security risk. nera: on the market it feeds into the local listing as well, right? viviana: 2% on the local stock exchange to raise $40 billion for the sovereign investment firm, sovereign wealth investment. basically they've already stopped thinking about the international listing at this moment so they've already pulled it back last year just

going for this local listing. aramco said it had to do with market expectations. and we saw the tatawal go in the bear market and seen it popped a bit and analysts in saudi slashing forecasts for other companies and maybe don't think right now it's the best time in what is going on with the saudi companies in stock exchange but look at the price of oil. they need $80 a peril to balance the budget and we're nowhere near that. nera: and how do you factor that in the strategy, somewhat weak on the oil price, you see us move anywhere neared 80 yet? >> not as constructive as $80 but the view being predicated on our expectation the net oil importers, the euro zone, china, should start consolidating here on the back of monetary fiscal stimulus and abasement in the trade tensions. at the same time the biggest contributor to the growth slowdown we expect will come from the u.s. consuming its own oil so in terms of balance

between demand and supply at opec sticks to the oil supply plan it gives us somewhat higher prices for oil from here. from that point of view we like to express that view by being more constructive or bullish on the likes of cat, like funding securities like the french frank including oil price and relative brazilance and bank of canada will decouple from the feds so relatively hawkish including the s.m.b. so lone cat swiss from here and always we have to say constructive in the region crown, not the best view to have at the moment i admit but it is the case of having a more constructive view of oil from here plus giving the exceptional resilience in the economy in light of what's happening outside of norway. we stick with that view so we think that outperformance of oil currencies could still come

especially against other commodity currencies like aussie, new zealand dollar where we have the central banks clearly in favor of easing. nera: thanks for the guest host for the hour. kg up on bloomberg, we'll keep you up to date with every twist and turn in the brexit process over the weekend and ann edwards leads other special coverage. up next, shares slumping in two of france's biggest companies today. we'll bring you the story. this is bloomberg. ♪

nera: economic politics, i'm neara in london. a gloomy day for two companies. renault slashed revenue for profit this year. a similar story on the world's largest yogurtmaker cutting the full year salesmaker and is a dent to the recovery plans. the stock price has seen strong gains year to date. we're standing by in paris with more. good to see you. what does it mean for renault and the company going forward from here. what was the reasoning for the

cut? >> one week after the ousted c.e.o. who was considered as the last holdover of the carlos era and clearly this profit warning was unanticipated and clearly is adding to the storm at renault. renault of course is suffering as all the automakers with the downturn in car sales and hey're citing a deep demand in turkey and argentina and also struggling to go fast enough to make the switch to jet emissions and invest in electric cars. this is actually the second profit warning. they already did one in july. so the new interim c.e.o. will have a lot of questions on the 2022 strategy plan at renault. nera: always interesting as well what we learned about yogurt and bottled water which has to do with consumer shift to vegan products and perhaps

less plastic? >> that's right. in fact the situation is not as rosie either in terms of sales growth and do not expect revenue to rise between 2.5% and 3% and only when the expected 3%. there is a switch, consumers in russia switching to cheaper yogurt brands consumer in the u.s. and also choosing other brands and they did a good performance for baby food in china. nera: great to see you, caroline, for that update. we continue in the next hour. francine lacqua and tom keene still in washington, d.c. this is bloomberg. ♪

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francine: boris johnson, can he win over the parliament that defeated teresa may three times. hitting the brakes, china's economy grew at the slowest pace since 1992 as weak domestic demand and trade wars take a toll. new trump tariffs on e.u. goods take effect today. wines and whiskey, europe threatens to retaliate. early morning in d.c. good afternoon if you're watching from asia. this is bloomberg surveillance. yesterday we had a fantastic day, tom and i go onwards talking about tariffs and emerging markets and brexit with the governor. tom: that governor interview will be fascinating and the exit of brexit. what is fascinating is the energy of the international monetary fund meetings and across town at the ronald reagan building, the i.m.f. meeting of all the bankers and been years since i've seen a dovetail of energy with all the

eopolitics going on right now. phillip: and more trying to figure out what's going ok with the world. coming up, our conversations with the vice president of the european commission. and the commissioner for economic and financial affairs and later we speak to the bank of england government, mr. carner. your killer question on brexit? tom: where are we saturday and what happens monday morning. francine: what happened to pounds and the pound volatility. hi viviana [viviana: boris johnson has the sales job of his life. the british prime minister must sell his new plan to skeptical members of parliament and votes on it tomorrow. his minority party doesn't have the majority and needs to convince lawmakers. he fails they may have to

exit or leave e.u. without a deal. turkey's presidentered juan, the deal they've wanted for years. mike pence announcing the agreement with erdogan to halt offenses in syria. kurdish fighters will be forced to retreat from the battlefield and were once u.s. allies. turkish forces won't withdraw. kurdish leaders say they won't tand for a turkish occupation. and they're back stepping about comments from ukraine. mike mulvaney said the white house held $400 million in assistance to the ukraine. the president denies a quid pro quo. the democrats call mulvaney's questions a potential turning point in the impeachment investigation. he now denies saying what he said. over to china is where economic growth slowed in the third quarter from a year ago growth

domestic product rising less than 6%, the slowest pace since the early 1990's. factory output improves retail sales but china's slowing investment group remains of concern. on ticktock and powered by more than 1,200 analysts in more than 150 countries. francine and tom? tom: quiet markets out there. this is good conversation this morning. it's a good thing. let's get to it quickly. equities flat and the euro, 111-12r5. i don't know what sterling is doing, you tell me. francine: there was concern they couldn't debt it lieu and were optimistic and we'll have to wait and see as we do the arithmetic for the brexit vote and i would point for china growth it wasn't great but hasn't royaled investors either and is a interesting dynamic in itself. the e.u. and u.k. secured a brexit deal. the prime minister boris

