matt: brexit deadlock. eu is respected to approve a brexit delay as boris johnson fails to push through his plan for timing. fresh u.k. election could be in the cards. china is reportedly planning to replace embattled hong kong leader carrie lam, but will it make a difference to the protesters? and softbank to the rescue. wework accepts a $9.5 billion

bailout. but at a valuation of less than $8 million, there's a big difference. let's check in first on what's going on in markets. you got a lot going on in brexit. to the generaled terms of boris johnson's plan. they did not agree to the timing. so it may not happen before october 31. you can see the pound down still at 1.2865, a relatively strong level. index arer stocks in down about a quarter of a percent. your most of the movers to the downside, the breath of the downside. , bututures are also lower recovering so much throughout the morning. on "surveillance" we

have an interview in about 10 minutes time. let's get first word news in new york city. donald trump has asserted there was no deal between him and he prayed and the credit present but that has been directly contradicted. in a detailed statement about william taylor made the claim the president -- the claim. the president tweeted the inquiry was quote a lynching but added he will win. the financial times reports china has drafted plans to replace carrie lam with an interim chief executive. the report cites unidentified people briefed on the deliberations. the ft says the interim chief executive may not stay for a full five-year term. russia and turkey struck a deal

to create a buffer zone in northern syria. president erdogan spoke with vladimir putin for more than six hours before announcing the agreement. it includes joint control of corrugated action to remove kurdish fighters from border areas. the kurdish ypg fought for years beside u.s. forces but turkey has labeled them separatists and terrorists. in chile, the president has announced a series of packages to combat ongoing protests, including a supplement for workers, a 20% increase in pensions, the scrapping of electricity price hikes and higher taxes for the rich. the government says police 15 people have been killed in five days of rioting and violence clashes. 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. matt? back to you. matt: thanks very much. johnson will push for

a general election if the eu proposes to delay brexit until january. the prime minister caused his brexit bill after mps rejected his plan to get it signed off in three days. now, eu leaders will consider whether to grant a delay to the brexit deadline, which had been 31st of october. and they will decide what length that delay will be. johnson warned that the defeat on the timetable leaves the u.k. in limbo. it is to my disappointment the house has again voted to delay, rather than a timetable that would have guaranteed that the u.k. be in a position to leave the eu on october 31 with a deal. uncertaintyfurther and the eu must now make up over how to answer parliament's request for a delay.

joining me from brussels is our reporter maria tadeo. and in westminster, anna edwards is standing by the first, is the they areto, look, obviously going to give the u.k. a delay. how long is that delay going to be? >> that's right. to think the eu would not grant more time is frankly a very unlikely scenario. they've always said they want the u.k. to leave they still believe it's the only way to at thise european union point, you have donald tusk suggesting in a tweet that he wants an extension going all the way until january 31. that is exactly what he is going to put -- pitch. to agree to this

unanimously and the debate in brussels is just about how much time will the u.k. be given. looking at a short, technical extension. or do we look at a three-month extension which perhaps includes the possibility of leaving that is the debate right now, there is no clear answer. european leaders are still debating how to response. but the going to send a letter or call an emergency summit? if they do, they will have to wait until monday next week. the eu leaders on the same page here or are you hearing any pushback? >> frankly, the real pushback here has come from emmanuel macron. the french president who has said many times he does not believe it is the right time -- it is the right time to leave brexit and focus on europe. yet sent said time has not actually fixed any issues.

if you weeks should perhaps suffice. to say, he is actually on an overseas trip abroad and not has in europe so the debate been made more difficult because he is not in europe. hand, we do hear other leaders who say that three months at this point is good hand, we do hear other leaders who say that three months at this point is good enough and won't give everyone to rethink the role. it gets tricky. they don't want to be seen as interfering in u.k. politics. asy don't want to be seen pushing for different events, that's another tension here. speaking of u.k. politics, let's get down to anna edwards who is live on the green covering this all morning and has been all over the story for the past three years. the whole time boris johnson has been prime minister, he has guaranteed his constituency the u.k. will leave the eu on october 31.

he has been incredibly adamant about that one points. it's pretty much the only thing he ever says about his plans as part minister. -- prime minister. how does that look right now? anna: it does not look good for him and a narrow definition. he certainly said it many times, we will leave on october 31 and that does not look very likely. enough, he said we will leave the eu with this deal but he did not mention the date many took it as tacit acceptance of some kind of necessary delay regardless of if he goes for a general election or tries to renegotiate some new timetable, either way, they will need some kind of delay. we'll talk to ian duncan smith -- we had spoken to ian duncan smith earlier on and he said we need a general election and the

parliament is dysfunctional. address thisg to bill up like a christmas tree with amendments, essentially suggesting there's no point in finding a new timetable what has come out of the process will look anything like the bill we put in, so he is certainly suggested the general election path forward is the only one. suggesting they were those would be the results pushing for a general election and he needs the labour party to go along with the idea. matt: anna edwards will continue to cover that from westminster. thanks both of you so much for joining us. this hour, we have a guest cohost from goldman sachs. coo for amia and the head of fixed income. let me ask you your take.

it seems it will drag on longer, but we are getting some sense of certainty. ?o you feel the same way andrew: i'm not sure. we take one step forward and in one back. it looks we have clarity, and now, we see a delay. it was commented previously that the 31st october deadline looks pretty challenged. to way ifwill have they can actually get an election and the two thirds majority parliament required. or do they accept there are going to be amendments to this bill and try and push it through with those amendments? neither of those choices look particularly palatable. i think we're still very much in the state of limbo. and on the sidelines, we got to wait to see what the europeans say in terms of the delay. i would agree with the previous commentary, it looks likely they

go through to the end of january. what's been requested by parliament and i don't think the europeans will want to frustrate the u.k. political process in any way. matt: do you expect we get that delay, and in the meantime, rather than dying in a ditch, boris johnson tries to call an election? berew: that would probably his preferred choice but it will be very difficult whether the labour party would agree to that. there is speculation and we don't know the answer to those questions. we think it will be difficult to force through an election. there are lots and twists and turns. they will try to amend the parliament act which requires a simple majority. so we are on pause, as boris johnson said, to work out the next course of action. but unfortunately, we remain in a state of limbo and that's not good for the economy. it makes the bank of england's job difficult, and as an

investor, leaves us in the state of limbo of trying to get clarity in terms of the past forward -- path forward. matt: is the u.k. uninvestable or do you still have positions on u.k. assets? sticking close to home, neutral in terms of allocations because these outcomes are so binary. and as we've seen, almost impossible to predict. u.k. assets are kind of stuck here and we have seen a bounce in sterling is of the prospects of a no deal brexit looking slim. that was not the case perhaps a couple weeks ago so yes, there has been a bounce, but we do need some clarity. either we move towards an election or move towards agreeing this deal with some form of amendment. on hold and we think about it from a company's point makeew your very hard to long-term investment decisions with this degree of uncertainty.

we have seen five quarters of contraction in investment in the u.k., that's unprecedented. it's that uncertainty that is just causing the u.k. economy to be absolutely flat that's not great from a growth or unemployment perspective and that's what we want to see improved. we have much more to talk about from andrew wilson from goldman sachs. coming up, we will speak to the , the norwegian telecoms business which has announced countermeasures against us trading platforms. -- streaming platforms. don't miss that interview next. . this is bloomberg.

matt: economics, finance, politics, this is "bloomberg surveillance." the chinese government is drafting a plan to replace carrie lam with a quote interim chief executive. that's according to a report in the financial times, citing unidentified people briefed on the liberations but china's central government says they perfect -- firmly backed lam. they withdrew the extradition bill in the legislature. that was the bill that sparked the months of protests. for more on this, our asian government reporter joins us from hong kong. beijing to some extent is pushing back on this report or at least calling to report a rumor, but not firmly denying it.

