futures. we are flat on ftse futures entirely. european stocks? joerg: i would say it has done maybe it is the earnings story coming through. what is expected. better than anticipated numbers. cut as we the last the banking sector, the oil sector, both still in focus for us as we start this equity get more into the election. session here for european equity period. markets. pound looking to be the fed made next cut only if sg quite strong this morning against the falling dollar. special happens. maybe that is the weight on the saying they just rates on ftse 100. spanish ibex opening. the short-term and that he has we do see a little bit of room done with the market expected, for gain. some of the pound turned up by and that is not negative. .3%. do see moves to the upside. any: he basically took away the german dax up by .2%. expectations of another rate cut let's look at the sector you this year. point and see where we are. big -- hei see how financials are pretty mixed.

energy is interesting because energy looks to be fairly red. tried to stay independent. all in all, that is a positive industrials also being bought this morning. move but now he is doing another not a very clear message coming from the sectors. what do we see in the movers? move because he holds himself out of the election and that is the best he could do with the moment. no doubt we will see some moves our colleagues based on that. >> and we are getting gdp running that powell will need a figures out. horror show to cut again. third quarter gdp in spain is it your expectation that we do not get a recession, there is expanding 0.4%. that matches the estimate but so no longer any need for rate you know gdp in spain is up 2% cuts? momenti would say at the from a year earlier. there is no recession, the ,umbers do not sure recession .4% as a month over month european thing. the way the americans do it is but he makes clear in his speech year-over-year numbers. if something happens, that is normally something i expect from take a look at the movers. a central bank. you've got three houses 17 gainers. -- 317 gainers. psa is down 5% after unveiling he should do what numbers show their plan to take over fiat him and he believes he has to do

. he should be independent and help the economy. chrysler. he has done a great job. i've got to get someone on the record saying that is what it is. matt: what do you expect from we cannot always be trumpeting the public relations line. christine lagarde? here we can see as far as the i think today is mario draghi's winners, sanofi up after better than expected earnings. last day and office. when he drives away in his we got a lot of earnings out that be street. limousine, it will be the last ing is another one. for.he is in frank ing is a gain or. on the downside, total, bp and are you optimistic for lagarde's tenure? joerg: i was a draghi has done there is food a. eot.here is peug what he has to do. they are in a difficult time. the stoxx 600 is up .3%. what he has done, history will show us. anna: we will let these markets settle down a little bit. i believe he has done what he had to do. the aviation sector, a big mover. we will get to those. liked tot something he european markets opening higher. it is unlikelyed do, but he has done that. for lagarde, it will be

different because she takes over to move in either direction on policy. has to normalize the joining us now is bob parker. very good to see you. bob: good morning. situation in the next 10 years, and that will not be easy. matt: will it take that long? anna: de you think the fed has take: i believe it will achieved a soft landing? bob: if you define a soft that long because governments landing over the next 12 months have not done their homework, and they have to do the homework to go in the right direction for with inflation under 2%, then the ecb to react. the answer is yes. it is not an easy job she takes over. it is interesting that if you look at the recession which here,this government over investigators -- investors were worried about two months ago and you can see the reichstag from the new york fed recession our window. thank you for joining us. model, it was predicting in joerg de vries-hippen, cio eruopean equities, allianz global investors. september that the risk of recession in the states was up next, some of the stock close to 40%. movers this morning, including that is a very high level. fiat chrysler, surging after a the recession indicators have come back in quite sharply. tie up with peugeot. the futures markets were discounting a near 100% this is bloomberg. ♪ probability the fed would cut yesterday. what is interesting is over the last month we have seen a major

shift in the futures markets which were discounting a cut in december, now they are -- the ability of a cut in december. what jay powell said is right. the risk of recession is quite low. ,he risk of moderate growth that is quite high. it could be on hold for significant time. assetsow do you see risk and the situation, bob? it looks like the fed saying we are on hold the next move is going to be down. it is already a pretty accommodative environment in the u.s. and the economy doesn't look that bad. bob: the first point to make is i agree with you, the economy doesn't look bad. if you break down the components of the economy, can is holding

up well. retail sales is holding up. the two negative areas of the economy have been export growth and investment spending. if we do get slow continued progress on the u.s.-china trade dispute and the first phase should be signed in november, although the location of the signing -- it is not going to be chile. it is going to be somewhere. there may be some pent up demand on the export side. we could see some improvement there. i stick to my view that at least for the next six to 12 months, trend growth in america is going to be close to 2%. coming back to your question, what does that mean for assets? bond yields are anchored very close to where they are today. at worst, it will take a six months time horizon.

trading somewhat higher, 1.85%. that in turn underpins global equity markets. environmentl yield for fixed income assets staying tight, i think the downside risk to global equity markets are reasonably low. anna: we saw yesterday between viet kreisler and persia, we saw anna: welcome back to the both socks going higher. european open. -- both stocks going higher. this is the picture across the equity space. volatile in the first hour or so, there was talk of it so. weakness in the london market, yesterday. now we are seeing the details. down 0.2% and a little more the details produce a different picture. fiat chrysler up 9%. strength but fairly flat on the dax and cac. peugeot down. annmarie: i want to start with 9%., up more than we will leave those there but those numbers up.

this comes after the news of the clearly that is a big story for confirmation that fiat will go today. ahead with this tie up. why don't i get your thoughts on the auto sector, the consolidation. at fiat higher and we have been talking -- we have a lot to talk about when it comes to earnings. let's focus in on the auto space peugeot lower, it looks like psa is buying fiat. and the potential to make a real difference through m&a. missed estimates on the air bob: i think it is necessary. france earnings, and they trimmed their outlook. bottom line on the auto sector is still far too much spare royal dutch shell is down by more than 2.5%, they beat the capacity. too much supply. it gets into a debate about the highest analyst estimates. they are warning about a structural problems in the auto sector. sharing, towards car slowdown in share buybacks. matt: thank you very much, car sharing which is a global phenomenon. that is going to accelerate. annmarie hordern looking at the what does that mean? it means there is a dent in movers in london. sweeping changes at ubs show no sign of halting as the swiss potential revenues in car sales. lender senior equity markets i think the auto sector, whether banker leaves his london-based. you call it a takeover or a combination or a merger, it is promoted to a position

romantic. the new management lineup of the last may, so he has only been veic -- new peugeot, there for a year and a half, and now he is gone. the move comes after a 62% year fiat chrysler, comes from persia on year slump in operating profit at the investment bank. -- peugeot. joining us now is are managing we will see the auto sector editor. we have a lot of changes still further cut. that is very necessary because of those structural problems in at ubs. the sector. matt: peugeot also has to pay a this was the kickoff, but now we 5.5 billion euro kicker. are saying more people moving yet the giveaway half their auto parts is this -- they have to around. what does this bank want to do giveaway half their auto parts to stem the volatility? business. week we had an peugeot down 8%. bob parker, you are going to stay with us. , andview with the ubs ceo we've got a lot more to go through. we are going to bring you the one of the things he told us is stocks on the move this morning that he is a test with costs, including those automakers. and that he has a plan to look , down thea shares at costs across the board, most in five years after unveiling this so-called merger.

including banking. this unit went through a revamp this is bloomberg. ♪ very recently where there were big changes. the idea is that they want to -- the traditional areas of strength have been in wealth management, and ubs was one of the first banks to pivot from investment banking to focus on wealth management. what you are saying is a .ontinuation of that pivot they are a dressing units that are not performing well, that are expensive. at the same time you saw a lot of loyalists have followed, and it looks like the future of many of these top executives is in doubt.

