biggest: europe's economy dodges recession after surprise growth in the third quarter. roads are blocked in schools are shut as protests paralyze hong kong. and jay powell says monetary policy is where it should be as he sees u.s. growth continuing. ♪ francine: welcome to "bloomberg surveillance." good morning and good afternoon, this is "bloomberg surveillance." the stoxx europe 600 pretty much unchanged.

euro-dollar at 1.109. if you look at government bonds across the world, they are actually advancing. this is on the back of german and chinese data. the focus is now on trade. but there is one stock we needed to look at a little bit more. 6.1% afterining interim results. they have a new partnership with tencent. we'll have more on the sector with burberry gating 6.1%. -- gaining 6.1%. up next, we talked to the silver lake co-founder about investing in tech. but for now, let's get straight to first word news in new york city. >> boris johnson is back in campaign mode after a difficult visit to flood-hit areas of northern england where his response was criticized by local residents. in a speech at a factory which

makes london taxis, the prime minister said getting brexit done would trigger a wave of investment. jeremy corbyn, meanwhile, said he would not allow a referendum on scottish independence in his first term. bloomberg's latest poll average puts johnson's conservatives 11 11 points ahead of labor with the anti-brexit liberal democrats at 16%. fed chairman jay powell is pushing back at president trump's call for lower interest rates, saying it does not suit the u.s. economy. he told lawmakers that rates are on hold after three straight isuctions, but did signal he ready to act if the outlook for growth falters. his comments largely echoed the message last month when he noted continuing threats the economy. dashed to the economy -- threats to the economy. speaking to bloomberg, mary daly also echoed drum powell's comments -- jerome powell's

comments on rates. >> i see the level as appropriate for the economy we have. good consumer spending, good domestic momentum, but facing these headwinds which have hurt investment manufacturing. we are in a moderately accommodative stance. >> hong kong has suspended all schools until sunday amidst a fourth straight day of chaos. the financial hub has been paralyzed since monday morning when a protester was shot. igniting a citywide unrest. hong kong's subway operator has partially suspended services and a few people remain in critical condition. and china's economy slowed further in october. -- country'ss factory output, retail sales, and fixed asset investment all missed estimates. investment grew at its slowest pace since 1998 with private companies pulling back. meanwhile, japan has reported an unexpectedly weak third quarter.

growth in the world's third-largest economy came at at -- at an annualized pace of 0.2 percent, sharply missing estimates. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: germany has dodged a recession. posteds biggest economy surprise growth but weakness is expected to persist. joining us is our managing editor for western europe from berlin. first of all, what helped to keep up growth? >> they just narrowly avoided that technical recession. it came in part because of consumer spending, and in particular, strength in the construction industry. as we know, the building boom is continuing here in berlin. it has been such they have a frozen rent to control the

increase in prices. it was on the consumer side where they have managed to contain this recession. francine: what are we worried about underneath the numbers? looking at the corporate stories, there are quite a few job cuts. isthe underlying concern still about global trade tensions. of course, in the last hour, diemler said they would cut thousands of jobs to bring down spending. 10% of management positions worldwide. that continues from the point of view in the corporate side of things. one of the weak areas still in investment on the manufacturing side. they said again they are going to slow investment so we don't

see any real change coming anytime soon. francine: does it mean we are going to get more fiscal stimulus? or any? >> that is the concern you are hearing, for those who want that stimulus. the german government has said ande is no crisis or need that would certainly back up argument they would have. the fact that it's not something the government is keen on doing, the fact he did not dip into recession means it's likely they are not quick to open up the pursestrings. we will be talking with the german finance minister olaf else in berlin and hear more -- olaf -- left schultz schultz and hear more from him. francine: thank you. joining us is a capital market strategist. great to have you with us.

when you look at the concerns, germany is less of a concern. what does it mean for fiscal stimulus? it feels the whole ecb premise is trying to convince germany to loosen the pursestrings. >> on fiscal stimulus, i have a different view. i think they are doing something. francine: that's what they say. said they are doing a slow-motion fiscal stimulus. practice, they don't go out say we are going out with a big package. that's not what the admitted friction will do. -- the administration will do. but they are picking up investment, establishing a fund for infrastructure. make fiscal way to stimulus more palatable for the

electorate and the common citizen. and they are doing also some tax cuts. they are talking about raising minimum tensions, which will indeed help the economy. francine: they are dealing with the trade war at slower demand worldwide and automobile problems. how good can the german economy trying to be? up? he pick that will it pick up? -- will it pick up? >> the real issue is the automotive sector. i am not an expert, but there is really a paradigm shift and they have to deal with that we know how important that is in having in the economy automation. u.s.-china,ked to but there is the realization it has to do with continents.

there is not a direct impact of u.s. trade sanctions vis-a-vis china on germany. if there is one, it is limited. it's more about confidence in trade. francine: given the economic sermons, does it put into question fact that it is one of europe's powerhouses? >> france is doing well. seeing some affect and some results of the reform macron did. probably come up micron is reaping some benefits of the macron is reaping some benefits of the reform that spain is doing well -- and spain is doing well. the economy is integrated into the german one, so definitely, italy suffers from that. it is the opposite and italy.

exports did better than german exports, but consumption and demand is very low. francine: is the political situation stable enough that companies can grow? do we still have a coalition that is uneasy? >> in italy? francine: yes. >> budget law goes in the right direction. we should ask ourselves whether it goes far enough. we would like to see more structural reform coming up and we don't see that. francine: thank you so much. stay with us, plenty coming up. including the growing tensions in hong kong. schools have been suspended as protesters continue to clash with police. plus, jay powell hits pause. the fed chairman stick to his view on interest rates. that story later. this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg surveillance.". let's get the latest from hong kong. protests are paralyzing the city. schools have been suspended and the subway operator has partially suspended service. let's go straight to our editor in hong kong. how bad is it and how bad is it compared to monday? jodil -- jodi: what has happened is the new normal is the weekday

business of the city is disrupted. we have seen over the past five months increasingly violent clashes between police and demonstrators, but now we are seeing this happen in the central parts of the city and financial hub and on a daily basis. , cancellations and the subway be disrupted every day, it's hard for people to get to work. many companies are having people work from home. meetings are canceled my big events are canceled. really, the life of the city has changed this week. making it this is difficult for people to make decisions or carry on with their daily lives. this also started last weekend when there was the first death from the protest of a student who had been hurt and died there a demonstration -- died near a demonstration.

that really heated things up last weekend. that really escalated things further. francine: what can you tell us about a possible curfew? tweet had said could impose a curfew -- said hong kong could impose a curfew. jodi: central times sent something out and deleted that tweet. there was speculation carrie lam would employ more emergency measures. she has hinted she will not allow this to continue and that city will take whatever steps it needs to take to try and maintain order. we have not heard anything specific about a curfew, but that has been one of the things in that toolkit. she did meet late last night with some advisors at her home. the government said it was a

routine meeting, but it happened a day oft after violent demonstrations and clashes with police. that's the other thing that has happened this week that we have not really seen yet in these months of protest. a number of universities have now become among the battlegrounds between protesters and police. really violent clashes occurring. some foreign students have been sent home and classes have been canceled. some, indefinitely, so it really has been much more of a disruption to daily life than it had been previously. francine: thanks so much. let's get straight to the bloomberg business flash. daimler is set to/jobs edits mercedes-benz division. they hope to save more than one billion euros following to two profitings --

warnings. they are grappling with the shift to self driving and electric cars. they have not specified a number of positions that will go. soare stairs -- shares after its newd platform attracted 10 million customers. fans have had months to preorder at a discounted rate. the figure surprised analysts who expected disney to need much more time. bloomberg intelligence notes it took hbo for years to hit 10 millions of scrubbers. bhp has named its next ceo. henry previously led the marketing division, having joined the company in 2003. his elevation to the top job clears the way for a new executive to meet the challenges slowing growth and demand in china. that is the bloomberg business flash.