johnson has less than 36 hours to help sell his deal to a skeptical house of commons. compromises over northern ireland means the last of 10 votes and makes winning a majority in tomorrow's special sitting looks even tighter. bloomberg's anna edward. you've been covering it from the very beginning. how different is this new deal and will people in westminister vote on the deal or is it once again party politics. >> a bit of everything here. some will vote on the deal and others on the apollo ticks. how difficult will it be for boris johnson to get this through? there are fewer fingers the number of m.p.'s that could stand between boris johnson with a deal or no deal. we're counting the individuals into camp. let's focus what happened the insist 24 hours. and a number of the employees thrown out of the party just

weeks ago, some of those have been coming out of the wood wark seeing a way to get back in the fold. but keep an eye on one important amendment by sol ver because it would thank things and putting down an apartment that would folk yuts to certain scrutiny and help to be the wearer of confusing mettaging but where would that leave us come sunt. it wouldn't be clarity. him tom: let me go to a broader picture 10 years out. does the prime minister's deal risk losing northern ireland to hiled? ication of the >> it's something we talked about before, isn't it. i was mentioning yesterday, they've been saying this for decade and they've got posters to that effect all over, the border country at the moment when i was in island i was willing at those.

teresa may described many months ago when she was here, she described what boris johnson has done, the way there is now some sort of customs line down the irish sea and described it as no u.k. prime minister do sign up to. how will she vote tomorrow? it will be interesting to watch. d.c. is further distancing northern island from the rest of the united kingdom and is not a separation by any means right now. dominic rub saying it is not a line in the irish sea and doesn't bring those two parties closer, does it? francine: thank you, anna p. in brussels. let's get to our reporter in our report trying to look the a the arithmetic of parliament and has been doing it on the three votes and on teresa may, where are we ought right now and how many votes does he need and how does the convince the

m.p.'s to vote for this deal. >> he's about 0 votes short and there are 75 to 85 m.p.'s who potentially could be sold. and some of those as anna was talking about are former m.p.'s who are desperate to get back in the party and always said they'd vote for the deal. so it's not that surprising the trouble is on top of those guys, he needs to pick up the 28 who never voted for a deal, they call themselves the partance because they see themselves as holding out for a proper brexit. it's looking good for johnson with them. a lot of them said we'd never betray the b.u.p. johnson looks like he's on course to get at least a half of them. then he needs to pick up later m.v.p.'s as well and there are signs he could do that.

he stnt need to do quite well but really, really well in all of these. nejra: what do we know the prime minister will do if he loses the vote on saturday. kelly ann: he won't tell us. he's required by law to seek an expense, a lay to breakfast. he's saying he won't do that and we snow he's given accordance to the bank of scott lick he will come take. in a way there's been briefing they've got clever ways around the law but ultimately we've had that briefing from people like this before and it's turned out that actually didn't have clever ways around the law and the people who wrote the law are also quite clever and say there are no clever ways around the law. i think probably he'd seek an extension. 's the idea the e.u. would say no because jean-claude made

in announcements. 's not up to runger the folk pomes case if there's a brexit it won't be their fault. tom: from those of us confused by the many folks, you'll anna and others had a beautiful essay on the confusion and what would you guess where we will be monday morning. >> that's so hard, tom. i actually would be surprised if he wins this total. -- this tomorrow. there's a lot of options. my feeling is the boris johnson administration is turning out attention to ay's shore it up and you give chris else, you say you'll get your parliament labor votes and then it turns out the labor votes don't show up.

i suspect having monday we all hit the plant that will said you won't seek an attention. e's speaking to an election. so my -- i mean, i wouldn't bet anyone's int on perfection but that's my hutton. leading our special coverage through the weekend on this important saturday parliament session. joining us, always a high point of the meetings of the international monetary font with i.r. math and she simply owns the phrase dysfunction. doctor, thank you for joining us. i want to get to china later in the hour. let us talk of the dysfunction and populism you study in europe as well. brexit is a form of populism. does the populism ebb in the

coming year or two or is it here to stay? >> it's here to stay. the vote was two years ago and we have issues regarding that. i think the underpinnings of what was the cause of populism, the concerns about the inequality and distribution of both, the concerns about the pop race mantra. so i think those things are here to stay. tom: the word is synchronized from the managing director. the synchronization of europe and the dynamics across the channel right now, how synchronized is it or is it the united kingdom alone. i wouldn't buy into the word "sink ron us" because within all these european economies, the u.s. and japanese as well. there's not synchronicity in refardfarge for demand which is strong consumer demand services

and domestically oriented weisses and what is supporting growth we see trade has collapsed. i don't like the word sink ron es. tom: we heard it from dr. linske as well. francine: if we get an organized brexit does it take away the worry of the world market or are people ignoring it? >> i think it takes away the worry and there's been an awful lot of uncertainty and more than just brexit but if that was taken off the table about would be a sigh of relief like ok, let's get on with what we're going to do and business does really like to have a certainty and a five-year horizon and many have made adjustments and moved on and does improve the environment and would be good for europe.

exiting is not good for the u.k. so u.k. will not be better off for this. certainty is a good thing but knowing you won't be in the u.k. in europe anymore is not a good thing for the u.k. but certainty overall is better and certainly for europe would be better. francine: thank you. in the meantime we're looking at live pictures over in wars loana. tens of thousands protesters faced off police. setting newspaper barricades in the streets. you're looking at live pictures. these trenthy prison certains fiven to the potential leaders that riled up protests. this is bloomberg. ♪

viviana: you're watching bloomberg surveillance. renault, the french company, slashed this year's outlook and renault is saying weakening economies are hurting car sales and blames tougher rules on emissions for higher costs. renault is the share falling the most in two years. the yogurtmaker lowering its outlook. they lost market share in america across all categories falling for the sixth quarter in a row and that's the bloomberg business flash. francine and tom? tom: viviana, i thanks so much. it's a joy in character for francine and i to speak to katherine mann out of o.c.d. and out of a classic text book of years ago. so in a short interlude here on

the early morning of washington, we're going to go back to first principles with professor man and do that on the trade deficit and its sustainability. you broke a monocombraff -- monograph 21 years ago for president trump and suggest he hasn't red it as well. let's go back for first principles, why should we not fear a trade deficit? ms. mann: a trade deficit points to an economy doing really well and points to an economy with robust consumption and robust investment and uses imports in order to improve purchasing power for business ansd consumers. so you like imports and they're an indication of how well the economy is doing. tom: he's got smart guys around him why can't they convey the mann religion to him? katherine: i think there are a couple issues that are at odds. first, of course, we have to remember that the u.s. actually does quite well in services and those don't seem to be terribly