revamp, ubs did signal that several hundred jobs may be at risk. anna: let's move on from the specifics about who is going where and talk about bnp paribas and their results. a couple of things coming through in earnings season, one is cost control, and the other is fixed businesses, and this is where bnp has excelled. an outlier inn how well their fixed business has performed. deutsche bank which reported decliney reported a 10% in this particular unit. the fortunes are mixed across the sector. bnp was a surprise, and they are trying to take away from businesses that deutsche bank is abandoning such as the prime brokerage business. now you're seeing bnp put the

past behind it, it has gotten rid of its proprietary trading units and some of the more risky capital market activities. now you're saying those moves are starting to pay off. becauseere was a run-up so many of these banks, beating estimates and still falling. thank you so much for joining us, managing editor for european finance out of london. i want to get more on the bnp story from the bank's cfo. we should look at equities anna: welcome back two european open. it is a mixed picture. that were in line with the market. european equity markets, lots of combinations to talk about. equities within bnp paribas, the annmarie hordern has the details. overall demand in the market was

>> there is a host of earnings. lower than what we saw. we are looking at this merger or a deal. peugeot down more than 8%. fiat is skyrocketing on this deal. the peugeot family. there was demand and we have adapted the bank so we could 32% premium to serve the client in an optimal way, in a digital way, in a take control of fiat. shareholders are assuming more personal way. that led to a positive revolution. >> do you think you can sustain market. peugeot is going to distribute .ts stake in for racier double-digit growth over the next two quarters into 2020? airbus is down some .6% today. is important is that we continue to serve clients and grab market share. that is what we aim to do. matt: let's get back to bob parker right now. the physical numbers, we remain bob, let's focus in on what you there for the client and serve the client and optimize, and we think about the brexit situation right here, they split in the have the capital to do so. >> christine lagarde will european union, the new vote. give us your thoughts. bob: obviously the discussion overtake the european central

about brexit is now delayed bank friday. until after the general elections. is this going to help bnp today, it was supposed to be brexit day. paribas? happen in or may not thef you look at the levers 2019. it may well be delayed. ecb has, they can shorten rates the central case scenario is and do qe and have an going to be a soft brexit. impact. the interesting question is what this can also have a negative happens in the general election. impact, particularly qe. you have had a number of what else can they bring in? interviews recently, people it is true banks have to deposit reserves at the central bank, trying to analyze the opinion polls. which costs money. there are some areas of clarity in the opinion polls. this is compensation for that. the conservatives will lose in scotland and will probably lose it is going to help upset the and some of the major cities like london. negative impact of negative you've got a large area of the country where voting intentions rates? >> if you look at the overall a very opaque. 10 basist could offset the midlands and the north of the u.k., i think the brexit party may make some gains. points on the short term.

however, the impact of what qe labor may make some losses but it is not at all clear as to will do in the longer term is not within the reach of what is addressed. whether boris johnson and the >> do you believe you have been tories can achieve a majority. that is why, this rally of or impacted bycb negative rates? at theou look overall , ifling where we are today overall growth, one could say it you went long sterling at 121 a is intended. -- it is timid. few weeks ago, i think a number of foreign-exchange players are that is why we have to see the going to be tempted to take impact of the latest events. profits at around current >> do you expect negative rates levels. 129 is not properly discounting to keep impacting? if there isok at the risks of the eighth further minority government. some form of qe on the lower it occurs to me how rates, that is probably going to have an impact. important scotland is. anna: that was the bnp paribas you got to crack that. divide it up between cfo. up next, should assets price out areas of uncertainty and areas of certainty, one area of a recession? the conservatives we will put that question to the market live blogs.

that is next, as the fed cuts will lose most of their seats in scotland. anna: let's talk to you about rates. they suggest there are no more what is going on in the markets. cuts to come. the yield story in various asset this is bloomberg. classes. i am looking at the screen. ♪ this is the cash yield in the u.k. on the rise. onsus what you can get government debt. this is a really big gap. this gap in yields, stocks paying out cash versus the bond market. this is the point that you reference. theme inally, one big investment markets is very simply the dividend yields for cash rich companies under leverage companies are very high indeed, relative to government bond yields. if you believe the ecb and fed and other central banks are on hold and therefore the bond yields are anchored where we are

now, i think you are going to see a big increase in investment cash into high dividend paying stocks. the u.k. is one example. i would highlight japan where japanese corporate cash is at a record high. matt: bob, we are going to keep you with us. we have more to talk about with bob parker. i want to focus and more on halloween and another brexit deadline come and gone. while the u.k. remains in the you for now, uncertainty is still spooking investors. our halloween reporter dani burger has been analyzing the numbers. >> happy halloween and it might no longer be the deadline for brexit they are still plenty of fright. i brought to you the scary chart for investors in the u.k. the low borrowing cost we have seen companies really ramp up their investment spending. when you look at what has happened over the last 3.5

years, you see companies in the u.k., airlines, a concern of no deal. has often beeny haunting the property market. buyers and sellers in the u.k.. when we look at a headline index of prices, they remain negative in the orange and the number of homes put up for cell desk for sale, they have fallen lowest since 2016, the month of the referendum. this might be the scariest chart i have. opening, theyt have taken years to reach between the eu and other countries. it took five years but -- five years to reach an agreement with anna: welcome back to "bloomberg japan, as well as canada. 20 years get a deal done with a markets: european open." minutes into the trading day. group of countries in south america. the u.k. has very little time to stoxx 600 up by 0.1%. reach a free-trade agreement. the london market diverges to the downside.

the pound is stronger. here is what you should watch , will this be halloween matt? anna? themed? it is the last day for mario anna: these are two places that draghi as ecb president. are very closely aligned at the moment. christine lagarde starts the job it might take quite a long time with the divided governing council in a slowing euro to get a deal. up next, don't call it a merger. economy. investors take a clear stance on how much, we will find out. angela merkel begins a three-day the buyout. visit to india and is expected we will take about -- we will to meet prime minister modi to talk about the deal next. this is bloomberg. ♪ discuss security. data fromh out for the world's largest economy at 12:30 u.k. time, we will get the fed's preferred gauge of inflation. talk now joining us to about that and other things is richard jones, our mliv strategist in berlin. i am sure you play the whisper game on the bloomberg.

i am looking at payrolls the granddaddy of all statistics tomorrow. the whisper number and the survey number, why the big diversions, and what are you expecting? richard: we have had soft readings for the numbers, so the whisper number is probably higher. we are bound to get a better than expected reading, and maybe there is too much pessimism baked into the survey number. i expect we will get something around the whisper number, nothing outlandish in tomorrow's payrolls. anna: we will get a measure of inflation from the u.s., and we will look back at this data. richard: that is the message from the fed, they are due for a pause which validates with the market has been saying for six

weeks. we have had 40 basis points of using priced out. the fed acknowledge that. we will watch the data. i think the data we have seen over the past six weeks has come in on the softer side. every data point matters in terms of what the u.s. interest rate will price going forward. matt: where do you see the biggest volatility in currencies now? probablycurrencies are in for a steady ride. the u.k. election could potentially drive volatility in the pound, but we will have to wait until the election result to see the full extent of the volatility in the pound. it could be more volatile after the election than the campaign. anna: we should tell everybody u.s. futures look flat to

slightly positive. nasdaq futures are up 0.2%. apple and facebook higher. apple shares up 2.5%. matt: welcome back to bloomberg markets. this is the european open. we are 21 minutes into the trading day and we are looking once again, another day that we focus on the technology side of at green arrows for the most part. the ftse down. thanks to the chip not much movement after stocks. the flavor of the earnings story balancing up against the high level of the s&p 500 is today. in europe means the oil and gas closed at a -- closed at an sector is weighing on european all-time high. markets. ♪ is your devries hip and. i wanted to talk to both of you about the earnings season and get your take on what we have seen. rate -- whatld you would you take from the outlook we are putting together? joerg: the one part of the

industry is positive, the other negative. negative had something to do with automobiles and the other one, not bad. it really depends. you see companies in the automobile sector, they talk about -- if you talk with other people, they see the light at the end of the tunnel. thef you listen to automakers, it is all over. everybody else, the consumer seems to be supporting this fine, bob, why do you think being consumer is not out there buying cars when they are buying everything else. bob: it comes back to what we were discussing earlier, there is a structural change in the demand for autos. one can get into a discussion about the impact of car sharing,

