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has investors start to reassess risk. the other risk that needs to be reassessed, are we underpricing the fact we could see an upset in the conservative majority, cable down .2%. coming up, a host of interviews from the bloomberg's economy forum. tomorrow, standard chartered's

ceo anddman sachs former white house adviser gary cohn, an absolutely stunning lineup. let's get the first word news with viviana hurtado. >> he didn't initially realize the white house was putting unacceptable pressure on ukraine, this from a former envoy. joe biden.ng former special envoy kurt volker was one of four witnesses yesterday. next will be gordon sondland. the fed minutes will likely reinforce rates are on hold. chairman powell addressed the congress twice last week. the signal policy is in a good place provided there isn't a " material reassessment of the outlook." the key thing from the minutes will be what that phrase means. protests in iran have left at least 106 people dead according to amnesty international.

thousands took to the streets after authorities increased gas prices as much as 300%. arrestedforces thousands. netanyahu isnjamin calling on rivals to form a unity government. according to the jerusalem post, he hopes for a deal with his main opponent after reports of a power sharing between the rivals. contract runs until the end of the 2020 three season. he oversaw an unfortunate spell of manchester united, he hosted chelsea and milan. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. nejra: thank you so much. let's get to breaking news and

the ecb publishing its financial stability review. the takeaway is the ecb is flagging risk to financial stability from its own stimulus. some of the headlines to draw your attention to is the ecb sees signs of excessive risk-taking in some sectors. --seems the possibility of a it sees the possibility of a contraction by 2020 come at a possibility rising to 22%. a renewed cutie could cause shall -- qe could cause shortages in the report market. potential side effects from its loose monetary policy, highlighting how years of stimulus designed to bolster the economy is leading to an erosion of financial stability. the financial stability review is pointing to the side effects of low rates and is noting the weakening profitability prospects of euro area banks. globalave been saying, stocks have taken a hit after the u.s. senate passed a bill aimed at supporting protesters in hong kong and warning china

against violent suppression of the demonstrations. beijing has warned of retaliation. let's get to senior editor jodie snyder. we've got warning -- jodi schneider. we've got warnings of retaliations. do we have any sense of what form they might take? --u know, nejra they said they will retaliate forcefully if this legislation is passed, if it becomes law. the senate passed it, but it is not quite the law. both chambers have to reconcile slight differences in their bills before they send it to president trump's desk and we

have not specifically heard from president trump on whether he will sign the legislation. nejra:? and that is the key question, isn't it how the present -- isn't it? what is the likelihood of this becoming law? a pretty good likelihood at this point. both chambers, and even if president trump or not to sign -- to veto it, they probably have enough votes to override a veto and we heard from vice president pence in recent days sounding -- basically saying it would be hard to do trade deals if there is violence against the hong kong protesters, so that would seem to indicate support for this bill. the bill, what it does is require the state department to certify annually that hong kong remains officially autonomous to be able to justify that special trading status that the u.s. has

with hong kong, a different status than with the rest of china. nejra: jodi schneider in hong kong, thank you so much. the senate vote martic challenge to the government in beijing as the u.s. and china seek to close a parliamentary agreement. the deal that fell apart six months ago is being used as a benchmark to decide how much tariffs should be rolled back in a broader agreement according to bloomberg sources. let's get to the trade war and markets. joining us, the global cio at credit suisse. fact they are using the proposal as a benchmark to -- benchmarks, does that worry you or make you optimistic for the end of the year? >> there is reason to be optimistic. inter-linkage with hong kong is not particularly market friendly, to be honest. i think markets would prefer

to see those issues decoupled. thet has been priced into deal being made and there may be uncertainty that gives back some return. nejra: room for disappointment but your base case is we do get the phase one trade deal, that deal between the u.s. and china. what in the details of that would want you to put on more risk? december tariffs, a rollback in september tariffs, or more of a rollback in the $250 million? would bey a pause sufficient. both parties, especially on the u.s. side, have an interest in getting this resolved, especially the president. heading toward an election and it is clear the more uncertainty lingers, the more impact on economic momentum

in the u.s.. nejra: you stay overweight equities and have a conviction in that tactically over the next three to six months. does that position remain, even if phase one doesn't get signed? >> yes. nejra: why? >> because i think we are coming slump thatconomic has been particularly hard, especially on earnings. we see early next year. there is great reason to be pro-risk in this environment of incredibly low yields. the fed is still quite supportive, not really on the horizon for further cuts but also not for rates to go up on the short end and that keeps us optimistic for equities. nejra: michael scrollback from credit suisse stays with us. next, lots coming up including head-to-head with over three weeks until the u.k. election, party leaders clash in the third debate.

we will discuss who came out on top. plus, home depot disappoints. we will focus on retail developments and what it means for the u.s. economy, next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." -- bloomberg surveillance. let's get the business flash with viviana hurtado. is replacing its investment banking chief according to the financial times. him move to a nonexecutive role, part of a series of management changes. more could be announced later this year. more than 23 million times, that's how many times west bank has been accused of breaching

money laundering laws, the biggest breach in laundering and terrorism financing laws in australia's history. they say they recognize the severity of the issue. the u.s. is investigating if swedbank breached sanctions against russia according to a swedish broadcaster. transactions after the u.s. imposed sanctions on russia following the annexation of crimea. swedbank says it hasn't found any signs in breach sanctions. that is your bloomberg business flash. nejra: just over three weeks until the winter election in u.k. and boris johnson and jeremy corbyn faced each other. effectively tied in a snap poll on which candidate won the clash. they went ahead --

head-to-head on brexit and spending plans. >> we have a deal that is of an ready. it is ready to go and it is approved not just by our partners in the eu, but by everyone of the 635 conservative and delivers everything we wanted from brexit. >> we will in three months negotiate a credible leave option with the european union and within six months come up with that to a referendum of the british people to decide between the option of leaving while protecting jobs and trade and the good friday agreement with europe or remaining members of the european union. that will be the choice put before the british people. >> i have been very clear about the deal i have done. it is in black and white. you can read it. we don't know what mr. corbyn is with the't come clean electorate about what he is proposing to do, nor will he -- >> allow mr. corbyn to respond

to you. >> what i would probably leave under the tree to him would be "a christmas carol" by charles dickens. [laughter] >> a literary effort, probably my brilliant brexit deal. nejra: let's get more with bloomberg's international government editor and still with us, michael from credit suisse. withh we had some jam te this discussion, but your take was itom last night, for so low expectations corbyn going into the debate or that he focused on a lot of issues other than brexit? >> the headline poll showed it about split, 67% of people fought jeremy corbyn did pretty well -- thought jeremy corbyn did pretty well. boris johnson is known for his public speaking skills, so

expectations on him or higher but if you look at the footage, he frequently interrupted the moderator when she was telling him to finish and he brought everything back to brexit. to the point you could start to hear the groans in the audience becoming audible over that. jeremy corbyn, obviously trailing in the polls, he has ground to make up but was seen as giving a more polished performance last night, perhaps a more sympathetic performance to the british people when asked about trust of politicians and the controversy with the royal family at the moment. he did better answers on that, so he is showing he is not to be counted out. nejra: this is the first debate. we've got another one to look forward to on december 6. what else might happen between now and the election that could swing voters? >> it is clear from the questions last night and audience reaction brexit is one issue to voters in this election, but they will look at red and butter issues, educations, health care, the

state of the nhs. that is when they came up last night, funding for that, issues around security and crime and so on. is a factor when it comes to the ballot box, many will look at what the local member is promising and labor and conservatives are promising in jobs and health care. that is where you can see the debate perhaps moving over the next couple of weeks. nejra: is the market underpricing the risk of a conservative majority upset in the election? perhaps germany doing a lot better than people expect? >> that is the real risk -- jeremy corbyn doing a lot better than people expect? >> that is the real risk. a majority sufficient to bring his deal through, supportive for the pound and markets. if that becomes a skinny majority, we will see some further volatility in the pound, for sure. butntially in risk assets, i have to say my main scenario is still mr. johnson sales

through this. i'm not a political expert on ukip politics, but that has been -- u.k. politics, but that has been the scenario. i don't believe in a hard brexit and and the risk of that was overpriced into a pound -- the pound. we see the pound is undervalued and with good upside. i think if boris johnson retakes that majority, we will see that movie the next three to six months. nejra: other than being along the pound, how else would you position going into the auction? are you doing anything around the gilt markets or buying more u.k. equities? domestic u.k. equities would be an interesting asset class to look at because in the scenario ning, more win steering toward domestic plays in the u.k. is something we would do.

