francine: all goes to the white house. president trump says he protester high interest rates in a meeting with the fed chairman. siegemund howdy. hong kong police -- siege mentality. hong kong police surround protesters in a standoff. boris johnson and jeremy corbyn go head2head in the first election today. with the conservative -- will the conservative's double-digit lead be narrowed? welcome to "bloomberg markets: european open." we are seeing some risk appetite come through in equity markets, despite the lack of clarity on

whether we are any closer to a phase one deal between the u.s. and china. the s&p 500 hitting another reluctant record, i would call it, and u.s. futures on the front foot. the euro study. we sought strengthen -- steady. we saw it strengthen against the dollar yesterday. 1070 right now. general concern about growth in u.s. stockpiles, meaning it is trading at 56.96. coming up, we speak to the managing director of the fund,ational monetary kristalina georgieva. don't miss that. markets pushing down the 10 year treasury yield last week. let's get the bloomberg first word news. >> today, the public hearings of the impeachment inquiry start again. the u.s. house intelligence

committee plans to hear from 8 witnesses this week. they are examining if the president lied to special counsel robert mueller. this comes as president trump says he is strongly considering testifying in the investigation. the u.s. reversing its stance that israel's west bank settlements are illegal. the move is a big policy shift for the u.s. and the latest political offering to israel since donald took office -- donald trump took office. it could give a boost to prime minister benjamin netanyahu but is likely a further setback for the palestinian peace process. a possible end in sight to the political deadlock in spain. separatists looking into a deal that would put pedro sanchez in power. it is prepared supporters for the possibility. there is a hook. they want direct talks over the future of catalonia. bolivia's ousted president has weighed in on who is the country's rightful leader. answer the nation's

president lacks legitimacy. he says a senator elected by the chamber is the legal head of state, adding that the current administration has no constitutional right to rule. he has not had any contact with them. >> i don't have any channel. as far as i know, the only communication is between legislators and legislators from the right wing that took part in the coup. they do have contact in order to set some rules probably. >> global news 24 hours a day, on-air and on tic-toc on twitter, powered by more than 2700 journalists in over 120 countries. this is bloomberg. president trump says he discussed negative interest rates and the economy with jerome powell yesterday. the president tweeted that he again called for lower rates to compete with other countries and said that to stronger dollar is hurting manufacturing and growth dollar isong a

hurting manufacturing and growth. eric rosengrant spoke exclusively to bloomberg. >> i am not so sure we needed quite so much accommodation at this time. i am a little bit worried that we have less room than we otherwise would have if we were to have a big negative shock. i would say it is not just the short end of the market or the long end of the market. it is a lot lower than what we were experiencing prior to the last recession, which means even quantitative easing will have some limited effect, given that that could quite easily get down to zero more quickly than we are expecting. nejra: joining us for the hours europeanth, head of rate strategy at ubs. what do you make of eric rosengrant's argument when your call is for three rate cuts from the fed in 2020. john: i think one of the points he is making is that historically speaking, they don't have a lot of room to

maneuver compared to other central banks. they are in a much more fortunate position. they do have some room to maneuver. i think it is right that they tread carefully and use the ammunition they have sparingly, make sure they need it. his view is at this point they have done plenty if not a little bit more than they needed to. the reason we expect them to do more in due course is because we think the economy will demand it. he talked of the possibility of more quantitative easing, not saying that he thought it was impotent -- it was imminent. there is unawareness these tools might -- an awareness these tools might be needed in the future. yes.: so the fact that you said three rate cuts in the first half of next year it says to me that you expected those to be more preemptive rather than reacting to where the u.s. economy is right now. if will the market take that

they are seen as three preemptive rate cuts? john: we will get the minutes this week from the last meeting. we think they will say we believe we have done enough for now. there were dissenters to the last three rate cuts. the committee is probably comfortable with where things are. the reason we think they are going to go again is because we think growth will slow materially in the u.s. in the first half of next year. significant slowing from the recent pace. with inflation a little bit softer perhaps than they would like to see it, we think they will need to do something. onlyiew is they are halfway through the cycle adjustment. nejra: both front and back and yields rubbing significantly? john: yes. 10 year yields around 1.8.

nejra: yields dropping is what i mean. john: we think they get as low as 1% by the middle of next year. beyond that, we think they start to pick up again. we see this as a bit of an air pocket for the u.s. particularly, but the u.s. economy as well. we think the first half of next year will be problematic, headwinds. tariffs have already been implemented between the u.s. and china continue to bite. beyond that, we think growth re-accelerates into 2021 at the moment. this is only a temporary slowing but it will acquire that policy response -- require that policy response in our view. nejra: in terms of what president trump and jay powell discussed, we understand that negative interest rates were discussed. could we see negative rates in the u.s.? is that something you are modeling our? john: not at this stage -- is that something you are modeling at all? john: not at this stage.

we still only see the fed funds target rate going down to 1%. there is still some more room before we start having that debate. clearly, if growth were to really fall over, whether in the u.s. or more widely, that might become more of a focus in due course. we are not where we used to be on rates, but they clearly still have significant room for maneuvering before that becomes a real conversation. our view is the fed will to act purely on economics which starts to look a bit more promising after the first half of next year. nejra: if things get material worse, fiscal will have to pick up. john wraith of ubs staying with us. coming up, we speak to the managing director of the international monetary fund, kristalina georgieva. don't miss that interview at 9:30 a.m. london time. this is bloomberg.

economics, finance, politics, this is "bloomberg markets: european open -- this is " bloomberg surveillance." 100 protesters remain sounder -- remain surrounded by police at polytechnic university. speaking earlier, chief executive carrie lam called for a peaceful resolution to the standoff. if the protesters are coming out in a peaceful manner -- in other words, they stop violence, they give up their weapons, they take the advice of the policeman , then there is no situation that that sort of violence will happen. nejra: joining us now from hong kong is jody schneider,

bloomberg's senior international editor. great to have you with us. what are the prospects for any kind of peaceful resolution to the standoff that just seems to be getting worse by the day? >> it is hard to see how it is a peaceful ending to this, given chaotic clashes occurred over the past few days, particularly yesterday, where we saw fires raging, cars on fire, teargas in the air. today, we have seen less of that. we are not exactly sure how many protesters are still on the campus. some say more than 100, we have heard 60. there are still some protesters there. as we just heard carrie lam say, she says she hopes it will end with them voluntarily leaving and it not being a chaotic outcome. they don't seem to be leaving. the campus is still surrounded by police.

nejra: of course, we heard from carrie lam. we just heard a clip from her morning.efing this she covered a number of topics, including the cleanup on the weekend by the chinese people's liberation army and also the fact that the government wants to hold the district council election on sunday as scheduled. what were some of her main messages? was aboutst message polytechnic university and saying that the protesters needed to leave, that this was only going to go well if they left, that the police were in a reactive stance. . she mentioned the cleanup in response to a question during the briefing. she mentioned the cleanup by members of the chinese people's liberation's army garrison here in hong kong saying that it was just a cleanup effort that they have done voluntarily and charity work in the past.

when asked whether this could mean more, signaled that them being more involved in hong kong and in the unrest, she said not right now. those words right now some people in hong kong pause. nejra: what did mitch mcconnell have to add to the debate? we heard from him as well. >> that's right. mitch mcconnell, who is the senate majority leader, a republican, basically called on andident trump to stand up stand for the protesters. we have not yet heard from president trump in recent days on this. we also heard from the u.s. secretary of state, mike pompeo, who did speak in favor of ending things peacefully. he actually mentioned the standoff at polytechnic university and said it was important that this end without violence. nejra: appreciate your time. thank you so much. let's get the bloomberg business flash. here's viviana hurtado in new

york. >> emirates is considering an order for boeing's 787 but the decision is likely months away. the airlines president continues -- airline's president continues to say that -- will drag on the airline. >> we will start seeing a more consolidated industry as far as the airlines are concerned, more efficient, less of them, and perhaps more efficient usage of their inventory. 2021, 2022istic in but 2020 will be difficult. will startk, wework cutting jobs in the u.s. in an strugglingstave off -- more news could come on friday, on the company's chairman is expected to tease a five-year plan for the company. wework declined to comment on these potential cuts. that is your bloomberg business

flash. nejra: boris johnson and jeremy corbyn will face off in their first election, tv election debate this evening. it comes as jeremy corbyn seeks to reverse the prime minister's opinion poll lead. johnson's party is 14 points in corbyn's. jeremy yesterday saw the three main u.k. wide party try to move business at the conference. >> one of the advantages of voting conservative in this election is that we can and will get it done and get it done in a matter of weeks. we have a deal that is ready to go, just add hot water, stir in part. it is there. >> what we are offering this country is to negotiate a trade deal with the european union, which gives a credible leave option alongside remain to put that to a referendum. >> numeral democrats are absolutely going to try to stop a brexit -- liberal democrats

are absolutely going to try to stop brexit and use our strength to bring much more reason to british politics. >> if we get a working majority, we can get parliament working for you. we can then unleash the potential of the whole country. >> properly functioning public sector that provides the health care, the social care, and education that is so essential to all of our lives. that is the areas that we will be campaigning very strongly on. >> we are not in the business of putting into number 10 somebody who is so obviously unfit to do that job as jeremy corbyn or boris johnson. --anwhiles, hsbc meanwhile, hsbc's david bloom says -- >> you cannot have a boris johnson and jeremy corbyn winning and a hung parliament and we don't know which one it is. you have three different views that could have dramatic impacts on sterling.

