commodities market is responding more to concerns around global trade rather than to the more positive signs. it seems we are pushing equity prices higher. a look at the futures, ftse futures to the downside, the dax of cac futures at the start the trading day. not as many earnings to deal with today as yesterday, but the earnings story is very much at the heart of things, many companies coming through with numbers, and we will get analysis on how significant that is in about half an hour's time. opening up by 4/10 of 1%, euro stoxx a little bit changed. littlesee a bit of movement+ to the upside in the pound. there it is. typically, that put some downward pressure on the ftse. that negative correlation, as we see the ftse 100, with a similar move to the

upside we are seeing and some of the other parts of the continental european market. and with perspective, it seems to be one of those days where the markets are looking on the bright side. he saw that in the asian session and the futures, and the u.s. futures pointing higher. i do say we see some areas of red. we have been focusing on the scandinavian financials and have had some reports this morning, so we will see, but elsewhere, matt, i see a lot of red on the board. on thereat deal of red board. it seems the market just wants to go higher this morning. matt: yes, and we do see a lot of scandinavian movers who have put out earnings today for one reason or another. the big movers to the upside, if you take a look at a number of stocks gaining, 409. the number of stocks losing 159.

this to percentage movers, anna, so we will see a difference. i did this because a couple of the earnings companies are not big market movers but still making a lot of headways, so there is a logistics company, traded in denmark, right now 6% after raising earnings and targets. there is another one that provides armored car services to toks and retailers, loomis, move your money around, also a 4% jump right now. if you take a look at the losers, we have got another danish mover, danske bank, donw. -- down. we were just talking to christian weinberg about the biggest loser, in terms of not only points or percentage but also in terms of points.

it is one of the biggest losers. you have got a lot of banks down, barclays, standard charter, santander, among them. anna: it seems to be an area of weakness in an otherwise upwardly moving market. matt, the equity markets, and the risk appetite, your etn -- european markets open broadly higher. boosted items.mi next up, a jobs report that is likely to be depressed by the gm strike. joining us now is the global head of fixed income research at hsbc. good morning to you. let me ask you. picturet term, a bigger , the jobs data we are expecting tosee, it led many anticipate the worst six months -- well, the worst six months since 2010. are we going to see something similarly week today, do we

think? different,a point is but with the incoming data today, it is a reflection of last year's over tightening. how monetary policy works, so it is a fact now. at the time, it was an opinion, but we are looking back, and they have reversed the hike, so they have cut three times and have been reversing the balance sheet, so that is not really a question of that. now, the incoming data is reflecting that. of more concern to me is the risk of double counting. so if we respond too aggressively to soft debt today, to me, it invalidates the evaluations. it does not necessarily mean we will change our forecast because of one data point, so to me, it is consistent with lower yields for a long time. anna: so you suggest they have already cut rates to deal with the worst, they do not need to do it again. toven: not everyone is going

put their hand up and say, "sorry," but the tightening and exactly the data coming in now reflects what happened last year. anna: ok, match. matt: -- ok, matt. matt: with the over tightening, what were the results of that? we see unemployment at less than 4%. i mean, the lowest level it has been since 1969. i do not know what you are doing a 1969, but i was not doing very much, and we still have no recession. there is still growth in the u.s. economy and positive rates, unlike many of the other developed nations around the world. trying toll, i am work on a forward basis, matt, so if we had been discussing this last year, which i believe we were, when yields were virtually double in the u.s., above 3%, most of your guests would have been arguing for 4%.

to me, that was the tightening. it is a fact because of the hikes of last year. it is no longer an opinion. year's timeata in a will look different, so i am not going to react on the incoming on a monthly basis. weighting they cyclical drivers, the near-term data points, like the data coming in from china, weighting those against the longer-term structural drivers, and to me, the failure of mainstream forecasting has been to underestimate longer-term structural drivers, excess debt, etc.. anna: so where does that leave us in the big conversation, the big picture about how low yields stay for how long? i have got a chart here that talks about -- this is a value -- a chart of negative yielding bonds. everyone is talking about the

extensive negative debt globally, and we still have so much, but not nearly as much as we did. it is a problem for some people, the negative debt, but you have to think of it from both sides of the argument. negative yielding debt with negative interest rates is an outcome, of what went before. it is the price we pay for previous excesses. it sounds about -- a bit harsh, doesn't it? but it is not wrong. an oxymoron to say it is wrong. so to me, the amount of negative debt will go up or down. anna: because you say the markets have functioned perfectly well with the negative yields. we saw that relative value now. steven: exactly. that is my point. everything is relative. fives, germany versus the u.s., and if i talk to my father, he is 80 years

old, and his reference point is zero, so he would not understand, but that is his reference point. i suggest that people who work in big institutions and hedge funds are a bit more sophisticated and presumably understand the valuation. to most of the world, who are not actually rich, if you are a japanese or u.s. investor, they yield more than your local market. i know that may sound a bit complicated, but, again, is a fact. the u.s. rates are so high compared to other markets, which created this opportunity, so to call it rich or wrong seems to be dangerous. if you look five years out, where will the policy rate be? will it be above zero? i doubt it. in which case, those who yield above that cannot be rich. matt: you could also -- you can make money if someone else is willing to pay for it, so if you find a greater fool, you can

pass on that negative debt. doterms of the u.s., steven, you see those rates going lower? i mean, what is were forecast for 10-year treasuries? i am not into the greater fool idea, which reminds me of bitcoin. u.s., our forecast is 1.5. the 10-year, and that is over the next five years. i doubt that in five years' time it will be above 2%, in the same way i doubt we will be above zero. japan has been zero or negative for 20 years, so if i suggested to you that we are five years in in year of and are entering it in the u.s., you have to frame it in the context of what has gone before in japan, and it is

similar. the outlook for this country is compared to japan. matt: but do you expect negative nominal rates in the u.s.? steven: there is enough of a potential balance and response from lower rates to avoid that this time, but who knows for the next cycle? it could well be that we have to go below zero. so for now, i would say no, and it is probably quite a big lobby in the u.s. to fight against it. anna: if anyone watching is in the asset management industry, they are thinking it is temporary, and that is interesting. thank you, steven, with hsbc bank pre-he stays with us. later, bloomberg's jonathan you, is with us -- thank steven, with hsbc. he stays with us. up next, we will bring you the

stocks on the move so far. nk so far the biggest loser. money laundering worries. this is bloomberg. ♪

welcome back to bloomberg markets. this is the european open. we are looking at some green arrows in terms of the equity

indexes, the ftse up, as is the so we are the cac, looking at some decent gains here. let's get to the individual stories behind those indexes with dani burger in london. seeing some big losses from donskoy bank -- k, citing higher compliance costs. it is still dealing with the fallout from the money laundering scandal, one of the biggest losers, and one of the biggest gainers are loomis, gaining more than 6%. they also had earnings, net sales beating expectations. now, we are seeing shares trade at a record high, and they also announced a chief compliance officer that is new stepping in today. and down 23%, just about, giving a warning that trading is looking much more difficult than they thought at lookers, and it

is starting to hurt. they had two clues 15 car dealerships. also, they said their ceo and ceo are stepping down -- their ceo and coo are stepping down. dani burger on the movers. donald trump has lashed out on thebrexit deal, saying agreement will make it difficult for the u.k. to strike a trade deal with the u.s. areident trump: there certain aspects of the deal, you cannot do it. you cannot do it. you cannot trade. we cannot make a trade deal with the u.k., because i think we can do many times the numbers that we are doing right now. trump making his views clear. let's talk about where we are with the u.k. story, with , andions, and brexit talks steven major, the global head at hsbc is with us.