nejra: we heard from the two leaders of labour and conservative yesterday, but there were other parties involved who could upset the result. libhe performance of the dems, and can they pull votes away? if jeremy corbyn or boris johnson don't get a majority, who do they need to enlist to work with them in parliament or do you get a dysfunctional parliament where nothing can get her? -- get through? who has the votes to govern? also, the scottish party is another one to keep an eye on. those are the four key ones for possible alliances. does either party have enough votes on their own initially or do we get involved in that messy horsetrading? nejra: what is your base case after 2020. >> holding steady.

if we see a majority in parliament that is not hung, they will want to sing what is the economic broader impact on the. -- on that. nejra: thank you so much. still to come, bloomberg is cohosting the new economy forum in beijing and we've got some great guest. prudential ceo mike wells joins us at 9:00 tomorrow morning. this is bloomberg. ♪

nejra: this is bloomberg surveillance. raise $11y be set to billion in its mega hong kong stock offering. the company is telling investors it will likely price shares at 176 hong kong dollars each according to bloomberg sources. joining us, bloomberg's reporter in hong kong. great to speak with you. talk to us about the timing of why alibaba is doing this now. julia: well, it is certainly an interesting timing given what is going on in hong kong and protests have escalated, but in a way, it is quite a good time -- as good a timing as any for alibaba. they logged a new record for the single shopping day bonanza.

it is good to start a large offering with and the company's well-known by investors and liked by investors. they don't need to do too much marketing. it achieves the company's long-term ambition of listing close to home and giving chinese investors a way to hold one of the chinese tech darlings. backdrop,e political it is still a good time for alibaba to raise the money. it shows the company is strong and doesn't need the cash, the cash will help it fight its many battles with tencent in cloud computing or online food delivery. it could that's what do with the money, and we've also covered the fact that it would bring alibaba closer to home, but what would the listing mean for hong kong? julia: well, it is great success, the fact a company would do such a large listing

and successfully conduct it a time protests are going on, they are turning quite violent. this is a sign hong kong is still open for business and is a viable listing venue. it would also propel it to being the number one exchange in fund-raising globally. it had that title last year and alibaba's listing now today would put hong kong back at the top spot again, at least for the time being. nejra: bloomberg's reporter in hong kong, thank you. next, home depot disappoints, kohl's shares disappoint. we will talk retail shares. this is bloomberg. ♪ ♪

nejra: power to the people. the u.s. senate passes a bill

supporting protesters in hong kong. beijing threatens retaliation if it becomes law. head-to-head with just over three weeks before the election, party leaders clash in their first tv debate. it's not poll because i do draw. alibaba -- a snap poll calls it a draw. this is "bloomberg surveillance ." i am nejra cehic and london. let's check what's moving in the stock market. we have a down day overall, but some interesting stock movers, annmarie hordern. an >> all reporting obligations were filed properly and they are rejecting a claim in a german newspaper saying earnst & young could not approve the financial statement in singapore. we will keep an eye on that stock throughout the day. kingfisher is a loser this morning, down more than 6%. like for like sales missed

estimates, trading in the third quarter disappointing. nexi spa, an italian newspaper is saying nexi is looking at a share deal. word: let's get the first news with viviana hurtado in new york. firsta: in the u.k., the election debate looks to be a draw. with borisyn tied johnson in snap polls. they clashed under the national health service and brexit and what they we get each other for christmas. corbyn saying he would give johnson a novel of "the and the u.s.ol," warningassed a bill, beijing against violence impressing -- violently suppressing the unrest in hong kong. if the bill becomes law, china

vowing, threatening to retaliate. fed minutes out today will likely reinforce the message "rates are on hold." jerome powell addressing congress twice last week, saying the economy is any good plays place provided there is not a material reassessment of the outlook. that will be the key thing for the minutes, exactly what that phrase really means. saudi aramco seeing sufficient early demands for its ipo. that is three days after a deal. thanks behind the offering are signaling they have nearly enough orders to cover the institutional -- aramco has two weeks of marketing to go, declining to comment. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over i'm vivianaes, hurtado. this is bloomberg. nejra? nejra: home depot and pulls posted this up -- in pulls

posted disappointing numbers. american consumers could keep up robust spending as the holidays approach. strobaekh us, michael from credit suisse. how robust is the u.s. consumer? michael: if you look over 10-15 years, consumer spending in the solid,t is pretty much in the black for decent growth. nejra: you are generally optimistic about 2020 in terms of global growth as well, and the u.s. within that, too. that is even if a phase i trade deal does not get past. what makes you so bullish for the outlook on the u.s. economy? michael: first and foremost, we are coming through this sharp manufacturing slowdown. japan, andany, significantly that is very typical. it is not just about trade tensions.

as happens every three to five years, tending to compress long years dramatically, especially in the u.s. slump goingg this slowly away into 2020, and that is why we are optimistic on the u.s. and the global economy in general. that is why we stay pro risk. nejra: you raised your em equities to an overweight allocation. we will talk about that later. in the end, you still prefer the u.s.. in my mind, if you were more optimistic about the global economy, there may be an argument for perhaps upping european shares. why do you prefer u.s. sales? michael: forced -- first and foremost, the u.s. economy is the backbone and we clearly have a preference for the u.s. we just upgraded emerging markets very recently because we believe as the economic slump economy, on the global

emerging markets will begin ticking up. and indeed, maybe in early 2020 we will look at european equities. nejra: in the meantime, you do not have a favorable view of bonds, and we see the curve flattening in the two tenants in the last six days, a lot of it led by -- reassessing the u.s.-china deal among other things. do you see the 10-year yield getting easily above 2%? michael: quite easily. on the short end, it is hard to see how we are going to get away from negative rates in europe, how we are going to get interest goes up in the u.s. as we through this extended cycle. but long years, especially in the u.s., were compressed by trade tensions, uncertainty, and the search for yield globally. could-- global growth

pick up next year, too. nejra: but even if yields pick up, you still do not see ingress ash investment grade bonds in the u.s. as an attractive proposition right now? can take moreu risk, you should go to the emerging market. michael: so emerging -- nejra: so emerging markets over the u.s. in terms of bonds. you do not expect any fed rate cuts in 2020, as far as i understand, so does that translate to dollar strength in 2020, or the dollar drifting at levels it is at now? michael: toured europe i have a bit more straight painting toward -- toward europe, i have a bit more's strengthening in the early part of 2020, and as we get further and deeper into 2020, the dollar could begin weakening. the dollar has a path for being slightly overvalued.

and we think sort of on the five-year horizon, the dollar could go down. nejra: a lot of people do expect rate cuts in 20, despite what they fit -- despite what they said and despite what the market is pricing with one rate cut, and that at the end of 2020. if we see fed rate cuts, does that support markets with you because of more liquidity, or do you think, hang on, something is bad and we need to take risk off the table? michael: the second half of 2020 will be really interesting. we have the u.s. presidential election. we will see who is running against who and who is on the program. i could be, if you were a marginal risk to the market. the first halfin with probably a rebound in growth, the second half looks to be the more perhaps vulnerable part. look for the first half to provide returns, and for the second have to be more careful.