the impact of people holding off waiting for new electric models,. that could be a positive point in the auto sector. at the moment, are people buying autos because the raft of opportunity to buy electric opportunities are there. i think there's an awful lot of holding off. german consumptions retail sales data is one bright spot in the german economy. anna: let me ask you about the earnings season and the corporate fundamentals that you have been analyzing. where d.c. the companies with the buffer required to withstand the sluggishness we are seeing in global growth? >> it really depends on which region you are. it depends on what you are

doing. the central banks are doing all they can, the government is doing all they can do. anna: treasuries rally after the moment,y-saving at the so if all thinking about the bank of japan interest rates could go lower. apple result beat as the iphone consumptions, that is the situation at the moment. all companies that have the boards sign off on something to do directly with the consumer, that tells us that world is not come to an end. a merger to create a european matt: bob makes a great car giant. fiat unveiled today. point. good morning. a lot of these companies are good afternoon if you're gearing up to put out a ton of watching from asia. this is bloomberg surveillance. electric vehicles. i'm francine laqua in london. right now, the consumer maybe tom keene in new york. doesn't want to buy a gas or great fed show yesterday. knowl vehicle because you a lot of discussion about the markets, what this means or treasuries and we look at greg's the electrics are coming they are not there yet. it and not only a major car brexit.- greg' if you want to get in on these automakers when their shares are getting pummeled for the benefit that you get when the payoff finally comes. tom: we will do a little on fiat chrysler through the morning. buy a new car and as we had the fed day yesterday

that important fo press conference by chairman powell your neighbor sees you, do you like that? will drive folks to an appropriate conversation maybe the diesel is the best you tomorrow. jon ferro and i will interview could buy at the moment. the vice chairman of the federal clarida.ystem, richard for me, it is not the situation, you have to be very cautious what you are doing because other we will speak with the vice people see that. chairman about many of the thoughts we heard from chairman there is so much misinformation powell. that the people are going to be what's most important about richard claret is the single -- for me, the automobile thing belief in a solid american economy. is a little bit done by we will try to define that politicians, done by the public, tomorrow. also at: we will look not at all time right information. dollar. i thing we have ism tomorrow. here's viviana hurtado. anna: i think we are going to viviana: we begin with a deal break in. that will create one of the world's largest automakers. we got this across the bloomberg. considering rivals fiat chrysler and pfa group -- the boards agreeing to extending some paris exclusions. work toward a binding agreement. we have seen an uptick in

european stocks in the last 20 shareholders of each company will own 50% of the new entity. minutes. slightly predating that news perhaps but that adds to any momentum that was building in the markets. psa's ceo will leave the company. european stocks up by a quarter of 1%. hong kong has now entered a recession. you,in conclusion with hong kong's economy shrinking at 3.2% annual rate, much worse this underlines the upside than expected. risks. if you get some sort of deal on it second quarter in a row gdp decline. trade. bob: the first point you make is experts say for hong kong to investors went into this recover tourism from mainland earnings round with very china must revive. negative expectations. in august it was half of what it was in january. that wasn't particular the case in markets. federal reserve chairman jerome powell signaling to central bank the earnings results are coming out ok but the key point is policy now on hold after cutting there coming out better than interest rates this year for the third time. those negative expectations. powell says the policy is you put on top of that a delay to further trade and the appropriate to keep the economy possibility of some improvement going and inflation near the 2% goal. the u.s.-china trade it was a two-for-one shot for relationship. twitter. a delay in trade conflict the microblogging site between the u.s. and europe, announcing it will ban all political ads. plus the fed central banks, not co jack dorsey was able to take bad. a shot at facebook.

anna: bob, thank you so much. dorsey tweets, "we believe political message reached should and.ork devise hip bought.", not -- this isll signals facebook has come under fire for the way it has handled advertising by candidates. bloomberg. ♪ global news 24 hours a day on air and on tic tok at twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. tom: equities, bonds currencies equities, bonds currencies commodities -- following -- airbus up to 20gn a deal for

planes. i'm not sure what book value is or how much they will pay but we are looking at the share price for airbus. i'm also looking at renminbi. tom: well done. seven .0331 -- to 7.03.down technically not a big deal but the vectors clearly stronger. let me go to the bloomberg to bloomberg toesteemed get into our esteemed guest get t this is what our viewers and

listeners feel. this is one measurement, the cleveland fed, and it shows a persistent inflation above 2.5%, now nudging near three percent. one measure the fed would use is the inflation rate, the cpi, which is set below the cleveland fed, and now there is this new gap of the powell inflation versus may be the inflation we feel as well. it's a good stepping point to wolfgang when shao joining us. looking forward to a discussion in a bit. very perceptive on the u.s. economy and also the global instance as well. this does not go away. how we measure inflation, what the public feels is a higher rate than what central bankers use. why do they do that? to somes interesting

accent psychological question. people focus more on the bad news than on the good news. that explains quite a lot of the perception gap between what matters ofks say are inflation and what people fear. probably we won't be able to get rid of that no matter what we do. francine: we had some breaking news in the last couple of matt: 30 minutes into the seconds. doubt that ato trading day. long-term trade deal is possible with president trump. the shares show you what is wolfgang, how would that play going on. chrysler up 9%. into the fed's mind? are they pricing some kind of peugeot down 8%. jerome powell calls an end to agreement or was it just not something people could say with certainty? his policy, which is in a good wolfgang: i'm hearing from many people a lot of skepticism that this was possible. place. he says i know how you did last i'm not entirely sure how this is -- whether this will actually summer. despite a 35%lls affect the policy-setting. rise in trading revenue for the third quarter, beating rivals. the broad realization that the trade deals are not possible

-- weighing on good morning, welcome to "bloomberg markets: european our economies globally will continue for a while and will open." affect us. i am matt miller alongside anna edwards. anna: i very much like the francine: let me bring you more on this bloomberg story that says this is the first stage halloween themed headlines. between the u.s. and china but the chinese are dangling prospects for other stages. congratulations to the team on the creativity. this is according to private let me give you breaking news on conversations in recent weeks. hong kong. it's important to note that the a technical recession. aipac cancellation adds another who hasise to anybody hurdle for the deal. been witnessing what we have seen on the street and listening to the companies talk about the disruptions that the protest are wolfgang: this is a deterioration of the situation that your colleagues have having. unearthed. i would assume this is now also not all that, going -- affecting also the european situation. unevenly split. 326 stocks upward. pressure on eu. chrysler is the biggest gainer. tom: major market moves.

looking at my terminal, futures reverse to a negative five from we have been talking about the announcement from fiat and plus one, yields come in with a vengeance, 30 year bond in three peugeot. basis points off this bloomberg story. say from utility space, -- i want to go to the utility sector is one of the best-performing sectors this you. it buried in the middle of this that chinathe idea morning, which is not that positive when you think about the earnings reports. still utility's is the biggest also wants the president of the gaining sector. numbers fore the united states to cancel a new wave of import taxes due to take effect december 15. how much of this is about saving third-quarter gdp, down 3.2%. face? that china is saying we are not much worse than the estimate of going to do a long-term deal, but the way we are going to get there is to peel back what's 0.6%, but you have to ask andself, who was compiling already been done? do you see any ability to peel how recently were they updated. back? ,e were going to see a big drop yes.r: 3.2% is what you see quarter over quarter. hong kong entering a technical we will probably not have a lot of peeling back now but if we get to a stage to deal, we recession. probably should have some peeling back.

it is not going to surprise my best guess at this stage is .nybody that china is reminding us that china does not only want to let's get the first word news. prevent further tariffs from the the fed will cut interest to roll back some of those that have been exposed. we have a geostrategic rivalry. rates for the third time in a row but the biggest question is there would never be the one deal between the u.s. and china will it stay on hold. that solves that all but there remains a good chance that we jay powell says policy is in a get a deal now and next year trump and xi want to celebrate good place and investors looking another deal ahead of the u.s. election. to more easing. i would say, cautious optimism that there will be some progress in japan the central bank left on u.s. china. we have diplomatic policy unchanged but strengthened its forward guidance. infrastructure now in the united the doj topped with timeframe states to save face? do we have the ability to do for keeping rates extremely low until spring of 2020. phase one, whatever that means, 3, 4, 5 to an actual the bank is expecting rates to stay low as long as necessary to avoid losing price momentum. red greek -- an actual agreement to rescind or pull back previous adster is banning political decisions? wolfgang: i'm skeptical about .