francine: thanks so much. trade uncertainty appears to be taking its toll on china, with the economy losing more steam. industrial output and retail ,ales slowed more than expected reflecting how cautious companies have become. the weakness suggests that the efforts to break the slowdown are falling behind the curve. still with us is our guest. when you look at growth worldwide, this is not only china-u.s.. as the head of jp morgan oftench was saying, it is the graphs that suffer the most. in the standoff, who loses the most? >> everybody is losing. the tension it is injecting into the world economy is uncertainty and a lack of confidence. direct impact on the tensioner for germany but

direct impact on uncertainty and lack of confidence. turmoil also potential which would be very damaging. if the u.s. would impose sanctions on european goods. sanctions are already taken, particularly on cars. francine: how much have supply chains around the world actually shifted because of this trade war? if there was an agreement, maybe more than this phase i. do supply chains go back to normal? >> this is a medium-a long-term question, and i think you are right. this is a secular issue which has to do with the multidimensional aspects and trade between the u.s. and

china. some shifts in the global value chain. i think the principle of china meeting investment is meaningng in china -- investment is developing in china, it could also just mean five and china is not always one of those. , don't think we will go back but once again, this is more on the medium-term. the markets expects a phase i agreement. history, i small think if we had a venue to meet, it would be much easier. the fact that the venue has been canceled because of the trouble in santiago and that they have to find a new venue to meet will

make things more, gated. -- more complicated. francine: i'm sure people would welcome them. we will get back to our guest. coming up, we talk about the u.k. ahead of next month's general election. we get retail data out shortly. we talk retail at a brexit next -- and brexit next. this is bloomberg. ♪

>> company is -- companies are coming to my office, the ceos are saying to me that paris is haveattractive because we quality in work and also quality and our business friendly. re business-friendly. francine: paris is continuing its push to lou were business to the country on the back of brexit. still with us is our guest. election,a campaign so we don't know how that will fall, but are we reducing the risk of a no deal brexit? >> i think this is what markets believe. markets are really discounting that. also, from a political point of

the most foreseeable thing is that if a conservative wins the election, they will be able to make that agreement. francine: thank you so much. coming up, satisfied with interest rates, the fed chair sticks to his view and signals the central bank could resume cutting if the outlook changes. we will talk about the all u.s. consumer after concerns with manufacturing treasuries, and overall government bonds. this is bloomberg. ♪

germany's close call, europe's biggest economy in recession after surprise growth in the fourth quarter.

hong kong protests paralyze the city. andy fed chair says monetary policy is where it should be as u.s. growth continues. good morning, everyone paid good afternoon and good evening if you are watching from asia. this is "bloomberg surveillance ." i'm francine lacqua in london. we look at some of the figures with a focus on brexit. focusing on what happens in this early election december 12. there is quite a lot of story about the fact that it is the first time the u.k. goes to the polls in december. for that data, back to that data, october retail sales falling 0.1%. the forecast was 0.2% increase, so a little worse than expected. that is for the month of october. if you look at the sales but exclude fuel, the drop is even bigger, down 0.3%. let's check in on your biggest stock movers. here is dani burger.

the biggest mover on the stoxx 600 today, a molecular testing company. the diagnosing company is looking at potentially buying them. these discussions are not final by any means. other bidders could merge, but iagen is singing -- seeing the biggest gain since 2002. it is at about a four-month intraday move in terms of magnitude. it holds up despite the unrest in hong kong. morgan stanley says that this means their rollout is really on track. the company announced with the social media giant -- announced a partnership with the social media giant. announcing a new strategy update, whereby 2022 they plan to cut about one billion euros in jobs and personnel at mercedes.

according to city analysts, that is actually disappoints despite peersst-cutting measures of disappointments seen in the price share today. thank you so much -- francine: thank you so much. let's get to first word news with rithika grouped up. ritika: germany has dodged a technical reception. that recession. -- a technical recession. -- apected a retraction contraction. turmoil in the car making sector has led to the worst when you're factoring slump in a decade. boris johnson is back in election campaign mode after a difficult visit to flood hit areas of northern england, where his response was criticized by local residents. in a speech, the factory which u.k. london taxis, the prime minister said getting brexit done would trigger a wave of investment. labor leader jeremy corbyn pledged he would not allow a

referendum on scottish independence in the first term of his government. bloomberg's latest five hole average puts johnson's conservatives somewhat -- some 11 points ahead of labor. hong kong has suspended all schools until sunday amid a fourth straight day of chaos. the area has been paralyzed since monday morning when a processor with -- a protester was shot, igniting citywide unrest. two people remaining critical condition from the recent clashes. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am ritikantries, gupta. this is bloomberg. francine? francine: jay powell is pushing back at president trump's call for low interest rates, saying that does not fit the u.s. economy at the moment. he told lawmakers rates are probably on hold after three

straight reductions, but signaled that he is ready to act if the outlook for growth falters. his comments largely echo his message last month when he noted continuing threats to the economy. >> our economy is in a strong position. have growth, a strong consumer sector, inflation below target. and negative rates we see around the world would not be appropriate for our economy. meanwhile, speaking exclusively to bloomberg, the san francisco fed president echo jay powell's comments. i see the level of the policy rate right now as appropriate for the economy we have, which is good consumer spending, good domestic momentum, but facing headwinds which have hurt business and investment manufacturing. we have a moderate of stance, and that is appropriate. francine: fabry seo, the one

thing as an investor, the thing you have to get right in the next 18 months is the call for recession or not and also where information goes -- where inflation goes. you get that right, you get the markets right. is there anything we are missing measuring in the u.s. economy? >> know, frankly, the picture now is clear that that's clearer than it was six months ago. i think we see strong data on employment, on consumer -- we probably will have a fantastic holiday season coming up. so i think we should look at it in the same way as chairman powell just said. look at the coming up data. francine: how many insurance cuts does the u.s. economy need? i don't think markets expect new cuts in the coming months.

i think we are good, i think the fed has done its job. be and the perspective will somehow clear in the spring. nextld like to remind that year is obviously an electoral year in the u.s., so by tradition the fed is a bit more active. inwill see if it happens 2020. this is a great chart, basically looking at inflation outlook in the u.s., looking at the five years still below the cpi. is there a concern that actually inflation suddenly picks up aggressively? fabrizio: i don't see it. because overall, globally, there is no inflation. even the fact.s., that you have full employment there is tension on the inflation side. globalization,

are really putting pressure on prices. and obviously the situation in europe is quite different, where there is no sign of inflation. francine: this is a pagani chart, looking at economic warnings. how difficult is it for an economist to see a recession, and are there indicators you would look at first? fabrizio: first of all, i would look at the cycle. and this is a very long cycle. at the same time, this could be, could go over for another couple of years. we do not foresee recession in 2020. i don't think there is enough consistency of data to say that there will be a recession. we see consumer spending very strong all over the world. janice -- anle exogenous factor that would

placate markets and provide confidence to investors and entrepreneurs. what we do not see and would like to see in 2020 is a pickup in investment, which has been lagging in the last 18, 12 months, all over the world. fabrizio, thank you so much. fabrizio pagani. up next, the smoking gun. we break down day one of the impeachment investigation and the implication for markets in the 2020 election. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get to the

bloomberg business flash. shares soared after its new streaming platform attracted 10 million new customers. preorder had months to at a discounted rate. the 10 million figure surprised analysts, who expected disney to need much more time to reach that level. bloomberg intelligence notes it hit hbo t four years to 10 million subscribers. fell, whichares could raise more than $11 billion u.s. selling 500 million new shares according to deal terms that came by bloomberg with the aim of pricing next week and stopping trading on november to a six. alibaba's new york shares have risen by a through this year. after years of trial and error,

boeing is dumping the robots that built sections of fuselage for the triple seven -- for the 777 family. skillednow allow engineers to insert parts on the plane body. that is the bloomberg business flash. francine? francine: thank you so much. thefirst public hearings in impeachment inquiry into president trump have begun, and the public heard from the acting ambassador to ukraine. a senior official in the state department -- the two were asked if rudy giuliani's shadow visit to ukraine was to dig up information, and he said yes. on security a hold systems in ukraine but could not say why. i and others sat in astonishment. ukrainian --e that

ukrainians were fighting russians, and counting on the assurance of u.s. support. i realize one of the key pillars of our strong support for ukraine was threatened. the regular policy channel was running contrary to the goals of long-standing u.s. policy. trump spokeesident out against the hearings come decrying them as a witch hunt, and he says he did not even watch the testimony. pres. trump: i have not watched, i have not watched for one minute because i have been with the president, which is more important as far as i am concerned. this is a sham and should not be allowed. it was a situation that was caused by people that should not have allowed it to happen. i want to find out who is the whistleblower. francine: joining us now is senior editor covering washington politics for more than a decade. you know what they say about first impressions. what were the key elements that democrats chose to lead off with? >> democrats really put on two