technology has been on fire, especially this year. also financials. to hopefully ad steepening of the yield curve, and they have generally been strong on the performing in the last two to three years. michael strobaek stays with us. and stay with "surveillance. we will talk about europe next. this is bloomberg. ♪

nejra: this is "bloomberg surveillance."

i'm nejra cehic in london. let's get the bloomberg business flash with viviana hurtado. viviana: hsbc is replacing its investment banking chief. he will move to a nonexecutive role at the division as part of a series of management changes. more could be announced here. siemens is looking to shed about 75% of its struggling energy unit. one of the most radical spinoffs for the powerhouse. the ceo was hoping the move will boost its valuation. nextba signaling its offering will come at a discount. stock offering will come at a discount. nearly 3% below the new york close. the sale marks one of the largest in the world this year, likely the biggest in hong kong since 2010. -- his head coach contract last until the end of

the 2022-2023 season. most recently, he saw a disappointing spell as manager of manchester united. that is the bloomberg business. nejra? nejra: viviana hurtado, thank you so much. the ecb has this morning warned of potential side effects from its own policy. review, intenty -- as well as in some real estate market. meanwhile, central banks will be hoping to get insight into what kind of president she will be when she speaks on friday. meanwhile, michael strobaek stays with us. talk about these played it -- the financial stability report and the risk from its own stimulus. when you agree that negative rates have not been a good thing in general for financial stability in the euro zone?

michael: yes, i would agree. i am a believer in the fact that negative interest rates, first of all, you will not find them in any textbook that i have come across. they have in my view potentially a reverse effect of what they are supposed to do, i.e. lower rates. my view is that they do not encourage spending. they actually potentially encourage savings. those people that really today have wealth, especially in europe, are not young people. they are older people. older people need to save and look for the future. they are not going to go out and spend all their money and progress just because negative , whichre what they see is increasingly the case in europe. secondly, institutional investors, pension funds, overall are being hit by negative interest rates because they need to pick it up in an assetse, and

location they just cannot take a lot of risks, so they pay the bill for this. that is not great for the financial sector. nejra: whenever i bring this up with people, the counter argument, they say to me when i say the ecb policy may not have been as effective as it would have -- as they would have liked it to be, is that factual of how things had been if they had not done this? how have you been navigating it, and how will you continue to navigate it if you expect it to go lower longer? michael: we have been able to move into a more risky asset class and take on the credit spread, the return spreads you see from taking on risk. nejra: but away from europe? michael: not necessarily away from europe. many institutional investors have gotten into real estate, as the ecb itself is pointing toward. you see in europe, especially

the country i come from, obstruction in real estate investment, getting away from the negative rates. nejra: the comments that we have got, for example, from -- something coming through, him saying the ecb is not close to the reversal rates, and you might disagree with that also that the market has not seen any distortion from tearing, and -- tieris a partial ng is a partial -- how much can christine lagarde reduce the impact from negative rates that you talked about? will she be able to? her appointment to ecb heralds possibly a new era. there is an inconsistent path with its interest rate policy. that cannot continue to buy bonds because one day they would have bought all bonds, and it will be feeling the impact of

what it is doing. therefore, with her arrival at the ecb, from the imf, she is a pareholder manager, excellence. she is a nonmonetary politician that will push the european countries to counterbalance monetary policy by fiscal policy. those countries in europe, which is crucial -- germany. germany is one of the wealthiest nations in the world. they have saved for 25 years. germany has substantial, for --cal policy, if you are they can leap faith and say we can spend more, and there is one but in all of that, and the germans are not interested in signaling to the rest of europe that let's just open the floodgates here let's increase our debt levels, especially in europe or it so it is going to be step-by-step. they will spend substantial time with the current and future

politicians, especially in germany, to get down that path. fora: if you are bracing fiscal stimulus to come, even if it is not very soon and it is step-by-step, what opportunities are you getting ready to take in europe across asset classes? michael: clearly domestically in europe, that will be exposed to what has been disappointing economic growth and momentum, especially in germany, also in italy are that would be -- in italy. into european equities, they have underperformed u.s. equities for a long, long time. nejra: the past 12 months they have done ok. michael: they are coming slowly back, for course because we have seen the global economy where europe is strongly exposed. they come back and european equities have also come back. nejra: michael strobaek from credit suisse stays with us.

numbing up for tomorrow, devon solomon, the seat -- coming up for tomorrow, david solomon joins us. this is bloomberg. ♪

nejra: economics, finance, and politics. this is "bloomberg surveillance ." let's talk about emerging markets. while policymakers at the fed and ecb looks set to keep rates on hold right now, many have moved to cut further. india and brazil enjoy the firepower to shore up the global economy. michael strobaek from credit suisse -- let's get back to the fact that you have raised em equities to an overweight add location. is this based on your outlook for china, your expectations from the fed, a little bit of both? michael: it is based on several factors. first of all, the global economy is coming back from the steep slump we have seen this year. second, it is difficult in this environment to see the dollar strength and a whole lot, which normally is a headwind. the fed is on hold.

that is supportive as well. finally, emerging markets have meaningfully underperformed in terms of returns but also in terms of earnings. therefore, in general it looks -- that has caused us to shift a bit within our overall overweight of equities, more to what is emerging and a way from developed -- and away from developed. nejra: the fact that the fed has signaled it is on pause, and you believe it is, does that mean emerging markets, central banks might also be on pause, and that perhaps complicates the view of liking emerging markets or other emerging market assets? not in general. i think this is more on the growth and earnings side that you should play this. the central banks can take stock from there, and in general, keep the fed assets on hold, so the dollar does not go through the roof. nejra: are you bullish on china? michael: yes, we are.

we have gotten back to being optimistic on china. we are optimistic coming into the year only to see trade tensions going into what has sort of eaten up and come quite -- and become quite bad through the late summer months. now as we discussed before, i still see the trade tensions as only one part of the equation of the overall economic growth aming back, and therefore i not so worried on that side that that would hit emerging markets and therefore we are going there now. nejra: if you see the trade war as one part of the concern, a lot of people have highlighted that china's mistake economy is slowing, regardless of the trade war. does that not concern you? michael: know, i think we have seen -- yeah, trade has been one side, but i believe china is holding up quite well. will addely that they more fiscal spending in 2020. that should be supportive generally.

nejra: you are generally bullish, underweight bonds. are you building protection in the portfolio with such a pro-risk tilt? michael: we are beginning to go in that direction for several reasons. we are seeing, and investors should recognize green light returns in portfolios, of even a 13%,m type risk profile, 14%. nobody expected that coming into this year. we have overshot probably the annual returns by 2.5. you should take some of that if you can come if you will, for christmas, even though there may be -- the level of total returns this year are so good, that why don't you take a bit of it coming ensure it, and know that i have this in the back. nejra: how are you doing that? do not to signaled that on our horizon we do not

believe in equities. we are most likely going to look into options markets, think of buying some protections outright . but in general, make sure that for whatever reason, trades, some surprise before year-end comes, we have some downside protection for a meaningful sell. nejra: would you be adding to gold? michael: i am not a great gold fan. ofd has been the inverse what the u.s. in general has done. i think gold has been overbought and i would not do that. i would more look into where i can look in some cheap protection, given where volatilities are. nejra: thank you so much for joining us today, michael strobaek, cio for credit suisse. on her way toa is the bloomberg new economy forum. we will be talking to the former new york fed president, bill

dudley. in terms of how the markets are trading today, we are seeing a strong risk -- and assets. theeuro weaker against dollar, the 10-year treasury yield sliding a few basis points or do we get to 1.70? or do we break through it? with the long end outperforming, in terms of the regional equity benchmarks, futures in the u.s. on the back foot. interesting session yesterday. the nasdaq got to a record, the dow under pressure because of retail earnings. this is bloomberg. ♪ when it comes to using data, everyone is different.