facebook is under fire for the way it has handled advertising. this. i agree with the tone of your --stion that the diplomatic sayser ceo jack dorsey lyrical messages should be infrastructure is not in place. earned and not bought. facebook says it is an issue of freedom of speech. i'm slightly less optimistic on the progress there. with us.gang munchau >> we are not doing it because we will see how that plays out as well substantial market reaction. of the money, this is less than 1% of the revenue, and revenue is not worth the controversy. we are pleased to bring you brendan murray ahead of all of our trade reporting and but mark said we believe in free expression and political ads research. he will join us in a moment. that can be a part of that. professor aiken -- richard clarida tomorrow you. thank about what is going with jon ferro and myself. ♪ on at the fed. officials have cut interest rates by 25 basis points for the third consecutive time this

year. they have also hit the pause button on further cause unless the economic outlook changes. pledge andropped the added a promise as it assesses the appropriate path of policy. chairman powell justified the position at a news conference. >> most adjustments since last year will continue to provide meaningful support to the economy. we believe monetary policy is in a good place. the cio for european equities is still with us. what do you think about what powell said and how it euro-dold

when china pushed back on that and they could not get that -- francine: i think we're just going to fix your mic a second. halloween hauntings.

we were going back to the political implications. if you are a treasury person, you read the bloomberg scoop and what do you decide to do with treasuries? somethinge scoop is that adds risk to the global and u.s. economy for next year and that means a little biased toward even lower rates coming out. increased risk that china and the u.s. will not have a new trade deal next year. this is just a risk for the time being. we have to see how it develops. a lot can happen between now and easter. one is somese agricultural purchases by china, some pledges to not meddle with their currency and maybe some reheated pledges to protect american intellectual property. what china wants is some tariff relief. that appears to be coming theyher, something that

can do. anything beyond that, big structural changes the u.s. is looking for, the current tariffs in effect that china wants pulled off to not look like they will happen. tom: there are stories that come out of one quote and a lot of filler. this story is not a lot of filler. there some real substance here and in the middle of the story, exactly what you discussed, a chinese plea for tariff reduction. does our team in washington, including michael mckee, is there any indication that our mercantile president wants to give way on tariffs and give way on import taxes to americans? brendan: there seems to be a sense that any further escalation is something that the u.s. will consider backing away from, but the tariffs that are already in place, the 350 some odd billion, don't appear to be going anywhere. the administration likes was happening with those. they are diverting, ma

manufacturing outside of china. those don't look to be going anywhere. in the administration wants to hold onto those so they can enforce whatever pledges china might make in the future. tom: can they sustain that within our -- can they sustain that belief, given sub 2% gdp -- i'm told it's a 0% statistic. how long can they keep doing that even the economic growth? the great chart you gotten your story. says, they will continue to grind and grind if the u.s. tariffs stay in place and there's nothing else given on the chinese side. basically, the 2% growth number we saw yesterday, if that's the thing we can be looking for in an environment where tariffs stay on chinese product and this dispute drags out. francine: thank you so much.

.rendan murray china set to douse a long-term trade deal -- to doubt a long-term train deal to be possible with president trump. it's halloween. it is mario draghi's last day as ecb president before christine lagarde takes over. exactly how much the economy is flowing, we will find out with third-quarter gdp numbers. in asia, angela merkel begins a three-day visit to india. she's expected to meet with prime minister narendra modi to discuss defense and security. we get the fed's preferred inflation measure, pce core deflator. this is bloomberg. ♪

you're watching bloomberg surveillance. samsung electronics posting better earnings than were expected. it's forecasting a gradual recovery in the memory chip market next year. says growing sales of 5g products added to the bottom line. juicecreated new ways to iphone sales. a second of talked about installment plans and giveaways. latest quarter iphone sales falling, but overall revenues rose. apple forecasts more topline growth during the holiday period. facebook user growth is still

possible in the u.s. better than expected third-quarter sales. global useronthly base growing by 35 million, that includes 3 million new users in the north american market. thank you so much. what was extraordinary about the apple conference call and text calls, the scale here, becoming like the two big to fail big banks. we don't really understand the size of these companies. apple services, itunes and all that is the size of a fortune 70 company in america. as viviana mentioned, the installment sale growth, the monthly plan growth, the drug of the product on the monthly plan is explosive. francine: i think i was looking at some facts about apple. it's as big as the gdp of some countries.

should we talk about germany and europe? apple, talkingof about trade. i guess europe is stuck in the middle. the people that are really stuck in the middle are open economies that export a lot. is that why it is so tough being a german company right now? holger:holger: it is tough to be a german company if you're exporting machines cars and chemicals. the rest of the german economy is doing fine because germany has this big export oriented and cyclical factor, germany is the weakest of all of the major advanced economies in the world. francine: when will germany come up with some real fiscal spending? the rest of european countries want more. holger: much of this debate is misplaced. germany has a problem in cars coming chemicals and parts of

industry. it does not have underemployed construction workers who could put in all of these public investment programs that people are talking about. german public investment is rising at a rate of close to 10% year on year anyway. however, what germany gets out of it at the moment is a 6% increase in the prices for public construction. in other words, germany is already throwing so much money at it that it gets a little isolated problem in public construction. throwing more money at public construction would not help. some targeted help for the car industry would do much more. tom: you're a wonderful student of all this, wolfgang. can you please describe to me what populism means in germany? i think we are living in america. we see the populism of lebanon -- these other flashpoints. skewed to the south, the southeast, the more conservative

parts of germany, what is the definition of germanic populism? wolfgang: germanic populism is different from that of italian populism. germanic populism is not necessarily a motion of the far-right. he put money into companies and i think he was the first granddaddy of modern german populism. today, it is the extent to which we prop up dying industries. the car industry is a dying industry, the coal industry. is about trying to keep that alive. malaise a structural underlying this.

this will be the big story of the 20 20's. the newst to which -- headlines were about nord stream powerstation, vw's suv sales. usually about carbon emissions. that is very much the heart of what the german economy is and what it does and the difficulty coming to terms with it. populism seems into that. francine: thank you both. us. with keeping a close eye on shares of a french carmaker and italian carmaker fiat chrysler. gaining some 9%. this is bloomberg. ♪

♪ "surveillance." jobs day tomorrow in america. a fed day yesterday and tomorrow. jon ferro and i will speak with the vice chairman of the federal reserve, richard clarida data, to redefine the solid american economy, a word that he uses often. look for that in the 9:00 hour. francine: let's have a look at what the rand has been doing. following the most since september after the country explained the cause of bailing out the power company. ascomave selected a new leader to be announced. a minister -- is a

minister. investors were surprised yesterday when looking at the budget in south africa that it contained little detail on how some of the debt of eskom will be reorganized. what have you seen? what are the various options on the table? >> thank you for having me. what we have done over the last few days is firstly, proven to plan tod that we have a and repositionom it into a modern utility on the basis of a resource plan published by the government, which indicates what the mix of energy will be over the next 10 years or so. in a paper that was released days ago, on the one hand, we

will create a separate transmission entity and on the other hand we will create competition within the generation units within eskom itself, similar to what other countries have done. furthercommitted to a search for cost-cutting, whether it is the supply of coal or the supply of equipment or systems within eskom itself. lastly, get better operational efficiency from our generating plants. all of those are connected to the financial aspects. what we have seen for the first doingnths is -- have been for the first few months is evaluating the debt. the minister of finance will ultimately take charge, but he has indicated the kind of support eskom will get from the government.