>> this is not the first time there has been that report about carrie lam potentially stepping down or questioning whether or not she wants to stay in the position that have been previous reports of her offering to resign. she pushed back against those reports as well, saying of course anyone in a difficult position like her could take the easy road out and resign, but it's not something she said seriously and she said she will stick around until this unrest and the situation is settled. beijing, from the beginning, has said they are backing her and the police are pushing this report away. we also learned that taiwan is going to hong kong to try and take the murder suspect at the heart of this entire extradition bill. what is the story with that? yeah, this is actually an

incredibly bizarre and complicated dispute. obviously not men being released today had confessed to killing his girlfriend in taiwan on vacation but he came back to hong kong. his crime was alleged to have happened in taiwan, they are different jurisdictions. hong kong tried him and could not find any evidence because everything was in taiwan. they put him in jail on a money-laundering charge. now he is coming out today and both sides are bickering about what to do with it. -- with him. hong kong has suggested letting him on a plane and flying him to taiwan, taiwan pushes back saying that endangers passengers. it is a very confusing situation where both sides are trying to score elliptical points -- p oltiical points.

hong kong, obviously, has a pro-china government and taiwan needs towards independence -- leans towards independence. matt: thank you for joining us, our asia government reporter on the developing story out of hong kong. up next, the latest twists and turns in the trade war. what that means for markets right now. this is bloomberg. ♪

matt: economics, finance,

politics, this is "bloomberg surveillance." let's focus on trade and tariffs. trade tensions are hurting chip stocks. texas instruments gave a weak forecast, saying customers are now far more cautious as they agreement.-- for an we have had a some movement towards a truce here. -- had some movement towards a truce here. what you expect from trade? >> you use the word truce wisely there. i think we will get some agreement and what is being referred to as phase one of the discussions. if we get some agreement around that and can't stop talking about it, and get it out of the headlines and focus on the underlying economy, that will be good. we don't even need to see tariffs cut them we just need to

know this is the environment we are operating under. it is really the uncertainty that has been causing difficulty. i think markets would welcome some clarity and maybe the status quo is about as much as we can hope for. focus on enable us to what is going on in the underlying economy and take away the uncertainty that comes about from the back and forth of these trade negotiations we have been seeing. tradedo you expect these -- the you expect the tariffs -- do you expect the tariffs to damage the economy? do you see a recession coming up? there is no doubt we have had some slowing of gdp globally in the u.s. and china and other places as a result of these tariffs. but if we get to the point where we stop in terms of the escalation, this is the

environment we are going to stay in for several months, hopefully some years. that provides a little more clarity and enables companies to take decisions around investment. but in terms of recession, it still looks highly unlikely. the u.s. consumer remains robust in terms of wage growth and unemployment. provides a pretty solid base for the u.s. economy to operate on. that does not mean investment and trade are not going to weigh on growth, but our own forecasts are something around 1.325%. recession, and a as a result, the fed is going to carry on with some bias towards easing. another rate cut seems highly likely. but beyond that, we go back to being data dependent and say not how much the economy and rest of the world slows. is canhe question then

central banks helped to bail us out? we will talk about central banks a little closer to me next. germany -- next here in germany. andrew wilson from goldman sachs stays with us. bond market is about to lose its best friend, mario draghi. but 10 investors expect the same support from his successor christine lagarde? we will talk about draghi's final meeting at the ecb in frankfurt on thursday. this is bloomberg. ♪

matt: >> her deadlock.

the eu expected to approve a brexit delay as boris johnson fails to push through the timeline for his plan, though he gets approval on the bill. a fresh u.k. election could be on the cards. china is reported to be planning to replace and battle hong kong leader carrie lam. will it make a difference at all to the protesters? softbank to the rescue. a $9.5 billion payout. you are watching "bloomberg surveillance." let's get your biggest stock movers in today's market. chipmakers oney of the big stories today. disappointing news from texas instruments.

all of the big chipmakers fall in today's session. swedbank declining after results saying the cost associated with the probe of the scandal over alleged mishandling of money looks like it is going to extend well into next year. the u.s. investigation could continue for years to come. shares declining nearly 5%. abb reporting earnings that actually disappointed. they , of the robotic demand looks weak. there are wider macro concerns in the market. matt: thanks very much for that. dani burger with some of your big merck movers -- movers. viviana: president donald trump's assertion there was no julypro quo behind his

conversation with the ukraine seems contradicted by top u.s. envoys. madehouse investigators the claim. the president tweeted the investigation is a lynching. he added, we will win. "the financial times" claims hong kong plans to replace carrie lam. xi, itese president reports lam's successor would be in by march. russia and turkey striking a deal to create a buffer zone in northern syria. president erdogan speaking with vladimir putin for more than six hours. the coordinated action with syrian control to remove kurdish fighters. separatistled them and terrorists.

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'm viviana hurtado. this is bloomberg. matt: let's get back to our top story, which is brexit. boris johnson will push for a general election if the eu proposes to delay brexit until january. let's go live to westminster's where anna edwards has a guest for us. anna: i'm joined by labour's shadow justice secretary. are you or how much do you think we are headed towards a general election? and id: i hope it happens will be supporting it happen because as soon as an extension is agreed with the eu, that means boris johnson can't join the duration of a campaign.

we want the tories gone as soon as possible. will they bring an early election then? supporting aill be call for a general election as soon that you has agreed on the extension. anna: one with the election take place? richard: my understanding is that if an election were voted for this week, it could still take place before christmas, otherwise, the timetable means it would be after christmas. we want the constituents gone as soon as possible. labouror government -- government would hold a public vote. we also want to end a decade of .ory

, bank you want that, but you also want the polling. how do you tackle the fact that boris johnson is well ahead in the polls? richard: theresa may well ahead in the polls before the last general election and we end up in the 3.5 million votes biggest swing to labour in the general election since 1945. i think we can do the same thing this time. i think once the campaign starts, people hear the policies, i think people have a choice whether they want a future for our country under the tory regime, which is more like a donald trump, united states future, or the kind of future of public service investment and more equality in the labour government.

anna: you think a general election is inevitable? richard: i think it will come sooner rather than later. alternative plan might be just to try for a different timetable. andhat something the labor -- labour and tories are talking about? yesterday, jeremy corbyn made the, that the labour party needs to look into the withdrawal bill. until a general election is called, we will carry on making that offer to try and improve this bill to make it closer and closer to what we would call a credible -- anna: that isn't jeremy corbyn trying to avoid a general election? richard: until a general election happens, we have to carry on doing our job which is scrutinizing the government and working in a way to try to

protect living standards, jobs and the economy. we will continue doing that until a general election is called. anna: thank you very much. thanks very much to you as well. anna edwards at westminster today. let's talk central banks. as we were telling you earlier, it is the end of an era. mario draghi will provide over -- preside over his last ecb before handing over the reins to christine lagarde. he has been appealing for physical help for pretty much his entire tenure. on deafuest has fallen ears. still with us is andrew wilson from goldman sachs asset management. how would you rate draghi's record, and you think that christine lagarde is going to be any different?

firstly, he really has done a very good job. it is easy to forget the european bit crisis and how he managed that. eurobly, rescuing the area. i think we need to look at it in the light of his achievements over his tenure. i think he has done a very good job in terms of managing through that financial crisis and getting us to where we are today. the handover tomorrow will be interesting, certainly what he focuses on. we wouldn't expect any change of policy. pretty significant policy changes last time with quantitative easing being open-ended. we would expect him to lean into the fiscal policy rhetoric. i think you may use this last opportunity to push government across europe to do more on the physical front. we all know that monetary policy is really reaching the end of

its limits and effectiveness. it is time for fiscal policy to take up some of that slack. whether christine lagarde will continue to be as boko haram that, we will have to -- boko haram that, we will have to -- that, we will have to wait and see. matt: you launched an etf last month, and it is focused on europe. tell us about the performance of that because it is a very competitive market. andrew: we launched a u.s. equity etf last month. tomorrow, we are launching a chinese etf. our own estimates are somewhere around $2.5 trillion of assets managed against the global bond index based on the inclusion of china. it will increase to 6% of the