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sanctions if human rights continue in hong kong. -- if human rights violations continue in hong kong. will it affect the trade war talks? greatternal dynamics, a bull market. every once in a while, you have to plug a little bit, a little red on the screen. staida polite, rather debate. tom in new york. in london, francine lacqua to the new economy forum in beijing. polite,ards, was it so the debate, that you as our expert were going like this? a: it did reveal some of aroundeaknesses, maybe nhs, financing, with a breakup of the union.

all we will touch on this across the elections today. anna edwards is leading our coverage. right now we would like to lead with an important idea. in the 6:00 hour, mark your calendars, global wall street -- william dudley is out with a wheelhouse essay. we will have that for you in a very important bloomberg opinion piece, which goes back years ago with edwin mckelvey. we look forward to speaking with bill dudley at 6:00 a.m. other news in china? alibaba is already listed in the u.s., adding a hong kong listing coming out confirming the pricing of the hong kong listing, with the news to come next week. they are going to buy 500 million shares at 176 hong kong dollars. hong kong confirming the pricing we have been reporting overnight. that means they will be raising $11 billion in their hong kong listing. they do not necessarily need the

money right now. certainly they want to add that hong kong listing to their business. tom: signifying hong kong is still in business after what we have seen in processor -- protester riots and senate action in the last few days. first word news with viviana hurtado. viviana: the current status of the u.s. and china tensions come up another notch. china is threatening to retaliate and has told the u.s. to stop meddling in hong kong affairs. before the bill goes to donald trump, the senate and the house must resolve differences in legislation. it is unclear if he will sign appeared bloomberg has learned a trade deal that fell apart six month ago is being used as a benchmark in u.s.-china negotiations are the key provision, how much tariff should be rolled back? this in the first phase of that agreement. the two sides may rollback the luminary terms of the failed

deal. today the federal reserve release its minutes of its last policy meeting, likely to reinforce the message that interest rates are on prolonged hold. last week, jerome powell telling congress rates are in a good place after last month's third cut. powell said the only would have to suffer what he called a "material reassessment." to the u.k., jeremy corbyn drawing level with boris johnson in the crucial television debate tom and anna were discussing. corbyn tied with johnson. in approval scores come he has trailed johnson. they battled over brexit and the national health service. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over i am vivianas, hurtado. this is bloomberg. thanks so much. right through the data, equities, bonds, currencies,

commodities. futures negative nine, dow futures at negative nine. oil south yesterday. 5520 on american oil. what do you have, anna? anna: 90 is where we trade. , oil prices yesterday. i have the pound here as well. the fact that there was some favorable polling around jeremy corbyn yesterday after the debate certainly moving the pound a little bit. the specter of corbyn just rising a touch in the peripheral vision of market participants. that is what has been going on in the relationship between china and the u.s. and how that ties into hong kong protests. the u.s. senate unanimously passed a bill aimed at hong kong protesters and warning china against violently suppressing unrest. global sales have taken a risk and china has threatened to retaliate if the bill takes

effect. jodi schneidery in hong kong. this is another dimension to the standoff we already say. it seems the u.s. and china, it seems now that the hong kong protests threatening to disrupt these trade negotiations, at least optically. certainly complicate the matter. this is becoming, as the trade negotiations on that phase one deal, are heading to the final rounds come as we expect, and at this point we have seen really this challenge. this bill is viewed as a challenge to china's authority over hong kong. we saw china come out with a threat today, another threat, saying it will retaliate. in an unspecified way if this legislation passes and is signed by president trump. the senate went ahead and passed

it today, yet it still has a few more hurdles. each passed slightly different bills, so they have to reconcile their differences and then the president has not said whether he would sign it. there appear to be enough votes, given that there was overwhelming bipartisan support to override a veto if he was to veto the bill. tom: if marco rubio and the senate should veto proof action, tell china what to do, how does hong kong itself respond to that? there was a statement today from hong kong that it was also a negative statement along the lines of china, saying that they did not feel that this was appropriate for the u.s. to intervene in their matters. the bill itself, what it would do, it would require the u.s. state department to certify kong remainst hong

sufficiently autonomous to be able to justify that special trading status the u.s. has with hong kong. it is unlikely to have a different status than the rest of china. so this would essentially require that that happen, and it would also allow for sanctions against china's officials for human rights violations. there is quite a bit in there that beijing wants to criticize. at this point it is viewed as symbolic. there is a 30 -- there is a $38 billion two-way trade between the u.s. and hong kong, and it does not look like that is threatened at this point. yet it is a symbol, a message to beijing from the u.s. senate. anna: thank you very much. jodi schneider with the latest on hong kong. be aware, we are expecting to see at least a briefing taking place in hong kong. we seem to be -- the briefing, we are expecting that to be held

near the polytechnic university campus. jordan us now in london, from nomura. more ofto talk about these development spear european stocks have been selling off because of this seemingly more evident link now because of protest activity. different geopolitical stances of the u.s. and china. that possibility of a phase one trade deal. jordan: you have seen a little bit of a pause in risk asset price. folks are still waiting to hear what happens in the house and then what does donald trump do about it. it is quite amazing, but actually, it does mean the white house probably gave the nod of approval to the banks that you could do this. also goes to underline how it is not just a republican

session, the trade tensions with the border. the in that sense, it raises big questions for phase two, phase three. phase one is pausing the december tariff hike, because that will be impactful to the consumer and lead to recession in the u.s., may be rolling back to what we had in september and previous tax. hopefully that is what happens. that is what the market hopes for. phase two, more difficult. it is tangible, and also intangible things. rights, allroperty of the sort of stuff that is long term structural issues between china and the u.s.? phase two, the market has very little hopes. not too worried about that. but it is in phase i right now. it will not help all trump in his reelection campaign if the global economy slows down. tom: jordan, as china advocates

action in response to what president trump, marco rubio, and the others will do, is the yuan, the renminbi, a tool for them, or is it not part of the discussion? jordan: it is absolutely a tool. every time we have seen the tariffs go into effect, chinese exporters have been buffered from the overall price from u.s. importers on those goods being relatively the same. os importers have not lowered prices in line with the fx devaluation. relativelytill incorporating tariff prices. china has to be valued more. it means in december, on the 15th, we have plans to go ahead on the final trend, which is things like xbox's, laptops, iphones, and so forth. all of u.s. consumer, those laptops will already be in the u.s., but it will impact

next year sales. anna: happy holidays. jordan, thank you very much. coming up on this program, over the next 48 hours, a green interview from the bloomberg new economy forum in beijing. -- ubsw, we speak to ceo. later in the day, we catch up with the goldman sacs chairman -- coleman sacs chairman david solomon. this is bloomberg. ♪

viviana: you are watching "bloomberg surveillance." alibaba is set to raise $11 billion in its mega hong kong stock offering. it has priced shares at a little over $22, roughly a 3% discount.