curve, and you. say that the curve has a steepening bias. holdingto us what is the low and down for you or what will hold the and down. -- what is holding the low end down four what will hold the low end down. steven: it is very positive force sterling and sterling assets. the front end of the curve, the shorter securities, are very sensitive to the policy rate, and however this turns out, inside the probability of the bank of england pushing rates up, it has been sort of removed, and we were talking about them even cutting rates, so if the valuation does not reflect the chance of a rate cut, then it is cheap, so for us, holding it relative -- holding twos relative to tens, that is good

for us, and it has a very long curve. there is a steepening pressure, more technical, related to these and also bias, and guys who are liability driven investors, and the balance of all of this is that much of it is done already, so these are people who are forced to buy, so if you add that to the fact that the next movements could be down rather than up, the hold curve is tilting toward steepening bias, and we cannot find many other markets with steepening bias. in fact, everything we are looking at is flattening. it seems that it is flattening from the front. the u.k. is a bit of an outlier with the markets. anna: yes. matt: so how could that be changed, given certain outcomes of the brexit situation and the election? are there results you are

looking at that could trip -- change that trade? -- steven: how you weight them with probabilities, and each day, the opinion polls will be shifting up and down, but it looks like on balance, we are going to have a monetary policy that is more accommodative, so, therefore, supporting the funds, and it could be the fiscal policy is brought into play war, whoever wins. now come of course, that might change, given the various opinion polls, but imagine if you had a looser fiscal policy and lower rates. on balance, the two should add up to a steepening of the curve, on balance. anna: ok, major global head of fixed income with hsbc, steven, he stays with us. christine lagarde becomes the new president of the ecb, but how will she cope with the euro

downslopen zone -- risk? this is bloomberg. ♪

>> nobody thinks that negative

rates is a signal of a healthy economy. rates have interest less effect in terms of stimulating growth. >> everybody can see that. >> overall, for our business, it is not a good thing. >> if this situation stays like this for a long time, we will have to think about charging institutional customers. oure are looking across businesses and passing along negative rates to clients, where it is prudent and sensible and also legal. >> our clients put a lot of money into our bank. 6%. we do not pay them anything. >> we have to change. >> negative interest rates on retail deposits is something for the future i believe -- europe'sse are some of key banking voices on the impact of negative rates from the last week of earnings.

toa, subzero rates continue bite some lenders. today sees a new era began at the european central bank. christine lagarde is now the president of the ecb and the first woman to hold the position, and despite a glowing resume, she faces a lot of challenges as she inherits a dismal economic outlook, negative interest rates, looking at fiscal spending, a governing council that seems pretty split. joining us now is a senior multi-asset strategist, steven fixed global ahead of income at hsbc. he is still with us. what do you think christine lagarde's first task should be? task would be to press the case for more fiscal stimulus, or fiscal stimulus to take on more of a role in helping the euro zone in this

slump, and i think she would be focused on that. on the monetary policy front, she will not upset the apple cart. with thee, she will go council recommendation. it would not be much of a change. your thoughtsven, on what christine lagarde would have to do, and there was a lot of talk about the tier system that mario draghi put in place. withn: they will continue the same policies. so much has been done that there is very left -- very little left to do. in the previous meeting -- it is quite interesting. investor,e a rational would you buy a two-year note or so?o -90 twice or so, we have bounced off reversal rate is that theoretical level where if you go underneath that, the

policy rate becomes, in a way, it is like a -- anna: and it shows we bounced off of it, putting a yellow line in at, what, -100 basis points, but you say the reversal rate is where the conditions start to tighten. steven: yes, and you mentioned tiering. these sixdeposit at times acquired reserves at zero, so that is a safe asset. we talk about eurobonds or euro bills or a combination. it is happening. there is a safe asset which yields zero, which is competing with the short german paper, which went as low as -92 and is andmoving back to -60, -50, as we said earlier, it is all relative. why would you hold something at -60? you were talking about

negative rates forget that does not help bankers when they are losing money. to someone from deutsche bank, and he did not seem that excited, saving about $100 million a year. it is still losing money and not able to grow revenues. yes, absolutely, but it has to be said that the bar is quite low for banks. we have known that for some time, and that is already in the expectation for earnings, so we actually got some surprises, even from some u.k. banks, as well as some net interest margins. also, barclays, although that came from the investment banking side surprise. they are able to sort of navigate this and manage expectations, with a surprise on the upside, which was a surprise to us. supriya. stay with us, steven, thank you very much for

your time. steven major, with us for the past half-hour, from hsbc. european automakers and their story, and their credit. we will talk more about their sector. this is bloomberg. ♪

♪ matt: 30 minutes into the trading day, let's get your top headlines. payrolls arearm expected to show job growth at a five month low. the strike from gm will skew the numbers. followingh higher better manufacturing china data, anda call between the u.s. chinese today threatens to unsettle the market. as an impeachment inquiry against donald get started, he says boris johnson -- donald trump get started, he says boris avoidn's plan could help

-- in the future. i am matt miller along with anna edwards. anna: still seems as if this european equity session wants to go higher. two thirds or so on the stoxx a0 moving higher, leading to net gain of four tens of a percent. we wait for the jobs data. we focus on the chinese data, the beat data as opposed to the data that missed. we put aside concerns on whether ofwill stumble on phase two the trade deal. has -- up 8.5%. that is the biggest mover to the upside and one of the standout performers.

we also heard from bba aviation. let's look at the other side of the equation, one third of stocks moving to the downside. we talked about danske bank. they reduced their guidance, still concerned if they have a handle on what is going on, down 4.8%. an interesting story around anything to do with leasing cars or selling used cars, a move to the downside in those stocks, auto trader moving down 1.9%. know the handover from some of the numbers out of avis overnight, that is rental of course, there are a few elements of the car story having an impact on the market. president trump is weighing in on prime minister boris itnson's brexit deal, saying

will be more difficult for the uk2 to strike a trade deal with the u.s.. speaking to nigel farage, the president said the two countries could be doing much bigger numbers when it comes to trade. >> under certain aspects of the deal, you can't do it. we can't make a trade deal with the u.k. i think we can do many times the numbers we are doing right now. >> the trump impeachment inquiry is going public. the u.s. house voted along mostly partisan lines to begin open hearings to investigate whether the president abused his power and should be removed from office. formal voteint to a of articles of impeachment. there are trouble -- republican-controlled senate is unlikely to convict him. --ndinavian earnings season

donskoy bank comes in -- danske bank below estimates, citing an market.ngly difficult denmark's bank is still dealing with the fallout of a $200 billion money scandal. pg&e has restored power to essentially all customers. the blackouts were to protect electrical waters -- wires from downing in wind and causing forest fires. the bad news, there are still weeks left in california's wildfire season. 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. half -- this is bloomberg. oft: we are about the third the way into earnings season, this week's report includes heavy hitters like apple and google along with european banks

that have struggled to find their footing with rock-bottom or even. burger.h more is dani dani: there is no limit, and corporates did reflect that when it came to banks. still a lot of surprises to the upside that probably has more to do with expectation setting. some of the smartphone makers like apple and samsung, they beat estimates. we saw chipmakers boost their prices today. facebook beat expectations. scrutiny means investor sentiment is still mixed. some of the oil majors, some of them on the beat board, bp, shell. we saw a lot of the shares slumped. shell gave a downbeat forecast for the global economy, and the

falling oil prices hurt. credit suisse, a solid beat, even though we have negative interest rates. analysts use words like mixed, mediocre, unimpressive. ing didredit suisse, miss their analyst expectations, feeling the pinch of rates and struggling to boost revenue. one of the other highlights to point out is google, a rare stumble by the parent company , dented by spending on cloud business. i want to give a quick breakdown of what the sectors look like. consumer sectors in europe posting the greatest due to utilities. if we look at the negative, those are more telling because it shows why europe's earnings seasons have looked so weak, and it follows oil prices.

materials earnings growth down 35% and energy down more than 25%. this might be why we are seeing europe move towards an earnings recession. anna: dani burger. steven major is still with us. thingsick up some of the -- there seems to be some big structural changes underway and now we see consolidation seemingly about to take place. what expectations do you have for autos? subriya: while the structural challenges for the sectors should not be underestimated, also causing them to bulk up and respond to those challenges. we have seen signs of consolidation this week between

a mergeriat chrysler, to create the world's first -- fourth largest carmaker. cyclicalsvalue especially in europe and japan, and the auto sector is smack bang exactly what we are looking value.clicality and that you bought psa -- fiat and not psa, because we saw that huge move. are there certain names or certain areas in the automotive supriya:? we are sticking with european autos as a whole. to be had further down the supply chain or upside

as growth is realized in the electric vehicle space, but that is not we are focusing on tactically. the sector is rated at nine times forward pe relative to a global market trading north of 15 times, so that is the kind of value we are looking at. some of our economic data around global office sales, that creates a good tactical entry point, signs of improvement from a low point. anna: just looking at some of your calls, you do not want credit in the portfolio and i wonder why when interest rates are so low. aboutng to steven major lower from longer interest rates. if rates remain low, why worry about credit? thatya: it is precisely environment of ultralow rates that has caused a clear deterioration in credit quality. the cr companies have started

borrowing again and financial corporate's have taken on a lot of debt in this cycle, causing debt to raise to historical highs. the deterioration in credit quality and obstruction, there is better compensations in equities. you are not being compensated in credit markets relative to the risk you take on. poundwhen you look at the gainsu see the changes, when we think there is less possibility of no deal, or drops when we think there is more possibility. you don't think that tells the whole story, right? has had somepound blinkers on. gauge,been a narrow narrowly focused in shifts in

brexit related sentiment, but in a very narrow sense. just looking at prospects for no deal but no brexit, the fact is a deal can be quite nuanced, especially when it comes to the scope of a future trade relationship with the e.u. when we look at the election, perhaps there is less attention given to the fact that if you did have gains coming through coulde labour party, this present present risk in terms of significant shifts in the structure of the economy. you have this current account deficit, information coming out overnight. in 2018, the current account deficit widened. there are a lot of different aspects the pound has been paying less attention to, and this has been odd in my view. we expect that to change. anna: thanks for joining us this

morning. she will be continuing the conversation with us on bloomberg radio. we have got to let her go. up next, some of the stock movers, including dse pen alpena. beat since the $5 billion takeover in august. the stock is up more than 50% this year. this is bloomberg. ♪