index by the course of next year. that is around 150 billion dollars of inflows into the chinese market. it part of our strategy, smart investments made simple. giving our investors access to a range of markets. it is certainly going to be one that will grow over time. over the next 10 or 15 years, you would expect it to see significant waiting. it is already the second largest bond market in the world. i think that is just an example of us giving investors access to these kind of markets. matt: are you going to be focused on fixed income etf? you seem to be going toward the bond market, or are you just trying to deliver more optionality? andrew: just delivering more options to our investors. there is a range of etf's that will be launched over the next few months. it is just broadening out the

offers we have for our investors across both equities and fixed income. i think what is particularly interesting about this range is technology tour find indices that we expect to outperform passive investing over a period of time. very inexpensive for investors to gain access to these asset classes. before now, it had not been easy to access as a retail investor. matt: will there be a lot of interest for the chinese bond fund at the start, or is this the kind of thing you see growing more overtime? andrew: i think we see it growing more overtime. as we already know, the increase in china into the index is staged over 20 months. it is happening in small increments each month. burn,going to be a slow but over time, there is no doubt about it. china is the second largest bond

market in the world. investors will want to get access to that as you see the chinese economy continuing to play a very important role in the global economy. you see liberalization across chinese financial markets. it is certainly something we expect to see over the next 3-5 years. we are going to see increased interest from investors to get access to that market. this is an intro to get in at a very early stage. over time, i would expect to see significant flows going into the chinese market. matt: andrew, thanks very much. andrew wilson from goldman sachs asset management talking to us about the etf market. i want to get to a political story next, the u.s. ambassador to the ukraine has become one of the biggest threats to donald trump's presidency. his statement contradicts the president's claims of no quid pro quo. this is bloomberg. ♪

matt: welcome back to "bloomberg surveillance." i am matt miller in for francine lacqua. telecom and nordic entertainment are going to combine their satellite-tv. this comes as the broadcaster compete against streaming services like netflix.

isenor's jorgen rostrup with us. how are you going to keep margins up when taking on a giant like netflix? jorgen: there are two reasons why we are combining assets. a segmentt this is that is declining. for the reason of getting good product offerings in the market. we see this as a tremendous synergy transaction. we also see that the way to generate good cash in order to continue to innovate the product offerings for the customers. as you were saying, there are many competitors out there. that we will meet the

customers needs for satellite-tv and entertainment, and this is good to be a strong player in that market. see the stars you for your business? where do you see the real growth coming through? telco business, it has been a fantastic quarter in the sense that we have combined a couple of structurally important views where we have now close the transaction in finland. we are buying a telco company in finland, and have already gained 90% of the shares. that is a structural growth initiative, and there are pointing to telenor all over the nordics. we still see asian being a growth region. bangladesh is the strongest

growth asset we have. thailand are returning to growth again after a couple of quarters struggling a little bit for various reasons. in a large portfolio, te some, there will still be businesses struggling, but others moving ahead. we still believe it is going to be valuable for the group. matt: everybody is preparing for slower global growth. if i look over the last five 71%, moreal return, than 10% a year in terms of your annual return, beating out the benchmark index. do you expect that time -- type of growth to go forward? jorgen: it would be rough on me to promise you anything. i don't want to give any estimates, but i think that our development over the last three or four years is based on our

strategy of modernizing the group, of really buying back shares and honoring the shareholders. into nordic more and are exploring other ventures. i think it is the strategic elements that has been their rights. we are really investing in good networks and good coverage positions. we are also now embarking on andring the nordics first, we are building a five hour 5g position in the nordics. we believe that telenor will still stay in the forefront of the industry. matt: thanks so much for your time this morning. financial officer of telenor joining us.

up next, softbank to the rescue for wework. we will talk about what is next for both parties. it is a big party. this is bloomberg. ♪

matt: economics, finance, politics. this is "bloomberg surveillance. " we are gearing up for boeing earnings later on. the company's third-quarter results are expected to be well under the 2018 numbers, but they will be eclipsed by questions around the 737 max chet. -- jet. two fatal crashes within five months lead to a grounding of the aircraft around the world. shareholders will be hoping that the earnings will be enough to stop the selloff or the resignation that we saw. boeing shares saw the biggest one-day slide since 2016 on friday while the losses -- with losses extending through monday. we have seen kevin mcallister, not of "home alone" fame, but the highest ranking executive of

boeing step down. let's get to the other big corporate story. wework has accepted a $9.5 billion rescue package from softbank. the deal gives the japanese investor and 80% stake in the company at a valuation of less than $8 billion. it also sees the founder getting two proxy board seats and a package that includes $1.2 billion in stock, $500 million in the credit line and 185 billion dollars for consulting fees for the job he has done. joining me now is chris bryant. it is pretty amazing what adam neumann gets after basically driving this company into the ground. chris: it is pretty extraordinary, and i am sure there are quite a lot of people at wework who are pretty angry about what has happened. at the end of the day, he deserves a lot of blame for what happened.

a lot of investors were pretty unnerved. on his way out, he is receiving a big chunk of money. there is no getting around that. there is the famous phrase, if you owe the bank $100, it is your problem, but if you owe them $100 million -- this is the case for him. softbank couldn't afford this company to go wrong. to get him to step away, he needed some assurances. in order to repay the loan, he is getting a new loan, plus a consultancy fee. from softbank's point of view, way to savery easy an interesting situation for them. reading an opinion column on this saying, they don't even have enough money right now to pay this severance

needed to fire the people that they need to in order to bring costs down. chris: it is a pretty extraordinary state of affairs. i don't think investors realize how tight the financial situation is. i would imagine with new cash coming in, one of the first things they are going to do is let some of those people go. clearly, this is a very difficult situation for softbank. they have now put $13 billion into a company worth $8 billion. matt: hopefully they keep the beer and flavored water. we continue in the next hour with nejra cehic and tom keene.

tom: this morning, could the

chief executive of hong kong be out of hong kong? could the usb out of syria and the middle east? could prime minister johnson be out of october 1 options? it is earnings, revenues. it is guidance season. what will be the trade war effect? adam neumann is out at wework. his employees are left speechless over a 1.7 can billion dol -- gagillion dollar exit package. what am i looking for in brexit today? is there a key vote, a key speech? do we watch a or whatever it's called? what is today in brexit? nejra: we got that boat yesterday that we were waiting for. mp's voted on the deal, but did not vote on the process, the three-day process to try and get parliament.ough

now, we sit here and wonder whether the election is more of a prospect. certainly, boris johnson has signaled it. even if questions ahead we do carry on with the bill through parliament. even more pressure on what amendments could be added. the key question we are asking ourselves now is, will boris johnson want to try to get more of a parliamentary authority with an election. jeremy corbyn has said he would support one. tom: we will continue. right now in new york city is viviana hurtado. viviana: we begin in the southeastern part of the u.k. british police have found 39 bodies in a container truck. it was reportedly driven therefrom bulgaria. a man from northern ireland has been arrested on suspicion of murder. container tracks are frequently used to smuggle immigrants. here in the u.s., president donald trump's ambassador to ukraine has now become one of his biggest impeachment threats.