seecine: can i ask if you the government possibility taking on some of eskom's debt into it balance sheet what is the likelihood? pravin: i am just giving you the context, that we have options that are being evaluated. the truth is, the ministry of finance will now engage to talk to different lenders and evaluate options with them. pretty soon, we will be able to indicate as a government what percentage of that debt will be taken on and in what form, and what other processes we will follow as well. francine: what is your favorite option at this juncture? pravin: we have been advised it is best to first canvas the views of the lenders to eskom, that the principal would be

applied, all of them will be seated on the same kind of basis. i think it will require time and patience, but this is work that has been done and more work will be pursued. in the near future, we will be able to make some pronouncements. francine: does eskom need further government aid? what has been allocated, is that enough? pravin: well, as i was explaining when i was interrupted, the minister of finance announced 23 billion rand per year for the next 10 years, but in addition in parliament, the minister of finance has a bill called a special appropriations bill that sends a separate amount this year, i think it is another 26 billion rand, and another amount as well so that eskom can cope with liquidity issues and pay

off debt when it is due, and pay off interest when it is due as well. the government will stand behind eskom, but at the same time we need to introduce efficiencies that have not been there. be fixed can eskom without drastically cutting staff? pravin: yes, i think it can. i think there are possibilities for us to cut all sorts of costs as i have been indicating. we had talks with the providers, for example, and many companies are making more than 100% profit , which is unacceptable in our current environment. we hope to have discussions with them and other people in the private sector who have a relationship with eskom to make sure we have the right kind of pricing. we are at the beginning of this process and we intend to create an environment where the sacrifice made by everybody

concerned, on the one hand, but on the other hand we become partners in creating the new eskom over the next few years. -- whoe: who will beep will be appointed as chief executive officer? pravin: the process is concluding that and hopefully we will have an announcement in the next week or 10 days. tom: thank you so much. the south african public enterprise minister, we thank you. right now, we have the perfect just on the cultural moment that is fiat chrysler peugeot. this is important for gm and ford and the rest of auto. goingis a cultural thing on. the former chief information officer of renaud, currently partnered at sia, and is a

student in the culture of french automobile manufacturing. we are thrilled to have you with -- us today.n't moment buy this for a what changes today? jean-pierre: good morning. of course, it is very important day for the french auto industry. two main pillars of this industry worldwide with the alliance, and with the peugeot-fiat. finally, thet families managed to marry themselves after years and years. last week, it was a very long story, and after the death of wanted to, the family

find a partner and they were anxious about the quality of this partner because the future of the automotive industry worldwide is quite difficult now. we want to settle this deal rapidly. in fact -- tom: if i may, because of time, i understand this. what i know as a kid is the coolest car in my neighborhood was a renaud dauphine. there is a magic whether it is renaud, peugeot, or others. will they bring an anglo-saxon rigidity to expense reduction? do you anticipate the dreaded english and american synergies on the mating of these companies? jean-pierre: in fact, when there is a merger in the auto

industry, there are two main targets. reduce costs and to improve the capacity of making synergies between the brands. tos is, the second target is share the r&d expenses. the r&d expenses will be higher and higher because the electrification and the autonomous car journey will spend a lot of money. in the short term, we know that this is very difficult to achieve synergy because of the product plans are done. synergy way to achieve ando have mutual platforms reduce the number of platforms. peugeot did a good job -- sorry. francine: i just want to get your reaction on the share price , because it is striking for me

that if you pull up the share price, which our team is doing now, fiat chrysler is up and peugeot citroen is down some 10%. what does that tell you about the merger? it does not seem like a merger of equals. jean-pierre: peugeot started in 2014 a very stimulating journey to improve its financial capacity to reduce costs and improve the value of the brand. they have done a good job, and the merger has been the acid test of the capability of the achievemerge and to visible results in the short term. they have done the job. the situation of fiat chrysler group is very bad. now, there are only two brands making profits and they are the american brands, ram and jeep.

the group is in a very bad situation. all the brands are losing money, even maserati. maserati could do well like ferrari, but they are losing money. the objective target of the team the bleedingt money off every losing brand, and to build rapidly a visible synergy. peugeot is not in the u.s. it is difficult to achieve synergy in the u.s. between the groups because they are only american companies. in china, both groups are suffering a lot. there is a very difficult path both giving good fusion

-- vision of the future of the group, and also to achieve short-term results with short-term profitability. francine: thank you so much, the renaud andof currently at sia partners. we will get more on brexit. if you look at market conditioning, a week in politics and marketa lifetime positioning is tough. this is bloomberg. ♪

♪ bloombergthis is .surveillance." it is halloween

another brexit deadline has come and gone, but while the u.k. remains in the e.u., uncertainty for investors. boris johnson is set to square off with jeremy corbyn for their first clash of the election. wolfgang munchau is still with us. let me kick off with you. when we look at the polls, do we trust them? are they volatile? do we have any idea of the working majority or coalition? wolfgang: the polls probably tell you the conservatives are ahead. hunchtuency analysis, my is that the tories are ahead and the message to get brexit done is selling. the feedback i get from people is they want to get this done. they may claim they are in another subject, but this is brexit, the big, all dominating

issue of british dominic -- politics. in my view, there will be an emerging majority to support brexit. francine: if we have a strong majority for the tory party and boris johnson, does it mean we will get a softer brexit because he does not have to appease the more brexiteer faction? stephanie: it depends on what you consider a softer brexit. in a sense, what is likely is he can pass the withdrawal agreement in the form it currently is. when we look further ahead, he is not talking about doing a theresa may customs style. he is talking about a free-trade event which will take a long time. the idea that they will be able to negotiate something in a year is incredibly ambitious. tom: i am thrilled to have this strange two of you together. wolfgang munchau has been one of

the leading voices on the ramifications of no deal, and stephanie, working with your company in edinburgh you have a scottish feel. i want to focus on the s&p. -- smp. -- the constitutional remainers? wolfgang: if there was a referendum, i think they would be in for a 50% chance. within election, their luck is may be different because they are split between two large parties. on the brexit side, that will be different because it looks like johnson has eliminated at least the brexit party to a large assume so i would ask -- remainers want-- to revoke brexit.

it has been a strategy from the lib dems to go for a hard revocation. not to go for another second referendum, but if they are in power -- they will not be in power -- but if they were in power, they would revoke. that has made a very powerful message. the snp say they support a second referendum, but my guess is their main goal is another independence referendum and that is easier to achieve with brexit then without. tom: i want to advance forward this discussion. it is so important. we have to dive into the mystery of the different constituencies in the united kingdom. with us are wolfgang munchau and stephanie kelly. do not forget, barry eichengreen berkeley on globalizing globalizing the

message yesterday from chairman powell. this is bloomberg "surveillance." ♪

♪ good morning, everyone, bloomberg "surveillance." tom keene and francine lacqua. with us are stephanie kelly and wolfgang munchau. i want to continue on scotland. of the the power scottish vote right now? interested to see if the conservatives will lose their seat in scotland. lots of interesting stuff going on. there is the double leaders in scotland who want to leave most of the e.u. and the u.k. people who be support the tories from brexit and then vote for independence in a referendum? that is a question i have. stephanie: i think the crucial

thing in scotland is going to be how the conservative vote reacts to ruth davidson stepping down. she is credited with a lot of this success conservatives have had in scotland, and whether they can hold onto those seats will be challenging. francine: no deal could still happen. wolfgang: yes, it can. for no deal to happen, if the conservatives when a very when a small a small, it is -- win majority, there is the possibility the erg might vote against the withdrawal not able tout it is pass amendments to ask for brexit extension. there is a window in which neither can happen, and then we

are bunching to the 31st of january deadline, and the government may not then ask for an extension or say forget it. the other danger is we are seeing a deterioration in europe as well. the french are very much on the edge. they have given them the extension on the election, but if that does not work, there will be people who will argue that we should not extend. that has not happened yet, but may happen if this keeps going. francine: what about a labour government? the crucial thing is two factors. one is their tactical voting. in the u.k., we saw more cases of the voters saying i will vote for labour because it is unlikely the lib dems can get seats and i want to vote for a remain party. corbyn what hean

did last time? labour went up 15 percentage points and if they can do that again, you are looking at them overtaking. conservatives have a structural advantage at the seat level, and anything we see around vote share, seat share, it is not uniform across constituencies. tom: are we finally to a european structure of parties -- i asked this question yesterday and will ask it again -- are we done with the simplicity of conservatives, labour, and a lib dems? are we finally to a more fractious permanence in our elections in the united kingdom? wolfgang: absolutely, we are, and europe in general, we were looking at the german real -- german elections where the four main parties together no longer have a majority. they would not even be able to form a mega grand coalition. the old grand coalition is a

structural majority. it is so fragmented that these coalitions, you need five parties in order to have a majority. that is the new normal of european politics. the other big trend is the greens coming into power in austria and i predict in germany in 2021. this is the big shift. if you are looking at fiscal response from germany, it will happen but it will happen then, not now. tom: this has been wonderful, wolfgang munchau, thank you so much. stephanie kelly, thank you for your contribution this week. andng up, barry eichengreen the gentleman from columbia university, richard clarida speaking with me and jon ferro tomorrow in the 9:00 hour. this is bloomberg. ♪