on the 13th of december, whatever sterling is traded at now, it will not be trading like that that day. francine: still with us -- nejra: still with us is john wraith. john: sterling will not be here come the other side of the election. it has been moving significantly. some outcomes are becoming in the market's mind more likely than others. i think that is the way that currencies always trade. they are pricing in the average range of property -- probabilities. sterling has been appreciating because it makes the resolution at least near-term at the current phase of brexit more likely. nejra: he sees sterling at 1.45 at the end of 2020 on a deal, 1.10 on no deal. what it really go that high -- would it really go that i? -- that high?

1.35 we think it may go to in a fairly short space of time. we get the majority for the conservatives, the deal goes through, gets ratified, that confirmation takes it to that sort of level. it probably hobbles around there for the first half of next year. as we get into the second half, it will very quickly come into focus that the transition period is due to end. by july, if there is a mutual understanding that an extension might be needed, it is agreed then to make sure we don't have these cliff edges. the current prime minister of the current government says we will not answer an extension to the current period. they don't have parliament pushing them to do that. if they only do it choose to in due course by pointing to economic risk. any extension request of the transition period comes at the very end of next year. that is serious cliff edge

concerns, headwinds for growth and investment, they u.k. economy slowing again in the second half of next year. where is the downside on the downside risk? john: it depends on what the downside risks are and where it materializes? a hung parliament is just a sort of ongoing process like we have seen over recent months? sterling loses ground, but in a way?of fairly orderly a big majority for labor we would suggest for some overseas investors would be a cause of concern? some of the policies around nationalization and not knowing what that might ultimately lead to? it points to less of a risk of brexit happening, which is seen as a positive for sterling? ? it's very hard to know -- sterling. it's very hard to know.

no conclusive outlook is priced in at this point. nejra: john wraith from ubs stays with us. we speak to the managing director of the international monetary fund, kristalina georgieva. up next, we will get the latest on the global trade outlook. this is bloomberg.

nejra: this is "bloomberg surveillance." i'm nejra cehic in london. the trade war's drag on the two biggest economies will

likely fade in 2020, according to goldman sachs. what do we get by the end of the signed of phase one deal , tariffs paused and rolled back on tariffs? john: we certainly do not think we get the rollback. that, in our view, is too optimistic. although there has been relatively good news recently, the tariffs that have already been implemented are in the pipeline and will bite harder in the first half of next year. you're starting to see effects on some of the impacts on tariffs implemented in terms of capital spending and hiring slowing down in the u.s., trade volumes leveling off. for us, although we may be through the worst of it, we still think from the point of view of the u.s. economy, you are going to see incremental slowing in the first half of next year because of what is already in the pipeline. nejra: if we do get the phase one deal past and a pause on the

december tariff, is that enough to take the 10 year treasury yield above 2%? john: we think a lot of that news has already been priced in an arguably the market has a ready gone too far. for us, yields are likely to end the year lower than where they are at the moment. nejra: john wraith from ubs stays with us. we speak to the managing director of the international monetary fund, kristalina georgieva. that is next. this is bloomberg.

nejra: powell goes to the white house. president trump says he posttest

-- he protested high interest rates. hong kong police surround protesters in a university standoff. carrie lam calls for calm. boris johnson and jeremy corbyn go head2head in the first debate. this is "bloomberg surveillance." i'm nejra cehic in london. let's get the bloomberg first word news with viviana hurtado. >> president donald trump protesting u.s. interest rates when he met with jerome powell. he says relative to other developed nations, they are too high. it was the second encounter this year as the president continues his relentless criticism of the u.s. central bank. over to hong kong, where city leader carrie lam is calling on a peaceful end to the siege as police some protesters continue to clash around a university campus. around 100 demonstrators remain inside. overnight, 600 protesters escaped or were evacuated, including several hundred under

18. the u.s. reversing its stance that israel's west bank settlements are illegal. the move is a big policy shift for the u.s.. since president trump took office, it is the latest political offering to israel. it could give a boost to prime minister benjamin netanyahu but is likely a further setback to the palestinian peace process. global news 24 hours a day, on-air and on tic-toc on twitter, powered by more than 2700 journalists in more than 120 countries. i am viviana hurtado. this is bloomberg. back to you. nejra: thank you. let's focus on the future of the global economy. the imf's new managing director today.erlin she will meet angela merkel later today to discuss how to promote a more private investment in africa. let's handed over to matt miller in berlin. i am very pleased to be joined by the managing director of the international monetary

fund, kristalina georgieva. she is here further compact with africa conference -- for the compact with africa conference. thank you so much for your time. why don't we start with that subject, what are your priorities at the imf? in terms of africa, what are you most focused on right now? kristalina: africa is a continent of opportunity. what we are focusing on with this opportunity to be hardest to the mac -- harnessed to the maximum. it is also a continent with many troubles. therefore, we have to be very mindful of risks, including security risks. with the compact on africa, our focus is on supporting these countries to have sound macroeconomic policies, to improve the investment climate, and to show it to the rest of the world. seen isave speed -- that this concentrated effort from their side, from our side

is paying off. on average, growth in the 12 compact with africa countries is 7.4% for the last year. this is almost twice as for the rest of the continent. and actually, on some points, more than twice. how do they do it? by looking at that sustainability when they borrow -- sustainability, when they borrow, borrow for good investment purpose, and by him eliminating -- by eliminating redtape for investors. ,att: talking about growth sustainability, borrowing. a number of countries, ghana, zimbabwe, kenya are boosting their budgets for 2020. i wonder if you are concerned that they are increasing their debt loads to unsustainable levels? kristalina: in some cases, we

are concerned with that. in other cases, we see that investing will pay off over time. take the case of kenya. we do advise kenya to be somewhat more cautious in building a bet -- building up debt. we have seen good macroeconomic policies in kenya. our engagement with the country by a large are judged as positive. one has to always remember, debt on its own is not that. it is bad -- not bad. it is bad when it goes for the wrong things and with a speed that the economy cannot handle. that is dangerous. we do say, you need to really get a handle on your debt. in other cases, like ethiopia, we say, you do need to really -- renegotiate some of your debt,

because it is non-concessional for things that should be funded on a concessional basis. again, it really depends on the country's circumstances. to go to the bottom of your question, overall, are we worried about debt levels in africa? yes. because about 40% of countries have got into debt distress levels. this is why in just two weeks in dakar we are going to have a very concentrated meeting with africa's leaders on that issue of sustainability. matt: what about debt levels in latin america? and the changing political climate that we see their? a lot of people -- there? a lot of people are starting to talk about and emerging-market debt crisis. is that on your radar? kristalina: totally on our radar. let's take the global number of debt. it is really staggering. we now have 230% annual gdp

globally as a debt level. we should recognize that a long and sometimes, negative interest rates of course have urinary -- have generated more propensity to borrow. when it is combined with relatively well taxed collections in some countries, where growth is disappointing and it has been disappointing this year for sure, then that worry about the sustainability of that goes up. for latin america, a number of countries, are engagement is around this question. how can you adapt to a lower growth environment? especially for economies that are more commodity depended. dependent.ve -- what you have seen in 2019 that commodity depended countries are doing actually worse than don

commodity dependent. more diversified economies outperform less diversified economies. everywhere, including latin america, the engagement is around don't get too accustomed to low interest rates. even if we now talk about low for longer, there is always a risk that financial conditions may tighten. think of what you borrow from, even if money is sheep -- cheap. taking this for a good investment is a priority. on the oned investment we want countries to make more of, investing in people, investing in human capital. human capital has for the future , digital economy, for a future that is all technology dependent.

