♪ francine: stocks. wall street hits fresh records. investors bet on a trade deal. solomon exclusive. the goldman sachs chief executive tells us he is optimistic and the chance of a recession in the near term is unlikely. uber stalls. they report lackluster user growth and lower food deliveries, sending shares lower and extended trade -- in extended trade. ♪ to "bloombergome surveillance." i'm francine lacqua here in london. these are your markets.

the stoxx europe 600 pretty much flat. we did have a bit of a move on the u.s. 10 year yield, currently up 1.82. we had renminbi, a little move actually that became a bigger move, strengthening past seven since the first time since august. s&p futures gaining some 0.2%. ourng up, much more from exclusive conversation with the goldman sachs chief executive, david solomon. he talked about negative rates, the industry, and of course, about trade. let's get straight to the bloomberg first word news. u.s. tariffs is what china wants before president xi signs a potential trade deal with president trump. ft reportsafter the to grease the wheels for an agreement. washington is reporting removing some tariffs on chinese imports. now to the u.k. election campaign. prime minister boris johnson and

opposition leader jeremy corbyn trading barbs. the house of commons elected its new speaker, mp lindsay oil. -- hoyle. he was a member of the labour party but is now not affiliated with a party. china's president backs chief executive carrie lam, despite five months of pro-democracy protests. president xi saying ending violence and restoring order remains the most important path of the city. where thestralia, central bank is keeping policy unchanged. it is betting to rebound -- a rebound in property prices will lead to an increase in household confidence. after three constant since june, the cash rate being held at 0.75%. the reserve bank sees economic growth picking up, rising by 2021 to 3%. president donald trump formally begins the process of withdrawing from the paris climate accord.

in 2017, the move was announced. it will take another year to complete. this sets the stage for the u.s. departure from the deal next november. that is the day after the 2020 presidential election. global news 24 hours a day, on-air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine? much.ne: thank you so u.s. stocks have hit fresh record highs and futures point toy higher open. we spoke exclusively with the chief executive of goldman sachs, david solomon. davi ifd you are watching what is coming out of: i think both are set to have a sort of a phase one deal. it looks like there is some progress and some movement forward. i think the issues are complicated but i am relatively optimistic, based on the data points, it feels like we will

have something constructive happen. matt: how much damage do you think has been done? can that be reversed? can the economy be salvaged? david: first of all, the global economy is still growing and chugging along. the trajectory of growth has slowed over the course of the last 12 months. what the trade attention has done has acted as a headwind to has done isnsion acted as a headwind to growth. matt: in the u.s., i think it is more and more the political situation has been uncertain. the democrats are moving towards an impeachment. you have some very progressive candidates on the democrat side for 2020. is, firstf a concern of all, impeachment for you? for businesses in the u.s.? think that, i

process, the process of impeachment and how it plays out, to the degree that there hearing andchment the president of the united states was removed from office, that would obviously be a very significant event. i do not see that as something that is likely. are inmoment, i think we a political process where there is a lot of discussion about this. the biggest thing markets are focused on is not the impeachment process in the u.s., but more what is happening in the election. i think it is a very early to predict and call. we are watching the election like everyone else and it will be an interesting process in the next 6-9 months. we see -- as the candidates take shape and we see what i think will be a pretty interesting election in the united states. matt: still a lot of uncertainty. you're looking at maybe a 15% chance of recession when you came into the job. recently you said it is getting closer to 25%. david: you're making a scions out of something that i am trying to give a sense of. you are quoting me correctly.

-- science out of something that i am trying to give a sense of. you are quoting me correctly. i said roughly 25%. if we had talked about nine months ago, i probably would have told you it was very small, kind of 15%. i think the uncertainty has increased a little bit, but i still think when you look at the economic data, the earnings momentum, we have seen 4%-5% earnings growth in the u.s. consumer is still very healthy. i do not see anything indicating the consumer is weakening. the manufacturing part of the economy is slower but when you look at the whole package, i think the chance of a recession in the near term is not significant. francine: that was david solomon, the chief executive of goldman sachs, speaking to matt miller in berlin. joining us this morning, peter kinsella, global head of fx strategy at union bancaire privee and mark cudmore. thank you both for joining us. let me tear it off with you.

now?happens to stocks >> i think they can perform quite well until year-end. the trade war has been going on for the last year and a half. the larger direction was consistently negative until about two months ago. now it has been consistently positive. now we get kind of the shorter-term fluctuations. it is like wave theory about one s coincide, the high-frequency and low-frequency wave, then we can get a real boost upwards. we have some short-term positivity. i am expecting that sometime probably very soon we will get another negative headline saying it is back in doubt. i think the people will not be too worried about. it will more canceled a good move more than go into the negative until -- unless talks collapse completely. i think overall, the backdrop is pretty good. we have gone past some of the big potential risk and

negatives. the fed are out-of-the-way. they are not in a rush to hike rates. the other one is earnings season, which is not a great earnings season. it was quite disappointing, but not nearly as disappointing as many feared. that is in the rearview mere. i think overall, -- mirror. i think overall until year end, the risks are skewed to a clear rally. francine: you have a rebounding growth expectations, but that is mainly on what happens in the trade war. peter: i think currency wise, i think definitely a bit more .ollar weakness when global growth accelerates and we remove a lot of uncertainty, the dollar begins to selloff immediately. at the margin, you would suggest a little bit of dollar weakness. you have seen some of the higher baylor currencies outperform against the dollar and i think that will continue -- beta currencies outperform against the dollar and i think that will continue.

you see that emerging-market currencies are no longer correlating with u.s. treasury moves. it is more about what is cnhening with cny and exchange-rate -- francine: mark cudmore come apart from change, is there anything else that could stop this risk on rotation? ark: i think there are plenty of things that can ultimately stop this but probably not in the short term. equities are expensive. we are looking at a forward-looking s&p trading above 20 versus the 10 year average of just above 18. that is a backward looking one. the forward-looking one is trading above 17 versus 15. overall, we are looking at a very expensive stock market and the economy is not doing great. yes, the u.s. economy has been slightly more resilient than feared. david solomon put the chance of recession before the next election at 25%. that is quite high. probably the risks are to the downside. while manufacturing is a small

part of the economy, it is the best elite indicator for gdp. people keep on siding the consumer has been strong and resilient, but the consumer is a indicator.gging overall, unemployment tends to jump after growth starts slowing down suddenly. we cannot point that too much to reasons for being confident in the u.s. economy. i think overall, the u.s. economy is slightly struggling. we are probably going to see that in the new year, not just at the moment, and we have got stocks that are expensive. i think in the new year, we are going to face those headwinds again but it is probably not the time to battle them at this time before christmas. francine: do you worry about the quiddity in the markets? look, given the funding squeeze we saw nearly a month ago, yes, people are going to be worried about the christmas. i think it is an issue we continue to tackle better. i think it is an issue that suddenly gets a bit of panic for

a few days but not likely a systemic issue. will that be a catalyst for a big selloff? i think very unlikely. francine: all right, thank you both. mark cudmore and peter kinsella from union bancaire privee stays with us. the goldman sachs chief executive's thoughts on europe and negative rates. that is coming up next and this is bloomberg. ♪

♪ francine: economics, finance, politics, this is "bloomberg surveillance." i'm francine lacqua here in london. let's get back to the markets and back to equities. they may still have even hired to go. with the details is dani burger. >> even though we have seen equities chart new highs, there

is one crucial group of investors who have not joined in. that is hedge funds. we could see stocks hitting new record again. a good way of measuring this is by looking at beta. this is another way of saying how much exposed to hedge funds are the s&p 500. it has continued to be depressed so far this year. 2002 isking back to about half of its average. why is this? hedge funds have not gone on the cyclical rally we have seen where value beats momentum. instead, they continue to love the momentum strategy. this has all the past winners, and bond proxies, low volatility quality. if you are a hedge fund following this strategy, this is what momentum looks like. you can see how poorly it has done over the past months. this index of momentum is now at its lowest level since 2017. if hedge funds are starting to get hurt by this, they are likely to move into the index,

hug those benchmarks and allow stoxx to go further from here. francine: dani burger with more on stocks. let's get back to our exclusive conversation. matt miller spoke to the goldman sachs chief executive, david solomon, about the rate environment in europe and monetary policy. david: we have been investing. we have new leadership in our wealth management platform in europe and we are focused on expanding market share here. if the right acquisition came along, we would certainly consider it, but we also see good organic opportunity for us to expand our wealth management capabilities in europe. that is something we are focused on also. matt: broadly across europe, there is a lot of talk about bank consolidation. of course, a number of regulatory hurdles. do you expect banking coming foron, is it european banks and does goldman sachs want to play a role in that? david: on the question of banking consolidation here, i

think that there are lots of somelling reasons why consolidation here would benefit the strength of the european market. but i think it is hard and not clear that it will actually happen. i do think it would be good for the european market, for the european capital markets region, if you had more of a european leader, consolidated european leader in some way. whether or not the local politics or the business rationale allows that to happen, i am not sure. i watch it as you do. i do think that there is certainly an opportunity to strengthen the position of one or two players here if there is some m&a, some consolidation. matt: i was at mario draghi's final ecb press conference. he said we are very happy with our negative rates experience. christine lagarde taking over. our negative rates helping the economy -- are helping the economy in general -- negative rates helping the economy in

