tom keene joins me. i'm looking at the markets.there is a little bit of pressure overall in the markets. the pound is declining. oil is up. is of our main the stories the standoff between the u.s. and saudi arabia as growing tensions between america and saudi arabia adding to a list of investor concerns that is driving up the price of oil. am also looking at pound weakening as a brexit deal is hanging in the balance. this is bloomberg. ♪ the rift widens as saudi pushes back against trump's threat. brent johnson back at $81 a barrel. big banks it continue to try to lower. discord in europe. this is "bloomberg surveillance." london,cine lacqua in tom keene in new york. we have a lot of news coming out. and i you want to talk about a royal pregnancy. that is also on our radar. there is the italian budget and bavarian elections. tom: i was fascinated with the results in southern germany. it is a real statement about populism in europe, isn't it? francine: it certainly is. we also spoke with michael who is

i'm tom keene in new york. stan collender with us, john ryding with us and linking in monetary theory. go to the screen, this is sterling, breaking through a 128. this is weaker pound sterling, breaking down through 128. one of the moves this morning. john ryding with us with his work at bank of england and the fed. what is austerity? mick mulvaney is coming on, he wants to balance the budget and we are going the other way in america. does america know what austerity is? no.: you did ask, what is the number that makes the budget work? that number is the same number that was your number which is three. england, thefrom number three, 3% growth. that is from the boys at preston football club. tom: i think it will fit my dog's vet bill. francine -- that is the real deal. thank you. stan collender, where is the austerity? stanley: a good question. i think john is right. we are not going to balance the budget anytime soon. to have aas tried budget resolution. that is impossible. the deficit is high. there is not enou

in london, with tom keene in new york. investors may be underestimated chances of an increase. dollar-yen remaining unmoved after the bank of japan left rates, asset purchases, and guidance unchanged. jane foley is still with us. given what we've heard from the boj today, it is going to think a lot more than the central bank to get the yen to 100, sorely. guest: yes. i would be thinking of a lot of risk aversion. for instance, we know that there is a lot of easing from the bank of japan am a but i think in terms of risk aversion, that is almost irrelevant. we've had a lot of investors buying the dollar when they are under pressure. in emerging markets this year, we saw a lot of inflow into the dollar. i would still maintain that when investors really are running for the hills, they buy the yen. i would think that in order to ,et from where we are to there we would have to also be seeing a much weaker global environment. perhaps much weaker u.s. growth, that sort of thing. i think that is what we have to be seeing. me, it i

this is bloomberg. ♪ tom: good morning. "bloomberg surveillance." francine lacqua and tom keene. let's turn to one of the distractions over the weekend, this one on the international campus. reagan and gorbachev. mark, extraordinary for any of us of a certain vantage to remember the somewhat triumph for all of that meeting in iceland. president trump wants to do away with the 1987 treaty in nuclear missiles. where are we on this right now? can he do that? mark: yes. nuclearthe intermediate missile treaty. as you said, it was a huge deal when it happened. out and john bolton is on his way to moscow to talk about it. this at treaty has been in discussion for a while because the u.s. has accused russia of breaking it, by developing a cruise missile that can carry nuclear war has. the russians deny it and accused the americans of breaching the treaty by building anti-ballistic missile systems that could also be converted to be used for offensive missile launch. tom: what does it mean for germany of president trump pulled away from the 1987 treaty? : for europe, this is really concern

tom keene in london. what you need to know, higher yields and you see it in weaker emerging-market currencies. president erdogan speaking in budapest on refugees and his domestic banks. with your news update, here is taylor riggs. taylor: for the first time in more than two years, the imf cut its forecast for global growth. is projecting global economy will grow 3.7% this year and next, down to 10th of 1% from the forecast three months ago. from the forecast three months ago. pakistan will seek a bailout from the imf. week during this annual meeting in indonesia in august. he told bloomberg the government may need more than $12 billion. they have13th time returned to the imf for help since the late 1980's. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. thank you so much great let's talk italy and the finance minister has said the country's output gap with nations is unacceptable. he

vonnie: bloomberg's he tom keene has -- bloomberg's tom keene joins us. tom? >> the question is the impact. we have heard about the farmers and the midwest. you wonder what the impact of a trade war in gary, indiana. be president will not campaigning there. gary, indiana is a home of the nobel laureate of columbia who joins us. you folded right into a blistering this course on the elections. what is so important about your discourse is it is about trump and the republicans, but it is really about the democrat parties that you identify with. it is a breath of fresh air as we have not seen that. what is the democrat party getting right as they move through these elections? >> i think they are realizing that they have to have more than an anti-trump position, they have done a positive position to understand why the country has not been forming very well. why there is such any quality? it has part to do with monopoly power, and parlayed that we have not done enough to protect those who have been so badly effected by -- have donewhat others to us. it is not immigra