wet: can i ask on argentina, still do not know the economic plan of the incoming administration. what would be a good plan for the imf for you to agree to renew the $56 billion argentinian scheme? kristalina: we would like to see what the government is thinking . we recognize that in argentina, poverty has gone up. any plan that the government bes forward ought t mindfulo -- to be mindful of the impact it will have on the most vulnerable people. we are already talking to our colleagues in the world bank in inter-american development bank of collaborating to support the kind of plan. of course, they will have to bring debt to sustainable levels so they can return to markets. i would expect that they would be quite keen to discuss with

the imf on how they can get there. last but certainly not least, the government has to figure out a way to live within budgetary constraints that exist, and to do so, they need to continue to work on where maybe public not deliveringe good value for the country. obviously, every country has to look for its own how to do that. and where they have to be more mindful in terms of policies to unleash investments and increase growth. so we are very open to have a discussion around these parameters, the social responsibility of the government. they made promises to their people. the fiscal viability of meeting these promises and debt sustainability potentially returning to be able to go to

market. matt: if we look at global growth, though, you were talking about the concerns you have with debt levels, but if we look at the global picture, are you less concerned than you are in october we see this peak dovishness in the fed seemingly has passed, the ecb as well? germany narrowly avoiding a contraction? doesn't look like in the global economy is bottoming out and the -- does it look like the global economy is bottoming out kristalina: this year, 3%, lowest in the last decade. next year, 3.4%. we also say there is quite a heavy cloud of uncertainty hanging over the world economy. the more that can be done to reduce uncertainty, especially to reduced trade tensions, hopefully to move from a trader truce to trade piece,

sustainable, and also the more governments can do to use all the tools they have at their disposal to boost that chance of upswing. what we are recommending is, if you have monetary policy space, use it. not many do. there is still some. matt: great place to have that conversation, right here in berlin, where this government has fiscal space. do you think of they need to use as the engine of europe to drive it? kristalina: they are actually using it. we have to give credit to the german authorities in the next year budget. they are providing stimulus. they also came up with a very ambitious climate plan. bravo. may others follow. that also would inject in a sense a stimulus. last but not least, structural reforms. improve conditions for competition. think ofthe long-term,

this investment in people i mentioned before. think of investing in digital infrastructure, in immobility. through this plan, make an investment now. guess what? the future is coming very fast. we need to get accustomed to the speed of change. it will never be that slow in the future. in that context, i think we can reach an upswing, but it would require policy efforts. it is not going to, just falling from the sky. matt: i want to finally ask you europe you are negative rates. mario draghi at his last meeting -- ask you your view on negative rates. mario draghi at his last meeting said they had a positive experience. i have also heard negative things about negative rates. especially concerning is that they think it is increasing wealth inequality. do you see it that way? kristalina: we have to

recognize, accommodative policy helped with employment. look at the employment in germany. it helped with growth everywhere. when it goes for a prolonged period of time, the inevitable risks are compounding. they are basically three. one is profitability of banks being affected. banks look for other ways to generate yields. up. we see equities going that requires potential measures, especially retail and the housing market to protect it from a bubble. three, the accumulation of high-yield, high-risk in banking but also in nonbanking sector. i can tell you at the annual meetings of the imf and world of the mediumue long-term accumulation of risks,

that was front and center. we are looking into that data carefully. as we say, right now, don't pull the plug. the economy is slow. you do not want to create more trouble. do not pull the low interest rates prematurely. over time, we do need to concentrate on why interest rates are so low and basically takes us to the issue low productivity, the demographics in advanced economies. what can be done to address these root causes for our economies to be so willing to take low interest rates for longer? matt: thank you so much. -- so much, kristalina georgieva , for a fascinating conversation. the managing director of the international monetary fund with that. i will hand it back to you in

london. nejra: thank you so much, matt miller in berlin. now to some breaking news. according to people familiar with the matter, medicine company have attracted takeover interest from suitors, including novartis. medicine company is a 4.7 billion dollar company that develops a promising cholesterol drug. what we understand is that novartis has been holding talks about a potential acquisition. other potential buyers have also expressed takeover interest. , -- was drugmaker, novartis the swiss drugmaker, novartis, conducting due diligence of the company. the ceo has her abide on deals to sharpen the company's focus on innovative drugs for cancer and rare diseases. it has announced over $16 billion of acquisitions since the current ceo took over in february of 2018. this is bloomberg.

let's carry on the global growth conversation with the imf managing director kristalina georgieva. she has told us there is still a heavy cloud over the global economy and that the world needs to end trade tensions. still with us is john wraith from ubs. she says she sees a bit of a blossoming in global growth and a bit of an upswing next year to 3.4% from 3% next year. that's a view i'm guessing you don't share. john: that's right. we expect 3.1 this year for the global economy and 3% next so in marginal slowdown. beyond that, we do see a re-acceleration.

for us, we think developed economies particularly are going to have a more difficult year next year as we were discussing the first half of the. some of the bigger emergency markets we think do better, russia, south africa, india do a little bit better. the overall growth outlook for the global economy is relatively stable. we do not share the near term imf.ism of the we think it comes a little bit later and therefore needs more policy easing to get that reacceleration going. nejra: does that include in europe? particularly given the fact that germany managed to nearly skirt a technical recession. john: very modest. we do think there is another 10 basis points to come off the deposit rate of the ecb. we think that happens around the quarter.e first that is in the context of potentially 34 rate cuts for the 3 full rate cuts for

the u.s. we think the overall euro zone economy slows a bit next year to just below 1% next year. it is a more modest calling than in the u.s. but a cooling nonetheless. you also expect a rate cut from the bank of england in may of 2020. you do not think a developed market central banks are on pause but what about emerging markets? do we see a lot more stimulus from china? john: not a lot. we have growth in china essentially stable next year. they are obviously -- the tariffs are obviously impacting more directly on china. we think we have seen the majority of. the overall situation is one word about the markets will have to do more -- is one where developed markets will have to do more heavy lifting. john wraith thank you so

much for joining us this hour, head of european, and u.k. rate strategy at ubs. we will bring you this morning's stock movers, including medicine company up in premarket on takeover reports. this is bloomberg.

economics, finance, and politics. this is "bloomberg surveillance." let's check in on your biggest stock movers with annmarie hordern. >> a lot of news in the u.s. is actually moving european corporates this morning. stc is opting for a public auction of airwave. this means this could mean billions of dollars for them unable to tap into. cindy world. d upore than 3% -- cineworl more than 3%. cineworld is in the u.s. with a theater called regal. the thinking is the hollywood studios could buy up some of these chains. easyjet to the upside, up more than 4%, even though they said

they were trim expansion exterior. some of this may be opening up space to raise higher fares. i want to show you what is going on in the u.s. premarket after a bloomberg scoop. medicines is surging come up more than 10%. they have a promising -- surging, up more than 10%. they have a promising cholesterol drug. one of those interested is novartis. nejra: bloomberg surveillance continues in the next hour, guy johnson in london and tom keene in new york will take over. our conversation with the mark mobius of mobius capital partners. markets having some risk appetite. the stoxx 600 higher in today's session. u.s. futures indicating we could see a fifth record in the s&p 500 today. we kind of whipsawed a little bit yesterday, got to a reluctant record. the euro steady. we saw some strength yesterday

on a weaker dollar following the meeting between president trump and jay powell. from yesterday. you are seeing a little bit of risk appetite. one thing about european equities is that carmakers have been leading the gains, boosted by data showing the region's car sales jumped in october. not a whole lot of direction in terms of direction of u.s.-china trade talks. a lot seems to have been priced in. that could mean room for disappointment by the end of the year. this is bloomberg.

