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tv   Bloomberg Surveillance  Bloomberg  October 1, 2018 4:00am-7:00am EDT

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francine: the new nafta. the u.s. and canada agree on a new deal. the italian finance minister prepares to try to convince his it euro area counterparts on his budgets. musk.c reigns in elon he steps down as chairman and cuffs up a $20 million fine as part of the deal to remain chief executive. twitter drama in the rearview mirror? ♪ francine: good morning everyone
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and welcome to bloomberg surveillance. i'm francine lacqua in london. these are the stoxx 600, pretty much unchanged. the dollar and canadian loonie on the back of that trade deal, keeping its leeway i lance. the italian tenure up 3.18. we had a lot of movement on not only is telling stocks, but it telling bonds, which draghi euro lower on friday on the back of that 2.4% budget deal. you can see brent crude at 82.79. we did have a call between president trump and king of dollar of saudi arabia desk king of dollar of saudi arabia -- king of della of saudi arabia. that means the share price is down 8.3%. coming up, the chief executive joins us for an exclusive interview at 9:30 a.m. u.k. time.
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let's get straight to the bloomberg first word news in new york city. here's taylor riggs. teamr: donald trump's pushed back that they laid out ground rules for the probe into brett kavanaugh. they ordered the investigation on the sexual assault allegations on the supreme court nominee following a request by senate republicans. the party had hoped to power through the chamber and onto the natures -- nation's top court. >> the white house is not getting involved in the fbi investigation and that way. the president very much respects the independence of the fbi and feels they should be looking at anything they think is credible within this limited scope. taylor: theresa may is facing the battle of her political life. they try to undermine her leadership, including foreign secretary boris johnson. he has described her brexit strategy as the ranged, but she
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and her team have renewed calls to support the so-called checkers plan. >> at the heart of the check is plan is a free trade deal and frictionless trade. tradek it's frictionless that ensures we maintain our guarantees with the people of northern ireland. and checkers, at the moment, is the only plan on the table that delivers on the brexit vote in the way i've set up. >> part of the responsibility of being a government, especially at a time like this, is that you've got to unite, keep a cool head, and give got to accomplish the task that you've been entrusted by the people to engage with. appetitedon't see any for that kind of division. taylor: a telling finance italian finance
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minister alums investors. while the spending plan is not on the euro group agenda, he's a certain to face questions about the proposal on the sidelines of the. closing watched talks details released 2.4% deficit target. auld a telling assets -- put talent assets under pressure. the typhoon that hit japan is moving northeast. southern and western japan was at a standstill ahead of the extreme weather. werethan 1000 flights canceled while train services were closed yesterday. most are expected to run today. global news, 24 hours a day on air and at tic-toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine? francine: thanks so much. forget about nafta.
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forit's all about the u.s. the u.s.-mexico-canada agreement. it will make modest changes to the deal he once called a disaster, easing uncertainty for companies relying on terror free commerce. commerce.free how will this deal move markets? what's next for the dollar? joining us for the hour is the cohost at ubs. thank you for joining us. is this a reversal? is this a u-turn? or is this an exception? guest: i think it's good news definitely for everyone. i think the market is reflecting that. inhink these headlines have the past been the cause of great uncertainty for investors. whenever particularly told investors to sell. i think it's right to make these
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noses. the trade with these countries are deep and likely to get deeper overtime. francine: this is my trade of the day. thank you for hillary clark, so we have canada, which is the white line, and you have mexico in the blue. does it mean we are going to see easing of tensions between china and the u.s.? guest: those tensions are a little bit deeper in the sense that the main question is, what is the negotiation there for? at the end of the day, we haven't seen terms and requirements for both sides. we haveur scenarios, some kind of escalation in terms of economic damage. i think the most interesting bit with this is not so much about the first order of discussion, the trade conflict, but have different authorities react to that. because of two reasons.
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the first one is that people haven't seen yet the full policy response from china, which is to support the economy on the back of those headwinds. the second thing is people haven't seen or priced growth data into the u.s. for what is essentially a tax to their consumers. and i think how the economy and how the companies react to all this will be a key input into what happens next. francine: let me bring you to my other chart, looking at canadian dollar, mexican peso, an american dollar. guest: we are bearish on the dollar from here, for a number of reasons. the first and morten posen one, -- most important one, it may be happens it's pointing in that direction but there's a good chance there is damage to the economy by q1 and the market is not pricing that in. francine: you're expecting the u.s. economy to cool down and for the fed to wait on hiking more rates.
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make the riskeast as big as what the market is pricing in. the market may think if the u.s. economy starts a little bit cooling down now, what happens when they price in fiscal stimulus, which are fading gradually towards the end of 2019 to get out? francine: if you look at dollar from here, doesn't go down? does it help with emerging markets? guest: yes, with accommodation of stable u.s. yields over one year, and the fact of chinese easing offsets some of those treasures. but they are price very negatively. third, risk premiums are quite wide. all of those, emerging markets have a spell of relief. francine: what is your favorite pairing? is there any bargains you want to scoop up? guest: we like the mexican peso.
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we like high yields between south africa, indonesia, mexico we cover the whole world. we would be short asian currencies. for instance, with lower yields the cousin of the ongoing easing and china and how that could affect those, including korea and malaysia. francine: thank you. head of fx and rate strategy at ubs stays with us. up next, the $40 million tweet. what's next for the carmaker? keep it here on bloomberg. because the managing director joins us for an exquisite interview. that's at 4:00 p.m. u.k. time. this is bloomberg. ♪
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francine: economics, finance, politics. this is bloomberg surveillance. i'm francine lacqua. the electric carmaker has forced to find a replacement for elon musk. the sec and him will have to settle fraud charges about taking the company private. they will have to add two new independent directors and directors to oversee the tweeting and their outspoken officer. what's next for tesla now that the deal is done? joining us is alex webb. all, what is the best possible deal for elon musk? alex: i think it's pretty good.
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he's pretending bet executive officer ship -- he's retaining the executive officership. ban oniled a shorter holding the chairmanship and a smaller fine. his game of poker did not pay off on that level, but i think he probably is in a better situation than he was thursday. francine: how is he going to work with the chairman? has the chairman going to work with them? there'se big question, an appetite to take on the role. they could be a dead duck role given elon is only banned from this position for three years. perhaps the expectation is that he would come back in three years. whoever goes into the role might have assurances he will hold it longer. there's a nine person board, five members very closely aligned with elon. adding two members shifts the
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balance, means the chairman might have more control. certainly a long overdue move. francine: what do we know about model three? now they have to deliver. alex: that's one of the advantages of the settlement. does not have this distraction hanging over his head -- elon does not have this distraction hanging over his head. it might be too little too late. they might need someone to help push this production and finally getting to the point where he says they are close to profitability. and therefore, there's the hope that cash flow might be positive in the third quarter, which means they are able to invest in the new models and production line. francine: thank you, alex webb. he stays with us. we talk about currencies. let's get numbered business flash with taylor riggs.
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taylor: ryanair shares are sharply lower this morning as it became the latest european airline to cut its earnings outlook. the region's biggest discount carrier lowered its profit from 1.1 billion euros to 1.2 billion euros. two days of strikes in september translated to lower profits and fewer bookings in october as customers feared more walkouts. oil has extended its gains after the longest quarterly rally in a decade. slow down in american drilling added to supply risk while the u.s. and saudi arabia discussed market stability. thanking donald trump -- of saudi arabia are reported to have spoken on the phone saturday and maintain supplies to ensure stability of the market and growth of the global economy. the number of eurozone banks deemed too big to fail growth
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from seven to eight with the arrival of nordea. they are moving from helsinki to stockholm, saying it's driven by regulatory consideration and to be inside the european banking union. it's introducing automated and digitized services to replace human beings. to really be able to have the same competitive conditions that our europeans have. playing field with the largest players in europe. we only get it if we are in the banking union. it's a natural step for us to take. traded 165 publicly companies without female directors will have to find more by the end of 2019 after a bill signed by jerry brown. it requires a company with five
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directors to have two female members by 2021. that's your bloomberg business flash. francine? francine: thanks so much. less than six months until the u.k. leaves the eu, theresa may at her checkers plan are coming under further attack. with mays conservative party gathering in birmingham, the former foreign secretary boris johnson called it deranged. speaking to bloomberg, greg clark defended the proposal. deal is something that wouldn't be in the interest of either side. and canada wouldn't achieve our objectives. with got to be to nations about bes. -- we've got to tenacious about this. francine: and edwards is there for us. will she survived the week? anna: boris johnson does seem to be on the move.
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he's not launched a leadership bid, but he's made himself vocal over the weekend in papers and elsewhere talking about deranged, preposterous plans from theresa may, the prime minister. i spoke to ministers this others and we spoke defending theresa may as prime minister. it is a secretary and city minister backing her plan. one of them suggesting boris johnson, we've seen this before. he just behaves this way, as if it's nothing more than that. philip hammond, the chancellor, talking about how boris is not capable of grown-up politics, mocking his inability to grasp of the details. it does seem as if theresa may's grouping are coming to her defense in the early stages of this conference, but we'll have to wait until wednesday to hear from her platform. francine: what are the prospects
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of the checkers plan? anna: this is the plan. theresa may's plan is the plan under attack from all sides. the eu rejected it. some people in her party don't like it. that's what boris johnson is objecting to. he thinks it requires them to stay to closely aligned to the eu. he prefers something like the canadian free trade agreement. theresa may and philip hammond rejected that, suggesting if we had something like canada, it might lead to more checks at the border. business wouldn't like it because it would provide friction to trade. philip hammond said it could encourage others to argue for borders in the u.k. elsewhere. this is a fascinating debate whether checkers survives the week and mother theresa may does, as well. francine: does philip hammond have support of his party? he came in and tried to defend theresa may and by defending
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her, almost lost boris johnson. anna: indeed, yes. this is in reference to the daily mail article written. he did say the mocking of boris johnson suggests he's not able to grasp the details, saying he will not the next prime minister. it's all-out war between boris johnson and theresa may, but boris johnson not yet launched a leadership bid. if you've may said, got an alternative proposal, let's see them. they are not my did to adjust the checkers plan. it is the plan as theresa may and her cabinet set it out. it's the one negotiated by the government and the eu 27. they are trying to give the impression that's not going to between in birmingham. francine: and edwards in birmingham. we will have plenty more throughout the day.