william taylor testified in secret before a house committee. according to a statement, he said he was told the president wanted ukraine aided to be contingent on the investigation of the bidens and 2016 election. that appears to contradict the president's assertion that there was no quid pro quo offered to ukraine. earlier, the financial times said an interim leader could be installed by march in hong kong. of protestng months by introducing legislation to allow expeditions to china. today, that measure was formally withdrawn. 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'm viviana hurtado, this is bloomberg. tom: thank you so much. currencies.nds,

four days in a row, one screen. michael purves will join us in the next hour. futures, negative three. spread does nothing, oil, maybe a little bit south. shockingly quiet. nejra: shocking as well as we are in kind of swing of earnings season. the stoxx 600 up a little bit. the s&p 500 closing below 3000 yesterday. losses.tending the some of that optimism we were seeing at the start of the week starting to come off a little bit. the bond market is certainly not pricing a rosy outlook today. yields dropping in the u.s. and europe. gina martin adams was brilliant yesterday. i just want to show the size of people market -- the bull market. is theu have here ballmer years. it is amazing the lift off of

microsoft up to 136. it is a bull market for microsoft. look for that this afternoon. nejra: let's get back to our top story.boris johnson will push for a general election if the eu proposes to delay brexit until january. the prime minister paused his brexit deal after mp's rejected his deal to get it signed off in three days. >> quite disappointed that the house has again voted for delay rather than a timetable that would have guaranteed that the u.k. would be in a position to leave the eu on october 31 with a deal. eren i face furth uncertainty and the eu must make up their minds over how to answer parliament's request for a delay. eu leaders will consider whether to grant a

delay to the 31st of october deadline and at what lengths it would be. anna edwardsnd join us in westminster. anna, let's come to you first. signals of that might we get this week? labour party, but they election.k with an it would be a lot easier for boris johnson to have an election if the labour party were on board. one member said just yesterday, go along with it as long as the threat of no deal has gone away. is.e is assessment that it michael smith said it is important that we move towards a general election right now. he said the opposition parties are going to try, if we pursue the withdrawal agreement, they

will try and dress it up like a christmas tree. so many amendments will be attached to it that it won't look what anything like the legislation it started out. tom: what is the date calendar today starting at 2:00 p.m. london time, what should we look for into the evening hours? if you ask mp's what they are doing for the rest of the day, they have no idea. they thought they were going to be in three intense days of debating the withdrawal agreement bell. since the vote last night that were to ge -- went against boris johnson is around the timetable. without a timetable, they cannot continue voting on the withdrawal agreement bell. -- bill. we wait to find out whether the prime minister want to perform -- pursue a general election or

if he comes back with any timetable. that is something the labour party leadership was offering yesterday. nejra: in terms of timetables for the eu, if we talk about extension, what sort of timelines are on the cards other than one until january 31? : there is an extension of three months that will go all the way to january 31, 2020. this is not a decision for donald tusk to make. this is something all of the eu leaders will have to agree to. no-brainer. like a they don't want a no deal. they don't want to push the prime minister into a no deal since he is so close to getting this deal. the question is whether you go for an extension into 2020 or you actually push for a short, technical extension. this is exactly what emmanuel macron wants. he feels this is perhaps a way

to focus minds and keep the pressure in london. the issue right now is that macron is not in europe. he is doing an overseas trip and that debate is very much ongoing. we hear that by the end of the week, europeans will decide on the length of the extension and whether they just send a letter to the u.k. or call a special summit that is being penciled to take place on monday. nejra: maria tadeo joining us from brussels, and anna edwards from brussels -- westminster. aining us now for the hour is pimco portfolio manager

different things buffeting us right now, and there seems to be a magical desire for a magical short-term solution that will get corporations back on board investing. do you buy that scenario? geraldine: there is a chance for a bit of a late cycle cyclical rebound. i think rather than looking at brexit, we have to look at the u.s.-china relationship. this is really what on the

global scale has dozens of investments in capex. therefore, this is what one should look at. one cannot forget the fact that earnings are in a global recession. things are not exactly terrible, but they are not great. markets continue to go higher, up.aluations are going the market is already partially pricing the fact that they would be a bit of a truce between the u.s. and china. certainly, if you have a truce on u.s.-china, you already have quite a bit of monetary stimulus in the pipe, a little bit of fiscal stimulus here and there, nothing to write home about. there was a decent chance for cyclical bounce toward the beginning of 2020. tom: we are thrilled that wei li is with us and geraldine sunds trom as well. we have a terrific set of conversations over the next hours. scott galloway will join us from wework.

us.on rose will join once again, his magazine timing is unreal. the president in the middle east, well-timed. this is bloomberg. ♪

tom: so much going on. wework debacle in the united states and earnings. geraldinekets, sundstrom with us from pimco and wei li from blackrock. i want to flip the questions here. do you see a new permanence of

belief in a low rate regime? if we shifted from low rate dynamics to a permanence of low rates? we are looking at how many more rate cuts they would continue to deliver for the rest of the year. phenomenon.a u.s. it is in europe as well. there is arguably more room for them to deliver. intertwined global markets are, the low rate environment is contagious. tom: i love this chart that we are putting up here of germany, the united kingdom and italian yields. let's take the finance of bonds

and bring it over to equities. do youlook at dividend growth and dividends as a substitute for yield? the marketcertainly, has been doing this especially in the case of euro because of negative yields. equities are becoming some kind of asset for yielding assets. from here, two possibilities. and theetentions uncertainty we are seeing continued to deteriorate. equities might have a harder time. certainly, some dividends would have to be cut. on the other hand, currently, the earnings, even though they are in recession, earnings growth is not negative enough to dividends.p cuts and therefore, equities are a great substitute for many investors that are facing negative interest rates. nejra: couple that with your late cycle view and take it back to the bond market. would you still be preferring

sovereign debt over corporate credit? in general, we want to be cautious and prudent in a late cycle. in terms of corporate debt, we still have some, but we want to have much more high-grade debt in securitized debt and steer away from junk. in general, if you go lower grade and keep maturity generally shorter, speaking in terms of portfolio construction, government bonds still offer the right correlation, even though the room for rally in many places is relatively contained. wanting toinvestors stay defensive? wei: if you look at flows so far this year, there has been a very prominent preference for fixed income over equities for the most part of this year. the breakdown only starts to

look a bit more balanced over the course of the last five or six weeks or so where the flows are more evenly placed because of the brexit development looking better. earnings are very muted. also, u.s.-china tensions are de-escalating somewhat. that has been the catalyst for why flow data has become a bit more balanced towards risk, but more broadly based. definitely preference for a type of investment. tom: this is wonderful. i really want to talk to geraldine sundstrom about one page of the five pages. we have so much more coming up. i want to mention the scott galloway joining us in the next hour on 1.7 billion reasons to love wework. this is bloomberg. ♪

viviana: you are watching "bloomberg surveillance.: softbank unveils a $9.5 billion rescue package for wework. adam neumann will leave the company -- lead the company's board. he walks away with as much as $1.2 billion in stock, a $500 million credit line and a consulting fee.

texas instruments rocking the chipmaking sector. the company giving a weaker than expected forecast. it worn to trade tensions are making customers far more cautious. the report led to a selloff in semi conductor stocks. texas instruments are seen as a broad indicator of the market. growth in operating profit will flow. the world's second largest brewer selling less than expected in africa and the americas. heineken says that was partially opted by double-digit growth in asia. nejra: thank you so much. geraldine sundstrom and wei li are still with us. we have something like 20% of the s&p 500 reporting, some big bellwethers in their. what are you going to be looking for in the guidance? wei: we are actually looking at

the earnings expectations for this quarter's reporting being really muted, and potential for actually realized reporting to outside.on the this could carry on the momentum for u.s. equity markets for a bit longer. specifically, in terms of things we are watching out for, definitely signs if global trade tension is feeding through to a profits forecast. ifo, margin development, margin peeking out is finally starting to impact forward guidance. this quarter aside, it is very important to look beyond this year and look at eps growth for next year, which currently is at high single digits. it looks a bit elevated, but trend tends to be that as we get closer to the season, expectation will also get lowered a bit.

we should watch out for that. nejra: do you expect the earnings season to confirm your preference for u.s. equities? geraldine: yes. so far, it is a young season. generally, surprises in the u.s. have been better and growth has been better in the u.s. relative europe. more importantly, i think it is going to be important to look for those sectors still seeing growth. what is happening around 5g. there are certain other areas of tech in semiconductors which have been more positive. nejra: geraldine sundstrom and wei li stay with us for the hour. much more earnings to come. this is bloomberg. ♪ everyone uses their phone differently.

