francine: president trump vows to further disentangle the u.s. from china. sterling slides as boris johnson says he is prepared to walk away from the eu without a brexit deal. brexit negotiator calls for realism ahead of trade talks. angela merkel considers taking action against nord stream 2 after the poisoning of putin critic alexei navalny. poland's prime minister says it is a no-brainer.

good morning, everyone. welcome to "bloomberg surveillance." i'm francine lacqua here in london. we are getting some breaking news out of the u.s.. this is president trump, according to bloomberg sources, putting up to $100 million of his own cash into the presidential race. this is what the markets are looking at. if you look at euro-dollar, there is a bit of movement on euro-dollar, but also pound. european stocks are sliding, led by technology stocks. oil dropping 28 two month low -- to a two month low. there is concerns that president donald trump has been stoking these tensions with china and germany. we are seeing construction companies, mining companies leading losses across the stoxx europe 600. let's get straight to the bloomberg first word news. >> good morning. let's start in the u.k., where

the chief brexit negotiator has called for realism from the eu ahead of the latest round of trade talks today. hean emailed statement, warned britain must be treated as an independent country if progress is to be made. both sides are seeking to settle outstanding issues before a summit on october 15. boris johnson has appeared relaxed about the prospect of leaving without a deal, telling supporters it would be good outcome for britain. germany's debt spending may become the new normal. that is as the finance minister said the economy should not return to a balanced budget anytime soon and that normality does not necessarily mean running a surplus. chancellor angela merkel's government abandoned its so-called black zero policy this year and is set to borrow millions of euros to counter the virus crisis and modernize its economy.

argentina has officially emerged from its night default -- ninth default. this follows the restructuring of $65 billion of overseas debt. the upgrade is a culmination of more than four months of negotiations with argentina's biggest creditors. new bonds were issued last week to replace securities that had been in default since may. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine? francine: thank you so much. big news out of europe. a top tradeamed post. he replaces and succeeds phil hogan. it shows the importance that the commission at the eu is attaching to some of its commercial policy. vski highlights

that they are worried about curbing some of the market's distorted practices that may be chinese officials are putting in place. --ia tadeo is monitoring moderating a panel with mr. vski.o he is the executive vice president in charge of the euro at the european commission. with the appointment of him as the top trade commissioner, really once again shows us that the eu is serious when it comes to trade. president donald taken another shot at china as -- president donald trump has taken another shot at china. he has threatened to scale back economic ties with the nation by punishing american companies that outsource to china. pres. trump: end our reliance on

china one sent from, whether it is decoupling or imposing tariffs. we will impose tariffs that punish companies that deserve america to create jobs in china and other countries. if they can't do it here, then let them pay a big tax to send them to other countries. francine: for more on all of this, we are joined by brenda murray. a lot of stuff to do with trade. there is what we heard from president trump yesterday and then just moments ago, we have a new trade commissioner and the eu -- in the eu. his trade -- is traded the biggest unknown for top world economies in the coming months? >> there are definitely a handful of big events that will come together over the next couple of months. it has been a big year for trade already. we are looking at a number of other risks. the one you mentioned at the outset was president trump, who

spoke yesterday mainly from a script that we heard already about decoupling from china. what was different about this is it wasn't to his base or a rally of his supporters. it was a labor day press conference where he made this point about china in stronger words than we have heard recently. vskis is an interesting pic, he is not a hawk or a dove when it comes to trade. he is pretty much down the middle. that will be interesting to see how it pairs up with the more protectionist u.s. officials. francine: what do we know about how biden's administration would be different from the trump administration when it comes to trade around the world? >> biden said that he will put the trade war kind of to the backdrop, at least initially,

while the u.s. tries to get a handle on the pandemic and economic downturn that it is undergoing. know, mayexpect, you be issues with china and the eu to be delayed for six months to ntil any sort of recovery is seen. it sounds like a cessation of the hawkish rhetoric both on the transatlantic and relationship with china. francine: all right. thank you so much. brendan murray with the very latest on trade. vskis of the european union will become the eu trade chief. fivewas announced four or minutes ago. the man of the hour is right on a panel with maria tadeo in brussels. we will be speaking to nancy pelosi later today about trade.

she is the u.s. speaker of the house. we will be looking forward to that interview. this is bloomberg. ♪

♪ >> we also need to get -- that could work. it is important for being able anresolve trade disputes in orderly manner. we need international organization dealing with trade. therefore, we need w-2 and we need to reform it.