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how much does the u.k. political drama drive markets? what is priced in the pound right now? guest: i think what the market is pricing is a high chance we get some kind of deal that kicks the can down the road. if that doesn't happen, and we end up landing in one of the hard brexit, or variations thereof, i think it has substantial downside. even in a soft brexit scenario, people underestimate the damage to the u.k. economy from the fact that the financial sector, a key plus of surpluses a sickly starts to move away. and indeed, even for a soft brexit, a services deal that protects the financial sector as it stands is not necessarily part of the agreement. francine: let me bring you to my chart. this looks at volatility. we remind ourselves we had a
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flash crash a year ago at the party conference. are you worried about volatility? what is that mean for how you play the market? guest: we have done an analysis of the economic scenarios that happen in a hard brexit scenario, soft brexit scenario, or not brexit scenario. we projected our models to what that means for the pound and looked at volatility to see what's priced in. the bull market is not pricing the very negative scenarios happening in any kind of sort on the horizon. particularly that we have the same challenge persisting for a few months, the fact that the leadership of the government does not seem to converge to one solution. there is definitely a scope for downside. it brings volatility higher. francine: what is the alternative?
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is it a leadership challenge? wouldn't go to general election? or would it mean the u.k. crashing out of the eu? guest: i think all of these scenarios you spoke about and both higher volatility and more risk. the best case scenario you work on is something that maintains the status quo for a little bit longer. and that helps us deliver some kind of detail, some kind of plan that smooths out any kind of adjustment or basically maintains a lot of the things the u.k. economy enjoys at the moment. anything short of that is particularly bringing the markets to thinking about the worst-case scenarios. francine: if there's a general election, what happens to pound? i don't know if that's 10% likelihood or higher. guest: i don't know because i don't know the discussion around the election and don't know what it goes for, what the party stands for.
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is it a soft brexit versus hard problemi mean the main in the whole negotiation is that there's not a clear sense of what would keep the political, what would bring a sick -- consensus around the political establishment? francine: i'm sure people in charge feel the same way. what about the current account deficit? guest: that's the biggest issue. that's what the pound is the most formidable. -- the most vulnerable. it has a big trade deficit, which is financed by two pockets of inflows. the first one is capital inflows by infrastructure in the real estate sector, and other related sectors. the second one is a large surplus --services three quarters of which, a little bit more than that come from -- basically, if the uk's financial
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surplus, financial sector surplus, generated surplus, starts relocating from here, moving out of the economy, it widens the account gap. as it widens, the easiest path economically to smooth this out would be the currency base. francine: this is my euro pound chart. why is this not you move -- why is this not moving? it's a range bound. what does it take to break out? guest: the first thing, the u.k. economy is a globally exposed economy. the last few months, with the global economy being stronger, it hasn't grown. if the u.k. stayed with status quo, it would keep the currency stable. the second thing that is the euro by itself. that's a contributor. the third thing, as i mentioned,
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in a price there is a markets assumption that in the 11th hour, we have some kind of a push. francine: thank you so much. themos stays with us. up next, the italian finance minister faces a challenge. we talked the italian situation and where yields are headed. let's look at where shares are secing premarket after the came to an agreement with elon musk. so many questions remain. we talk about italy, we talk about eurozone. later, we talk oil. this is bloomberg. ♪
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francine: this is bloomberg surveillance. let's check in with trending across the bloomberg universe on tick-tock. the prime minister of japan wants 30% of business leaders to
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be women i-20 20. change has been slow. only 4% of managerial positions are held by women in the country. theresa may is facing the political aisle of her life to maintain control of the conservative party. italian bond futures continue to tumble after the government proposal becomes the latest mega-bank. in the meantime, we are getting breaking news out of the u.k. this is manufacturing for the month of september. it was a little bit better than expected, rising. you can see the pound is it 1.3048. there is taylor riggs. taylor: u.s. and canada have agreed to it trade deal. will replace the
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24-year-old nafta pact. signed the accord by the end of november. donald trump cmis pushed back against reports that the laid fbi ground rules into the investigation of brett l. the president ordered the investigation friday. it was a turnabout for the nominee they hoped to power to the chamber and onto the top court by early this week. the white house is not getting involved in the investigation in that way. the president respects the independence of the fbi. they should be looking at anything they think is credible. taylor: theresa may is facing the battle of her political life. top politicians have tried to
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undermine her leadership, including boris johnson. he has described her strategy as deranged. they have a new call for the party to support the plan. japan, a tsunami made landfall west night. it's moving northeast and left 1.3 million buildings without power. much of japan it at a standstill ahead of the extreme weather. more than 1000 flights were canceled and the trains were closed. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs. you so much.nk let's talk europe in the italian finance minister.
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after initial targets with investors, the 2019 spending plan will face questions about the proposal on the sidelines. are 2.4%etails so far targets. how will the budget battle continue to affect the bond market? overreact?kets it's not what they were expecting. it's only 2.4. >> is a storm in a teacup. at the end of the day, we need to remember a few things. the first thing is if you put the numbers down, 2.4 is not the deficit that leaves italy in a blowup. it is slightly bigger than what the markets expected.
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60 basis points do not typically change the course of a nation basically. is no one talks stimulus, whether you like it or you don't like it is a policy approach, i think it will create a little bit of extra growth. that needs to be accounted for. francine: it's trying to deliver on the promise that they campaigned on. >> they were elected with a large majority with a certain agenda. they said they would implement it. six months ago, we were worried that it would lead to some kind of 6% deficit. that was the indication back then. at the end of the day, they need to deliver something and they
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need to deliver this. last but not least, people confuse this discussion with this is not the case where europe controls some kind of outflow of funds into italy. it's a discussion about whether the budget fits the models of the eu, which will start next month and take us through q2 next year. that may result in a fine. francine: why do the markets do so badly on friday? are they taking this as an omen of things to calm, that they are happy to fight the eu? >> is the result of three things. the first is the market expectations were mismanaged. a lot of participants were hoping for something closer to 1.8. second, it tells you a lot about
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the liquidity of the market. it's more of a statement about how liquid the italian market has become. rulesligation of capital and so on and so forth. the last thing is that when you situation, you become too immersed in the details. that is mostly about how scared the market has become. francine: let me bring you over to my chart, this looks set italian credit default swaps. a danger that banks are too reliant on italian government that? >> i think that one of the biggest problems the eurozone faces and it's something the banking union has tried to resolve is the circle between banks and government. at the end of the day, when we
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look at what christ into the government bond -- is priced into the government bond, we can actually show investors have a large price to a scenario written on the basis. no italian banquet stay unharmed. that's why you need to assess the situation. it's not as good as people may have wanted for in the budget, it is quite thin. about thedo you worry president changing at a time when we are trying to figure out what italy will become? >> the most important thing to remember is italy is not greece or spain. is italy has a significant problem, it's not something that anyone can not put into their growth outlook.
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it has been affecting the euro. francine: how much more will it impact? think we last investors to pay selling pressures. we think the euro is cheap. when you look at the counterpart in the u.s., there is very little risk. we think the euro is a good level here. francine: thank you so much for joining us today. next, we talk renewable energy and the future of spain. that exclusive conversation is next. this is bloomberg. ♪
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francine: you're watching bloomberg surveillance. let's talk commodities and oil. it is extending games after the largest quarterly rally in a decade. american drilling at a to supply risks. joined by the executive editor for energy and commodities. how is the market interpreting the call? stewart: we don't know the details of the call. they probably spoke about other things. what trump's after here is more barrels. saudi arabia does have the bills. how high can they get? a long time since it
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had to go this high. they will be maxed out. can they sustain that? if something else goes wrong in or world, libya or venezuela nigeria, have they got enough spare to make up for that. will the rally continue? will it increase to $100? stewart: the market talked last that theregapore will be $100 oil. no one is predicting when that will happen or certainty, if you look at the options market, people are already hedging themselves. they are right for all the reasons we discussed. there is some real uncertainty about what opec can meet. francine: could come as quickly as the fourth quarter? stewart: that will be the
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critical moment. that's when the iran sanctions kick back in. that's when demand peaks. there is really not much in the system. saudi arabia probably has a little bit. replace of that out to those iranian barrels? tom: thank you so much. joining: thank you for us this morning. let's keep the conversation on energy. spain's largest power company said they could be the carbonized. they will shut down to: power stations, saying they are lowering emissions. joining us now for an exclusive conversation is the chief executive. as always, thank you so much for coming here. it's a pleasure to see you. how do you see the market going? prices are going up?
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>> the prices? i think we have been trying to promote and increase the price. finally, we succeed and the price is going up to a rational position. this is met by once needed. this is the existing into renewables. certainrise is countries and certain governments are already surprised. i think that is trying to make clear fore race europeans. most technologies we are clean.ng have to be they have to be benefiting the situation. francine: power prices in spain are going up this year. as we mentioned before, i
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think prices are increasing. i think that is the consequence. have traditional technologies. that's why i think instead of it being -- building renewables. we have to be more aggressive in building renewables so we are not affected. francine: are we late? years, ithe last few has been drastic with green technologies in solar. it's time for that. we need to move in that.
