>> hong kong protests fight retail sales. polls show the u.k. labour party closing in on boris johnson conservatives. a government in crisis. the anti-establishment duo is a ruling alliance addressed. ♪ francine: welcome to bloomberg surveillance. ,hese are your markets treasuries sliding attach. a lot of the focus is on

better-than-expected chinese data, giving a lift to the market. it may have gotten a little bit better. opec up 1.7%.of november manufacturing also ,oming out, that tmi figure indicating a contraction because it's below 50 but better than the 46.6 that was our preliminary preview. coming up its merger monday, all things deals with the cohead of global m&a a jp morgan. let's get straight to the bloomberg first word news. signaling they will consider deeper cuts ahead of the latest opec plus summit. this is despite the rest of the coalition showing reluctance to refuse output -- reduce output even further. the meeting in vienna starts in december the fifth. the junior coalition partner in

the german government electing a new leadership, throwing the government into crisis. social democrats are bringing in a team that vocally opposes the alliance with chancellor angela merkel. the new leadership signaling it won't bring an abrupt end to the coalition and it's more likely to put forward a set of new demands. hong kong retail sales plunging more than 24% is the latest sign the unrest is hitting the city's economy hard. this weekend saw a return of protesters. police fired tear gas and later a group of protesters blocked roads and set fire to a subway station entrance. the european union will challenge the u.s. and china on climate targets as the fight against global warming becomes a major international issue and by the end of the century, the block is looking to target net zero emissions but how much investment is needed to achieve this goal. at least another 175 billion euros a year.

keeps pilings debt up after a decade of easy money, the world has a record $250 trillion of debt, that's almost three times the global economic output. about $32,500 for every man, woman, and child on earth did global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thanks so much. less than a month until the new decade, let's take it off with a look for m&a. a search is but mergers and acquisitions on track to may be top last year's total. worth $2.7als trillion putting us just a quarter of a trillion dollars away from last year's total. my next guest leads the global team focusing on all aspects of

m&a advisory, the global cohead of m&a at jp morgan. good morning and thanks for giving us a bit of your time. think i'm positively surprised it's been as robust as it's been, another year we will be challenging that 4 trillion mark we saw. right now we are running about 5% below last year so really another very strong good year for m&a. francine: is it different regions to 2018 and is it different sectors? >> what is defined the year is transforming north america. i have deals that have values greater than -- there has been 45 such deals this year, 35 of those have involved u.s. corporations, the u.s. has accounted for 60% of volumes in 2019, so that's been

the feature of the market and i think that's also a wake-up call for the rest of the world and particularly for europe because of the strength continues where u.s. companies do 50 or $100 billion deals and continue doubling in size, if it persists, at some point maybe japanese corporations will start losing their competitive edge so i do think looking forward, what i hope and expect is more activity from outside the u.s.. francine: so if people by other companies for a number of reasons. they want critical mass, they want higher margins, they see the one jewel in the crown they don't have. our people actually consolidating for the right reasons? logical,arket is very it makes sense for pharma company to hedge their r&d bets by acquiring companies that have late product r&d. it makes sense for it to be

consolidation. it makes sense for consolidation online brokers. it makes sense for payments to become global in scale. logical has been very in terms of their -- decision-making for m&a. it's also a discipline market because we've seen a lot of separation activity. where companies want to focus where it's so -- separating health care with donna her, novartis separating out and it's also a discipline market. francine: is it because they are under pressure? does the car industry need to consolidate because if you don't you go out of business? >> you have to evolve and keep moving forward, you cannot stay in this market, you cannot remain still. i don't think it's defense. you just have to become more

global, you have to find sources of growth and in many cases the economy is strong. but you have to support that with deliberate quality sources. >> is it cross-border or themselves? >> a combination of both. something for the rest of the companies out side of north america i think it's a wake-up call. we talk about european banking consolidation. we talk of a number of european companies that should be merged, boa would -- what needs to happen for chief executive to have the stomach? >> in my judgment has been a change in this fourth quarter because i think so much of m&a is correlated to confidence to certainty and in the european arena there's been a lot of sources of uncertainty and i think it's been easy for ceos to hold back and see what happens.

this onslaught of activity in north america has enough to say we have to get on with it and , we have seeneals european companies that i think the dam has broken and guess what, yes there is uncertainty but we have to get on with us. francine: i don't know if there's a direct correlation. if i was an executive and set i want to buy something, do i wait for all share prices to be this high or do i need the more depressed because i feel like i'm getting a bargain? market everybody's share prices being supported. there's so much liquidity supporting us, i think that strength in share prices providing a strong currency is also providing if you are concerned about asset valuations, it provides a great balance where i'm buying something, but i'm also

benefiting from that same share price. francine: how are these deals in the u.s. funded? >> for this reason, increasingly we are saying -- i think ceos are feeling good about their own currency and if they use that strong currency it's a great equator, it's a great balance against asset prices that might also be equally supported. francine: so the u.s. doing good, what does europe get paid -- get? asia as well? hernan: the easy rule of thumb was to say north american volumes directly double europe and then europe doubles asia-pacific. china,cific excluding the asia-pacific m&a volumes are 80% of those of europe heard even without china it's really

getting on and we are seeing a big increase. i think the region that has been lagging and has to get moving his europe. francine: what needs to happen in europe for them to have more appetite? ceos havejust think to come to grips and come to terms with this market uncertainty. i don't think it will go away. i think it's becoming -- it's coming from different fronts and i think you just have to see through that and focus on what your competitors are doing on the threat to your own competitiveness and get on with the program. francine: thank you so much. he is sticking around, from jpmorgan chase bank. in the meantime, russia and pipelinening a new gas and we are following everything alive. you can follow on the bloomberg terminal.

includinging up will have the we latest live from berlin. with both mainry political parties at the top end of london's property market. we speak to the chief executive of developer. this is bloomberg. ♪

♪ chinane: russia and marking the opening of a new gas pipeline. the pageantry was really quite telling. we have president xi and , actuallyputin

looking at the opening together. we have full live coverage from all angles on something which could be significant because is not only a gas line, we will keep an eye on that and bring you any breaking news. let's get to the bloomberg business flash in new york city. >> deutsche bank denied the u.s. federal government is widening its investigation into the lender. the u.s. is investigating the bank's role in the dirty money scandal. i of investigations if deutsche helped move painted money into the u.s.. goldman sachs will avoid hard profitability targets at its investor day in january according to the financial times. the investment bank will instead focus its core wall street business, the centerpiece of the announcement, they say it will launch a new merchant bank with

more than $130 billion of assets. a record u.s. online sales reached on black friday, nearly $7.5 billion in sales were made by a smart phone or computer. the second biggest digital sales day in american history. this is behind 2018's cyber monday. sety could be even bigger to outshine that record by about 19%. that's your bloomberg business flash. -- as 2020ow it's approaches, let's continue the m&a conversation. at 2020, what's the role of private equity? a lot of people saying they are just sitting on cash and there is more cash and opportunity, you will have billions of cash coming in. equity we think private is one of the features of the market in 2020, they have now surpassed the one trillion mark

in terms of dry powder. every company seems you've raised a $10 billion fund. blackstone announced a $26 billion fund and private equity activity accounts for about 25% or 30% of the market. we think going into next year is going to cross the 30% mark in the activity opportunities will importantly taking public companies private because i think if there is a slight adjustment to the market, that will bring prices under pressure and i think i'm -- importantly is whilst in the past there was a premium required to take a company private, there is a discount to that premium. there's a lot of ceos who actually don't like the market scrutiny and are very open-minded to take the company

private. i think that's a combination of the dry powder and that will bring opportunities for private equity. francine: big companies a little bit like what we saw. francine: -- hernan: the constraint is how much equity you put to work. i think we have seldom seen private equity deployed more than $1 billion for single transaction. there different reports of that being challenged. as you go larger and the scale you'll need any number of these firms to work together and associate themselves. as the size gets larger and more challenging. or 10 billion deal size, that's one where there is the possibility. francine: why so much money and private the equities? does that skew up all the risks for how investors should be looking and -- if there is all this cash and private equity

then it changes the m&a. i think it brings different opportunities. my sense is that private equity used to be the only game in town in terms of financial investors and now you see sovereign wealth funds, there's many more sources of financial investors looking into dealmaking and that's contributed to returns coming down, i don't see private equity needing to extract 25% or 30%, i think the return criteria has become more logical to some extent and that facilitates dealmaking where their own investors are happy to express the terms. francine: is money going to come back, do you have an idea of for the government is in some of the policies in place? hernan: the general sentiment i get from the u.k., whether in north america or asia is we want to understand the rules of the

game, is not so much about brexit or no brexit, it's tell us the rules of the game and once we will engage. but until we know the rules it's difficult for us to engage. francine: we touched on the car industry and health care, his payments a big one right for -- right for consolidation? think it makes sense that a sector that was regional to some extent is gradually becoming more global. it's a very scalable sector. francine: is there a downside to all this m&a? every time you've to advise the chief executive you would warn them of, does it have to be a culture for? we've talked about regulatory risk, i find that we are almost doing deals backwards or the other way around. we used to figure out a deal, negotiated deal, announce a deal

and then we start dealing with all the different stakeholders and now it seems like we are doing it backwards. we start figuring out who are the stakeholders, once we understand those constraints, then we structure the deal and we announce it. we are almost going backwards to address those. francine: thanks for joining us today. global cohead of m&a for jpmorgan chase bank. up next the coalition and crisis. his a ruling alliance at risk? this is bloomberg. ♪

