francine: draghi's is one song. -- swan song. time as president. favor allowingto to 15 days for a brexit extension. shares skyrocket as the carmaker returns to profit leaving -- beating even the most optimistic estimates. ♪ francine: welcome to "bloomberg surveillance." i am francine lacqua in london. write your markets, focused on

what is happening in the world economy. working off a couple signs that the global economy is losing momentum. we are also getting october area manufacturing pmi instead of the forecast of 46 pounds. it's all to do with the extension. we're hoping and waiting to hear from the eu. we are getting a couple of key decisions and we have the ecb a little bit later today. all eyes on mario draghi for his last news conference. bank -- norges bank leaving its key rate unchanged. shares are down 22.5% and we will have a full roundup of all of your stocks. coming up, we speak to the acting chief executive of air shuttle in about 10 minutes. but first, let's get straight to first word news in your city. agree theysadors

should accept the eu's request for a third extension of the brexit process. splitey are reportedly over how long to grant the extension. the french are pushing for a tight deadline but many other countries want to permit the three months officially asked for. johnson was forced to ask for an extension after he failed to gain the backing of lawmakers. liftingrump is sanctions against turkey after it complied with the cease-fire agreement with kurdish forces in syria. it shows hiss decision to withdraw forces has paid dividends but the senior republican on the foreign affairs committee criticized the move. u.s. representative says bashir all aside and russia are going to feel the back. al-assad and russia are going to fill the vacuum.

monetary authority of singapore told us his baseline view is quote the current cycle should be bottoming out towards the end of the year. he says the decline in trade and manufacturing has not spread to other sectors. >> we can't be there. every slowdown, every risk on the horizon has to be addressed by monetary policy. i think fiscal policy has a strong role to play in that has not been sufficiently addressed. >> mark zuckerberg warned congress that if the u.s. does not take the lead in tech innovation china will step in. he faced a grilling from u.s. lawmakers on the house financial services committee over fact theking lyrical had and prevention of the latest videos and online child exploitation. discussing plans for facebook's libra cryptocurrency.

parts of california are going dark as the first stage of a massive blackout that could leave a million and a half people without power. pg&e cutting service to customers in an attempt the power lines from spiking -- sparking wildfires. the blackout is said to spread overnight in the parts of the san francisco bay area. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. in a few hours, mario draghi will preside over his final meeting as president of the european central bank. in eight years in charge, he has lived up to his pledge to do whatever it takes to save the euro. he found measures to support banks and hands over the reins to christine lagarde in a difficult economic climate. hour is theor the

chief investment strategist in germany, austria and eastern europe at blackrock. so thank you for joining us on what feels like an important today. if you look at mario draghi at mario draghi and what he has been able to do, he is getting quite a lot of hard times because of a divided governing council. what can christine lagarde do differently? first of all, she will not need to do anything very soon. the september move of ecb was all about creating some time of --l for christine lagarde for christine lagarde. then she needs to win over those who have been opposing ecb policy of late which is an argument where she can bring in all of her experience as a previous policymaker and a french finance minister to win

over people and build compromise. and to win over the public, which is quite difficult. i think christine lagarde is exactly the right person at this point in time to continue mario draghi's work and to build on this legacy. francine: what are you expecting from christine lagarde? we had a 30 minute conversation weeks ago. it's clear she also sees himself as a politician. what would you do differently? is it really trying to persuade politicians that they need to do more on fiscal spending? martin: it's both, but predominantly in the latter. policy as of monetary it's coming to the ecb having used most of its ammunition at the disposal is the need for using some of the fiscal space that exists.

it will be the task of the ecb in ansuade policymakers intelligent combination with the central bank itself. impacttral bank has an on what the fiscal authorities do. it goes beyond its own independence. it would be quite an interesting way for christine lagarde to even extend the independence of the central bank. francine: what does it mean for markets and europe? europe has the ecb, but it's not really up to them. it could really break your. -- europe. martin: europe can only play a role in this world especially between the two blocks, it's not just china, but the world is building and the u.s. and america's. europe cannot just stand on the

sidelines looking at its own national interest. it can only work as a bloc in the big global game between the three regions. the eu must speak for europe at this point in time, and of course, the ecb is an important player. but also comes down to the larger countries finding a compromise. italy needs to be taken back on board after it has been standing on the sidelines. there is a lot to do inside of europe before europe can actually play a role at the global stage. francine: when you are intimating is basically structural reform. and we are seeing a more friendly italy towards europe. german'ds to happen for s to pick up? we spoke to all of shells at the imf and he said they are already doing a lot. they are saying their

surplus the way larger if their fiscal policy was not so extension dairy already. by negative german interest rates across the whole range of maturities, you definitely have a surplus almost by definition. my sense, and last time i was in their lane, the sense i was getting was that the german finance ministry would only be willing to spend more i.e. make a significant fiscal extension possible in the case of a deep recession, which is not we are seeing. i think we are rather in the midst of a mild slowdown and not on the way to a deep recession. francine: martin, thanks so much. still ahead, stuck in a brexit limbo. the eu keeps boris johnson waiting to find out the new deadline. we will have the latest from brussels next. this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg surveillance." let's get straight to the bloomberg business flash in new york city. >> nokia shares plunging the most since 1991. this after the company cut its outlook and paused dividends. the telecoms equipment maker says the earnings boost from 5g will take longer. that's as it invests more than products to fend off rising competition. nokia cut earnings and margin expectations for this year and next. it also scrapped its dividends for the third and fourth quarters of fiscal 2018. itla shares a jumped after reported a surprise profit exceeding the most optimistic

estimates and by a wide margin. in the third quarter, the carmaker earned a dollar 86 a share. the consensus estimate was for a $.24 loss. investorsalso told his new plant in china has already started production and the model y crossover will launch a month earlier than planned next year. >> the factory being constructed in such a short time approximately 10 months. as far as i know, it's unprecedented. this will be the sample for future growth. we will modernize in shanghai and build a giga factory in europe. taking a hit last quarter as they booked losses across a key number of projects. this includes the much touted technology upgrades which contributed to an operating loss of 421 million euros in the fourth quarter.

the biggest lender in the region is pushing through an overhaul of its business and slashing its dividend policy. this year, coal powered generators in europe faced more than 6.5 billion euros of losses as plunging renewable energy --ts and cheap national natural gas cut their used to a record low. according to a report, almost 80% of coal-fired generators will be unprofitable. that is your bloomberg business flash. francine: thank you. the eu left boris johnson hanging as officials in brussels debated the new brexit deadline. france is said to be pushing for november 15 while others prefer january 31. let's go to brussels and our government reporter. great to have you today. what is france trying to achieve by pushing for a tighter deadline? >> emmanuel macron, he has been britain's that no are -- noir.

he basically thinks there should be more pressure on the house of commons to get the deal through he thinks the only way to do that is to get a very short delay. he thinks that if you can do that, you can put pressure on the house of commons. merkeler countries from and very much all other governments, they basically think you need to get a long extension to let the process play out and let parliament have a general election to see what happens. boris johnson has are he said he will trigger a snap election if the extension is granted. why are so many pushing for a january 31 deadline? >> i think they just think they should not get involved in british mr. politics. forget, boris johnson was forced by parliament to request an extension of three months.

so the eu and most countries are saying, if that's what they asked for, then we should give them that. if we give them anything else, it looks as though we are interfering or trying to make something else happened were triggering elections were not. i think that sort of thing is very difficult for the eu to excuse. they say, actually, brexit has nothing to do with us. get on with it. francine: that he so much, bloomberg's european government reporter. still with us is market from blackrock -- martin from blackrock. i am now if the outcome has a huge impact on investment opportunities in the pound. martin: probably not much. but one thing is clear. the less likely no deal brexit becomes, the more necessary it is to build up or start building up positions in sterling again.