this is the last close of its depository shares in new york. it will be hong kong's biggest share sale is since 2010. three days after launching the deal, bankers for saudi aramco see enough demand to cover the ipo. bloomberg has learned they have enough orders to cover the institutional portion. saudi authorities have been pressing the kingdom's richest families to invest. they have also loosened margin lending rules for banks. that is your bloomberg business flash. anna: thank you very much, viviana. just over three weeks until the u.k.'s winter election, boris johnson and jeremy corbyn facing each other in the first of many tv debates. deal that is ready to go. it is approved, as i say, not just by our friends in the -- by everyone in the candidates, and it delivers everything we wanted from brexit. >> we will within three months

negotiate a leave option with the european union, and with -- within six months put into a referendum with the u.k. people, leaving or remaining with the european union that will be the choice put before the european union. >> i have been very clear about the deal that i have done. there it is, in black-and-white. you can read it. we do not know what mr. corbyn is -- >> it is not just about -- >> he won't come clean with the electorate about what he is proposing to do -- >> i lower mr. corbyn to respond, please. >> what i probably would leave under the tree for him would be "a christmas carol" by charles dickens. [laughter] joining us now, associate fellow for the europe -- toward rochester from nomura is also

with us. welcome to the program. plenty of things to moan and groan about. we had the audience moaning and groaning through parts of that, they well tried and tested messages. what would your interpretation be? jordan: i think the audience won. that was clear. they were hollow laughs, several times. wasactually, i think it their failure, if you like, to persuade people that they were the sort of candidates they wanted to vote for. that is my first take away my second is that i think on balance, germ important -- jeremy corbyn one last night. he came across as a more likable figure. self,is boris his usual rather blustery and a bit of a bully. anna: with a message of get brexit done, which is fine if you tune in every year, but if you hear it every five minutes, it becomes nauseating.

do they change strategy or do they keep hammering that? quentin: it is very difficult to know. remember how badly that failed for theresa may last election. strong and stable. it went on and on p that is the danger of i am going to get brexit done. which, it -- having said which, it is a message that gets things done last night. tom: is britain reasserting a two-party system, or is there --ll a risk of becoming more with the parliament terry parties fighting each other out? quentin: i think it is reasserting the two-party system. against all the odds, people seem to be drifting back to the camps of conservative and labour, whereas they do not want it, but they know that the theem really is biased in favor of the two big parties. so although people have been drifting away from the big parties, the system pulls them back.

tom: so much of an election, and i understand that it is different than the united states, is about not what to do but what not to do. what does prime minister johnson not have to do? what does he need to avoid? avoidn: he needs to making stupid mistakes he needs to avoid appearing too much of a bully. i think that is his bedside last night. overusing his time and having to be reined in by the presenter. she was having quite a lot of difficulty getting him online, , aseas corbyn came across he said, leadership is about listening. that was quite a clever message. anna: i think it is interesting to see, for a lot of the time around the run up to the election, we have been talking about how currency markets on the one hand, they might like this, about boris johnson, on the other hand they might like

this about jeremy corbyn, then when you see the knee-jerk reaction to the outperformance --jeremy corbyn yes -- jeremy corbyn yesterday, that is how we should interpret any. are spookilypolls similar. that is why the market is a bit cautious. if the market sees that trend continue, tightening the gap, the knee-jerk reaction is labor goes up, pound goes down. the reasons why are more than twofold there there are many reasons first of all, a referendum -- you increase the chances of remaining level, the chance of it going higher goes up, right? doing all of the sort of antibusiness or let's just say -- the marketnks

would still regarded as a game change in the u.k. economy if the pound goes low on that. tom: very good. we are thrilled that quentin peel could join us today from chatham house. an important discussion and set of discussions. the bloomberg new economy forum this year in beijing. with bankers in attendance, including mr. winters, devon solomon of goldman sachs. -- david solomon of goldman sachs. this is bloomberg. ♪

tom: off the radar. they are not. they are sweden, separate from oxford and madame lagarde. have spoken many times before, always an original central bank with their own set of values and their wonderful history under crisis. making comments here on stability. i believe we will have some of that discussion with bill dudley, former new york fed president, in the 6:00 hour. greater europe, jordan rochester still with us, and we are thrilled to bring you quentin peel. for decades with "the financial times," now holding court at chatham house as well. 2020, it is a continued euro experiment. we talk about banking union and we talk about these good feelings, but mostly, i don't see much trust, internal trust,

country to country. what does the peel trust meter look like right now for europe? quentin: we are in a very strange period of drift, i think. it is partly angela merkel on her way out. this is the period of the merkel -- that is a problem because germany does not provide a sense of leadership. have emmanuel mack ron clearly trying to make the running, but he, too, has got -- you have macron clearly trying to make the running, but he, tomb, has -- christine lagarde indeed is taking over at the ecb, so everywhere, we are waiting to see what is going to happen. so the new era -- that this heralding in a new fiscal year for europe? jordan: i don't think you will be pressed in the short term.

you need did a to get worse and an actual progression and job losses. first of all, they cannot do it until you have that emergency brakes and so forth, and the new commissioners might be focused on different topics rather than physical. before she took on the role officially, she started saying the netherlands and germany -- she could not say that as the governor, as president. anna: thank you very much. jordin rochester -- jordan rochester and quentin peel. tot miller is in frankfurt bring us that conversation a little bit later on. this is bloomberg. ♪

♪ tom: good morning, everyone. tom keene in new york, anna edwards in london. francine will be in beijing

leaving our coverage of the bloomberg new economy form in the coming hours and days. an interesting set of bankers in an interesting time, particularly with the bank bailout and some of the great test for american and european stocks rolling over the last number of days. right now, here's viviana hurtado. viviana: china's message to the u.s. comes after the senate unanimously passed a bill backing the protesters in hong kong and warned beijing against the crackdown. the house has passed more legislation. more differences must be resolved before it is passed to president trump. people are dead after antigovernment protests. demonstrated after the government increased gasoline

prices by as much as 300%. hundreds of people have been arrested. he is the most anticipated witness in the impeachment hearing so far. beforesondland testifies the u.s. house intelligence committee. song lynn has said president trump did not offer a would grow between thepro quo ukraine but there are differences between him and other security officials. passing a bill to curb the use of e-cigarettes, banning some flavored nicotine products and raising the age to buy products 21. leaders say it is backtracking on the issue that required them to take action. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. anna: breaking news from

and oslo, they announced a new ceo. now appointed after having an interim ceo, jacob schram to this position. interesting place right now in america, it is fascinating where norwegian air will be five years from now. they are counting the fed and its, jordan rochester with us as we consider what is out there for the central banks. let's go back to the old days when we did not know. now we know what the minutes are. what view does anyone get? jordan: the economy can pour over the language used. there are a couple of examples

jerome powell was talking about in testimony not long ago about significant gush of the target rate -- of the target rate. will that be in the minutes? the consensus on the council? economists make their long term forecast, while they might not move a big amount on the they need to forecast correctly. tom: tell me the quality in the united states, multiple dissents. does it help you glean the dissent level? jordan: when a speaker makes public comments and the minutes as well and the consensus view, something -- that should be the market, just when

you have a hawk. then he realized this is not a big deal. understand where the balance of risks lie in policy. anna: let me ask you about some of the detail we are looking for this time around. there is a need for a material assessment and people are looking to see what would justify a material reassessment. signing a phase one trade deal perhaps? it is subject to interpretation. a material reassessment, what does that in? job losses, 50 k? they will never have a quantifiable number. the language will help you know they are moving towards that. since they made that statement, -- the u.s.-china

deteriorated -- that allows you to understand. what president trump said the fed and what he was complaining about as he has done many times, to play into where the dollar -- the reaction functions after the data. jordan: it is clear since donald that hecame president -- while you have the president on twitter asking for lower rates it is not going to happen, so the fed should do its best. anna: jordan rochester stays with us. ceo ofng in africa, the -- about the plan for future

projects and the role of chinese money and africa. this is bloomberg. ♪

♪ anna: i am anna edwards in london with tom keene in new york. francine lacqua is traveling when event in china which you will hear a lot more about. a $340st announced million -- the deal is part of the larger two decade trend of asia investment in the continent that has led to china becoming africa's largest trading partner. over investments are now $1.2 billion. -- from theow is

africa corporation. what is the significance of this local kimchi? our business model requires us to take capital, the lowest possible cost and deploy the highest policy asset over time until we get paid back and reach out for their money. we have seen some chinese lenders becoming increasingly wary of lending more and more into africa. it becoming more difficult to get money in africa or not? there's always an issue related to business.

when you can monitor the performance, you get your money back. wonderful totom: have you with us. the great worry is investment into africa and it is not being done by a traditional loan agreement. are there sidecar agreements? there are these discussions. are there other things going on besides the transaction? see, $200 million the ones we all take her for general-purpose and -- they havechina done business with the government and secured government.

i think that is changing when they see that is not as successful as they hope moving forward. tom: are the large american banks eating for this business opportunity? >> we have relationships with jp and we bank of america, have worked with them for 11 years. we see there is continued interest in latin america in africa. anna: let me ask about where african dutch africa finance corporation gets its money -- africa finance corporation gets its money.