♪ this is bloomberg surveillance. germany's government has been thrown into turmoil after the social democrats elected new leadership that voiced opposition to the ruling alliance. bloomberg'sow is german government reporter. what do these new leaders stand for? this government has been bad for their city. they have called into question or at least toying with the idea of getting out of this coalition but the image is not so clear-cut. is former finance minister actually a pragmatist. he does see the new elections would not do any good for the

social democrats and would rather like to stay. the lawmaker is really an ideologue and she thinks this government really needs to move much further to the left, given a much longer -- and she would like to leave this government right now. francine: is there any wiggle room for negotiations? mind thate to keep in they also don't want new elections but they have made clear that the coalition has agreed in the cdu has already bent over to do everything to keep the spd in. they've introduced a lot of social reforms that passed a new minimum wage, basic pension and say enough is enough we are not going to make major concessions anymore. thees they do want to keep broad coalition, they are

probably going to sit down with them and negotiate but the room for compromise is limited. coming up, hong kong retail sales slumped as chaos cripples the economy. we will be have the latest on the fallout from the ongoing protests. this is bloomberg. ♪

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the u.k. labour party is closing in on conservatives, markets underpricing the chance of global governance. duo ishas established me a ruling alliance and a risk. good morning, good afternoon, good evening. this is "bloomberg surveillance ," and i am francine lacqua in london. everything about 50 means it is an expansion. everything below 50 means it is a contraction. we have european figures early on. still a contraction but better than expected. you can see the pound at 1.20905 -- at 1.2905. it is still below 50 at 48.9 pounds. 1.2 907, and we are a weekend two days from the u.k. election. let's check in with the biggest stock numbers with annmarie hordern. annmarie: the biggest gainer on as theyx 600, up 5%

sell oil fields in uganda, come after the president of uganda met with the ceo. rio tinto is up more than 1.5%. we are seeing all the miners rise this morning, rio tinto upgraded rbc, and they will benefit. ted baker down 2% this money. the start of trading, it has plunged more than 10%, and this comes as the overstated the value of their inventory. it has been a rough year for the company, missing a number of sales updates. so much, thank you annmarie hordern. plunging 24% in hong kong. an ongoing sign that the unrest is hitting the economy. firedsed -- the police tear gas into the tourist district. roads were blocked and fire was

set to subway stations. asia correspondent enda curran. if you break it down for us, how bad is it? ina: it was pretty bad october, francine, and that was broadly expected. we know that tourism on the retail spending side of things has been getting hit. china's ohs by slowdown -- own slowdown as well. we know that the broader economy is suffering is well under the trade into logistics side of things. that is suffering because of the world slowdown in global demand. there are two ways of looking at it. on the political side in terms of protesters, no sign of a circuit weaker. there is an impasse that remains on the world economy side, the demand for trade of goods is in something of a sluggish stabilization. to combine that, looking for hong kong's economy, it is pretty bleak at the moment and

that is why we are looking at a recession. we hope perhaps for some kind of a turnaround into next year. beijing oneat does for hong kong? if the protests continue, do ory want to safeguard it, will it be unrest if hong kong loses that jewel? enda: if they keep moving money in and out to -- into and out of china, the rule of law here gives it a vital role in terms of settling and agreeing on contracts for trading in securities and the like. there is no doubt that what hong kong's economy may be what it was -- may not be what it was in the past, it still plays an important one in china's economy. that will continue to be the case. we do know the that on the political side there is no sign of a circuit breaker. we know the protesters have

their demands. we know that the government seems resolute and inside of things in terms of insisting there is no violence before any kind of concessions can play place -- can take place. as long as that continues, it should be said that the broad property story and the financial services side of things seem to be holding up. we start to see a term downwards in either of those pillars of the economy, that is when we know things are deteriorating further. francine: thank you so much, chief asia, our correspondent, from hong kong. here is viviana hurtado. viviana: a brighter outlook for chinese factories. pmicial manufacturing showing an unexpectedly strong november there it for the first time since april, the rebound in new orders are pushing the gate into expansionary territories. trump is donald

declining to take part in the u.s. house impeachment hearing. it is this wednesday, but he is keeping open the possibility of testifying at a later date. his lawyer says the process has been unfair to the president, adding that the hearing was scheduled "no doubt purposely while mr. trump is in london." bank of england governor mark carney is accepting a new job. he will become the yuan special envoy for climate action and financed his new pay packet, a bucket a year. he is currently going to lead his -- leave his new job, but his successor has not been named. he may be asked to extend his term. in the third quarter, turkey's economy among political uncertainty hit the recovery. fromxpanded by 0.4%, down growth of 1% earlier in the year.

currencyon followed a a crisis in 2018. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries, i am that the on hurtado. this is bloomberg. francine? francine: over to the latest on the u.k. election and the two men vying to become britain's next prime minister playing the blame game after the terror attack in central london on friday. they clashed over the situation. didn't andinister's sing himself from his party's about record on crime. >> what i have said, in the last three or four months, is that i think this whole system of automatic early release, which has brought in by labor -- it was under that -- i have only been -- labor leader jeremy corbyn blamed the decade of spending cuts to the prison service overseen by the tories. it on thenot keep

cheap. for far too long, our country's leaders have made the wrong goals on our security. francine: let's turn to the nato meeting this week as well. it will celebrate 70 years of what alights officials are calling the most significant -- most successful security group in the country. let's bring in our group, in charge of -- our guests. exactlyf you focus on what is happening at the polls, are the polls shifting, and is one of the big focus is now on security following the knife attack on friday? >> we are seeing the polls move around a bit, but that is to be expected. oris johnson is in front, but it is all about -- boris johnson is in front, but it is all about the margin. you can see risks coming in as to whether he can get a

majority. security is becoming a key issue after the attack that we saw on friday. we see each party blaming each other, boris johnson saying this comes back to labor policy in 2008 with the early release of prisoners. jeremy corbyn is saying it is the tories and your policies in recent years. we have not spent enough, so they are trading insults on that. johnson really has to separate himself from policies that were very recent under the prior conservative government. basically theave most recent polls, and i guess bethere is collusion to built, we keep talking about the two men who are likely to be in power. but if they cannot do it on their own, do we have any idea of who would likely form a government? or is it too soon? rosalind: it is a bit too soon, but the party will gravitate

towards labor more so than it will toward conservatives. it really depends again on how much of a margin boris johnson has. if it is close, close to a home parliament, you might see that kind of discussion. but if you get the majority -- of course, the fed will work to get brexit done. francine: is there still campaigning? there was still campaigning following the attacks in london, but how much will there be before septa -- before december 12? rosalind: there will be a few. throughthey have to get a few things including the nato summit and the visit by donald trump. which corbyn sees -- wish johnson sees as another risk to him and another means of attack by jeremy corbyn. francine: the event is in

london, meant to celebrate 70 years of what the alliance officials and leaders are calling the most successful military grouping and history. there is concern about the as partiesfuture, are bringing in conflicting agendas to the table. president trump is pushing back against nato for quite some time, but now others are joining him. >> that is really right. this is one of those times when you might actually -- you usually come into these, when you think of donald trump as a wildcard, we might not actually be this time. you have turkey's erdogan, who has annoyed a lot of people in the nato alliance by purchasing russian defense systems. emmanuel macron has his own agenda. mccrone and erdogan have been trading insults back and forth. when you look at this, it is sort of like when your family gathers at the holidays and you're sort of wondering -- it is your family, right?