we still see that some of the positions we have seen are undervalued. and not all of the investors that are probably willing to invest in the u.k. in general in a normal scenario have come back to the market. francine: this is one of my charts i love and looks at pound volatility. that has been dropping quite a lot. are you expecting volatility to go back up after the extension? one elements in the extension would probably be there are still some european politicians still hoping and thinking that avoiding brexit altogether is still possible. there may be a believe in the european union -- belief in the european union.

it will mean that if this is true, some will come back to this extension. boris johnson said, they will call a snap election and the election will happen. it will mean the parties involved need to position themselves with regard to the brexit question. this time around, voters will know what they are voting for they will not go into the unknown. they know exactly what they are voting about and they can say yes or no. that will bring back some of the volatility. francine: thank you very much. up next, we speak to the chief executive of norwegian air after the company boosts cash. that interview coming up next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." norwegian air has signed a joint venture with china construction bank. shares are surging this morning on hopes that the agreement will shore up this cap carriers and bolster profitability. joining us is the acting chief executive and cfo of norwegian air. thank you for joining.

multiple measures to improve liquidity and your balance sheets. your share price is rising some 13%. how much of this is a turning point? are you only going to see good times ahead? geir: we came out of q3 which was a relatively good quarter. it is a good thing. that is despite the fact that we included and the figures. we are relatively good and we are headed towards being profitable. francine: what happens? know there are sparse reports

about you being a takeover target. that comes up again and again. do you feel more comfortable in this position? we are creating a vehicle with china construction bank. and are the majority of they start out selling 27 aircraft. most of these will be marketed in the regional market. if freeze up capital expenditures close to $1.5 billion and we will have a positive equity affect as such. it is creating a vehicle that gives us flexibility going forward. obviously, they are a very strong partner financially with a lot of capacity. francine: have you had any potential buyers looking at norwegian? well, i am not able to comment on that now. region isfor the

related to turn this company back into a year on year profitability or a profitable company. what will we see from norwegian in the next couple of quarters? what will we focus on from the big announcement today? we have massive changes this year and used last quarter dive dive.p we also have external industry experts. dive. we also have external industry experts. we have gone out today and said we have targeted the improvement coming out of 2021. that work has started the summer and continues that the next 18 months. and if we are able to deliver on this plan.

francine: thank you so much for joining us. acting chief executive and cfo of norwegian air. next we talked with the latest in the impeachment drama as house republicans storm a hearing with the blessing of president trump. that's up next, and this is bloomberg. this is what the markets are doing. there's a little focus on monetary policy market expectations. we are also looking at a lot of earnings. -- areare in advancing advancing and investors are shrugging off signs that economic growth is losing momentum. sovereign bonds are steady and we have several monetary policy decisions. this is bloomberg. ♪ from the couldn't be prouders

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will he take the stage for the final time as president? boris johnson is waiting on a third brexit extension. skyrocket as the electric -- electric carmaker. good morning, afternoon if you are watching from asia, this is bloomberg surveillance, i am francine lacqua. >> we have had a host of earnings this morning. i want to kick it off with nokia plunging this morning, down 21%, the biggest drop for the stock since 1991. they halted their dividend payments. the 5g expenses are turning out to be more than expected. the british lender had a loss this quarter. it set a tough scene for next week. allison rose takes the helm as

the next ceo. stock has had two profit warnings this year. let's get straight to the bloomberg first news look, this is viviana hurtado. viviana: you ambassadors said they should except the u.k. -- they are reportedly split over how long to grant. the french are pushing for a tight deadline of november 15. many countries want the three months of the u.k. requested. johnson was forced to request an extension. president donald trump is lifting sanctions against turkey after the country complied with a cease-fire agreement with kurdish forces in syria. mr. trump said it shows his decision has paid dividends. the senior republican on the u.s. house affairs committee criticizes the move because

-- singapore's economy may be a few quarters away from a recovery. interview, wee are told the baseline view is the current cycle should be bottoming out toward the end of the year and into next year. notaid the decline has spread to other sectors. slow down. risk has to be addressed by monetary policy. that has not been sufficiently addressed. viviana: hold onto your wallet. we are going to talk about possibly the most expensive parking space in the world. a parking spot in central hong $1g has sold for almost

million. it is an illustration between the gap between the ultrarich and ordinary people. global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: $1 million. i can't believe it. maybe it's covered in gold. as global headwinds take their toll, we see them mixed bag of , the tradearnings war is weighing on operations. still with us, martin lueck from blackrock. i always feel a little bit unfair putting all the earnings in one basket. i don't know how much they are impacted by the trade war. companies that don't

do the kind of products we want anymore. there are a number of instances, the ones you mentioned are probably the most important at this time. the difference between the impact companies feel from the trade war on one side. companies have a lot of business outside of their home country and then there are those that are more defensive, that are more geared into the domestic economy, driven by domestic demand. there is a clear distinction in this earnings period that companies that have been struggling are those that have global exposure and are really feeling the impact from the trade conflict. on top of that, we have individual mistakes companies because of tektronix shifts in the underlying

industry. francine: is there a trade war discount for these earnings? how do you see the trade war developing? martin: that is a good question. i think the answer is yes. my sense is the trade war will go away at least in the way that we know it because both sides, china and the u.s., can remove tariffs and come back to a solution sooner than later. i expect something like that to happen before the end of the year, or early 2020 at the latest. china needs to growth stimulus and to get to an agreement and the u.s. president needs it for an election campaign because he wants to show the success of a better deal for the u.s. to his own voters wants to go into the campaign with this. both sides seven interest and when both sides have an interest it is likely a deal will come. francine: where would you put your money? is there a sector that is more

attractive? martin: if we are right about the picture, we don't believe the world economy is going into a deep recession. we are in the midst of a rather shallow downturn and probably the economy will look better in six months time. is the classical recovery story we are seeing. it won't be very strong and it will not be long-lived. period whene a companies will perform better. francine: let's get the latest in the u.s. and president trump gave the ok for republican lawmakers. aoomberg has learned that plan was outlined to the president, it delayed the closed-door testimony of a pentagon official for several hours. the republicans demand the hearing be opened to all

lawmakers. a blue bank senior editor who has been covering the white house for decades joins us now. -- a bloomberg senior editor who has been covering the white house for decades joins us now. >> it is an absolutely staggering visual if you have ever followed this at a granular level. once you get to a certain point, you can't go further. they have these classified rooms set up where you can kind of receive and deal with sensitive documents and testimony. the idea is a bunch of lawmakers are going to barge into their with their cell phones, that is another level, that does not happen. the cell phones are a security risk. i think there has been some understandable backlash that has come off of this. president trump said to his top , thes in congress

congressman from florida is certainly one of those front and center. he said go fight harder and that is what the republicans are doing. francine: what does this mean for the impeachment saga? does it get uglier? derek: absolutely. it can only go down from here, right? in all seriousness, this is one of those things where you should expect there to be more and more and more of this sort of thing. republicans are complaining a lot about process. do you remember benghazi? it is like that, where one side is trying to go in a certain direction, the other side complains about process the entire way. it has a little bit of that flavor. you can expect a lot of processing complaints from republicans. one thing i am watching here is the fact republicans have not

abandoned president trump. you keep seeing headlines that they are increasingly uncomfortable about trying to defend some things, that might be true but there is a large gap between that and being willing to get rid of rent -- rid of president trump. when you watch the republican party march in lockstep with president trump, you have to remember that impeachment, ultimately get to a two thirds senate vote for approval -- removal. if republicans are marching in lockstep with president trump, they will probably not be voting for impeachment or removal, right? francine: thank you so much. teslas surprised profits electrifies investors. this is bloomberg. ♪

francine: this is bloomberg surveillance, i am francine lacqua in london. let's get to the bloomberg business flash. viviana: nokia shares plunging the most since 1991. this comes after the company cut its earnings and margin expectations for this year and next. it scrapped its dividends for the third and fourth quarter. the equipment maker said an earnings boost from 5g networks will take longer. certainvests more in products. microsoft earnings saw a boost from competing programs. profits in the first quarter rising to $10.7 billion. period revenue,