very veteran, seasoned state department officials who laid out in stark detail what it looks like with a sort of shadow diplomacy effort led by president trump's political allies, namely rudy giuliani, where mr. giuliani was trying to get ukraine to dig up dirt on the bidens, specifically joe biden's son, hunter, and they laid it out in this sort of sober kind of fashion, kind of a drama free kind of fashion, which is interesting because you think of these as very tense settings, but it was very calm stated through most of the time. republicans on the other side said it frankly did not much matter. they tried to poke some holes into testimony, questioning whether or not these people had learned their information first or not, but overall you are sitting there looking at, i think, you're seeing a lot of these reports, you have read things, heard things, read what

may or may not have happened in closed-door testimony. this was all in the open and laid down. francine: derek, what comes next? what is the next process in the impeachment saga? derek: well, we are going to have more of these hearings, featuring additional expert witnesses democrats are calling. but the difficulty i think here is that what you are looking for scalether this tips the on impeachment. and so far, we are not seeing any movement from republican lawmakers to say they have changed their opinion based on anything here. if anything, it was a display of two political parties living in two completely different realities. francine: derek, thank you so much. derek wallbank, senior editor in singapore. here is what you should be watching out for today. preliminary euro area gdp is at 10:00 a.m. the consensus is 0.2% change.

atlantic, fed chair jay powell testifies at a house --get committee hearing, and also coming up, the company working to detect cancer faster than ever before. a look at how artificial intelligence is transforming diagnostic health care with kevin lyman. this is bloomberg, and that is coming up next. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ." november 14 is the day that then effectively stop in comparison to men in the u.k.. we spoke with the principal -- about the responsibility of shareholders to hold companies to account over diversity. i think it is the responsibility of individual

firms, supervisors, shareholders, of everyone involved, to progress this issue. we are starting to see some shareholders put more pressure on their investment firms to address gender imbalance. thecally starting at forward level, but that is trickling down into mid-management. the combination of both the individual firms policymaking pressures from the internal forces, -- external forces, that is the only way we will push onto the next wave of chain. >> in an economic downturn, the most vulnerable groups will be disproportionately affected. diversitying about now and ethnic diversity. where the companies that you spoke to in this report focused on that? >> absolutely, and i think now more than ever recognizing that gender is only one more aspect of diversity, it is becoming increasingly prominent. we talk about gender because it represents 50% of the population

there is such a disparity between the popularity representation, but that applies to many of the aspects of diversity are gender is a starting point. when we talk about gender initiatives, it can and should be used as a way of moving out into those border topics. if you are launching a gender initiative, thinking through how this impacts women of color, women from the lgbt community, women of different socioeconomic backgrounds, continue the dialogue and starting to understand the differences of those intersections of different aspects of diversity. that was the principal at oliver one in. recognizing diagnostic health care by using artificial intelligence to detect diseases faster, list as one of the 50 smart companies, it is raising funds for the next phase of its software platform. the ultimate goal is to save

time, money, and lives it will it work? and how much will it cost? kevin lyman, chief executive, great to have you on the program. first of all, our international viewers, some of them know and some of them do not. this is using software to detect if you go for an x-ray on the m.r.i. scan. so there could be a tumor that you basically interpret faster than a human being, is that correct? >> absolutely. we develop critical applications of artificial intelligence, with radiology, moving into other areas of diagnostics, with the goal of deploying software that sit side-by-side with clinicians diagnosis more accurately. francine: what is different? kevin: we are happy to announce today that we have $25 million in new funding to help grow our team and deploy our platform as

we commercialize globally starting early next year. this is coming after having just raised another 15 million in funding this year, six months earlier. this is enough funding to sustain our commercialization into the next phase of business. francine: this would be through private health care, or through public health care? kevin: the funding or the deployment? francine: the funding of the commercialization. kevin: we work with hospitals and on a public and private basis, both the united states and abroad. francine: people want to find out if they have cancer as soon as possible because there is a bigger chance of survival. is it basically just catching it quicker because it is cheaper, or do they see things that a human eye would not? kevin: it is a little bit of both. it is complicated to say ai outperforms a human,

because there are a lot of underlying steps. in the areas we have built ai, we have met or exceeded expert level performance. an example would be lung cancer -- we have been able to identify malignant nodules with about a 10% true rate. we have been able to pick up the links a -- malignancy about 24 months earlier than a human radiologist. ltimately we work with of about 30 million patients throughout the world. that early detection of malignancy has been trained on about 2000 patients, but each of them have 10 years of scans that whate us to train ai cancer looks like early on. francine: where is this taking hold? is it mainly in the u.s.? kevin: we are primarily active in canada, the united states,

japan, and australia, and i am happy to say that here in london about two weeks ago we announced a relationship with the largest system in the -- the largest hospital system in the middle east. yourself as you see a unicorn, that one billion-dollar valuation that changes your life, i guess? kevin: one thing i will say to that, we have been fortunate to b1, andr series b and investors see clear signs that that is where we are headed. francine: kevin lyman, chief itic.tive of enl "bloomberg surveillance" continues in the next hour. tom keene joins me out of new york. we speak with glenn hutchings about investing in tech. we hear from jay powell, and a lot of it will be focused

on hong kong. world,om around the germany is better than expected. if you look at china's factory output, retail sales, and fixed income investments, they all missed estimates. we also saw data revealing that the economy in japan fell sharply in the third quarter. --estors i digesting investors are digesting economic data. bonds are investing. 10%.rberry announced this is bloomberg. ♪

francine: hong kong on the edge.

protests paralyze the city. europe's close call, biggest economy dodges a recession after surprise growth in the third quarter. and powell's happy place as the fed chair says monetary policy is where it should be. good morning, good afternoon, good evening, everyone. this is bloomberg surveillance. i'm francine lacqua in london tom keene is in new york. i am looking at treasuries. growing 0.2% in the third quarter, matching estimates. but i think it is a little day to day. tom: it is a little bit of this percolating of this is the bottom, and i guess the tendency , francine, is people are not saying up but maybe they are saying we do not go down anymore. francine: right, bottoming out, considered good news considering what we have seen. let's get to bloomberg first word news with richie could up. it is ain hong kong

fourth straight day of chaos. protesters are blocking roads and the subway has partially suspended service. the government has decided to keep the books goals closed through sunday. -- keep public schools closed through sunday. a number of businesses have told employees to work from home. the first day of impeachment hearings put a spotlight on the investigation's limits paired democrats were forced to rely on wesley secondhand accounts to make their case against president trump. and while, republicans attacked sources. of first-hand jerome powell is signaling the federal reserve could resume cutting interest rates if the growth outlook faulted. the chairman stuck to his view that the rates were probably be on hold after three straight cuts. powell testified before the congressional joint economic committee. germany narrowly dodged its first recession in six years.

gdp unexpectedly rose .1% in the third quarter. but now that puts a damper on talks that german government would have some sort of fiscal stimulus. still, the economy is stuck in low gear. manufacturing is in its worst slump in a decade. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am to countries, group to -- i am rithika grouped -- ritika gupta. fx quiet out there, a little bit of a pause with rates two days in a row, coming in lower rates and spreads. stocks are struggling because they are focusing on so much data that they want to know what happens around the world. so let me try and recap some of

that. china factory outlook, data revealed japan's economy was struggling in the third quarter, and looking at germany, better than expected. euro-dollar, 1.1003. but renminbi, 1.02. tom: very good. let me go to the bloomberg. we have breaking news right now, and this is really important in terms of the trade war. let's pause here and go to the chart. curves china removing the on poultry imports in the united states. curb onoving the poultry imports in the united states. make a comment on this. francine: let's get that on china. china is the trade story come also a gdp story. talk to us about our charts. took a longou, it

time to get the chart up. the gerbils are slow after the cold here in new york. this is where we used to be, a stunning point. we vastly exceeded beyond that in pork prices. the dominant source. china, so that poultry folds in with the illnesses in china. bit of ais a little snapshot on this breaking news, holding into trade this morning. let me use that as my chart. do you have a chart for us today? francine: i do. i had the five-year breakevens. five-year yields breakeven, still picking up a little bit. but i wonder, tom, it if you look at futures and the data in general, whether we are moving on this breaking news we had moments ago from china.