♪ "bloombergme back to markets." 30 minutes into the trading day and looking at some decent green arrows across european equity indexes, the dax up for tens of 1%. fiat and peugeot. fiat and peugeot plan to merge. to $47cap of close billion. emerge as the may biggest winner in the deal, since the talks were revealed. the other winners are the small advisory firms being hired. , tomated by freeman and co.

split as much as $90 million in advisory fees. let's bring in chris reiter who has been covering the auto industry for years. clearly anl, this is acquisition, right? we can call it a merger but you is buying fiat, which is good for john elcon. ands: the elcon family agnelli family have wanted to reduce their exposure to cars since they took over, and this is the deal that gets them to a manageable state and automaker without totally getting out. matt: anna? anna: what does this leave us with, the picture for the big automakers? how will this entity stack up against the competitors? we are not talking about the world's largest carmaker being created. peugeotiat chrysler and

still have the same problems in that they are mass-market automakers largely exposed to mature markets. fiat chrysler is mainly in the u.s. and have given up a lot in europe, and peugeot is basically only europe. the combined entity will have a weakness in china, and with the best prospects. but are strong in europe, that is not a huge prize these days. our previous guest likes the automakers because they are starting to do something about the predicament they are in. who is next to go in this consolidation? chris: there is probably a number of candidates. you would think jaguar land rover is a company that has sort of been floundering. one of the things fiat chrysler

peugeot, is very mass-market focused. they do not have an audi or a porsche. the brands are relatively small and weak. if they wanted to go to the next step, they could go into luxury to get more margins, which are really important, given all the expenses to upgrade technology, self-driving, electric cars. then there are smaller players like ford has been struggling for a while, who knows what happens with gm, mazda is around. matt: there is a lot that could happen, basically. i find the land rover jaguar deal interesting because it is such an incredible brand, such an amazing luxury product in range rover, but they need investment to step up the technology. , and it is the

weekend. anna: you go ahead and do that. matt: we can talk about oil as well, if you like. anna: we have 12 minutes left and you can go off and talk cars until monday. those advisory firms that get the job this time around are looking ahead to all the other mna. does m&a -- m&a. oil could have the biggest weekly loss on doubts on donald trump's trade deal. we expect numbers from exxon mobil and chevron later today, with earnings from bp, total, and shall. joining us as our executive editor for energy and commodities. u.s. look ahead to the majors that report later on. what are we expecting to hear? >> we went into this week

supremely confident we had the right theme, and the earnings from shell, bp, and total have confounded that. we are having a tough time. the oil price is lower year on year and there is an overlying -- underlying program does problem of getting people to invest. exxon and chevron will be two different stories. chevron is in a much better state than exxon. we are looking for information on potential m&a. exxon, we are looking for something resembling a turnaround. no one wants it anymore. the ceo is showing up on the analyst calls making an effort, trying to show investors they are friendly again. i guess we are looking for a continuation of that effort. matt: how does the trade war and possibility of a trade truce affect the outlook for these oil majors? stuart: enormously so.

shall is a very good example -- is a very good example. we fell back three or 4% on the open yesterday, largely a function of them saying there are some doubts about the timetable for the buyback given the lack of economic growth. there is no doubt you are seeing it for the futures in crude oil. it is not all about supply specifically on the demand side. anna: stuart wallace, thank you for joining us. next, the impeachment inquiry. live tojones joins us also talk about jobs. this is bloomberg. ♪

♪ to bloomberg back markets. open." "the european looking at pretty solid green arrows across european equity indexes, the dax up for tens of 1%. 1%./10 of joining us in the studio is fx and rates, our strategist. this is the big friday for you,

for the blog, for economic data points because of nonfarm payrolls. richard: i think the chances for a positive surprise are high because the survey consensus of 85,000 is the lowest we have had since september 2017. that is a low far -- low bar for a beat and anything above that will be positive for the markets. we might get more pullback in the rates move. the data in the u.s., including the chicago number, was awful. yields came down 10 or 15 basis points in the short end. anna: a conversation we had earlier on was steven major of hsbc, which was trying to sequence our thinking from jobs to rates to market. the weakness we are seeing in the jobs market was anticipated earlier in the year and led to the interest rate cuts we have already seen.

i guess that rate is a flag, but just because we see weakness in jobs data does not mean we should expect more cuts of interest rates. richard: if you look at the survey data, which is forward-looking, the chicago fed , dallas fed, philly fed, the pmi data out of chicago yesterday surveys what do businesses expect going forward. they have all come in on the south side of expectations, so the hard data coming in softer than expected, that is what the markets were anticipating. the markets are starting to price more into next year because the survey data is soft. matt: the weakest month for the dollar in 21 months. is there upside? richard: we were overdue a correction in the dollar. if we get rates continuing the dust continuing to be softer, we get a further downward move in the u.s. dollar.

matt: richard jones in berlin. richard is not the only exciting interview we have today. we have the fed vice-chairman richard clarida for an exclusive talk. ♪

♪ francine: i'm jobs on the rope. u.s. payrolls in a slump.

what do warning signs in the real economy mean? trump weighs in on brexit. and the house formalizes the impeachment process. will earnings -- good morning. good afternoon watching from asia. in london.ne lacqua tom keene in new york. there is only a four hour different between the u.s. and europe. i know that the clocks change on sunday. before that looking forward to your great interview. tom: i want to say with apple tv launching their new morning show, i would rather talk to you any day of the week then jennifer aniston. just so you know. the morning show thing is what we do. francine: i don't believe that for one second. never. tom: the morning show is what we do and we are thrilled that apple joins the competition. francine: there are plenty more

on markets and we will look at brexit. first let's get to the bloomberg. voting to. house approve and proceed with its impeachment inquiry putting donald trump's presidency on treacherous ground. it sends a signal, a vote to impeach mr. trump is all but inevitable. economists expect the u.s. jobs report to show falling to a five-month low. in october bloomberg believes employers added 85,000 workers. reflectlikely general motors strike that lasted six weeks. a warning from boris johnson to donald trump on trade. the president says the brexit deal will make it difficult for the u.k. to strike a trade deal with the u.s. speaking with nigel faraj he said that if they made a break

with the eu the two countries could do a bigger trade deal. it was a chaotic halloween in hong kong. police using tear gas scuffling with protesters and partygoers in defiance of a ban many wore masks. taking tougher security measures. hong kong approving restrictions on online posts inciting violence. global news, 24 hours a day on-air and on tic toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine, tom? tom: two data streams that i know, there isn't that much going on into this jobs data. that should be expected after a two fed day. this is interesting. i will run that up to 112 right now. sterling i am watching, what are you watching?