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interesting and step-by-step, needs interpretation. best at that has been anna edwards. she has been steeped outside 10 downing street on the minutia of brexit. strike forward the conversation at westminster. anna: thanks very much. we will try to get out to the minutia. shadow minister for business and international trade joins me on the green. good to see you. ask about the possibility of a general election. is it inevitable? bill: thank you for inviting me to talk to you. we have been saying for some time we want a general election because we want to move on from brexit to the big priorities, the decline in living standards, the problems in law and order

from 21,000 police officers. anna: can i press you on the general election point? bill: the first part has to be making sure there is no possible , because no deal exit until that is secured we cannot risk going into a general election campaign. what the prime minister can do is crash as out in the middle of that campaign. he has broken that many promises, including recently to the democratic unionist party about their not being a border down the city between ireland and the u.k.. we cannot trust his word that he would not do that, so until we have an absolute guarantee, until the e.u. has agreed, if this bill that was paused by the government last night, until we know what is happening, we cannot say for definite when we would push the button for a general election.

no deal is still a realistic prospect. anna: as soon as the e.u. says yes to any extension, would you say yes to a general election? bill: you would need the absolute commitment of the united kingdom at the same time. as soon as that happens we will want a general election because we want to address the problems of 21,000 police officers cut by boris johnson. anna: when can a general election take place? bill: there is the potential at the end of november and the beginning of december. until we know for certain, there is quite a lot of things that can go wrong still. it is impossible to say. anna: the polls do not point in the labour party's favor. polling,dful of the you would go into a general election process? bill: of course, because polls

are a snapshot at any one time. they don't look good for us at the moment, but that was true in 2017. anna: did not win there. bill: it was a poll suggesting we were 20 4% behind the conservatives when theresa may called that general election. we finished almost in. weare not far behind -- finished almost in that. we are not far behind. end up in ado not general election, could you see a new timetable being agreed for the existing legislation? could you see boris johnson picking up on jeremy corbyn's offer? bill: it is a very important offer, because when we voted against the program motion, we did so for the reason that whilst everybody in this country

is frustrated, especially those of us who have not been in politics and it has taken three and a half years and we have not resolved brexit, rushing it through would be an enormous mistake. so many mistakes could be made. there are real question marks over what is in the real -- the legislation. and environmental and consumer protections, they put a border down the irish sea he promised he never would do. he still has a trapdoor to no deal at the end of 2020. it begins -- if in the transition period there is not an agreement. anna: would you need to debate all of that? bill: it was three hours last night and 12 hours today. that is nowhere near adequate for such a detailed, complex, and far-reaching set of

proposals. deal which was the amendment to the treaty of rome took 40 days. the number 10 advisors says it would take 37 days. i am not going to put a figure on it. jeremy corbyn quite rightly made the offer to boris johnson last night that we would work with them on a timeline but we will work together on how to get the legislation through and ensure accurate scrutiny, and the deal is agreed across the house of commons. anna: thank you for joining us on the green. mp andther send, labour shadow minister. he is heading back inside. tom: thank you so much. francine lacqua frozen yesterday. right now in new york city with our first word news, here is

viviana hurtado. saying --onald trump william taylor testifying behind closed doors on capitol hill, saying the white house threatened to withdraw military aid unless the ukraine announced investigations for the president's political benefit. president trump has been privately flooding the names of replacements for acting white house chief of staff mick mulvaney. among them, kellyanne conway and steven mnuchin. mulvaney has fallen out of favor with some of the president's allies because of high-profile stumbles in dealing with the impeachment. malaysia looking to settle its case with goldman sachs in the -- $700ndal, to pay one billion. negotiators may settle for $200 billion. malaysia is trying to recoup money from the plundered fund.

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. nejra: russia and turkey have struck a deal to create a buffer zone in northern syria. president erdogan talked with vladimir putin for more than six hours before announcing the agreement which includes joint patrols and coordinated action with syria to remove kurdish fighters. joining us from istanbul, great to have you with us. erdogan called this a historic deal. give us more detail. >> this deal complements an earlier agreement with the u.s. and what it did was allow vladimir putin and president erdogan to take back large chunks of syrian territory that was until recently controlled by

kurdish forces, once allies with the u.s. turkey wills that not extend its military operation outside a relatively narrow strip of syrian territory that it has seized, and at allows turkey to push back kurdish militants it considers its enemies, away from its borders, without having to go through a lengthier military campaign inside syria. nejra: what does this mean for the u.s.'s position in this? a tweet from president trump said good news seems to be happening with regard to turkey, syria, and the middle east, but it seems the u.s. does not have a lot to do with this. are: clearly, u.s. troops wrapping up their operation in syria. once that happens, that is completed, clearly there will be a vote in syria after the u.s.

troops. it looks like with the grand agreement we are seeing taking place with different deals with turkey and russia and the u.s. over the past week, we are seeing that russia and turkey are trying to fill that void that will be there once u.s. troop withdrawal is in place. tom: i have to be careful how i ask this question given that you are geographically in s-10 ball. mr. -- istanbul. mr. erdogan as thief. who exactly this morning is supporting the leader from damascus? who is mr. assad's ally? biggest allyad's is russia. having said that, we are seeing a gradual shift in the political

rhetoric in turkey, led by president erdogan, towards the central government in damascus. for the first time in a long time, the president has refrained from publicly rejecting any possibility of any talks with the central government last week when he met with reporters from the foreign press. process thatly a is taking place. one, and surely the russian president vladimir putin is helping the turkish government to manage this this processo make as gradual as possible by not pushing a direct dialogue with the regime in damascus as the first precondition with erdogan. it is definitely taking place.

it looks more and more like turkey is less of an enemy to assad. tom: thank you so much for your team's reporting on this geopolitical event. our turkey bureau chief this morning. we have lots to talk about. i want to talk to our guests about the challenges of the bond market. on the challenges of wework, scott galloway will join us off the accounting that softbank is using. this is bloomberg. ♪

♪ everyone morning, bloomberg "surveillance." we have two wonderful guests on set.

on a percolating story coming off imf research, geraldine sundstrom with us and wei li as well. up in thewrote this journal and i brought it up at imf. in there green book, financial stability book, chapter three, there are five pages on the demand for u.s. high-yield paper by foreign nations. they single out taiwan. are we all being yield hogs now and will that get us into the next bond crisis and that everyone needs u.s. high-yield debt? lower yieldsthink globally have been pushing people into a desperate search and therefore, they are slowly going down the quality spectrum to find the yield they need. pimco has been prudent and cautious on that. we are not shying away from

high-yield, but there needs to be a lot of work from credit analysts to get visibility on cash flow, and to circumvent the risk of lack of liquidity of building a portfolio with short-term maturity, somehow self liquidating, and using this appetite to lower exposure because this is a market where you need to be a little bit contrarian. tom: this is really important. the distinction here are adults like pimco, adults like blackrock, versus nations that are desperate for yield. asthere a systemic risk nations load the boat on u.s. high-yield debt, versus sophisticated private houses? wei: if you look at the default profile for the u.s. high-yield we are not seeing it in the late cycle and that has to

do with the benign environment in terms of funding, not only in the u.s. but globally. theave seen interest in form of etf flows into u.s. high-yield markets, but we still have a preference for higher grade credit rather than high-yield. on a related topic in the income search, we are seeing a lot of interest for china bonds. year comfortably about 3%. it gives you unique diversification benefits that developed market bonds and emerging market bonds do not give you in the context of a diversified portfolio. with china bonds increasingly included in benchmarks, we think the structural demands will be here to stay. nejra: what would be the best place to put your money in

chinese fixed income? not everyone is convinced we will see meaningful monetary easing. this yearve so far seen on the monetary and fiscal front, but not fully blown out, because they want to save their ammunition. owned in global investors' portfolios. benchmarks get you closer to what you should be owning and beyond that, you could be more selective in terms of potentially looking at the higher credit space. nejra: if you believe in the global easing cycle, what parts of the emerging markets are poised to benefit most? geraldine: you can play it with interest rates. they are relatively low in a number of countries. to use more foreign exchange as some kind of a derivative.

if central banks are easing aggressively and we do not have a recession, you can find great carrie and a number of high-yield emerging markets like mexico and brazil. nejra: geraldine sundstrom and wei li, great to have you. boeing earnings are due. third quarter results will likely be eclipsed by questions around the 737 max jet, two fatal crashes within five months lead to a slide in shares. investors hope the earnings today will be enough to stop the selloff. this is bloomberg. ♪