general, helping to boost inflation? david: i think when we look back at negative rates, i think when the book is written, it will not look like a great experiment. i do not think negative rates are bringing the benefits we would like to see. negative rates have not allowed an acceleration of that growth, opinion. i do not take a negative rates are really constructive but we will have to wait and see how this plays out over the years. i worry that will need -- when we look back on this experiment of negative rates we will not like what we will see. matt: some say fiscal stimulus is needed to mitigate the unwanted side effects. i know that you will be talking to companies around germany. surely, they will have things to say about negative rates. they will probably also want to talk about infrastructure spending that they think is needed. do you feel like fiscal spending is needed? does berlin need to spend more? do governments need to chip in more? david: you talk to people here in germany, there is a

significant amount of fiscal stimulus. when you look at some of the and -- of the ambitions some of the capital being spent to move the economy toward a more green economy, there is no question. francine: that was david solomon, the chief executive of it goldman sachs, speaking to matt miller in berlin. we are back with peter kinsella from union bancaire privee. how much of a killer for the real economy are negative rates? some argue it hurts the transmission mechanism but it is also helpful for nonperforming loans, in italy, for example. peter: i agree an awful lot with what david said. interest -- negative interest rates were a purely academic theory and now europe is being used as a big test chamber. francine: well, japan was there. peter: for a while, but -- a little while. the banking sector is being massacred. it is having a really negative effect on profitability in the banking system. if the banking system cannot make a decent profit, why should

they give loans? some of the larger players are no longer giving personal loans. it is no longer work there while. i think the negatives outweigh the positives on negative rates. i think it is definitely doing more harm than good at this point. francine: we were talking to mark cudmore also about liquidity. should we worry about liquidity a little bit more given what we have seen only 3, 4 weeks ago? peter: liquidity concerns are always an ongoing concern for any investment manager or bank. the fed has come in with their bill policy, so clearly they realize there is an issue and they have done something to address the issue, so that is good. i am less concerned that i was. coming to year and, you always see -- end, you will always see a small spike in repo rates. i think they will be agile enough. . francine:francine: to intervene how many interest rates cuts does the fed actually need --

agile enough to intervene. francine: how many interest rate cuts does the fed actually need? peter: at a minimum, we are kind of ruling out any kind of rate hikes anytime soon. i think that is good news for markets for sure. francine: economics, finance, politics, this is "bloomberg surveillance." from -- francine: peter kinsella from union bancaire privee stays with us. pound for pound, as a uk's political leaders trade blows over brexit. this is bloomberg. ♪

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♪ francine: this is "bloomberg surveillance." i'm francine lacqua here in london. prime minister boris johnson, his main rival, labour leader jeremy corbyn, trade brexit blows as a u.k. gears up for an early election. johnson wrote an open letter to jeremy corbyn and jeremy corbyn accused johnson of hijacking brexit to pursue his own agenda. what does this mean for the pound? still with us is peter kinsella from union bancaire privee. a no deal brexit could still happen. peter: another brexit could still happen. it has largely been priced out at this point. that is reflected in the price section. we have kind of priced out no deal at this point. what we have not repriced in as such is a conservative majority. we certainly have not priced in anything like a labour type

coalition. we priced out no deal but have not quite priced in any electoral certainty yet. francine: we also have to talk a lot about u.k. government spending, right? which seems to be set to rise. it is kind of the end of austerity if you kind of listen to the candidates. what does this mean for pound? peter: i am always a little skeptical about politician's promises, particularly in an election campaign. ofn if we enter a period leaving the eu single market, there is going to be a time of adjustment. a lot of the promises that have been made might not really come to fruition. what it should mean at the margin is slightly higher growth, at the margin, but that having --f you will see sterling easily

135,. positive. 140 francine: it means you get a brexit deal? peter: it means you get certainty. it means the tail risk of jeremy corbyn and that government is not going to happen so it is a very positive sign for sterling. francine: peter kinsella from union bancaire privee. takeaway troubles. with lackluster food deliveries and user growth. we are seeing a lackluster market. if you look at european stocks, their trading sideways. u.s. futures still edging up. the renminbi touching seven and we are looking at treasuries. they are actually falling. ♪ this is bloomberg.

♪ francine: stocks cheer. wall street hits fresh records in u.s. futures show no sign of

the rally. exclusive. the goldman sachs chief executive tells us he is optimistic on trade progress and the chance of a recession in the near term is unlikely. relatively optimistic based on the data points. i am watching them, just as you are. it feels like we will have something constructive happen. francine: uber stalls. the ride hailing company reports lackluster user growth and food deliveries. good afternoon if you are from asia or good evening. this is "bloomberg surveillance." i'm francine lacqua here in london. we are getting some u.k. data. a lot of it will be on brexit or at least of the focus will be on brexit, which is we are not -- why we are not expecting pound to move much. services pmi actually rising to 50. that means they are no longer in contraction. we were expecting a 49.7 figure. uber's third-quarter revenue

came in better than expected. investors disappointed with user growth. annmarie hordern joins us with the details. >> we are getting the first premarket. it is falling more than 5%, as investors were left disappointed with lackluster growth in key metrics closely watched by wall street, one is the bookings number. this measures the total value of rides, food, and orders. the second was the monthly active users. that basically means those who food ata ride or least once in the quarter. they pledged to turn a profit by 2021, which we also heard from their smaller rival, lyft. uber emphasized their greater efficiency they want to strive for. that is if they cannot get to the number one or two spot in the market, they will exit. all of this was enough to lift the stock, which may come under more pressure tomorrow.

we have a stock lockup for a large number of shareholders and that is expiring. the expiring will likely bring another four times its current flow to the market. right now, the free float is about 11%, which means for uber 's market cap, only $6 billion trade in the white line on the bottom. francine: annmarie hordern with the latest on uber. let's get the bloomberg first word news. be any changes for goldman sachs as it prepares to celebrate its 150th anniversary? chief executive david solomon says expect the new initiatives but no big review. we spoke exclusively with mr. solomon. he gave us his opinion on negative rates hitting banks. david: i think only look back on negative rates, i think when the book is written, it will not look like a great experiment. i do not think that negative rates are bringing the benefit that we would like to see.

there is no question the growth in this part of the world has been lagging and negative rates have not allowed an acceleration of that growth. ecbew president of the christina lagardere using her first speech to call for strength, resolve, and courage. she steered clear of a monetary policy. she joined the institution when the euro zone economy is under stress again. her first policy meeting is scheduled for december 12. over to india. the country deciding against joining a trade agreement covering much of asia. a paves the way for the 15 other countries to sign in china back to deal. india says it has significant issues with the deal, the regional comprehensive economic partnership. global news 24 hours a day, on-air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. ? francine: francinefrancine: thank you so much. italy's infrastructure has been in the spotlight ever since the bridge collapsed in a general what in august of last year -- genoa in august of

last year. the motorway is now being reconstructed and renowned architect is overseeing the project, costing an estimate 200 million euros. i am delighted to be joined by marco bucci, the mayor of genova. in government in italy actually facilitated the authorization process to rebuild the bridge? marco: the authorization process was different than any other. the commissioner has a lot of freedom of doing things like a private company and this is one of the reasons why we are so quick in doing things. demolition has been completed at the end of june. we have all the. website and 50%

-- west side and 50% of pyres up on the side. we are unplanned to really have -- plann paln to have to have the bridge completed and opened by the spring of 2020. the way that we want to do is to demonstrate to the world that you can do good things with a good future and get caused in the right time. francine: how does that change the dynamic for genova? does it help with the bridge? do you have a lust to us -- last taurus now because of the -- tourists now because of the bridge collapsed? mayor buuci: we are in good shape right now. in july, the port has the record ever. we got the most of the traffic that we ever had in the city of jennifer. francine: this is from -- nova?fer -- ge francine: this is from where?

mayor buuci: china, the united states, and the north of africa. genova is the gate of entry for the south of europe. given the collapse, should the concession be removed? mayor buuci: i would not say that. this is a government decision, not my decision. i really think that the conception will be discussed in the next 2-3 months. i need to understand who should i give the bridge and when the bridge is going to be ready we have to have somebody managing it. francine: maybe someone more local? mayor buuci: i think i will give back to the government and the government will give it. depending on the government. francine: how proactive is the government in talking to you about this? mayor buuci: i am talking a lot with the government.