-- >> we see the same trend in africa. you continue to see investment. anna: is aviation attractive? >> it is attractive. anna: you mentioned energy. >> interest in supporting are morees, we interested in supporting industries. we are more interested in doing projects that have low cost

to hashyou don't have it is the investment cost at the beginning. it is the investment cost at the beginning. tom: thank you so much. africa finance corporation. let me do a data check. it is really on the move. futures -12. this comes off a most difficult day. onto the second screen if you can. that is a solid move with the end stronger. bloombergng up on "daybreak america," erik schatzker speaking to anna botton, santander chairman. you can catch that at 1:00 p.m..

we don't really have a lot of their alipay in europe, and that is clearly a priority. today trans -- transfer this out to tencent. alex: there is a lot of politicking. they are not really willing or able to do that. hong kong has a legacy in the

region, had a one share -- the same way in the u.k. and london stock exchange. the biggest shareholders, but they won't join the hang seng because the structures are little bit tricky. it was inevitable that at some stage the most surprising element. even with the flatness of alex webb, always valuable, our bloomberg opinion. so much technology out of london. a final thought with jordan rochester. i have to ask about yen. what are the effects, if china acts and we get the worst outcome which is stronger yen,

what does that mean for the japanese economy? jordan: the economy, just like the rest of the world is suffering from slow growth and low inflation. a stronger yen essentially is difficult for kuroda to achieve. --y are looking for a move potentially delays the timing even further. it means that other central banks as well, if you have risk off, we'll try to stimulate the economy. tom: i was stunned how inflation expectations have not come back. deflationn outright -- in outright deflation? jordan: it is not in disinflation. deflation will be a concern if

you have a much stronger yen or a structural trend globally weighing down on that. you have cyclical forces in the interest rate market and growth and inflation expectations, and the structural force of disinflationary impact of demographics in japan and also from technology. there is a mixture of factors going on here. it is hard to say that japan will have strong inflation for the sustainable long-term. anna: i would look at an interesting chart about chinese ppi in the way that maps onto the value of the euro and the link and deflation's between china and europe. what we see at the end of this week, looking ahead to the data that is due to come out, a manufacturing recession is something we have talked about in developed markets. are we seeing in the data any

reason to be cheerful? jordan: absolutely. on monday morning, essentially we said pretty quiet and it is all about friday. we have christine lagarde giving her first speech and also you have the pmi. and services as well so we are hoping for a clear bounce back. why are we looking for that? the rate cut, we had an extension of quantitative easing and equity markets have done pretty well for confidence. expectations for the ecb -- for december. anna: you think what the ecb is doing works? jordan: it is fading through. credit data and growth has been pretty -- pretty good in europe. this means more money for

households. interest rates and mortgages have been following. it bounces back in the data. tom: thanks for the briefing today. an important conversation in seven minutes. william dudley, the farmer new york fed president -- former new york fed president. we will start the next hour with futures -104.ow from a preholiday new york, this is bloomberg. ♪

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sanctions if human rights abuses continue in hong kong. marco rubio and a veto in the senate. china considers the matter "an internal affair." the internal dynamics of a great market. -- great bowl market. -- bull market. and theird corbyn collective anger. tom keene and anna edwards in four francine lacqua. francine will be at the economy. new world banking has been a little weak over the next 10 days or so. what perhaps waiting for christine lagarde has to say. -- interesting

to see what she does. how much of a break. tom: there is an essay out. of the many ideas in this wonderful essay, chronic budget deficits require large increases in the supply of treasury debt, amazing with low interest rates how people are not talking about a trillion here and a trillion there. for many ceos, the calculus has been simple -- more leverage facilitates greater share buybacks. that touches on the idea of asset bubbles.

then he wanders beautifully back to the time of his wonderful work with edward mckelvey at goldman sachs where there is a dark side to the brave, i.e. longer, business cycle. when recessions become less frequent, the soccer -- shock of recession becomes greater. such an important idea about the duration cycle. our governors and chairman powell aware of this duration? >> i think they are aware of the duration. they are aware of the risk that are building by the fact that the expansion has lasted so long. the buildup ofht corporate and their financial stability report. you wrote, there is not a

moment to lose. , a moment toevel lose of the united states for its fiscal and monetary house in order. bill: we have a bond market that doesn't -- the growing risk in terms of budget as far as the eye can see. we're going to end this business probably with the budget deficit of 5% of gdp at a time when interest rates are extraordinarily low. it is potentially a vicious circle

the fed is successful in generating greater inflation and i think they will be successful over time. when that happens, the calculus in the bond market turn away from using bonds to hedge against recession to be more

concerned about inflation. supply will continue to increase into the market ways. i can imagine a year or two from now, we are not talking about 10 year treasury years below 2%. we are talking 3% or higher. tom: bill, thank you so much. i will have a note on twitter from this essay from the former president of the new york fed. a good conversation with gabriela santos, futures -11. american oil, 55.38. oil is worth watching with the recent drop. anna: it is also worth watching what that does to u.k. stocks because the stocks in europe are down. we sometimes look for fx effects. a weaker pound but oil majors really slumping, bp and shell bringing the biggest points

contribution to the downside on the ftse 500 -- ftse 100. tom: i really want to get to gabriela santos on international investment later in the hour. on the overall central bank down, from where you proceed in the investment world, our global central bankers in touch with the message and in touch with the underlying theory or are they making it up? >> i think they are trying to provide as much offset as possible to policy uncertainty. we have seen that from the fed, we have seen that with the ecb. they are trying to do as much as possible. we wonder how much it helps and whether it can create more issues down the road. as bill dudley was pointing out, around the issues of corporate and government that. -- that. -- debt. tom: fiscal space, we are doing

that in october. . regardless of who wins the election, more fiscal spending is in the cards. --is just tom: you and jp morgan see the political will for fiscal expansion. >> it will depend on the composition of congress, the exact amount that we see, but there is focus on spending more and not an over concern

the two sides may link the size of the rollback to the size of the deal. the federal reserve released minutes of its last policy meeting.

they are likely to reinforce the message interest rates are on a prolonged hold, chairman powell telling congress interest rates are in a good ways. if that would change, the outlook would have to suffer a "serial reassessment." 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. hurtado.ana this is bloomberg. anna: thank you very much. just over three weeks until the u.k. election, and boris johnson and jeremy corbyn have faced each other in the first tv debate. >> we well within three months investigate a credible leave option and within six months put that in a referendum to the british people to decide on that option of leaving while protecting trade and the good friday agreement, or remaining members of the european union. that will be the choice but

before the british people -- but before the british people. >> we have a deal ready to go and is approved not just by our partners in the e.u. but every one of the 635 candidates -- conservative candidates, and delivers everything we wanted. clash,he near hour-long the opposition between the labour later -- leader effectively tied in a snap poll on which candidate won on the evening. it was just up about who did well on the night. usriela santos is still with and matthew joins us. i thought it did expose a couple of the weak spots for johnson and corbin yesterday. johnson to the back foot on the union. corbyn over the

matthew: if you look at the data, it still looks pretty good for johnson if you look at ownership, who is loan -- owning these big issues, johnson is andted more than corbyn even on the nhs, conservatives have closed the ground on the labour party. was is probably why corbyn going after johnson on the nhs and johnson knows he is weak on brexit. overall, keep one thing in mind. the average conservative leader is 11 points. where we were in 2017, the conservative league was 18 points. anna: funny how they are able to hold onto those votes in between election. what about who looks more prime ministerial? is that with this comes down to?