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♪ tom: it was an appropriate press conference as the chairman explained the clear appropriate realities of our appropriate future. investors loved it. standard & poor's at a record high. forget guidance. the profound impact of the growth of our technological giants, facebook and particularly apple delivers society changing growth. in search of a trade piece. -- peace. bloomberg reports china must have tariff relief. barry eichengreen with us and moments. this is bloomberg "surveillance." an extraordinary news flow, any number of ways.

this trade story, truly market moving. francine: the trade story is market moving. we are trying to understand what happens after phase one. it was a bloomberg story saying there is concern from the chinese side that they will get to phase one but do not want anything else. the euro area economy is growing 0.2% in the third quarter, a touch better than estimates. we will get to gdp's out of the euro area and trade. tom: much more coming up. i want to mention tomorrow, conversation with richard clarida data in the 9:00 -- clar ida in the 9:00 hour. here is viviana hurtado. viviana: officials in china doubt a long-term trade deal with the u.s. is possible. bloomberg learned china is warning visitors to beijing at will not budge on the stickiest

issues. the chinese are concerned about president trump's impulsive nature and fear he may back out of the limited deal. both sides have said they want to sign the deal. protests taking their toll on hong kong. the city has entered a recession. 3.2economy shrinking at percent annual rate in the third quarter, worse than expected, and the second quarter in a row gdp declined. for hong kong to recover, tourism from mainland china must revive. in august, it was half of what it was in january. a deal that will create one of ,he world's largest automakers unveiling a plan to merge. in the next few weeks, the two boards agreed to work toward a binding agreement. psa includes peugeot and citroen. each company will own 50% of the new entity.

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 get to the data right now. i have never done this before. markets, while they were quiet, the trade story, futures up one to -12. curve flattening. the 10 year yield is three basis points, 1.74%. stocks,: if you look at they are slipping because of our bloomberg story about a long-term trade deal between the u.s. and china. you can see pressure on european renminbi, 7.0 457. tom: joining us as barry eichengreen, but first brendan murray as joining us. in the middle of the story is a

new report, the chinese must have tariff relief. is there any indication they would get that from president trump? brendan: not that we can tell. there seems to be, we are stuck at a stalemate like back in may. trump could not get the big, comprehensive deal he wanted in may, so he decided to parcel it out and do it in phases. we will hear a lot about phase i over the next couple of weeks, but what we are hearing and reporting is china has no interest in dealing with the broader structural issues with its economy that the u.s. is demanding in phase two. tom: usually, these scoops come out and there is a move and it comes back. that has not happened this time. there is a real permanence to this morning's shift in the markets off of the reporting. what was the distinction of the sources within the chinese

domestic debate, what are the nuances that are new this time from the chinese? brendan: we are reporting that china, while trump is saying, we could do a couple of phases, china and the officials are trying to send signals back to this aton that, you call phasing of a big trade agreement, but we did not sign up for that. i think what we are getting, the signals we are getting from the chinese side are trying to lower some of the expectations about what we are actually going to get in a deal, and what could happen beyond that, and what it looks like is more stalemate. professor, you, brendan murray called me up at 10:00 p.m. last night and said, get barry eichengreen on to drive forward this story this morning, and we do that. on international economics is definitive.

i would go to one thin volume, "globalizing capital." are we right now globalizing a trade war? barry: i think the trade war is ongoing. brendan scooped me this morning. in a sense, i felt phase one has been cosmetic from the start, that there will be some symbolic soybean deals, but the big issues about intellectual property and technology transfer and the chinese model, are intractable and will not be solved by december 15. i think the trade war is ongoing, and there is the danger that other countries, south korea and japan have been drawn in already, widen. francine: what is the significance of the chile -- of chile canceling the apex? that seems like a crucial bit of the puzzle. barry: that has to do with their

domestic, political upheavals. it will require the u.s. and china to find a different venue. i don't see that as a big obstacle. the venue is a small issue. the fundamental question of whether the chinese are prepared to change their economic model under pressure is much more important. francine: what do we know about the chinese thinking that if they hold off, they could get another president that may be easier on them, or elizabeth warren who would go harder? brendan: like you suggest, elizabeth warren, several of the democratic candidates who will oppose trump next year, they are not exactly soft on china either. what china is trying to do, it appears, is sort of run out the clock and see.

the chinese probably look at anybody other than trump as more predictable. one of the big things with this administration is the tendency to tweet decisions without any notice. that kind of thing does not sit well with the chinese, who are very slow and deliberate in how they negotiate. tom: there is a lot of criticism of president trump, going back to elizabeth the first england and neo-mercantilism. in your book, you talk about china and the international system. are they as mercantilist as president trump? barry: they are mercantilist in their own way. markets are not fully open yet to foreign investment. they are using their trade and foreign investment as a way to try to strengthen their political and diplomatic toition, using trade strengthen your political and diplomatic position is the essence of mercantilism.

they have their own distinctive economic model that has emphasized those practices for many years now, so i do think the u.s. has valid grievances with china. butink we are there rivals, this strategy is not a way to make progress. francine: we are just going to the french finance minister talking about peugeot and the tie up with fiat chrysler. >> at the world level in the automotive industry, this is good news for france and europe, because you know that we have to face the challenges of the electric cars, of the autonomous car's. and to face that kind of challenges, you need to have changes that the world level. the merger between peugeot and fiat would force the auto industry at the world level. we will be very vigilant as far

the site and the jobs are concerned. >> [indiscernible] >> we will be very vigilant, and on any issue and all other , iues i have to face here evidence that i will be vigilant, that no jobs will be cut, and that we are very vigilant about the future of the site. >> does it make it more difficult for renault who is not part of this anymore? they tried to merge with fiat in june. will it make it more difficult for renault? >> i don't think so. i called yesterday. you have on the one side, the necessity of having a better declaration between renault and nissan.

there is also the necessity of clearly defining the industrial structure of the merger. alliance remains one of the most important automotive industries in the world. i am very confident that in the next month, you will have the reinforcement of this industrial strategy for renault and nissan. we have made clear from the very beginning that for the french state, the priority was the reinforcement of the alliance between renault and nissan. on the other side, we are creating a new world champion with the possibility of having a merger between peugeot and fiat. that is good news for the french industry and the european industry. the finance minister of the republic of france on the

merger, huge cultural implications for the fabric of france. we will continue with barry eichengreen. clarrow, we will have theida, and we woke was him on ida and we will quiz him on -- ♪