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if we want to reach the 2030 target that we have already committed to, we need. framework has to be made it. it has to be clear and predictable. technologies, it has already been investing. penalized fort be already doing the job. week, i was invited and he was very direct insane the time is over. francine: there are a number of rivals in spain trying to race to get the battery charging services for electric cars. is this a new frontier? we serve 100 million
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customers worldwide. we are in britain, germany, france, brazil, in many countries. we don't like to be the excuses offor having the expansion. to warn us.'s going francine: in five years? can it come sooner? jose: i was already the ceo of the mobile phone. predicting to have 100,000 mobile phones in the scenario of two years. in a month, we had more than that. if we start talking about millions. i think that could happen as well.
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that is very reliable. i'm sure it is going to boom as it has in other technologies. francine: you were in a fight to acquire brazilian power. are you going after something else? jose: our financial is very strong. pay more thano the real value of things. we were in this case the enabler around our own distribution. pay whate are ready to the world is ready to pay. there are plenty of opportunities to put the money in. .rancine: thank you so much we will talk a little bit more about spain next. it is one year on from the
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independence referendum in catalonia. this is bloomberg. ♪
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francine: economics, finance, and politics. this is bloomberg surveillance. let's get to the business flash. taylor: vessel shares jumped in premarket trading after elon an agreement over front charges with the sec. he will step down as chairman and $40 million will be paid to the regulator. lower as itre became the largest to cut earnings outlook due to labor strife and higher costs of fuel. itsdiscount carrier lowered profits by 12%. , that was lower traffic and fares and fewer bookings in
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october as customers fear more walkouts. that is your bloomberg business flash. francine: let's focus in on spain. today is one year after the independence referendum in catalonia. they are targeting the transportation network to mark the anniversary. the majority of the political uncertainty is in the rearview mirror for spain. what does that mean? we have the chief executive and he is still with me. we were talking about the political uncertainty. is that now off the table? do investors ask you about this? jose: not much. we demonstrated during those months that the democracy works. people were not respecting the
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rules. when people do not respect the taken withon was certain measures. that is according with the law. ishink the new government under control. that it was three days ago. when somebody has broken the rules, the system has to work. clear with they separation of institutions. my reaction to the market is not taking consideration for what happening. you're very focused on emerging markets. we saw a selloff during the summer.
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how does it help you? jose: we are in the major market. really.not nevertheless, we need to make sure that we have a big present which is mexico. we have the biggest producer of electricity. we supply electricity to 40 million brazilians. both are involved in brazil. i think it looks like more chances. independence will be the result and things will go to another manner. in mexico, there was a lot of noise in the last month. a new president was elected.
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, this goes agreement to where they were. during the crisis, both suffered through those years. it has been an example of independence of regulators and respecting the rules. things are about change. francine: thank you so much as always. catch want to hear more, is episode of leaders with lacqua when bloomberg continues. this is bloomberg. ♪
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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. ♪ francine: the new nafta. the u.s. and canada agree on a tentative trade deal with
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mexico. the italian finance minister prepares to try and convince his euro area counterparts on his budgets. sec,usk settles with the agreeing to step down as chairman. good morning, everyone. this is "bloomberg surveillance. " i'm francine lacqua in london. tom keene in d.c. i presume you are focused on trade. tom: we are going to open the conversation with christine lagarde on this horrific earthquake and tsunami in indonesia. she will travel to bali in a number of weeks. we will focus on trade. it's got to be over the u.s. -canada-mexico act. i don't have the name memorized yet. we will talk a lot about that over "surveillance" today. francine: we certainly will.
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plenty more on that. catch tom's interview at 4:00 p.m. london time. here's taylor riggs. taylor: president trump has gotten the trade deal he wanted. the u.s. and canada have agreed northap the 20-year-old american free trade agreement and include mexico in a new three-way deal. among its modest changes, it calls for u.s. farmers to have more access to canada's dairy market. would haveexports tariffs on u.s. cars. president trump has called nafta a disaster. corporate governance experts tesla has been ordered to replace elon musk with an independent chairman, part of a $40 million agreement to settle fraud charges related to musk's tweets about taking tesla private. he will be allowed to stay as
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ceo. in indonesia, the death toll from an earthquake and tsunami is now over 800. the government is continuing to search for survivors from this disaster. beyond the human cost, and it uses likely to take a hit to its budget from reconstruction. the disaster may hurt its all-important tourism industry. in the u.k., prime minister theresa may faces the biggest political battle of her life. she is trying to retain control of the conservative party while other conservative politicians undermine her leadership. partyrived at the conference in birmingham needing to convince conservatives to back her brexit plan. her former foreign secretary boris johnson called may's plan "deranged." 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'm taylor riggs. this is bloomberg. tom: thanks so much.
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equities, bonds, currencies, commodities. really doing better with futures. there's a little bit of a european bank futures right now. we've got a very nice lift in the equities markets. we will bring you that data. 1.1604.lar about 20 minutes ago, that $83 a barrel crude. next screen, if we could. the vix, 11.84. and mexicoda celebrate stronger loonie, stronger peso. futures: equity advancing along with the currencies of canada and mexico, as you say. that will help support equity markets. european stocks climbing.
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havens actually falling. italian bonds, we did see the markets a little bit spooked friday. this is now the job of the italian finance minister to sell it to his counterparts. tom: futures up 18, dow futures up a solid 207. starting with a real lift this morning. francine: it is all about trade. forget nafta. now it is all about usmca. president trump is set to sign a successor to the free trade agreement that he once called a disaster. the canadian dollar had a four-month high on news of a tentative agreement, and the mexican peso is also trading higher. --are joined by our geo our guests.
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thank you both for joining us. how big a deal is this? are we going to see more theptions like this, is u.s. softening, or is this good news for the three blocks? >> i think it is a big deal for north american markets. i don't think it is a big deal globally when you talk about all the trade issues, particularly between the u.s. and china. these are modest changes in the agreement. therefore, i don't think anyone is going to be upgrading their views on growth, trade balances, all of the sort of big that growth indicators. it will make people more comfortable owning canada and mexico because there was some risk premium and those markets for the destruction of nafta, but this is not a big issue in terms of the u.s. and china. francine: this is better than no deal. does it impact u.s. growth? >> probably not. u.s. growth at the moment still looks pretty solid.
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consumer confidence is at an 18 year high. short-term, it is good for sentiment. it is not so long ago we thought things would stretch on into 2019. it still looks very like the original nafta deal, but even canada and mexico are not exempt from the steel and aluminum tariffs. they may protect from the auto tariffs should they come through next year. i don't think it has a material impact beyond this short-term sentiment. tom: to both of you, janet, to me it is a massive amount of saving face. what is really significant to me are the tpp elements. both secretary clinton and president trump said we are not doing tpp, but we got some transpacific partnership elements in this document, didn't we? >> i must admit, given that it only came out at two minutes to midnight, i have not read all of it. tom: that's fair. >> but as we touched on, there's
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some broader issues to do with trade. a lot of those will extend to the u.s.-china trading relationship, and still this possible disruption to supply chains that may come through. but i think also looking at it from a european and asian perspective, the big way in which concerns about trade are impacting all investment sentiment. trade growth had already slowed. this concern about how much trade tensions can deteriorate ed onill being weigh investor sentiment. are loonieormand, and peso tradable this morning? >> absolutely. getting some continuity in terms of trade policy between the u.s. and canada means you don't have obstacles to rate hikes from the
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fed, and he canada dollar continues to appreciate. a few months ago when we have the results of the mexican presidential elections in july, there's not much scope for the pacer to outperform, but it will be taken higher on today's news. the bloomberg terminal, i want to pick up something where you basically say jpmorgan has adopted a new baseline that assumes the u.s. and china in game involving 25% u.s. tariffs on all chinese goods in 2019. a weaker yuan becomes a part of that. you lowered that to what level? >> we got it at 720 and five months, so about 5% lower than where it is now. francine: but you are not expecting the economies to be affected. the impact will directly be on you on. -- on yuan. >> exactly. the u.s. is segregating the way
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it treats china from the way it mexico.anada and throughese will respond offsetting stimulus measures. one of those will be cutting interest rates or reserve requirements that will lower the value of the exchange rate. we will get to a place where growth doesn't look any different between the u.s. and china. china will have provided stimulus, but part of that is a weaker currency. that's where you get market impacts through the foreign exchange market place, as well as through the equity markets. tom: thank you to both of you this morning. to kick off speech the and of the international monetary fund. after that speech, i will have a conversation with christine lagarde. look for that in the eleven o'clock our. we will type -- in the 11:00 hour. we will touch on indonesia and
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trade in argentina. this is bloomberg.
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taylor: this is "bloomberg surveillance." --hoosing crepe denmark's danske bank has removed the ceo for his role in worstin one of europe's bloody-minded -- worst money laundering scandals. aston martin has lowered the
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price range for its planned ipo in london this week. the british sports car maker made famous by james bond movies has cut the top end by about 11%. analysts had been skeptical it would reach its previous estimate. that is your bloomberg business flash. tom, francine? taylor: francine: thank you so much -- francine: thank you so much. ministeran finance will have to sell his budget proposal to his european counterparts this week. he is likely to face questions about the plan to set a 2.4% deficit target. markets have been spooked by the announcement. investors remain concerned over potential friction with the eu. john normand and janet henry are still with us. janet, do you worry about italy dragging down european growth? janet: not growth, per se, but i think what is happening in italy
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is a reflection of the ongoing challenges that the european institutions face in terms of getting all member states on board with the rules, effectively. i think the challenge with italy isn't so much just the headline budget deficit they are projecting for 2019. certainly the markets have been led to believe, and the finance minister had indicated, it is that they said the deficit is going to be at the order of 2.4% to gdp for the next three years. short-term, that might add to growth, but it is the longer-term challenges associated with that and how they negotiate with european institutions that will be where the big challenges come from. francine: did the markets overreact? 2.4% is not 3%. they have to deliver on the promises they put in the campaigns, to some extent. john: depends on whether you are an italian voter or nonparticipant. 2.4% is no big deal if you are a moderately indebted country.