>> we talked about this idea of a european identity and europe being more autonomous. we are stuck with a trade deal that could potentially happen with china, another with the u.s. are you confident that you can negotiate the two at the same time and get to something may be by the and of the -- end of the year. >> in our conversations with u.s., as you know, we are discussing some meaningful deals. ,f you want some targeted deals in a sense, we are avoiding further escalation of trade conflicts. indeed we arena, working now and focusing on investment agreement. ifcourse, it will be great we were able to conclude it this year. be ambitious agreement and it needs to

address challenges and imbalances we are facing in our investment relations with china. >> that's a good word that you mentioned, and balance. you feel -- imbalance. you feel the relationship needs to be more balanced at this point and they are aware of that. europe is aware that the relationship at this point is not equal. >> that is exactly subject of conversations we are having with china. we had a round of discussions on eu-china economic dialogue in july, where we were discussing in depth all those issues. and from eu side, also clearly indicating problems which still needs to be addressed. firm, i guess tough but that's how you want to be as the commissioner. are you going to be ready to fly across the world? i am sure d.c. on your agenda next. what is the number one priority for the european union now?

i know you are taking on more roles, more trade portfolios now, but what is the number one thing you think we need to address at this point? >> if i need to say in one word, i would say implementation. because we were able to agree on a substantial crisis packages and some of them are still to be implemented. an economic recovery plan, so now we need to put properly in place, implement it, make sure this money really reaches the economy, really reaches the people. maria: implementation of those agreements is what really matters next. i want to put that same question to maya and martin. what is the number one thing we just think we have to -- francine: that was mr. dombrovskis moments ago being appointed to the top trade post, in conversation with maria tadeo in brussels. he is one of the european

union's top economic policy makers and now has one of the top jobs of negotiating trade. this was after the resignation last month of phil hogan. joining us to talk about trade and central europe and what can negotiation in the or actually with trade is kevin daly from goldman sachs asset management. great to speak with you, as always. thank you so much for coming on "bloomberg surveillance." let me just ask you about trade, because we see -- or it seems to be at the forefront of everyone's minds, right. we had of this news about president trump and china. we had a new appointment for trade at the eu. what does it mean for the countries you covered in central europe? kevin: for emerging-market economies more generally, i think trade is absently vital. these are -- absolutely vital. these are cyclical countries that depend on the trading environment. if there is progress on trade

talks, if there is a freer, better environment for trade going forward after the troubles we have had in the last couple of years, then that will certainly be positive for em's and for the region. francine: if you look at growth in general, are we seeing positive signs and growth that are here to stay? is this a trend? or do you worry that a second lockdown will bring us back to further lockdown and therefore, more economic pain? kevin: we are relatively optimistic. i mean, we have very much a v-shaped recovery in growth and we are well above consensus for growth, not just across the region, but also globally, for next year. we think that the consensus or the majority out there are underestimating the degree to which economies will snap back, simply from easing of lockdown measures and turning the economy back on again, if i can put it

that way. we expect five poor -- 5.5% growth, while consensus is around 3.5%. will there be legacy effects from the crisis on the level of gdp -- there will be legacy effects from the crisis on the level of gdp. things like industrial production and retail sales, not just in emerging-market economies, but so far globally is bouncing back faster than we anticipated. francine: if you look at growth and in your notes, you know that basically growth could be innate v-shaped recovery. what does it mean for monetary policy? kevin: one could argue that actually oil growth would be very strong. i think there will be a legacy effect from the crisis on the level of gdp and on star capacity. the -- spare capacity. this is where growth rates with those violent swings in growth from the crisis, growth can