china putting curbs on this u.s. poultry import. i don't know if that has linkage to hong kong, i don't know whether it has linkage to some of the bad news in terms of data that we had from china, but first let's go to hong kong. protests paralyzing the city. public schools have been suspended. events are canceled. the subway operator has partially suspended service as a violence in the city worsens. jody schneider. there was a tweet that was deleted about a possible curfew in hong kong. i don't know if we have an update over whether there will be a curfew imposed on hong kong. whatf we had a curfew, signal does that send the echo -- does that send? >> there was a tweet from the global times, a state run newspaper, saying there was going to be a curfew announced over the weekend, and that tweet was deleted. of a curfew, news although there has been a lot of talk about carrie lam, the chief

executive, imposing further emergency measures. do not know what they would be and if anything -- and anything would be speculation at this point, which we don't like to do. but we do know that carrie lam has continually said, including endoscope press conferences this with -- including in two press conferences this week, that they will restore order in the city. we do not know about a curfew. that would be a signal that things have worsened significantly. and they have worsened significantly this week. protests, largely relegated to the weekend, now it is during the week, disrupting classes, university and school has been canceled and there has been disruption to daily life, including in the center of the financial hub tom. tom: and i have noticed the cfa institute delaying their normal december exam for a couple days because of the uproar. i need to go back to first

principles. who does the chief executive work for? who does carrie lam report to? lam is chosen by beijing in the long run, so she has had meetings with chinese officials in recent weeks, and they have said they stand by her. they have said they stand by the police. acceptedly she is not in her city of hong kong. and continues to say that she will do whatever she needs to do to restore order in hong kong. so it is very difficult to do this with demonstrations really spreading throughout the city. we had a map today that showed them in more than a dozen places on tuesday and wednesday. so it is really hard when there is that kind of spread out there on university campus. there is the center of the city, they are on the island, they are all over. and they pop up seemingly

randomly. so this has made it very difficult to control the situation here in hong kong. schneider from our bloomberg hong kong bureau. we got breaking news from china moments ago, about five minutes ago. china will allow imports of qualified poultry from the u.s., according to a statement on the chinese customs website. the timing could be interesting because earlier today we had some pretty bad economic figures out of china. i say bad, it is relative compared to what china has had in the past. but we are really seeing the engines of chinese economy spluttering. i wonder if that is linked. let's go to our guests. thank you for joining us. therade, you have spluttering china growth, and that you have china removing

curb exports on poultry. and then other exports from the u.s.. are they links? >> we are making progress in terms of phase one of trade talks. that phase i is largely a sideshow, which i guess is good enough for trump, but in terms of the substance of the trade talks, there is not much there. so far, so good. have not tackled the real difficult stuff. that is phase two, phase three. and as of now, that looks far, far away. francine: i am looking at industrial out book -- outlook. retail sales, still expanding 7.2% in china. but it is worse than expected. fixed income investment is also slowing. workis a china that can through the trade war he? >> i think the trade war is

definitely affecting chinese growth, also weakened by structural factors. so i think it is in china's interest to find a deal. we do expect some kind of limited deal that at least puts a stop to further escalation. but i think to find a more comprehensive deal, you need to do with more significant issues like intellectual property, and it looks like we are far from property, and it looks like we are far from that. tom: particularly with your history in asia, do you have an understanding of the credit structure, full faith and credit and corporate credit, the different debt credits of china? do you have an understanding of them, or is it a mystery? active in the asian credit market. if you look at the development and corporate credit in china, you look at the chart of the rising debt growth in china over the past decade, the chart looks

pretty scary. i think what we have to keep in mind is that a lot of the debt increase has been driven by state owned enterprises which have the backing of the public sector balance sheets, which remains relatively healthy. so as much as the upright figures look worrying, i think we have to keep that in mind as well. tom: he mentions backing. what is the backing of the president right now, with all of it going on in hong kong, obviously a distraction, with high pork prices and domestic impact. s backs president xi' within the communist party? is it there? wolfango: i think the backing is there. we discussed negotiations in the past. -- wew it was going to be do not know whether it was going to be on the west side next year. there is no accountability.

there are no elections, there is no party to congress. there are no opinion polls that matters. challenge, nothing particularly worrying in terms of his leadership at this point. francine: how badly, or is there anything china can do to make sure they date -- they get a deal? how badly do they want a deal? as phase think as far one is concerned, there is the general climate for a deal. it is interesting to see on the u.s. side, there are lawyers come on the chinese side, there are diplomats. so it is a different worldview around the table, trying to mash up some sort of deal. so i think there is willingness to get through this deal, but again, as nichola suggested before, we are still dealing with the peripheral issues. lawyers versus diplomats. i am sure there is a joke in there somewhere.

sp herethem stay with is a look at what you should be watching out for today. first we will take it closer look at the gdp figures coming out of europe. that was a short while ago. later, the fed chair, jay powell, goes back to the hill, sharing his take on the u.s. economy. managers, they must disclose holdings. it is going to be another busy thursday. this is bloomberg. ♪

>> i see the level of the policy rate right now as appropriate for the economy we have, which is good consumer spending, good

domestic momentum, but facing these headwinds, which have hurt business and manufacturing. so we are in a moderately accommodative stance, and that is appropriate. we have to have a good dose of humility about what for the employment means, and we have been consistently surprised at how low unemployment can go without spurring wage and price inflation. tom: mary daily. if you do not know her, learn about her. a brilliant pic to follow after john williams and chair yellen -- a wonderful interview with kathleen hays. maiango piccoli and nicola with us. you,a, let me begin with is there a central-bank theory right now, or is it every bank for itself? i think central-bank coordination is often there. what we are seeing is a

situation where central banks feel, generally speaking, that they have done enough for now to support the cycle, so the fed is sending some signals that it might actually be -- in practice, we are not entirely convinced that the fed actually is done because we think there is more weakness that will come through. , speak to the central bankers who watch bloomberg every morning. the populism that you study every day nation to nation rebounds right into tepid nominal gdp. do you look for continued sluggish growth worldwide because of the unrest, because of the turmoil? is that something that central bankers will have to react to? isfango: i think there turmoil in asia, latin america, some european countries peered i think it is becoming more difficult. look at spain and the u.k. and

so on. there is a variety of factors there. as nichola alluded before, the fact that central bankers provided enough time, but it has been largely wasted by government because we have not seen reforms. what is different from this side of the pond is that we have these wishful thinking debates about fiscal stimulus coming in europe, which is certainly not coming. but you're still growing at 2%, which is not a particularly great record there, despite what the president might think. francine: the one thing you need to get right is inflation. anyone in the market -- what will inflation look like? u.s.e the five-year breakeven. and they seem to be right. nicola: inflation is pretty role overall. phillips curves are pretty flat because of secular reasons like globalization and technology that are depressing the bargaining power of labor. what is more, growth has weakened, so the labor

markets will probably be less of a push or incorporate's have been squeezing their margins in spite -- less of a push. corporate's have been squeezing their margins. you could have a little bit of an increase, but we think inflation dynamics will remain pretty anchored. tom: anchored is the word. charles evans looking toward higher level inflation. we will continue with nicola mai and wolfango piccoli. testimony starts up tomorrow, friday or no pause for the rear he -- for the weary. jay powell, day two pay me maybe they will talk about fiscal space. 10:00 a.m. this morning. this is bloomberg. good morning. ♪

not rick's gives europe, it is bloomberg surveillance's europe. on theg perspective appalling floods from venice is the gentlelady from -- and the gentleman from bologna as well. this is extraordinary. from the three of you at our london desk, gives us the -- give us the perspective of what this means for italy. francine: you make us sound like a shakespeare play, tom. the square submerged. experts have warned that venice