cloud services rising 59%. this was lower than the 64% gain in the previous quarter. internaleloping an surveillance tool. employees say they discovered a new tool for this custom google chrome browser installed on all workers' computers. google said the claims are categorically false. the company said the tool is a pop-up reminder about how to use the calendar. his hedge fund after less than eight months of training. -- trading. he wrote an investor letter that is seeing -- is having difficulty raising capital. with more on this story, here is

dani burger. the industry has felt the pain of cheap index funds for some time but we are seeing veteran managers who survived several business cycles throw in the towel. jeffrey vanek is a legendary manager. during the four years he was managing fidelity, he managed to beat the s&p 500 but a fair amount. at this time, he moves out of tech stocks and into bonds. he received some scrutiny for -- exceptt was magellan up to avoid the tech bubble burst. to give you idea how much his skill is desired, after 1996, he raised a record $800 million to start a new fund. we have come a far way. around the world, we have seen customers full back from hedge

funds after years of poor performance, failing to justify the high cost a charge. investors have yanked $56 billion, that is more than 50% in all of 2018. other chief index funds capture every single style out there, so it is difficult for active managers, especially in equities, which historically struggle to beat the benchmark. not even he has been immune. stocknd uses a bottom up picking style. he said it has been much harder to raise money over the several months than he anticipated. he also said he doubts he will go back into the hedge fund business. francine: dani burger with a great hit. after up more than 20% reports of surprise profit, exceeding predictions.

estimate.sus elon musk told investors's new plant in china has started production and the model why crossover-- model y will be coming. thank you so much for sticking around. drop, shares rise 20%. is he back on track? >> that is very much the question at this stage. profitabilityf sustainable? taz the is valued the way it is because of expectations of a growth. the numbers were disappointing on the top line. the revenuee hoping will continue to grow or recover again and there will be sustainable profits.

that is something to have not been able to do in the past. frankly, this is something like profitmillion swing in from expectations to reality. a $9old, to justify billion jump in valuation. is the next step to figure out if this is sustainable? >> we have to see how it develops in the coming quarters. huge salesnies have distribution networks. dealerships all around the world. substantial financing arms. subsidize someo of the cost in these vehicles in a way that it might be hard for tesla to do. francine: i know you can't talk about individual stocks. but if you look at the auto industry, what is the front --

frontier? is it driverless cars? ,o you look at electric cars renewable cars? >> it is moving in different directions. one element you did not mention his the share economy. people do not need to own their own cars. they will just share them. that is one of the major headwinds, especially in larger cities across many countries. , where the car industry is so important. of thenging perception car industry. it is moving in a different direction. we don't know how cars will be driven in the future. will they be driven by a fuel cell? all of these technologies will definitely play a role. driverless cars will still take a long time until the technology

will be around. my sense is the role the technology companies play in or replacinging traditional automakers, will not happen anytime soon. francine: what does that mean for investments? martin: we should not write off the traditional car industry altogether. the level of competence in terms of engineering and innovation is still very high. even traditional ones, even though some of them have been whichg on ev exclusively, i think is risky, some of them will be amongst the survivors of the industry. i do not think that traditional be replaceds will altogether. some of them will be the drivers of the new cars by whatever technology they will use.

francine: coming up, zuckerberg grilled on the hill. there is a long list of grievances by congress and he testifies for more than six hours. this is bloomberg. ♪

>> the chairwoman, our policy is that we do not fact check politician's speech and the reason for that is we believe in a democracy, it is important people can see for themselves what politicians are saying. political speech is some of the most scrutinized speech in the world. >> do you fact check any ads? >> yes. >> describe what you fact check. >> thank you for the opportunity to clarify. facebook itself does not fact check. francine: that was house financial services chairwoman maxine waters and mark zuckerberg. checkingked about fact

and cryptocurrencies. zuckerberg warned congress if the u.s. does not take the lead in tech innovation then china will. let's get back to alex and martin. what does zuckerberg do next after that difficult panel? alex: he has to convince presidential candidates that facebook is not a bad actor. have a lot of energy coming -- excuse my like mental block. the female democratic presidential candidate. francine: elizabeth warren. alex: elizabeth warren, i am so sorry. meanine: what does that for tech? facebook does not look great with the testimony but there are number of questions about big

tech in general. martin: that is true. what we are seeing is the acceptance of facebook in the broad society is changing all the time. young people are moving away from facebook to instagram and other platforms. there is a be certain fashion that is predominant of the time. the biggest question for big tech, will they still be useful in reshaping society? there is a lot of change going on in society in the industrialized world and the emerging world. if we look at china, there was talk about the emergence of two separate internets, one dominated by u.s. companies and one dominated by china. these are the biggest trends for the near future. change the wayit

facebook -- it was pretty disastrous. will it change the weight operates to save face? alex: i don't think so. there wasn't any massive faux pas. with u.s. hearings, that is the big thing. make sure no gaffe dominates the headlines. francine: thank you for joining us. bloomberg surveillance continues in the next hour. tom keene joins me from new york. we speak to francesco papadia. this is bloomberg. ♪

francine: he takes to the stage

for the final time. boris johnson on hold. that you keep the prime minister waiting. said to allown is just 15 days. tesla hits the gas. shares skyrocketed. good morning, this is bloomberg surveillance, i am francine lacqua in london. tom keene iswe have a couple ces this morning, the ecb with mario draghi stepping down after this. the focus is on data point to a slowing global economy. 16% it dovetails a appreciation on the mario draghi tenure. the negative rate environment. it is going to be an interesting press conference, just what is

the plan forward. francine: it certainly is. let's go to bloomberg first world news. isiana: the european union keeping boris johnson waiting. eu ambassadors agree the prime minister should get more time to work out a brexit deal but they can't agree on how much time. france is pushing for a november 15 deadline, other countries want to get the u.k. the three months it requested. president donald trump gives the ok for republican lawmakers to disrupt the hearing of the democrats' impeachment inquiry. some of them outlined a plan for the president for the disruption to delay the closed-door testimony of a pentagon official for several hours. republicans demand the hearings be open to all lawmakers. over to japan, he pleaded not guilty to all charges against him. his lawyers said the former chairman of nissan is a victim

of a conspiracy to bring him down. they blame prosecutors, the government and nissan. he was arrested almost one year ago for alleged financial misconduct. elon musk flipping the script on those who doubted tesla. the electric carmaker delivering positive earnings. the company's founder declares he is ahead of schedule with a factory in china. shares are surging in the market. global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: thank you so much. five days in a role, i have never done that. dead out there, dead futures. euro-dollar, real focused on that after the mario draghi press conference. we will have bloomberg headlines after the new york 8:30 hour

with all of the important comments from president draghi. thing youit is a good are looking at it. it could be the sign of a global downturn. i am looking at stocks up. we are seeing investors shrug off more signs of global growth. most bonds are steady. actually looking at global expectation for inflation in europe. those expectations are following. see it is de-escalating since 2012. joining me now is francesco papadia. thank you for joining us. is mr. draghi getting an unfair sendoff after all of the criticism we have had for the last three months from former

policymakers? i think a lot of attention has been given to one side of the story. is from mostly german, but also french, dutch and austrian former central bankers. much less attention has been given to the support mr. draghi has received. there has been a lot of confusion, in my view, about the -- heence between draghi insisted on continuity between he and mr. draghi. think it was quite significant and maybe a bit over noted. the attacks have been emphasized

and the defense may be has been not considered enough. tom: it is wonderful to have you with us. you are absolutely authoritative on market operations and thus an expert on what we are witnessing in the united states in repo, the challenges of the u.s. central bank to provide liquidity to the market. are there tangible worries out there? or can you say we are in control of the liquidity of our trust market? francesco: i think what is happening in the repo market in the u.s. is very meaningful. there has been a discussion whether we should return to a balanced liquidity situation. that was the view most prevailing in europe. or whether we should stay with an abundant liquidity situation, which is the view of the fed. had a bit more of the

balance view before i saw what happened with the repo market in the united states. you can set a reserve of liquidity is low in the united states and if that large amount of liquidity, you still have problems in the repo market. it means that something fundamental has changed and the demand of liquidity by banks. navigating in the dark. let us get ahead of the press conference. how far is mr. draghi in the dark? how far will president lagarde be in the dark? francesco: i will restate your question. how far are central banks in the dark? the problem is not exclusive to europe. if anything, it is more acute in japan and just a little better in the united states.