♪ "surveillance." francine lacqua in london, tom keene in new york. futures were up one and now futures -11. bloomberg reporting that china has to see no if's, ann's, or or buts, inands,

terms of the trade deal. forward and move to an appropriate conversation with the vice chairman, we have chris grisanti with us. always an interesting portfolio. and we are thrilled to bring you barry eichengreen from the university of southern california. you worked through the dollar dynamics, ism our model. i --sml model. do we have a new print -- theory? barry: i think theory has evolved. the all model -- old model did not have risk. would now we have risk on -- now we have risk on, risk off. whether it will remain intact,

we will see. tom: have we been modeling in finalst six months, rationalization of new terminal gdp growth rates that are lower even if they are politically unacceptable? to 2.0%ve to get used gdp? barry: we do. i think it is the new normal and the fed recognizes that. tom: is that pushing into equities? are you investing in the sphere of a bubble for 30 multiples based on two-phase stocks? chris: i think you have companies like apple and facebook that have real earnings that are at market multiples a little more, but not super expensive. 2% is the new normal, but rates are correspondingly low in economic activity can advance. francine: how would you quantify and qualify the u.s. economy? barry: the u.s. economy is on a

glide path to slower growth and we have to hope it will stay there. there was no news yesterday. we learned the economy had slowed slightly. we learned business investment was weak. consumer spending remained relatively strong, and we learned that the fed was unsurprised and did what was anticipated. i don't think there was a lot of news. francine: do you worry about manufacturing and at which point it could in fact the consumer? infect the-- consumer? barry: the only thing that has been holding up the u.s. economy is the consumer. consumer confidence is good, but less good by the day, so that question, is the consumer still confident or did consumption spending hold up in the third quarter because consumers were

frightened by the prospect of tariffs on december 15? eichengreen barry is auditioning to be an economist. the play in hedge funds and industrialsclicals, and manufacturing, is that go into -- is that overdone? chris: i think like 2016, the economy is bottoming and we are taking the proverbial breath of fresh air, and we will come back. we think six months from now, it will be better, rates will be higher, and you will talking about when the fed will have to hike. francine: thank you both for joining us. both stay with us, barry eichengreen and chris grisanti. donnieoday, david gore -- cordani, the cigna chief

executive. this is bloomberg. ♪

>> we are not doing it because of the money. this is less than 1% of our revenue and is not worth the controversy. expression,n free free-speech, and political ads can be a big part of that. francine: that was part of our exclusive conversation with sheryl sandberg about their decision not to block political ads. they delivered better

third-quarter growth in their global user base grew by 35 million. chris grisanti is a facebook shareholder and barry eichengreen, university of california economics. talk about technology. it seems a lot of companies beat yesterday. can they stay on this momentum? chris: i think so. what we saw from facebook is less than meets the eye. they hit on all the marks and the political ad is a very small part of their business. constant currency, revenue for advertising is up 33% year on year. they are really on the topline and bottom-line, doing just great. apple had a very strong number, and these stocks are not super expensive. they are growing at two to three times the rate of the market.

it has power to take it to the rest of the year at least. francine: will a lot of these companies be broken up? barry: i was going to say, the political pushback about these companies is more than simply political advertising. .here is that prospect it will take years if they are going to be broken up, so we will see how far forward investors look. tom: let's rip up the script. sarnoeichengreen, mr. 19 34 and the federal communications act. andegulated tv and radio some of that was political messaging. does berkeley get to play to a different facebook? does that need to be regulated? barry: i don't know that it needs to be regulated company by

company, but we need clear guidelines about what kind of political advertising is going to be acceptable on these platforms, just like we have different rules and laws regarding slander and the like. need tomodern societies have rules about what is acceptable, political speech, what isn't, what constitutes shouting "fire" in a crowded theater. tom: the absolute mass of apple's success or alphabet's success, and what scott galloway talks about at new york university, you look at this and yet there is a desire, should they be regulated or broken up? we were large microsoft shareholders in the mid to late 90's when there was talk of

breakup microsoft, it is too big. over that time, the stock more than quadrupled while this is going on because the earnings continued to come through. we don't think they will broken up, but if they are, youtube, instagram, whatsapp are worth a tremendous amount of money separately. this is a question of whether they should be broken up. from a shareholder point of view, the value remains. francine: barry eichengreen and chris grisanti. we are keeping a close eye on shares of french carmaker peugeot and the italian american rival fiat chrysler. they have approved a preliminary plan to merge. it is amazing to look at the difference in the share price, peugeot down 12%, fiat chrysler up 10%. investors ask whether this points to the fact that this is not a merger of equals. ♪

♪ "surveillance." francine the claw with barry eichengreen, i am with chris withnti -- francine lacqua barry eichengreen, i am with chris grisanti. viviana: bloomberg learned chinese officials doubt a long-term agreement as possible with donald trump, just when china and the u.s. appeared close to signing the first phase of the deal. they remain concerned about the president's impulsive nature and told visitors to beijing they will not budge on the issues. they want tariffs lifted. house community -- committees asking john bolton to testify in the impeachment inquiry. last month, he was ousted from the white house. he has been requested to appear but has not been subpoenaed.

the u.s. justice department striking a record deal with fugitive jho low. the u.s. will recoup almost $1 billion of money looted from the 1mdb, the most ever in an anticorruption crock down -- crackdown, accusing him of organizing the theft of more than $4 billion from 1mdb in 1mdb.rnia -- in california, brushfires have to theout, the nearest reagan library. hasre in wine country burned more than 76,000 acres and destroyed dozens of homes and businesses. 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. last coupleer the

of days and weeks, harsh wind and fire were devastating northern california. let's get back to barry eichengreen, university of california professor. you have to live this day in and day out. there are 10 fires currently burning. barry: it is the fires production -- interruption to electrical service. this is a reminder that climate change is the single most important economic risk that all of us, including investors, face . that even progressive states like california are behind the curve in terms of responding. tom: you have done some work for the state of california. do you see this as a federal solution, state solution, or every home for itself? barry: it has to be a governmental solution. every homeowner cannot hire his own private firefighters, only

the richest are doing that. the state of california can go some way if the federal government permits it to adopt stricter fuel economy standards and environmental standards. ultimately, it has to be a federal government and international response, so we are back to the paris climate accord. tom: i think of the laureate ronald ghose. ternality fires an ex or are they embedded into the cultural, economic, and societal system? barry: they affect everyone whether they live on the front lines of the fire, or fairly far away but still affected by what the power company does. again, i think individual homeowners do not take the consequences for the state and global environment into account when they decide whether to build in a fire zone or not.

that is what we need our government to do. francine: we will get back to professor eichengreen. peugeot and fiat chrysler have approved a preliminary merger. potential $49 billion market cap. under the proposal, shareholders would own 50% of the combined entity. joining me on the phone is damien flowers. share priceis the is down 13% on peugeot and fiat chrysler is up 10%. what does that tell us? damien: i think one should be careful about reading into the share price, some sort of judgment about whether this deal is a good or bad idea overall. these share price moves are related to, in a way, technical effects to do with the way the

deal has been structured. this has been structured a merger of equals, which means each side has to put out the same amount. haved closed doors, we pegged over the deal that these companies are not the same size. we have done a lot of things p moving around whichsa will base -- a lot of things which psa will be spun off and it will pay -- twollion shareholders. you are seeing the dramatic share price move because we need the market to value these net of that adjustment, and the judgment the market has come to as probably a fair one, that the value of peugeot needs to go down. francine: this megamerger, and a

lot of people are saying it makes sense for europe, but don't they need the crucial chinese market, and this does not give them better access to that. demian: that is right. parties that have had a torrid time in china in the recent years. you see news that one of peugeot's joint venture partners is looking to exit. i don't think they will be helping and china resolve this deal, but it gives them an opportunity to look at the china problem with a fresh pair of eyes, consolidate, step back and see realistically what they can hope to achieve in a market that is growing at a slower rate than in the past. ebita looked at the margin, peugeot, 300 basis points or more behind american general motors. is the goal of the scale effort

to go through anglo-saxon u.s. like synergies to get the margins up? demian: yeah. synergies is a big part of what this deal hopes to achieve, and you saw that story as well and fiat was coming with the renault proposal that did not work earlier this year. the synergy target these guys .2 is lower than the one they hoped to is lower- point than the one they hope to achieve. if you look at it from a profit perspective, a u.s. business, psa is a european one. there is a lot of overlap in europe and through time, the synergies they target are probably achievable, but it is not going to be a quick journey. they have said they will not close plants. it would be easier if they were to do that. that is probably politically undesirable. tom: this is the heart of the

matter. allowe french going to those synergies? synergiesthink the they are targeting are deliberately lower than the synergies they would have targeted if they had sat and said, we are willing to do very dramatic things including closing plants in italy and france. this is something they can platforms,reducing cutting r&d, reducing investment. is that the best solution one could conceive of? it depends on who you are. if you are in the unions, you would have a different standpoint. this deal is about compromise as any auto merger has to be, because the work is important to stakeholders. tom: thank you so much. data moving, a quiet day on the broader data market after the fed. in automobiles, there is some

movement going on. renminbi, a stronger chinese renminbi over the last few days. futures up one and they reverse a solid 12 points off a bloomberg story that we report the china push against the trade deal. this is bloomberg. ♪