important. the second thing is that i think there's a concern that the deficits are associated with job loss and it certainly is true in some industries, you import something and it's not produced domestically and those jobs are lost and other jobs are created. the transition is challenging and that's something that for many decades domestic policymakers have tended to ignore the transition costs associated with job loss. tom: i'm putting out on social dr. mann's book, it's vintage but written a year ago. francine: i need to pick it up again, actually. catherine mann joining us and we're getting news from the irish minister saying he'd strongly back a extension if a deal tomorrow is rejected in the u.k. parliament. it was interesting yesterday to have jeanne-claude junker to rule out a delay and something boris johnson probably asked for to put more pressure on hits people.

and the prime minister refusing to say what he is going to do if he doesn't win in parliament tomorrow. the bank of england governor interview is coming up. we'll talk about rates and brexit. this is bloomberg. ♪

♪ >> we have gone through a period of very expansionary money policy and what we see was the most risky decision and

not a the lo of space left and this policy acting alone is probably not the desired one or what we need to reactivate the economy so i think there's a consensus being built on the need for fiscal policy and structural reforms to be joining that we can really have a stronger growth going through. >> negative interest rates according to some are not a great idea. the asset purchases are saying it's not a great idea. overall, we should evaluate both the process and the council because there are more crossing accounts because in my case the balance is clearly possible. francine: the bank of italy governor and the prime minister of spain. et's get to catherine. catherine: you need more structural reforms and who will push for them? catherine: it was pointed out pros and cons pointed out with

the monetary stakes. and they can use these tools, i would say there's plenty of space, new tools can be eployed but the rates have a deleterious effect. and you have negative rates and less wealth and there's a response that's counterintuitive because people tend to save more and that has negative effects on demand. there's a limit we can use policy and has been well articulated by the outgoing head of the e.c.b., mr. draghi. the issue is you need fiscal policy and structural policies and often those two can go together. dmed, ee new r structural and different things that are fiscal, too. francine: will governments do

it and is lagarde the right person to convince them of it [catherine: coming from the i.m.f., it's a good background to be he'll dealing can some of the fiscal issues. she's had a long career of dealing with economy ministers and with treasuries and finance ministries so she can bring to bear all her work with those parts of the government as her new role as head of the e.c.b. we know fiscal is necessary. we've seen improvements, the netherlands for the country, using their fiscal space and so we're waiting for some other countries to step up and some of them, of course, have in mind the potential use of some structural changes, structural reforms in regulations on climate and also some spending on climate. you don't have to call it fiscal policy, you can call it other types of policies with the same result. tom: we'll continue catherine

mann and address the trade war in china as well. a lot more coming up today. speaking of central bankers, francine in conversation with mark carney. from the visit european vice president for euro and social dialogue. the same title i have for surveillance, i'm in charge of social dialogue. in barcelona, there are protests, continuing protests. we addressed this yesterday with the spanish minister, protests in catalo flmbings ia. the meetings of thi.m.f. and i.i.f. this is bloomberg. devices are like doorways

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and if someone trys we'll let you know. xfi advanced security. if it's connected, it's protected. call, click, or visit a store today. >> we have a deal. >> this deal represents a very good deal for the e.u. and u.k. >> this is a fair and balanced

agreement. >> we have delivered. >> everybody should be convinced that the deal is the best. >> that the irish prime minister is content is an important sign. >> that had to decide whether they want to deal. >> this is dear prime minister to deliver -- to your prime minister to deliver a deal. >> i help my fellow mps in westminster come together to get brexit done. francine: e.u. leaders react to boris johnson's brexit deal, better than no deal, but we don't know what boris johnson will do if you does not get it through westminster tomorrow. we do not know whether e.u. leaders will stick by what jean claude juncker said but they will not give an extension. tom: absolutely fascinating.

i am totally confused. francine: confused about what? tom: like they were saying, a deal is better than no deal, and that is an afterthought. this is mumbo-jumbo, and then we go to saturday. francine: you are negotiating with the e.u. and you have a deal and you have to get it through parliament. what everyone seems to believe as this is less economically damaging than leaving with a clean-cut. washington,day from our conversation with valdis dombrovskis, the e.u. commissioner for economic and financial affairs, and the bank of england governor. let's get to the bloomberg first word news. viviana: turkey agreed to temporarily halt its military

offensive in syria but is not withdrawing its forces. kurdish horses have been told to draw as part -- forces have been told to withdraw as part of a deal. this gives erdogan a victory he sought for years. trying to convince skeptical members of parliament to vote for his brexit plan tomorrow. if it fails, the e.u. -- the u.k. could leave the e.u. without a deal or would have to postpone its exit a second time. he will have to sell politicians. critics are blasting president g7mp's decision to hold the and a at his own home row, florida. the white house says the resort will be much less expensive than alternatives. energynt trump's

secretary is calling it quits. rick perry told the president he will leave this year. he has come over scrutiny -- under scrutiny over decisions on ukraine but had come under scrutiny before that. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: china's economy grew at the slowest pace since 19 92 as weak domestic demand and the trade war took a toll. missing the 6.1 percent consensus. joining us is bill rhodes and catherine mann is still with us. and thank the program you for staying with us. how much should we worry about china? catherine: you need to go below the gdp statistics and make a

distinction between consumption and investment and the trade side. still staying hard or staying good. it is the investment part that is weak. china has been wanting to do a transition away from investment led and trade led growth for some time. challenging, been and this is on the bumpy road. meetings andmf world bank meetings, i have been dying to ask you this question. international bankers want to create international revenues. can they create profits in china? can american banks and european banks create profit internationally, or is it a quixotic effort? william: if you are talking about china, china is in a difficult economic situation

today and if you are talking about banking, first of all before we talk about the foreign banks which are a small percentage of the toll in china, apart from the state owned banks , a lot of the provincial banks have problems. one of the small banks in northeast china went under and paralyzed the interbank market for 24 hours. just the other day, the central bank had to provide $28 billion. one of the things they have been trying to do is cut down on the debt to gdp. pbocave some people at the and in the central government itself, you have an experienced reformer who is the vice president and sort of problem solver.