francine: i am also watching sterling. we have elections on december 12. yesterday we had an interview. president trump spoke to nigel faraj. that was unexpected by some. ofhink that there is a lot investors focusing on these better than expected chinese manufacturing data and what that means because of the uncertainty over a trade deal. tom: let's go to jobs day. we have a wonderful lineup to give you perspective on the importance of what is assumed to be a lesser jobs. this is a trend. i have taken lines out of the chart to make it better for tv as well. that is the wrong banner, my fault. i put the wrong chart out there because i'm recovering from halloween. this is the jobs market, the 12 month moving average and the six-month month moving average rolling over. that is extraordinary. i will get back to the inflation chart in a bit. , tomine: following

dressing up as jennifer aniston from "the morning show." againstrump lashing out boris johnson's brexit deal. he said the agreement would make it difficult for the u.k. to strike a trade deal with the u.s. president trump: under certain aspects of the deal you can't do it. you can't trade. we can't make a trade deal with the u.k. i think we can do many times the numbers we are doing right now. francine: so let's get more on trade, more on brexit. thank you for joining us. robin, when you look at president trump weighing in on brexit, does it make a difference in the election campaign? we are voting on december 12. >> whenever donald trump intervenes in anything it causes

a wave. the timing was very interesting. this was meant i think to be supportive of nigel faraj. actually the timing to appear the nigel faraj show on london him. is supportive of but it was on the day labor launched its manifesto. labor was turbocharged in and anti-boris johnson language. the fact that donald trump was on the radio saying how terrible the labour party was an jeremy corbyn is, it allows him to latch onto this one angle that somehow boris johnson is going to sell out the nhs on a big american trade deal. donald trump coming in at a moment that was meant to help nigel for pressure, but actually gave the labour party of boost, much-needed. when you look at the what can a u.s.

trade deal mean depending on the brexit we get? >> u.s.-u.k. trade deal could still take place after the u.k. negotiates a trade deal with the eu. there's nothing to stop that from happening. we've heard these comments from donald trump, but that is likely to change once we get to that point. tom: is good to have you here on an important economic friday. what is your team say about the linkage out in such a short space? the pulling now does that predict where we will be two weeks out? robin: the one thing we have learned is that the edition electorate has become remarkably volatile in the last four to five years. 40% uncertainty of voting moving to a much more tribal attitude.

not party allegiance, but leave and remain. when you have that level of volatility any polling is highly unpredictable. last time jeremy corbyn was able to haul back 20% polling deficit.this time he is running 10% to 15 percent behind. the labour party has kept a very open line. they say they will renegotiate the deal and put it to a referendum. they haven't actually said whether they would campaign for the deal to negotiate or not. we have the election uncertainty, the uncertainty of jeremy boris johnson or corbyn are prime minister. tom: there is a sense of whatever the word is for progressive, of the moment. what is a liberal mean in the united kingdom as they go to this election? danae: thank you.

independent, neutral, from all sides of the political classes. i would say going into this election it is what happens after. will this election actually solve anything? what do you mean by liberal? i agree it is more about leave and remain and the future relationship with what the eu in the world will be. will the election solve anything or will be in a position where no deal is close to the central scenario again in a years time? negotiating a deal is not going to happen very easily. it is something that will take time to be approved in the u.k. and ratified on the eu side. it will likely be a mixed agreement, and that will take time. liberal is not a word that i would use to describe the political and economic outlook in the u.k. after this election. tom: you're both with us to get

us through this hour and into an eventful friday. we will be informed this friday as we try to bring you the voices we can to provide perspective. we begin with the vice chairman of the federal reserve system. then we will move on to the politics of emotionally-charged white house. ♪

tom: good morning, everyone. "bloomberg surveillance." .t is jobs day it is a full and important jobs

day. it is almost worldwide. it is a global slowdown. let me start with you. does global slowdown just involved, on a global basis, more unemployment? danae: employment has been quite high and most of the advanced world. the issue is not with unemployment. i think the world economic outlook projections we saw from the imf suggest we are closer now to a recession. the question is where will this come from? the jobs data has been fairly strong and political trade tensions have been strong. what happens first? do we see the consumer reacting to the trade tensions or the trade tensions and investment tensions and proof first? what we -- improve first. in europe and the u.s. we are

seeing fairly strong employment conditions and very weak business investments. much onnot focus as unemployment. if we go into a recession we see on the labor side as well. tom: maybe it is not an arab spring, but it is a global spring. there are a lot of protests and populism. i will let you choose the nation. is it labor tension and slow economic growth that gets that going? robin: i think this goes further and deeper. there is a sense of instability and uncertainty since the political leaders are not in control. obviously a slowdown in growth, a sense that job prospects are more uncertain -- especially among younger populations who you see leading protests from chile to hong kong. a sense ofve is ia

uncertainty about the future. governments have lost their capacity to drive change. when you have an american president trump taking on chinese president xi, and each looking after their own interests, it creates a great amount of uncertainty and their political allies, and whatever country it might be, especially europe, and leaves them with an air of uncertainty about how they carry their policies forward. the protests at the moment, the fuse is different in each country, but in general the sins of governments out of kilter is the main dynamic at the moment -- the sense of the governments out of kilter is the main dynamic at the moment. francine: in the data, is it construction, is it something we are looking at? if you look at the fed and you look at trade, what would you be concerned about? danae: it is about business investment and the strength of the american consumer.

also the sense of economic insecurity. we look at the headline data in terms of unemployment, but what quality of unemployment? looking at the participation rate and type of employment we are seeing, and how this is affected by the general economic outlook, and what causes the fed to react to it. francine: if you are the fed how would you worry about the trade war with china? danae: is a question of insurance for the economy. the fed has cut rates to provide that buffer. is its judgment enough for now? in the see a weakening economic data in how the consumer is doing, business investment is changing? that is what would change the fed rather than the trade tensions. having said that, a potential escalation of the trade tensions are likely. you are seeing the chinese side hardening, not just the u.s., because it has been going on for

a while. a deal is less likely to see. from their side they are saying does the u.s. actually want to have fair business with us or not? tom: i will introduce a chart. i will lead with my first question for eyes president clara today. i hear from bloomberg surveillance listeners worldwide , here is goods inflation with a little lift up in the last two years. here is service sector inflation. the number we are living is up here somewhere, and the number that the central banks are living is down here. the pce, the core, whatever you want to call it. house,conomic to chatham but how do central banks react to their theories and inflation guesstimates? they seem to be out of whack with the public. robin: they are out of whack with the public, but they don't have enough space to tell you to cut rates anymore.

there is a question as to whether central banks, if they should play such a critical role in the phase after the financial crisis in providing liquidity into the global economy. really feel it is time for governments to take the tough structural decisions to drive longer-term growth. tough decisions such as investing in infrastructure, energy subsidies, what climate change decisions, what type of employment protections they do or do not provide for the gig economy. we keep turning to central banks to provide the answer. there is an element of resistance, you see it in europe, to central banks playing that role. governments are not taking the tough decisions because they are concerned about the quick backlash that you can get at a popular level turbocharged by social media, turbocharged by four to five years of a loss of confidence in government.

we are stuck in this standoff between the national government and central banks. it worries me a lot. francine: thank you. next -- we will ask a thing or two about his industries and supply chain. this is bloomberg. ♪

francine: -- viviana: you are watching "bloomberg surveillance." is taking a 2.7 billion dollars stake in chinese-american drugmaker beijing. that will clear the way for cancer drugs to be developed and sold in the chinese market. mgen will own about 20%. diabetes drugew beat analyst estimates. that is your bloomberg business flash. francine: thank you. for more on novo nordisk, we are joined by the chief executive. lars fruergaard jorgensen. thank you for joining "bloomberg

surveillance." i want to ask you about how you're going to strengthen some of the things you are focused on, such as biofarma. how much will mna play a role in that? lars: we see our biofarma is growing 4%. we are quite pleased after the decline we have seen for a couple of years. we see with the full portfolio of products we have we can continue to drive, but we would like to complement that where we can add value to those. isis on the table, but it encouraging. francine: where do you see prices for drugs going in the united states? lars: there has been a lot of talk about pricing. the total market, manufacturers,

the value has come down by 10%. the whole market is down by 10% yet volumes are up so manufacturers are getting less and less. we think that trend will continue for the coming period. francine: if that trend continues, does it mean some businesses will have to go out of business, or that consolidation in that market is essential? to keep are committed supplying and innovating. we believe in an opportunity to innovate. we have very strong exposure to an alternative drug class used -- type two diabetes latest innovation is being launched in u.s. markets is driving growth in the markets and has become a blockbuster. we see significant opportunity

for driving growth and helping patients live with diabetes. tom: your income statement in krona or dollars is exquisite. your shareholder return is per year for1.3% 10 years. how do you send off the big boys? what is the corporate or national strategy of denmark to stay independent and push off the giant companies that would love to take you out? lars: that is a great question. have a say we patient-focused close to 100-year focus on diabetes so we know it better than anyone. when you stay close to your core you are more successful than most players. it is important to mention we have an ownership structure that will mean we stay independent

forever, basically, because we have majority ownership. the founders place control in a foundation which means we have long perspective on how we conduct business, focus on how we drive innovation. tom: greatly appreciate it. the chief executive officer of novo nordisk. it is jobs day. giving you smart analysis of the slowing american job economy. we do that on "surveillance." jeffrey rosenberg, we loved him on fed day and we brought him back from blackrock. this is bloomberg. ♪