i have a good relationship with the prime minister. i'm confident the situation will be resolved in the next few months. is a localayor, how administration dealing with trying to rebuild the city or actually increased tourism or business? mayor buuci: the city is going on the right track -- ci: the city is going on the right track. the gdp is growing, the active people are going. people have always been diminishing in the last 20 years and for the first time, we have the active people, the people who are working, are going up, and this is good. francine: do you see international companies or international investors wanting to come? mayor bucci: in the last 12 months, we have two companies -- international companies coming to genova. we have a very important research and development center

open up. francine: how much of a difference will that make? the local bank is no other table for lots of different issues -- now on the table for lots of different issues. the people trust in the local bank. the local bank is absolutely important to maintain a collaboration and help to all the local businesses. this is a must for us. we must have a bank. francine: you are here in london. you speak to investors. what do they ask you? mayor bucci: they ask credibility first. within the bridge, we demonstrate credit ability. and also, they ask help in order to facilitate with bureaucracy. those are the major issues for a foreign investor. otherwise, italy would be the perfect place to invest. francine: do you see that changing, the bureaucracy? hope tocci: i really change bureaucracy. what we are doing right now in order to facilitate companies, for example, we put our people

from the administration to help a company to invest. the person that we put in place will manage all of the bureaucracy instead of managing -- having the company manage all the drucker see. francine: is that -- all the bureaucracy. seen by the that government? mayor bucci: they are starting now. they realize. the local administration is much quicker. the local administration really gets the pulse of the situation more than the government. hoping the government will change mindset. francine: this will happen in the next couple of years? mayor bucci: i would say at the local level, we have already changed. i trust the government, maybe with the new election also, to change this kind of behavior and this kind of bureaucracy is really killer. francine: you said you had a record number of entries into the port but we are in the

middle of a trade war. if you are a small italian exporting economy, you must suffer from the u.s.-china trade war? mayor bucci: this is true, but from the other side, if you want to sell in europe, you have to bring goods over there. bringing goods is important and the goods are coming mainly from east asia. this is very important to have a port of entry on the south of europe and we can compete very well with that. francine: does brexit change the dynamic at all? mayor bucci: i would not say that. maybe brexit will help english companies to have a good court in europe and genova is a perfect place. place.perfect for that reason, it is becoming a very attractive place to have a headquarters in your. francine: marco bucci, thank you so much. he is the mayor of genova joining us. plenty coming up, including the u.k.'s retail sales.

we will look at what is behind move. later on, more from our exclusive interview with the goldman sachs chief executive, david solomon. this is bloomberg. ♪

♪ is "bloomberg surveillance." i'm francine lacqua here in london. let's get straight to the bloomberg business flash. in new york city, his viviana hurtado. >> barclays is being investigated by u.s. regulators about violations to securities laws after a former trader raised concerns about its marketing practices for certain months. the probe is -- bonds. the probe is preliminary and may

not lead to any allegations of wrongdoing. barclays and fcc declined to comment. mcdonald's losing another top executive. the companies human resources bars leaving the company. this comes a day after star ceo was fired. mcdonald's it drew a lot of scrutiny because it is seen as a bellwether for labor issues. toeers taking a drastic step -- the decline business in the diamond industry. the world's biggest diamond producer is lowering prices by about 5%. the move is aimed at helping improve profits for the middlemen. many of these customers on margins.n thin profit francine: bigger discounts have boosted demand in retail sales across the u.k.. new figures by the british retail consortium show the increased to 0.1% on a like for like basis from october of last year. ,ith us now is heaven dickinson

chief -- helena dickinson, chief executive of the -- helen dickinson, chief executive of the british retail consortium. helen: we see a mixed picture between those raising their game and meeting demands of customers and others who are finding it much more challenging because the cost base of the business or some of the legacy issues they may have. it is a real perfect storm of a technology changing the way we all shop,rising -- we rising costs for a loud companies and demand -- although october was a little better -- fairly sluggish overall. francine: how much of it has to do with brexit and how much of it is legacy issues? helen: i think the uncertainty that is surrounding us all at the moment, political uncertainty, brexit, is having an impact on shoppers. i think the most significant thing is the sort of technology

transformation that we are seeing. that is leading lots of retailers to invest in digital, mobile, innovation, and at the other end of the spectrum, causing grow distressed in certain parts. francine: how does the u.k. shopper shop? do you go online or look online and then go to brick-and-mortar? helen: all of the above is the answer to that. more and more of us are shopping across the different channels. joining them altogether and from a retail your point of view, what is important -- retailer point of view is to make sure --t francine: do shoppers look for bargains? if they are spending less because of the uncertainty politically, do they want bargains or do they still buy the same things but less of it? helen: it is a little bit of both. i think certainly the value equation, so not just price, but

product quality and how it all fits together is really important from a shopper point of view. what the internet and digital has done is give us our complete visibility and transparency over not just price, but where products actually come from and more information about how they are made. from a consumer point of view, we are all getting a great deal. shop prices have been falling over the course of the last few years, particularly in nonfood categories. a is really important forom transformation point of view that we have the right environment from government perspective to allow this transformation to occur. francine: what would you be acting for the next government, however that may be? what do retailers need from 10 downing street? helen: what they need is, as a backdrop to this transformation and restructuring we are seeing,

is the right policy environment to enable that to happen successfully. so there is big buckets of things around property taxes, business rates is really one that every single retailer that operates physical shops will always mention. e need reform of the business rates system. we need to be investing in people, retraining them so the nature of different jobs in the future, so things like the retraining scheme, the apprenticeship levy are not working well at the moment. we need those to work better. francine: we saw what happened yesterday. are you expecting more bankruptcies in the u.k. retail sector? helen: i think that comes back to your previous question. it depends on what environment the next government campaign place to ensure that we see a soft transformation, as opposed to a hard transformation, because we are at the moment seeing a number of foreclosures

and job losses, and yet, i talked to lots of others who want to invest in high street and town centers. the cost of doing so are just so prohibitive. we knew to create the environment to enable all types of retail to first in the future. francine: we have early elections december 12. it is 12 days before christmas. what does that mean for shopping in the u.k.? helen: who knows is the answer. i don't know. it is all to play for from a retailer point of view. the competition is really intense. consumers, shoppers are going to get some great deals. there is going to be a lot of value and a lot of great products on offer. the impact of the election being timed so close to christmas, because we have not had one in modern times, it is really

difficult to call. i speak to lots of cheeky test chief executives of retail businesses -- i speak to lots of chief executives of retail businesses. it goes from one end of the spectrum to the other. the are concerned that environment, the uncertainty is going to continue to weigh down. it is all to play for. consumers are going to get a great deal whichever way it pans out. francine: thank you so much for joining us. helen dickinson there, the chief executive of the british retail consortium. more from our exclusive interview with david solomon. we will hear his views on wework and other firms going public. this is bloomberg. ♪

♪ francine: economics, finance, politics, this is "bloomberg surveillance." i'm francine lacqua here in london. back to our exclusive conversation with the chief executive a goldman sachs, david solomon. matt mother asked about the hype surrounding wework and its subsequent sales ipo. >> at the end of the day, when the rubber meets the road, what are investors willing to pay for

a company when they have the transparency of the real financial information that has been vetted and presented in an appropriate way? when you have that, the market will speak. as an example, there was a lot of hype, but ultimately when investors were able to have a real discussion with real financial information and provide feedback, there was a pretty clear view as to whether company could go public. matt: can i ask about -- you know, this group of companies, the unicorns that have had ipo problems or have not performed well post ipo, like uber. are you concerned that we are seeing reflections of the dot com era where it was all about higher revenues and nobody focused on making money? david: i would not compare it. these are companies. we can debate the valuations, but they certainly are real companies. that is different from that

narrow slice of time during the dot com bubble. i do think what is happening is the monetary policy that has been ramping around the world -- rampant around the world has forced people out on the risk curve, has forced for people to look for other ways to drive returns. one of the things they have been chasing his growth, and to some costs. growth at all there has been a sentiment that if you can hook your wagon to a company that has a lot of growth and is focused on growth, that something good will come to that. that has incentivized lots of companies to take the capital they are raising from investors and spend it very aggressively to drive topline growth without understanding the consequence about that can translate to profitability. i think the market is speaking and telling people, let's rein that in a little bit. there has to be a clear and articulated path to profitability, to earnings in

some way, shape, or form. over time, a company can only be worth the discounted future value of its earnings. it is important you have a business model that can generate profitability. was davidthat solomon, the chief executive of goldman sachs, speaking to matt miller in berlin. they were chatting about uber. if you look at the uber share price and take it out a long wait, premarket down 6%. "bloomberg surveillance." continues in the next hour. tom keene joins me out of new york. don't miss our conversation with south africa's president, cyril ramaphosa. that is tomorrow and this is bloomberg. ♪

hascine: wall street

refreshed records and no sign -- he is optimistic on trade programs and that a chance of a recession in the near term is unlikely. uber reports lackluster user shares lower in extended trade. good morning, good afternoon, or good evening from asia, this is "bloomberg surveillance." francine lacqua in london. tom in new york. executivechs chief told matt miller in berlin they negative rates for holding europe back. also negative rates, francine, on this extraordinary equity market, the global equity market has now truly reached into the unknown. it is amazing to see analysis this morning. francine: we will spend a lot of

time looking at stocks and the risk on rotation. let's get to bloomberg first word news. viviana: bloomberg heard beijing once the u.s. to rollback u.s. tariffs on 360 billion dollars of chinese imports. this is a sign of an interim trade deal with the u.s. china could use tariffs -- could tariffs.u.s. hong kong's chief executive for xi jinping says he has a high degree of trust in carrie lam's leadership despite five months of pro-democracy protests. carrie lam denies that beijing wants to remove her from office. opec sees its market share shrinking. over the next four years the demand for oil will fall by 7%. opec says a big reason is the flood in u.s. shale oil supplies. that could lead to cut

production even further. president trump making it official that the u.s. will withdraw from the paris climate accord. the state department has formally submitted the request to leave the agreement signed by roughly 200 countries. the administration says that it places an unfair economic burden on u.s. workers. 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. tom: thanks so much. equities, bonds, currencies. seenow record highs as yesterday higher. that is extraordinary. god bless you, francine. on the next screen with oil lifting measurable. 12.78 sustained. closed risk on risk.