the debate was almost 50/50 from the snap poll as to who did well on the night and the verdict was moreboris johnson looked prime ministerial. matthew: jeremy corbyn is the most unpopular opposition leader since polling began. he is not that unpopular -- boris johnson is not that unpopular but is more popular than jeremy corbyn. if you look at who do brexit already voters like, they say johnson. ,onservative party and leaveers they say johnson. there is more ambiguity around jeremy corbyn. are among the things that matter alongside competence and johnson is ahead of jeremy corbyn. tom: thank you so much.

watching all of those, trying to figure out where to allocate the marginal dollars. in 12 months, will we look back at the united kingdom as the mother of all opportunities? gabriela: the pound has responded some. tom: equity markets. gabriela: a big take away for us is the conservatives are leading in the polls, but we have no conviction on the election outcome. at this point in time, it is hard to have a conviction on u.k. equities and assets together over the next two weeks, never mind the next two months. it is more of a neutral positioning given there is no high conviction. tom: we will be back, gabriela santos. anna: later today, a conversation with the ecb vice president. this is bloomberg. ♪

♪ good morning, everyone, bloomberg "surveillance." she is out of pennsylvania and we have been waiting to speak to gabriela santos about the arch call of the end of 2019, and that is the turn in international equities. gabriela santos out of jp morgan asset antigen, really working on -- asset management, really working on the global town. poppins"e in "mary

with the weathervane on top of the house. do i need to load the boat on international equity? gabriela: the past 18 months, this has been the story of a downshift in global growth seemingly without end, greater then the downshift in the u.s. less -- much must less obvious next year. tom: do you sell u.s. to go into international? how do you execute that transition? gabriela: if you have been very overweight the u.s. for the past few years, it is time to bring that down and bring your underweight to neutral. for a lot of our clients, there has been a heavy u.s. bias for years, so there is a lot of work to be done to bring it closer to a neutral in international. anna: how much does this move from u.s. toward international

rely on early signs of stabilization in the manufacturing sector? we get pmi data and other data this week. gabriela: it relies so much on that. there has been a lot of enthusiasm over the past 30 days or so related to those signs of civilization in manufacturing. it has been the weak spot of the global economy for the past 18 months. we will look at the november pmi's on friday, looking for the forward-looking indicators and the sub-indices related to output, new orders, inventories. those showed early signs of stabilizing and that is important to continue. the second thing is the trade truce, goes hand in hand. , the rally for percent of global stocks in the last month on the anticipation of that deal. i don't know so much

about phase i that there is a lot left to do, a lot of rally left to do. the expectation is we postpone the december increase in tariffs and do not put tears on european on -- tariffs on european autos. that is largely expected and priced in. the surprise variable is the discussion around when tariffs get removed. that is perhaps where we have more pricing in that needs to be happen. tom: we are going to dive into this in the next half-hour, but this comes down to we would like you to sell your apple shares and buy -- if you are selling apple, what are you buying? gabriela: we are most excited about international, not your super cyclical trades. those are more trades for the next couple of months. the international story we are excited about is the consumer

story, in particular emerging asia. by no means have we given up on the china and india story, the long-term structural stories that can get an added boost from sentiment. tom: we will come back and talk to her. no doubt, our single best chart of the day. right now in earnings, target's third-quarter earnings, but after home depot yesterday, all are looking at target and lows. anna: banking doing well in europe, trading week. -- trading weak. coming up, erik schatzker speaks to ana botin. ♪

♪ tom: good morning, bloomberg "surveillance." anna edwards in london, francine lacqua in beijing for the new economy

forum. futures rolling over. go --. -- go cash. there is an equity brief. viviana:viviana: stop meddling g kong's affairs, that is china's message to the u.s. after congress backed a bill backing the protesters. lawmakers warning beijing against a violent crackdown. the house has passed similar legislation. differences must be resolved before being sent to president donald trump. 106 to iran where at least people are dead after antigovernment protest, according to amnesty international. thousands protesting after the government increased gasoline prices as much as 300%. hundreds have been arrested. the most anticipated witness in

the impeachment hearing today, the ambassador to the european union gordon sondland testifies today. he has said donald trump did not offer a quid pro quo to the ukraine, but there are inconsistencies between his account and those of other foreign service and national security officials. on capitol hill, a house committee passing a bill to curb teenage use of e-cigarettes. the measure would ban flavored bait being -- vaping products to 21.se the legal age backing donald trump's the issue requires them to take action. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: here is the headline, not home depot. target out with really a quite snappy set of earnings, given

what we are seeing from everyone else. brian cornell with a very carefully worded paragraph within the earnings relief -- release, suggesting they are doing it across a number of fronts. yesterday, we saw home depot say this linkage of digital to bricks and mortar really isn't happening, and target goes the other way. they are not selling two by fours or sheets of plywood, but target goes the other way with a better than good idea. we will leave it there with more and target with a nice premarket pop, up 14%. right now in washington, kevin cirilli is with us, our chief washington correspondent. he is more than familiar with marco rubio of florida. what was the victory lap mr. rubio took on this vote against

beijing and carrie lam and hong kong? kevin: i don't think you can say whether it is a full victory until the president signs it into law and it is reconciled with the bill in the house. i spoke to an aide of marco rubio who told me this has been one of his driving issues and he wants to see it get over the finish line. this has wide bipartisan support in the senate. this happened yesterday during rush-hour when this was finalized. and theartisan support president has democrats and republicans who want to see him do something on hong kong. tom: what are the ramifications of the president of the united states goes against his party? this is vetoproof. is there a so what factor? kevin: vice president mike pence and forceful terms came out in favor of the hong kong protesters. that was seen as an indication

that the vice president is in line with lawmakers. it is fourth quarter and time for a phase i deal between china. this is really happening at a time in which beijing has responded and said they are fully prepared to retaliate with economic measures if this happens. this issue is completely thrust into the u.s.-china trade talks. tom: safe travels to atlanta for the debate tonight, bloomberg with full coverage of the democratic debate in atlanta with a number of people. may a lesser number as well. target out with earnings this morning. we will talk to gabriela santos about international investment. stopping by is gary shilling, to go with the physics of inflation and disinflation, his column

lower interest rates is without question the market call of his generation. wonderful to have you here. ofng up the chart if you can united states and e.u. disinflation metrics. ingis clearly in a shill direction, the e.u. in blue, the u.s. in white. does this continue into next year? gary: i think so. globalization is a key factor, but weakening economies worldwide also if you have more supply than demand, you have downward pressure on prices. anna: how sustainable do you think is this lower for longer inflation story at the moment? we were talking earlier ron to build -- earlier on to bill dudley and he thinks treasury

yields could get higher from a year, two year perspective. how long do you think inflation stays this low? gary: how low do i think treasury yields will go question -- treasury yields will go? anna: how long will yields say this low? gary: i didn't get that. tom: we have some audio troubles. if i look at disinflation and deflation and asia oversupply, the theory is you clear out the oversupply. you learned that in microeconomics just a few years ago. why are we clearing out the oversupply? gary: because you have a continual increase in supply and you don't have the demand to soak it up. you have a savings glut. there is more savings in the world than investing in that in effect is the flipside of having more supply than demand.