♪ viviana: you are watching bloomberg "surveillance." nike wants to be seen as a tech business. the brand has turned to former ebay had john donahoe to be its next ceo, replacing mark parker. online.s 50% of sales in the next few years, the company wants to double that. investigators

blame the design of the boeing 737 max in last year's crash. indonesia also criticizing the way the 737 max was certified. the head of boeing's jetline division has stepped down. the highest ranking executives leave. cctv stickingrun to the blackout of the national basketball a visit -- association. it is the first time that has happened in at least a decade. cctv launched its boycott when the general manager of the houston rockets tweeted support for demonstrators in hong kong. that is the bloomberg business flash. nejra: let's get back to brexit. donald tusk said he will ask the e.u. members whether they back an extension. ireland,aring from

that they back the brexit extension to january 31. let's get back to westminster with anna edwards. great to have you again. it is a good place to start the conversation, the rte line. is suggestingrt the island baxa brexit extension and this is good news. we do not want to see it tip over two way no deal brexit, and the prime minister's deal has not completed its passage, so that deal is not agreed yet and we cannot see a no deal brexit. the extension is our key priority. anna: if we get an ok from the

e.u., we might move towards a general election and that is something your party would be happy with. kirsty: we are quite keen on a general election, but we want it on our terms, not on boris johnson's terms. grantedve the extension , that allows us to make proper choices about what we do going forward and the way that we see ensuring we do not have a conservative government trying to push through a bad deal. bea: what will your pitch during the general election? how is brexit influencing what you will offer? kirsty: what is hugely important is the fact that england and wales are to the east. we are being dragged out of the e.u. against our will, and people in scotland feel that our voices not being heard.

it should be about scotland having the right to choose our own future. people are moving towards independence and filling more strongly than ever that scottish independence in europe is the way we should go. anna: some polls suggest the brexit debate is furthering the independence agenda for scotland , but other polls when you ask for more certainty, are you 100% confident if you want independence, that is not so clear. panel recentlya with 50% of people in favor of independence. it is moving in the right direction. polling recently on the fact that scotland feels they would be better off as an independent scotland than in a brexit written. .- britain we are winning the argument on the economy point. for: when will you push

another independence referendum? kirsty: the minister will ask for a section 30 order in advance of christmas and we will have an independence referendum next year. prove fromeed to westminster that it is binding. kirsty: we want a legitimate independence referendum that is recognized by countries around the world and recognized as being real and legitimate. we will be asking for the section 30 order. anna: kirsty blackman, mp deputy, as we track the twists and turns of brexit. prime minister's questions are still ahead. ♪

♪ tom: this morning, could the

chief executive of hong kong be out of hong kong? could the usb out of syria and the middle east? ofld boris johnson be out october 31 options? it is earnings and guidance season. what is the trade war effect. an exit, this is not bad. exitng for a $1.7 billion package. in new york, it is profound. is it equally as profound in london? -- it is a story that is most read on the bloomberg. you talked about the exit package and we have come to the

end of the adam neumann era. the question is what exactly is softbank's intention and why they would step in with that offer. tom: we have a wonderful hour, scott galloway is expected to be with us. a fabulous bloomberg opinion essay on the accounting of we work bank -- we work. viviana: boris johnson's next move may depend on what the european union does. he appears ready to call an election to rush his brexit deal into law. an official warning if the e.u. agrees to a request to delay brexit, the prime minister will seek a general election. voters would gamble that would give him a majority in parliament. in the southeastern part of the u.k., british police have found 39 bodies in a container truck

from bulgaria. a man from northern ireland has been arrested on suspicion of murder. in the u.k., president donald -- the ambassador to the ukraine becoming one of his biggest threats, detailing "alarming circumstances." taylor said he was told the president wanted ukraine aid to be contingent on the investigation of the bidens. that appears to contradict the president's assertion there was no quad core -- quid pro quo. china considering replacing carrie lam. that comes from a pro-beijing lawmaker in hong kong. an interim leader could be installed by march. measure was formally

withdrawn. 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. ,om: that me get to the data equities, bonds, currencies, commodities, flat, flat. the sterling report right now. european are seeing equities struggling for traction and u.s. futures as well. in terms of cable, if you still see light at the end of a tunnel , a brexit deal, how much do you want to load up on sterling longs given that no deal seems to have been priced out a lot? yields moving lower in terms of bunds and treasuries. tom: we will begin with geopolitics. our chieflli,

impeachment correspondent from washington. the house in peaches and it moves to the senate. s and peaches -- impeache it moves to the senate. "it is clear the president is going to be impeached. the president's loyalists interpret any criticism as an attempt to counter to by resentful senatorial elites. the port might evaporate if the president alienates so many independence that is even more tepid supporters conclude that come 2021, democrats will be appointing all the judges." this is a shift in the last few days. is it being framed that if he is impeached he could lose in a republican senate? kevin: now, i don't see that. we can't look at impeachment

through the sli corridor and the prism of the beltway. you have to go to the states where president trump remains plusy popular, and for 20 republicans to vote to convict president trump, i don't see that happening. my reporting has not led me to the conclusion that that is a possibility. tom: ms. mcardle brings it up in her essay, but there is the issue about republican control of the senate. because of the structure of how we vote in america, is republican control of the senate still a given? likely,he margin would potentially have the potential to get smaller. if you look at states like colorado and iowa, we were , i thinkhe other night the type of democrat that would challenge a republican like joni

will be not a progressive democratic-socialist but a more moderate democrat, a democrat.-esque type i don't think when you look at this in the prism through the media, that it is resonating on the ground in conservative states. tom: kevin cirilli, thank you so much. kevin: go, nats! rose, the cfr of foreign affairs magazine, out front with trump's middle east. i want to go to one paragraph which goes to the news of the read, butrd to president putin exemplifies how a wily leader, on and on, there

was the leader of russia and the leader of turkey shaking hands. give us the ancient tone of that in the modern tone of that photo op. gideon: the middle east is a great region in which powers come to play and walk away. the united states is the latest one to do that. powers,walk away, local russia is an inspiring local power, are having fun and making deals. to be and people who used our allies realize they can no longer count on the united states so they have to go with the strong horse, in this case russia or maybe iran. our enemies are celebrating and saying, we can get the american president to flinch and pull troops by saying we will invade. this was a schoolyard ploy in which erdogan made a move and trump flinched and pulled troops

out. veryesult is very bad -- bad for the situation in northern turkey if you care about stability and if isis is controlled. larger,al perhaps even of a new world in which the united states cannot be trusted to keep its commitments, that is the scariest part. will people draw a conclusion from american abandonment of the kurds in this area of northern toia, that this extends american commitments more generally? the president clearly feels this way. what is not clear is whether anybody else can trust the united states' other commitments. nejra: great to have you with us. conclusion,aw that what implications does it have for the u.s.? run if thathe long conclusion were truly accepted

that you could not rely on the united states and the liberal order would begin to unravel. a country like japan which does not have a major security effort of its own, would have to get one. europe would have to start paying for its defense or have a defense. i don't think those things are happening anytime soon. if i were an israeli or saudi, i would be going, mi the next one to get sold out? -- am i the next one to get sold out? tom: i am going to sell it right .ow, skip the next martini get a subscription of this and throw it to the kids and say, shut up and read it. essay, looking for a successful renovation. post trump, how do we successfully renovate what the elites want? gideon: henry kissinger started

a process half a century ago to use american power to get the countries in the middle east to play nicely with each other. the united states wants a stable region where oil flows and israel is protected. that is falling apart, and the question of what will happen is unclear because we do not know how far the u.s. withdrawal will go. it began under obama and has continued a pace under trump. the american public has not ratified this and american foreign policy has not, so the question of what will come after this, we do not know until it stops. tom: we got through this whole block without talking about brexit. it is a triumph. nejra: i am about to kill that, because we have scottish minister nicola sturgeon and --

holding a joint press conference in london. we have heard that leo varadkar is likely to back the brexit extension, throwing up the question if and when we could get an election in the u.k. this is bloomberg. 7%, smaller around after 15 years than it otherwise would have been. ♪