is very unusual combination very low inflation and very accommodative monetary policy for a very long period of time. together, that is why they are extraordinary. dark is around central banks in japan, united states, europe, maybe a bit less in the united kingdom. , is that the dark enough, as you call it, is the dark enough to push us into a recession because we don't have the monetary tools to deal with a slow down? look at thef you youomic situation as such, should not be exceptionally worried. yes, we do have a slowdown, but we don't have a recession yet. there is a worsening of the

situation, then central banks will be at a loss what to do. hence, the demand, especially in europe, less in the united states and japan, that fiscal policy would come to the rescue and help. again, i don't think the economic situation is such very worrying. what is worrying is the ammunition of central banks is not completely depleted but is not abundant, either. francine: do you worry about negative rates and the impact on european banks, especially german ones? francesco: i think a lot of discussion has been made of this reversal rate story. at a certain point in time, the lowering rates would have a counter effect on the economy. when is thisis,

reversal rate? i have seen some estimates that put it quite far from where rates are right now. now we are at -50 on the deposit. i have seen an estimate about 100 basis points for the reversal rate. i see no estimates that we are already at the reversal rate. there is a lot of room to decrease rates but maybe we are not right with the situation that anything that has been done on interest rates is counterproductive. tom: thank you so much. this has been fabulously informative, especially with the u.s. repo challenges. francesco papadia, the former ecb director general of operations. we will go to matthew miller in a bit. , iimportant press conference don't know if there will be tears, or m.i.t. tears at the

ecb news conference. mario draghi with a serious news conference at the 8:30 hour. this is bloomberg. good morning. ♪

francine: this is bloomberg surveillance. i am francine lacqua from london. finaldraghi holding his ecb press conference after eight years as central bank president. joining us now for more on the ecb and its limits, a senior

economist and chris ralph. thank you both for being on set with us. this is a historic day. mario draghi leaving effort doing whatever it took to keep it altogether. is he getting an unfair hard time? >> it is not the end of the era of low interest rates. draghi is getting a hard time, not really, not outside of europe. overall, he has done a pretty good job. got them outdedly of the crisis in 2012. he was extremely helpful to the euro zone and for the most part he has single-handedly with the ecb acted as the financial backstop to the euro zone for 10 years. because of that, the euro zone

has managed to get through three industrial recessions. this is the most export -- francine: what are the tools left the christine lagarde will use? chris: that is the challenge. said.e with what kallum she doesn't have many levers to pull going forward. all of the dials are dialed up of the current time. about is whatrry are the longer-term implications of this policy? i think it will take a generation for us to understand that. while i think draghi's legacy should be celebrated today, maybe interviewees in 10 years time might have a slightly different perspective. tom: let me bring up a chart. deutschmarkrted over the advent of the euro in

1999 at 116. the stability of the 16% depreciation we have seen in euro under the draghi 10-year. a -- at draghi exit different? euro is pretty much fairly valued, maybe on the competitive side. i would not link it to much. we have a bad habit of doing this. the thing that is driving currency is underlying economic performance. in theconomy is weak currency weakens as a result in a bank steps in, we think a central bank is weakening the currency, that is not the case. attention is focused on

the euro. the key issue is where in the euro zone doesn't underline economic growth. we overestimated the pace at which it is growing. tom: i take your point, but to meet we are in search of a banking union. we are in search of not only bank combination across borders but some form of cohesive fiscal space. can madame lagarde driver forward those two goals? kallum: that will fall on deaf ears, unfortunately. the big job of the ecb is to continue to figure out how it can provide a financial backstop the next time there is a genuine crisis. the politics in the euro zone is too divided to get a fiscal union. what is likely to happen is individually countries that have space will gradually turn on the fiscal taps. for the ecb, what worries me is

they will try with the depot rate, may go lower. that will not make a difference. bring that down by 10 or 20 basis points. french industrialists will not switch on the taps. backstop, what actually you can do as a central bank is contained risks that you get financial spillovers into the economy. until the euro zone coordinates better on fiscal policy, it is absolutely crucial the ecb can do that. the best thing lagarde can do is try to convince member states to give the ecb more room on the balance sheet to signal if it needs more assets for a future crisis. they will both stay with us. we are watching shares of tesla. the company posting profits. it is a turnaround for tesla.

the share price is up 17.2%. this is bloomberg. ♪

francine: you are watching bloomberg surveillance -- viviana: you are watching bloomberg surveillance.

costs. this to manage the shift to electric vehicles. third-quarter earnings were reported. they also say provisions to cover the cost of the emissions scandal might not be enough. that could drag on profits. nokia shares the following the most since 1991. it is delaying an earnings boost from 5g earnings networks. the company getting a boost from demand for its cloud computing program. revenue rising 25%. that is your bloomberg business flash. tom: look at tesla, but first microsoft. tesla gets all of the press. the cars are so cool. the cloud is as monday and as it

gets. can microsoft beat amazon or do they really not care to beat amazon in the cloud? matthew: i think there is such a big growth opportunity in cloud that they can both happily grow. they don't have to interfere with each other. clout is driving everything. it is quite mundane but it has that mystique about it. growth forng microsoft. tom: now that i ever spend any time on 5th avenue, but by chance i was there yesterday. was empty,ft store it looked like a bank branch in manhattan. sales were up 4%. when do they get rid of consumers? is there any feeling on that? i think it is still an important part of the company.

there is tough competition out there. not everyone likes using the apple device. withught up lost ground the latest product. i think they are going to stick with it. francine: talk to me about facebook. we have testimony and sparks were flying between maxine waters and mark zuckerberg. how did facebook do? how will it change how regulators look at them? matthew: it is incredibly fundamental, the issue both commercially and from a government perspective. the u.s. government is looking at this and thinking facebook is potential he big enough to become a genuine threat to the global currency of choice. there is a huge range of issues about facebook's role in the global economy and their power. i think this will be an issue that drags out for quite some

time. francine: what about tesla? tesla shares are gaining 20%. , when things are great they are great and this is definitely a great quarter for them. have $5 million of cash in the bank. we thought they were burning through that quickly. they have done a lot of things in the u.s. to improve the cost base. they have grown volumes. the question in 2020 is can they make those investments in the china factory and the european factory to make them work? tom: are they all clear of the image of making fancy cars in a tent? i don't know if that is true or not. with this announcement, have they moved on to a more adult

tesla? matthew: i think they are getting there. i don't think they are completely clear of that. there is still a question if some of those cars built in that tent will stand the test of time. there might be an underlying issue there about product quality. certainly china looks like it is a real facility. lessonsy they can apply and build high-quality cards. cars.h quality , a: speaking of twitter clarification at 3:30 this afternoon. twitter is killing it. this is bloomberg. ♪ everyone uses their phone differently.