the supply just keeps growing and that is globalization. demand just isn't there. you look at capital spending, it europe, probably a recession in germany or close to it. you do not have the spurs to demand and i think consumers have been holding up so far, but look very vulnerable. that is the last bastion of any spending strength ready much around the globe. anna: your thoughts on inflation at this point. i have been looking at a chart of chinese ppi, the inflation story looking very weak which ties in nicely with european inflation and pulls that down. they moved at the same time it would seem, broadly. do you expect us to stay in this environment? gabriela: we do have ppi deflation in china. that is largely a result of

falling material prices. there are so many structural issues that make us think that looking out over next year, over the next 5, 10 years we will still be stuck in the slow growth, low inflation, low interest rate kind of world. november, we have extended out the x axis. lower for longer has become lower for longer, something you have preached on for decades. do we need to get out of, do we need to escape lower for longer, or is there a permanent steward? gary: i think there is a permanence. i just don't think so. when you look at the situation, what is really going to change? if you want to get inflation, what you need is a war. historically -- tom: you say that with great respect.

it is not funny, it is a reality. 1749 all the years from and divided them into wartime -- tom: that was a great year for "surveillance." gary: and more time, the average inflation was 8% and in peacetime was -4%. productivity picks up and it outlives -- outlines demand. again, thatcolonize will be another war. i don't think the fed understands that. they are struggling to adapt to the idea of lower inflation, as is most of the economy. tom: gary shilling, thank you for being with us. 1748 is when jp morgan put their first house on park avenue. gabriela santos will come back on this interesting idea of international investment this year. right now, let's not forget we

will do a lot of coverage out of asia, the bloomberg new economy forum out of beijing. we will see a lot of coverage of that, and the conversation with your solomon, mr. winters -- mr. solomon, mr. winters, and more. good morning. ♪

♪ "surveillance," from new york and london. quickly on target, what is the distinction of target? what is brian cornell doing in

the bricks and mortar digital game? incredibleust had an quarter and that is reflecting his strategy. it comes down to everything around private label, a way to differentiate themselves. the small stores they are expanding in urban areas and the stories -- stores they have rolled out are engaging with customers. anna: what is it that the others are doing wrong? what are the others falling down on? >> i don't know that it is so much falling down, but target has been able to get a good balance between the private label brands and professional brands that value the perception people have. they are driving online sales and they are able to fulfill those at a lower cost. we had a really mixed season this earnings period with regards to retail, but target is doing the right things.

anna: the stock has gained 68% through tuesday's close and expected to go higher? certainly, as i came on to join you, the stock was up about 8.5%. customers still love that target experience. we are in an economic environment where people are still spending, but spending wisely. valuee label and target's proposition fits well with where customers are today. tom: greatly appreciated. with us is gabriela santos. this is the question at the end of 2019, we are hearing it from everyone, the dominance of u.s. equities and the shift to international. the shift to international is not the same as it was five or 10 years ago. gabriela: no, it is not. when we started this decade, we

were thinking about international and intra--- emerging markets. we wanted access to commodities and industrials. is ayear and next decade more consumer oriented story whether we look at europe or emerging markets. , thisingle best chart chart i played a couple weeks ago. it could be chart of the year. the u.s. stock market divided by what we have seen in international since 2011. this has been a great chore for people like you, saying someday, someday. why now? gabriela: it is been a tough few years for international. if we zoom out that chart -- tom: we don't do that on tv. gabriela: a huge outperformance compared to the u.s. em in the previous decade was up

double digits and the u.s. was flat. we have been in this wave of u.s. outperformance. by no means is that sustainable over the next decade. we are starting with international with cheaper currencies and cheaper valuations as well as areas like emerging-market potential. production is always the catalyst and if we have some more stability in terms of the economy front, in terms of policy uncertainty, you can get at her sentiment. anna: a catalyst around sijsling -- signing a trade -- phase one trade deal. do we have to get something going to get excited about the recovery potential for em? gabriela: speaking of the phase one deal, it is around the idea of lessening the risk of more trade shocks. that is where we have been for 18 months, trade stock after trade stock which made it so we

could not see a bottom in global growth. if we had a truce, that helps to lessen the risk and put stability in the global economy, and that is a win at this point. anna: what do you expect from central banks and emerging markets? i was reading that that is the space for cutting interest rates, emerging markets. it doesn't make the relative interest rate of some of those debt products look as favorable as maybe they have done. where do we stand on that? gabriela: there is a little bit more room to go in terms of monetary easing in emerging markets. whether we look at latin america or china cutting their interest rates over the past couple of weeks, i think there is a little bit more in terms of monetary ining -- a little more oomph

terms of monetary easing. tom: equities up, great. it comes down to business investment. is there a dearth of business investment nation to nation, em, and 11, or is it like the united states lack of confidence, or is there an oomph we don't see? gabriela: it is a story of weak capex around the world. we need policy certainty. tom: are you blaming this on president or everyone? gabriela: we can definitely look you mid-2018 where we saw the drop off in manufacturing and capex around the world. that had to do with the trade uncertainty. for europe, we have to discuss the brexit uncertainty and country by country, domestic policy as well. it is a combination of factors.

anna: let's talk about brexit. tom: it is like a drug. it is never going to end. anna: i cannot get off it. let me ask what you are looking for to start getting interested in u.k. stocks, what level of certainty do you need to see in the u.k. political picture to get interested in u.k. assets? gabriela: just like the trade discussion, it feels like the risk of a no deal brexit shock has decreased. i don't think we have yet seen enough visibility on the outcome of the election, on the departure of the u.k. from europe. we need more there and perhaps we get that after the election if we get a conservative majority. tom: i love that screen that is up, the u.s. ten-year, the u.k. 10 year, and germany with negative rates, another story

for 2020. with the exception of general mattis, it is one person where a is a white house there and different white house after he left. former white house economic advisor in london tomorrow, the 9:30 our. this is bloomberg. good morning. ♪

♪ >> things are a bit slower than in the past, but that is in -- the pastwith rates to stay very low for a long time. in that environment, one has to keep an eye on the risk-taking that is going on so we don't end up with excessive risks. anna: that was from our conversation with the riksbank governor. his biannual financial stability report, saying risks have increased. there are vulnerabilities in the banking system. they are one to fall in early equity trading today.

another story that we are covering is around hong kong. joining us on the phone is caringly, bloomberg's -- karen lee, bloomberg greater china editor. talk about things have been playing in hong kong. the violence at the beginning of this week, has it set us up for further protests or is the protest activity ebbing away? ebbing a little bit. schools are back open. students were hunkered inside university campus after essentially a battle with police, is down to about 100 people. traffic looks normal. people are back to work. at the same time, people are

looking ahead to sunday when we will have district elections and that is something that if the government were to delay it or cancel it, we could see further protests and possibly large ones. anna: we look for those developments. karen leigh with the latest on hong kong. european equities on the back foot, down seven tents of 1% on the stoxx 600. -- seven tents of 1% on the stoxx 600. of 1% on the stoxx 600. tomorrow, we speak to bill winters and the aib of ubs. ♪

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hong kong. china threatens to retaliate if a bill passed by this supporting -- by the senate supporting hong kong protesters become laws. and warning about the unwind of risk premia and excessive risk-taking. and it is a beat and a raise for both lows and target, sounding upbeat about the holiday season. welcome to "bloomberg daybreak" on this wednesday, november 20. a different tone from yesterday, better numbers from retailers. a different vibe going into the market. .&p down by about 0.25% rebounding off of that three week low. time for today's global exchange, where we bring you the news from all around the world.