renminbi i will show this chart on surveillance a couple of times, over two standard deviations of strength on renminbi. actually strengthened past seven for the first time since august. u.s. futures, as you appointed to, higher start. tom: we will link all we are doing today. partition american stocks with the rest of the world. this is one way to look at it off of 2008 along with morgan stanley world index. it is extraordinary this decoupling. 2000 11, up we go with the linear vector, and another linear vector flat. maybe you are a little bit of a lift up here, but that is an extraordinary decoupling. chartne: i think your

actually explains beautifully what is going on in the markets and what has been happening in the markets, also, in the last 24 hours. u.s. stocks hitting an all-time high in treasuries tumbling as trade optimism sweeps the market. that is what we are keeping a close eye on. those are global markets. in shanghai xi reiterated his commitment to economic openness. put the common rather humanity first, than place one's own interest above the common interest of all. now is theoining us jp morgan head of cross assets theamental strategy, and director of bloomberg markets strategies. thank you for joining us. when you look at what is happening in the markets and in

the last 24 hours you call it risk on rotation? apart from you don't get a trade deal, what else could hurt the rotation? >> if you don't see a lift in growth you can see the rotation fizzle out. the move into riskier assets is predicated that there has been enough central bank easing to deliver growth at some point in 2020. if you don't see that the move of prices is unjustified. you see it fairly mechanically six to nine months after such central bank easing. the absence of headlines around geopolitics, that can justify what is happening in markets. about earnings? have they been solid? they haven't been great, but not too bad.

>> better than expected, but they were looking for a contraction. the run rate is low single digits, not enough to justify the level of the s&p and multiple. the earnings attract gdp, up to trend as the economy normalizes. i think the valuations are stable. francine: for emerging markets? >> if that plays out where the central bank easing from the fed continues and provides enough emphasis to u.s. growth, i think we can see a recovery in risk assets, but that isn't our baseline scenario. is your vector on interest rates still a lower trend? is it a lower trend, or are we at a terminal value, or can rates come higher? >> i think they can go higher over the next couple of months, but the data will cause a pricing out of the hedge the declines still have on. for me another 25 basis points on the upside of the 10 year. which will be different than every other inflation scenario. you won't see central banks take back the cuts they put in place this year. the market selloff will short-circuit at some point,

maybe within 25 basis points to where we are now. tom: i news from shanghai is extraordinary. let me go to you on this. china seemsreview, to be moving towards some outcome on trade. can you describe the mic i -- the market moves just to china? we are going higher with nothing to do with china? >> i think china is part of the picture. the brexit spectacle we are seeing a much less chance of a no deal brexit outcome, and i think that part is part of the uncertainty investors have been working with over the past several months. that kind of risk has been taken somewhat off the table. tom: we are putting of these charts right now that i think are so important. you write a hyper-detailed

cross as hyper professional note. how do you fold this mother of trade,l markets, china and the rest into your professional work? >> it is trying to determine whether or not the good scenario is priced into market. everyone is turning optimistic about what global growth will be in 2020, but the real decision you have to make is how much is already in the price? it seems my behalf of return to trend growth is in the price. if we get better data continuously the markets can go higher. it is important to recognize that the starting level of pes on the equity market are more elevated than they normally are on a turning point. maybe there is 5% more on this justified additional upside on stocks above trend growth. francine: if you look at emerging markets, what kind of fed action is priced into equities? >> into equities?

francine: for emerging markets. >> if you look at the market pricing, pricing another 50 basis point the fed cuts. forhink much more is needed the profit cycle slowdowns and how that is really translating to the consumer sectors. francine: thank you both. us. stay with of next some of our exclusive he talksions with -- he sees the trade war between china and the u.s. heading. >> i am relatively optimistic. it feels like we're going to have something constructive happen. ♪

>> i think when we look back on negative rates when the book is written it won't look like a great experiment. i don't think negative rates are bringing the benefit we would like to see. there's no question growth in this part of the world has been lagging and negative rates have not allowed an acceleration of that growth, in my opinion. tom: in the united states you will hear mr. solomon with matthew miller in berlin earlier today. this is an interview where mr. solomon with all of the issues reallyman sachs addresses negative rates. and john norman. my essay this summer was jp morgan on this vector of yields ever, ever lower. it wasn't a forecast, it was a model. bigger pictures 60,000 foot view

of the trend of interest rates. how close to the ground? will we land on the trend of lower rates to signify tha negative rates that mr. solomon speaks of? for: we will go sideways quite a while which will be a disappointment. you would think you would see higher bond yields and the headache of negative interest rates that a lot of investors are dealing with would go away. i don't think it will go away. you will have a hike in policy rates over the next couple of years to in negative bond yields further along the curve. i don't think that will happen. we will be stuck with this rate setting for quite a while. tom: the textbooks don't have much on negative rates in them. what have you learned on negative rates. what is the textbook chapter you would write on the efficacy of negative rates? john: i think a lot of people are quite critical of negative interest rates because they look

at bank profitability. when you think about the counterfactual, i.e. where would growth or equity prices have been in the absence of negative interest rates, maybe you would have a slightly more charitable interpretation of the policy measures. the biggest prize is how persistently how negative bond yields can stay you and when growth continues to improve. it speaks to the scarcity of fixed income instruments created globally by these balance sheets, which are enormous. if you're looking at the european longevity and to a lesser extent the fed. the scarcity persists and you could have negative interest rates even with growth moving back to trend. francine: do you worry about the mechanism in the market? the liquidity, the issues we saw a couple weeks ago?

john: the liquidity is persistent. some of it is regulated to regulatory policy and some to balance sheet policy. i don't think we will get away from that issue. where it will be more binding is if we were in an environment of policy rate normalization. the constrained liquidity could emphasize moves to the upside, and that gives you an unwanted tightening of financial conditions. if they are keeping rates abnormally low that is stimulative, more if we are in reversal mode and low liquidity give you more significant spikes and yields along the curve, not just in the repo market. that is a more dangerous environment. francine: where do you see it in emerging markets? phoenix: in terms of what john has pointed out in terms of liquidity factors impacting our market, there is the technology sectors. that is a structural change in the economy that is pervasive, and something we will have to contend with going forward. that means a perpetual phase of low inflations around the world for lots of economies, including the emerging markets. that increases the yield appeal that they offer. tom: we will continue. kalen.rmand and phoenix

wang at theo selina top of the hour. the shock and all of a record bull market. now the dow as well. ther this morning, vice-chairman of global wealth morganent at stanley. this is bloomberg. good morning. ♪

viviana: you are watching "bloomberg surveillance." let's get your bloomberg business flash. shares of uber are lower in premarket trading, disappointing fourth-quarter results. lack of gains in bookings and monthly act of users. still uber beat estimates. by 2021 it pledges to turn a profit. xerox has beat a 57-year-old venture with fuji films, selling 27% to its japanese partner. the price, two point $3 billion. the partnership was one of the oldest tieups between an american and japanese firm. last year there were talks that xerox and fuji film would merge, but investors opposed the deal. reportedly ramping up the push into private equities. elliott management recently raised $2 billion for private

equity-style takeovers. regulatory says potential deals include buyouts of publicly traded businesses and carving out divisions of companies. that is your bloomberg business flash. francine, tom? tom: greatly appreciate it. john normand and phoenix kalen. is sending. erdogan messages to parliament. it is messages to a domestic audience as well. turkey is the kind of country with a two-level interest rate structure. inflation, a little bit better, i guess. he is talking about the central bank doing his bidding. which interest rate in turkey should our audience focus on? the domestic rate or the link to international markets?

phoenix: both are important, but the link to international markets is very important, because that is the core of turkeys financing, and they are heavily reliant on western-based financing. we look at that in determining the monetary tightness of the economy, kind of the real effective policy rates, which is around 14%. of: there is a set headlines, mr. erdogan, turkey looking for alternatives to f-35 jets.-- perhaps even getting russian s. how do you fold the ninepercent inflation and 14% rates into his domestic budget realities? phoenix: they are certainly running out of fiscal room for maneuvers. the fiscal deficit is pushing against the 3% barrier. we are looking at the kinds of policies they have with respect to foreign policy where they are turning away from the west, away

from the u.s. programs and undermining the participation they have had previously, like the f-35 program. that means they will be further onus on trade towards russia turning to china for financing. over the short-term those are avenues for them to get some amount of financing, but i don't think it is a long-term solution. that would be something they are working towards. from the we heard turkish president we fired the previous central bank president because he wouldn't listen, that is a direct quote, and we have decided to move on with our new friend. the newer governor will lower interest rates. your independence, which a lot were already skeptical about, what does it mean going into turkey?