this morning pompeo

requested an independent probe of hong kong riots. lam manages the message weapons must give up their weapons." market,is great bull the bears capitulate. this is "bloomberg surveillance." i am tom keene in new york. in london for francine lacqua. you have put a lot of time into airbus and their challenge from boeing. it has flipped. how good is airbus, as a general statement, feeling after the trouble chicago and san francisco are having? guy: i have to say that his view

is it is a struggle still to take advantage of the woes being in seattle. they sold so many of the narrow-body aircraft, they sold out so fast it is a struggle to take extra orders. that is the problem. it's a struggle for airbus to take advantage of this. they would like to, but they can't. this withll touch on guy johnson. a huge news flow. viviana: we begin in hong kong where carrie lam is talking for a peaceful resolution to a standoff between police and antigovernment protesters, raising fears of a bloody crackdown. overnight 600 protesters escaped or were evacuated. 100 remain on campus.

the u.s. walking out of military talks with south korea bulking theynald trump's request pay five times more for having america's troops there, raising questions about one of america's closest alliances. the two meeting at the white house, also with steven mnuchin. the president has constantly criticized powell. relative to other developed nations, he says u.s. rates are too high. says the warren investment firm is shamelessly profiting from the 2008 housing crisis. they bought houses and apartments in foreclosure. they say they began buying houses after the prices subsided in 2012. 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: equities, bonds, currencies, commodities. the great bull market continues, dow up 111 points putting dow futures at 28.119. that is extraordinary. let's leave it at one screen today. what do you have? guy: light volume in europe once again. trying to get a signal from the noise, it is quite fickle. risk sectors to the fore, but just. watch the pound tonight. we have the debate between jeremy corbyn and boris johnson. tom: edwards driving that conversation forward in our conversation with the labor leader. we will go to hong kong in a moment. the bull market is extraordinary. it was a legitimate

bull market about december 20, maybe december 24. correction, no correction, and a new leg up confounding the bears out there. morgan stanley will join us in the next hour. from socgen, the correlation between bond yields - and euro yen. do you believe that bond yields can go significantly higher, if not you have to look at euro-yen. about 100 protesters remained surrounded by police in a siege on the city's polytechnic university campus. 600 people escaped or were

evacuated overnight. we are joined by bloomberg's international editor, joining us out of hong kong. is there an expectation we see some resolution to the siege today? at this point.r this has been going on for several days. there were hundreds of people who did leave, either voluntarily or were arrested. we haven't really seen much movement today. the numbers differ. some say there are 60, some say several hundred, but there are people on the college campus, and they are there and the police are surrounding them. press lam held her briefing here and basically said that she appealed for there to be no violence, for them to voluntarily leave, but she couldn't guarantee it wouldn't in with violence. tom: are the protesters

affiliated with any political party, any belief of the people of hong kong, or are they simply young and angry? , butey are certainly that in terms of the whole protest movement, we have seen it start as a very widespread movement that had support. we have had millions of people in the streets early on. the people who have been in situations like this have tended to be a much smaller group, much younger, and obviously it has become very violent. there have been a lot of violent clashes, including probably the worst day at polytechnic yesterday when we saw cars on fire, fires raging, and a lot of teargas. guy: looking forward to continuing coverage, thank you very much. joining us with what is

happening in hong kong. joining us now the global head of fx strategy and the pair head of derivative strategy -- paribas head of derivative strategy. the biggest threat with risk assets is what happens with trade. if i look at hong kong, is that the biggest risk? that the hong kong story feeds in to trade risk and we don't get a deal done? >> no. if i were to be quite cynical i wouldn't say president trump would hang his hat in hong kong. he would take the trade deal priority over anything else. his international policy has been about pulling back, america first, remember? not hong kong first. i am afraid hong kong will not figure largely in his plans at this .1 year before an election. thatis there a danger

parliament takes it out of the president's hand? if that legislation goes through and the chinese react to it, it will we see that back into the trade narrative? >> i would say no. it is unlikely they will approve a big obstacle to be -- they will prove to be a big obstacle for trump. guy: they do have a problem with what is going on in hong kong. beeney deal, but has that an issue with the trump's relations before? no. of: how do the many stories politics, how does it fold into your year ahead essay? 60 to 70 pages of year ahead belief. how do you use these events with an economics, finance, and investment? ofwe are making a number assumptions, that we basically get an interim trade agreement that is then passed so we

prevent any further escalation and trade tensions. i am giving what we have seen in manufacturing data around the world. our basic viewing 20 20 would be we see some dollar weakness, a little bit of appreciation for some of the high-yielders. that we see a broader more positive risk environment into 2020 for most currencies. verywe spoke yesterday, a cautious view of economic growth. edmund, how do you fold the caution into the view forward? >> i think, to be fair to daniel, he is only cautious in the short term. he is looking for a gradual pickup in gdp growth in the u.s. through 2020 from below probably the first quarter. let's say the low end growth is 1% this quarter and next

quarter, then you see a progression back to trend growth around 2%. cautious today, absolutely. clashes in a years time, less so. when you talk about assets particularly, we do try to think a little about the future as well, so we decry the pathway up to 12 months in the future. we are at a low economic growth and momentum. assuming it increases we will be more positive going forward. that's the message. guy: you think we get a trade deal done by december 15, and if not more sanctions will go on? it seems the global economy needs a rollback in sanctions to get growth going, and if that doesn't happen growth will be difficult next year. >> i am hesitant to call it a deal. phase one by december 15. we think we get phase one and

there is a chance for limited rollback. thehe absolute minimum, market price in new sanctions. if that is announced in phase one that would be a disappointment to risk assets. we have priced a probability of limited rollback in phase one. it we would see zero rollback that would be a setback considering the noise we have seen so far. tom: absolutely extraordinary. about.re to talk the value play in play. banking and an important update. later. this is bloomberg. ♪

viviana: you are watching "bloomberg surveillance." let's get your bloomberg business flash. boeing is building momentum when its grounded 747 max will return to the sky. bloomberg has learned an undisclosed customer ordered 20 of them worth $6 million at -- $6 billion at list prices. european prices cut. mumbai-based company blinking stagnant demand in europe and trade wars. they have steel mills in the u.k. and the the netherlands. thank you. we want to bring up the total

return. this is the reality. right now it's a little hard to see. this is the world equity index screen on the bloomberg. dow jones up 20%. composite of 28.9%. these are extraordinary numbers. there is no other way to put it. edmund, what do the pros get wrong looking for single digits? looking to try to manage forward a decent return. the market says no and goes straight up. went to the pros get wrong? cautious asr always. at the beginning of any year equity strategists look on -- i have been in equity strategist for a long time and i recognize our fault. we look for the 10% upside every year. the number of times equity markets go up between 5% and 7%

is a small percentage, like 5% of the time. the s&p since 1928 the bucket of returns, the most popular that happened the most often in the u.s., has been 25% to 30%. this year, if you think of the mode not the means, it is bad on the mode. tom: they have all been humbled. if we could give this back suddenly given a set of difficult events. our use to do correction pullback, or for the healthy -- d for a steele correction pullback? a queuenally thinking for this year and one of the reasons why clients and investors have been so cautious is they remember q4 last year and what a horror story that was. we had a good year and then q4

we lost it all and more. people are quick to take profitability in q3 and become more positioned. my feeling here is that there is a good chance for a small, not even a correction, but a pullback. i think people will be buying because a lot of investors are desperate to up their equity ratings on any small excuse. is volatility solo across all the asset classes, including equities and really including fx? in largel banks part. surprisingtely has a effect, note -- acer pressing effect, no question. surpressing effect, no question. vol thathave low

is normally a warning sign. that is when the red lights flash and you say if we get any change in the fundamental data we could see a position squeeze and a large increase in vol. that is not the case at the moment. tom: peter, what is the dollar dynamic with edmund's equity market? you finally get the dollar to move weaker. what does that do to sox? tocks. >> it is good news for u.s. stocks and global stocks. it is good news for u.s. earnings. if we look at the s&p and the money equity indices they trade up relatively elevated levels. the catalyst for even better performance year would of course be an improvement in the year end earnings outlook. where we see a weaker dollar that will help on u.s. earnings.

that is how we think about the dollar at the moment. next see the dollar weaken year it would be good news for u.s. stocks. edmund, november 19, are we into the year-end ballet where there is a natural inclination for a lift in prices? >> yes and no. am: wait a minute, that is "surveillance" answer if i have ever heard it. me ave me a chance, give chance. let me be precise, and then you can slaughter me afterwards. in the broader sense it is strong, particularly in the more cyclical indices. it finishes in early may. so yes.

however, the sweetest spot starts when everyone goes on holiday. we aren't there yet. byhave a few weeks to presence before we go for this and it is ultra-bullish for u.s. global equities which is the pre-election year. in september you usually start to see a really good rally. that won't have started. tom: yes and no. guy johnson sitting on queen victoria street. in a timely conversation with the chairman of the securities and exchange commission. stay with us. this is bloomberg. ♪ ♪