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radio, we will have the press conference. now, your first word news. viviana: boris johnson is stuck in limbo, waiting for the e.u. to decide on his reluctant request to delay brexit. e.u. ambassadors agree the u.k. should get more time but cannot agree on how much. onnce wants a tight deadline november 15 and other countries are willing to give it the three month delay at wants. another black out in the state of california could leave more than a million people without power. pg&e cutting service to customers in northern california as an attempt to keep powerlines from sparking wildfires. other utilities are warning of shutoffs. the trade war is dragging on south korea's economy, gdp rising 4/10 of 1%. that puts south korea on track

for the smallest expansion since the financial crisis. the bank of korea cut interest rates. softbank will seek a u.s. national security review of its wework bailout and will file with the u.s. committee on foreign investment. the japanese conglomerate agreed to a rescue deal for the struggling office start up. 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: thank you so much. in a few hours, mario draghi will preside over his final policy meeting as president of the ecb. he has lived up to his pledge in 2012 to do whatever it takes to save the euro. we saw trillions in bond buying and measures to save the banks.

now he hands it over to christine lagarde and with the governing council split. joining us now from outside the ecb headquarters is matt miller. i don't know whether we will see tears withaughs or mario draghi stepping down, but he has come under attack for what he has done. what will his legacy be? matt: there won't be any tears today. he is not really the type to cry , as far as i have seen over the past few years of coverage. he will be seen as -- he made this heroic stance with the " whatever it takes" line, his epithet for sure. he is seen as one of the savers of the euro in the crisis. there has been a lot of criticism over this divided

governing committee the last three months, and certainly at the last meeting, and criticism throughout this term of negative rates. that is something that mario draghi has gotten a lot of flak for, and certainly from bank ceos but other wall street titans, negative rates is seen as a trap that is difficult to get out of and it has not gotten him closer to his inflation target. m.i.t.rio draghi is an phd. is there any permanence to the anglo-american intensity of mario draghi's academics, or do they go back to an old worldview? matt: i am not sure about his but he seems to be committed in almost a religious way to the european project.

that was his first and foremost goal. it wasn't about the mandate of inflation as would have been so important for someone like jens weidman, although that has been key to mario draghi. how does christine carry this forward? follows his commitments to the european union or focuses on her own mandates that she brings to office. tom: matt miller from frankfurt, the press conference as well. ralph and kyle pickering are with us. i want to go to you on negative interest rates. the great track for lagarde is the path to normalcy and what it means for the markets. can we come out of negative rates with normalcy or do you assume massive instability?

kyle: we are working on the basis where negative rates are normal. to idea that we get back normal is basically we want things to be the way they were 10 or 20 years ago and there are not low interest rates. make isake we often rates make easy monetary policy. in normal times, interest rates are low and i don't think monetary policy is as stimulative as we think it is. i don't see any excesses building. the signal that we have jennifer really moose -- significantly loose monetary policy. francine: what does it mean for financial markets? chris: if you look at the link between bond markets and equity

suggests thatways equity markets look relatively good value relative to bond markets when the yield curve is so low. negative even out 25 years in terms of the euro, makes markets look cheap. there is a danger investors keep reaching into areas of the market that are potentially more risky without a realization of what the risks are of accessing those areas. if you look at the high-yield market where there was a high-yield bond issued in the past week with a coupon of .75%. that is just lunacy. that cannot continue into the medium-term. tom: thrilled that chris ralph is with us and kallum pickering. we have a wonderful conversation on wall street with mr. ralph.

at 8:30 on the economics of europe, mario draghi of the ecb. right now in stockholm outside , mr. ingves takes conversation. this is bloomberg.

♪ chairwoman, our policy is that we do not fact check politicians' speech and the reason for that is that we believe in a democracy, it is important that people can see for themselves what politicians are saying. political speech as some of the most scrutinized speech in the

world. >> do you fact check on any ads at all? >> yes. >> describe what you fact check on. >> thank you for the opportunity to clarify. facebook itself does not fact check. tom: some of the intensity yesterday as mr. zuckerberg met with the politicians of both parties in washington. waters of is maxine the house financial services committee and it is on libra and facebook as well. francine: the e.u. left boris johnson hanging last night as officials in brussels debated when the new brexit deadline should be. france is pushing for an november 15 -- november 15 while others are pushing for january. i guess it depends if you are an e.u. leader and if you think brexit could be reversed which a

longer extension gives you a chance of that, or you are like france and want it done with. maria: that is the debate. the european leaders will grant an extension. they don't want to go for a no deal brexit, but they believe the prime minister is close to getting this deal done. in terms of the debate of how much time he should have, one is being led by emmanuel macron, who is not even in europe. he wants the deadline of november 15. the rationale behind this is he believes mps need pressure. they need that time pressure to focus minds. the other camp is saying, let's give three months, we don't interfere or pressure anyone. no side is winning this argument. we do not expect a position today, maybe tomorrow.

tom: how alone is mr. macron? how many other nations are on team macron? maria: he is not alone, he is just very vocal. he is always willing to stick his hand out and say what he feels is the right thing. he feels the last time he pushed for a short extension, it was validated. it is not just macron. they feel like he is the one who should do the heavy lifting and come out very vocally. it is not just france. many other countries feel this has gone on for too long and it is time for everyone to move on. europeans do not want two decisions to come together in december. francine: maria tadeo in brussels. we are getting news from stephen barklay saying there will be

minimal checks on goods from ireland to great britain. we are back with kallum pickering and chris ralph. on thes disagreement london set about what happens next. kallum: let's completely zoom out. the nature of the uncertainty markets face has changed over the last two weeks. before we were facing certain -- uncertainty on the brexit destination. now we are facing uncertainty on how long it takes to get to the brexit. hard brexit risk is quite low around 10%. the difference seems to be whether this will happen within the next month before an election, or after an election. i think boris in the end gets his deal through. chris: the challenge with the macron view is whether boris can

get parliament to ratify the deal in that short a timetable. parliament, as we know, has been incredibly unpredictable and it is difficult to say whether parliament would agree to the pressure or commit to the pressure that is being put on by the french. not goppens if it does through by november 15 and macron has to go back and say, we need a longer extension? francine: the question i have is whether in the market there is still a bias toward remain. do people still think in the markets that the u.k. could not leave the e.u. and is that priced in? so when we get a brexit, you see a reversal. i think we have gotten to the point where we have a deal. the e.u. has accepted the u.k. needs to leave, and whether

there will be a renegotiation to rejoin the trading partnership with the e.u., who knows. europeans have finally come to that, so the idea of the u.k. remaining in the e.u. is something, the markets got used to the fact that the u.k. will leave. , and i agreeion that the no deal is off the table. nobody in europe wants it, parliament does not want it, and only a few people on the right ring -- right wing. earnings season worldwide, what is the state of business in the united kingdom? what is the mood of large, multinational, and small businesses? kallum: the mood is pretty uncertain.

that is a lot of companies are worried about investment levels in a market that they cannot really -- they don't understand what the certainty of the outcome is over the next period of time. that is why this brexit resolution is so important for new investment opportunities in the u.k. tom: let's swing it over to consumer. in the united kingdom, does the consumer ebb? the consumer is doing pretty well. demand for labor is high. you will struggle to find a country with that rate of wage growth in nominal and real terms. the bit it is hurting his businesses. business investment is 15% below pre-referendum trend. that is businesses paralyzed by

the uncertainty. the moment they get clarity, expect them to release investment. i would expect a fairly sizable relief rally on the back of brexit clarity, and that is what we can look forward to. tom: kallum pickering, thank you so much. we will continue with mr. ralph as well. important interview on our international relations. out with a new book, my book of newyear a few years ago, a book on the admirals of the navy, james stavridis on the navy and the land between turkey and syria. this is. ♪