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is awith no end in sight problem from a market perspective. i don't think it was an overreaction at all. italy is going to have enormous challenges over the next year if that to gdp is not on a downward and ecb aree fed raising rates. tom, go ahead. tom: i insist. francine: i just had to get this question out. do you think it is going to get worse? the more the markets are in turmoil, the more it will test politicians. john: i think so there have been opportunities for the government to deliver something which would have granted some of the election were campaign promises come about also respected some of the debt sustainability obligations within the currency union. the fact they did not do that
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shows they have a different set of priorities. i think it will require more market stress to rebalance priorities it more towards debt sustainability and breakdown spreads. tom: do you see any indication of what the stress will play out for germany, for the netherlands, for the core of europe? i'm fascinated by how serious everyone is taking italy, but it is a mystery how germany and others will respond to whatever the crisis may be. how will they respond quest mark -- respond? john: i think it is on the rhetorical level. they will highlight what the rules are around fiscal policy, reject the budget if it doesn't show debt to gdp declining on a multiyear basis, and help the italian government will come back with a slightly lower deficit target for the next couple of years. that is the extent of what they can do. there is no way to really enforce fiscal discipline from a governmental level. they can only be done from a market level. tom: janet, what is so direct
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here is italy is not greece. that is the heart of the matter. how will these core countries treat italy is it is not greece? janet: i think these core countries you mentioned are certainly come off for now, going to take the lead. a country like italy has to submit its budget to the european commission. they have to take a view of whether it is realistic. that is certainly what we are waiting for the next couple of days. assumption?growth for italy is going to argue is growth is going to be sufficiently strong, and that is going to support the debt to gdp ratio still trends lower. they may also come up with some numbers regarding tax amnesty. if they can paint a convincing picture regarding the growth of the tax amnesty and other potential measures to make their numbers still point to a reduction of debt to gdp ratio, there could be some scope for compromise.
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but i think the initial round of where we go from here would be led by the european institutions rather than individual leaders of individual countries. francine: that may bring you over to my chart looking at the spread between italian and german ten-year yields. does that put pressure on euro, and is that make the european case for more bullishness? a lower euro helps with exports. does helpower euro with exports, but as with all countries, most countries are more dependent on external demand than they are with the euro. what we seen this year is that even though the euro, for some this year, was weakening against the dollar, trade goes was -- trade growth was slowing. certainly we think from here the dollar is likely to resume rallying and is going to be strengthening as long as the fed is expected to continue tightening policies. if we see a slightly weaker euro, it will help at the margins, but for exports it is
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more about world trade growth. francine: where do you see this going? the you assume the spread just keeps widening until we have a budget deficit of 1.8%? john: i think so. we've seen the government become more reasonable when the spreads touch 300. it is a young government, so we can't say it is proof positive that the rhetoric will turn more conciliatory. but i think this how the situation will play out, similar to the situations in other countries like greece. the government becomes a bit less aggressive in terms of market demands. tom: john normand and janet henry this morning. an interesting conversation coming up. he is the congressman from dca, the a's district of virginia -- the eighth district of virginia, executive auto
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and congressman from virginia. this is bloomberg.
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♪ good morning, everyone. francine lacqua in london, tom keene from our studios in washington, d.c. judgenow, away from kavanaugh, away from the important tory meetings in the united kingdom, you know the story over the weekend. elon musk loses the chairmanship
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for two cups of coffee. alex joins us. forget all the legal stuff. i believe tomorrow they've got to deliver a report on the building of cars. how are they doing? reporter: he certainly tells his employees they are on track to be profitable. it seems that is on an operating level. that has been the big question from the management of the company perspective this year. are they going to be able to be free cash flow positive? will be able to respond to the ambitious growth target they have? and they are able to hit that target, the certainty of the future management and the notion they are going to generate some money will suffer to investors. tom: hit the target is french for they've got to get customers that want to buy these things. is there still a huge demand for their automobiles? reporter: i disagree slightly. they've got the customers. what they don't have is the
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delivery. they've taken the upfront payment and bank the rest of that money when they deliver the car. they got a huge backlog of orders. at this stage, demand is at the issue. it very much is supply. francine: the other issue is who is going to be chairman. who wants that job? they may not be able to stay very long, right? reporter: that is the big issue. who is going to take a role that could be perceived as a dead duck, essentially? if i was the person up for the role, i would very much be seeking to have longer than a three-year term because otherwise, there's the risk that elon comes in at three years again. directors are required to be appointed. that will swing the balance of the board slightly away from elon at the moment. he has five members perceived as being close to him of the nine.
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francine: thank you so much. techwebb, bloomberg opinion columnist. , an exclusive interview at 11:00 a.m. in new york, 4 p.m. in london. they will talk about trade, dollar dynamics, and electric vehicles. looking forward to that interview, a bloomberg exclusive. this is bloomberg.
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♪ francine: this is "bloomberg surveillance." -- and francie from francine from d.c. in london today. prime minister shinzo abe wants
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30% of business leaders to be women. today only 4% of managerial positions are held by women. isme minister theresa may battling to maintain control of the conservative party. and italian futures continue to tumble. joining us on the phone is chat house's -- is chatham head of euro development. tom: coast to coast, this is the issue of judge kavanaugh. within the beltway of washington, there is no other topic. there are voices for the senate. there are voices in opposition.
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there are voices for the president. here's miss conway. >> the white house is not getting involved in the fbi investigation in that way. the president very much respect the independence of the fbi and feels, as he said last night, they should be looking at anything they said is credible within this limited scope. tom: a well-chosen moment because on this early monday morning, there is no other topic than the idea of fbi and dependents. from where you sit within your analysis, is the guy doing an independent investigation -- is the fbi doing an independent investigation? >> this is a question for everybody. what limits are being drawn, and who is drawing them? people are very concerned about the restrictions that seem to be placed on the investigation, especially with respect to who they are able to talk to. it is not clear. we don't know for sure where those limitations are coming from, but there seemed to be very clear lines being drawn.
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this is why we are getting so much pushback from a number of people. tom: leslie, what is remarkable -- and one of my books of the matrix,"the threat basically a history of the fbi and how they do business -- they have a certain process, don't they? part of the issue is will they be able to do standard fbi process. guest: of course. this is an incredibly complicated investigation to undertake. we have a very artificial time limit placed on this, which is the one week that jeff flake asked for on the back of amy klobuchar, the senator from minnesota, a very impassioned speech where she said time and time again, give us one week. why one week? why is this necessary to close down in one week just because of pushback from public and members of the senate -- from republican members of the senate
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judiciary committee? the thing i am interested to see, and i think so many people will be coming out only what comes out of the formal investigation in the course of this week, but what happens in the broader public. what other information comes out. what level of political bilization. i think it becomes politically very difficult to close this down in six or seven days. francine: does this impact the midterm election? polls?elieve the does it mobilize women to vote? are we overestimating the fact that it could mobilize the women vote? francine: it has implications on both sides of the aisle. partepublican conservative of the party, and frankly the entire party, care tremendously about the composition of this court. think there is a failure to get kavanaugh on to that court, i think it becomes even more
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important to republicans to turn out and vote because the court could potentially be up for grabs for this particular seat. so yes, will it mobilize women voters? they will become more mobilized as a result of this particular hearing and investigation and this candidate, the controversy surrounding kavanaugh. francine: what about women voters in the republican party? do we think the president cooled on his candidate a touch because he is afraid of being hurt in the midterms? statement was remarkable in its level of restraint, undoubtedly because he can see how controversial this is. the thing to note about the republican vote is the number of registered republicans has actually come down. some of that has to do with women peeling off from the republican party. is one of the lines of divide not only republican-democrat,
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but gender? i think the data we have seen thus far suggests this is the case. a plurality of women are concerned about this particular confirmation. tom: it is just an opinion, but you're such a good student of this, and maybe advantaged by the distance you are, and that is the idea from 1972 where a democratic woman in manhattan said i don't understand all my friends voting for mcgovern. is it possible that democrats are setting themselves up for a shock loss here because republicans get so fired up? it is undoubtedly the case that what happens in these days isr, five, six going to affect how intensely people feel about the midterm elections and turning out. could there be a backlash against the democrats is kavanaugh's confirmation is pulled? sure.
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it will mobilize the republican base. it is going to have an effect. as you said, this is the most significant fact in american politics right now, and the rest of the world, unusually, is watching this. there will be an effect, and we can't predict what it will be because we have to see how this plays out. tom: very valuable. thank you leslie. city within new york your first word news, here's taylor riggs. taylor: nafta will be no more. president trump is set to sign a successor that makes modest revisions to the agreement he was called a disaster. the u.s. and canada worked through the weekend to come up with a trade deal that includes mexico. it calls for improved access to canada's dairy market by u.s. farmers and tighter rules of origin for auto production. the deal is likely to be signed by late next month. in china, manufacturers are feeling the pain of the escalating trade fight.
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orderssure of new export fell in september to the lowest level since 2016. overall, manufacturing purchasing managers index came in lower than estimate. of business economists in the u.s. expect a recession by the end of 2020. according to a survey from the national association for business economics, 41% say the biggest downside risk was trade policy. higher interest rates are next on the list. 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'm taylor riggs. this is bloomberg. francine?e? -- tom, francine: thank you. after axpanding gains slowdown in american drilling and supply risk. president trump discussed market stability in a phone call on saturday. with us, john normand of j.p.