they know they cannot continue on with this debt. the former head of the people's bank of china who held the role a record time, at the sidelines of the 19th party congress warned of a possible minsky moment. when i went to brown -- tom: here we go. bill: minsky was a professor. i'm trying to figure out if i ever was in his class. financialis, the system in china itself is not that robust and they are concerned about the growth of debt. they are caught betwixt and between, because growth is slowing. it will go below 6% next year. tom: this is important, if you look at the financial aspects, we are at 6% gdp. joyce chang at j.p. morgan suggests growth is under 5%.

what is the urgency you see that they need to fix the system now at6% instead of fixing it 5.4% gdp? what is the urgency now? catherine: the urgency is for them to do some of these structural issues that have been facing the economy in the transition from the investment and trade led growth toward something that is consumer led growth. something they have been wanting to do for quite some time, decades in fact, and maybe this is not the opportune moment, but in some cases you do the reforms necessary to be done when you are pressured, in order to do them. society, itmer led is one that has a predilection , song, precautionary saving they have to worry about

precautionary savings bringing consumption down as well. from a policy standpoint, thinking about how to address that question is a real need. francine: if you look at the weakening investment in china, is that enough to push them toward a deal with the u.s. on trade? catherine: they need to -- there is a range of issues on the trade side. what is on the table for trade does not have a lot to do with investment. technology, yes, that is an important component, foreign investment and ownership, these would be supportive of a transition in investment away from building things and roads and bridges and houses toward a more balanced technology-based one. whether that will pressure them into a deal, i don't think those things are on the table for discussion. tom: catherine mann and bill rhodes, thankful they are with

us. in washington at the ronald reagan building, the institution of international finance, michael mckee driving forward the conversation. together this morning, james dimon, james gorman. this is bloomberg. ♪

francine: we will keep you up-to-date with every twist and

turn in the brexit process, anna edwards leading our special coverage on sunday and we will have special coverage of the vote tomorrow. we don't know what prime minister johnson will do if he does not get it through parliament. tom: we will be heavily involved with coverage on saturday and sunday as well. in new york city, let's get our business flash. the giant saudi aramco ipo is on hold for a couple more the timingco saying will depend on market conditions , buying time for wall street banks advising them to incorporate third-quarter earnings into their valuations. banks are struggling to meet the 3-d trillion dollar value valuation. changestrying to force at the phone and media conglomerate after acquiring a

$2.3 billion stake at at&t. they could sell or spin off assets, or shuffle the board. protests in hong kong are having an effect on hedge funds based there. they are seeing the largest outflow since the global recession. hedge funds total about $1 billion. that is the bloomberg business flash. tom: thank you so much. really extraordinary news flow. in washington, they are aware of brexit and such, but they are looking at the trials and tribulations of the president. eli lake, back to back two extraordinary essays on the president of the united states. far from fixing a problem because by the dam up -- caprice, the vice

president and secretary of state have compounded it. solve circuit test turkey -- turkey solve its problem, the president is repeating erdogan's talking points. a must read. with us in london, stephanie baker joins us, very much involved in this geography and these discussions. what is your insight of what is to happen next for these different players -- mr. putin, mr. erdogan, mr. assad, and mr. trump? stephanie: it looks like a total victory for erdogan. he got what he wanted, basically control of a safety zone on the syrian border. effectiveave is an change of a border, an international border, with very

little consequences if sanctions are lifted on turkey. it is also a victory for putin and assad, who are not party to this agreement but certainly benefit. becausealso benefiting at allows them control of he zbollah forces and allows them to move through. trump has positioned this as some great victory, but there are still a lot of questions. --re will the cordish kurdish forces retreat to and how long will this be for? i don't see this holding for long. it is a five-day cease-fire and unclear what will happen. tom: it gives them time to move material around. do we have an understanding of -syrian-russianh

armament is? stephanie: certainly, quite a bit. putin and russian forces have been reinforcing assad. forces have gained strength in territory because of the u.s. pullback. ofs is a wholesale kind departure of our allies, the kurdish forces, and certainly gives syria and russia the upper hand. what will happen to those kurdish forces that the u.s. has fought side-by-side with for years. francine: how is the republican taking -- republican taking -- republican party taking this? stephanie: much worse, this is a much bigger problem for trump in his own party than the impeachment inquiry.

you have had various members coming out criticizing his policy toward erdogan, his departure and pullback of support from the kurdish forces. is one place where you have seen republicans in congress break ranks with the president. i suspect they will make moves in congress to voice their displeasure. francine: bloomberg's stephanie baker, following the white house. coming up, an interview with the bank of england governor mark carney. we will ask him about interest rates. that we didnjury with an mpc member that if the deal gets through, maybe we can look at interest rate hikes for are the bank of england. we will talk politics and brexit with governor carney. this is bloomberg. ♪

♪ whereare reaching a point generate alicy can small benefit in terms of

economic growth, but might generate the probability of less growth in the future if we fall into financial instability in the future. globalized synchronized slowdown and it is important that we do something about that. the risks have been heightened in the uncertainty that comes from that. >> i think there's room for central banks to lower their policy rates further. in the philippines and india and countries, they have already decreased the interest rate. tom: conversation at the international monetary fund meetings yesterday. ,e will drive that forward including the important discussion with governor carney. james dimon and james gorman also. we are thrilled to have with us rhodes and catherine

mann. is thisthe same bank -- a new citigroup? ago, i retired 10 years and there is a long history. put it this way -- one thing remains the same, the international interest and coverage of citi, which is what made citibank the great institution it is. tom: well said. they have always had that international view more than any american bank. into anhave a view overwhelming debt? is the debt containable? catherine: the debt is a big , what isut who owes it being done in order to put countries in firms and households on a paths to repay