♪ this is bloomberg "surveillance." we will have plenty more on the markets and equities and some of the earnings.

let's get to the bloomberg first word news. viviana: donald trump has become the fourth president in u.s. history subject to a formal impeachment effort, the house making beneficial with its vote. formove clears the way televised hearings and the release of depositions, and ensures the president's right to participate in proceedings. wildfires still raging in california, but deliberate blackouts are coming to an end for now. the two largest utilities plan to restore power to virtually everyone. down, wind is dying meaning less chance of wildfire will start fires. saudi arabia gradually plans to cut government spending. the finance minister expects private sector growth to pick up.

that will not keep the deficit from growing, likely to rise from 4% of gdp to 6.5% in 2020. chaining -- but is changing his primary residence to mar-a-lago, florida. new york state and city imposed a combined income rate of 12.7%. in florida, there are no state income taxes. 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. we are getting breaking out of .he u.k. manufacturing this is the u.k. for the month of october as firms ramp stock building ahead of the brexit

deadline. it has gotten extended to january 31, but if you look at the purchaser -- purchase manager index, surprisingly rising in october. -- aindicates as sharp sharp slowing in the pace of contraction. expansionll not in an but much better than expected. pounds, 1.2954. the chi zhang pmi data shows manufacturing continued to pick up. tonese officials are said have doubts about reaching a comprehensive long-term trade deal with the u.s. we are back with robin niblett and danae kyriakopoulou. we touched on trade deal a short while ago. what we broke yesterday was a bloomberg scoop saying we could get a phase one deal but the

chinese see it more difficult to have something more comprehensive. could we have a trade war that last 10 years? robin: i think we will have a trade standoff and an economic level of decoupling or disconnection between the united states and china that will persist. this is not just about trade and tariff rates and intellectual property. there is a deep fear, bipartisan as china continues to grow economically and invest in its military at will become a strategic competitor to the united states. wherever you take this trade relationship, it is a symptom of a deeper strategic standoff. the united states has woken up to the fact that republicans and democrats believe they are helping their opponent get stronger. we may get a truce, and the idea

of it being a truce rather than a trade deal is likely. you still have a december 15 risk of yet another set of u.s. tariff hikes on the horizon. ofhink this is the beginning a long --. francine: can the chinese economy withstand something like that? danae: the trade tensions are just one part of the overall tensions. morenvestment tension is difficult for china to withstand , because domestic opportunities to grow and the return on investment domestically is slower because the economy is at a certain level of development. and not havingat the outward opportunities for investment, given where chinese foreign exchange reserves are, it will be more difficult. episode in the overall tension. now you have both democrats and

republicans more supportive of a standoff with china, because it is more about the economic insecurity the american consumer is feeling. that is a strategy or policy that is hard on china, will not be unpopular. the real game changer is whether the markets react and whether that translates into the economy. that is not popular with any u.s. president, so even if he has an incentive to go to a deal or a truce, will he be able to get it through because of bipartisan support for a more hard stance? tom: we go through this tick by tick. with the bloomberg story yesterday -- and it was extraordinary reporting -- nobody is reading jonathan spence. out-patientsg to our system, aren't they? robin: the chinese view is the

world is returning to the balance it had in the 18th century to the middle of the 19th century where if you ofbine a move, a linkage chinese per capita gdp, china will overtake the united states or at least be equal as long as it preserves political control for the communist party, and is able to manage its economy in a way the communist party stays in control. when you use that kind of language, this is not an economic system that marries easily with a free market united states. ony have got their eyes set 2049. gets a secondump term, they will play this out for long-term. tom: what do we miss on the week after week, on this friday as we enjoy another weekend in hong kong? what are we missing in the

debate? what does chatham house asia say about the theme forward into 2020 on the week after week after week tensions? robin: unfortunately, the problem with the hong kong protests is they have now in essence gone deep into the younger generation. it has some of that echo of other parts of the world, a loss of trust of the younger generation in the older generation taking care of their interests. the younger generation are use to a level of political fear -- freedom that they feel will be when onefrom them, country, two systems closes. it has been a failure by the political leadership in hong kong to address the economic development or a step four greater political

representation. without that being addressed, even carrie lam's potential resignation, that is not enough. we have passed a point of no return for many young people. this will be a constant sore for hong kong for at least a year. tom: interesting, this linkage of international relations into november. robin niblett and danae kyriakopoulou. at 8:30 and at 9:30, the vice chairman of the federal reserve system richard clarida in a conversation with me and jon ferro, and lawrence kudlow. this is bloomberg. ♪

♪ >> to me, the negative yielding debt with negative interest rates is an outcome of what went before, as the price we pay for previous excesses. if you look five years out, where will the ecb policy rate be? above zero? i doubt it highly. there is a safe asset which yields zero competing with the short german paper which went as low as -92 and is moving back to -60, -50. it is all relative. why would you hold something at -60 when you can hold something at zero? november 1, 2019, and extraordinary call by mr. major of hsbc, and those comments on negative rates are profound, particularly after the banking results.

robin niblett and danae kyriakopoulou are with us, to talk to us about a european system. steven major has absolutely nailed the ramification of this odd interest rate environment. provide perspective on that. at the world economic forum, how do they answer year after year after year of a structure that wasn't in our textbooks in school? danae: whatever it takes has become it takes forever, because we have been used to central banks being the only game in town. the question going forward, is this going to continue? the european central bank are tied -- is tied to the mandate and inflation is nowhere near their target, so they will keep doing expansionary policy to reach that, or other policy levers to support that economic

recovery because there's not much more they can do. at the same time, the marginal benefit of the policies they have is diminishing and we are starting to see negative consequences of that, that a lot of the members of the governing council are worried about. tom: we are on our way to december 12, madame lagarde darkening the door at the ecb, no doubt changing the curtains yesterday as well. everyone is focused on the fiscal space. does she need to focus on the banking system? robin: the banking system remains fragmented, i would say, given the size of the european the continent remains overly reliable on bank loans or more flexible finance and liquidity. structural steps could be taken in the financial sector. christine lagarde, rockstar leader of the ecb is walking at

a time when the capacity for central banks to make a fundamental difference is very limited. so long as germany remains committed and connected to a surplus budget deficit and does not drive new consumer spending, so long as europe, continental europe relies on exports to drive growth, and a global economy is slowing down, so long as you have what you are going moreve, and aging europe reluctant to take integration at a scale that would make a structural difference, it is an uphill rock to push and not in christine lagarde's power. francine: what does it mean for negative rates? how much more negative rates can banks hold? danae: will we start to see christine lagarde being more successful than draghi was in having that relationship and making sure policymakers move

with fiscal spending. the ecb is independent, but in the time leading up to her taking over she has been vocal. working with the governing council so they can work with the government to have more coordination will be key. negative rates are starting to have a negative impact. various members of the ecb board have been stressing this over months and spoken openly on the impacts on the banking system. we cannot know the counterfactual, where would we be had the ecb not gone into negative rates? that is important to keep in the back of our mind. francine: can they go further negative from where they are now? danae: they have indicated the measures they have now and the are theof qe, these measures on the table and it could go more negative, but i don't think that will be needed.

we are talking about a potential reversal of qe. these are questions the members of the governing council are getting, what will the economic outlook look like an and what environment will they consider negative rates? francine: thank you both for joining us, danae kyriakopoulou and robin niblett. later, david westin speaks to the u.s. ambassador to me nato. -- u.s. ambassador to nato. this is bloomberg. ♪

♪ viviana: this is bloomberg "surveillance." most of the world's biggest banks have been cut out of europe biggest deal of the year. tot chrysler and psa turned small advisory teams. used angeline and goldman sachs, the only wall street bank in a leading role. the firms will divvy up $90 million in fees. einhorn month for david , greenlight capital falling 6%,

cutting gains to 16%. he is having a resurgence following his worst year ever. he has remained committed to his strategy of buying down -- buying shorted stocks. network giving a sales forecast that missed the lowest projections, the ceo indicating facebook is the source of the decline in orders. facebook and microsoft accounting for 20% of revenue. plunging, posting third-quarter revenue that missed estimates. they added users in less lucrative international markets. that is your bloomberg business flash. script,e to rip up the robin niblett with us. iraq, corner of northern some of you well remember the wonderful essays on northern

iraq long ago and far away. this is turkey looking into syria, a green part of syria below the martin province -- martin province. russia-turkey joint patrols, you did that 20 page paper on alexander the second and the russian turkish war. did you ever think you would see that headline? given that turkey is a long-standing member of nato and they are pretty suspicious of each other, no. i would not expect to see them on the turkish border, but the syria border is one that is deeply worrying and always has been to istanbul or any government, as is the border with iraq, because that is where spreadsish population over those borders.