sometimes provide a somewhat misleading picture of the overall state of being. we think there will be a lot of overall spare capacity. rising unemployment from businesses that unfortunately will in some cases fail. we think that will put a downward pressure on inflation across the region, both in high yieldersands low alike. we are below consensus on inflation. we think there will be a u or n rates.l in interest francine: we are just getting some breaking news out of china. we understand that the australian tv anchor that was detained by china, this is basically the australian tv host , a broadcaster who was detained in beijing as tensions between the two countries have been rising.

we understand now from china that she is being probed for state security violations. offn't want to be an question, baz you see tensions china,tween the u.s. and between china and australia, are we going to see stronger ties between china and some of the emerging economies that you follow? kevin: those are links that have certainly increased in recent years, although you will have seen as well that there are tensions as well, in particular between the recent visit from czech officials to taiwan. i think that on these issues, actually european economies will very much hide behind what is negotiated from an eu side. it is not something that they will actually pursue bilaterally, at least on the trading side. they will from the investment perspective. from the trading perspective, it

is very much in the eu domain. today's news of the appointment of the commissioner i think is a critical appointment, both for the eu, central and eastern europe as well going forward. francine: thank you so much. goldmanly there from sachs asset management stays with us. south africa is expected to announce gdp collapsed by the highest levels in three decades. we will talk about that with kevin daly. this is bloomberg. ♪

♪

francine: this is "bloomberg surveillance." i'm francine lacqua here in london. let's take a look at some of today's key events as the latest round of brexit negotiations begins later. we will get a final reading on euro area gdp. we will also get an idea of how the south african economy is faring after one of the toughest lockdowns in the. it is expected to contract by an annualized 31.1% in the second quarter. still with us is kevin daly from goldman sachs asset management. if you look at south africa and you look at the inflation outlook, what does it mean for monetary policy and the economy? kevin: i mean, south africa had the toughest experience within covid.ion in terms of covid, by far, the worst growth rate in terms of cases. haveally, mortality rates

remained well below western european and u.s. levels. it still has a very tough lockdown. we expect, as with consensus today, we expect an annualized decline of around -40%. in an economy that was already crisis came at the worst time. we expect -- there was already a lot of spare capacity in the economy, so the crisis is to some degree pushing on the door that was already opened in terms of creating spare capacity in the economy. inflation has a ready fallen significantly. we think that next year, inflation will remain at or even below the 3% lower bound of the central bank's inflation target range. we expect that to drive to eu's monetary policy further next year. we are much more dovish than market pricing in terms of what

we expect to happen to interest rates over the next year in south africa. francine: where do you see rand heading? shock asabout an fx the main risk. do you think there is a real possibility of a big fx shot? -- shock? kevin: that is a real risk in south africa. we are somewhat surprised. we have been somewhat surprised by the recent strength in the rand. it actually will play into a weaker inflation dynamic. over the medium term, i do think that there are a lot of risks .round the currency situatione of payment in south africa has become somewhat more healthy but

fragility is a main risk in south africa. francine: thank you so much for joining us. from goldmanere sachs asset management. coming up, boris johnson wretches -- ratchets up the chances of a no deal brexit. our other big story today is trade. we will also talk about trade. this fits exactly into the narrative of brexit. the eu has named mr. dombrovskis as trade chief. the deal with the u.s., and then of course, we have the trump-beijing relationship we need to look at more. this is bloomberg. ♪

give you my world ♪ ♪ how can i, when you won't take it from me ♪ ♪ you can go your own way ♪

♪ go your own way your wireless. your rules. only with xfinity mobile. ♪ ♪ you can go your own way ♪ go your own way your wireless. your rules. only xfinity mobile lets you choose shared data, unlimited or a mix of each. and switch anytime so you only pay for the data you need. switch and save $400 a year on your wireless bill. plus, get $400 off when you buy the new samsung galaxy note20 ultra 5g. francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. to theet straight bloomberg first word news with leigh-ann gerrans.