phoenix: we have had this problem with turkey for the last several years. it is not new in terms of monetary policy independence or not. the credibility has eroded in investor's eyes. this really hurts turkey. the real rates will collapse because inflation is coming back up. policy rates are likely to head lower. the new governor is likely to raise rates into december even though inflation doesn't provide that space. the real rate buffer essentially evaporates. that is dangerous for turkey not to offer some premium for investors to step in. francine: president erdogan has long believed higher interest rates because inflation. phoenix: after the currency crisis last year, inflation has collapsed. it is now at 8.6 percent. it will start rising higher because of the basic effects eroding off and climb back towards the 12%, 13% at the end

of the year. inflation in turkey is very sticky. that is a persistent problem central banks have yet to tackle. tom: phoenix, right now we have images speaking in chung hyeon, mr. xi reaffirming support of carrie lam. now, mentioning sympathy for the protesters as well. give us the importance of of china andngth of the domestic strength of hong kong in that domestic strength. hong kong has been a starry magnet for chinese and eastward investment. the technical recession we have seen out of hong kong is this investment outlook. i think that is going to be a concern as well. the relationship between the u.s. and china and how hong kong

plays into this being a lever for western powers to kind of voice their opinions about what is going on democratically in asia is another source of stress in markets. francine: thank you both. manus cranny will be joined by the south african president live from the country's investment conference in johannesburg tomorrow around 9:30 a.m. and 4:30 a.m. in new york. we will talk about the rand. this is bloomberg. ♪

tom: "bloomberg surveillance." good morning. francine lacqua and london, i am tom keene in new york. the surging equity prices, one

of the mysteries into an early november. with our first word news in new york city here is viviana or todd a. viviana: president xi jinping vows the country is committed to economic openness. xi spoke at a trade expo. he said china will focus on imports and lower tariffs. bloomberg has learned that china has named its price for an price for an interim trade deals with the u.s.. it wants the u.s. to rollback tariffs on 360 billion dollars of chinese goods. the former ambassador to ukraine said she felt threatened by president trump. the democrats releasing the transcript. no phone call mr. trump called her bad news. he also said "she is going to go through some things." she said that comment shocked her. the house of commons has a new speaker. he will play the role of

referee. he promises to heal divisions caused by debate over brexit. doyle was elected from the labour party and will abandon his party affiliation. the state of california, state and federal agencies are seeking billions from pg&e for wildfires the last few years. the utility operating under bankruptcy protection. washington and california, two of the biggest creditors. 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. thanks, so much. it is about the markets, and may be about the dow higher, maybe what is going on in europe, but about the video syncretic moments out there. one is the visual of mr. xi providing comfort and confidence to carrie lam of hong kong. this has come out in the last 12 hours with meetings in shanghai.

we are here with john normand. within all of j.p. morgan, what is the symbolism of the various rate cuts and bank adjustments in china? there is an em tension, hong kong tension.what do you believe of the financial maneuverings of the interesting politics of china? john: i think there are a couple of issues if you just look at policies. policy seems to have reached the end of the easing cycle, this one and the monetary side in china. that is not a reason to be embarrassed. china has achieved 6% growth. what you saw in terms of a small adjustment in interest rates shows they have a ability to make fine-tune adjustments, but you shouldn't expect anything that will cause an immediate term acceleration in the economy. what are the limits of chinese

growth in the economy that will be interning a global economy that will be turning higher over the next year. the geopolitics are mostly constructive. china is asking for a tariff rollback as a precondition for signing an agreement with the u.s. if they managed to secure tariff rollback from the u.s. global investors will find that stimulative of the global economy and make them more confident with the moves we have seen in markets over the last few weeks. u.s.the equity markets of equities higher and morgan stanley not doing much, over to bonds. is there an opportunity for price lower rather than price of and yield down? john: i think em fixed income will be the best-performing part of the fixed income complex. fixed income is usually a carry play. all you need for the carry trade to deliver is a return to trade growth and the central banks on hold.

that is what we will see next year. currencies will be slightly higher compared to the dollar sustaining interest in the local dollar bonds which have been a duration play. bonds will be more comfortable with em with the running yield of 5% to 6% versus u.s. high yield, the only other place you could achieve 5% to 6% yield in fixed income. francine: going back to china and a trade deal, what happens after phase one? if you don't get anything after phase one is it a trade deal? john: it is a truce which is helpful. it does not touch off the capex cycle which is what you need to get confident the global economy will move above trend and stay above trend for a couple of years. you need complete tariff rollback to get the capex revival and clarity over who the next u.s. president will be and what that person's agenda will

be. francine: president was talking about integration and china was willing to find more trade agreements with the rest of the world. do you believe in that face value? john: i 100% believe that is the chinese objective. the problem is the u.s. is not interested in free trade even if it is interested in a phase i deal. it is good china has not turned its back on the globalization process, but ultimately it will be driven more by with the politics in washington dictate. tom: the president and china talks about the common good of humanity and he talks about trade. let's talk about the common good of humanity and our 401(k)s. most people missed this equity market. i know equity analysis is away from your purview, but every day the stock market is grinding out to record highs. why? investors think the cycle

will go on for a very long time in the absence of geopolitical risk giving you a recession and in the context of central banks being very accommodative. it is difficult to see the cycle ending in the next one or two years. it will roll forward, even mediocre earnings growth and you have a table to slightly higher multiple, you will get not only a slightly higher stock market, but a start market with bonds. if you think the cycle can go on for longer. am: within that is simply lower terminal value, a lower potential gdp, but also folding into a weaker nominal gdp. talk about those two tangents of a weaker nominal gdp, lower at revenues.owth, lower which consumes the other?

john: what ultimately drives equity markets is more the earnings stream and not interest rates, that is why you see a stronger correlation between measures of growth in the equity market rather than levels of interest rates and the equity market. it is the low interest rates what is needed to sustain something near trend growth in the global economy, and also in earnings. devaluations will stay high. to me it is not so much about the interest rates giving you -- the evaluations will stay high. to me it is not about interest rates giving you to sustain that growth. francine: we will talk about brexit. let the campaigns begin. in full swing and the u.k. as party leaders officially launch their reelection bids are next month. this as the house of commons elects its new speaker. what does this election mean for the next phase of brexit? this is bloomberg. ♪

francine: this is "bloomberg surveillance." francine from london and new york. tom will be joining us in the u.k. for election day. you have party heads coming out with pledges. the global head of democrats who took over 45 months ago launching her election campaign. to five months ago launching her election campaign. she is pro-europe. government u.k. editor is joining us. i have a million questions. do the poles changed by the day? do we trust the polls? been wrong for

the last couple of elections and they fluctuate. it is difficult for us to reach the voters they need to come up with reliable results. treat with caution. francine: the markets want to know whether we have taken a no deal off the table, which we haven't so far, and what are the chances jeremy corbyn becomes prime minister? tim: no deal is off the table until january 31. we will have a new government at that point. jeremy corbyn, there is a real chance that you could end up with a hole in parliament. we have heard from the leader of the scottish nationalist party that in that position she would be able to help corbyn take power. and what i've been reading, i know that there are eight parties running for election, is with fascination how the brexit party voters go over to boris johnson. that zeitgeist.

is it tangible that brexit party for rajan members will move over to vote for -- nigel faraj members will move over to vote? johnson iss what hoping for. the big risk is that faraj frightens some of the voters for johnson. it will become clear closer to voting day whether they will go all the way on their journey over to the conservatives or if they will stop off on the brexit party on the way. tom: what is the difference between a brexit tory and a brexit brexit party person? tim: in a sense that brexit party is made up of people who are disaffected with the other main parties, the labour party and conservative party. they want something different. really isl question

to what extent johnson can persuade labor voters in his key target seats not to vote for faraj, but for him. it is difficult to get labor voters to go straight to tory. francine: is this 100% brexit, or 85% brexit and 15% spending? but we are only a week in, he is calculating that the country's mood is one of frustration and anger that brexit has not been done. corbyn is playing on people's fears for the future of nhs and public services. it is which ever emotion wins out is the defining mood of the nation. fear or anger and frustration. if the that the issue is polls are correct that you can get a conservative majority. the conservative government would not only approve the withdrawal agreement but they would be missing fiscal policy that supports the interest rates

for sterling. because there is an unreliability of the polls it is a coin flip in terms of what the policy outcome will be after the elections as a function of what kind of government is running the country in a few months. i feel like there is no good risk-reward around preemptively trading. tom: thank you. ross and our brexit team, extraordinary coverage. the last couple of months and years. eight. are up there are selective secure -- oh, my word. yesterday i was off. the purchase at jake shack at the margin didn't help -- shake at the margin didn't help. 17%. the fries, i say. the fries! ♪

francine: this is "bloomberg surveillance." , and francine from london and new york -- tom and francine from london and new york. at the end of the day where

the rubber meets the road is what are investors willing to pay for a company when they have the transparency of the real financial information that has been vetted and presented in an appropriate way? when you have that the market will speak. example,work as an there was a lot of hype, but when investors had a discussion with real financial information and work with an underwriting group to work with the company there was a pretty good view over whether the company could go public. >> this group of companies, the --corn

i think that is very different than the narrow slice of time wheng the dot com bubble there were a lot of companies that were in a different state getting to public markets. i think what is happening is the monetary policy rampant around the world has basically forced people out on the risk curve, to look for other ways to drive returns. one of the things they have been chasing was growth, and to some degree growth at all costs. there has been a sentiment if you can hook your wagon to a company with a lot of growth, focused on growth, something good will come to that. that has in scented a lot of companies to take the capital they are raising from investors and spend it very aggressively to drive topline growth without understanding the consequence of how that can translate to profitability. the market is speaking and telling people, you know what, let's rein that in a little bit.