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morgan chase and janet henry of hsbc. oil could go to $100. third quarter would be the biggest concern, given supply and the sections on iran. for with that due to growth? to $100 over go the next couple of months, it is primary supply driven. supply has been robust, but there have been swing changes. in --ly driven rice supply driven rise in oil price seems to be negative for oil-producing countries. lower income people in the u.s. spend more of their money on energy and have benefited less from tax cuts, so it should be a negative for that squeeze on real wages.
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remember, these falling em currencies means in local currency terms, the oil price has going up by two or three times. francine: what is your take on whether we touch 200 -- touch $100? john: i think $90 is very easy to reach. , i think the u.s. could not have chosen a worse time to sanction iran in terms of adding stress to a market already tightening because of the opec restraint over the last couple of years. the u.s. is really courting a market event here. crude that isf logarithmic, which means slope matters, and it is an elegant chart. it has a certain acceleration to it right now. does the president understand who controls the price of oil? john: he thinks he does. that the u.s. is
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energy independent, which it is not. he thinks u.s. shale output is pretty elastic in the short run, which it is not. i think he has some clear views on what drives the oil price. i'm just not sure if he is correct. i think that is why the oil prices going up. he is miscalculated. tom: john normand with a careful analysis. we can get you in trouble as we can get you in trouble as well. if the president doesn't control the price of oil, who does? janet: lots of moving parts control the price of oil. lots of influencers on demand, on supply. over the medium to long term, i --nk shale is the marginal you know, will set where the marginal production of oil and long-term price of oil will actually be. probably it should be lower than today's level. but in the near term, actually some of the u.s. actions, particularly on iran, are one of the biggest drivers relating to oil price. francine: thank you both, john norment of jpmorgan and janet
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henry of hsbc. coming up, the head of the british chamber of commerce will talk about brexit. this is bloomberg. >> bloomberg's first word is brought to you by oppenheimer fund, the right way to invest.
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♪ -- until my last breath. [applause] he is saying that any have a backdoor will be met with the u.k. walking away. he's basically saying the u.k. may be left with no choice but a
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no deal brexit is the eu tries to lock us into a custom union. is the brexit secretary, saying the eu must watch the u.k.'s pragmatism. this is a very internal fight. we keep asking whether theresa may can make it a week. she came under attack by boris johnson was again. you have to ask, who would want the prime minister's job right now? tom: i look at this, and there's no difference therebetween what we see in beijing in a very forced meeting. i'm sure anna can tell us the backstory. francine: there are loads of backstory's, but it is just very difficult to see a way out without upsetting a fraction of the conservative party, no matter what way you look at it. it begs the question, will the prime minister get to parliament? annadwards is joined by --
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edwards is joined by the british chamber of commerce director. reporter: good morning to you. let's get straight to adam marshall to get the view of business. good morning to you. we will get to business and brexit in a moment. in terms of infighting within the conservative party, it is everywhere in the media here in birmingham. as somebody is been to many of these conferences, is it something that does this is should focus on -- that businesses should focus on as significant, or more background noise? guest: we are trying to screen out the noise and just get on with doing business at the moment. if you pay attention to the ongoing political psychodrama, orders don't get made. but there is a nervous mess. it does create a level of insecurity, and it does affect business confidence to see this going on.
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businesses in the u.k. have seen political ups and downs since the 2014 scottish independence referendum, brexit. at thet doesn't look agenda at the moment. as far as the prime minister's plan for brexit, i was speaking someone yesterday who says this is what business wants. guest: for us it is all about function, not necessarily form. i don't care what you call it as long as it delivers answers to the real world, practical questions. anna: does it deliver any answers? guest: host: it does deliver -- guest: it does deliver some of the answers. they need to see fairly frictionless trade. they don't want to see lots of impositions, whether tariffs or nontariff barriers at the border. citizens also want clarity on other issues, like who they can
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hire. there are so many real world, practical questions. the form is less important than actually getting those answers. anna: meanwhile, infighting within the conservative party about which version of a brexit plan to push for continues. the government says the chapter uern is the only -- the checq plan is the only plan. do you think it is possible to craft some type of canada style plan that does not create more friction for business? guest: it is hypothetical. differenteate scenarios for how i plan will work, but we are in a negotiation. this is not a one-sided thing. the u.k. needs to agree with the eu 27. will we need to get to is an accommodation for both sides. we want answers to this practical questions. we have said very clearly it is up to our politicians to deliver
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something that actually answers those questions against the best possible terms of trade for the future. anna: would be possible with technology, with a canada style deal that did not involve a line across island? guest: businesses tell us it would take a couple of years for absolute certainty on what the technology is for them to adopt to it. there's not much time here. we are running out of time. my worry, and the worry of many u.k. businesses who trade the worry of many u.k. businesses who trade actively with europe, as we are still have a debate about what solutions should be when what we are doing is repairing for their implementation. we need to draw a line and get the brass tacks and practicality. anna: your message to 's who believe a no deal brexit is a practical backstop? guest: we do not want to see a messy and distorted -- and disorderly exit, but we need to give businesses confidence on the domestic front. brexit is important, but if we
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don't have the right conditions for growth here in the u.k., we are not going to be up to make a success of it. with gaps -- we have gaps in skill issues that are bigger than we have ever seen. we have growth transport networks that are snarled. we have problems with broadband and internet connections. these are the kind of real-world things where is the government is focused on delivering for business, it will be helpful whenever the brexit outcome. anna: has brexit made it difficult to focus on those things? guest: it has squeezed the bandwidth of the u.k. government, but it needs to be running onto a competitive u.k. with low-cost, particularly upfront cost, for businesses and negotiating the brexit deal. anna: you've done a survey suggesting maybe 2/3 of businesses have not done risk assessments. how much of a worry is that? guest: i divide business into three tribes on brexit. there are those who are
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preparing actively, those watching and waiting, and those who i call the ostriches who have stuck their heads in the sand. more have their heads in the sand that are actively preparing. a bit more of our internationally active businesses are preparing for change, but we've got to do more to help smaller a meteor size -- and medium-size businesses prepare. , adam marshall here with me at the conservative party conference. francine: thank you so much. we will be with anna throughout the day. interesting conversation there. of j.p. morgan and janet henry of hsbc still with us. do you see more volatility and pound? what exactly is priced into pound right now? john: a sort of model scenario with the possibility of stress in short-term interest rates. there are expectations for only one hike from the bank of
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england over the next year. you have seen this in the positions of sterling, which are also short. that thet is a view economy is not going to collapse on the brexit scenarios for the next couple of years, but neither is it going to step up in a meaningful way. which way we go obviously depends on what policy path is taken. there's almost no clarity on that. francine: away from the politics, we need to deal with the current account deficit. janet: absolutely. at the end of october, we now have a date for the u.k. budget on october 29. all points to being quite cautious. and has to do with the italian situation we have discussed. barwin has been less than anticipated, but that's borrowing has been less than anticipated, but they are still worried about the debt. the economy has been relatively sluggish by pre-vote standards. we see it growing at about 1.5%. i don't think it matters as much for the currency.
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near-term the currency will still be the barometer on where we are on brexit. if it looks like a no deal, sterling will fall, as strategists have talked about. the softer the brexit, the more it will swing in the other direction. kind ofto some transitional deal where we get preferential arrangements on goods, but nothing on services, sterling seems fairly valued at the moment. francine: what will it take to actually move euro pound -- euro-pound? john: a lot lower? francine: or higher. what does it take for that range to be broken? john: i think you're dealing with two economic areas which have their own political constraints on the next 12 months. the italy situation and the issue on euro-sterling really collapsing is the possibility
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under a no deal brexit. i just don't see this going anywhere. i'm glad we are talking about brexit, but i've got an interview to do at 11 a.m. wall street time today. let me get some help from john normand of j.p. morgan and janet henry of hsbc. is at all clear in the emerging markets -- madame lagarde will no doubt speak of emerging markets today -- three weeks ago it was a contagion week of september. we are now into october. is it all clear? janet: i think a lot of the pressure on emerging markets have been associated with the dollar. actually, there has been a bit of relief over the last few weeks because the dollar wasn't strengthening. it was starting to we get a little bit -- starting to weaken a little bit. year, thever the next pressure is still going to be on some of the emerging markets because u.s. financials are still going to tighten.
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some of the emerging world has to follow suit. oil prices we discussed, and trade tensions. while we has a relatively good news over the weekend, i don't think anyone thinks trade tensions are over from here. this is going to be fairly uncomfortable for a lot of emerging markets. tom: we seen wonderful recovery, , throughrly in turkey a six level stronger turkish lira as one example. where is the opportunity within the complexities of the emerging market right now? where can i either make money, or just as importantly, not lose money? john: it is on a country specific basis. i think if you want to focus on a particular emerging-market where the assets might be cheap, the jim littell -- the geopolitical risk is minimal, that's used to be mexico -- that seems to be mexico. if you are looking for something
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to short, it is probably asian currencies. i think escalation is a done deal from the u.s. perspective on tariffs. i think the chinese policy response is going to involve a weaker currency. some of the other markets people are focused on because currencies are extremely cheap and interest rates are very high are argentina and turkey. i still feel like it is early days even though we have seen rebalance in turkey. i don't think you seen enough time pass between interest rate hikes and the lack of interference in monetary policy by the president. yuanine: overall, weaker means extra stimulus from the chinese. are you worried about the prospects? john: no, but just look at the yuan from being the stimulus that keeps growth from moving down significantly. it is about china's ability from a growth perspective with ite -- perspective whether tariffs will be used. tom: thank you so much, john
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normand with j.p. morgan and janet henry with hsbc. jobs day coming up on friday in america. acrossthat, this morning all of our platforms, my conversation with the managing director of the international monetary fund christine lagarde. in the annual meeting, christine lagarde on trade and of coarse, on a global system in recovery. please stay with us. today, showing risk on equities higher, canada and mexico stronger currencies. this is bloomberg.