leigh-ann: good morning. donald trump has promised a sharp cut back of america's economic ties with china. the resident threatened to pulmonary -- to punish american companies that do business in china. that puts him in stark contrast with his president's arrival, joe biden, who has accused trump of being soft on china to secure a so-called phase i trade deal in january. breaking news in the last half-hour. e.u.'s next trade commission has been named. phil hogan resign last month over a scandal in his native ireland. skinny back transatlantic tariff the globalupholding commercial order amid a rise in protectionism. germany's debt spending may become the new normal.

thety finance minister said economy should not return to a balanced budget any time soon and that normality does not necessarily mean running a surplus. chancellor merkel supple is setrate -- government to borrow about 218 billion euros to counter the virus crisis. and modernize the economy. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. francine? francine: now to the u.k.. serling declines are piling up as boris johnson the odds of leaving the e.u. without a deal. johnson said monday he is willing to walk away from talks rather than compromise on what he sees as core principles of brexit. joining us to discuss this is dani burger. just how negative has he turned against sterling?

dani: it is a stark contrast to where we were seeing sterling trading at recent highs, but sentiment could get worse. overnight we saw sterling fall atmuch as 1%, now trading 1.31 versus the dollar. but according to some, we could see sterling fall as low as 1.20. here is they thing -- at these levels, this really isn't a huge discount priced in. according to the imf, based on purchasing power, serling is just about even with the euro, and it is even more expensive than the yen. then we get the positioning. this is a city index. now -- active traders are the most net long, the pound, in about two years. if you look at the negativity over the past year, these really net short extreme positions, that is all but disappeared. you have to imagine, even if you think boris johnson is bluffing,

there are still other issues for the u.k. you have an economic contraction in 2020 that is set to be one of the worst globally, about 10% contraction. not to mention rising coronavirus cases. it is really not just brexit. given all these things and given the positioning as well, we could just be starting a correction in sterling. francine: we will have plenty more on fx throughout the day. dani burger there. the polish prime minister expects his country will see the sophist recession in the you -- in the e.u. >> i think he is now in a place which is good for the economy. timesnot intervene in , and if there are

unexpected developments, are central bank does not exclude intervention. this happens vis-a-vis the swiss .ranc, which is important but having said that, we are not concerned with the current level at all. it is good for stability of our economy, it is good for our expert in the industry, and it has the potential for further strengthening. >> across the border in germany, there is increasing pressure on chancellor merkel to abandon the nord stream 2 project. that has been the polish government stance for years. how would you try to convince germany to drop this project? >> now with the case of mr. navalny, i think it should be a

no-brainer. very sadee is a example of how russia is treating its citizens and opposition leaders, and this should be condemned -- not only condemned, but it should be -- there should be very strong sanctions and interventions following suit. germane i believe that leaders -- i believe what german leaders are saying. decision-makers and change their decisions already by the same token they finally admitted this is a political project because without political involvement, the project would already be

abandoned. i mean the nord stream 2 project. ,ith the recent developments isre mr. putin clearly threatening with intervention, and what he did to mr. navalny, this should be a final wake-up call for germany in terms of the e.u. and german attitude towards -- >> do you think germany would be able to, with the consequences for germany, for poland, and the on. if they didn't cut off -- cut off work on nord stream 2? would it get through the winters? >> of course. we have a lot of connectivity. the nord stream 2 project is very dangerous for ukraine because they are going to be completely cut off from their transit fees and their transit capacities. they have a gas pipeline system

which was built for -- to transit gas to western europe. obsolete, they will experience a huge blow. at the same time, there will be, for the first time, a situation where russian troops and russia will be able to march into other territory because they will no longer be dependent on the gas pipeline system. its 55 stream 2, with billion cubic meter of gas, is not only a political threat, it is also a geopolitical threat to this part of the world, and that should be stopped as quickly as possible. francine: that was matteo's more mateusz morawiecki. ---trading ted lieu shares