-- yesterday we heard from -- or the day before, from the mayor asking for emergency. so funds and emergency peered is there any way you can -- so funds and emergency. is there anyway you can do that? wolfango: it is difficult in italy to get anything done in terms of infrastructure. we have seen this years ago and now it is back. they have been trying to build the system to stop the waters. francine: is basically like a dam. wolfango: a dam to stop the high tide. it is still not working. so again here, we can throw some more money, provide all the emergency required, but the question here, it remains very difficult to get anything done in terms of infrastructure. francine: for the international audience, is this a problem of the central government? is it a problem because the prime minister is not dealing with it? or is it a problem because the

people in charge of venice are not doing enough? wolfango: it is a problem of the central government, regional government. there has been a massive amount of corruption from both sides of the political spectrum, just to be objective there. it is a question of rules, regulations, the ability to appeal to anything whenever you are trying to do anything in the country. it is a multiple problem, and now we are left with this. is -- atla, what pimco, you people make it happen by buying debt. do you suggest there can be directed fiscal space to continue the flood walls in venice, to continue managing the adriatic sea? can there be a managed fiscal space, project to project, whether venice or another european city? nicola: i would think so. for example, italy has got several exceptions over the years, for not meeting its

fiscal rules, and many of these exceptions were linked to the weather and territorial issues, so i would say that the european commission, europe, would go alongside a project of this type, where italy was funded by increasing the deficit. tom: this has been wonderful. nicola mai and wolfango piccoli. i will be there at the end of the year and we are proposing francine lacqua and i -- i think, francine, it says road trip, the mop up after venice. these are the worst floods in over 50 years. in san marco square. this is bloomberg. good morning. ♪ here, it all starts with a simple...

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midtown manhattan. here is ritika gupta. ritika: another fine -- sign of a thaw in the trade war between u.s. and china. afteres less than a week the u.s. said it would allow imports of chinese poultry. the first day of public impeachment hearings ended with battle lines being drawn sharply. showrats say the testimony he abuse the power of his office. republicans disagree and say at rest there have only been -- at best there have only been secondhand accounts. momentan uncomfortable involving president erdogan. president erdogan said he returned a letter president trump wrote him last month, and -- theyed they u.s.

blamed for a 2016 q.. mark esper stated a number of korea.in north meanwhile, and intelligence sharing agreement between south korea and japan expires in two weeks. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am riddick ago. -- riddick a group to. gupta.ika surprise was real what germany has been doing, better than expected. i don't know if that means less fiscal stimulus than we have

been talking about. let's go back to nicola mai and will faang go piccoli. -- will faang go piccoli. piccoli.o the fact that germany is a little better, what does it mean for the construction of europe and european bonds? nicola: germany just about skirted recession. the previous quarter was revised down and business surveys remain at the bottom. the trade war resolution is in flux but it will be a slow process. i don't think germany is out of the woods. some recovery for next year is likely but it will be gradual, as germany remains plagued by structural issues in the auto sector in a more protectionist world.

francine: does the fact that we are getting better than out of germany mean we forget about stimulus? wolfango: we forgot a long time ago. the key indicator has always been unemployment, so unless we deterioration in the employment figure and get the consensus to spend more, we are not there. when we get there, the question is how to spend. how to spend given the transition of the system in place in germany. tom: we will speak with stephanie flanders later, her important conversation with mr. scholes on banking unions. is that feasible? with your feel, expertise out of germany, can that occur? nicola: there have been some steps forward by the finance

minister, but the proposals that have been put forth by germany do not solve the problem. assigning include risk rates to sovereign bonds on bank balance sheets, which in our view would create issues and instability and more fragmentation in the market. the kind of banking union germany is thinking of is not necessarily a solid structural that -- structure that will improve the region. tom: are you buying coupon for next year or total return? nicola: we always think in terms of total return. products lot of income where we try to deliver a steady , whileto our clients having limited volatility, and that remains a key strategy.

we always think about total return. francine: where do you see germany playing a crucial role? is there anything else that germany needs to play a role in, especially if brexit happens, to try and advance the markets in europe? situationthe domestic in germany is getting complicated. merkel is under pressure. pressure. that is the reality back home, the government has been defeated in the regional election and someone. the leadership the germans can provide is trying to reach compromises around difficult things, like they have done in the past. behindlways reactive, the curve, and then dealing with the issue. if we expect germany to take the lead, no. the guy who is taking the lead is macron and he is doing it in

a french, arrogant way. francine: what does the ecb need to do? we continue saying christine lagarde had to convince germany to spend more fiscally. will she be able to do that? nicola: i think you are right. the ecb does not have a lot more in terms of bullets. cutting the rates more negative would be counterproductive because of the impact on the banking insurance. we think they are pretty much done on rates. they can probably do more on qe , but i am sure she will push for it. we don't see year, a physical regime shift in germany. francine: thank you both for joining us. up next, we hear from glenn

of ones, chief executive of the world's largest technology investors with over $43 billion in management with the likes of alibaba and tesla. missionssion -- their is to invest in leading tech growth companies. ♪

♪ ritika: this is bloomberg "surveillance." wesson will smith & split into two companies, one focused on firearms and the other on outdoor products. is tryingutdoor brand

to reverse a stock market decline at a time with more gun restrictions. shares have fallen 39% this year. is making reportedly the case for a proposed merger of xerox and hp. he holds an almost 11% stake in xerox and owns 4.2% in hp. that could increase pressure on the printer and personal computer company to strike a deal. that is the bloomberg business flash. iconnice to end with mr. -- icahn. there are many who talk and few that do. glenn hutchins has had legendary success, through the ownership of silverlake and his work in transactions and combinations, to his public work with the fed, the brookings institute.

we are thrilled he could join us. the arch theme we see is there is money, money, money out there. everybody is talking about money up to their eyeballs. what are the global ramifications of so much money in finance? glenn: that is a really interesting question. there is a little bit of a paradox at work because money is available because rates are so low. rates are so low because authorities are worried about the economy faltering. it is ironic that some of this availability is a consequence of economic problems. becomes, as a consequence of that excess liquidity, if there is so much return that it is increasing the risk. tom: you don't talk about your

prodigious ability to judge credit. how do you judge the credit system right now? people talk about leveraged loan access or maybe this flavor of shadow in shadow banking. how do you judge the credit markets? glenn: that is a good question. the credit markets are obviously stretching for yields and we are yields and we are starting to see in the leveraged loan high-yield part, a deterioration in credit quality and associated terms. the big question is whether that creates systemic risk or the potential for market adjustment. a lot of this is at the corporate level and is not being provided by deposit making said a sense, so i'm not worried about systemic illness but i am not a buyer of high-yield at these terms. francine: is liquidity a concern

in the markets, and could that be the symptom of something systemic? we saw it with the repo market, but by the end of the year it could provide something ugly. repo: the issues in the market suggests we have less liquidity than we originally thought. what i think is going on in large part is as a consequences -- consequence of all the we not around big banks, only have excess reserves but we have buffer reserves. banks keep a certain amount of reserves in buffer to manage their new capital requirements and standards, but i think we have gotten to the point where we understand what that is. there is adequate footing and the market seems to be moving smoothly. the issue in liquidity is moving into parts of the market with bubblelike behavior.

in addition to the high yield sector, this can be expressed in andbubble in index funds etf's. francine: when does the bubble burst? are they big enough to bring us back to something we have seen with the financial crisis if the trade war also goes wrong? glenn: if i knew when the bubble would burst, i would not be talking to you on the television. i would be trying to invest. nobody knows. and these bubbles can last for a long time because we do have low interest rates around the world. in europe, they are negative interest rates versus sancho amounts of securities -- for substantial amounts of securities, driving investors into ever increasing risk layers for returns.

rate investors go for credit, credit investors go for equity. some except less favorable terms. that risk seeking enhances the risk and creates more of a bubble and more of a potential to burst. i think right now, you have to have precipitating actions and i don't see any at the moment. tom: i want to come back and talk about your event in paris with bloomberg. how far removed is the united states right now within environment and climate change? you served under president clinton. i presume you do not have an affinity for the present u.s. plan. how alone is the united states as you go to meetings in paris? glenn: i am no longer in the public sector, so i don't think

about it from a public policy perspective. one of the things that is interesting is in the private sector of the united states, company after company is taking the actions necessary to make them more resilient to climate change, everything from high waters on the east coast during hurricanes to the forest fires occurring in california. there is a disjunction between the reality of climate change being dealt with by american businesses and the political construct in washington. climate change is not the only where businesses, states, and cities have to deal with taking action. tom: we will continue with mr. hutchins in pairs. us.ango piccoli with

yesterdayant meeting between the president and mr. erdogan, a certain delicacy to that meeting. we will touch on that in a moment. america,"on "daybreak someone of interest in mr.'s -- in chicago, mr. zell. this is bloomberg. ♪