>> we are in a good place. the compositions been a little different than we expected? we didn't expect consumption to be quite so strong. the imposition of the tariffs in the global slowdown resulted in both exports and business fixed investment being weaker than we would have forecast, but consumption has picked up, then quite strong, an we expect that can -- and we expect that to continue. guy: if we don't get a trade deal by december 15 we have to put the fed back on the table. at the moment it is on the

sidelines. if trey doesn't happen, do we need to start pricing and cuts for next year? >> my answer would bs irrespective of what happens on trade -- would be yes irrespective of what happens on trade. weould say coming into 2020 are likely to see a situation where we see the core inflation come off a little bit. we we get any news on trade or growth whatsoever, that critical environment for that fed, no question they will cut rates. to push fed was keen back on a political interference. is that the reason? >> i think it is a normal tete-a-tete between powell and trump. it did happen with bernanke. it does tend to happen. powell will push back against any perception of political interference, but, i often say that trump is by far the best

forward guidance for any bank. if he wants a weaker dollar, he gets a weaker dollar. if you want to lower oil prices come he gets lower oil prices. coming up, johnson and corbin set to go head-to-head in the first u.k. election debate. lead labour party to conservative party? we will see. this is bloomberg. ♪

tom: up, up we go. down 30,000. guy johnson, i haven't gone through that mathematics yet.

we will do that sometime today. guy johnson in london, tom keene in new york, we need a briefing today. the u.s. senate is on the verge of passing a bill to support the hong kong protesters. the measure has been met with silence by president trump. hehas yet to indicate if would sign legislation that could anger china when the two countries are still negotiating a trade deal. antigovernment protests in iran raising the question is the ofmp campaign maximum pressure starting to work? it led to buses and banks being burned and a number of people killed. tensions in iran have risen since the u.s. pulled out of the nuclear deal entry imposed economic sanctions. ousted bolivian president morales says the rightful president is the senator from his majority socialist party. --tead the interim leader

and mexico morales was asked if he had any contact with the government. any.don't have as far as i know the only communication is between legislators. between legislators and legislators from the right-wing that took part in the queue. they have contact to set some rules, probably. >> opponents have accused morales of trying to rig last month's vote. he quit on november 10 and say he is the victim of a right wing coup. 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. guy: thank you, very much. the election campaign heating up. party leaders failing to impress business executives yesterday caught between boris johnson's

brexit in jeremy corbyn's nationalization plan. advantages of voting conservative in this election is that we can and will get it done, and get it done in a matter of weeks. we have a deal ready to go, just add hot water, stir in pot. it is there. >> we are offering for this country to negotiate a deal with the european union which gives a credible leave option as well as remain and put that to vote. >> we are being very ambitious in this election to bring much more reason to british politics. >> if we get a working majority we can get parliament working for you and unleash the potential of the whole country. >> a properly functioning public sector that provides the care so

essential to our lives. those are areas we will be campaigning strongly on. >> we are not in the business of putting into number 10 as someone so obviously unfit to do that job as boris johnson and jeremy corbyn. of: let's get a take away where the pound goes mnext. let's talk about the pound. 1 are trading just shy of .30 .35. gets us to 1 >> up to the election the spread between conservative and labour stays where it is. what we saw was the spread between the conservatives and theur narrowed throughout campaign. that led to a subsequent hung

parliament. i think investors are wary of that. with they will want to see is that conservative lead remained steady. up until about a week before the election, that is when sterling flies. >> they are extremely undervalued. if you look at the global equity market rally this year and you say the euro zone and u.s. has done 25% year to date each day, what has the ftse done? 8%. 100 has little to do with the messy politics apart from certain names. the vast majority of the ftse 100 has nothing t do with the u.k. economy or politics, yet 8%. ast is interesting to me is soon as it goes out the mid-cap

companies go up, too. people are starting to reprice that on the back of a potential conservative majority. tom: do i buy the indexes of the united kingdom, or are there sectors where i can get a better pop when things turn out rosie? >> here's one for you. if you want to go gung ho you by u.k. dividend yielding stocks. if you buy an index of those stocks which will cost you virtually nothing, you get over 6% in this negative yield world. let's not to like about that? is some serious competition right now. currency adjust that, what is your call on sterling? is that ever higher? >> i don't think it will have that much of an effect on the underlying domestically-focused

equities. that is more of the uncertainty which will. lead to there is a case for sterling appreciation. year,he course of next potentially doing further levels, that could see around 140-ish. there's definitely more upside for sterling from current levels. let's take a look at what you should be looking for out for the rest of the day. 's third-quarter results from some of the biggest retailers, including home depot continue this rally. top of the u.s. open, public impeachment hearings into president trump, and tonight boys johnson and jeremy corbyn

head-to-head the first u.k. election debate. that is all coming up. this is bloomberg. ♪

>> there is quite a heavy cloud of uncertainty hanging over the world economy. the more that can be done to reduce uncertainty, especially to reduced trade tensions hopefully to remove from trade truce to trade piece, and also the more governments can do to use all the tools they have at their disposal to boost that chance, and what we are recommending is you have monetary policy space, use it. ,e have to recognize

accommodative policy helped. it helped with employment. look at the employment in germany. it helped with growth everywhere. time, theit inevitable risks -- when it goes the inevitable risks start compounding. tom: in berlin speaking of synchronized slowdowns. guy: what will that have on the oil price next year? let's figure that one out. the global economy doesn't look great next year. the economic data with a recently slow set of growth, figures from around the world, that is what the imf is pointing to. 61, a little north. what is it do next year? >> steady. global economic growth will

drive the oil price, but the oil price is fairly depressed from where it has been historically. we think 55 to 65 is a good range. u.s. oil production will be less next year which will be a boost for oil prices going forward. i amwhat do you think, and curious to put this in the complexity of the aramco ipo coming up, the saudis want elevated prices as we approach that ipo. do you think the desire to have prices steady into the ipo will keep us where we are? energykey for the entire sector, including the aramco ipo, is stable oil prices. we need steady oil prices to bring investors back to the energy sector. higher oil prices would help valuation of the saudi aramco ipo. we are days away from pricing. we are probably stuck where we are. us: good to have you with

from london. you own the idea that i can take income from limited partnerships and i can make total return out of it. has that experiment been successful? you can get a snappy yield but if you get a price to climb, the idea of a higher yield on mlps? good point. tortoise has been investing in partnerships for a couple of decades. over the long-term you have total returns that reflect obvious capital appreciation in the current dividend yield. over the last several years you have seen price decline offset some of that dividend yield. if you look at mlps and energy infrastructure and the need and critical nature of the structure and the yield you can get them investing in energy infrastructure, you were talking about 6% yield being attractive. 7%,lp space you have 6%,

9%, 10%. tom: we understand the structure of mlps. are you at risk for capital erosion as you enjoy the substantial yield? atwell, if you look valuation multiples and where the mlp's are trading versus history, mlps are trading at lower than historical enterprise. we think that there are still opportunities for capital appreciation, not necessarily capital depreciation, tom. guy: capital is moving away from the energy sector at the moment. what is it that can possibly turn people's heads towards the energy sector once again? what will it take? high oil prices? with esg there and more people having it as a principal part of their portfolios, why invest? >> that's a good point. tortoise has a strategy. do youroach is how

reduce carbon emissions in environment where you will have global energy demand rise. population and gdp growth will grow and you will have natural energy demand rise, but we have to reduce carbon emissions. investing in companies in the energy sector that are helping or contributing to lower carbon emissions, where is that happening? places like renewables as well as natural gas. natural gas can reduce carbon emissions. carbon emissions in the u.s. have declined in the last 10 years because of less coal in more natural gas. tom: greatly appreciate that today. we will continue. a lot coming up on e.m. and the burgeoning international market. mr. mobius of mobius capital partners, always timely. this is bloomberg. ♪