it is of particular concern to them. what they are most worried about in istanbul as if the syrian regime re-takes control of that border with turkey, they can then allow the kurds to exist surreptitiously within the border and will go back to the father bashar al-assad's when he used the kurds as a tweak when he needed it. tom: do you just assume we are setting up a 20 mile buffer zone, erdogan with a page up at the u.n., showing this territory , is it basically a formed gaza strip except maybe thinner and longer? robin: this is an idea president in 2011was in favor of and 2012 when the turks shot leada russian airplane and

to a decline in relations. they feel they need a buffer zone. it depends on whether they are or are not able to repopulate this space with syrians who fled. millionas over 3.5 refugees based all over turkey and is coming under pressure to move some out. if they can create a zone where they can send some of those refugees back, it would be a huge step up for erdogan. francine: he says, if you don't do this, send them to europe. robin: he will be careful because the one bit of leverage he has is holding back that pressure on the refugees coming through the eastern corridor. there is a big money payment which has pushed out 3 billion out of 6 billion total. he does not want to end up with too many enemies.

he has a bad relationship with the united states, prickly relationship with russia, and bad relationship with syria. it is a last resort for him to ever use. changing with the u.s. allies in the middle east, what does it mean for the rest of the world? our allies across the world -- are allies across the world saying, i am less committed to the u.s.? robin: we have been moving slow motion since president trump was here and there were some echoes of this in the obama administration, a move to a more free-for-all world that lacks a u.s. hegemon that is there to write the rules and protect the rules. we have all piggybacked on it. many americans say people in europe and east asia have free written and benefited from the

u.s. investments and we have all focused on getting rich. there is some truth to it. europe areh korea, having to worry more about their security. whoever becomes next president, it is hard to go back to the kind of we all take care of the world policy that we associate with the 1990's and 2000. tom: a moment of silence, everyone turns to the dreaded year-end review. what will be the theme for chatham house as you write up the forward view for 2020? robin: the two interesting themes i would like to look at are the changing balance between governments, the corporate sector, and civil society. this public awakening around climate change is driving -- it

is part of that popular frustration we see with young people in governments. companies are realizing maybe they cannot rely on governments to take care of them with trade deals and they will have to get more in tune with civil society. china will be big and is moving up. that could have a big impact on g20. tom: at least another 20 pages for your minions at chatham house to write up. a look forward to 2020, you do that on november 1. later today, a conversation with richard clarida, the vice chairman of the federal reserve system. this is bloomberg. ♪

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set as americans confront high crimes and alleged misdemeanors. it is jobs day, lesser jobs growth. there is apple and exactly 14 other stocks and the rest of the ofket, beware the ides november. this is bloomberg "surveillance." live from new york and london, we are going to do brexit and all of that in a moment. when you go home this weekend, is there campaigning? francine: you mean apart from halloween? it is becoming all halloween. , veryabout campaigning different from the u.s.. the election is on december 12 so it is short and sweet -- i don't know about sweet but it is

short. the polls are volatile by the who will end up prime minister is not that easy. tom: right now, we move on this important friday to our impertinent -- first word news. ♪ the u.s.-- viviana: house voting to proceed with the impeachment inquiry, placing donald trump's presidency on shaky ground, sending a signal a vote to impeach is all but inevitable as it a trial in the sentiment -- senate. a bloomberg survey indicating an october, they believe employers added 85,000 workers. data will likely affect the impact of the general motors strike that lasted six weeks. a warning to boris johnson from donald trump on trade.

he says the prime minister's brexit deal will make it difficult for the u.k. to strike a trade deal with the u.s., speaking to nigel farage in a radio interview. he said the two countries could do a bigger trade deal. a chaotic halloween and hong kong, police using tear gas while scuffling with protesters and partygoers. communist party leaders in beijing signaling they may be taking tougher security measures. hong kong courts approving restrictions on online posts inciting violence. 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: as viviana was just lashingg, donald trump out at boris johnson's brexit

deal. he said the agreement will make it difficult for the u.k. to strike a deal with the u.s.. >> under certain aspects of the deal, you can't do it. you can't trade. we can't make a trade deal with the u.k. i think we can do many times the numbers we are doing right now. francine: joining us now on all .f this, ronald temple we are delighted to host him in robin niblett is still with us. u.k.-u.s.ook at the relationship, we thought it was strong but the interview put it in doubt. ronald: donald trump is always maneuvering and keeps his allies

and friends as uncertain as his enemies. as too nigel farage trumpian in the u.k. victory was brexit, so this is a clever market on his part to use his alliance with put pressure on boris johnson and say, remember the deal with the u.s. is more important than your deal with the e.u.. , but it is ae clever political maneuver to --st nigel farage standing nigel farage's standing the day he releases his manifesto for the brexit party. francine: does this read across into your world? does it make a difference for

investors? ronald: it does. part of it is the u.s. strategy is divide and conquer. it is in the u.s. interest to see the u.k. negotiating alone and if the trump administration have its way, would love that with every other trading partner. what that means for the conditions under which the u.s. and u.k. will trade. tom: your global work for deutsche bank years ago and your , yourial work for lazard thoughts on the city. -- the ever changing paul's. what do you think of the spirit of the city into 2020? ronald: brexit will have negative implications for the city. we don't know the shape of the agreement we will have with the european union, how the rules

will work. we have talked about financial passporting and the ability to trade or transact across country lines. when i look at the city of london, it is a phenomenal infrastructure, the amount of talent you have here. you cannot replicate it anywhere else in europe, so i tend to be more optimistic about the resilience of the city of london , although this is likely to lead to market seepage. tom: the image on the cover of "the new york times," speaker pelosi on the podium is extraordinary. your thoughts, and particularly working on this historic moment for democrats in the polarization with republicans? momentit is a remarkable , because it looks as if all things being equal, donald trump will be the fourth president to face impeachment or be impeached and obviously be taken up to the

senate for the trial. what worries me from where i sit is when donald trump is in a corner, he hits back twice as hard. i am trying to work up, where will he play his counter move? this is a serious case. the democrats have resisted as much as possible under nancy going theeadership impeachment route because it will probably harden up donald trump's base. the seriousness of the call, the fact that you only had two democrats step aside and not go is athe vote of the party show of the seriousness of the charges being made. when you see the recent evidence being done secretly moving to public hearing, this will take on an even more partisan days. the worried we are in for

kind of election with -- election donald trump likes, with gloves off, us and them. francine: how does the market price it in? this is one of those topics where the market is not good at pricing in. thequantifiable events, market tends to look past. if i could back out, where investors should care as if you want your currency to be the reserve currency of the world and want to be a global leader, the rule of law is important. the challenge in separating facts from politics, and good luck with that in washington. it is critically important that the people in the house and the senate objectively evaluate the facts and think about the long-term standing of the u.s. and our credibility and world leadership, because there are real consequences. tom: robin niblett, thank you so

much for perspective today, from chatham house. ating up today, jobs day 8:30, lots to talk about off a slow presumed labor economy. one of our themes with the vice chairman of the federal reserve and the 9:00 hour. i will take a broader view and jonathan ferro will go more narrow. after that will be mr. kudlow. this is bloomberg. ♪

♪ "surveillance." it is jobs day. ronald temple with us, and with us now from citigroup, andrew

hall and horst. we will do a couple of briefs throughout. chase.ut to the i am going to show a chart in a minute. how much rollover is rollover? andrew: in terms of the jobs report, we will get a weak number. tom: is it g.m. adjusted? andrew: you have to autoworker adjust. a number like 70,000 or weaker than that. we know we have 47,000 workers that were on strike and on top of that you have the workers that were out of work because they are suppliers for the auto industry or related. you will see that clearly in the manufacturing sector so the markets can look through that easily. tom: this is a chart i did years ago. i have darkened the three month moving average. this is the one year and six

month moving average from the regression from a peak of a year ago. it is irrefutable we are rolling over. did you hear that rollover in the discussion with chairman powell? andrew: what he is reflecting, we definitely slowed down. that is undeniable in the data and your chart. how concerned should you be? are we slowing down because we are hitting supply constraints in the labor market and running out of workers? that would be a good reason to slow down. is there weakening demand in the economy overall? it looks more like the first story, a strong economy running at a pace of 140,000 jobs per month. plusis lower than 200,000 where we were last year but no one expected those numbers to continue. francine: is it really only the ism that could give more

indication on where the economy goes next? important, ism is but we are not out of the woods yet. the data has decisively slowed down. month.200,000 jobs per that, 200,000.re if thisatching to see global synchronized industrial deceleration combined with the trade war is starting to contaminate the consumer sector and household confidence. the university of michigan has given conflicting signals. i am worried and i think the pmi's will be helpful. will manufacturing pmi's start to bottom out because global negativity is pervasive. francine: we did not get a hint of that from the fed this week. why not? ronald: i think the question mark is still there.