♪ i am near at london with tom keene -- nejra cehic in london with tom keene. minister johnson paused his brexit bill after mp's

ejected his plan to get it signed off in three days. joining us is anna edwards. this is the calculation boris johnson has to make now, whether and when to call a general election. that is what we are watching out for, any clues to the path forward and how quickly there will be an election cycle. it takes about five weeks to organize an election so could we get it in before christmas? we have prime minister's questions around lunchtime here so we will see if there is any hints in the address as to whether the election path will be followed, or whether he will try and craft a new timetable for his withdrawal bill. that is what jeremy corbyn was suggesting after boris johnson, one of his efforts in the house of commons was defeated yesterday. whether it involves an election sooner rather than later, or

trying with the new timetable, either will require some kind of delay of some duration from the e.u. tom: anna edwards, thank you so much. much more on brexit today with anna edwards and the rest of our team. we have been talking with gideon rose about the middle east and which, syria and russia, gets us to the russia-turkish conflict which is about as long as brexit will be. it goes on and on. what is the damage? gideon: the entire anglosphere has gone nuts and we are watching it. the idea that one english-speaking great power would make a full of itself and befoul itself, the fact that two were doing it at the same time is crazy. this is a follow-on to the basic

mistake of having voted against something but not for something. everybody voted for brexit, sold the bill of goods, this is bid -- bad. it is a lot easier to get into a commitment then to exit it. we just had a beautiful image of scotland and wales managing the message forward. in your expert at foreign affairs magazine, here is the gentleman from wales now, can you speak of a disunited united kingdom? gideon: nobody can predict the future and anybody who says they know what will happen next week or next month, i stopped making those predictions a while back. it now seems like the line of europe will be drawn in the sea off the british coast. that is an interesting change of affairs. whether that will play out, we

don't know, but lots of interesting stuff is afoot. nejra: we fixate so much on the withdrawal bill and the extension possibly to january 31, but after that will be further negotiations. in terms of what boris johnson negotiated, how would you compare that to theresa may's deal in terms of whether the u.k. will forge better trading relationships with the e.u. and elsewhere? gideon: the deal seems to be less bad than other deals, which is not entirely unrelated to why it got an approval vote before it got rejected. at this point, it is too speculative to know which one will pass, how it will pass, and what will happen next. tom: thank you so much, gideon rose with us as we celebrate trump's middle east from foreign

affairs magazine. coming up, scott galloway of new york university is my book of the year a few years ago. thet now, wework, extraordinary japanese transaction of yesterday. this is bloomberg. ♪

♪ viviana: this is bloomberg "surveillance." a 9.5 billionling

dollar rescue package for wework. the japanese conglomerate will get an 80% stake. wework founder adam neumann well leave the board and walk away with as much as $1.2 billion in stock and a $500 million credit line and $185 million consulting fee. at $47was once valued billion, now less than 8 billion. texas instruments rocking the chipmaking sector with a weaker than expected forecast, warning trade tensions are making investors far more cautious. semiconductor stocks, this is seen as a broad indicator of the market. heineken addicting growth will slow. slow.dicting growth will

it was offset by double-digit growth in asia. nejra: thank you so much. joining us now in london is michael purves. great to have you with us. season,arly in earnings 20% of the s&p 500 reporting. what do you do and a market where the s&p 500 is swinging gently around 3000? separateyou have to the developed market political risks like brexit from the fundamental stories and recombined them in a coherent way. that is difficult. when you look at brexit, you could have the most 10 brilliant people in the world staring at the data trying to get a trade on and it is like staring at a roulette wheel. you cannot get an edge. you have to recognize this persistent overhang is part of that.

on the fundamental side, the earnings will be one more pretty good quarter. earnings estimates for the quarter are too low or 12 months more if they are too high, i think the buy side has figured that out. unless there is massive surprises in the tech sector, the earnings season will come in , almost in an uninteresting way. the decent forecasts for future with all the caveats that trade can take us in different directions. strategy,t is the invest and protect? michael: you need to step back and look at the defining thing in the u.s. equity complex has been a huge rally against the backdrop of a massive bond bid. it caught many of us by surprise. , therethis equity rally is massive polarization.

if you look at sector pears within the equity conflicts, russell growth and russell value , the tech sector versus financials, it is at record levels by correlation coefficients of .8 or higher. every sector rotational bet between now and year-end is a rates trade. you have to have a context that is not a view for what might happen with interest rates. tom: you have a spectacular essay on clipping the s&p 500 dividend. we should look at the equity markets like it is a bond proxy. discuss the convertible bond nature of the s&p 500. michael: i came up with this whenwork two years ago, you can remember treasury yields getting extraordinarily low after brexit, you could buy

credit quality was in decent shape and the dividend yield was so much lower than the treasury yields. it provided a key element of support. that framework goes back to 2010 and 2011 and in a low nominal gdp world, that becomes relevant. you can almost flip the coupon at 2.1%, 2.3%, and on your equities, there is growth. you get a benefit. that is the convertible bonds analogy. tom: michael purves, thank you so much. see, with a trend we may raising their guidance. ♪

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now you can take control of your home wifi and get a notification the instant someone new joins your network... only with xfinity xfi. download the xfi app today. ♪ i am nejra cehic in london with tom keene in new york. china is considering a plan to

replace carrie lam. earlier, the financial times said an interim leader could be installed by march. month of protests. gideon rose is still with us. if china is drawing up the plan to replace carrie lam, how do you see the protests evolving? gideon: jobs you don't want to have, head of hong kong, trump's chief of staff, these are no-win situations. in the long run, it is hard to see beijing letting hong kong go, but what we have seen over the last several months is a degree of passion and people protests and power in the streets of hong kong that has forced beijing to pull back a little bit from its attempt to accommodate and absorb hong kong

more directly. how long that will continue and what will ultimately be won is unclear. shot, what are they watching from beijing on hong kong in the sense that on a given friday, they bring 20,000 troops over the border. that has not happened and nobody wants it to happen, but what is the estimate of how they will respond? it easyeverybody finds to predict things far away and when you get close up it is hard to predict. the domestic politics going on inside the chinese regime and how xi feels, how insecure he feels, what cannot be accepted is a threat to his power and position. whether the leadership in beijing will code this as that,

that would be the kind of thing that would force them to crack down. they are also rational and relatively controlled, so if they think they can deal with the situation better and accommodated by playing it out --ger and not having a hard we will watch this play out like we watched other revolutions play out. where this goes in the long run is not good. tom: what did your experts learn from the summer communist guarding, dust gathering? gideon: there is a lot of strength and authoritarianism. the personalized rule of a strong dictator. tom: you are talking about china, not america. i didn't mean to say that. you areputin, erdogan, seeing the strongmen have their day.

we talked more about putin and erdogan meeting after trump's withdrawal from the middle east. you see strongmen riding high and you see it in asia. tom: how far is president xi riding high? gideon: if you can survive the turbulence going on and keep things calm and resolve the conflicts with the united states in a way that does not create a rupture, then yes. tom: gideon rose with foreign affairs magazine. british prime minister boris johnson is considering his next move on brexit. he could call a general election. parliament blocked his plan to rush a brexit plan into law. if the e.u. agrees to a request to delay brexit, he will call an election instead. it appears the chance of a no deal brexit has receded.

president trump and the acting account -- william taylor testified behind closed doors on capitol hill and said the white house threatened to withdraw military aid unless the ukraine announced investigations for the president's political benefit. president trump has been privately floating the names of possible replacements for acting white house chief of staff make all veiny, among them -- mick mulvaney, among them kellyanne conway and stephen mnuchin. mick mulvaney has had high-profile stumbles dealing with the impeachment investigation. 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: it is one of the best earnings releases, caterpillar. it is in english, how rare is

that? us andubot heart joins michael purves is with us. i look at the press release and they give us guidance and all of buried in it is a headline, focused on maintaining flexible cost structure. michael purves says corporations have a lot of wiggle room to not --t cost if they do karen: there is things they can do around the margin on cost, material cost, etc.. it is a very volume driven country -- company. tom: it is unit based and volume, unit. anything of the global message from caterpillar

like we look at the domestic message of fedex? karen: they give us monthly dealer numbers and across-the-board it has been slowing, worldwide. negative in asia-pacific. north america has been the strongest but that is accelerating. miningction is worse and well downturn. nejra: given the reaction we are seeing in the shares, half a percent, that would be the biggest drop once the market gets going, how much bad news is in the price? karen: i think a lot of people anticipated a guidance cut and production cuts. order of magnitude is larger than expected. and wet the year a lot, only have one quarter left so that suggests the fourth quarter will look worse than people anticipated. andings have gotten waxed