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. .
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tom: this morning, it's a trilateral saving the face of infinitesimal moves on topics
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usually debated. what you need to know, north america and free trade are so 1994. also, tpe. risk on. for markets and maybe for tesla, color $40 million weeks. can elon be elon and not be chairman? quarter, we fourth considered judge kavanaugh and the midterms 36 days away. this is "bloomberg surveillance," i'm tom keene in washington, d.c., francine lacqua in london. andnd after -- nafta conservative brexit meetings, there's madame lagarde, how she will address all of those trade issues later this morning. she governments his words and she's pretty eloquent, so i'm looking forward to the word -- the interview with her. thehe will ask about dollar, emerging markets come and perhaps italy.
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hit for the euro and it's uncertain about the budget and interesting to hear. it is subtle but front and center here in the beginning of the fourth quarter. here's taylor riggs. taylor: president trump have gotten the trade deal he wanted. u.s. and canada agreed to scrap the 24-year-old north american free trade agreement and include mexico in a new three-way deal. among its changes, called for u.s. farmers have more access to canada's dairy market, plus canadian auto exports to appoint will be affected by u.s. tariffs on foreign cars. president trump called after disaster. -- corporatela government experts said the electric carmaker has been called on to replace elon musk independent chairman, part of $40 million agreement to settle fraud charges related to the
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tweet about taking tesla private. he will be allowed to stay on as ceo. in indonesia, the death toll from that earthquake and tsunami is now over 800. the government's continuing to search for survivors from the disaster. indonesia is also likely to get hit from its budget from construction. in the disaster may hurt its all-important tourism industry. medicine hasze in ane to james allison and japanese scientist, for their discovery of a cancer therapy involving the union system. global news, 24 hours a day, online and on tic-toc on twitter powered by more than 2700 , journalists and analysts in more than 120 countries. this is bloomberg. tom: equities bust, currencies, commodities, risk on this
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dow futures of a solid 200 as well. risk on with a nice recovery in euro. up, we guess that the moment. the vix, 11.80, the yen weaker with a 114 print. crude with an 83 print lifting rapidly. francine: this is what i'm ,ooking at, looking at futures i see a little bit attention when it comes to italian bonds. investors are market -- watching the market closely. , outputon euros actually slipped the slowin two and am looking at brent, 83.17. tom: there is no other topic in
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america or within the beltway, not the washington redskins, but this issue, the matter of judge kavanaugh. there are many voices for, against. here is ms. conway of the white house. kelly conway: the white house is not getting involved in the fbi investigation in that way. the president very much respect the independence of the fbi and field as he said last night that they should be looking at anything they think is credible within this limited scope. tom: kellyanne conway on cnn yesterday. from ourilli joins us chief washington correspondent of the milkene institute. seen, what do you expect to today in your washington? there's eager anticipation to see exactly what the fbi will produce in regards to the report with judge kavanaugh. this should be over by the end
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of the week, however, that have been underestimates that suggests it could be done today, tomorrow, wednesday. winstone, folks are going to have to look at it. it was a rare moment of bipartisanship to see senator cruz and senator flake together and quite frankly, they ultimately can of voting differently on this issue. tom: this is after a careful read of the threat matrix on the process,fbi has a method, including writing a rethink down. -- writing everything down. in the fbi say we need more time? kevin: they can of that's a great question for three deadlines that were set in regards to the senate judiciary committee, you are saying they want to see the investigation yield its course and concluded central conclusion that have others saying republicans saying let's keep this particularly within the one week time frame. francine: who is advising president trump on this and
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whose advice is he taking? kevin: tom mcgann has been charged with driving judge kavanaugh for his confirmation proceedings and i think, with the i talked white house and the senate judiciary committee and judge kavanaugh want to keep the team very small in terms of who was briefing him in preparing him for this is a whole. overall, when are we expecting to find out from the fbi exactly how they are receiving and what the timeframe is on this? kevin: this week, whether it's the first half of the second half of this week, we don't know. but it has become the complete wildcard in the midterm elections. president trump was campaigning in west virginia over the weekend, estate he carried by 42 percentage points of the 2016 cycle and that the state where centrist democrats senator joe manchin is the swing vote on the judge kavanaugh hearings and
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this is where this incredibly interesting because judge kavanaugh's popularity is different based upon the geographic locations throughout the country. i know you're a real student of it. a question that came up during the weekend, whether it was a certain view of judge kavanaugh laughing at matt damon on snl, or other people appalled by the whole process in support of judge kavanaugh, etc., kevin, is the fbi lyrical -- political? general'sey political, mr. rosenstein, deputy attorney general, i let you tell me. but is the fbi of political institution? it shouldn't be, but in this washington, there's no doubt that these institutions, the fbi, cia colonies intelligence community institutions have been the recipients of political attacks. kevin cirilli, thank you for briefing. we need to the topics to talk about. maybe you can segue over to
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nafta, it's the u.s. mexico , which i think is the u.s. marine corps, but i think i will let some oil supply in on this. was it a success president trump? mr. lee: he's taking apart the entire multilateral framework that he is saying we try bilateral approach this is his first so-called victory. tom: it's a tweet. mr. lee: he's calling it a victory coming is taking tpp and putting it into nafta or modernizing nafta and that physically what he should have been doing but it shows it's easier to do when you have a small number of people negotiating and that's the theme of this of administration, to minimize the number of negotiators at the table. francine: what does that mean for foreign policy? does it mean the president escalates down his fight with china? is there anything we can read between the lines or separate issue? mr. lee: this is a very important innovation in the
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sense that in the past we always large negotiating bodies and actually stole things a lot of minority governments like india to tank the latest round of talks. what we're showing here is that if you minimize the number of people, players of the table negotiating, you actually can get action and relatively fast action. this last round of putting canada and was relatively quick. francine: how does that translate into their dealings with china? mr. lee: the whole piece the next world trade framework is to arrange how is that large economies interact with each other. the u.s. china, and eu. and negotiation of going to be electoral property protection and market access. those of the terms to be negotiated and those of you to be brought to the table and the tariff talk is a lot of noise i think disturbing below and bring them to the table. -- to stir people up and bring
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them to the table. the table,n to read copyright goes up to 70 years, but ok, great, what does it mean for the people watching the show? i couldn't come out with much. is there any real effect on people? kevin: there could be of the long-term and you see some businesses trying to price that in. i would know that with particular regard to the point you were making in terms of the populist streak that it runs rampant right now through the left and the right, that is going to be some that is definitely going to be shaping the 2020 divide in the democratic field. in the midterm election, we haven't really seen it weaken much of a factor because all politics is local is in the local feels like ohio, it's a very different reason we use the -- it's very different from what we see elsewhere. and lamelycirilli with milken institute.
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-- bill lee with milken institute. christie and i will be in conversation on many topics and yes, we will talk the horrific earthquake in indonesia. please stay with us. this is bloomberg. ♪
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francine: this is -- taylor: this is francine "bloomberg surveillance," on taylor riggs. industrials will manage the elevator auto supplies and plan construction units, season craft materials will run steel and metal focused operations. we spoke to the company's ceo. we will now create the two
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companies which will be clearly focused on the market and we think with materials and industrials clearly focusing on whichdual market, increase a lot more value for our shareholders and give a clear orientation and focus for employees and for the businesses inside the company. taylor: ceo thomas morgan has one removed for his role in of the worst money laundering scales. part ofted that a large the $235 billion that flowed through its tiny estonian unit was probably longer. aston martin has lowered the price range for its planned ipo in london this week, the british sports car maker made famous by james bond movies at the top end by about 11% and analysts had been skeptical that aston martin would reach its previous goal is as much a $6.6 billion. that is your bloomberg business flash. with less than six
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months until the u.k. leaves the eu, theresa may and her at underrs plan are coming fire. the conservative party get in birmingham for the annual conference, boris johnson called the brexit plan direct, while --a edwards spoke with jake jacob ress-mogg and he says he will not support the prime ministers plan for brexit. >> i will vote against checkers on monday i will vote for the prime minister if there's a vote of confidence on tuesday. the prime minister remains in the government remains a listen the fixed term parliament act it loses a specifically worded vote of confidence. >> a vote against checkers would not be seen as a vote of no-confidence. important point. it's a constitutional change that i think people really have not paid a lot of attention to. anna joins usne: now with indexing smith.
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-- ian duncan smith. anna: a former work and attention secretary and prominent. good morning let's talk a little bit about the checkers plan and what changes you want to see. do you want to see letter canada style free trade agreement? when you are free arrangement with the european union because that is what they want and they don't want checkers because checkers gives peculiar access to their market and they don't want that without the full freedom. we should go back to a free-trade deal in canada is just a name for it. it's a deal with japan, south korea, etc. deal gives a much cleaner break in the u.s. respond by saying the irish , you do all this
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without a hard border and then we are home and dry but checkers itself i don't think flies within the description at all. it be possible for theresa may to change your plan from checkers is on the looks more like a candidate deal? she doesn't sound very moved change. no, i'm hoping they will get around to that. right now, checkers -- we've been told of the eu the checkers doesn't work so the government has to come back was often better and the institute for economic affairs the put this out about a week ago, they said is very good reason for a free-trade arrangement, could be a very good one in the european union wants it and we have to make sure it's for the whole of the united kingdom. early to say that checkers won't fly with the eu because this just part of the negotiation and perhaps there is room for checkers to work? mr. smith: he doesn't work for us either. we'll be half into their rulebook, not a joint rulebook, all of the regulations we have
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to abide by those in basically, we would be ruled takers from the european union which is not what people voted for. toy voted for a clean break take back control of your borders, your laws, your money. this is being adjudicated by the court of justice. the business secretary said the business wants checkers not a canada style deal and i spoke to the bcc earlier on and they said one business wants is some certainty. when he stop doing this and move on with something. thinkith: i don't business wants checkers come i think some business might want checkers but bear in mind they are only present of our companies actually exporting to the european union. and their 92% that don't have that issue. we have to provide for them what they don't want to be is locked into a rulebook is all about just those who export not about their domestic businesses. when you to be able to help change regulation, make it much more relevant to the u.k. and wouldn't be able to do that when it comes to checkers.