francine: what happens to dollar, given what we were talking about? andrew: it is a very interesting scenario, because you have these scenarios where if we have a weakening in u.s. growth, the dollar will rally because there will be a risk off. if we have a big increase in u.s. growth and a bottoming in terms of the data and it looks like the u.s. is that outperform or, we will have a stronger u.s. dollar. like we were talking about globally, things are may be looking better or not as bad as a couple months ago. extremesay those more scenarios have become increasingly likely where you will get an outperformance from the u.s. or globally a weakening. both of those are stronger dollar scenarios, but we have a weak trend that is persistent. tom: with that said, what is the 12 months for gdp call of you

will -- of you and catherine mann of the united states of america? ronald: right at 2%. story wherea consumption is driving things. tom: you have to help me withclarida today. is that solid economic growth? andrew: 2% is a fine pace, but not solid. this is all in consumption, weakness in investment, global weakness in the industrial sector. we would like to see more of a broad-based growth scenario which we are not seeing. tom: you want to join me in jon ferro at 9:30? andrew: i would love to. tom: andrew hall and horst and ronald temple.

horst andhall and horst and ronald temple. in two hours,t important perspective on the labor economy. ellen zentner killed it. jeffrey rosenberg on the fixed income view. this is bloomberg. ♪

♪ you are watching

bloomberg "surveillance." amgen is taking a $2.7 billion stake in a chinese-american drugmaker, clearing the way for about two dozen cancer drugs to be developed and sold in the chinese market. stake.ill own a 20% most of the world's biggest banks have been cut out of europe biggest deal of the year. turned toler and psa small advisory groups. used angeline and goldman sachs, the only wall street bank in a leading role. the firms will divide $90 million in fees. that is the bloomberg business flash. tom: let's bring up a chart. andrew hollenhorst and ronald temple with us. the chart is extraordinary, something i have looked at, dave wilson has looked at as well.

500 ande series is s&p the gray line is the medium geometric average of a gajillion stocks. temple, there ron value geometric index. there are 14 stocks moving higher. do i climb on board those 14 or do i have to go the other way with those behind? within the 14, there are some good values that have upside, but you are showing there is real opportunity in the u.s. equity market despite all-time highs in the s&p 500. look beyond the headlines and beyond the small group of momentum that seems to drive the market. there are some good values. tom: give us a name, sector,

country? ronald: some of the more cyclical stocks. we are looking at numbers and saying is the global industrial deceleration going to contaminate the consumer and pull us into a recession, or do we get scared, stocks get cheap, and it is a great buying opportunity? the key thing is to balance your portfolio. we consistently see value focusing on the ron's -- raw fundamentals of companies that have large amounts of capital and attractive valuations. attractive valuations is the challenge but it just takes scouring. francine: when will equities and bonds stop sending the emerging messages? ronald: you see the sharp declining yields and think recession is imminent and look at the equity market and think the market must be great. the only thing that i can think

of is perhaps investors have decided that central banks will succeed, we will avoid a recession, but rates will be lower for longer than we thought so you need to buy as much duration, credit risk, and spread as you can. equities look relatively cheap. arguably, ixist and still see upside in equities. francine: where do you see treasuries going? andrew: we think they can go higher from here, but close to fair value, and consistent with what was being said, this is a market pricing a fed that will keep rates relatively low, central banks globally that will keep rates low. that is why you can have a coexist in of low rates and high equities. it is pricing central banks that will stay relatively dovish even in this 2% growth scenario in the u.s. tom: where is your potential

growth line? it goes to the conversation with richard clarida. i have seen a change to a new subdued potential gdp and terminal rate. andrew: growth is still around 1.8%. 1.8%, is that politically acceptable in the united states? andrew: i think it is a question of economics. the potential is where the economy can run without creating inflationary pressure. we are not running at a rate of growth that is pushing inflationary pressure, but ultimately it is an economic question, not a political question, and economics telus 1.8%. hollenhorst and ronald temple stay with us. radio, aoomberg tv and conversation with the jcpenney's chief executive.

the focus will be the u.s. consumer, whether the economy is holding strong or not. we will have plenty more on online versus mortar. tom: this will be a fascinating interview with the vacancies and amazon, itncy of comes down to an arch issue for america into 2020, when do the storefronts go away? when do the storefronts in their way get refilled? in new york, there is a huge issue and i am sure coast-to-coast as well. richard clarida do in the 9:00 hour. it is jobs day. ♪

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only the fourth president in u.s. history subject to an impeachment effort. the house making that official with its vote to proceed with its inquiry, clearing the way for televised hearings and the release of depositions. it ensures the president's right to participate in proceedings. yorker, he is changing his primary residence to florida. that is where he owns the mar-a-lago resort, a move that could benefit his reelected -- reelection chances. rateork has a combined tax of 12.5% and in florida, there are no income taxes. in the state of california, the fires continue to rage but the blackouts are coming to an end. they plan to restore power today

to virtually everyone. fierce wind is dying down. blacked out apg&e record 3 million people in the golden state. day,l news 24 hours a powered by -- 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. tom: you must be a certain vintage where this gives you pause. times,"n "the new york the speaker, and this headline harkens back to it as well. we are thrilled to bring you anna edgerton. she is editor of polarization for bloomberg, and she joins us today. us the polarization of

your congress. anna: it was amazing on the floor of the house yesterday as you could feel the polarization. it was like a team sport and the fact that the vote was so partisan is remarkable. tom: the morning must read, dana milbank for "the washington post ," clearly against the president. he speaks to the republicans. republicans claim that trump did nothing impeachable and nothing wrong. go gop were asked, will you on the record and say the president did nothing inappropriate? 53 on stage, a very clear yes, said kevin mccarthy. doesn't he know that colts always ended badly? end badly?ways

members are left with whose constituents love donald trump, so this is a political move. we lost a lot of moderate republicans in 2018 when democrats had an amazing midterm election, and the ones who are left are loyal to donald trump. francine: when do we find out exactly when the impeachment process continues? tom: i would like to know that too. anna: everyone would. yesterday moved us into the next phage -- phase. the next stage is public hearings which will have risk for republicans and democrats. we will probably see articles of impeachment on the house for. -- house floor. tom: how purple is texas? they are retiring, they are

leaving. i don't buy this. anna: texas is a fascinating state to watch and could be a place where democrats could pick up congressional seats, but not like we will see texas go for the democratic nominee. with so many retirements, democrats could pick up a few more seats. francine: anna edgerton of bloomberg news. what happens with brexit? what do the polls tell us about the december 12 election in the u.k.? questions foron our international audience and ourselves. the polls are so volatile. do they settle as we get closer to december 12? david: this is one of the most unpredictable elections and the campaign does not start until next week. nigel farage speaking in about a half an hour about the plans of

the brexit party. they will eat about 10% of the vote or more. 2017 remember that one? that was billed as a brexit election and the polls shifted enormous leaf from the beginning of that campaign to the end -- enormously from the beginning of the campaign to the end, enough to throw the result into unknown territory. where we are on december 12 could be a different thing. francine: we had a guest who said what is being overlooked is there is still the possibility of a no deal brexit. if the conservative party gets a narrow majority but there is not enough to stop a no deal. david: that is right, whether there is a narrative -- narrow conservative majority or a hung parliament, we could be all the way back to that same situation, propped up again perhaps by the dup.

they are the ones who do not like this deal. a lot could go on with boris innson's big plan to leave january, and we have another cliff edge facing us at the end of january. the europeans are running out of almost camed fromm close to blocking the one last week. what are the odds of everyone agreeing we need to get this done? francine: david merritt, bloomberg executive editor. war, stillina trade with us andrew hollenhorst and ronald temple. ,hen you look at u.s.-china insiders in beijing telling our reporters that we could have a phase one agreement but anything bigger and longer lasting beyond that was quite unattainable.