it, you have to break down the numbers. guy compared to when this was out there, the debt was amenable. catherine: we do debt service all the time, and that accommodative monetary policy in the u.s., japan, and europe have put into place and opportunity for governments to use the space wisely, to put into place productivity enhancing strategies so countries can repay their obligations. firms should be doing the same thing. a lot of them are borrowing for purposes not associated with that activity enhancing strategies. you can look at the debt and some of it will not be sustainable. bill: one of the things that is concerning is the buildup of debt, not just of the sovereigns , but the private sector. we have been in a situation

which i have talked about a number of times, the tremendous search for yield. banks have thrown so much money through quantitative edie's -- quantitative easing and negative interest rates that firms are taking tremendous risks on search and reach for yield, and that can only go on for so long. my concern is in the next year or two, we may have a real problem in the international economy with this search and reach for yield. francine: because of risky investments, illiquid investments? bill: all of the above. not just the sovereigns, it is also the private sector. catherine: you look at the numbers and it is the private sector that is the driver of the rising debt obligations. what are they using the debt for? maybe one third is for new investments and increasing the capacity for the firm to repay obligations.

the other two thirds not being used for that purpose. tom: buried in the financial stability's book, this is like 300 or 400 pages of phd work at the imf, a quiet two or three pages of the harm of a persistence of low interest rates. i go back to actuarial assumptions changing and the audit days of negative interest -- oddities of negative interest rates. we are having a debate we have never seen before. catherine: not that i can recall, no. it is a consequence. interest rates are low for a long time. people borrow. tom: agreed. catherine: what do you do with what you borrowed? does it go for something that will enhance your capacity to repay the obligations you are taking on, productivity enhancing, or not? that can be analyzed at the firm

level, the household level, and the country level. that is the strategy we do to evaluate whether or not we have a problem. this iserlying all of the larry summers theory about secular stagnation. the question is, you are not really getting bang for the buck with all this borrowing, and that is a concern. francine: catherine mann and bill rhodes. in the next hour, we will be joined by jacob frenkel of jp morgan and will talk to valdis dombrovskis and the prime minister of belgium. we will talk brexit and global trade. this is bloomberg. ♪

♪ tom: this morning, quiet markets within a synchronized global

slowdown. wars affected by trade synchronized by the white house. beijing, economic growth below 6%. the place of america in the middle east, we speak with jacob frenkel of jp morgan. speaking of jp morgan, jamie dimon, morgan stanley, mr. gorman, they deliver first in class earnings at noon. they meet to greet global banking. this is bloomberg "surveillance." we are at the meetings of the international monetary fund and the world bank. brexit. all of this is francine: they had a deal, and yesterday in the quarters of the imf and world bank meeting, people are talking about the itl, whether it is a risk if

gets voted through parliament. the question is whether he has the votes to get it through, and what if he doesn't? yesterday we heard from jean claude juncker saying they will not give them an extension, and angela merkel saying an extension is inevitable if mp's reject the deal. tom: here is viviana hurtado. viviana: boris johnson now has the sales job of his life. planst sell his brechtian -- brexit plan to skeptical members of parliament who vote tomorrow. his party does not have a majority so he will have to convince opposition lawmakers. if he fails, the u.k. may have to delay the exit day for a third time or leave without a deal. a victory for turkeys -- turkey's president erdogan, an

agreement for turkish forces to halt and offensive in northern syria. kurdish forces are forced to withdraw. kurdish leaders say they will not stand for a turkish occupation. the acting white house chief of staff backpedaling on a controversial statement about ukraine, mick mulvaney saying the white house did withhold $400 million in military aid to ukraine to further donald trump's military interest. that undercut denials of a quid pro quo and democrats are calling his statements a potential turning port -- point. in china, economic growth slowed from a year ago, gdp rising a less than expected 6%, the slowest pace since the early 1990's. retail sales holding up but shina's slowing investment

remain a concern. 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: let's do a data check quickly. quiet markets, futures as flat as you can get. euro with a little bit of strength. curve steepening. francine: sterling is fluctuating a little bit. headline goes to every on whether boris johnson will seek an extension or not. pound pretty much unchanged. u.k. primeore the minister seeks parliamentary approval for this deal. we do not know whether he asks for an extension. european stocks unchanged. european leaders reacting to the deal that boris johnson reached with the e.u. anncellor merkel said

extension is inevitable if mp's reject the deal. joining us now from brussels is anna edwards with the latest. anna: we don't know whether he has a majority in parliament or whether he will get this through parliament. what if he does not get it? says -- the law says he needs to ask for an extension and that is why all these lines out of brussels at the moment around which leader says an extension is possible or isn't is so interesting. the u.k. cannot legislate what the e.u. 27 say and it has to be a unanimous decision, so anyone could veto an extension. merkel, according to a newspaper, says an extension is unavoidable if mp's reject the deal. they will see what mp's managed

to unearth. it did seem to me the word of prolongation as a word is coming up everywhere and discussed everywhere by these e.u. letters because it is not a word -- leaders, because it is not a word i have used. leaderd from the irish saying ireland would back an extension. that if anequivocal extension was sought, they would back it. it matters for the framing of tomorrow's vote. francine: how different is the deal to a theresa may deal? anna: it is different on customs, on how it treats northern ireland around customs. the free trade agreement he is aiming for, he is not talking about hugging closely to the single market. he is looking for a free-trade agreement and that puts more distance. one of our colleagues talking

about there is one way to sum up this deal, it is harder. most notably, around customs checks and where the border lies , around customs in the irish sea. tom: we look forward to anna's coverage through the weekend and her special sunday coverage of this critical saturday vote and the consequences afterward. this is my high point of the imf. he has been here for 34 consecutive years and brings substantial academic ability, jacob frenkel, former governor of the bank of israel and --ising jp mayer again chase j.p. morgan chase international. here inappy to have you some shocking uncertain times. sends, the imfl that you have been -- the multilateral sense, the imf that

you have been apart, is it gone? jacob: i hope not. what we see now is ace this is -- a system in which there is great risk everywhere, the risk between the united states and the federal reserve, the risk between the monetary authority and the fiscal authority, a risk within the ecb, risk between china and the u.s., a risk, a risk. all of this is completely inconsistent with a successful, integrated world that the global organization wanted to establish. or 1939ken back to 1913 or sometime we did not see it coming. are they solvable risks or is something bigger coming we cannot synthesize? jacob: the first thing, when you say we did not see it coming, the benefit of looking back into history as we see what happened