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a free-trade deal would do very well for us and the exporters would still be able to export. this just in time nonsense is rubbish, used to be involved in that before and there are plenty of things that are imported from outside the eu at the moment that arrived just in time. the idea that elicits from the eu, it's not going to work is not true. anna: that is added friction. mr. smith: it depends what you need without a friction. if you allow for the time is a start across the border, don't believe there should be any, do good to nobler checks at all out of the give me those. most of the stuff we're talking about is pre-declared through people who got authorized economic operators from trusted traders come all this stuff can be done, a very minimal friction can be allowed is on the interest of europe. francine: what a sport -- anna: what is boris johnson bloomberg up for? -- limbering up for? talk aboutthere's no
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leadership because of prime minister is your notice talking about getting river. it's all about checkers. he resigned over checkers and he estimate the case white checker doesn't work. it's quite legitimate. anna: is it quite was a number andall it deranged preposterous and not put your hat in the ring to take it in a different direction? it's a bad deal for us and for them in for free trade which is what we want. i think boris is language gives it a bit of color but it is true the end of the day when you strip away all of that, you are left with a trade deal that doesn't work but we want a free-trade deal that would work and i think would view europe across that line. it is still possible to find a deal under theresa may that you get enough parliament support for? go to ah: if we free-trade arrangement, in parliament will almost certainly back that because it's the best offer this on the table. i don't think checkers will fly
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at the labour party doesn't want to back it anyways i think a good free trade arrangement gives us that flexibility i think it will get through parliament. smith, formercan tory party leader. tom: with us in washington is william lee, now the milken institute, our chief economist. , with your work and imf and citigroup, it's always about the ascent of china. give us an update within this trade war on the strength in the power of china. to lagardehristians today is when this china get a more dominant position at the imf? that's the kind of emotion behind this. mr. lee: before they get more location of kona, they have demonstrated their economic prowess and made in china 2025 is really their strategy for doing that. it's an amazing strategy, it's taking all those areas where the u.s. has not been dominant and
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become the new standardbearer in vehicles, and solar power, and high-tech, and pharmaceuticals. these are areas where they are trying to establish your dominant and i think it's is really reflecting of the trade orders we are about to negotiate which is how does a large country trade with another large country because small countries is on the move covered all the way back. tom: is the quickest solution for china to move as some form of regional or multilateral negotiation versus a trump lateral unilateralism? trying tohey are express they are the new multilateralism but china's modernism is large china dealing with small southeast asia. the thing they haven't faced up how they deal with a large market access in the u.s. and the eu? it's been negotiated with trump and the key is they have to demonstrate they have the economic prowess how they deal a large market access in the u.s. and the eu? , they have the expertise in these areas to say
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we have something you cannot live without, 5g, pharmaceuticals, elected vehicles and is in the october of your markets two, where is china last open of our markets to your disney movies of marvel comics but at the same time, we have preserve electoral property rights because we don't want the u.s. scientists reverse a and is sure inff property that is exist right now. anna: it was only about intellectual property, the trumpet administration would have done it evenly. also the the europeans bugbear about the electoral property, they could've done it differently but this is about something else. it's funny how countries to terminate their negotiating positions. we could've done of the europeans, but the europeans don't really have their act together either. the difficulties in dealing with europe has been shown by the fact that all they can offer us was to get rid of the tariffs on manufactured goods. that was the only opening ploy to start negotiating position with the u.s. that have nothing
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to do with high-tech, nothing to do with the new industries of the 21st century. weakest,here europe is they haven't really innovated to the same pace as china is doing now and as the u.s. has been doing. francine: do you think the europeans will find a way of working with the u.s. much less -- much like this nafta 2.0 is? absolutely at all politics is regional. that's when the stopping point is going to be. the europeans have to deal with the agricultural interests and industrial interests of europe as well as the u.s. dealing with our local state and local interests and china have to deal with their provincial governments because the chinese government is the federal government but there's also provisional governors who became very powerful. tom: it's all about saving face. it is president trump or
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president hillary clinton, the fact of the matter is, they can't get elected supporting tpp , but isn't that what we just saw? and maybe is that what we're going to see with china? "bloomberg surveillance," mr. the key key --mr. lee: is to say we are helping your local industries and helping employment and employment is andting higher wage jobs that is the propaganda point and whether that is true or not is yet to be seen, but certainly the initial foray is going to be we are creating new jobs for you. lee with the milken institute with us. canada and the united states agreed on a new nafta and we of important conversations coming up. he is the congressional district from mount vernon up to the potomac past reagan airport. beyer will join us. looking forward to speaking with don beyer as well. and we touch upon tesla shares, higher. this is a bond chart which it is most interesting as well with
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price lowering yield higher, francine, the tesla story is going to be fascinating to see how it plays out given production that we will see this week. it certainly will. the dynamics of that company is whether it can deliver the goods and also whether the new chairman can work with elon musk. there's a very strong story with a very animated chief executive. we welcome more on tesla. much more with this morning, conversation with christine lagarde. stay with us. this is bloomberg. ♪ ♪
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francine: this is "bloomberg and francine" tom from london and washington, d.c. today. italian bonds dropping as investors running where it between potential friction between populist governments and
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the european union of the country's budget proposal. italian bonds slumped since the budget deficit was announced late thursday. let's get straight to our milan beer if -- bureau chief. dan: yes. i think they might have to wait a while because all italy did really was produced one number. they haven't produced the whole budget plan which they don't have to do until mid-october. the figure they released at the end of last week was the budget deficit figure of 2.4% which obviously scared the market because it was higher than expected. produced debt to gdp numbers and all of that has to be put together in more real plan and then brussels will
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evaluate it. francine: what needs to happen for us to see more market volatility? can they actually do this? dan: i think given the whole process that there will be some back-and-forth obviously, and lots of discussions underground today. today there's a meeting of economic and finance ministers and luxembourg and there will be lots of back-and-forth before the is any kind of position adopted by the eu, these numbers .re just not going to work they wasting this afternoon to see the -- it will be interesting as afternoon to see if the finance minister make some comments as well as his colleagues. i wouldn't expect a formal ontement from the ministers
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what's come out so far. tom: what's the agenda this week? dan: it's been kind of a barrage over the weekend where the main components of this governments hit the italian newspapers with .nterviews, tv shows there will be more of that i think trying to sell this forept that it's time according to this coalition, it's time for a change, promoting investments, we are a lot of talk about investing in infrastructure, trying to get the economy growing again. there were some decent numbers on employment which dropped below 10% this morning so i think we will see more of the selling of this concept certainly throughout this week. will we get fresh elections in the next six months in italy? dan: that's a difficult question
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to answer. i think certainly on the one hand, mr. demaio, the head of the five-star and the northerly are so far as sticking together. they emphasize a lot this past in mediahat they did that they are one team speaking with one voice and they rejected the talk that he was about to step aside. for the moment, i would bet morneau then yes -- more know yes.-- more no than tom: let's get the first word news. taylor: down, francine, nafta will be no more. president trump signs a successor for modest concessions to the agreement he was called a disaster. it calls for improved access to canada's dairy market by u.s. farmers and tighter rules of
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origin from the production. the deal is likely to be signed by late next month. in china, manufacturers are feeling the pain of that escalating trade fight, one measure of new export orders fell in september to the lowest level since 2016. overall, the manufacturing purchasing managers index came in lower than estimates. two thirds of business economists in the u.s. expect a recession by the end of 2020. is it going a survey from the national association for business economists, 41% say the biggest downside risk is trade policy and higher interest rates are next on the list. global news, 24 hours a day, online and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thank you. right now, and important conversation on judge kavanaugh or trade, he could even be on butlatest repair our volvo,
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far more importantly, all you need to know is the democrats in the district of virginia is why planes are gone time that reagan. how many joins us times a day international questions your office, what are you going to do about reagan, you must get 10 times a day. most of the time it's airplane noise rather than helicopter noise. on the edge oft your congressional district but it's a part of the buoyancy of the city, and reagan is doing well. rep. beyer: it's doing very well in dallas has suffered. dulles has suffered periods underutilize and very expensive. i'm sure would expand the budget deficit out to $10 trillion. your thought is the senate battles over judge kavanaugh. get beyer: i'm so easier to
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through this credo into a judge will has when i been reading the emails back-and-forth from my classmates from 50 years ago a very divided. i can't remember seeing a country is divided between who believes ms. forde and who believes mr. kavanaugh i'm looking forward to hopefully an open fbi investigation that is not political. virginia politics is a unique separate public in a democrat politics. he went to williams college in that was a feeling of america not populist. how populist is the nation right now? rep. beyer: if you look at democratic primary results it seems more populist and i've never seen as much civic agendaent, as a democrat tend to see that is the one bright spot of the trump election is there are so many our local democratic committees have doubled and tripled in size but at least in my district doesn't feel populist.ly little p
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it's very good government-based. francine: when the midterms come, what do you think people will vote on? we areyer: everything hearing is that health care and specifically drug pricing to be the largest single issue. second, there is a norma's concern of my democratic family about the inequality of the distribution of wealth and income. , a significant two thirds of the economy are struggling to be just were they were 20 or 30 years ago. there aren't any easy fixes on this. it is something we have to struggle with. francine: do you believe the polls or do you think there are republicans that will vote democrat without telling the pollsters? rep. beyer: it's hard to believe the polls after 2016 we figured there was a 95% chancellor clinton was going to win, -- tom: you know that.