♪ you are watching bloomberg "surveillance." general motors moving closer to ending a five-week strike. 61% of the workers voted in favor of a tentative contract. the flint, michigan factory

considered a bellwether. the city of flint is a union stronghold. ebay is suggesting holiday sales that fall short of estimates. says it could cloud the fourth quarter when it clashed with activist investors. scott schankel blamed the slowdown on internet sales tax laws. sales of norwegian air soaring, reaching a joint venture for leasing with the chinese bank. norwegian reported third-quarter profits that beat estimates. that is the bloomberg business flash. tom: it is an uproar in the united kingdom, the idea of fees and compensation and how advisors giving advice will be paid. long ago and far away, i went on overseas jollies with fidelity

investments. 11n there was a bombshell years ago in the united states. it was a quiet press release on march 5, 2008 that tore fidelity to shreds over some of the interactions of their people with the incentives of trading and their wealth advisors. mentioned lynch was in the sec press release. it is now upon the united kingdom and the focus is on st. james place wealth management, we are thrilled chris ralph joins us this morning. the core thing for me as a pro is what has taken the united kingdom so long? butu.s., not perfectly, they mopped this up 11 years ago. why is the u.k. doing overseas

jollies in fees? chris: we are looking at a situation where there was a conflict of interest infidelity between the fund managers and brokers who were giving them information. place, what we have been provided and clearly moved forward from is an environment get, we get our people to in different places, to allow them to talk about business. we spend a lot of time talking about our investment management approach, the way they can provide better advice to their clients, and i think that is completely separate. i was going to come back on the point, i think the fees are important. we have an environment where the qualifications for advisors that are now required post the

regulatory developments of the the 10 years, make necessity of being qualified equivalent with an accountant, and actuary. therefore, people associated with the actuarial profession will cause problems. tom: this is not about bad people. it is about catching up with a modern structure of u.s. wall street. does the fca, financial conduct authority, do they need to catch up with the sec? chris: i think that is up to the fca to comment on. what i do know that at st. james place, we have an ongoing dialogue with fca about all different aspects of the business. i talked to them about our investment approach and my

colleagues talk about the way we remunerate our advisors. that is an ongoing discussion. they are very aware of the way in which we have compensated our advisors over a long period of time. the fcapersonally see is necessarily behind the sec in the way it deals with this. francine: hasn't had an impact on how many people use -- has it had an impact on how many people use your services? chris: not at all. results showed good, positive inflows into the business. business is strong and we continue to deliver great results. clients, for me, our our existing clients continue to give us assets to manage and recommend their friends, family,

and colleagues to us. i see clients all the time. what is being written about in the media is different from the experience the vast majority of our clients have. tom: chris ralph, thank you so much, comments on a huge debate in the united kingdom on investment management. with st. james place wealth management. we have more leading up to draghi and the press conference, and earnings, revenues. what do you do in investment? kate moore darkens the door. this is bloomberg. ♪

♪ hey. hey. you must be steven's phone.

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. ♪ tom: this morning, once again, quiet markets.

equities flat, renminbi strengthens. rates are still negative. depreciation,o 16% over the years. this morning, a press conference and then mendon lagarde, -- madame lagarde. microsoft sits on cloud nine, revenue floats upward 14%. this is bloomberg "surveillance," from new york and london. we are all looking to frankfurt this morning. he may say something that will move markets. francine: he may. i don't know what he can say. maybe he will say whoever comes next, christine lagarde, still has to deal with the downturn but i wonder whether he would want to boxer in. humor,a little bit of

because it has been an eventful eight years. tom: we will have coverage of klaas -- across bloomberg television and radio. viviana: the european union keeping boris johnson waiting. ambassadors agree that u.k. should get more time to work out a brexit deal but cannot agree on how much. france is pushing for a tight deadline of november 15 but others want to give the u.k. three months. donald trump giving the ok for republican lawmakers to disrupt the impeachment hearings. some of them outlined plans to the president, this disruption delaying testimony of pentagon officials for several hours. republicans are demanding the hearings be open to all lawmakers. in japan, carlos ghosn pleaded guilty -- not guilty to all charges. his lawyer says he is the victim

of a conspiracy and blame the prosecution and nissan. he was arrested for alleged financial misconduct. elon musk flipping the script on those who doubt tesla, the electric car maker delivering power -- positive earnings that no one saw coming. tesla's third-quarter profit margin were better than expected , shares surging in the premarket. 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 me do a data check. five days in a row, dead. i have not seen this in ages. talk about range bound. flat. spread, flat. euro, flat. oil not doing much. a huge earnings day today. francine: i am looking at

equities. they are a little bit on the upside, focusing on better than expected earnings. growth helpedte investors shrug off signs of inflation -- recession. , fiveooking at the euro year five year inflation swap, a good indication of concerns the e.u. will face when madame lagarde takes over the european central bank. tom: interesting, and a lot going on focused on the ecb. why don't you take us to frankfurt? francine: in a few hours, mario draghi will preside over his final policy meeting. in eight years, he has lived up to his plight to do whatever it takes to save the euro. he oversaw trillions in bond

buying and measures to support banks. now, the governing council is split over the direction of european monetary policy. joining us is bloomberg's matt miller. it is the end of the year and a lot of people will take time to reflect on his past as ecb president. has he done a good job or did he leave europe in a difficult state? sense, he is seen as almost heroic. his line that he will do whatever it takes to save the the -- behindt me, and he did save the euro. you mentioned the five-year five-year forward, john claude office,when he left the showed as proof of his success and draghi will not be able to do that because he is so far off

of sustainably achieving his target. side,ve that on the minus and the governing committee is more divided, more than it has been over the last three years. you have a real criticism of his push to renew the bond buying program and cut rates again. tom: i love how you say "divided." lagarde shows up on december 12. who does she need to sell on this operating committee? matt: i was talking to the chief economist at julius baer who said one of her main issues is to reunite the governing committee. some of the big critics are gone, and germany has in a sense made a peace offering by nominating isabel schnabel to

the position. some of the more critical voices of draghi's policy have left almost in protest, and are being replaced with more dovish economists. will bee lagarde's job a little bit easier. the difficult thing lagarde will have to do is the thing draghi has not been able to accomplish, getting governments on board for fiscal stimulus. you guys were talking about what could be market moving? one thing is if draghi goes and calls out governments, and gets really specific about who needs to spend what to improve the economy. tom: matt miller, thank you so much. ,e will be looking at the ecb and part of this is maybe the boredom of it. we will go to what matters in the earnings season, global markets. kate moore joins us.

she has been brilliant on having the courage to stay in the market. does the quiet, the lassitude now mean i stay in the market? kate: i do not see any reason to be super fearful. the fact that the market has been so cautious coming into the earnings season, that people were worried about geopolitical blowups and policy mistakes. a are not pricing in de-escalation of trade between the u.s. and china. that means when we get a little bit of good news, it will leave the market higher so we are staying risk on. tom: the dow is not a bellwether but is on the edge of being a bellwether. i give dow great credit for writing a press release in english. there is the margin compression, down 230 bps.

that is a little bit of margin challenge. will we see further margin challenge? kate: margins are one of the key things people are watching for. it has been very hit and miss. some companies have a video syncretic things affecting their margins, and a lot of companies have continued to manage their margins this far into the cycle. we have had conservative behavior, companies careful about investing and additional hires. not as many companies are featuring -- are seeing margin repression. meanine: what does that for where the money should be moving? is there anything you would favor? kate: i think there will be greater differentiation in 2020 then there was in 2019 between the region -- winners and

losers. people will have to do more homework if they want solid returns for years into the future. i think a lot of low hanging fruit has been plucked. i think the pain trade is higher into year end, but 2020 will have to be a year or companies deliver on the bottom line, show they can maintain their margins, and do a good job of investing for the future with the risks of uncertainty around politics and u.s.-china trade. francine: is there a danger they focus too much on cost-cutting and do not reinvest enough? kate: this has been a big debate over the last year or two, what should companies be doing with record level profits? should they disburse that back to shareholders? should they buy back stock? should they invest for the future or sit on cash for a rainy day?

we have not seen a big pickup in capex. may be good if you are in equityholder. we will have a lot of push and pull. people will only invest in products that can be creative in the near term. tom: certainly, the earnings begin to hint at that. later today, jon ferro and i will have it on radio, the press conference of mario draghi, all of those headlines from our team in frankfurt and london. draghi, 8:30. this is bloomberg. ♪

♪

viviana: you are watching bloomberg "surveillance." the parent of mercedes-benz will focus on cutting costs amid the shift to electric vehicles. daimler reporting third quarter earnings that beat estimates. daimler saying provisions to cut the cost does cover the cost of the diesel emissions scandal may not be enough. shares of nokia falling the most since 1991. the maker lowering its earnings guidance for this year and next, and halting dividend payments. they are delaying an earnings boost from 5g mobile networks. microsoft reported quarterly sales profits that were better than expected, getting a boost from its demand for the azure computing program, the demand rising 25%.