it is important for people to grow, but there has to be an articulated path to earnings in some way, shape, or form. i am a believer that in time a company can only be worth over time the discounted future value of its earnings. it is important you have a business model that can generate profitability. there is more market discipline coming into play, and that is helpful for markets. of goldmansolomon sachs on discounted cash losses. let's go to a chart. i have sold this many times before. and white uber. the overpricing will be at the earlyeen in october. i love what was said last night about the absolute inability to scale. they just can't drive it down. the income statement on a price

or unit bases to scale up a lesser loss. why is that? why can't they scale? are haven't seen the story talking about, but the way that uber has driven growth historically is by offering subsidized fares. that is something that is hard to scale and harder to maintain. what they're doing is different. they are spending their money on new product categories with hope that drives a more sustainable earnings and growth trajectory then giving the likes of you, me, anyone else using an uber venturefrom a to b capital funding in the form of a discount. tom: david solomon said growth at any cost, amazon has done it to some acclaim as well. how different is uber from an amazon-like formula? >> it is a long way.

the difference is that amazon, they were spending huge amounts of money making big losses going back 15 to 20 years, but the money was being spent, a lot of it, on infrastructure. warehouses, data centers, all that is needed to deliver the kind of products that we see today. with uber that was not the case, or has not historically been the case. it has been handing over discounts. tom: i'm going to use that 10 times today. i'm going to port over to something. all of these cool phrases. francine: he demands a royalty, so i wouldn't use it too much. when you look at technology, i don't know if uber is a technology concern because of the valuation at the beginning, or if this is just the level of disruption. john: the issue with a lot of names is whether or not there is a valuation concern and

profitability concern and a leverage concern. anytime you look at an old business cycle there will be names that seem to take all of the boxes. the issue is if you aggregate these things is there an issue around corporate profitability and valuations. i don't think there is now. they would be if the global economy fails to pick up because you would have a mediocre path for a while. a number of companies which have not yet shown profitability would be under more stress. goodness something good seems to be about to happen on the global economy to ease some of these concerns come but you will always have name-specific issues. francine: i know you don't want to talk about name-specific, but how long do you give a company to not make money before you question business policies? sector fixed timeline by and particular name. the nature of the unicorn phenomenon is not all of these will make money.

those that do make significant amounts of it and see the significant rise in share prices that justify a strategy which focuses on these. that basic concept is still at play even though some do not provide the payoff. enough of them do to justify owning the sector. tom: what is the loneliness of this great bull market? among the sophisticates hedging every step of the way, how alone is this move up? ahn: you definitely see particular type of investor who has not participated in the move up. this is obvious when you look at hedge funds returns come along short hedge fund returns have been more focused on defense -- defensive stocks and growth stocks as opposed to value stocks. some of that is reversing. how much longer does that reversal continue for? is there a baling in type of phenomenon because the positions

and valuations are so skewed within the equity markets? that to me is a call not just on positioning, a technical issue, but a macro call to make if growth is just getting to trend or better to trend. if just to trend my guess is rotation has a few months and a few percents in it. if you think above trend growth, the rotation could last for quite a while because not only do you have an issue of sectoral positioning in the equity markets, but of regional positioning where if clients are very underweight markets outside the u.s., particularly europe, japan, and the eu complex. ultimately it is the strength of the business cycle and persistence of the expansion. tom: are you presuming a rotation for those international markets, the international equity markets? john: yes. i think that is what clients should be doing now. there's more pessimism about the non-u.s. economies as opposed to

the u.s. economy is reflected in clients and investor underweight which have not been fully covered. my guess is that as a rotation which only has another month or two left in it. ultimately to rotate to other non-us markets have to be predicated on a view that the non-us economies will deliver more growth than the u.s. that is a tough case to make over the next couple of months. tom: jp morgan, the head of cross asset fundamental strategy. interesting markets looking at the bloomberg. dow futures up 82. the 30 100 watch on spx. linking this into the fixed income markets. this is bloomberg. ♪

tom: this morning, will or will not?

does the president have the will to rollback tariffs? china requests that for the "good of humanity." it is a great and beautiful market. midcycle, late cycle, maybe never ending cycle? uber, get out the mba speak. total inability to "scale, scale." what does scale mean? this is bloomberg surveillance from new york and london. francine, a new speaker. no order. a new speaker from lancashire. is this a big deal? francine: it is a big deal because the other speaker has risen to fame all over the world. i don't know whether the new one will be more tame. he gave local interviews yesterday. he will have to tread carefully.

the speaker of the house cannot be political. john bercow at times drove the agenda. tom: the leader of the lib dems driving for their message on leave or remain. wants u.s. tong rollback tariffs on $360 billion after signing an interim trade deal for the u.s., china could move tariffs on u.s. goods, mostly farm products. vote of confidence for the hong kong chief executive from xi jinping, who says he has a high degree of trust in her leadership, despite five months of pro-democracy protests. expects demands for oil will fall by 7% over the next four years because of the flood of u.s. shale oil supplies,

which could lead to cutting production further. president trump made it official. the u.s. will withdraw from the paris climate accord. u.s. state department formerly requesting, saying this place is an unfair economic burden on american workers. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado, this is bloomberg. equities, bonds, currencies, commodities. up we go. spx.watch on spread widening. oil with a lift. $57.01.n will frothy well under 13, 12.87 on the vix, 30 year bond

should be green. yield four basis points higher. renminbi, that is a jump condition. sevenne: strengthen past for the first time since august. european stocks higher. investors taking confidence from signs that america and china are going toward a deal. looking at the pound, toward december 12. u.s. stocks, all-time high with treasuries tumbling. trade optimism across global markets. can be resolved by a single country alone. goodst all put the common first rather than place one's own interest above the common interest of all.

we are in shanghai. president xi was clear. he wants more economic openness and free trade agreements. will we get them and who is he targeting? he focused around china's continued commitment to reform and opening. seems the audience he was targeting was europe and southeast asian countries. he didn't mention the u.s. or trump. he took a veiled swipe at the u.s. saying no country should put unilateralism above the greater good saying all countries need to uphold the global trading system. he spoke about china reducing barriers of cost of countries doing business in china, multinational institutions and china will be beating up law

enforcement for protecting intellectual property. you heard him talk about concerns around the potential decoupling and that we cannot have intellectual barriers around the world. the french president spoke. despite the fact that we have 63 countries present here, most other western nations did not send high-level delegates, if any at all. shanghai, sorom important is the domestic power of cities versus beijing. say, a an update of shanghai region versus the federalism of the message out of beijing. interesting. china is often viewed as a monolith. in fact, it is more like a bunch of different countries put together. each province has competing

interests. however, when it comes to this exporternational import, conference, beijing and china are aligned. this is one of jie zheng thing's key pet projects. key pet projects. despite the trade tensions, they were able to get u.s. companies to come in strong force. according to the official statement, u.s. companies take up the largest exhibition area. shanghai is incredibly important to xi's vision. last year he talked about the tech board, and that was executed. tom: thank you. abrupt shift to politics of washington. days, any number of media outlets, on the electability of the president. extraordinaryt,

essay summing up sets of research and pulling as we go. britain, 12 days to the election. here, 12 years. lauren is six points -- elizabeth warren is six points behind the president in michigan. "the senator from massachusetts is proposing to hugely expand the role and reach of government in our lives. can she eventually transform her image from being a progressive populist to being a mere populist?" kevin cirilli goes philosophical on us this morning in washington. what is the level of panic in the democratic party when i see these different articles? kevin: i am not sure there's any panic within the progressive wing. there is uneasiness emerging with the joe biden campaign.