they are yours. but you're just wondering what explosion is going to happen, and they are all probably market moving if and when they do happen. not only do i expect president trump to tweet, i expect him to tweet earlier than he usually does. we are regularly expecting it in the 6:00 a.m. washington time window. bump that up a few hours because he will start tweeting at the start of his day from london. allnato meeting will have sorts of pomp and circumstance, and i put all of that to one side. i think the key thing to watch is what happens on the sidelines. all of the sideline one-on-one meetings. that is where the real action will take place. know whetheron't prime minister johnson gets hurt or helped by a president trump tweet. in the past they had a frenemy relationship, friends and then not so friends. does that make a difference to polling? it could, because the

british people do not have such a positive view necessarily on donald trump. johnson, he has praised him before, saying he is a prime minister. -- a good prime minister. that does not necessarily help oris johnson with british voters. what conservatives are concerned about is what donald trump might say about boris johnson, about minimizing the one-on-one time they have together. that actually could be detrimental to boris johnson because it gives jeremy corbyn an avenue into say if boris johnson is reelected, you're nhs, what boris johnson would do with the trade it with donald trump. so the goal is to keep that to a minimum and not have donald trump praise boris johnson if at all possible. he can tell donald trump what to do. francine: thank you both. coverage of the nato summit. "surveillance." plenty

coming up, both main political claimingt the top -- credit for the market. cuts atconsider deeper the meeting this week. can anything get the oil price higher? that is still to come on "bloomberg." ♪

francine: this is "bloomberg ." let's focus on one of the most important real estate markets over the past 30 years. north aker has developed more than 1000 luxury homes at some of london's finest addresses. with most -- with both political

parties budging a measure to cool the housing market after the election, what does the future hold for prime central london developers? joining us now is the chief executive offer of north aker. thank you for joining us today. when you look at the conservative pledge to the manifesto, i want to introduce a 3% surcharge for overseas buyers, what impact will that have on the market? >> i think it will have a substantial impact. if you look at where we are in the bear market of the moment. if you ask me what has been the single greatest contributor to this bear market, it has been , bringing it from 7% to 15%. 3% andeasing it another pardoning plainly foreigners and that is it, it was about opening up foreign investments. francine: what about the idea that you could cut the stamp duty to balance that out a

little bit? if the conservatives win a majority, do you think the measures will be put into place? --i think it is difficult to there is a talk of an additional be seen as a big possibility at the moment. francine: do you worry that london will lose its status as being able to cater to the world's up wealthy? >> i don't think in the long run it will have such an impact. we are in a fragile market that is showing the first losses of trying to recover from the bear market, and i think hitting it over the head at this point is not the smartest way to go about it. in the long run, i think london will be one of the leading cities in the world. if you look at it from an ownership perspective and take a five-year ownership cost, the initial 3% does not put london out of kilter from other major cities in the world. francine: there are high property taxes we are just -- which we are just talking

about. does it depend on the next election, or not so much? niccolo barattieri: not so much. think it is still a fragile market. i think we are seeing the first signs of recovery in q3. you have had average discounts that have shrunk. you have seen a buy registration that has increased. these are all a factor of the effect of the pound being weaker into the market now. francine: does it have an impact, a weaker pound, for your buyers? niccolo: it is a laggard effect, but it takes time, so, yes. with the market down 25%, -- it is a buying opportunity. francine: if you look at where your clients are from, does the composition of your clientele change in the last four or five years? niccolo: i think the clientele has changed dramatically over the last six or seven years. you have seen huge demand from

china, and u.s. buyers are coming into this market. as i have never seen them before. francine: what happens of jeremy corbyn and labor come into power? what impact will that have on high-end luxury market? niccolo: that is the black swan event that i talked about before. then we will reassess the whole market and buckling down and waiting for it to pass. into,ne: any insight would people just stop buying at all, or would it come back slowly once we have an idea of the policies and action put in place? niccolo: i think it is quite clear what the policies are. it depends on whether he has a majority or not. if he wants to push his policy through, it will have a substantial effect on the property market. is it francine francine: is it harder to find new sites to build on? niccolo: it is impossible.

supply in the next five to 10 years is going to be very curtailed because of planning rules and because the actual prices of land have not come down, making the economy of buyable -- viable to deliver new housing. we had not done any marketing whatsoever for about two years because sales in general in london have been incredibly slow. but what we have seen in the last two months, we have more sales in the last two months than in the last two years, which is interesting. francine: how do you explain that? niccolo: all from china. i think the first of all, you can see it coming out of the ground and it is going to be quite spectacular. i think what is happening in hong kong as well is pushing money to london as well as a safe haven. i think the two things together, with the fact that it is six years that people have been buying off prime central london.

it is also a lifestyle choice. lifestyle choice after six years starts getting boring and you want to get on with it and buy something. that is what we are seeing. francine: thank you for joining us. will have a discussion on opec. this is bloomberg. ♪

>> our largest investor is

warren buffett. you not only had a bad decade, you had a bad century. ,rancine: economics com politics, finance. and wednesday, the 29 member nato alliance meets in london. on wednesday, the house peach mint inquiry continues. president trump has been invited to present a defense, has declined to do so. friday, opec and allies meet in india. friday, we get the u.s. jobs report. so let's focus on oil. here with more is annmarie hordern. first of all, how do they get prices up? annmarie: one thing they can do is cut output, and that is with

the iraqi oil minister was alluding to. we need to take this with a huge grain of salt. first, iraq has not complied. in october, it dropped 100,000 pounds a day, but they are well within compliance levels. saudi arabia, russia, has maintained they will maintain the current production deal, so the market does not expect deeper cuts. francine: do they expect a downturn in the world economy? that would shift everything in terms of demand. they expect oversupply in 2020 that will office set -- offset the deficit at the end of 2020. big big question is, how bad will this be for prices, especially if we don't get a trade deal, which has been driving the oil market. opec may have to -- how high will -- how low are they willing to take? francine: what are they discussing in the first quarter of 2020? annmarie: they will discuss the state of oil play and what they

will do next year. one thing you will hear is that they do not cut production, which is what everyone is signaling. you will see i think a lot more hardlines on those that are cheating, those that are not complying -- nigeria, iraq, russia. russia, the eighth month, november, they are set to not comply. as part of their saudi counterpart, i think saudi may be getting frustrated. francine: annmarie hordern with the latest on open. bloomberg surveillance continues in the next hour, tom keene me in new york. this is bloomberg. ♪

hong kong protests, retail sales sink as chaos

crypts tells -- cass cripples the city economy. our mark -- our markets underpricing the chains of the corbyn government? a government crisis -- angela merkel's coalition partner and establishment duo -- is a ruling lions at risk? att's a ruling at alliance risk? tom keene joins us from new york. if you look at the markets, they are on a stronger footing on the back of better-than-expected factory sales in china. the u.k. are in nine days away. tom: massive risk on this morning, dow futures off to a record high, he yields really snap. higher yield, lower bond prices. it is a good monday after a good thanksgiving. is.cine: it let's get straight to the bloomberg first word news in new

york city with viviana hurtado. viviana: the white house will not take part in this week's impeachment hearings. keeping open options that he would be representative. he says the process has been unfair to the president, criticizing the house judiciary committee are demanding a response before any witnesses have been named. china striking back at the u.s.. beijing is freezing court visits by u.s. forces. it will sanction some american organizations after threatening to retaliate for president trump's decision to sign the bill, backing hong kong protesters p this week in madrid, all eyes will be on china. negotiators from almost 200 countries will be there for the next round of united nations climate talks. china is in focus for several reasons. it is the world's largest investor in renewable power, but it is also the top carbon polluter. to the u.k., that is where boris johnson will paint his

conservative party as backers of law & order. london is still reeling from friday's deadly knife attack. conservatives are pushing the message delivering brexit will bolster u.k. security. labor leader jeremy corbyn will try to return to a debate on the cost of living. he wants to cut train fares by re-nationalizing the railways. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am vivianatries, hurtado. this is bloomberg. tom: equities, bonds, currencies, commodities. a market list. you see it across all asset classes. futures up 11, dow futures up a whopping 1.03. oil journey here as well. that is what i would call it. 56.54, american oil. the vix -- it will be interesting to see if the vix comes in in the early morning. there is the friday close, set