>> i think we will start seeing

more consolidation in the industry. airlines are concerned with being more efficient, less of them, and perhaps more efficient usage of their inventory. 2021,ite optimistic in 2022, but 2020 will be difficult. quality control is perhaps not what it should be. that there is a rush to market to get things done. i'm not saying that they cut corners dilbert lee, i'm saying is a result of the speed -- corners deliberately, i'm saying as a of the speed and the quality control out to people like us needs to be greatly improved. my own view is that we are talking about maybe in the first ,uarter calendar next year possibly even a bit longer, but in the end, i repeat the

question, the only instance in which will sanction the flying of this aircraft are the regulators. not bowing. -- not boeing. is in forohnson francine lacqua today. there are people that talk and people that do. guy has done miles on airplanes to understand it. i'm sick of the happy talk. e article this weekend that said american airline staff are begging not to fly on the 737 fax. are they going to get this thing off the ground based on your reporting? guy: probably next year. that seems to be the direction of travel at the moment. we will probably see some sort of regulatory clearance at the back end of this year. it will be the issue of training pilots and if they will simulated time.

you are looking at a first half of next year return to service. it will be staggered around the world. the faa will be first, probably the european operators after that, but not long. the chinese could take quite a while to rea recertify the aircraft. tom: is that the gift that keeps giving to airbus? guy: probably not. sold so many of these airplanes so far out that in order to get extra slots to allow airlines if they want to 737 itfrom single source is incredibly difficult. you can't make that happen quickly. the other thing is what happens with recertification derivatives. a-320, doesan old

that need to be recertified? there was rating this very issue -- there was rating this very issue. attention for the regulators, otherwise the recertification process will be broken and fragmented. we have built our safety record, which is exceptional in aviation, on the reciprocity in the certification process. is: basically what he worried about is in the end we end up with differentiation when it comes to the regulatory process for certifying aircraft. that would add huge costs to bringing a new aircraft to the market. the one that stands out, the .iggest risk, is the 777x well that need to be fully recertified? will that push back the service

time? comment, whatl can you do about the taxes at heathrow? when i buy a plane ticket to london the taxes at heathrow are enough to choke a horse. can you solve that? guy: unlikely. you will likely see those taxes go higher and higher. i'm not sure it's the right solution, but probably the easiest from a political point of view. they're probably going to go up more on narrowbody than long-haul. tom: absolutely fascinating. edmund, it really shows the internationalization what we are doing on airlines, jetting aournd, pushing venice into the ground with our tourism and all that. how do you play the new internationalism and the equity

market, not just airlines, but how do you go international if it is a five to 10 year trend? >> well, there are two things you can do. two big trends at play. first, the whole sri trend is a big one. sri index has been outperforming the benchmark quite consistently for the last few years. i think that continues. this shift towards a shaming and the focus on environmental responsibility on corporate governance takes a leg up. secondly, you want to look away from amazon and netflix. what is interesting is that they are tech about consumer and they are losing altitude. what i think will gain altitude and where the natural growth will be for consumers and consumer tech is emerging-markets. india.ack to china and

i know that you can buy good chinese stocks. the new emerging area will be india where you have a lot of consumers who don't even have a smartphone yet. in in awas coming bentley today, i didn't think he as going to talk rupee. -- >> it depends how long you are investing in. passivefind is most investors will hedge about 40% to 45% of their underlying risk. if you have a much longer term dealing with more longer-term fixed asset you would hedge last. you have your cash flows from your dividends, etc. that is typically what we find. that is what i've asked my clients to do. guy: the value, sustainable?

>> absolutely. stay with it all the way. with the pickup and we expect, that will help thou you have a leg up. tom: this has been great. guy johnson, thank you for the airline brief, something critical to every viewer and listener of the bloomberg world. thank you so much for being with us. usnk you so much for joining today. coming up, we continue the discussion of the bond-stock nexis. this is bloomberg. ♪ here, it all starts with a simple...

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that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. tom: this morning, secretary of

state pompeo requesting an independent probe of the hong kong riots. advantage airbus, order by order. boeing challenged to show the x.fety of the 737 ma seeing way too much of guy johnson this hour. this is bloomberg surveillance. guy johnson denver francine lacqua -- infer francine look off. -- francine lacqua. this is not like the debate in atlanta. jeremy is one-on-one, corbyn versus boris johnson. and the scottish national party have been refused.

low for the way jeremy corbyn is likely to perform. pound has risen on growing expectations of a tory win. if jeremy does better, we will see. tom: pulling data out, we will brief you on that. a briefing in new york city. here is viviana hurtado. reporter: hong kong, carrie lam, calling for a peaceful between protesters and police. overnight, 600 demonstrators evacuated. 100 are still on campus. of talkswalking out with south korea. questions about the stability of one of the u.s.'s closest alliances. president trump said he

protested u.s. interest rates at a meeting with jerome powell. -- u.s. treasury secretary the president has criticized powell, saying u.s. rates are too high and salaries are growing faster in texas than in new york city. the u.s. commerce department says per capita personal income in midland, texas was more than $122,000, higher than that of new york, boston, san francisco or san jose in california. powered by more than 2700 journalists and analysts in over 120 countries, i'm viviana hurtado, this is bloomberg. tom: home depot out with earnings. usually it is a bellwether. nominal gdp equivalent. not today. home depot, a little lost. one home depot, strategic plan to move forward.

there chairman and ceo makes clear that it did not happen in this quarter. slower american economy. many economists, even the optimists, talking about a week fourth quarter, maybe that dovetails into lower interest rates. for home depot, this has been a really difficult quarter. sales light. all the other statistics, light. we see the stock performing light. the tenure track record of home depot orders on apple like. this is a bellwether for america. guy: i find this incredible. this is what they are doing with guidance. rates, remortgaging story in u.s., how much of a kicker lower rates, 75 basis points have given to that market, you would have thought this was

translating into people doing renovations, buying the lumber. it is fascinating. maybe coming through from higher expectations. i would have thought there would have been a transition from mortgage bonds to the bond market and further on into the likes of home depot. tom: they bellwether for the global audience, in america, we measure by federal express, home depot. absolutely dominant across america. there are a few others. walmart on retail sales as well. there is a lightness here and they highlight investment, maybe like amazon also to a strategic to sayo i am hesitant it falls in gdp. it has been challenging. data check. bonds, currencies, commodities, the great bull market continues. jim karen is not leaving the set

until we get the dow up. guy, what do you have today? guy: europe, just off session 4.08s through the morning, on the stoxx 600. ok in paris in frankfurt. german boones, small selloff in bonds. -- bunds. jeremy corbyn versus boris johnson. that, now just shy 1.30. tom: home depot, a challenge and slam. the message by management. that is a significant drop for home depot. much more on that today as well. james karen, one of the great charms of the gentleman a fixed income at morgan stanley, he has enjoyed losing money when the pig walks away.

long ago and far away, he traded this stuff. for decades, he has done strategy and fixed income portfolio management as well. double-digit total returns, tlt up, and norma's number, 20 year duration, everyone is making 2009, 2019 -- is next year a clip coupon year? >> in the sense that i do not expect there to be a big range. yields higher if we get recovery or stability. a lot has to do with the trade between u.s. and china. we could be in store for a small cyclical recovery, 2020. we have monetary stimulus. some call will go a long way. clip a coupon is correct. 10 year treasury yields could get to the 2.25% range. tom: i will ask the question. jim karen 101. bonds, low yield, flip the

reciprocal, newman eight or to denominator, that gives you and enormousquity -- equity. >> mike wilson and i are great friends. tom: i was trying to get there. , thee lower bond yields easier equity valuations are. tom: i have a 20 multiple. >> i am looking at the index. the idea behind the thing is lower rates are part of financial conditions, which are comprised of equities, currencies, interest rates. interest rates are a part of it. with them as low as they are, it supports the 18 multiple to the index right now. if there is earnings expansion you year, 5%, even that,

could support slightly higher than 18 multiple. it is still well valued. equities. i would not say it is over the top rich, relative to a bond guy's perspective. guy: good morning from london. big picture. people are talking monetary policy around the world, out of ammunition, fiscal policy taking over. is theetary policy done, 30 year bull market in bonds over? >> great question. --omberg had rosen grinned rosengren on yesterday. he said fiscal policy would have to be what comes next. clearly, what you need is political cooperation in order for that to happen. i don't see it in the immediate future. i see it if we go through a fiscalted slowdown, yes, policy will have to heavy lift,

in the form of infrastructure rebuild or taxes or something of that nature. the one thing we have to understand about fiscal policy -- fiscal multipliers. everyone talks about it as an elixir. theave to recognize multiplier effect you get on fiscal policy tends to be low, meaning you don't get as big of a bang to your buck and it tends to be shorter lived when you get fiscal stimulus as opposed to monetary symbols. fiscal stimulus tends to be a one-off boost or a boost over 1, 2 years, then the effects fade. interest rates tend to be stickier longer, putting the level of the cost of money in place. extra fiscal spending is not going to generate that much growth? what happens in the next downturn? >> depends on what type. next downturn, you're looking for impulse.