polls,th warren in the the latest illustration of how she has ascended and molded her political policies into the democratic party platform over the past couple years since candidly, she was first elected as senator. you have seen this play out again and again, whether the creation of the consumer financial protection bureau or how she impacted federal reserve backingpushing for the of the former fed chair, janet yellen. when i talked to folks connected to the campaign, they tell me, you have not seen elizabeth warren create herself in terms of trying to win over more moderate voters. she was a republican before a democrat all those years ago. francine: what can you tell us about ukraine? kevin: the president was in kentucky last night campaigning. there were t-shirts reportedly

that said, "read the transcript." the president supporters in line with him. adam schiff, democrats in california set to release additional transcripts from the impeachment inquiry committee today. we will likely get the former envoy and the european union abbasid or, gordon sondland's testimony. of the transcripts released yesterday, i have to be frank, several sources connected to prominent republicans on the hill, they do not see this as much of a game changer in terms of the trajectory. tom: thank you. markets, extraordinary bull market in equities, cross asset. equities, bonds, currencies, commodities. with a wonderful twist, morgan

stanley, not just morgan stanley, morgan stanley like, what in gods name should i do with my money? brian joins us on fixed income. you guys must be getting absolutely pounded about this bull market and what do i do with an intelligent portfolio allocation? what do you do right now? brian: fixed income investors have been cautious, just like equity. yields is the lower running out of steam. how can i get income, capture upside and not get damaged in growth? tom: we just heard from china. the upward, mr. xi looking for humanity. the presidential ballet, 2020. how do you fold that world into you being senior vice president? what do i do with my money at morgan stanley? brian: fixed income markets are calm. a lot of the noise, they are not

concerned anymore about, or for now about trade war and the political noise. markets have said uncertainty peaked. we want a truce in the trade war. there will be an election. for now, central-bank easing and growth. risk on rotation, visit something with trade or something deeper that could go wrong? liquidity or something else? brian: there is always a fear of background issues popping. the biggest risk in market is coordinated central-bank easing, all across the globe. the market pricing shows you, the market expects growth. as we see more pmi numbers across the world, manager surveys, eventually gp data, -- is it working? the fear is, if we have had this

easing, all this good news, if it does not flow through, then the markets get nervous. there are signs that growth is returning trend, and that should be enough for now. weinstein from morgan stanley investment management stays with us. conversationof with the goldman sachs conversation. the impact of rates on europe and how he sees the trade war between the u.s. and china. ♪ >> that feels like we will have something obstructive. ♪

tom: oh, it's washington.

cool and collected compared to london. washington this morning, the nationals at the capitals yesterday! very cool to see the nationals! they are a baseball team. come on! they were there with the capitals, the capitals and the nationals bonded and then they went to the white house. david solomon with matthew miller in berlin. this is an informative interview. there is something different about a ceo, wall street abroad versus new york. here is solomon on the rate environment of europe. david: we have been investing with new leadership in our wealth management platform in europe and we are focused on expanding market share here. we would consider an acquisition. we see good organic opportunity for us by growing people and footprint to expand our capabilities in europe. more broadly in europe,

there is talk about bank consolidation. there are regulatory hurdles. do you expect banking consolidation? is it coming for european banks? does goldman sachs want to play a role? david: on the question of banking consolidation, there are lots of compelling reasons why consolidation would benefit strength of european market. it is hard. it is not clear it will happen. i think it would be good for european markets, the capital markets region, if you had more of a european leader, consolidated in some way. orther or not local politics business rationale allows that to happen, i am not sure. i watch it as you do. i think there is an opportunity to strengthen position of players through m&a or consolidation. it may not happen.

matthew: mario draghi, i was at his final press conference. he said, we are happy with negative rate experience. christine lagardere expected to throw the same line. are negative rates helping the economy in general, to boost inflation and bring growth? david: when we look back on negative rates, when the book is written, it will not look like a great experiment. i don't think negative rates are bringing the benefit we would like to see. no question, growth in this part of the world has been lagging. negative rates have not allowed acceleration of growth, in my opinion. i don't think negative rates are constructive. we will have to wait and see how this plays out over years. when we look back on this experience, we will not like what we see. sayhew: central bankers fiscal stimulus is needed to mitigate unwanted side effects. you will be talking to companies around germany.

they will have something to say about negative rates. they will probably want to talk about infrastructure spending they think is needed. does berlin need to spend more? david: talk to people in germany. there is a significant fiscal stimulus spent. if you look at ambition around sustainability, economy and the capital being spent to move germany to a green economy, there is no question that is a significant stimulus. francine: david solomon, chief executive, goldman sachs speaking to matt miller in berlin. more on the european central bank, negative rates, the great experiment, what it means for brian stillchanism, with us. christine lagarde, european central bank, what are you changing? you focused on negative rates or communication?

banks tou need central continue to be a steady hand. we can debate all we want whether negative rates work. that is where we are. if you are a central banker, it is unlikely you will mid or think about the idea that you don't have enough bullets. you want to watch for central banks to continue to guide markets, they are there and can do more although they may not do a lot in the future. tom: the single best pie chart. brian weinstein has put together a chart of all the equity returns year to date, the total returns with emerging markets failing, developed economy here and spx up high as well. that bar chart includes bonds. where is the opportunity now in fixed income when you look at those returns? brian: fixed income has outperformed. if you told me at the beginning of the year equities are where they are, i would not expected. the return from fixed income

this year has been from duration. that opportunity has played out. tom: where will it be forward? brian: there are still places. tom: what do you mean? brian: income, places where you can get a good coupon. equities lag. you can buy corporate bonds in dollars of em corporations and get high yield returns with no duration. tom: give us an example? brian: not so much a normal country. think about how badly the u.s. energy sector has done. you might find a mining company that issues bonds out of an emerging market country that has 500 basis points more income and a better balance sheet. there are not as many investors focused on it. francine: thank you. brian weinstein stays with us. coming up, plenty more on the trade concerns and airlines. our conversation with the chief

smith as they wrap up the investor day. this is bloomberg. ♪

francine: -- viviana: let's get your bloomberg business flash. premarketr lower in

trading, showing lackluster gains in key metrics, bookings and one point active users. 2021, they pledged to turn a profit. ending a 57-year-old joint venture. xerox to thef fuji partner, for $3 billion. talk xeroxthere was and fujifilm would merge. opposed the deal. see good equity markets we in the messages coming off of a week ago friday, up up we go. up as much as 8 earlier. francine and i want you to know, renminbi jump condition, two

standard deviations of strength on the chineseyuan. at the bottom, renminbi through like, the emotional level, a dow 10,000 benchmark. nebraska.n from lots to talk about. he has trotted out a new book, which is basically a statement on a storied life. as well, i am forced at gunpoint. president obama called me last night and said you have to talk about the white sox. i said, i don't think so. we will talk about the chicago cubs. they did something right. they re-signed anthony rizzo! ♪ sometimes your small screen is your big screen.

and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. whether you're travelling around the country or around the house,

keep what you watch with you. download the xfinity stream app and watch all the shows you love. francine: this is bloomberg surveillance, tom and francine from london and new york. december 12, early elections in

the u.k. party leaders are setting up the agenda. just deliveredyn a keynote speech on brexit. if you look at the polls, mr. corbin could put a majority through, especially if you believe the hint that they would do what they can to put him in power, if it came to that. let's get to the first word news in new york city. viviana: china closing in on the first phase of a trade deal with the u.s. reiteratedi jinping his commitment to economic openness at the global trading f orum. >> in order to boost growth at home and create more room for givel growth, china will greater importance to import. we will continue to lower

tariffs and institutional transaction costs. viviana: china is trying to position itself as a champion of multilateral trading when the u.s. is backing away from institutions such as the wto. northern mexico, nine members of a local family of american mormons were killed in an ambush as they traveled. the attackers were believed to have been members of organized crime. six of the victims, children. for decades, the family has lived in a fundamentalist mormon community in mexico. state and federal agencies in california are seeking billions from pg&e for wildfires of the past two years. the company already operating under bankruptcy protections. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado, this is bloomberg.

tom: thank you. brian weinstein with us of morgan stanley this morning. this will be a lot of fun. we will talk to a gentleman who defines the midwest of this nation. the blurbs on the back matter. george will says you connect to ricky-- equate him of the st. louis cardinals. where do you get a book blurb from your arch competitor? comment from san francisco on, the harder you work, the luckier you get. we could go for three hours, joe ricketts on the book, and also the work you're doing. take us back to nebraska in the

fabric you brought. urban, fancy audience. you did not start out fancy in nebraska. what was it like coming into world war ii and out? >> i had to come out of world war ii. the economy was booming. people were not sure what would happen after the war was over. everyone was worried there was going to be an influx of people from europe and asia that would cause a large amount of unemployment. demand foround was, products and services was so products and services was so high that they could not get insurance. tom: you are at first omaha you said we want to play by a different rulebook which led to ameritrade. great company but i really understood charges we had

on stock trades were for services that a lot of customers did not care for but they still had to be covered. when the opportunity came to cost that a system of would allow us to lower operation cost, we wanted to pass that on to consumers thinking there would be enough market to cover our cost. we were incredibly right. tom: i want to talk about the title. is the ether's at risk? joseph: i think so. that is one of the reasons i wanted to write the book. seems to me we are moving away from the center of what has made our economy strong, ever since the founding fathers came here. that is the free enterprise system. talk,urprised at all the the socialistic ideas, the presidential candidates at the current time.

the wealth of america really comes from the brains and effort and sweat people put into the in maintainingde our economy. how does that change? theout going onto socialists, as you put it, do you feel like in 2019, that dream is still alive in the u.s.? joseph: it is still alive but if we are not careful, we are going to kill it. we need to let young people know the wealth of our country and all the lifestyle we have, which is so wonderful, really rests upon the free enterprise system as well as on our political system and our religious system. we have a value system based on christian judeo ethics and that is important to our society. francine: what about immigration?