above 28,000. yen confirms a weaker japanese yen. francine: when i look at what markets are doing -- markets are definitely risk-on, bonds sliding after this robust factory data out of china. but the euro zone also seems to have spurred the global economy has turned the corner. i am looking at the manufacturing purchasing index in china exceeding estimates. i am also looking at crude oil ahead of opec, 56.53. tom: this chart is deceptive. this is long economic growth, and it is not all that active. what it shows with a vengeance is the snapback from the gloom inr, gloom in march, gloom 2017. indicatesack, gdp now what we saw in china overnight with better economic data. the snapback hear from the gloom

of economic gdp is really quite good. francine: tom, if you look at my bloomberg terminal -- thank you to hillary clark, who makes me smarter on charts -- working at inflation. the cpi trend is low target with expectations firmly entrenched. firmly entrenched at historical low levels. we are tracking inflation and a lot of euro traders want more. over to the latest on the u.k. election, the two men vying to become britain's prime minister playing the blame game after the terror on friday and central london. forrest johnson and jeremy corbyn clashing over the release of the -- boris johnson and jeremy corbyn clashing over the stabse of the men who two people on london bridge. thank you to our guests for joining us. security is front and center after the knife attack on friday, but does it sway voters

nine days ahead of the election? >> it plays into one of the key debates in the election, and one of those is crime and security. of course, there has been increasing crime in recent years. this allows both sides to come at each other and say you are not being tough enough, especially going back to labor in 2008 with laws around early release and the prior administration under theresa may let this guy out and said he was rehabilitated or going into a process of rehabilitation. that enables both of them to come at each other and say you are not doing enough and you are not strong enough. perhaps it could affect the way that people feel in terms of the polling we are seeing? polling, havehe they shifted? if it is more:

serious, it is hard to tell because most of the polls have been showing tracking around tell of that around 12 points ahead. some of those key states, he is only about 5, 6 points in front of conservatives. that is where you really could see enough movement in the next 10 days to see those states swing back toward labor. so it is pretty much up in the air what kind of outlook we are going to get. tom: i have about eight things to talk about and no time to do it. this is a brilliant essay. i just went to the fun part because it is monday morning. criticize --t to this goes to nato budgeting for defense. the only theoretical answer is to let american protection as more european self-defense -- the french and the germans do not fully trust each other. the italians trust neither of them, the germans don't even andt themselves, bucharest

put a pest just trust each other, people in the balkans don't trust anybody." but it joke, rosalind, shows the underlying tensions of this meeting. rosalind: it does. it is not just president trump for a change going into this meeting, it is emmanuel macron from france, who has called nato brain dead. has been called brain dead, so a lot of interesting language being thrown around. forhave the potential fireworks if you put them all in a room together. nato has survived rough patches before. it has been built among nations who have distrusted each other, different kinds of regimes. it holds them together to avoid a repeat of the conflicts that we have seen over the past century, since world war ii. it has survived these kinds of

existential questions before. perhaps this is just another example of it looking at itself. we have all of our troops in worldwide for the nato meetings, which i think is wonderful. we had derek wallbank on earlier. how will mr. erdogan be greeted? it is a fascinating condition, isn't it? rosalind: it is, because there is criticism of him on two fronts. one is the fact that he went into syria without telling anybody first. it seems to be ok from the u.s. the other thing is he says that a russian defense system is not compatible that it could potentially be used against it he is coming in with criticism, sniping publicly with micron. but the reality is there is no need to keep turkey out of nato, and there is no need by erdogan to leave nato. it is an essential ally to the

nato country. he is probably going to get away with it on both russia and on syria because nato cannot push him too far. they cannot threaten to kick him out. they do not want him to be kicked out. so this is all language and noise this week that is unlikely to change the reality of the nato membership. francine: it is politics but then it translates into policies. >> it does. first of all, there is a political relationship growing between the u.s. and europe, which has been true since trump came into power. the nato issue is a subset of a broader story of transatlantic tensions that have built up. i think you are right to be talking about this idea of europeans not trusting each other and working at how best to come up with the european defense force. it is not just about trust, it is about who will spend the money on the european defense force and what shares of adp --

of gdp will come into the country. the u.s. has been the central part in terms of funding nato and providing more support than anybody else. the u.s. has done that because it knows that a stable europe is not just good for europe, it is also in america's own best interests and has been over the last few decades. the one thing that has changed, with the end of the official cold war, there are questions about what nato's role should be, but i still think it is a meeting of countries that have a like-minded view about democracy in most cases. tom: what i find fascinating here is the economic might of europe. the way you pay for defense is to have a well running economy. that is richard haass 101 over here in the state. does europe have the economic might come of democrats, the oomph to fund greater defense? stephen: i don't think it has the political will, more to the point.

europe could cut back spending, some ofre on defense, the social support methods in -- measures in europe could be cut back to a degree. its potentialn enemies, what the level of threat that comes from different parts of the rest of the world. there are mixed views in europe about russia's role, and there are mixed historical relationships between europe and other parts of the world. if you think about europe currently, there are some who want to make sure they strengthen the transatlantic alliance. there are others who look not just to russia but also to china for future economic relationships. both of those things complicate commonlity to agree, on european defense policy. francine: both our guests stay with us. coming up next, angela merkel's coalition partner elect an antiestablishment duo.

this is bloomberg. ♪

francine: this is bloomberg surveillance. we must talk about germany and the government there has been thrown into turmoil after germany's social democrats elected new leaders for demanding a shift to the left, putting germany's chancellor, angela merkel's, role as chancellor risk. quizzed rosalind on politics. how problematic is this? exposes the long-standing risks that have been going between the coalition

partners, and is quite a swing to the left. they will have a vote this weekend on whether to leave the border coalition, but it is important to know that a vote for new party leaders -- the vote this week and will be the delegates. if they vote to lead the coalition -- leave the coalition and trigger an election, they may be putting themselves out of the job because polling shows that it would attract the poorly. there are questions whether they want to go that step to have an election. is it really in their self-interest to be doing that right now? francine: economically, stephen, what does germany need right now? stephen: there is a different view between the spd and the cdu and terms of what they need. the cdu has fiscal discipline to make sure there are increases in budget borrowing, commitment to a balanced budget in the medium-term. in the spd is saying under new people that there may be room to

have -- it may be good news for germany and the rest of europe. there is a debate that really goes to the heart of german policymaking. tremendous are using caution in terms of budget borrowing, and that is something that the -- tom: let's bring up these two new members of the spd and their visibility to germany and the rest of america. -- how a look at the spd left is left are they? francine: -- rosalind: they are pretty left for germany. their policies are not just about fiscal spending, but about other things in terms of wages and social issues and so on. and they are laying that out quite clearly. interrupt.t mean to are they bernie sanders left or bill clinton left?

rosalind: you would have to put them more on the bill clinton left. germany is a cautious country in terms of policies, so anything that moves away -- they are certainly more significantly less than they were before this leadership election. what you had was the finance minister being fairly on the same page with angela merkel. he did not win the leadership there. mark aboutquestion his future, which we need to look at very closely. that really puts them at us with the cdu. get a split this weekend, it is really a question of when or if there is a divorce going on, but it is a question of the track of angela merkel's current time and when she moves off. perhaps that is when the change happens. it is a question of when, not if. tom: thank you so much. it begins two weeks of extensive

european coverage in london and with that, the leadership of roslyn manna for an -- rosalind mathieson. --rave new world, 2020 coming up later this money, j.p. morgan chief investment banking officer. that in the 8:00 hour. this is bloomberg. ♪

viviana: you are watching "bloomberg surveillance." , ack friday setting a record record $7.4 billion in online sales on the day after thanksgiving. almost $3 billion of that on smartphones, the only day that has ever been bigger for online shopping's last year, cyber monday. today, by the way, is cyber monday. some surprise company -- comments from iraq. they will consider deeper oil production cuts this week. contrary to the signals the cartel and its allies have sent. they appear reluctant to have further reviews output. the ceo of nissan taking over with a long list of problems to fix. -- makoto uchida --