♪ toturkey will continue uphold what it is supposed to uphold. i am a big fan of the president. i know that the cease-fire, while complicated, is moving forward and moving forward at a very rapid clip. trump andpresident the turkish president mr. erdogan after their meeting yesterday. we have various angles. we need to understand whether turkey tensions rise over syria and what they get in terms of money, and everything else they need to discuss including the trade war.

let's get back to the silverlake founder glenn hutchins and wolfango piccoli in london. i am not how you would describe the press conference or how the relationship between the u.s. and turkey is evolving. are they friends or enemies or both? wolfango: they are struggling more and more to work together. they have a personal relationship between the two leaders. they only thing -- the only thing that is working is the romance between erdogan and trump. ,hen we look at policy establishment, congress on one side, the turkish public opinion on the others, things are going in the wrong direction. the meeting yesterday was supposed to be turning the page. it was barely a footnote at the bottom of the page. there was nothing particularly

meaningful coming out despite the positive speech. francine: what does this mean for markets and investors? how difficult is it to price and these geopolitical events we are not used to seeing? glenn: i am having trouble hearing your question, sorry. francine: my question was, how do you deal with the geopolitics? we were talking about the u.s. and turkey. glenn: i am not an expert on the u.s. and turkey. the major geopolitical issue affecting markets is the relationship between the united states and china, the most important markets relationship in the world. trade talks have injected a fair amount of uncertainty into the economy because people are having trouble planning. some supply chains are being reconfigured and that reduces efficiency significantly.

one of the reasons why interest rates have had to be reduced. mightthe trade talks resolve the near-term issues, there are major structural problems between the u.s. and china that will be business andnt in economic planning for the foreseeable future. tom: help me out with the ortion of 1914 and 1913, 1939. is there a linkage of hong kong tension to the greater tensions ,f china, its regional world and world within the united states? wolfango: no, i don't think we are there. day, it isof the very much a self-made crisis. it was mistakes by the government.

reflects deeper concerns about the long-term relationship between hong kong and china, but i would not put everything in the same basket. we need to talk about -- we need to be careful about that. the question as was suggested becoming more difficult to govern countries and tackle global are issues because the international system is slowly breaking apart. tom: we have time for one more question with mr. hutchins. i noticed the boulton self -- boston celtics did it to the washington wizards last night. notice how he is having no trouble hearing now. the boston celtics start 9-1. are you going to lock away the trophy? glenn: it is very early on in the season. the team is doing really well.

one of our top players was injured, hope he will be back soon. brad stevens is perhaps the best coach in the nba and is a talent. you should come to a game with me. tom: i would be honored. glenn hutchins, thank you so much from paris. hour, i believe we have been brexit free. 30 seconds on the general election. wolfango: one more to go, the tories in the lead for a solid majority. i think it is still a? dang. mark.uestion still four weeks to go. francine: your brexit roundup. , do not miss our

conversation with the mayor of istanbul. you can catch that on bloomberg tv later on. china, at your markets, and some of the data points throughout the day. stocks are struggling to pinpoint to some positive trade news, mixed growth data. most government bonds advancing. , afteroking at the euro some of the data in germany showed they narrowly dodged a recession. ating up, steven wieting citigroup's private bank. this is bloomberg. ♪

♪ this morning, yields are lower after the ever higher yield dash.

year-endor is the slumber beginning? huddles with hong kong officials, what to do next and into this weekend. the cfa institute delays their december exam in hong kong. it is a day of rest, more impeachment testimony tomorrow. this is bloomberg "surveillance," from new york and london. we just did a little bit on the general election. am i right that there is a quiet in the dash to december 12? francine: there is a little bit .f quiet a lot of -- quiet a lot of media are trying to inure out about voting december. it is more about how many people turn up.

this is a whole other set of problems we have in the u.k., and it could affect voter turnout. tom: december 12, looking forward to that. learnedbloomberg has that the sticking point and trade talks between the u.s. and china, the u.s. is demanding that china spell out how it plans to reach $50 billion a year in agricultural imports. china is resisting. china has lifted a ban on american poultry that has been in place since 2015. america agreed to let chinese chaos, -- a third day of protesters are still blocking roads. the government has decided to keep schools closed during --

through sunday. a number of businesses have told employees to work from home. the first day of impeachment on thes was a spotlight limits. democrats relied mostly on secondhand attacks and republicans attacked on a lack of first-hand sources. its sixthdged -- a recession. that puts a damper on talks that they would add fiscal stimulus. the economy is stuck in low gear, manufacturing in its worst slump in a decade. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am reddick a group to. to.itika group

gupta. to -- handle on -- a 1.09 euro-dollar. weaker euro over the last number of days. francine: stocks in europe are fluctuating. most bonds are advancing. german data showing better than expected figures, but investors are worried about what they saw in china. fixed asset investment missed estimates. we will have plenty more on the markets. in hong kong, protests paralyzing the city, schools are canceled, and the subway operator partially suspended service. joining us from hong kong is iain marlowe. there was a tweet that was

deleted that suggested curfews from one of the media that is backed by the chinese government. do we know anymore? iain: his tweet sent hong kong into a tizzy. he is closely followed for his predictions on the trade war. he said he looked into the report that came from one of his reporters that said the sources did not stack up, and he ordered them to delete the tweet. they basically sent the hang seng down a little bit as people are on edge a little bit and thought this was coming next, but it is not the case, a little bit of fake news in hong kong. at howe: when you look much support there is for the protests, are people fed up with the disruption? iain: i think it is getting to

the point where it is as bad as it has been throughout this unrest. straight daysur of transit disruptions, companies telling people to stay home, schools and universities canceled. it has gotten as bad as it has been, but at the moment, people are decently patient. there is a lot of grumbling. there have been some attacks on people who disagree with protesters and it is not something people are likely to take into the streets. tom: i could make jokes about the nightlife of central, but there is nothing funny. the tourism and business has been shattered. it is thursday evening in your hong kong. we will frame out friday and then we get to the weekend. what do you presume will occur on a given saturday morning or

saturday night? kong is an exceptional city. you can walk three blocks up the hill and see people drinking beer and partying, and walk three blocks south and you are in the middle of a riot. all of the industries have been hit. retail, shopping, restaurants, everyone is down. i spoke to someone who ran a frozen fish business, business down 20%. it is citywide and does not look like it will get better. it has been five months now, almost half a year, so this is a semipermanent state of affairs for hong kong businesses and restaurant errors. -- restauranteurs. tom: thank you so much. this is the perfect just for today.

we will speak about the markets and earnings later, but we are thrilled steven wieting could join us. up foraving the shingle 22 years, smith barney as well. flagship ands the that includes song shown. how has your firm -- includes hong kong. how has your firm adjusted? issue isook, this fairly specific economically. if you are looking for economic impact, it is significantly the isle of hong kong. single day sales throughout the larger china -- tom: confidence. steven: if you look at latin america where there has been a number of protests, a number of unrest, it, popular

has occurred in several places across the world and is still seen. the pricing of financial markets around the world has been very idiosyncratic. it has not been a picture where the entire world economy looks like one place you could put up on the screen at one time. francine: overall, everything is a little bit more depressed, right? whereis not one region you think is outperforming and doing better than is expected. everything is brought down because of subdued demand. is that fair? steven: i would take a look, and to put serious political questions aside, let's take a look at financial markets and the performance of larger greater china equity market and hong kong market, which is different by 25 percentage points this year. that is a vastly different

market performance overall, and if you take a look at the world at large, we see one theme going through this. in china where you have 7% retail sales growth and the united states and germany where you are seeing 3% and 4%, there has not been a big depression in demand around the world. shock, aen a trade synchronized decline in global trade activity and industrial production, goods production. ,hat you saw out of germany fairly growing, is a major economy between sales growth and manufacturing. thatgap has to close and will be the story for 2020. factors around the world have to make as much as is being demanded -- factories on the route -- factories around the world have to make as much as is