when we did not see it coming. just look at the early 1930's, the whole tariff rise. in the united states with a well-intentioned effort to improve labor on u.s. citizens, they raised tariffs and the stimulate should -- stimulation trade geared the great depression -- stimulation triggered the great depression. i hope currency -- current policy members understand we are playing with fire. the world is much more integrated than before, because capital markets were not as integrated as today. therefore if you did the wrong thing, it took time before it reflected itself in the system. financial markets translate immediately to the present and we see the volatility. francine: is this enough to start or make a recession worse? jacob: it is enough to wake up

people to say, if we are neglecting it, it will make the recession work. why do we have a recession? because we have some rain did to be in the system -- rigidity in the system that needs to move from one risk source to the other. it gets stuck and a recession comes in. it is easy to say. say it is only in the political arena, europeans do not get their act together, china focus on its domestic fares, it is too easy. the real issue is to bring people together and say, we are in the same boat. we are not on the same boat, we are on the same plane. if the plane has trouble, we know how it ends. francine: coming up, over the

weekend, we will keep you updated with twists and turns in the brexit process. sebastian salek will cover the vote and anna edwards will host a special on sunday. this is bloomberg. ♪

♪ you are watching bloomberg "surveillance." tonelt is setting a gloomy for the european auto industry, saying weakening economies are hurting auto sales, blaming tougher rules on emissions. falling. danone

the u.s. yogurt business losing market share. all categories fell for the sixth quarter in a row. that is the bloomberg business flash. tom: there is so much going on with in england and brexit and the united states. , j.p.s, jacob frenkel morgan chase international chairman and joining us also is kevin cirilli, our chief washington correspondent. what i know they are talking about at the pentagon, an essay in "the new york times" by an admiral of the u.s. navy, this was a direct and scathing indictment of what we are observing in washington right now. this is admiral make raven -- one retired four-star general shouted, i don't like the democrats but trump is destroying the republic. if our problems are meaningless, how will our allies trust us?

it is time for a new person in the white house, republican, democrat, independent, the sooner, the better. what is the state at the pentagon? foremost, thend president's decision for mike pence to get to some kind of agreement with turkey with regard to the situation in northern syria has allowed washington to take a collective deep breath. the president was facing criticism, but at the end of the day they have gotten themselves a five-day cease-fire. tom: we have u.s. material blowing up u.s. facilities on the ground as we try to gracefully escape. what is the morale at the pentagon? kevin: when you talk to the political appointees versus the career officials, there probably would be a difference in morale.

francine: what does it mean for the republican party in its commitment to president trump? kevin: very committed. republican staffers are rolling their eyes at this impeachment and feel it will be a political disaster for democrats despite ares saying independents for impeachment. francine: are there rolling -- are they rolling their eyes about syria? kevin: they have created a situation where they are openly criticizing the administration but they are behind him on a whole host of issues because they feel it will help them to be behind him for midterm elections. president trump remains deeply popular, and on foreign policy they cremated -- created a dynamic where they can criticize him. tom: jacob frenkel, chairman of

j.p. morgan international and a lengthy service of the bank of israel, i know you don't want to talk about israel monetary politics, but israel is part of this tension. and goes back to the 1980's the rekindling of turkey-is really relations. turkey-israeli relations. are those relations gone? jacob: i don't see them gone. there are fundamental reasons why they should continue, and there are huge amounts of tourism going around, a lot of transactions. one is very concerned about what is going on. we are talking about geopolitics and smaller countries. small countries cannot affect the nature of the global scene. we are a small boat and a big

ocean. the big ocean, the stones are fed by the big boys. the task of the small boat is to strengthen their own boat so they are more resilient to these kinds of shocks. tom: the president is developing a kind of isolationism. he has got a big boat. isolationist boat this president is on? kevin: that is what he ran on. , thats something he felt antiestablishment strategy he felt would fuel him. thatdoes he still have resonance within the republican party? kevin: at the rally in dallas, the president was full steam ahead. jacobs point, --

jacob's point, this was the messaging he held for. he is daring the republican party and the democratic establishment, you monti make -- fromant to make withdrawal syria a problem. francine: the composition of the world economy is changing because of this. our central banks realizing the new world order? jacob: in israel, the economy has changed dramatically. 20 or 30 years ago, it was enough to know what happens to the u.s., japan, and germany. today, they produce just one third of world output and at the time they produced two thirds. where did it go? , particularlyts asia, so the world has changed. it is much more important than it was before and let me come

back to the earlier point that you may find it politically advantageous to be elected on a platform of isolationism, but you cannot change the law of physics and the world. the world is integrated whether you want it or not. the genie is out of the bottom mustttle, and the system make use of this interaction. the trade world and the capital market world will not solve the issue. francine: that is not what the u.s. is saying. kevin cirilli, jacob frenkel stays with us. breaking news the spokesperson of boris johnson saying if a deal is passed in parliament, the government would legislate quickly and aim to pass the necessary laws before october 31, because the worry is they get a deal but do not pass it in

time. coming up, and interview with mark carney. this is bloomberg. ♪

♪ negative interest rates are not a great idea. asset purchases are not a great idea. overall, we should evaluate the pros and cons of this because there are both pros and cons and the bow -- negative balances

clearly positive. francine: that was the bank of italia governor. christine lagarde has been officially appointed ecb chief by the e.u. council meeting in brussels. how will the ecb change under madame lagarde? the market is testing whether the ecb is running out of tools. what can they do next? jacob: madame lagarde is extremely eloquent and astute. she will recognize how occurrence in the ecb -- how the currents in the ecb are moving now. there is a risk under the surface and now it is coming out. it is not healthy that it is coming out, but that is life. that means there is a few years of a political and analytical

debate, namely if you decide you need to have easy monetary policy, you need to decide how to do it. ,o you go more negative rates or asset purchase? the fact of the matter is those are two different strategies. francine: does division in the ecb governing council make monetary policy less effective? jacob: it is always that monetary policy is becoming less effective once it shows less coherence. when you have tranquility in the system and clarity in the system, it is enough that theirry policy whispers eyebrows to have an effect. you have to scream louder to have an effect and you are not heard or understood. the issue is have all the debate at home, reach the conclusion, and go ahead and do not confuse

markets. tom: next year, 35 years? jacob: i hope so. tom: his 34th consecutive year at these meetings. he is with j.p. morgan chase international, their chairman. we have much more to talk about, francine lacqua with the interview of the day with the governor of the bank of england. of thedombrovskis european commission give us an update of the dynamics of all going on in london. a special program note, sebastian salek on saturday, anna edwards on sunday as the story of brexit unfolds, washington this morning. ♪