that is my expectation. i think phase one might be the final phase. many issues are nonnegotiable or intractable. to chineserphed being a competitor to a national security adversary. whether we will sell products to use for theave dual likely wewhile it is will see a phase one deal, investors should not get too excited, because i am worried the damage is already done. the uncertainty into the corporate board rooms and c-suite has been damaging to growth. even if you get phase one, you have an election in 12 months, another uncertainty. people are thinking short term of -- resolution of china means

off to the races with capex spending, that is too optimistic. tom: andrew hollenhorst of citigroup having the privilege of working with catherine manm who owns -- catherine mann who owns this idea of chinese dysfunction. i know you cannot talk china specifically, but the body language? andrew: that is what investors are looking for and what we are looking for, what is the tone, where are these things going, not just the near-term possibility for a short-term resolution but are we headed in a positive direction? there is a lot of uncertainty. tom: francine? francine: i wanted to go back to ron to figure out what that means for your investment. ronald: it makes it harder on dust ittion, because to is one thing to analyze tariffs -- it is one thing to analyze

tariffs but another thing to say companies cannot sell to china. it puts a limit on how much of a rally you can get out of equities, and on earnings growth. 20/20 is looking a little better, but we should be careful not to get too enthusiastic. hights a lid on how treasuries can go. you can see with positive moves on trade, maybe we will get the yields back to 2% and that will be reason to extend duration. tom: ronald temple and andrew hollenhorst with us. later today, an important conversation with richard clarida, vice chairman of the , evermore after the nuance of the press conference of chairman powell two days ago. ♪

♪ tom: bloomberg "surveillance," we survived halloween. devilleella thing go? francine: people thought i was lady gaga, a star is born. tom: very successful, very brave. alike.rs and laborers andrew hollenhorst trying to be the adult, carl riccadonna dives in with immense detail. this is inflation and it is just like jobs, a raging debate. service sector inflation is way up. goods inflation is coming back but nonexistent. that is a jumble of inflation

data just like the jumble of jobs data today. carl: service sector inflation, the white line in the chart is really what the fed cares about. the vector is moving completely sideways, no slope in that line. that is telling the fed there is no inflation problem they have to be worried about. the other line is the goods sector where you can see a little bit of an acceleration. that is the tariffs starting to percolate through to consumers. that notch down, that is the impact of the strong trade-weighted dollar starting to clobber import prices and push goods inflation may be back into an outright deflation. the strong dollar is something the fed has to be focused on. francine: what does that mean for the markets? ronald: it is interesting that

you are seeing an uptick in tradable goods. if you look at 2017, the average tariff on chinese exports to the 3.1% and nows. was is 25%. a key point for me to watch is, does that lead to an accelerated momentum in inflation that is sustained? place put a tariff into you expect inflation to be higher that year. i think you are more likely to dip back to the old trend which is less likely to have an effect on the markets. francine: let's bring the chart up again that tom brilliantly made. i have not asked about dollar dynamics and how that percolates your investment. ronald: the dollar is a tough call. towardto lean more stability to slight strengthening. the fed signaled pretty clearly

the midcycle adjustment is over and we should not expect further rate cuts absent economic news. we might have reached peak negativity on the industrials in terms of pmi and other soft data. it is unlikely we get a resumption of easing in the u.s. but you are likely to see it continue with the ecb. tom: i have the gm strike, noise, noise. if i get a gloomy number, do i go with that? carl: you plug your nose, cover your ears, hold your breath until we get to that november data. remember this chevy slogan, like a rock? the impact of the gm numbers will be like a rock and we could potentially see a negative payroll. strip out manufacturing and government, which will be affected by census workers laid off, and look at private sector hiring. tom: cut to the chase.

carl: the private sector number matters and we are seeing a deceleration of the economy on the back half of the year, going 6.3% to around 2% on the back half. the strong dollar, the trade war still very much present, the gdp going deeper than 2%. andrew: you take the noise out and see some slowing, but i am more on the side of ron that we are slowing to something that looks like potential. tom: we have a job economy, two brilliant minds, and carl riccadonna is quoting robert seeger of detroit. cool that we got bob seeger into our jobs day. "surveillance"on at 6:46 a.m. new york time.

carl riccadonna. tom: ♪ night moves ♪ terms of earnings, we saw surprises to the upside, apple and samsung beating estimates, boosting chipmakers. energy giants shell and bp looking at shells slumping after a downbeat forecast for the economy. credit suisse with an ok beat while ge feeling the pinch of interest rates. ,oogle showing a rare stumble stunted by spending on its cloud business. we will look ahead to the week that is an data coming out. this is bloomberg. ♪

♪ viviana: you are watching bloomberg "surveillance." shares of pinterest plunging. postingany third-quarter revenue that fell short of estimates. primarilyadding users in less lucrative international

markets. another milepost along the comeback trail for jcpenney. today they open what they call a brand finding store, a place for them to test ideas before rolling them out to 850 outlets. the ceo speaking to emma chandra in an exclusive interview. >> it has been an interesting decade at jcpenney, and as i have been overt on my earnings calls, there is a lot of fundamental problems to fix. we are marching down that path, but at the same time running a parallel path of transformation and innovation because we know we have to be more than a department store. siviana: taking over at penney' a year ago. tom: that is called managing the last 10 jcpenney, the years, -25% per year.

that goes right to what i want to do. i lost all my alpha owning to jcpenney like stocks. passive do active when month after month seems to do better? give me the defense of active. ronald: if you look since march of 2009, the s&p 500 has compounded 17.5% per annum. it made sense to be passive because you made so much money off beta that you would be a winner. if you are an active manager you have typically 2% to 3% residual 50 basis pointo drag before fees. it is almost impossible to see another decade of 17.5 compounded returns in the s&p. you are more likely to see a 5% to 7% earnings, driven by earnings growth, it may pe appreciation.

when you have that much lower returns from beta, you will have a better time with your active managers delivering you on hundred 50 to 200 basis points. it should give them more activity to do idiosyncratic risk around trade, etc. tom: inform our audience how they avoid the next jcpenney. there are always going to be companies that encounter difficulties in the market and it comes down to understanding what you own. when i talk to a junior analyst, how does the company make their money? what are key variables that you can predict that will drive cash? accounting, build scenarios out to understand what the bear case is, the bull case, and the base case. at the portfolio level, understanding the drivers of risk and how they relate to each

other, and how you may be taking unintended bets so you do not wake up one morning and say, i had a big risk in the factor terms here. francine: do technology stocks have a valuation problem? ronald: parts are overvalued, parts are attractively valued. you have parts of the market where people are chasing growth at any price. that is a dangerous situation. we have seen it before in the bubble. there are some companies generating tremendous cash flow where barriers to entry are enduring, and people are underestimating. we were all taught in undergraduate estimation -- education that you should a sermon the reverse mean and by definition, -- they will revert to their cost of capital. our analysis in the last 20 years is that does not happen in

a number of sectors. francine: we spent a big chunk of the program talking about the car merger with peugeot and fiat chrysler. even if you have a megamerger that drives costs in a better direction, if you are not present in china, can you survive the next 10, 15 years? ronald: i think you can. it depends on the scope of your addressable market. i think in the large-cap universe, companies have pinned too much of their hope to growth on china, which has not come through. part of what led to the trade war is the u.s. corporate community and european corporate community have been thinking, we can compromise and overt time-to-market dust over time -- over time, the market will open up. there is plenty of growth

outside of china as well as in china. tom: ronald temple with lazard asset management, love seeing him in our london offices today. much more to talk about. it is jobs day. ellen zentner will join from morgan stanley. as you heard from carl riccadonna and andrew hollenhorst, it is a jumble of jobs day. we will try to give you perspective on whether it is up or down. hour,ctive in the 9:00 richard clarida. i will open this conversation on this conundrum of inflation. michael mckee weighing in as well, and jonathan ferro with lawrence kudlow. ♪

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confuse thecould jobs and wage data. in big oil really means big dividends. exxon and chevron will report this morning. and china talks tough. the government says it will take a bigger role in hong kong as the communist party meeting promotes strong leadership above all else. welcome to "bloomberg daybreak" on this friday, november 1. i'm alix steel. happy jobs day. let's take a look at where we are in the markets. -- wee debt huge rally had that huge rally in the bond market yesterday. 0.2%.ures up by about it was a really big move yesterday. also watching the dollar. the dxy fell the most in october since january 2018. weaker dollar