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rep. beyer: even i'm too young to have a landline at home. tom: you are one of the few people in washington for moving cars out the door. what do the politicians get wrong about the production, manufacture of automobiles, whether it's in windsor, ontario, over the border in mexico, in sweden, or for that matter, in detroit, was the number one thing your colleagues get wrong. people don't understand how incredibly international it is great i don't have a single american nameplate car and most of the cars was a largely assembled here in the united states and every thing is coming from everywhere. i felt almost, people realize that the chinese owned company that is designed in sweden and now is going to be manufactured in charleston, south carolina. the president has had a
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residence with americans who feel cheated on trade. will this new trade agreement the u.s. and ca, will it advantage working-class democrats coast-to-coast? i hope so. i don't find myself often think that things about the trump administration, but it was canada joining this last night and ashley modernize nafta, that's a good thing. it's much better than where we thought we was going to be which was in withdrawing from nafta was going to be a disaster for the american worker. tpp ibig proponent of hope this means is back in the direction of doing that. francine: do you think a trade war with china will escalate or de-escalate? will the trumpet administration really put tariffs on cars? rep. beyer: i pray that will put tariffs on cars. there's and the white 18,000 automobile dealers in the united states and 18,000 of them do not want tariffs on cars.
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not only the imports, but the domestics. general motors and ford have been very clear that this would be bad for them. buton china, don't know, always seen so far as escalation. i would much prefer to see de-escalation, it's really hurting us. francine: tariffs on cars, with that mean -- what would that mean? you are still selling foreign cars, but more expensive or would it drive the foreigners out of the market? rep. beyer: he would push some of them out. land rover which is totally made in the u.k. and owned in india, a would take those things that many tens of thousands of dollars and probably destroy them in this country. i certainly think it will be a very bad thing for the u.s. automobile market. on both sides of the situation. francine: commerce from don beyer,-- congressman don thank you.
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we ask that you executive about tariffs and now to pfizer ceo, he's ready to step aside at the end of the year into three months and we understand that mr. barlow will succeed i know a lot of our reporters are trying to hit the phones to get confirmation of this but we understand from "wall street journal," the pfizer chief executive will step down in a and borlandnths will succeed him. funny more on that advisor and we look at the premarket trade. this is bloomberg. ♪
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tom: good morning. from our studios in washington, i'm tom keene and friends in the bond london.
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-- francine lacqua in london. what we learn from the conservatives, is there going to be news out of this or do we just move on to october? francine: there's always news, especially if you get the conservative party with the divisiveness, the first europeans and into europeans, and cory johnson is making a lot planves with his checkers -- calling the checkers plan to range. no one is really up to have the job of theresa may for the moment, so i don't know whether there will be a leadership challenge or just tough words. are going to their cell phones trying to figure out the news flow and we are doing on trade this morning. up,ou were just waking there is a trade deal of the united states, of mexico, canada and we also have been focused of course on the collapse of a multilateral world and the idea of moving to bilateral and contentious unilateral emotion come all of this in front of my conversation with madame lagarde today.
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bill lee with the milk institute and now jordan missed someone ,ho has been uncommon in value mary lovely joins us, senior fellow at the peterson institute is as it was syracuse you of your city, wonderful have you here today. about -- do imf to about the collapse of multilateralism? ms. lovely: the big concern is with the trade tensions for the future of the global economy. are listing the trade concern is the biggest fear on the horizon. and she has been a voice for reason and calm and i think she can continue to do that in trying to lead us towards caramel waters. her tom: waters. tom:there's a lot of saving the face of this of the decimal we can 11 or chapter nine of whatever document it is and then we all move forward and say it was in the store document -- and historic document? us areely: many of
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relieved to the damage that was done with minimal as it was, critically to the u.s. auto sector. although as we all know, this looks like it is teaming up for that will autos and lead to more conflict and will shift the focus to u.s. japan and u.s. eu relations. mary lovely, this is basically a rebranding of the nafta deal. do you think we will see more u.s. rebranding of trade deals? ms. lovely: unfortunately, yes, although i hope the businesses and citizens are beginning to catch on. basically, the rebranding, we shouldn't take too lately because it comes with increased protectionism. and that's a problem. like weos, it looks will have a ceiling on how many will be able to import from canada and those are part
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of a totally integrated production network across the region. they really affect u.s. producers in u.s. based producers business strategies. fortunately, it looks like the ceilings have been set high enough where it does very little really to force him to rearrange production in the short run. mean thatdoes this the trade tensions have less teeth than we thought? this is a deal the president called a disaster and now it's a rebranding with very minor tweaks. theyou infer from this deal fact that the u.s. will be less belligerent with the rest of the world? yes and your pointing out some that's very important and we saw it before with each week you have a career u.s. free trade area, this seems to be a pattern now and some of us can sign a bit of relief that he will take just president from will take credit for the changes but overall, they are rather modest.
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the problem is increased protectionism. the pattern that has been established as countries no longer trade with sectors from his company's with companies because all traders so integrated multilaterally in multinational income you really can't separate one country's stuff from another country's stuff, it's sectors dealing with each other and the future is free trade agreements across sectors. ms. lovely: it still has to be the government's that negotiate free-trade agreements unfortunately i think our administration doesn't seem to understand the level of integration you are describing and that is the worry -- the worrying thing on the horizon. we will see it with autos when they get the big tariffs and i don't think anyone will read from that. we've seen both the unions and business say they don't want to. tom: free-trade is not cool anymore. we won't have that in the title. you mentioned tariffs, let's be clear of it's just a given pile
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i heard one billion autos in the next 10 years or whatever. tariffs with who on automobiles? ms. lovely: we would have had tariffs with everybody, potentially. mexico and canada had to back themselves out of that. they have this sewer to hanging over their head that if you don't reach an agreement to limit your exports to the united states, we will lack you down with tariffs. tom: it's attacks on american auto buyers. beyettacks on congressman dealership? dealerships will also see some of the hit. so yes, it will be across the huge lot of america and i think he was talking about how the dealerships would be impacted, but consumers will be impacted, producers would be impacted, workers would be impacted. francine, sotom: much winning.
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francine: bill and mary, bill lee of the milken institute and mary lovely of the peterson institute. charts aji tveir . they are pretty good a new can take them and reuse them enderle your boss. this is bloomberg. ♪
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taylor: this is "bloomberg surveillance," i'm taylor riggs. let's hear your bloomberg business flash. regular last two minutes, they reportedly will be a change of the top of pfizer, according to "wall street journal," the drugmaker's ceo and reuse plans to step aside at the end of the year. the journal says he will be replaced by pfizer's chief operating officer albert orlov. that's your bloomberg business flash. tom: the single best chart right now, with william lee of the milken institute, francine, want to bring bill lee in a chart that harkens back to your conversation with stuart wallace today which is oil and you can always see it in dollars, the white line, but there is for a given em and that is the
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devaluation of the turkish lira and the crushes -- the crushing expense of oil normalized back a good 13 years. a hugee, this is computers issue for domestic em economies. issue andit's a huge we are hearing chatter from traders and oil could go at $100 a barrel and this could happen the soon as the fourth quarter because of the iranian sanctions. how much does that hurt the emerging markets that are just turning to rebound? mr. lee: this is an enormous challenge, francine. highlight the difference between the method pricing in dollar , as the dollar strengthens or the other way around, as the emerging-market currencies continue to weaken because so much is flowing into the u.s., the difficulties they face to try to adjust their economies is massive and i'm not sure that without the kind of structural changes that they have not been putting in place all this time, they are going to be on to do it without a lot of disruption and unemployment and
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inflation in these emerging-market economies is why to be the biggest problem facing investors tomorrow. within my conversation with madame lagarde, let me ask you an open question. what is the number one mystery you have of your imf right now? mr. lee: how will my old imf adjusted models and framework to a non-multilateral world. and i honestly don't believe the imf is capable of doing that right now because the institutional momentum that is there is stuck. tom: don't they have to give up the power of your voting and given over to dominant in nations like china? mr. lee: are the europeans going to realize that their economic power and political influence is waning in light of the emerging-market strengths? no, they are not. we've seen this year after year when the european block just prevents any kind of on a readjustment and that's the
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reality that is there and they're going to come to friction not just with the trump administration but with china and the rest of the emerging markets as well. a nice present on his former employment of the international monetary fund and milken institute right now. there's much more talk about. jonathan ferro i will drive for the conversation on "bloomberg surveillance." fm inthat on radio, 99.1 washington on later on sale of my conversation with madame lagarde. she is a wonderful opening to indonesia and bali meetings looking for, demanding whether the global leadership steered towards shore. this is bloomberg. ♪
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u.s., mexico, and canada agree on a last-minute trade pact. horse johnson and philip hammond trade insults. purses musk. muska pays up. pay.ec agrees to is it enough to curb his letter habits? >> welcome to bloomberg daybreak it i'm david westin. along with alix steel. big changes like an goldman. they have the meeting at 7:30 a.m. where all the bigwigs meet in that beautiful concert room. for kobe the tone, the five, i'm paying attention to that parent david: a lot of body language. it will be interesting to see what changes are made. alix:

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