♪ bloomberg "surveillance." from the meetings of the international monetary fund and

world bank, an eventful day in washington. will be a conversation with the vice president of the european commission, and our important interview of the day, francine lacqua in conversation with the governor of the bank of england. what are you going to talk to mark carney about? a two hour conversation? francine: in 10 minutes. if you look at volatility of the pound, i don't know if it is something they worry about. if the deal goes through, they could be looking at interest rate hikes so i want to ask the governor how quickly they can have that reversal. tom: i am sure he will give you a clear answer on that as well. toiana: turkey agreed temporarily halt its military offensive in northern syria but is not withdrawing at sources.

kurdish forces have been told to withdraw as part of an agreement vice president mike pence announced after meeting with arkey's president, giving him victory he sought for years. boris johnson trying to convince skeptical members of parliament to pass his brexit deal. they could exit without a deal if not past, or be forced to ask for an extension. he has to sell politicians on this agreement. critics blasting donald trump's decision to hold the g7 summit at his own resort in florida. critics say that will add to the investigation of him profiting from the presidency. the president says the resort will be much less expensive than alternatives. the energy secretary is calling it quits, rick perry will leave

this year. he has come under scrutiny on his discussions on ukraine but was planning his exit before that. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: we will have special coverage throughout the weekend for that vote. sebastian salek, and anna edwards on sunday. the focus is on the arithmetic in parliament to see whether boris johnson can put the deal through, and if he does not have enough votes, what does he do? he refuses to say whether he will ask for an extension. we are joined by alexander de croo and valdis dombrovskis. dealyou look at the brexit , finally we have an agreement. what does it mean for the e.u.?

were they showing their softer side? valdis: we have emphasized on the e.u. side that we want to reach an agreement and a no deal brexit will be destructive for the e.u. and u.k. economy. we have been working to achieve this agreement and it is positive that a deal has been reached. for ratifications in the u.k. and european parliament. francine: what is the chance we get a brexit deal? if we don't get an approval in parliament tomorrow, is an extension the only way forward? they were saying they will not give an extension. ,lexander: until two days ago you had a u.k. prime minister still saying i am willing to go ahead with no deal brexit. that has changed, because he has a deal and implied if he would

not get a majority in parliament that probably he would contain a general election or extension with a deal. to ancertainty attached chaotic no deal brexit, that one is gone, and that is a major change of strategy. tom: both of you are students of european history and the dynamics across the channel. i am thunderstruck of the articles on the future of ireland, or maybe even the separate scottish vote. i don't want you to comment on domestic politics, but are we missing the potential turmoil to come if we get some kind of deal and move on? are we missing something in the future? valdis: that was exactly one of the reasons why reaching a deal was difficult, that the e.u. has been very clear we need to respect the good friday

agreement and avoid a hard border within ireland, and as the e.u., we will only agree to a deal that is acceptable for ireland. from that point of view, the deal now safeguards the single market and the good friday agreement in ireland. tom: you are both products of american education, clark engineering and kellogg as well. we have a president who is clearly comfortable with an isolationist policy. you lived the advantages of come to america and get educated. do you see a permanence to the president's strategy, or is it a one-off issue and we can get to some normalcy in the multilateral world that gave you your educations in america? alexander: i have no crystal ball, but i would think if you look at it from a logical

perspective in 10, 15 years down the road, europeans and americans will find each other. i am quite convinced. what happens between now and the next 15 years is highly unpredictable, but we are starting to see the cost of that. this is one of the first years where the volume growth of worldwide trade is going to be around 1% and gdp growth is 3%. worldwide trade is growing much slower than economic growth. that is a very telling element because it means there is some kind of a break on worldwide trade. that is not a good thing if you look at the world reports that you have annually, explaining the impact on worldwide value chains. francine: how important is it that we deal with brexit to focus on that? we have trump tariffs coming into play today. tom: i didn't know that. francine: well they retaliate?

valdis: first of all, in regards to tariffs imposed today related to the wto dispute and airbus, and what the u.s. is doing is implementing this rolling on airbus case but there is also a boeing case coming. there have been violations of subsidies through both airbus so the u.s. has chosen to go with tariffs and we will further negotiate a rulesment to agree on the of subsidies in the airline industry, because there are new competitors coming in and it would be in the interest of the e.u. and u.s. to have clarity around the rules instead of having another round of tariff escalation.

once the bond ruling will come in, the e.u. well respond with its own -- will respond with its own tariffs, and it will hurt people on both sides of the atlantic. francine: how do you see that developing? for more countries push retaliating against trade tariffs? valdis: we are not talking about retaliating. leasts case we are at using the wto framework and that is different from steel and aluminum tariffs which were unilateral, and the u.s. retaliated, if you want. we are expecting it. i am saying there will be another ruling coming and we will be forced to impose our tariffs. prefer to avoid this. alexander: it is not a good thing.