particularly, in downturn, you get some form of recovery mechanism, whether monetary or fiscal. it is not supposed to be a permanent mechanism of perpetual fiscal stimulus. it is supposed to give you a boost to get the man back and get animal spirits flowing again. we don't want to be too reliant on fiscal stimulus. it is probably, in the next downturn, it will probably be the biggest form of stimulus over that time. tom: jim karen with us as home depot blows up. much more on this. huge news flow. three sub headlines, absolutely critical. home depot, worst drop to december of '08. home depot, sales per square foot up, ok screen percent, but this is stunning. 1.9%,e ticket rose tiny customer transaction rose 1.5%.

really drives forward to a more otherq4, along with idiosyncrasies of home depot. down 7% now. jim karen with us from morgan stanley. this is bloomberg. ♪

>> you are watching bloomberg surveillance. boeing building momentum for -- for wendyd jets grounded jets return to the skies.

learned ang has undisclosed customer order 20 of them. jobs in the european operations cut, saying two thirds of the cuts, the move blamed for demand in europe, global overcapacity and trade wars. pg&e near settlement with california regulators over wildfires. bloomberg has learned the bankrupt utility would pay $1.7 billion in fines. they have been accused of failing to properly maintain equipment blamed for starting deadly fires in 2017. that is your bloomberg business flash. tom: thank you. when we have breaking news, i like to show you a chart off the terminal. we were able to whip this up,

short notice. nothing more than extraordinary home depot performance over 15 years versus walmart. couple really interesting things. red walmartepot, and the interesting thing is the malaise of walmart and then it changed. walmart started to move up, taking on amazon. home depot in a different world. and 2009.ince 2008 down 6.7% off difficult news today. gives you perspective on the success of home depot over recent years. we need perspective. sarah, usually we are talking luxury. luxury of a two by four. take us back. why has home depot been so excellent? what is the pixie dust? >> they have done a good job of

connecting with customers, particularly that general contractor, making sure they have the assortment they need and the pricing they need. until now, home depot has done a good job of bridging digital and physical. online orders are picked up in store more so than at most retailers. they have done a good job of making that a seamless experience for the customer. that has been important. tom: in your world, everyone wants strategic plan. maybe one barney's out there i don't know. international audience, barney's down in flames on madison avenue as we speak. what in god's name is one home depot? digitalidea that the and physical need to come together, online cannot exist in one silo, and the physical in another.

they have been on a multiyear journey to fix that. some of that is customer facing stuff, being able to purchase online, pick it up in store. sun is behind the scenes like fixing i.t., rejiggering supply chains for both channels. what sounds like this quarter what happened is a stumble in that mission. 3.6%,able sales growth of many retailers would kill for that in this environment. it is lower than analyst expectations and lower than what we have been accustomed to with home depot. they chalked it up to sloan and's -- to slowness. guy: this chart is worth paying attention to. home depot, the blue line. u.s.,me sales in one-family houses sold. one-for-one. sarah, let's talk about the mortgage market. mortgages supercheap.

i would've thought demand of the kind of stuff hd is selling right now would be skyhigh. >> you are absolutely right. this is so concerning. they have typically done a good job of navigating the housing market and upbeat consumer in general. when they cut guidance earlier this year, it was attributable to macro factors like deflation and lumber prices and conservative is around china tariffs. this is the first time in a long time we have seen them cut guidance because of their own misreading of the marketplace, performance or inability to time rollout of strategic initiatives. withwe rip up the script chef james karen of morgan stanley, buying the camp chef smoke vault gas smoker to smoke the turkey. give us the opinion. when was the last time you

bought a straight two by four at home depot? [laughter] >> i think i did a good job of connecting the macro to what is going on. it is not a vacuum. when you look at that chart of home depot, 2008, right after the crisis, people were repairing homes, not buying new homes. they got a boost. then we had a housing market that started to accelerate over the past 5-7 years. now we are seeing a plateau in new home sales, appreciation, a lot of that stuff is going sideways, still positive trajectory. what many people are looking at is forward earnings or expectation of demand for services going forward in a market that has done well and is probably reaching a more normalized level of growth in home price appreciation and what have you. this is partially what is going on. connecting the macro to this is important. numbersrth-quarter gdp

well under 2%, any number of services. morgan stanley, obviously with a challenging call. sarah, thank you. on short notice to give us wisdom on home depot as well. lots going on. harris associates, david coming up on value. maybe home depot will become a value. stay with us. home depot down 7%, this is bloomberg. ♪

need so muchure we accommodation at this time. i'm a little worried we would have less room for a negative shock. the long end of the market has been fluctuating between 1.5% and 2%, a lot lower than what we are experiencing before the last recession which means quantitative easing would have some effect. guy: the view from boston. the view from morgan stanley. the fed is on the sidelines. if we don't get a trade deal by december 15, do we have to put them back on the table? jim: the odds go up. it will depend what happens down the road. if we look at other markets. credit spreads, relatively low and tight.

credit is cheap and money is accessible. does the additional 25 basis point rate cut by the fed, does that really help at this point? does it need to? equity markets are doing well. we effectively need to see the dollar getting weaker. we would like to see that. that would be broadly good from a world growth perspective. i don't necessarily think that if we don't get the china deal done in december, the fed will immediately be back on the table by january/february. tom: bombshell. moments ago. bloomberg economics. retails holiday season could be the weakest in a decade. what do your people say? this folds into fixed income in stocks. are you looking for a worn-out consumer? jim: we think consumption will weaken. that is important. narrative has been consumer is holding this up.

what will take the place of the consumer? i will be out of consensus and say manufacturing. pmi's, iok at ism, think they bottomed. ni,lical recovery theme, mi capex manufacturing taking the place of consumer to some degree but consumption is 70% of gdp. q4 estimates for growth will be less. tom: that news. holiday shopping, jewelry right at the top. jewelry looks good. stop laughing. jewelry looks good for holiday shopping. news you can use on bloomberg surveillance. coming up, the fcc. ♪

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every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. >> i think we will start seeing more consolidation in industry, as far as airlines are concerned, more efficient, more

efficient usage of inventory. 2001.ptimistic in 2020 will be difficult. there other issues that suggest that quality control is not what it should be, that there is a rush to market to get things done. i'm not saying they cut corners to liberally. i am saying as a result of speed, they are overlooking important areas. quality control out of the plants needs to be greatly improved. we are talking about maybe first quarter calendar, next year, possibly even longer. in the end, the only people, entities which will sanction the flying of the aircraft is regulators. not bowing. -- boeing.

tom: i spoke to him years ago in dubai. a real force in the airline business. guy johnson, really earning the miles, the airshows and the study of this crazy business we use. why are we hearing from the american airline companies, united, american, delta, why are we only hearing from emirates? guy: he is talking about what is going on with his particular airline and sector. we have heard from those airlines. they have pushed back service dates to the max well into next year. they not expecting the aircraft back in service until march at the earliest. you can see it from the way they are structuring expected fleet development next year. they don't expect it back. the moment the time i looks like some degree of certification,

they will argue about how you get pilots retrained, if at all, then entry into service january/february/march? tom: stunning. i believe it was the washington post or the times with a blunt story about staff saying they really question if they will get in 2020.7 max first word news. >> u.s. senate on the verge of passing a bill to support hong kong protesters. that measure has been met with silence from president trump, who is yet to indicate anything because it could anger china. the countries are still negotiating trade. administration is formally reversing its stance, israeli settlements in the west

bank are illegal. secretary pompeo saying it does not violate all international law. blow toians call this a justice and peace. a senator from his majority socialist party, the interim leader, the u.s. and brazil recognizes her claim. ifmexico, morales was asked he had any contact with the government. >> i don't have any channel. as far as i know, only communication is between legislators. they have contact in order to set rules, probably. reporter: bolivia has been in terminal -- in turmoil. victim of as the right wing coup. dayal news, 24 hours a powered by more than 2700