that is your bloomberg business flash. tom he? francine? tom: thank you so much. the people who write books and a lot of them are stephen king of hsbc. he has really done well. here are some of the selections. i emphasize there is only room to put three books up here. we did not put "the shining" up. "brave new world awfully good right now. "the new imperium." how is that going? is president trump an example of the new imperium? u.s.en: well, i guess the had the new imperium when we got to the end of the second world war and we became the dominant -- and became the dominant power. what happened more recently i think is that the rise of china, the u.s. has not been as confident to be the world's

dominant power, walking away from some of the ripon's ability -- of the responsibility they had. these rumbles that are relevant for this week in terms of a commitment toward nato, and also that affects the five that is the fact that china has grown so rapidly over the last 20 years. tom: you nailed it. confidence. where is the european confidence? i look at angela merkel and all the other stuff. where right now is europe confidence? a structuralpe has problem, and to understand it, you have to go back to japan's experience over the last 20 or 30 years. japan was growing at a reasonable rate, and then it started to have the population, the aging story coming through in the 1990's. they tried to offset that by additional government borrowing, high levels of government debt. but ultimately japan stagnated

since the 1990's. europe, maybe 20 or 30 years later, is going for the same kind of demographic difficulty. you look at italy, the aging population story, and german is not far behind. for all those reasons, europe has a street -- a structural difficulty in terms of economic growth. one of the problems with that is that when you say to the central bank, the ecb, they are trying to do something more about growth. talking about fiscal policy, easy to rates, it is afford additional levels of debt. as japan demonstrated, unless you spend that money wisely, the chance of an improvement in productivity, you ultimately need to make the economy work well. francine: we have people come on and say the level of moving is not too bad. you are not seeing great growth, but you also do not lead badly.

stephen: japan has differences relative to europe, and that is partly social differences. remarkably narrowly ofined population in terms ethnicity. it is much more of a melting pot in europe. the problem with a melting pot is that when things are bad, people tend to blame each other. francine: coming up, hong kong retail sales fall again as chaos cripples the economy. we will have the latest on the financial fallout from the ongoing protests. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. we are continuing to keep an eye on the fallout from the sister

party to the cdu. as we understand from the angela merkel spokesperson, they have ruled out renegotiating. we will keep an i on any fallout from the election over the weekend. let's get straight to bloomberg first word news. here is viviana hurtado. viviana: president trump will not be present on wednesday. the u.s. house judiciary committee picks up the matter. the white house criticized the committee for demanding a response before any witnesses were named. he is calling the process unfair. the christian democrats in germany telling the social democrats there will be no renegotiation of the terms of their alliance. they said if they cannot accept that, they can quit the governing alliance. in china, the factory outlook is

brightening. last month, the manufacturing output jumping unexpectedly. the first time since april the index signaled expansion. in hong kong, protesters returned to the streets. police firing tear gas at thousands marching to the u.s. consulate for a rally to support donald trump signing a bill supporting the protesters. 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. this is bloomberg. tom: thank you. me look at the bloomberg terminal with futures at new highs today. it is a risk on feel. that begins in china. jean-luc joins us now. let me begin with hong kong.

was there a sigh of relief in let me beginbeijing over the wes it more to come? what is the tone from beijing as they look at the change in hong kong? >> there were more protests, a little more subdued, not as violent as we have seen. obviously the police did come out and did have to fire tear gas to disperse crowds. we had not seen that since the election two weeks ago. it does seem to be a little more tense. notink beijing is relieved to see more violence. of course, there is a lot on beijing's plate. meetings with the calmness party. in beijing, is there a desire for the fiscal space the west wants? spaceina apply a fiscal to lead to a better politics for the communist party? >> i think they would like to do

that. china also has this huge debt problem. we have seen many companies default recently. we have had a company in shandong province not be able to pay off bonds. that has sparked concerns of contagion. there is a worry among party officials that if they do a broad-based stimulus, they might get some relief, but the aftereffects years down the road will be even worse than what they are dealing with now. francine: we have a great quick take that explains how hong kong's special status is in testy territory. what is beijing's view on the? i think beijing's view is on interference. that is what they called the hong kong bill president trump signed last week. they are not allowing u.s. ships

to visit ports in china or hong kong specifically. they have taken action against american ngos, including human rights watch. francine: thank you so much. geneva is them global fx go head of strategy. does the u.s. trade war continue as it is? can the world economy withstand it? >> there may be some kind of stage one deal at some point that takes us back from the brink. the underlying reality is these are two superpowers that regard each other as rivals. the americans across the political spectrum want to contain china rather than engage with china. there is disappointment in the

west that china has not transition to the kind of political system the u.s. had hoped. this clash of superpowers is likely to continue for quite a while. francine: what makes you worried about the world economy more than other things? we saw factory orders in china better than expected today. >> certainly, i think the number one concern right now is how these negotiations between the u.s. and china are going to pan out. our view is we are going to go through a phase one deal, which is likely to be limited in scope to it will likely -- in scope. this is not something that is going to be for the short term. this is going to stay with us for the longer term. these impacts on global growth,

especially if we have a reinstallation of trade tensions , will not be able to cushion monetary policy because monetary policy has reached its limitation. front, if youl look at the eurozone, you still have germany. it still remains uncertain. the u.s. has pretty much exhausted fiscal buffers. tensions istion of definitely a big concern. give us a call on the u.s. dollar out 12 months. absolutely at hsbc nailed stable or stronger dollar. what is your view forward of what u.s. dollar will do? >> i think it largely hinges on negotiationschina

go from here. if we go into an environment exchange two countries , go on to do some renegotiation come up but we go through a phase one deal, and things normalize, we will see a bottoming out of manufacturing and global trade growth. that is very important for the dollar because this is precisely what cap the dollar higher in 2018 and resilient in 2019. if these things start evaporating or diminishing, what you are going to see is the dollar overvaluation is going to come front and center in the market. i think what we are going to see in 2020 is some gradual depreciation and the dollar. tom: very good.

coming up in the next hour, cyber monday. in my house, it was cyber friday, cyber saturday, cyber sunday. oliver chen with us. he is really good on retail. this is bloomberg. cyber tuesday. cyber wednesday. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. the focus likely to be on her plan for the biggest reassessment of the institutions mission in 16 years.

if christine lagarde has to get one thing right, is it to try to put a more united front silver ecb governing council is more ecb governinger council is more united? >> i think that is right. i think she was chosen because she is more politically savvy, although less of a political economic background. basically to bring in more united front as far as the ecb is concerned. we have to remember that the do in termscb can of easing from the point we are on, so the number one priority is to ensure there is more unity in the governing currency. at the same time, i'm sure she

will keep on shouting at the germans about the need to enact some sort of fiscal stimulus. francine: when you look at euro-dollar, where does it go from here? is that we won't see a gradual appreciation from here. this is coming on the back of a slightly negative view we have on the dollar, which hinges a lot on some marginal positive progress on trade tensions. this is likely to improve the external backdrop, and with the eu being a very open economy, this is going to be a relatively positive factor. we have a term in our value around 115. the headwind for the euro-dollar remains the absence of headwind. tom: i am fascinated by this.

lagarde approaches as if she is going to insert herself into fiscal dynamics, policy, will. does she have a chance in hell of getting this done? >> it is very tricky. in one sense she is right to aim for this given her monetary ammunition, but at the same time, this requires agreement among the germans and french and everyone else on common fiscal stimulus. some have argued that germany could end up with fiscal stimulus that is good for them and the rest of europe if they have a weak economy. you end up with some difficult issues. the problem is they have a single monetary policy, but it does not have a single fiscal policy. tom: is the ecb mandate different from the central bank of norway, new zealand, whatever? is she playing by a different rulebook? >> one of the issues out there

is the mandate has some bias. if the target is inflation that is a little less than 2%, what towardsseen is a bias inflation being lower than that. there has been talk about asymmetrical inflation target or a range between 1.5% and 2.5%. the problem with the range is it is fine announcing it, but unless you have the tools to hit it, changing the mandate will not be incredibly meaningful. francine: the spillover in germany politically, and the fact that it will not do enough to stimulate the economy, is that lagarde's biggest concern? she doesn't have anyone to do more fiscal spending, she will be stuck. >> she is. the biggest way to understand this is to prepare the eurozone with the u.s. or china. can toe cases they