tesla shares are down. there doesn't seem to be a huge catalyst for this, but the electric vehicle maker is widely expected last friday to be added to the s&p 500 index, but actually they were not because the indices which oversee the gauge instead added online retailer -- i don't know why -- whether that is why tesla is falling further today. 5.5%,eek tesla fell some and today pretrade tesla is down 10%. we will have plenty more on tesla, plenty more on your markets and trade. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get to the bloomberg business with leigh-ann gerrans. -- a-ann: j.p.morgan is source says the bank requested that 50% of its steelmakers be in the office on any given workday. that is up from 25% previously, but more than half the sales and trading staff are already coming back into the london office. google is scrapping a plan to rent office space in dublin for as many as 2000 workers. the tech giant had been in talks feetase about 2200 square of space in what had been one of the city's biggest real estate deals in years. the decision not to proceed will be keenly watched as investors weigh the impact of the camera virus outbreak on the city. and downloads of the disney-plus

went up 68%rvice this weekend. mulan was really -- was released on friday. on top of the seven pound a month subscription, customers were also required to pay an ,dditional $30 to see the film something the company has not attempted before. it is your bloomberg business flash. francine: the bank of england chief economist has warned against extending the u.k.'s furlough program. saying continuing support for jobs threatened by the pandemic is a necessary process of adjustment. u.k. is coming under pressure to extend the support scheme after -- france is also considering to follow suit. joining us now is miss rockman -- major month. rahman.ij

are we going to go to wto rules come january 1, 2021? can hear me.if you i think we are having a couple of technical difficulties. if you can hear me, i was asking you whether you thought we would have a no deal brexit by the end of the year. mij: i can hear you. unfortunately the line is quite bad. i do still think a deal is likely. i think the government has come to the view of playing hardball with the e.u. side, signaling its willingness to reopen the withdrawal agreement. again, it is a hardball strategy designed to extract concessions from the e.u. on the critical question of state aid. i don't think that strategy will be successful, but i do think that is what the latest

back-and-forth is about. francine: is this a negotiating tactic? in oneu could look at it of two ways. the government has come to the view that a deal is not deliverable in brussels. what it may now want to do is to reopen the legal constraints within that withdrawal agreement that will apply to the government in a no deal scenario, especially on the question of state aid. from one perspective, the government has given on the deal , and now they want to address the legal default on the withdrawal treaty. none of the perspective is that with the government is doing is using that threat to push the accelerator further down in an attempt to extract concessions from the e.u. side. that is the interpretation at the moment that i subscribe to, but i think this is a massive escalation, a negotiating tactic of the government, and it

elevates the risk of the chances of no agreement. francine: i guess the question is if there were to be a no deal brexit, would it boost the popularity of boris johnson, who has come under strong criticism with his handling of covid-19? it is certainly red meat for the hardline brexiteers. from that perspective, yes, this is absolutely going to further consolidate the base. in terms of road opinion, i don't think there is much support across the population, -- in terms of broad opinion, i don't think there is much said board across the population for no deal. i think a large majority of the population does want to see an agreement with the e.u.. however, for this administration, that is going to mean a deal that allows it to do what he wants to do on state aid, and that is the question -- is a deal doable, but delivering on the government agenda

regarding state aid? that is very unclear, which is why i think there is this parallel conversation about the no deal andt on with the government wants to do on that agreement. francine: about 40 minutes ago, is was put in charge of the trade portfolio. what does that mean on how the e.u. will deal with brexit come on how the e.u. will deal with the u.s.? -- we think he will be a know that trade is a geopolitical importance to the e.u., and it seeks to fashion a tougher stance in the world against china, against america, indeed against the u.k. i suspect he will be a continuity cabinet. he will continue to push hard to level the playing field with china, the u.s., and others.