being demanded, and that is more. us: we had one guest with yesterday, 13% up for the s&p target. steven: i would not be that optimistic. it is easier to be an economist than an investor. it is leading people in the dark and telling economists where the economy is going. what we have seen and financial markets in the last few months, the bottoming of interest rates globally in august, the rally encyclical shares, the story i just told you has been increasingly priced into markets , and the very strong return we have will get us something less next year. we spent a lot of this year worrying everyone about an imminent economic collapse, and it is not about 1/10 of gdp. it is that everything collapses. it has not been there on the

demand side of the economy at all across almost any region, with the exception of the one you just showed. we will have some follow-through. i would prefer in this environment that we are going to emphasize quality, that it will still be a volatile year, and income producing equities, for example, will probably be the long game. is theshort-term it cyclical rebound in industrial activity and more cyclical shares. tom: we have a double interesting story on turkey as bloomberg drives forward the conversation. io's releasessk and extraordinary meeting point erdogan and erdogan, showing a video that was anti-occurred, and pushback from , and some- anti-kurd

pushback from senators. we will then go to the istanbul mayor. erdogan has a deeply divided turkey, and we will speak with the mayor of istanbul, a territory erdogan lost recently. this is bloomberg. ♪

♪ >> i see the level of the policy rate right now as appropriate for the economy we have, which is good consumer spending, good domestic momentum, but facing these headwinds. we are in the moderately

accommodative stance and that is more than appropriate. we have been consistently surprised at how low unemployment can go without spurring wage price inflation. tom: our kathleen hays with mary daly. i strongly urge you to look at mary daly's path at the fed and the interviews she has given over the last number of months. citigroupting with and in berlin, stephanie flanders, in charge of bloomberg appropriate economics. it is the word du jour. describe appropriate economics. stephanie: it is appropriately data-driven. appropriate is the new data-driven.

we have seen a pretty consistent theme out of fed policymakers over the last few weeks as we have a bit more optimism around the survey data on global manufacturing and the markets want to take that optimism and use it, but not necessarily leave people thinking everything is resolved. on the face of it, they have taken the december rate cut off the table but without suggesting that because they think necessarily the job is done. ed: and hyman was with us -- hyman was with us and he was direct that the united states needs a fiscal expansion. does the united states have fiscal space with $1 trillion deficits? stephanie: the definition of fiscal space is changing all the time.

in germany, they are holding off on their old definition. what we do know is that 2020 is the year where the extra stimulus you got from the trump tax package is now no longer there, is not helping growth. the fed would probably say the growth trajectory the u.s. is on is in line with its long-term potential. we have had a 10 year recovery and should not be expecting , but thath above 2% is a battle with the white house. you are not going to get a lot of action from the fed. francine: how does the german figures change everything when you talk about fiscal stimulus? , is it less likely they will do stimulus?

stephanie: i will be asking that very question in about 20 minutes to the finance minister, is -- the budget for next year is going through the key committee in berlin and the fact that number was positive will put that conversation off for another six weeks. withan important interview stephanie flanders. we will talk about the e.u. and germany question. steven wieting of citigroup with us as well. chairman,y, the fed the second time on the hill in two days. the budget committee at the house can be a bit fractious. this is bloomberg. ♪

ritika: this is bloomberg "surveillance." let's get the bloomberg business flash. daimler wants to save jobs by cutting its mercedes-benz division. daimler plans to eliminate 10% of management positions as part of the effort. they have issued two profit warnings.

burberry is teaming up with tencent to explore social media friendly stores. the british luxury store positive six months of reports. shares of disney have soared to a record high. it is a blistering pace that reflects the strength of the family-friendly market. dodged whatrmany would've been its first recession in years. we were talking about that with stephanie flanders who was speaking to olaf scholz later on. .

-- if you areon the ecb and christine lagarde, how do you measure success in the next 12 months? just onnetary policy or whether governments open their purse strings? stephanie: it is set so much by having a broader support for economic growth in the euro zone , but that emphasis on other policy would be a mark of success. christine lagarde is realistic. ecb have had those in the begging the world not to leave things in the hands of central banks, and it has not made a huge difference. you will not necessarily see a big change of fiscal approach in germany, but i think they will continue down that road.

hearingngly you are they are focused on the question of the euro zone itself having a fiscal capacity. germany maybe does not need stimulus as much as other parts of the euro zone, but they are the only country that have the pursestrings to do it. does the ecb still have the right tools to deal with what is coming up? stephanie: it is a difficult place -- steven: it is a difficult place to be. we have extremely accommodative monetary policy in a nominal way, and you simultaneously do not have a lot of economic growth, and probably below potential for the euro zone. there have been outside shocks, nothing wrong with internal demand, but to be in this place with the inflation rate low target, and you think about the

real challenge for central banks , the thing you might want to do to have a stronger, higher inflation rate, so you are not tattling deflation that a downturn, the steps you take can be destabilizing. tom: stephanie flanders, thank you so much, steven wieting coming back. looking forward to your interview with mr. scholes. that wall put up on the negative interest rates of germany cannot be seen enough, an extraordinary statement of financial history. with the, adrian or new zealand bank. this is bloomberg. ♪

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every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. tom: good morning, bloomberg "surveillance." interesting news flow. now, first word news. the first day of public

impeachment hearings ended with battle lines being drawn sharply. democrats say the testimony shows how president trump abuse the power of his office. they relied on secondhand accounts. the hearings resume tomorrow. there was an uncomfortable moment or two at a joint press conference involving president trump president erdogan. president erdogan said he returned a letter from president trump warning him not to be a fool. erdogan also complained the u.s. will not extradite a turkish cleric that he blames for a coup. ark esper says there is number of issues in south korea as he begins an eight day trip through asia. president trump has demanded they pay about five times more to host u.s. troops.

an intelligence sharing agreement between south korea and japan expires in two weeks. the engines of china's economy are sputtering. retailial outs but in sales rose less than expected. estimates -- the data underscored the need for a trade deal with the u.s. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. tom: yesterday, i woke up from trying toillance" nap get the gauge on impeachment, people on this side, people on that side, a fractured agreement -- america, and the washington post showing the import of the

moment -- import of the moment. trumporter of president brings up a transient point to legalwered by the authorities and the powers at be in washington. kenneth starr explained there was no john dean to testify. this is what the president told me. the president's handling of ukraine seemed less the execution of an intelligible ofn than a chaotic mishmash constantly changing urges and demands, a toxic brew of individuals whispering into his ear. giuliani was filling his head with all sorts of conspiracy theories that made the president very hostile to the country. an essay for mark theissen. who won yesterday? kevin: i don't think anything

changed. i think marc theissen headed on the head where centrist republicans that are up for grab stand. every single republican lawmaker i spoke with including their staff and strategists say this did not move the needle at all to convince republicans to join democrats. tom: i do not you to do your inner noah feldman on this monograph on impeachment, but is ae confidence -- incompetence high crime and misdemeanor inside the beltway? kevin: some would argue it is. i am not a lawyer, i am a journalist, so what you are hearing from the essay is what you will be hearing from the likes of moderate republicans, senator mitt romney for example,

who will be looking at that precisely. i was struck overall by how much of a bad day it was for rudy giuliani and how he was running a shadow state department and went up against them and lost. francine: what are we going to see next on the impeachment process? is there another testimony? kevin: this week, the hearings continue. i was struck by the chairman of the intelligence committee who said publicly acknowledging the first time that if the house votes to impeach the president, when it goes to the senate it will take six to eight weeks, which is on timetable from the clinton impeachment but still quite remarkable for anyone who thought this would be a quick ,rial as was first insinuated and as speaker pelosi calculated. they were wrong. it is a significant political risk to every democratic

candidate fighting for headline space during a senate impeachment trial. francine: how are people in president ofth the turkey? kevin: that was remarkable. i was at the white house after covering the impeachment, and the juxtaposition of top republican senators sitting in the front of the white house, watching as turkish president erdogan really gave a backhanded remark to president trump regarding foreign policy, striking. tom: i am going to rip up the script and go along with you. axios released this idea of erdogan showing an ipad video and republican senators from the south really reacting. explain to our global audience