fiscal policy alongside a single monetary policy. the eurozone doesn't have that. understandably expect this is a way of getting germany to pay for the weaknesses of other countries elsewhere in europe. the reality is you end up with this asymmetry between monetary policy at one level and fiscal policy at another. thank you both for joining us. stephen king of hsbc. stay with bloomberg as we bring you live coverage of christine lagarde's answers to eu lawmakers' questions. you can catch that at 9:00 a.m. in new york and 2:00 p.m. in london. this is bloomberg. ♪ is bloomberg. ♪

viviana: this is "bloomberg surveillance." let's get to your bloomberg business flash. goldman sachs reportedly will avoid setting profit targets. goldman plans to put the focus

on its core wall street businesses. announce the launch of its new merchant banking division. fiat chrysler committing to doubling up on a major u.s. production target. the automaker will spend $9 and at 9000 jobs. a marketing firm owned by carlos group has gone bankrupt. it is no surprise. the company says it was working on a plan to hand over control to its competitors. that is your bloomberg business flash. tom: thank you so much. we are thrilled to begin the week with stephen king of hsbc. does economics, but he thinks about the broader picture as well. of globalome form

stagnation. i look at french, german, u.s. gdp, it is not there. i have a great bull market. how do you link the two together, which is the worries of your economic world with the up up up of the stock world? expectations of profit shares within gdp have risen. part of it is the demise of unions and the factory floor. there is no doubt that technology is being used primarily to boost the profit shares rather than productivity in a significant way. thisave a story whereby redistribution of income will help alongside the stock market. you have this massive monetary stimulus coming through the central banks. the hope is that stimulus would

lead to rising financial asset prices and the two companies to invest more. unfortunately they are not doing much investment. you have the effect of it all. does hsbc incinerate to be a la ben bernanke? >> there are certain effects that are worrisome. when you look at the shiller price to earnings ratio, that by historic standards looks very high. the other time was in 2000 when the nasdaq bubble burst. for those reasons alone, you can say there are some reasons for caution at this stage. the difficulty is wondering what the trigger might be for some reversal.

the impact of trade in terms of exports and capital spending. the capital spending is weaker than people expected. companies are worried about global supply chains. in those circumstances, maybe. maybe that is a reason for the stock market to eventually correct. >> will the u.s. consumer stay strong? unemployment is incredibly low alongside low wage increases. it is a weird story. unemployment being low is a sign of strength, but at the same time low wages is a sign of enduring stagnation. consumer would not to quite so well. have they rearranged themselves to neighboring countries? >> there is some essence of rearrangement. some of them might have gone to china or vietnam or indonesia.

it is not like for like comparison. the infrastructure china has been putting in place is not perfectly replicated in vietnam or indonesia. you are seeing a cancellation in many cases. investment that would have otherwise come through. tom: of the gdp issues right now, when you look at the senses of all hsbc economists, are you summed up for next year? versuse u.s. gdp of 1.8 2.7, where do you fit in that continuum? >> in terms of thumb up or thumb down, my thumb is probably level at this stage. i don't have much confidence. i am much more worried about a significant slowdown more than anyone is forecasting. that comes back to the issues of flatten versus yield curve.

veryact that there are not many monetary offers like there are at the moment. tom: thank you. cannot say enough about grave new world among his other efforts. he is with hsbc. willr next hour, we continue this conversation to set you up for december and 2020. carl weinberg will join us. i am thrilled all of her chin has agreed to darken the door because after cyber friday, cyber saturday, cyber sunday, it is cyber monday, which is before cyber tuesday and cyber wednesday. ♪ whether you're out here on lte.

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during xfinity mobile beyond black friday. plus, you can save up to $400 a year. click, call or visit a store today. tom: this morning again, london must consider sudden terror.

maypresident of the u.s. possibly not be greeted by the prime minister of the united kingdom. china signals economic growth. 30,000? suggest dow cyber monday, how can bricks and mortar compete with the online juggernaut? this is "bloomberg surveillance." from our world headquarters in someork to a sober and sai doing to london, francine, we are having a moment of silence for the london bridge attack. how are we moving into a new week for the general election with this terrorist attack? francine: security will be center, leading up to voting. borisis jeremy corbyn and

johnson and the mayor of london attending a memorial for the stabbing victims. that was on friday. .oday, londoners move on terrorism and security one of the big topics for this campaign. our thoughts to cambridge university, directly affected. two first word news in new york city. viviana: the white house will not take part in this week's impeachment hearings. president donald trump's lawyer keeping open the possibility that he would be represented at future sessions. said the entire process is unfair. china striking back at the u.s. beijing is freezing port visits by u.s. ships.

that is after threatening to retaliate for president trump's decision to sign the bill backing hong kong protesters. this week, all eyes in china. negotiators from almost 200 countries will be there for the next rounds of united nations climate talks. china is the world's largest investor in her noble power, but it is also the world's top carbon polluter. over to the u.k., we begin the show with live pictures of the vigil being held there. prime minister boris johnson will paint his party as backers of law and order. london reeling from the knife attacks. will leader jeremy corbyn try to return to a debate on the cost of living. he wants to cut train fares by nationalizing the train system. 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. thank you. the president out with a hat trick of monday morning tweets. we move on to his travels to london and the nato meetings and the distraction of impeachment. wednesday i believe is the focus of impeachment. debating in argentina a massive devaluation of their currency, which is not good for our farmers, therefore effective immediately, i will restore the tariffs on all steel and aluminum that is shipped into the u.s. from those countries. the federal reserve should likewise act so that countries no longer take advantage of our strong dollar by further devaluing our currency. this makes it very hard for our manufacturers and farmers to fairly exports their goods. lower rates and loosen fed.

we will do the data check here in a bit, but we have truly one of the nation's authorities on latin america and the linkage of international economics with trade, and that is carl weinberg. again, conflating the simple economics that you work every day. what does the president get wrong? carl: the agricultural commodities he is talking about are priced in u.s. dollars. it does not matter whether they devalue or not. their customers is going to be unaffected by all of this, except now they will have tariffs on steel. it is a negative for those countries and for u.s. customers of the products of those countries. tom: the president and his supporters feel we have unfair agriculture relationships, maybe like the french looking at agriculture as sacred.

is it sacred in latin america? are they heavily subsidized? they are a little bit subsidized. i'm not familiar with the details in those countries. every country subsidizes agriculture, including the u.s. i think the president is trying to strike out on one of his favorite themes, which is currency devaluation and strong dollar. in this case the reason is entirely misplaced. tom: wonderful to have you on. we will get to the data in a moment. a lift to equities off of good chinese news. the topic in london is the presidents visit. our white house correspondent is just insane. we are thrilled he could join us today. there is a backdrop of domestic politics, both u.s. and in the united kingdom as well.

what is the goal of the president? what is the message he wants to reaffirm with the nato? >> there are a couple of big areas of concern for the president. one is turkey's adoption of the s 400 missile-defense system, russia's system. it seems to counter the whole idea of the nato alliance, which was as a counterbalance to russia. from frenchd a lot president macron about updating the alliance. president trump has raised some of those concerns before. in the last two nato summits, he has threatened to walk away. we are interested to see how far he pushes his case for additional defense spending. francine: as you have laid out, he has gotten a lot more support in the last couple months. >> boris johnson in the u.k. is

another example of that. he has a close working relationship with the president. completely different from past prime minister's. especially with this backdrop of the recent terror attacks, it will be interesting if the president adopts a different tone as he arrives in london. the president has generated a lot of controversy by attacking the london mayor over knife crime in the city. we will see if he tries to adopt a more restrained approach. heard it is have maybe not the best look for boris johnson at this juncture to be seen as overly friendly with the u.s. president. has someone briefed the president on that? thet is possible, but president use this personal relationship.