-- whacked and then come back during the day. it was a pretty big fourth quarter cut. we will get no cut in 2020. nejra: how much of a signal should the border dashboard -- board take from these numbers? all the hope seems to be hinging on the u.s. consumer. michael: the consumer has been doing the heavy lifting and the rest of the world weakness story has been in the markets and almost every facet of the market. i would be surprised if caterpillar earnings, does that move the broader market in the u.s.? i would suggest it won't. the stuff that will get me worried is if you start seeing major margin contractions of some of the big tech names, consumer tech names in particular.

part of that is understood. if you start seeing a ramping up of cost, whether it is because and simplepliance capital efficiency models are not what they once were, that will be a much bigger issue for the stock market. we are back to the story where 70% of the economy is consumer, manufacturing is small. caterpillar has a small exposure. it is not the 2010 fixed asset story in china. caterpillar was a darling. tom: gideon rose demands that i capext elasticity -- elasticity. you can drop this off a cliff like they do. do they have enough fungible can in capex where they

manage the revenue path? karen: it will be in operating cost story. do you have margin confidence? margins formental caterpillar can be large turns and a cycle, so the margins will be more negative. tom: how many basis do they come in? be 50 to 100ld basis points. they manage the cycles much better than in the past with a much more flexible cost structure. cat used to use money when things went down and that does not happen anymore, but earnings get hit. nejra: thank you. boeingg with earnings, is due to report and about an hour as third-quarter results will likely be eclipsed by

questions around the 737 max jet. to aatal crashes led withdrawal around the world. those results due at 7:30 a.m. in new york. this is bloomberg. ♪

♪ you are watching bloomberg "surveillance." nike has made it clear at wants to be seen as a tech business. turned to former had john donahoe to be its next ceo, replacing mark parker.

nike gets 50% of its sales online and the company wants to double that. , investigators have partially blamed the design of the boeing 737 max in last year's deadly crash. of lion air flight was one two. meanwhile, the head of boeing jetliners division has stepped down, the highest ranking executive to leave since the crisis began. china's state-run cctv sticking to its blackout of the nba. it's sports channels did not air the nba game, the first time in a decade. cctv launching its boycott when the general manager of the houston rockets tweeted his support for pro-democracy demonstrators in hong kong. tom: single best chart is a

stock chart for wework. wait a minute, there isn't one. a morning must read from tim called when. it is absolutely brilliant, about when you have to account out a train wreck like wework. this essay should be required reading, cfa level one. wework from a passive investment to an associate, southbank no longer needs to deal with fair value accounting, the true mark to market value for wework every time the co-working start up conducts a new funding round. galloway.e with scott it is a hugely japanese transaction. could they have done this if

they were u.s. money? scott: that is a good point. in my view, this will go down long-term as the most expensive face-saving move in the private markets because this was not as much an $8 billion financing of wework as an attempt to kick the can down the road and save face for the vision fund. after approaching 100 potential sources of financing, softbank came in because they are the only ones who wanted to see this thing survive. i look at-- tom: associate status rather than bringing wework into the balance sheet. what does it do to the confidence you have of the journal yesterday, $7.5 billion to eight billion dollar value. that can get amended and adjusted down, can't it?

scott: there is value. there is a global brand that has evolved the workspace on a unit level. if you back out the $43 billion in long-term leases on average duration of 15 years, you have a company that is worth less than $8 billion and probably has a negative value. the alternative was a loan to own package coordinated by jp morgan. softbank could not have that happen, could not have the biggest investment in their portfolio, the vision fund, be taken over by american banks. if you were to look at the cap table, this organization probably has an enterprise value worse -- worth less then zero. nejra: does the story show us that the market has worked? scott: that is absolutely the

correct observation. the reason this is different than 1999, and there has been some attempts to correlate this is like 1999 again, in fact the markets held here. there was a firewall. acause we got burned and company with negative margins went public and they registered a 35% decline in value, they decided to not let wework get public. the people who registered a loss from 47 billion to 8 billion were professional investors. at softbank, it was the employees of wework. this is the markets behaving as they are supposed to and for a certain extent, this was a victory for the markets. tom: scott galloway, too short a

visit. i cannot say enough about the immediate read. speaking of which, the chief executive officer of one of the zuckerberg, will attend the house and foreign services committee. i don't black t-shirt think anyone will worry about what he is wearing but what he will talk about. this is bloomberg. ♪

♪ bloomberg "surveillance," nejra cehic in london, anna edwards on the green and westminster. we will be following those saying thevaradkar extension could go out to january. january of the next year or the year following? could january 31, and it be a shorter deadline than that. rose.ith us is gideon

he has done it again with another essay, a telling set of essays of where we are. at the top of this is a little headline on the cover screen. foreign policy legacy? did you get that from donald trump? what was donald trump handed by president obama of this mideast mass? gideon: president obama started to pull back from what was perceived as an overextension from the bush administration in the middle east, and it seemed like he was going to pull back a little bit and restore the core of american foreign policy and launch some new thing. he never got around to launching the new thing. that was pushed off to the imagined successor that never occurred. you were left with a pulled in version of the previous american policy.

where that was going to go was never clear, and what trump has done is said, i don't like that policy, let's pull out. the ultimate winding down. 75.re seeing vietnam everything we have done here we have done before. we have abandoned allies, walked away, abandoned the kurds before, but we have never done it on a whim and done it against the entire strategy of the country. tom: we have a president with a vietnam heritage. as you look at the democratic candidates and they have to frame a democratic foreign policy for the election, are they still living the ghosts of liberal policy beliefs off of vietnam? gideon: it is an interesting question. the answer to trump is not simply, it was great before, because it wasn't.

the interesting party -- questioned the democratic party has not grappled with, so you don't like trump and you don't want this, but what about the criticisms and charges against the last generation of policy against china and trade that allowed the tensions to build up so trump could capitalize on them? what is your reaction to the problems that brought trump into office? we have not seen democrats think creatively about that. nejra: the future investment initiative is happening in riyadh next week, and we understand steven mnuchin and jared kushner will be attending with trump officials planning a stop in israel. interesting.is the trump administration to the extent it has a middle east strategy, seems to have tried to

put together a strategy that involves the united states walking away from the middle east while continuing to confront iran by using israel and saudi arabia as proxies. the first couple of years of the administration, the administration gave israel and saudi arabia everything they wanted. the hope was that would help them counter iran, but they cannot counter iran for a big variety of reasons. israel and -- israelis are pariahs in the area. when you see the trump administration out of syria and iraq, you see the israelis and saudis going, we thought you would have our back against iran. when they realized the trump administration will not have their back and they can attack saudi oil fields, their deal is

with iran. i don't think we are going towards a middle east war. we are going towards a settlement of jockeying locally, not involving the u.s. tom: did you see these headlines on the meeting of mr. johnson and mr. corbyn? nejra: i did. they are meeting to discuss the brexit timetable. that is one thing we are looking forward to, the tweaking of the timetable or the calculation boris johnson has to make to call an election. we will see if the extension will be ratified by all e.u. nations, the island saying yes. this is bloomberg. ♪

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the company echoes similar warnings as texas instruments in a weakening global economy. norfolk southern on deck. brexit now in the hands of the eu as it decides how long an extension to give the u.k., while boris johnson debates and election. softbank takes control. a $9.5 billion rescue package, gets adam neumann platinum parachute. welcome to "bloomberg daybreak" on this wednesday, october 23. the latest from blackstone. asset under management increases billion.ear to $550 net inflows did declined by about 15% year on year. it is going to be the industrials and the semis leading the market today. s&p futures are going to be a little bit softer, down by about six points. texas instruments warning last