i don't anticipate because of his rise to the job they flew change over the last six months. francine: coming up later today, we will speak with nancy pelosi, the u.s. speaker of the house. we will ask her about trade, trade between the u.s. and china, trade between the u.s. and europe. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. brexit.'s chief negotiator has called surrealism from his e.u. counterpart to head of the next round of trade talks, begin in london today. david trust warns that written must be treated as an independent country if progress is to be made. both sides are seeking outstanding issues before an e.u. summit on october 15. joining us now is christopher hansen, a member of the committee on international trade. thank you so much for joining us. first of all, is the e.u. happy with the u.k. passing a law that

reinterprets the impact of the northern ireland protocol? the northern ireland protocol is something that both sides have signed up to, and we believe that the signature and the vote in parliament is worth something, so i believe there is room to agreed-upon.t is francine: the british government plans to give its own ministers a set of questions like which goods will pay tariffs as they cross into northern ireland. will the you have a objection to that? >> i can hear your question very clearly. -- i cannot hear your question very clearly. francine: the british government plans to give its own ministers a set of questions like which goods will pay tariffs as they cross into northern ireland. will the e.u. have an objection to that?

of course: this is not up for discussion at this moment. i believe that we should look ahead and not look back but -- on what has already been voted, so that is definitely not up for discussion at this moment. the e.u. believe there must be some kind of paperwork on trade crossing between northern ireland and great britain to protect its single market? yes, of course, we have the european customs code that has to be respected. agreed in the withdrawal agreement, so here we have clear principles on how this has to be applied, so there will be additional paperwork, but that has been known for a long time, so the british has 350 billion to take charge of this

additional paperwork that will be necessary. we were of course not demanding for this, but we have to cope with the situation. as it stands, and of course this has to be in line with the withdrawal agreement. hansen, how do you see this panning out? if this is something the u.k. would like to avoid, do you think the e.u. and the u.k. will find an agreement in the 11th hour? christophe: it depends if both sides are able to negotiate and come a little bit back from the extreme positions. everybody will have to make some concessions. it is not just one or the other. both have to work together on a compromise, but so far there is very little movement with the ongoing discussion. behope that we finally will

-- we hope that finally this is -- there is six weeks left to the date that boris johnson decides if we can live by an agreement by the end of october. we need to ratify this in the european parliament by the end of october is fine, but now the clock is really ticking. we have to make huge steps ahead deal, we haverade to put the question out if everybody really wants a deal at this moment. francine: when you look at the concessions that the e.u. would be willing to accept, how critical is it to the e.u. that there is a deal in place with brexit, and does it mean that both sides will come together? are you willing to compromise?

the european union has already showed a certain will to compromise. talking about fisheries, for example, there is an opening they have openly shown some flux ability there. i think that is crucial. it is not just one part that has to give in. we know of course that our trade relations are very intensive come around 47% of goods from the u.k. are exported to the european union. muste around 8%, which is -- much less of the european union exported to the u.k.. if there will be a major disruption, both sides will suffer, but of course it will bp proportional that it will be -- to whatl to the is going to the other side.

much,ne: thank you very chrisophe hansen. the markets actually are concerned about what is going on in trade with the u.s. and china. technology shares are sliding. president trump stoking these tensions with china, but we also have virus cases across germany and the u.k. continuing to rise. treasury yields are following that are falling. "bloomberg surveillance" continues in the next hour. tom keene joins me from new york. we will be talking about brexit and we will be talking about pound. this is bloomberg. ♪

francine: social distancing. president trump vows to further

disentangle the u.s. from china. he also suggests heavy taxes for american companies that create jobs overseas. pound pain. sterling slides as boris johnson says he is prepared to walk away from the e.u. without a brexit deal. the u.k.'s chief brexit negotiator calls for realism from brussels ahead of today's trade talks. and angela merkel considers taking action against nord stream 2 after the poisoning of putin critic alexei navalny. while speaking exclusively to bloomberg, poland's prime minister says it's a no-brainer. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. a number of things going on. as e.u.mr. dombrosky's trade commissioner. we look at tesla, down 10% premarket, and we have a lot going on with trade. tom: there is only one topic for the markets, and it is