i think the president will not be afraid to wade into the situation. uproar a yearan ago. does he slipped into london and slipped out? arrivingesident is late tonight. i don't think we will see as much fanfare as usual. there will be 30 different world leaders in town today. it is a rare situation for president trump where he is not -- hasrily the biggest the biggest spotlight, but we know with one tweet he can recapture that limelight. tom: the markets pull back a little bit. we will do a data check in a bit. here is a morning must-read. carl weinberg has lived this, which is the trust of

international economics. presidents right to criticize cheapskates such as germany, the only theoretical answer to less american protection is more european defense. the french and the germans don't fully trust each other. the italians trust neither of them. the germans don't even trust themselves. warsaw distrusts portland. bucharest and budapest distrust each other. people in the balkans don't trust anybody. you have to be from europe to write that. does your trust the president of the united states? >> i don't think europe trusts this president of united states. he has been critical of nato, their unions, their globalist approach. president trump not a friend to the europeans. the quote you just put up his or

interesting in germany given the rise of opposition parties. tom: the stp. >> they are now going to question the zero budget deficit partyf the governing cdu and push them to more spending. as germany comes to the help of europe why spending more money, this will ease the distrust we see around the eurozone. francine: if the president eases tariffs or does not take them off, is the biggest loser the eu? >> the conversation will be mostly about the european union and nato. there are lots of tensions within nato. there is the turkish problem. the alliance is at risk right now. the news story today will be focused mostly on nato. tom: carl weinberg with

high-frequency traders. let me do the data check now. it is up, up, up. the president pulling it back a little bit on a trade tweet. dow futures up 88. euro turning. oil with a little bit of a lift as well. on the next screen. the vix 12.73. what data do you have? francine: better-than-expected manufacturing readings from china and the euro area. that tweet on tariffs may be dampening some of that optimism. european stocks up 0.2%. this is bloomberg. ♪

viviana: you are watching "bloomberg surveillance." recordriday setting a $7.4 billion in online sales in the u.s. the day after thanksgiving, most of it coming from teen households. the only bigger day that has been for online shopping was last year's cyber monday. iraq saying the opec plus coalition will consider deeper oil production cuts this week. that is contrary to that signals the cartel and its allies have sent. the new ceo of nissan taking over with a long list of problems to fix. they will have to deal with decade low profits and an aging product lineup and h

nissan's partnership with -- tom: we will do retail here in a bit. i am looking at my chart on the year. this is how we do it. i go into a huge database of my chart. we are going to rip up the script massively with carl weinberg. the u.s. is, "taking in massive amounts of money and giving some to our farmers who have been targeted by china." thank you for getting that up, the team in the locker room, control room. let's go to the chart of the year. it is simple. it is the standard deviation hockey stick of customs tariffs.

are we bringing in massive amounts of money on an aggregate basis? it in a moreay political spin. we are raising taxes on a massive amount on american consumers and companies by imposing tariffs. tom: where are his economic's visors to advise him -- economic onisers to advise him weinberg 101? tothey have a responsibility educate our first non-economist in basic world economics? carl: i think they have a responsibility. mostly it has been a hit to corporate profits but out of the field of vision of a lot of people. on december 15, that will change unless the president backs down. that is when this becomes really

political. if he imposes the tariffs that have been proposed for december 15, that will impact consumers directly, and then we will get more reaction to it. francine: is the president saying i am keeping on the tariffs to try to make the fed move on interest rates? carl: i hope he is not trying to do that. he is trying to get the fed to do something, and i think that is outrageous. it is not proper conduct of monetary policy, proper presidential conduct, the way this country is supposed to work. i don't believe the tariffs are the important part of the pressure he is putting on the fed. it is mostly domestic. he wants to keep the expansion and stockmarket rally going through the election day. i think that is a pretty simple economic-political analysis. i totally disagree with the advice he has been getting that putting these tariffs on is good

for anybody or will be a means to achieving an end. i don't expect china to bend to any of this. influenceds the fed in any way by what the president tweets come either to the downside or upside? carl: i think other than the blood pressure of individual voters, i don't think there is any reaction to it. the fed has its job. it has its mandate. it is data-driven. it has a whole history to defend, a reputation of keeping its eye on the ball. the fed will do its job. i have confidence in that. tom: do you have a calculation on u.s. gdp that is diminished when you some in the benefits of these trade tariffs and the negatives of these trade tariffs? do you have a number that you work with? carl: we don't have a hard point estimate.

it is hard to prove a negative. it is hard to prove what gdp would have been without the tariffs. we don't have much on our positive list. we have seen a little bit of import diversion. tom: that chart is great showing the pullback. the dow and the s&p look the same. that is remarkable with these tariff tweets are doing. francine: it certainly is. we'll get back to the tariff tweets and carl weinberg. alliance at risk? we are live in berlin next. we will try to find out more. this is bloomberg. ♪

francine: this is "bloomberg surveillance." been thrownment has into -- germany's government has been thrown into turmoil, putting angela merkel's last years as chancellor at risk. how problematic is this for angela merkel? isi think this is just what a real challenge for the german government. the party leaders have been constantly toying with leaving the government. this is not just a game. they mean this seriously. they say if this government has brought down the sdp to the level of 15%, they fear

extinction. worry if they stay in this government, it will go further down. they want to make sure that this government is with them, getting a clear sdp footprint. if they stay in this government, it will go further down. they want to makethey say we han the line already far too much. we have been making far too many concessions on social issues. ahead we aresk going to see. francine: when do we find out more about the various possibilities of what happens next. the next step is next week's party convention. this will not be as dramatic as it could be. the sdp delegates will probably support this new leadership because they are probably exactly what they wanted. they will probably give this sdp leadership a mandate to

negotiate with merkel's cdu. this is when the trouble is likely to start. sdpave to see how hard the leadership is going to push their left agenda and whether they are ready to push it to the end and maybe leave the government at the end of it. tom: can there be a minority government in germany? has this been tested before? we have been used to minority governments in the u k, etc. -- u.k., etc. >> this is not been tested before. the minority government has the advantage that this government could survive the next year. this is in the interests of angela merkel. she is concerned that she is going to be in government when germany has the eu presidency. she does not want that in the middle of the eu presidency that germany is running an election

campaign or has to settle into a new government. there is a willingness to keep this government somewhat going. the result could be that the sdp is withdrawing its ministers from the government, but it stays in the government and occasionally votes along the just to avoidel no elections. tom: thank you so much for the briefing. stormesident in a tweet this morning. he wants the fed to lower rates and loosen, as well as a discussion of latin american rates and tariffs. this is bloomberg. ♪

tom: "bloomberg surveillance." good morning, everyone. francine lacqua in london. i am tom keene in new york. let's get the news out of the way and then move on to retail.

here is viviana hurtado. viviana: president trump is reinforcing tariffs on steel and aluminum from argentina. both countries have been presiding over the massive devaluation of their currencies according to the president, and that is not good for american farmers. the white house may take part in future impeachment hearings, but president trump will not be represented on wednesday when the house judiciary committee takes up the matter. the white house criticizing the committee for demanding a response before any witnesses were named. he is calling the process unfair. chancellor angela merkel's governing party is playing hardball, saying there will be no renegotiation of the terms of their alliance. the social democrats picking new leaders. they say they will demand policy changes.

over to hong kong, protesters returned to the streets. police firing. gas at thousands of them. were -- firing tear gas at thousands of them. rallying to express support for president trump signing a bill. tom: let's dive into retail. we will do this with oliver chen. he has the granularity of big-box and luxury retail. he tells me what to buy. just by her this. bring up the retail carnage. macy's crushed. this is year-to-date. down 70%. target the other way, massive success. amazon not doing that bad. zz.s is the bus

coveted, lineshe out the door. extraordinary. -- how doail do you -- how -- oliver: very versatile. what is great about this is the future of retail is community brands. the teenager is the shift from cosmetics to skincare. it all starts with healthy skin. tom: you have healthy skin. carl does not. that is a different story. oliver: to take it back to retail in general, these new stores are highly experiential. immersed in aing store, and it is about being body positive. tom: i'm getting enough from

francine in london. she says let me in here. his berlin body positive? i am enjoying this conversation so much. i don't think i can add anymore. our margins in cosmetics better than anywhere else? oliver: they are very attractive. especially prestige cosmetics. when you talk about department stores, margins in apparel have been very low, about 3% to 5%. that has been impacting the retail industry and department stores at large. we do like walmart and target. you have to eat. francine: shoppers are fickle. when it comes to fashion, there is so much fashion. is it different with cosmetics? oliver: it is different with cosmetics. 30% to 40% of the purchases are new products.