tom: thank you so much. kate moore with us of blackrock. gordon johnson with us. rodjohnson is a lightning for the tesla acolytes. he has been cautious on the path forward. one quarter up, one quarter down. we have another quarter. do you see a new sustainability? gordon: i think we go back to the jack's -- johnson outlook. this quarter looks similar to last year. what happened is you had a bunch of unexpected profit that came in, but if you look underneath profitd, effectively the is not quarter vintage. there is 26 million and other which wecluding fx, don't know what that is. credits.n in gains and

none of this is core to tesla's business. additionalated an $551 million in net income but their revenue is down. we think there were a lot of one-timed items. tom: are they legit accounting items? gordon: they're free cash flow was up roughly 360 million dollars and 340 million was an increase in payables. the capex they were supposed to spend this quarter was 600 million and a came in at like 200 million. tom: this is exactly what you are talking about. there is a difference between big caps and edging the story, and with an entrepreneurial story dutch company, how are they managing this story? gordon: they are managing it significantly. last quarter, stock went up. people thought they were off to

the races. elon musk said they would be profitable for the rest of their existence. they have still burned close to a billion dollars and are trading at 400 times next year's earnings. for the first time since 2012, revenue growth is down. this is supposed to be a growth story, significant growth, where you are not actually seeing that. francine: are you telling me the share price today, the significant increase is unjustified? people want to know whether musk will deliver, yes or no? gordon: ludacris that the share prices up 20%. a $46 billion company effectively put up 145 million dollars roughly in profit. that is nothing. they are trading at 90 times that number. you need significant growth on

the topline and topline growth was down 7% year-over-year and sequentially. this is not justified and we do not think it is sustainable. francine: kate? kate: i cannot speak specifically on tesla, but there are a number of companies from a positioning perspective work under loved and under owned. if things look marginally better than expectations -- tom: they cover. is really of this about positioning and not fundamentals. tom: a lot of math you are throwing out. i want you to slow down and give us the one ratio where mr. suspect.ked -- act is what really gets you going? gordon: the p/e ratio. they are trading at 400 times

next year's earnings. tom: where are they trading three or five years out? gordon: probably roughly 200 times and in this quarter, -7% year-over-year. francine: thank you so much, gordon johnson. kate moore of blackrock sticks with us. coming up, the twitter chief financial officer joins us at 3:30 p.m. new york time, 8:30 p.m. in london. he will be asked about tech valuation. this is bloomberg. ♪

♪ francine: this is bloomberg e.u. leftnce." the boris johnson hanging as officials in brussels debated when the new brexit deadline should be. france is pushing for november 15 while other nations preferred january 15. raphael joins us. if you have an extension to january 31, it gives boris johnson time to call an election. therese: for the e.u., there is no question they will deal with some kind of extension. they do not want a no deal brexit. emmanuel macron seems to be

arguing for a shorter extension like you did last time, but very few people think he will drive the hardline. the reason is if you just went for the shorter extension and the e.u. agrees, it would force parliament to make a decision now, and the e.u. could be blamed for interfering. the betting is that they will go for a longer extension and that leaves the conservatives and labour party with big decisions on how to proceed. the the prime -- francine: prime minister wants to get on with brexit and the domestic agenda. what is the domestic agenda away from brexit? therese: that is an interesting indication that he wants to move this beyond brexit. so does the labour party. jeremy corbyn would love to have a campaign not focused on brexit , because his other policies are quite radical, very socialist,

and our polling quite well. the labour leader is not falling well. tom: you read my mind. what do the polls say and are they good at predicting what the general election will do? therese: the polls are showing a strong lead for the conservative party. wildlycorbyn is a unpopular leader of the labour party. we have to qualify that, because ly, polls are aggregate and how this breaks down by constituency. the conservatives are likely to lose big time in scotland. we do not know how labour league voters will break. they might go for the brexit party because they want to get brexit done. it depends whether the election is before brexit or after, and on what terms.

conservatives are leading. that does not mean they would get the parliamentary majority. francine: who wants an election? therese: boris johnson. francine: even if he gets the deal through? therese: he would like to get the deal through and then election. the longer parliament scrutinizes this deal, we have talked about amendments added, but the more they unpack this deal and take it apart line by line and look at the reality of an internal border between northern ireland and the rest of the u.k., the harder it will be to sell it. the more he will have to defend it on the merits rather than on the principle of getting brexit done. i think he would probably rather , as he is clearly being advised, to take it to voters. approximate raw

failed date for a general election? date for a general election? therese: december 12 is the last possible date because of schools booked out for christmas events. if we will see it this side of christmas it is early december. --: christmas 13 -- november december 13 is when we have the "surveillance" party. thank you as always. greatly appreciated. , our conversation today on the politics of the united states of america stavrid is with a new book. ♪

♪ this isis -- francine: bloomberg "surveillance." a lot

of folks wonder what is happening on capitol hill, focus on d.c. and the impeachment proceedings. we had an update from derek wallbank. in london, it is sunny -- not really. we are still focusing on brexit, pound movement, and what kind of extension the e.u. will grant the u.k. tom: right now, we will get through the fog with kate moore of blackrock. she was brilliant earlier on capex and the realities of margin compression. phraseirm has their own for job cuts. are you cutting jobs or moving sectors out, blocks out? we feel really constructive about the labor market and consumers in general, so we are not seeing broad-based job cuts.

when the labor market gets tighter, we are seeing more companies invest in technology that improves their efficiency and maintains the margins we were talking about. technology to maintain margins and deliver on the bottom line. it will not be adding additional headcount as health care costs go up, but we can expect a strong and firm labor market. we are staying constructive on the consumer. tom: kate moore is with blackrock, not a big bank, so you are able to talk about the big banks. u.s. bancorp is trying to catch up fast. can the smaller banks be successful in the technology war? kate: do they have enough money to invest in the technology, build a platform, have enough innovation, and keep their customers captive to compete with the bigger banks? this is playing out not just in

banking, but across every sector and industry. it is the haves and have-nots in technology leading to the differentiation. francine: can people acquire technology or do you have to build it in-house? banks have a negative interest rate problem so technology feels like something that will make the difference at the margin as long as they survive negative rates. kate: that is fair. it takes a lot of spend to integrate that technology into your system. it is not necessarily plug and play. if you are looking to buy a specific asset, valuations are more and not particularly cheap. we hear it on the private side all the time that there is huge competition for access to software or growth technology companies. if people are looking to bolt that on, they have to be

comfortable with the multiples and comfortable they can integrate the technology to deliver on the bottom line. i think it will happen as the labor market stays tight. it will be important to leverage technology and it will separate the weak from the strong. francine: does it mean we will need consolidation in various industries to play catch up? kate: there will be further consolidation. if you are in the bottom quartile or quintile, the lower group of performers and have not been able to leverage technology and are not throwing off free cash, you have to ask well the business be viable in three to five years. the dynamic nature of the market and how fast-moving technology is, and how incredible it is at transforming a business and the way consumers operate with that business means you do not have a very long runway like you might

have had in the past if there were new entrants into the business. tom: right now with our first word news in new york. viviana: boris johnson is stuck in limbo, waiting for the european union to deal with his request for an extension. most ambassadors agree the u.k. should get more time but not how much. france wants a tight deadline of november 15. other countries are willing to give the three-month sake -- delay. more blackouts in the state of california could leave more than a million people without power. toe cutting service customers in northern california as an attempt to keep powerlines from sparking wildfires. the trade war is dragging on south korea's economy. gdp rising less

than expected for tens of 1%. on track south korea for the smallest expansion since the financial crisis. the bank of korea cut interest rates. in spain, workers are exhuming the body of francisco franco. it has been in a giant mazza liam since he died 44 years ago mausele -- mazza liam -- -- 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 has been a troubled giant. andesota mining manufacturing, 3m, and it is ugly.