journalists and analysts in over 120 countries. i'm viviana hurtado, this is bloomberg.. tom: thank you. with our chief washington correspondent, kevin cirilli, we can catch up on the gossip of washington but instead i am fascinated about how the staff is showing up at the impeachment testimony. david holmes has been doing this for 17 years, out of pomona, princeton, st. andrews in england. what has fascinated me is, why do we want to hear from a counselor, a junior level staff on ukraine? kevin: it is also jennifer williams, senior advisor to vice president mike pence, testifying today along with the national security official. in terms of david holmes, the reason he is so interesting is he is an individual that says he overheard the conversation

between president trump and gordon sondland, the eu ambassador who is testifying publicly on wednesday, tomorrow new york time. president trump asked for an update with regards to president zelensky investigating into the bidens in exchange for that aid. like a these people have paper trail diaries notebook? are they just mouthing off? is it all documented in the past? reporter: such a great question. as of now, nothing has come out yet to indicate one way or the other. i was struck. sources i talked to, the budget guy, mark zandi, he testified the other day behind closed doors. that would suggest members of congress, the house intelligence committee are looking into

documents to see whether there are documents, especially as relates to the $400 million. london.d morning from equity market volatility has fallen since impeachment started. markets firmly believe this is a nonevent because they think the president probably will get convicted in the house but nothing will happen in the senate. is there anything thus far that this abuses us from that idea? >> now. markets have not blinked on any transcripts. note, thisesting to is a vote of confidence from investors on the constitutional system and a democratic system in the u.s. i would note other volatility on the horizon. they have to pass a government funding bill. short term one-month extension

into december to keep the government open. mey economists have told taxes have been priced in in the next three months. speaker pelosi, president trump indicating confidence. u.s. and china, december 15, key deadline for volatility. tom: thank you. kevin cirilli on the events inside the beltway. stanley, thean flow of paper expected to come out. credit and theat credit market. will we see a wall of paper? jim: i think we will. we will have to fund more going forward. that is expected. there is demand. if you asked most in markets, they say liquidity is not enough, i cannot place enough money in bonds that i want.

we are in an interesting spot. rates are low. that is contradictory to having a lot of demand. because there is expectation rates will stay low for extended periods, they may wiggle but generally speaking we are not looking for significant sustainable rise in interest rates, there could be a wall of paper coming toward us. refinancings, more treasury issuance, corporate's, what have you, i think it will be met with good demand. tom: demand issue. jon ferro has been brilliant. for 20atiable demand basis points away, is it too much like 2006? jim: not to the extent of leverage. there was more leverage in the system. mostly short-term financing. this is more longer-term. not done with a lot of leverage. regulation has made that the case.

case of aee this as a tinderbox of overloading on more and more interest rates, assets, fixed income. i see this as demand. interest rates are low around the world. negative in many places. $16 trillion of negative yielding debt. when you get a positive yield, sometimes that will attract attention. francine: -- guy: average discount rate for pension fund 3.7% jim: that is a problem. yields lower and lower, liabilities in the future, higher and higher. many insurance companies, when there are long-duration assets, with low interest rates, which have a higher yield, typically are getting heavily demanded for, even at this 3.75% level. in many cases, even lower than that. look at the 30 year treasury

just over 2%. there is significant demand for long-duration players in market. what they are trying to do is plug the hole, meet the funding gap and try to march along. this is where things could get ugly when rates rise. we don't know when that could be. tom: we will continue. home depot down 7%. time of the year when people adjust. moffett.us, craig at&t, sell, his cut, rating with a scathing note. no other way to do it. start with the entertainment group. he notices subscriptions down 15%. blistering analysis. falling faster than revenue.

really quite a note from mr. moffett. international and emerging markets. always important to speak to mark about when finally internationals perform as the u.s. does. with david westin later. dow futures up. this is bloomberg. ♪

>> the government has to figure out a way to live within budgetary constraints that exist. work ond to continue to

expenditures,rom delivering good value for the country. i want to say we have to give credit to the general authority. they are providing the stimulus. there is a big percentage boost. they also came up with an ambitious climate plan. for those, may others follow. that would also inject stimulus. tom: matt miller, spirited discussion with the new managing director of the imf. her new great theme, synchronized slowdown. jim with us from morgan stanley, single best chart. next september 20, the red sox will beat tampa bay, what are they? rays.

they have a day off to fly back to boston. that is when we hit dow 30,000. we have used fancy mathematics of the terminal to regress. i will not go into details. unimaginable. here we are. low rates. everyone wrong on the higher rate call, which is why we are talking about dow 30,000. who says they will go higher? jim: if we get some recovery --t year, which is expected then to what degree? are we talking about anything more than 40 basis points higher, 10 year yield? that is just a correction. low rates. it is all about earnings, growth. you can get cyclical recovery. resetif we had midcycle and interest rate policy easier,

2020 setting us up for cyclical recovery. and witharnings back the p/e ratios cyclical part of the markets which has been mainly unloved. more value versus growth. that could probably boost prices higher but i am not an equity analyst. i look at cash flows. i discount those at interest-rate, which is low, which increases present value. that gives me upward pressure. tom: what about energy? jim: energy is difficult. there are pockets of energy that are good. in cyclical recovery, that is where you want to be. financing and financial

structure of many energy companies don't look good. if they don't get earnings. tom: what price do they need to generate earnings? jim: tougher question. level,bably need price more broader based global growth in the area north of 3%. say 3.3%. wti somewhere in there would look ok. tom: there you go. next year will be interesting for that sector. next, jim will stick around. manager.ome portfolio talking about the pound. jim may join tom on radio. up next, johnson and corbin, face-off tonight on u.k. television.

what impact will it have on the pound? changed.les have you have scenarios now. you don't have a view. you cannot have them both winning. we don't know which one it is. you have three different views that could have dramatic impact on sterling. trading that way in december. ♪

>> let's get they bloomberg business flash. shares of home depot down sharply in premarket trading. cutting growth estimates for the full year, the second time this year the company cut guidance. fourth quarter sales were worse than expected. to fuel long-term growth, easyjet ordering a dozen narrowbody jets. capacity is pushing back another set of deliveries. now that demand has been more challenged, when you look at

yield environment, most airlines are trying to mature growth and continue to focus on delivering and optimizing results. reporter: in the 12 months that ended in september, easyjet profits falling 26%. passenger numbers rising 9%. guy: thank you. u.k. election campaign heating up. party leaders failing to impress when it comes to executives. cbi conference yesterday. tonight, we get the big debate. boris johnson versus jeremy corbyn. expectations may be low for jeremy corbyn. if he does better than expected, the pound goes down? let's figure out where we are. how would you rate either of their chances of exceeding expectations? reporter: expectations for

jeremy corbyn are low. they were low in 2017 and he exceeded them and went on to win for the labour party their largest increase in vote chair since world war ii. does it happen twice? there were voters impressed with him then. at the time they did not know him well. they have had a lot of time to get to know him. will those voters who have abandoned labour party over brexit or for other reasons, now come back? probably unlikely. that said, it has also been argued the underdog has advantage in these debates. david cameron famously debatened after the 2010 that the format favors the underdog, which is surely jeremy corbyn tonight. win for boris johnson is to hold the line.

he has got a commanding lead in polls. known as a good debater. he has struggled before. that has not prevented him from winning elections. against ken livingston in the london, for example. he needs to not mess up. hold the line. matters is not simply who watches, but whether those who watch are likely to change their minds. there was a pull out that showed 62%oll out that showed that watching the debate are not likely to change their mind. guy: what would make people change their minds? if you have made up your mind on brexit, what makes you change your mind? are people voting on

brexit or the nhs and social policy? brexit,are voting on minds are made up. the other thing that could change people's minds, some major event, manifesto, something that changes this campaign. i don't see either very likely. we have a manifesto coming out thursday. guy: we will see what happens. thank you. on bloomberg tv and radio, a conversation with this gentleman. this is bloomberg. ♪

♪ alix: trump-powell protest.

president trump tweets he protested u.s. interest rates in powell's meeting. d.c. speaks out on hong kong. mitch mcconnell urges the president to defend protesters. mike pompeo says he is gravely concerned about the violence. u.s. stocks close at another record. technology stocks raced to their best earnings in a decade. . retail on deck. come to "bloomberg daybreak" on this tuesday, november 19. earnings, and on comp sales wind up looking like for the full year. it downgraded its full-year earnings. you got the home depot and kohl's double way me in premarket, but other than that, it is really quiet. you're still seeing that melt up in the broader equity market.