there is a lot of innovation in skincare. there is newness. there is the no makeup makeup look. there is doing this. there is technology. you want to buy some safe and trusted players. alta has advantage over a player like amazon. tom: what is the trick? they have lines out the door like abercrombie & fitch of yore. oliver: they have a very small distribution footprint. items sell out. that is part of the strategy. candidate? takeout oliver: they are private. we will see. think about drunk elephant. tom: drunk elephant. oliver: it is a queen beauty brand. another thing that is happening in all of retail and restaurants

is this moved to radiance. tom: when i am doing soulcycle, i head over to drunk elephant immediately afterwards. carl: can i try it even without the experiential element? tom: you can. this is critical. monday, all, cyber of that. i am seeing larger discounts online because they don't have the cros cost structure of brick-and-mortar. how does brick-and-mortar fight off the cyber deals? carl: what is really going to happen is the bricks and clicks the sis will factor into this. they are all promotional. 30% to 40% off online and in stores. stores were prepared for this.

there was a lot of guide down to be prepared to promote more than last year. tom: i am doing got on a spring vacation right now. i am doing a guide down. carl: you have basically the same stuff with different product differentiation around it. you're supposed to get competition down to zero in a perfectly competitive world. tom: are you saying oliver chen is a wheat farmer? let me bring in francine lacqua on retail. francine: when you look at all of these cool new brands, drunken elephant, how do they compare with other brands? is it difficult for the older wants to play catch-up? oliver: we have seen a whole cycle of change. what has happened with the reality of mobile, mobile is 50%

traffic. mobile is the new mall. wantsw consumer really something different. you have seen the rise of harry's and more challenges to gillette. larger brands have grown slower or lost market share to smaller brands with generation z. targets portfolio, they have replaced a lot of their private label brands with new brands that appeals to a new generation that wants transparency. it is not easy. what needs to happen with older brains, embracing a new generation z, which believes in and anability, values, real shift is happening across food, personal care, retail. francine: can amazon deliver that for generation z?

it is to be determined. is amazon about brands, or is amazon about convenience and distribution and speed? that is the question. tom: one final question on tiffany. what does it signal for the rest of luxury to see tiffany taken out? oliver: it is the greatest american luxury brand being taken out. it signals more consolidation in the space. and how important that asset is in terms of diamond. we are living in a world of specialization, and consolidation. francine: we will have more on retail. carl weinberg and oliver chen coming up. by a record asnk chaos cripples hong kong's economy. this is bloomberg. ♪ is bloomberg. ♪

tom: good morning, everyone. francine lacqua in london. i am tom keene in new york. we love to get your headlines and breaking news. responding to the president's tweet, the leadership of brazil saying they are open to talking about it. he is annaro saying ally of the president. the president tweeting on tariffs and the fed this morning. best chart.single we want to fully in hong kong.

we can do that with oliver chen on retail and carl weinberg joining us from high frequency economics. this says it all about the assuredness of development in hong kong. this is prada. six stores them at in hong kong. let's review. luxury went into hong kong with a vengeance. oliver: luxury did about 5% to 10% of total revenue in hong kong. this is a major factor. lvmh as well. richmont, we are talking 57th and 5th avenue. they are one of the big consortiums, conglomerates, whatever you want to call it. how much of their revenue is in hong kong? oliver: about 11%.

tom: how do they respond to the protests? oliver: it has been difficult. there has not been an easy solution. numbers are down double-digit. responding means marketing in china and hoping tourists go to other places instead. francine: do people go to other places? is there a shift if product cannot sell in hong kong? do people buy more prada products in airports around the world? oliver: we have seen demand stronger abroad. this is just lost sales to a certain extent as well as we have seen negative earnings revisions in those companies. the answer is mostly no. carl: isn't this the core risk for hong kong that we see business diverted to other places, not just in luxury goods, but manufacturing and

trade and finance? is this just goes elsewhere. oliver: it is. i think it is a permanent change andethinking capex distribution for what will make situationn evolving with no positive and insight. francine: are we going to see consolidation because of it? oliver: i think that brings up that question, making sure you have great spots, you are consolidating locations. that is happening in the industry were companies have been focused on specific flagships. we saw that with cartier in new york. it is a good strategy in terms of amplifying and simplifying and investing in the right points of distribution. tom: i'm glad you mentioned mobility. mentioned dr. you

sylvia will join high-frequency economics. he has been looking at mobility and the leakages domestically and internationally. secularreezing up in a stagnation whether it is china or the u.s.? is there something to what larry summers is talking about? carl: are you trying to bring in the sentiment of retracement from globalism? we will be less competitive. we have a secularism problem. we have a demographic shift with baby boomers like me getting older. we have a slower growth rate. complicated setting within the united states. this globalism and trade thing is a big contributing factor at the margin. tom: fold that into retail and our consumption as well.

your business is winners and losers. what are the practices of the winners in terms of capital allocation and reading the customer? oliver: reading the customer has to do with managing inventory close to needs. managing inventory with a high degree of speed. the need for speed in your supply chain and also getting to the customer within the hour, using buy online, pick up a store, ship from store, car pickup methodologies. that is one aspect. thinking that innovation in retail and executing is about a younger consumer and generation z and responding to those consumers. you have to execute across many fronts. it is shared gains and losses, especially in clothing that has been deflationary. clothing is a competitive space. so is beauty. it is the losers who are not

executing to a new generation. francine: what about jewelry? tom: what about it? francine: what about it? jewelry is a fragment of the market that is not very branded. tiffany was an expert at diamonds and engagement. that is a very difficult market to replicate. jewelry is branded. watches are especially high margin. what is happening with the consumer issues doing more self purchasing. that is another trend. gifts all guys buying the time, the woman is also thinking about herself and self purchasing. that has been a market in opportunity. francine: guys buying gifts all the time. there you go, tom. thank you very much. thank you so much, oliver chen.

here is a look at what you should be watching out for this week. the world's largest climate summit has kicked off today in madrid. starting tuesday, the nato alliance meets in london. on wednesday, the house impeachment inquiry continues. president trump has been invited to present his defense but has declined to do so. on friday, we get the u.s. jobs report. next, we talk more about retail. this is bloomberg. ♪ this is bloomberg. ♪

viviana: this is "bloomberg surveillance." goldman sachs will avoid setting profit targets at next month's investor day. they plan to put the focus on its work wall street businesses. they will announce the launch of a new merchant banking system. -- division. fiat chrysler doubling down on u.s. production. the automaker will spend $9 billion and add 7900 jobs as

part of a tentative deal between fiat chrysler and the united auto workers. francine: thank you so much. this is our newsletter from tim ross, bloombergs u.k. government editor. we understand boris johnson's conservatives will move to bolster the law and order credential on monday, coming on the back of this terrorism attack on friday. have the polls shifted? >> we have not seen the full polls on anything conducted since friday. the polls were narrowing. the question is whether that continues or heightens after that attack. francine: what will both parties have learned the 2017 elections come and what are they doing differently this time? difficult toedibly predict how a terrorist incident might impact the outcome.

last time there were two incidents. at the time, were saying it will help theresa may, because she was the former home secretary, but those tax arguably helped jeremy corbyn because he turned it into a debate about tory police cuts. boris johnson is trying to move the discussion away from that. francine: president trump shows up, and who knows what he will tweet and whether that is beneficial for boris johnson or not. >> what you have seen already is clear signs from johnson that he does not want to get too close to donald trump this week because an endorsement from trump could be a curse rather than a blessing. francine: the polls are narrowing. are they narrowing it up for the markets to price in a jeremy corbyn election? the key question is what is happening in those key target seats. it is about the detail on the

ground. francine: what are they voting on? >> they are voting potentially on donald trump and whether corbett's argument that johnson thed sell out the nhs to u.s. francine: one of the highlights, reading his work, betting the house. turning a little bit lower. this is after that trump tweet on tariffs. there is a move on tariffs by america, reminding investors of these lingering trade deals. this is bloomberg. ♪ eals. this is bloomberg. ♪ when it comes to using data, everyone is different.

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pmi balance boosts global equities, while cracks show in smaller companies and exports. german chancellor angela merkel faces new leadership in her coalition partner, throwing doubt as to how long her tenure can last. trump derails the green shoot narrative. the president raises steel tariffs to pressure the fed to cut rates, throwing cold water on the global equity rally. welcome to "bloomberg daybreak" on this monday, december 2. . if you are just getting back from the long holiday weekend, welcome. in the markets, the story about an hour ago was a new narrative. . we may have green shoots. the worst may be over. we saw that in the bond market and equity market. president trump throwing cold water on that. s&p futures now treading water. still somewhat risk on. still seeing a huge co-op in the bond market, particularly in germany.