♪ tom: very good, bloomberg "surveillance." single best chart, chris grisanti with us. professor i can green e ichengreen. there is a classic look back to world war ii, the economic history of 1945.

our single best chart, synthetic euro, and voided dirt to the advent -- advent deutschmark, up to the advent of the euro, and the great rollover. talk about the european economy and draghi. how did he do? barry: you have to give draghi, in my view, the highest possible marks, that there really was an existential crisis in his earliest years. he put that to rest. historians will look back on that as a singular achievement. tom: with it comes what you have always talked about -- i think of you and the late martin feldstein of harvard talking about the need for the fiscal union. i see no indication of it. madame lagarder and the presidents of the ecb after? barry: madame lagarde gave an interview yesterday in which she

signaled caught new 80, there will be continuity -- continuity , continuity in terms of negative rates and asset purchases. she will be stepping into a hornets nest because there is a lot of opposition to continuity. i don't think there will be progress in fiscal union and deeper banking union and all that, until the next crisis. the father of european integration said europe makes process -- progress through crises. i think that will be the situation facing the next president of the ecb after madame lagarde. francine: what kind of central banker does europe need? i know you have written about this. is it just a central banker that does not show a divided government counsel to the world, or is it one that inspires politicians to spend extra in stimulus? barry: i don't think it is the

role of the central bank or the central bank president to tell governments what they should do in other domains, including fiscal policy, except insofar as that bears directly on the central bank's own mandate. president doescb have considerable diplomatic skills and communication skills. there is a lot of misunderstanding in the public, especially among the german public, about what the ecb is doing and why, so having a president with those communication skills will certainly come in handy. francine: communication to the person on the street? is there an exercise to understanding what the ecb does to them? barry: yes, communication to the person on the street, the ecb has been trying to move in that direction. i don't think division within the government counsel is entirely bad. it indicates they are not

subject to groupthink and are having a frank and open discussion, but there has to be a point where they move forward in terms of policy. the it goes over to dividend, more patient investment in value. how do you price in a higher european dividend versus the culture of a lower dividend with dividend growth? chris: when you are talking about growth, you have to come to the united states. the reports we talked about yesterday, apple and facebook, we are the play for 2% does not look that great but looks ok compared to europe. i would say one more thing vis-a-vis europe, all eyes for investors will be not on the ecb but on london this month. we will see which way the brexit election goes, and i think that will make a great deal of -- tom: can you get out in front of the polls and say, i need to find british multinationals or

british domestics? chris: i don't think so. what broadly determines is whether populism is still surging or whether it has peaked and is receding. that is what investors will look for. tom: chris grisanti with us, a wonderful conversation. gene munster is scheduled to join us at some point. barry eichengreen, thank, thank you was well. on technology, they are up there right now and they are in the news flow. facebook with a really substantial move, and you heard say, separate from the washington ballet. apple with an extraordinary preholiday statement that was dutch with guidance that was taken, better than good. that was taken, better than good. ♪

♪ you are watching bloomberg "surveillance." posting a third straight gain at its fixed income trading business,

outshining its wall street and european peers. costs -- theying are slashing costs. it was a two-for-one shot for twitter. they announced they will ban all political ads. jack dorsey was able to take a shot at its rival, facebook, tweeting "we believe political message reach should be earned, not bought." apple creating new ways to juice iphone sales. executives talked about installment plans, trading programs, and giveaways. iphone sales fell but overall revenues rose. during the holidays, apple forecasts more topline growth. tom: thank you so much. this is a joy. apple, chris grisanti with us and jean munster joins us. all you need to know is he has

been an intelligent bull on apple since time began. the number that floored me , therday was services fortune 70 company. you have a vector when service overtakes product? gene: it is still a long way away because it is 20% of revenue in the hardware, 90 -- 70%. i want to renew the point around expanse and an impressive take away, the part that jumped out to me was services and wearables, this is the new ad over the last few years, it is the highest bid percentage, grew at 29%. you have the iphone down 8% and

this other is not doing well. tom: we showed the iso you can do on the new camera. , when youct of god throw it in the dark room. we said we are going to put giveer on, but only if you us a some of the parts valuation. what is it? gene: this is worth 350 or potentially better. i would put a timeframe on that, one to two years. the sum of the parts is the traditional way to view this. i am advocating that we are entering a phase where investors should think of this is a consumer staple business. they have low to mid-single digit revenue growth. i am offering a different perspective to the sum of parts. with the view that the world

needs a consumer staples tech company, apple is the only company that brings all these things from wearables to phones and computers and services together. that should be a $350 stock. i was an analyst for a long time and i know the mentality of not wanting to stick your neck out too far on price. they will have to make a jump and think of this in a dramatically different viewpoint on the multiple. francine: what is apple's biggest weakness? does not seem to be many blemishes this quarter but they will come up. gene: just the reality that the iphone was down 9%. it was down 20% in the december quarter, so you can look at the most recent results as a win, but there is still some variability to the iphone business. and thinkt-forward about that variability over one

to two years, the cops get get easier, and then you get into the 5g cycle. tom: you will make history with that 350. you jumped out of your seat when you heard 350, and you get there over an x axis. how does tim cook manage that to 350om 200 whatever per share? chris: 250 used to seem like a huge reach, and here we are. the secret is the services. not only is it a brand-new business that is 20% plus, but a much higher margin business. tom: the other item i had yesterday was installment sales are explosive. you don't account on valuation for a lump-sum business, versus a monthly payment revenue stream. that changes the calculus. chris: it certainly does.

they are hitting on all cylinders. what tim cook lacks in vision, he makes up for in running a prompt business and we are happy to be shareholders. francine: is there anything else you think is good value at the moment in tech? is there something in china that will be the next big thing? chris: we are really scared of china. we see issues that are not getting better, that are getting worse. you reported this morning on the stumbling of the trade talks. we are wary of that, even with apple. that is one of our worry spots, they are growing their china business terrifically but what about the future? we like roku and have been shareholders for more than a year. that is right in the middle of the streaming wars. facebook, apple are easy to look at. movingk and adobe are

not to an installment like model of subscription, and they will have earnings that are more reliable. just as gene was talking about, you can put those in the bank and they become more like consumer companies. this trend will continue and we are investing there. francine: chris grisanti. in the last hour and a half, chinese officials have been casting doubt about reaching a comprehensive long-term trade deal with the u.s. this was a bloomberg story. stage one is in the works between the u.s. and china, but the chinese are downplaying the prospects for others. tom: much more coming up, a lot to talk about today as we come out of apple, technology, and we moved to another story. we move tomorrow to a discussion with the vice chairman of the federal reserve, richard clarida a. ♪

♪ alix: china skeptical on a long-term trade deal. officials warn they won't budge on the thorniest issues even as they inched towards signing a phase one deal. chair powell: we believe monetary policy is in a good place. alix: fed chair jay powell lays out the conditions for another rate cut and rate hike. the powell put remains in play. apple and facebook to the rescue. facebook sees u.s. user growth. apple finds more ways to sell iphones. now it is up to industrials and pharma. welcome to "bloomberg daybreak" on this thursday, october 31st. happy halloween, everybody. you've got the trade headlines around 5:00 that rolled over, and s&p futures are off by 0.3%.

just goes to show how fragile we really are in this rally on any headline risk. dollar-yen did touch the 200 day moving average, now lower. some big buying happening