joseph: we need immigrants, definitely. and a lot ofite the people we interview, in creating those companies are immigrants. we need immigrants. we need to make sure the immigrants are going to be people that are going to contribute to our society such as entrepreneurs that want to just get here and start businesses. is six important here weeks ago there was a full paid add in the journal, td ameritrade commission free, charles schwab commission free, somebody else commission free. how do you do what you invented giving it away? explain to our audience -- weight, this is the ultimate free lunch. they do not do that in nebraska. how are you going to give it away for free? joseph: we need to be careful about equating buying stocks with placing bets on football games. that is one of the bad things about this free stuff.

there is other ways of making money. for example, brokerage firms loan money to accounts and have a cash flow from that. they have cash flow that comes from market makers for delivering a certain amount of volume to exchanges. there are ways of making money that allow brokerage firms to continue to survive and do well. what is going to happen in the future is the brokerage firms are going to look at demographics, financial plans, services that customers in certain demographics want, so they will individualize services they will be able to charge for. tom: senator warren of massachusetts -- what you said a moment on socialism in america, senator warren, does she define socialism? she has a message that resonated with part of america. how could you get comfortable with president warren? joseph: it would be very difficult.

she would eventually take away all the opportunities that kind of exist now. money is not going to be put at risk. if you are going to tax away the risk benefits, you're not going to take risk. job rates -- socialism has always led to poverty and misery throughout history. it is amazing we do not look at history. tom: no one cares about this discussion. they just want to understand baseball and the cubs. out in thes started negro league and became everything baseball personifies. the pixie dust is gone. baseball every year is older, wider. the youth thing is baloney. how do you straighten out the game? do we need a pitch clock? are you going to desecrate wrigley field? joseph: i am the wrong guy. tom: oh stop with this. baloney. how do you, joe ricketts with

the cubs, almost as venerated as the red sox -- [laughter] how do you fix the game now? joseph: i will defer. tom: i give up. joseph: you're welcome. francine: i don't know. don't talk to me about the cubs. i know nothing about that. i am in the same boat as a lot of our international audience. are we headed to a recession in the u.s.? joseph: when it starts, i really don't know. the economy normally goes through ups and downs. this much i can tell you, the next recession is not going to be long for deep. i have never worked in such a good economy. i am still working a lot today. this economy is hot and good. any dip we see, a natural adjustment, will not be much. tom: in front of creighton, do you just assume you have to move

to the big cities? is that ethos still out there? so much history of this nation that you have to move from nebraska to the big city. joseph: i don't think so. what the digital revolution is allowing people to have jobs and live anywhere. a lot of people are moving to small towns. what we normally have thought of as rural america to earn their livelihood, was a well-paying good job. tom: the best part of this interview has been brian weinstein and the white sox. you kept your mouth shut. joe ricketts, thank you so much. joseph: my pleasure. francine: plenty more on markets and coming up, we talk with the south african president. live from the investment conference in johannesburg, tomorrow. 4:30 a.m. in new york. this is bloomberg. ♪

tom: bloomberg surveillance, good morning. francine lacqua, chicago cubs fan in london. i'm tom keene in new york. how about a single best chart? brian has an adult job. he has to figure out what to do with your money. it is a great disinflation from the 50's to the 80's and on down we go. do you frame a morgan stanley w aroundanagement vie permanence of disinflation or do you have to hedge it will end? brian: it has been a one-way trade since i started. lower yields, inflation not

being risk. as we get to a point where central banks have done as much as they can, we worry about it a little more. we are not getting word of the moment about a move higher in interest rates. we think they will stay low. maybe not as low as the last six months but still low. tom: you mention the maturity that people own of fixed income every month. where is that optimal maturity or duration now? brian: 2-5 year part of the yield curve. tom: i cannot get a coupon there. i have x amount of money. i cannot get it in five years. brian: in the majority, the aggregate index -- tom: you want me in thailand? brian: i understand people don't want to do that. you're right in passive corporate bond etf's, yields are low and duration is high. but we have a fund with a duration of three years with a coupon of 4.

it is not the most exciting but it is relatively safe and that coupon beats most yields in the world and it is not all thailand. francine: if you look at the search for yield, does it mean there is also too many risks on the market that we do not have a grip on? brian: we worry that there are sectors over extended. if you look at returns in generic corporate bonds, it looks like you are taking duration risk. extend the, people yield curve because they are looking for more coupon. there are risks in market that people are overextending themselves. that said, those bonds mature themselves over time. you don't need anything natural to happen, you just need time. francine: are they risks or bubbles? if they are bubbles, where are they? brian: tough one. i think they are risks. the risk is you get a surprise inflation and everyone wants

out. that is liquidity risk. you get risk noise around trade in brexit come back with a vengeance. for the biggest risk that growth does not materialize. those are not bubbles. those are everyday risks. that is fine. are you being compensated? you need to have some income. there are places in fixed income that are attractive. it is ahematically, sophisticated question about risk and bubbles. we assume this is the most unloved equity market ever. futures are up .06. is this the most unloved bond bull market ever? brian: it probably was the first half of the year. august, everyone decided they had to love it. there has been a capitulation in bonds. if you look at valuations, high yield, it is not unloved anymore. maybe in em, high yield, leverage loans but in the broad

fixed income market, it is not unloved. francine: thank you for joining us, brian weinstein. coming up, take away troubles. uber disappoints with lackluster numbers. we discuss that next, this is bloomberg.. ♪

>> it is important for people to grow. there has to be a clear path to profitability, earnings in some way shape or form. i am a big believer that overtime a company can only be worth over time the discounted future value of earnings. it is important you have a business model that can generate profitability. there is more market discipline coming into play. that is healthy for markets. francine: that was david solomon. revenuehird-quarter better than expected but investors were disappointed. shares down 5% after results.

a lot of the disappointment was around food delivery. how much time will investors give to uber to show they can be profitable? >> the underlying results weren't so bad. it was more about focusing on the profitable niches, that has been the story for uber and lyft in the last couple quarters. they are trying to focus on corporate rides, airport rides. as the use of growth was disappointing, food delivery is still a competitive market. you see a lot of vendors trying to take market share using subsidies. on the rideshare side, the economic seem to be getting better, especially in the mature markets like u.s. and can the -- in canada. investors will give it time given that it is focusing on profitability. it has laid out a clear goal for 2000 when one. more of an execution story now.

-- for 2021. francine: can the company actually survive it? >> there are too many vendors out there. they cannot be all around. they need to get consolidated. there will be a catalyst. there will be more companies that will fail. we cannot sustain these unit economics. you will see consolidation play out in the next six months to one year. that is where you will see these guys raise prices. that is what uber and lyft has done on the ridesharing side. they have been raising prices. it has been elastic. tom: why is the stock down? >> because of the lockup. lockup will introduce more flow in the market. investors are nervous. tom: is that the mother of all buy opportunities? extraordinary.

the non-scale. >> think of it this way. uber has been trending down since ipo because investors have not believed in the fundamentals. sentiment is negative. you will see relief once the lockup is passed. at least, there is inflection in terms of how they are thinking profitability. food delivery side is still competitive and you are not seeing that but on the ridesharing side, it is positive. tom: i read through the earnings. this thing -- i don't want to associate it with something like we company, but it is basically we want to be like amazon but we are not amazon. to amazony can they get out 2021? >> they don't have to spend anything on performance advertising. they have huge brand value

globally. that is what will drive leverage. right now, they are 30% on sales and marketing. if they are able to cut that by half, you will see a big lift on the cost leverage. tom: big lift, get it!? get it? francine: got it. continue. [laughter] >> it is more about, how can they achieve that positive aspect which investors care about? our view is, right now, it is fairly obvious they are still trying to expand in certain markets. if this were to operate as a mature business focused on just ridesharing and food delivery, the profitable rides, they can get to that. francine: if you are expecting consolidation of food delivery,

can they afford to buy a rival? will not makethey any big acquisitions given that it is a big part of the story. investors care about profitability. they will make small acquisitions, like the one for corner shop, which was aimed at expanding grocery delivery, a new market they are trying to bundle when it comes to the proposition of on-demand delivery. that seems to be more logical rather than a big acquisition. francine: do you think overall, there is a selloff bias? tom is saying companies are not comparable but how much does investor psychology mean uber gets a tough time? >> uber just has to push forward the path to profitability because of we work. had that not happened, we would not be talking about uber needs to be positive by 2021. it is fairly clear, uber needs

to focus on unit economics, path the profitability. they have multiple levers to focus on the cost aspect. tom: we have run out of time. pledged to be profitable. on my honor. i will do my best to be profitable by 2000 anyone. mandeep, always interesting on uber and maybe pellet gun. we will try that. -- peleton. we will try that with the chief executive officer. smiles. smiles. ♪ here, it all starts with a simple...

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world has been lagging, and negative rates have not allowed acceleration. alix: negative rates don't work. david solomon, ceo goldman sachs, in exclusivity view, talks about negative rates and profit for unicorns. uber wins on earnings, fails on outlook. in bookings and monthly active users. u.s. equities continue their record rally as chinese president xi talks up imports. welcome to "bloomberg daybreak" on this tuesday, november 5. i'm alix steel. in the market, you have this optimism continuing. you have a record rally for the nasdaq on hundr -- for the nasdaq 100. also record highs for the dow and s&p.