currency affected sales, negative you out, new guidance reflects market trends is how the troubled 3m puts it. that has been a troubled story. it is not a secret of my affection for the leaders bookshelf. it is my single best book. james stavridis has a new effort out. we will get to it in a bit, particularly the brilliant chapter on the submariner rickover. with our former nato supreme commander, we must speak of the moment at hand. on the back of your book you have the usual heavyweight herbs. -- blurbs. pentagon public at the , and very quiet is seal. admiral --u think of

essay that's or our commander-in-chief to shreds? james: let's say as a general rule we do not want to see senior military retire and insert themselves into politics. these are extraordinary times. bill mcraven calls them like he sees them. if anyone sales true north, it is bill mcraven. tom: this essay comes out of the officerty of texas, an from the navy core. all of you guys have to observe and know the pentagon. it has been in lockdown. what would you suggest has been the motive of the pentagon given syria and turkey and the buffer zone? james: i would say surprise and dismay, surprise because of the

rapidity which which -- with which these events have uncorked themselves, and dismay because we have walked away from a kurdish ally. that is loyalty, that is not sailing true north, and it will have affects around the world. tom: can we recover that loyalty? can, time has we a way of eroding. if you are south korean and seeing the president of the united states saying we will not fight for these bloodstained sands anymore, will we fight for the snow-covered mountains in south korea? that credibility is a long-term strategic risk. howcine: talk to me about it was possible for vladimir putin to become such a big player at the expense of the u.s.. james: it has been a bit of a journey.

he backed a horse early that was assad, a war dictator in syria. when everyoned was walking away, and his horse is performing well coming around the post. step one is to get in early. step two, put resources in. step three is you get lucky when your principal geopolitical opponent in the united states decides to pull back, at in my view, precisely the wrong moment. it is just not open pulling strings-- putin pulling . the other winner is iran and the islamic state. francine: would you say overall globally it is russia and vladimir putin that are the big winners? james: i think so. the losers are u.s. credibility

with our allies, nato as an alliance. ally, and turkey, a nato are doing these joint patrols together. putin is peeling off the second largest army, turkey, in nato. from anht to concern us alliance standpoint as well as geopolitical. tom: you joined the navy out of vietnam. right now, there will be an ensign on board one of our platforms showing the flag in the eastern mediterranean. how do we show the flag? thingswe should do three , talking publicly about where our ships are going and coming into port. secondly, we ought to be conducting exercises with allies in the region, notably nato partners. third, we ought to be pulling into port.

we ought to take that destroyer into the black seaports because we are in a competition with russia, not only within the black sea but in the eastern mediterranean. francine: we will be back with james stavridis and kate moore. we are getting some news out of lebanon, the lebanese president is addressing the nation. the banks shuttered for five working days in a row amid massive protests. once theyand today are confident that employees and clients can safely reach the branches, the president is urging parliament to approve anticorruption laws. ♪

♪ surveillance."s -- this is bloomberg "surveillance." general motors closer to ending a strike, 61% of employees voting in favor of a deal. the city of flint is a union stronghold. quarterjecting holiday sales that shawl fort of estimates, suggesting the departure of the ceo could cloud the fourth quarter when he clashed with activist investors. the interim ceo blames the slowdown on internet sales tax laws. achieved a deal to shore up its balance sheet.

the region reporting third-quarter profit that beat estimates. tom: we are going to do a single best investment chart with the gentleman from carlisle, the admiral who is sailing true north. salvaging him and saving him is kate moore. what is the most important dot on this map? it is right there, the guadalcanal. that was the darkness of early world war ii and from that, with the war boom, this is the ibbotson chart showing the dow. we have shown the success of american capitalism. how do we keep this chart going? kate: the u.s. is full of some of the most innovative and exciting entrepreneurs. we have a culture that encourages development. tom: and allows failure. kate: that is a critical point.

some other countries with strict it rigid labor laws make difficult for entrepreneurs to start new ventures. looking at europe, this has been a massive complaint across the tech sector. if we do not have labor flexibility it makes it difficult to invest capital. some companies are looking to change labor laws, thinking of india and emerging markets. but have a set of talent labor laws that make it difficult for new companies to come in and hire big parts of the workforce. if we can see that -- fix that, we will see more companies -- countries compete with the u.s. francine: are these companies too big in the u.s.? if you look at the parliamentary committee and some of the big tech companies, it does not seem regulators have a huge handle on

what they do and how to police things online. do they need to be broken up? kate: some very large companies have different businesses under one umbrella. whether or not we will see a forced breakup, i cannot speak, but it is likely to be a political hot button throughout 2020. in addition to concerns around geopolitics in china and trade, we would expect very large companies with undue influence on our culture and the market to be under the microscope for a good part of the next 12 months. tom: kate moore with blackrock. we will continue. the conversation with mr. draghi, look for that at 8:30. this is timely. mr. kelly of southwest airlines. i was on one of their planes the other day. it was beautiful.

this is bloomberg. ♪

♪ this is -- francine: bloomberg "surveillance."

sweden's central bank is keeping an outlook for a rate increase in december, exiting negative rates. riksbank expects to keep rates unchanged until 2022. governor spoke to bloomberg after the conference in stockholm. >> we think as growth will be slower, but do not foresee a downturn around the corner. against that backdrop, given the extreme monetary policy, we think the right thing is to slowly move up towards zero. the swedish economy has had a very good run for a number of years and against the background, it seems quite natural, a slow move out of negative territory. it is a completely different conversation what happens to an economy if you are steeped in negative rates for a long time period. period for us, the time

seems to be around four or five years. tom: we thank him for his attendance in the recent days. the book is "sailing true north," and what you need to know, when you look at different generals or admirals, possibly you can learn something about the fabric of the nation. ,ou have many admirals in here mr. nelson from the united kingdom. i want to go to the guy with the lightning rod of debate when i was a kid. he would not even wear the uniform. how does an admiral get away with that? james: hyman rickover completely broke every mold. he was a flag officer longer than any other officer in the navy. he demanded his appointment as an admiral and an appointment to the department of energy because

of his nuclear capabilities. tom: i think presidents were afraid of him. what would he say about the current commander-in-chief? talk: above all, he would about sailing true north, telling the truth of using honesty, follow the facts where they go. i think admiral rickover would be annoyed by the loose and fast way in which the president and so many in the political scene on both sides play with the truth. tom: we looked at the generals under roosevelt, he said he learned so much about names he was not familiar with. which was the admiral that surprised you within your research? james: of the 10 in the book, the one i learned the most about was the chinese admiral. tom: really? modern chinese? james: this is an admiral from the 1400s. based for all the

chinese claims in the south china sea. a former slave whoa former slave highest level, it is a story of resilience and tells us a lot about chinese culture. francine: why do we still need a navy? aren't the wars being fought through cyber and online? james: i don't think so. first and foremost, 70% of the world's surface is covered in water and 90% of traded goods moved by water. there are ways to choke off economies from the water, if you well, from the sea, so the seas will continue to be part of this global fabric. we have to project power from the sea and conduct see control over regions. our ballistic missile submarines are the ultimate nuclear deterrent from the sea, and we

need ultimate sea left to move goods inlift to move times of conflict and war. francine: are we spending enough on our navies? james: currently we have about 270 ships and any responsible analyst will tell you we need 330. we are not building as fast as china. russia is improving their capabilities. we are back in an era of great power politics that will require more investment in our naval capabilities and some others. indeed the news dimension that will influence all of these other activities. tom: to circle around admiral mcraven, if the president is in the process of losing officers, is it thinkable that he could lose and listed? james: so far, he has hung very

well with the enlisted force. that is typical with the support nationally. he has great support among white, noncollege educated males. i have described the enlisted force of the united states. much going on today, but leave without question. mario draghi's final press conference, we will have complete coverage in the 8:30 hour. euro up, very stable with the 1.11 handle. how we set the table for christine lagarde. this is bloomberg. ♪

anchor: emerging markets enjoying the rate cut party. weak growth way on global economies. tesla drives into profit. the company posting a surprise profit with echoes of 2018. twitter and 3m are on deck. buckham to "bloomberg daybreak" on this thursday, october 24 -- welcome to "bloomberg daybreak" on this thursday, october 24th. i'm alix steel.