we use to have a u.s. president who said towards the economy, do not do stupid stuff. if you look at what is happening today, a lot of what he would have called stupid stuff -- tom: given the micro tariff story in belgium, give us one example of how trump tariffs, mercantilism directly affects the nation of belgium? alexander: we are one of the top five most international economies in the world, small and highly competitive, a lot of american investment. if there is this worldwide trade, it has a direct impact on our economy and the u.s. economy as well. we have evolved to highly sophisticated value chains and if you start going through that, you will be slowing down growth and slowing down prosperity. we need more prosperity for climate change. francine: what is your biggest

concern for the e.u. economy? valdis: the e.u. economy currently is slowing down even though we expect economy growth to continue in the e.u. we see that fundamentals are still strong. our services sector is developing strong. jobs are still being created, but yes, indeed, we see a slow down. part of it is related to the global trade tensions, part of it to geo letter call ends -- geopolitical instability. in the e.u., there are some internal issues. it looks like we will avoid no deal brexit, so that is a good thing for the io economy. there is some fiscal uncertainty in some e.u. members states, so there are some concerns to be addressed. the e.u. side is emphasizing its

need to strengthen the resilience of more e.u. members economies to withstand economic shocks. thank you, alexander de croo and valdis dombrovskis. we will keep you updated with every twist and turn in the brexit process this weekend, sebastian salek on saturday with the vote and anna edwards will host a special on sunday. coming up, we will speak to mark carney on brexit. this is bloomberg. ♪

♪ francine: bringing you up to date with what is happening in brussels. we are expecting a news conference from angela merkel shortly. moments ago, madame lagarde saying she is looking forward to working with the talented ecb staff. she commented on twitter after the ecb counsel said she was officially appointed ecb chief. led by the newes managing director of the imf, on a trade war, permeating all the imf research and the effort at the world bank and the efforts at the iif again. enda curran has given us huge advantage at bloomberg "surveillance." he has planted

himself in washington for these meetings. belgiannue with the prime minister and the european commission vice president. give us an immediate update on this friday of protests in hong kong and the beijing reality of this trade war. enda: on the protest side, things are at an impasse. there is no sign of a near-term resolution or breakthrough. it becomes something of a proxy in the u.s.-china relation. we appear to be heading toward some kind of trade truce or agreement between president xi and trump, however chinese economy -- china's economy continues to show pain with gdp on a downward path. tom: i did this for the engineer

log thekis, we always first and second derivative. growth, and itna is concave. need chinaoes europe notth to sustain at 6% and migrate to a five or four handle? valdis: when we discussed a slowdown of china's economy, we are still talking about economic growth of 6% which is what advanced economies are growing, so it is quite a strong growth rate. someone expected china to grow in double digits for a long time. tom: factors are in the wrong direction. valdis: indeed, there is a

slowdown. the trade conflict with the u.s. is taking a toll on china's economy and the global economy. the imf estimates it has affected negatively 0.8% of global gdp. side,ore, from the e.u. we urge both sides to avoid further escalations and to go for a negotiated settlement of this conflict. francine: we are getting some breaking news out of the trade that thener saying e.u. will retaliate over the u.s. airbus tariffs. that is the latest from miss's maelstrom.-- mrs. i don't know whether that means this escalates to the point that you economy gets hurt in europe.

valdis: i would not use the word "retaliate." if the u.s. is imposing tariffs in the airbus case and not going for a negotiated settlement, once the and amount ofling tariffs the e.u. can impose is decided, the e.u. will impose those tariffs according to wto rules. francine: what do we know about how much of an impact is europe feeling from the u.s.-china trade war, and what can you tell us about belgium? alexander: if you look from a china perspective, the relation to the u.s. is only the third most important. china is trading much more was southeast asia. china is trading more with europe than with the united states. we from a european side is a trading bloc, they are second to none on this.

what you need to do on the european side is take those things much more in our own hands. i agree with some of the elements of level playing field, some of the trade we are having with china is not on a level playing field. in belgium, we have one steel mill which is known as the number one or two most productive from an ecological perspective. if you get dumped steel and the market at not the same standards, it is the strong ones that get punished. , it a belgian perspective makes sense to have a frank discussion with china. i think the power we have over the china relationship is more important than the u.s. yourthank you so much for comments, particularly on this breaking news. the deputy prime minister of belgium can come back. his acclaimed quote is something

we at "surveillance" love -- an aging population is a blessing. bankg up at the imf world international finance meetings, michael mckee providing key leadership, moderating many panels including the jameses, james gorman and james dimon. this is bloomberg. ♪

♪ this is bloomberg facebook vowing to carry on with its digital currency despite high-profile defections. --id marcus says he does not countries that pulled out of the libra project. libra has faced substantial pushback from lawmakers and regulators. when you look at these digital currencies, where will the biggest disruption come from, central banks or big tech?

valdis: if you look at initiatives like libra, one area that they seem to cover, unmet demand for cheap and fast international transfers. therefore, when we are discussing libra at the e.u. level, there are a couple of points we are making. indeed, we need to look ourselves how we can find a european instant payment system. that is a demand we need to meet and there is work with both the european central bank and the backing sector -- banking sector. we need to assess risks which propose fore libra money laundering and monetary policy. we have sent a questionnaire to

libra and just two days ago we got responses from them and we are assessing those, because we need more detailed information on the nature of their project to see what kind of regulatory framework would be needed. what we have indicated from the european commission side, we would be ready to come forward with an e.u. regulatory framework. willine: in 10 years, what the payment system look like in europe? valdis: technology is looking so far, i would not now predict. i think it is safe to assume that there is going to be european instrument payments -- instant payments. there is a customer demand for this and we see several initiatives from the ecb, from the banking sector, initiatives like libra which are looking at

that segment. francine: we are just getting breaking news out of president erdogan saying turkish forces will remain in northern syria and the border to a safe zone is the border with iraq. mr. erdogan said there are no clashes ongoing in northern syria, something i am sure the commission well look into. thank you for joining us, valdis dombrovskis. good and interesting panel coming up with the vice president on esg and financing. we willp, mark carney, talk pound and brexit. ♪

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china gdp falling come but it could have been worse. u.k. parliament votes on johnson's brexit plan saturday. pushes back on tighter controls while d.c., europe, and its cofounder warn of more power. welcome to "bloomberg markets" on this friday, october 18. i'm alix steel. we made it. my theme of the morning, it kind of could have been worse. you take a look at where we are in the market considering all of the negative data out of china, s&p futures holding around the 3000 level. the cable rate kind of going nowhere. not a lot of selling over in the bond market.