how the phrase "kurds": ♪ resonates with conservative republicans. kevin: the kurdish u.s. allies have been staunch defenders of christians and have been longtime allies to the u.s.. democrats have long held that position. there was no deal yesterday in terms of whether or not erdogan would back off from buying the russian missile defense system, no deal in trade or a long-term plan, andt peace there was a lot of head scratching as to why he was there. tom: thank you so much. steven wieting taking all of this in. you and catherine mann and others at citigroup have to synthesize this politics. as it impinge on the confidence of the business nation, or is it

idiosyncratic? steven: look, there would be so much to say. tom: you have 30 seconds. go. steven: markets focused in on the fact that so little seems to have been actually clearly agreed upon in the trade deal between the united states and china, had a larger impact on financial markets today and yesterday then this domestic political issue. if you think back to the election and what changed, why did we have such a powerful financial market effect at the end of 2016? unified republican government cut u.s. corporate taxes, dramatically raised the net profit level. it had a one time lift up in the level of after-tax profits in the united states, and that kind

of policy can move markets. politics only matter if it changes policy. politics and things like impeachment and geopolitics difficult to put on the market because they have not modeled it before? how do you trade impeachment? steven: markets would care what they are doing as they are taking the notion, the strong consensus among investors that republicans will not remove the president of the united states and that it will therefore have no immediate effect on policy. that is why markets are looking beyond this at the moment and not focusing in on any changes in how the economic policy of the united states as a result, in the immediate sense. francine: we were all listening to the president trump speech at

the economic club of new york where he talked about negative rates and he wanted more free money for the u.s. economy. does constant badgering of the fed actually move dollar or change policy? steven: it really does not seem to have had a significant effect on the federal reserve. we need to turn to the fed a little bit. the federal reserve really was off course in 2018 in terms of the degree of uncertainty about its lending to the treasury and mortgage-backed securities market, where quantitative tightening would end, and we disagreed with the federal reserve, saying this does not matter. as the fed has changed that policy and taken away what would have been three rate hikes in 2019 and instead is rate cuts, perhaps they would not have to do those rate cuts if we had

clarity on where lending and the balance sheet would go. now, the fed has pretty much executed well. they have taken away their threat to this economic expansion, which was legitimate. when you listen to chairman powell talk about czar in a good place and we are confident -- things are in a good place and we are confident, in the event that something is out there, we don't have to be completely confident in our policy, and we are ready to act. in forcing that message may be stronger in enforcing the notion that we are protecting the economic expansion. yeary and timber of fidelity's extremely important note where he calls for an end anthis "bear market."

exceptionally optimistic note out of fidelity this morning. it will always be optimism on the american experiment and entertaining and smart. mr. zell on the white sox. sam zell, what will the white sox do? sam zell in the 8:00 hour. ♪

♪ >> even before jeremy corbyn got in -- francine: nigel farage and the brexit party in the u.k.. out coming out, laying where things are going. this is the really important

bit. we heard last week that nigel seate will not contest the s that were won by the conservative party. everyone wanted to know whether there was an agreement between andl farage, the tory, boris johnson so they would not hurt each other's vote. tom: a wonderfully short campaign in the u.k. in their general election. when john authors writes a brilliant essay and we have steven wieting onset, who is the expert i know at linking our earnings into the american economy, john authors with a brilliant essay today. is nons out there

relationship between earning surprises and index performance either. it is at least reasonable to argue that rates are swamping any signals we might receive from earnings announcements. clearest, producing guidance. -- the clearest lesson, producing guidance is pointless. are we wrong to make earnings a three ring circus? there is the idea that earnings beats by themselves or downward earning estimates will tell us where the market is going. the stock market is telling us where earnings are going. is tellinge have had us where eps will be six months from now. when you get a simultaneous equation and we get too

optimistic, share prices have risen too much, then you get that problem. very much the reverse too. at the last -- if we look at the last couple of years, the notion that we would have earnings gain in 2020 was in question and we became more bullish when people questioned that prospect. up the chart. we have the yale ibbotson chart. it is the logarithmic view of witharket, up forever, great respect for president carter. you talk about simultaneous equations, that means there is three plug-ins if there is two equations. , diminished spirit,

revenue down, and we have to worry about it with the stock market. steven: u.s. large-cap companies are there because they succeeded and if they do not succeed they can be out of the index. eps shrinks a bit over time with share purchases, but if you take a look at revenue growth overall, very broadly, u.s. nominal gdp growth is very close. it even accounts the penetration of u.s. profits in terms of a larger, faster growing world economy in those terms. one thing that has happened as we have had large declines in interest rates for all borrowers of all credit quality. we have had profits rise more than gdp, so you simultaneously have low interest rates, a high strong economy and high strong stock market at the same time. that would trouble you in terms

of returns, but our ability to sustain it is not so out of the question. weree world economy showing lots of demand excesses and inflation was rising because we cannot produce as much, you know you are living beyond your means. the u.s. economy is not showing that. tom: we have to simultaneously bring francine in. francine: when you look at investment, is it going to come back in key industries next year, and is that the only thing that will avoid a recession? steven: i am more pessimistic on the investment component. a little of that is politics. a good deal of the fact that we peaked economic growth after the u.s. corporate tax cuts. we peaked business confidence and a few months later, we started the trade war. if you look at the peak in

business can but -- confidence and the start of weakness, it is in for a bit of a shock. if we do not clarify our trade relationships, that will be a drag. you could do something about that. we could probably recover from that, but that will not be a booming part of next year's growth. industrial production and end consumption will be fine next year. francine: thank you so much, steven wieting. tencent teaming up with to experiment with a new way to engage consumers. it is a blending of social experience with the retail experience. the first asked -- the first step will be a burberry store in shenzhen. on the back of that, the share price gaining. tom: that look is middle robert

plant. go, zeppelin. francine: six-month earnings be investors estimates and shoppers seem to like it. ♪

♪

this is bloomberg "surveillance." let's get the bloomberg business flash. -- owner of's within lesson smith & wesson will split into two companies, one focused on firearms, the other on outdoor products. outdoor brand is trying to fight against a decline at a time when gun restrictions are increasing in the u.s. carl icahn is reportedly making the case for a proposed merger of xerox and hp. he holds an almost 11% stake in stakeand also owns a 4.2% in hp. that could increase pressure on the printer and personal computer company to strike a deal. cisco came out with the sales forecast that fell far short of expectations, a sign companies

are postponing hardware purchases. revenue in the fiscal second quarter will fall as much as 5% from a year ago. transforming them into more of a networking and business company. upncine: burberry teaming with tencent to experiment with social media friendly stores, as the british luxury band -- brand reported earnings that beat estimates. pfanner.s now is eric we have been trying to figure stores withse new tencent will be. chinare opening first in and we are expecting mirrors or selfie spots. eric: this is an acknowledgment by the new creative director that it is all about creating buzz online and blending that with offline.

people go to stores not just to buy something, but they want to post a selfie that they have been in a store. you want to have a good backdrop. you create exciting scenes for people to put their selfie up against, and other people want to have the same picture. i don't knowine: if it is a younger crowd or a cooler crowd if you merge the experience, is it a way to counter hong kong where they are losing sales? down 38% in the second quarter, double-digit overall for the first half. pretty dramatic and in line with what others have said. all the luxury brands are getting hit very hard by what is going on in hong kong. chinese consumers are spending elsewhere. francine: what is he getting right? eric: he has created a lot of

buzz for the company. he has made a more dramatic look using the new burberry logo on a lot of products, marv a high-fashion concept than his predecessor -- more of a high-fashion concept than his predecessor christian bailey. he is much more about creating buzz for the brand. francine: thank you so much, eric pfanner. stay with bloomberg as we bring full coverage of the fed chair day two on the capital. his testimony is later on. european stocks down. focus is on data, germany, japan, and china. ♪

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china shows a economy recycling. china stands firm on the need for tariff rollbacks and the u.s. demands china shows how it will buy every year. brexit, d.c., hong kong, latin america. c.e.o. chuck robbens warns of a lack of clarity and business confidence as they face their first revenue decline in two years. welcome to "bloomberg daybreak." i'm alix steele. waiting for jcpenney to look at a read on the market. the equity market down .2%. as i said, maybe it could have data dump had he been worse. you are seeing money flow into the bond market, two days yield