tom keene in new york. we look at the markets. after a tumultuous week, i would suggest there is a reprieve today. let's see what happens during the day. we had some news out of china giving a lift to the markets. tom: a little information flow does that. we saw that yesterday. we were -300 and came back nicely thursday morning, and then it just disappeared. i think there is a real tentativeness about what friday will bring as accounts settle to an october monday. francine: let's get to the bloomberg first word news in london. this could be the day of reckoning for an american pastor at the sent of a diplomatic dispute. he has been detained for two years over his alleged involvement in the 2016 coup attempt. the u.s. has imposed sanctions on turkey over the detainment. u.s. treasury has said china is not manipulating the yuan. steve mnuchin's staff has not found evidence to do so. record $34 billion despite u.s. administration tariffs. washington and beijing have imposed tariffs on billions of dollars worth of goods. china might h

tom keene in new york. to jacobing to speak lew later on. tom: the tension really wraps up. i have a chart that shows the tension in the u.s.. disappearance, some say murder. it is a lot of different opinions. the president ramped up that yesterday. francine: it is not only a u.s.-saudi arabia standoff, it is the u.s. and a lot of world leaders. here is taylor riggs. taylor: we are starting with that story. president trump says he is unsure if his administration will take part in a saudi investment conference following the disappearance of jamal khashoggi. the president told reporters that steve mnuchin will decide by friday whether or not to take part. cnn reports that the saudi's will admit that khashoggi died under interrogation. british prime minister theresa may and french president emmanuel macron are calling for cool heads to prevail in brexit talks. may told parliament that she does not believe the u.s. and eu are that far apart. macron has taken a hard line stance, but does he believe collective intelligence will work out? leaders were hoping to have a deal by tomor

i'm tom keene and london, francine lacqua. vote.at matters is this the senator from kentucky says they are moving to a vote this week. it is that together with trade and whether there is a tenuous link and rather the distraction we are seeing is hindering or helping trade. wes look to italy. weking at the markets -- also look to italy. emerging affect markets. tom: first word news in new york and here is taylor riggs. >> president trump has cleared the decks for a protected trade war with china. he struck that last-minute trade mexico and canada and convince japan open one-on-one talks. at a news conference, president trump says it is to early to talk with china because you beijing is not ready yet. the senate is likely to know -- vote on brett kavanaugh's nomination to the supreme court. the senate first need to vote to cut off debate before the vote. the fbi is conducting a week long investigation into sexual allegations against kavanaugh. the head of the european commission warns italy could face a greek style fiscal crisis

i'm tom keene in new york. we turn now to what has transfixed the beltway. the kavanaugh vote expected saturday. here is judge kavanaugh writing in today's wall street journal. i am not a pro-prosecution judge. i would always strive to be a team player. i have not changed. i would keep an open mind and strive to preserve the constitution and the role of law. talked with our chief synthesizer of this moment, kevin cirilli. who advised the judge to write this? did he want to do this? the person briefing him has been tom again. the one paragraph in that op-ed that matters is when he said he realizes he might have been too emotional and he might have said ,hings during his confirmation that hearing last week, that he might not what have wish to have said. -- might not have wished to have said. would appear based on public comments, those republicans were moving toward voting for him. they praised the fbi investigation as being thorough. has been moreski difficult to read. we are anticipating a procedural hurdle at about 10:30 a.m. this morning. cabinet, youhis h

tom: bloomberg surveillance. francine lacqua in london, i'm tom keene in new york. here is kailey leinz. kailey: angela merkel is said to be planning to quit as head of the christian democratic party after nearly two decades. according to the source, merkel told a leadership meeting she will not run again for the chairmanship in december. it is reported she wants to continue serving as chancellor. the move follows a decline for the cdu in an election over the weekend, with the party suffering its worst showing in more than 50 years. jair bolsonaro has won brazil's presidential election, marking a hard pivot to the right in latin america's biggest economy. the former army captain swept to power on a manifesto promising to open up the resource rich economy to private investments, strengthen ties to the u.s., and unleash an aggressive crackdown on epidemic crime. with almost all ballots counted, bolsonaro won 55% of the vote to beat the former mayor of sao paulo. in his victory speech, bolsonaro promised to reduce the size and cost of government and to reform foreign p

is tom keene paired with me nejra cehic . the president in a conversation with axial's making it clear he will vote after the fourth amendment and the birthright for children born in america of undocumented aliens and a few other definitions. i will tell you, this will be the discussion over the next seven days to the election. nejra: it is extraordinary. the question for me is whether the president has the power to do what he says he will do, something we will discuss. busy in europe as well. we are talking about the fallout of angela merkel saying she will step down for the -- from the leadership of the party and what it means for the economic boom. european data out this morning, some showing softer than expected. tom: good to have philipp hildebrand on a busy news day. there is taylor riggs. plans toresident trump send 5200 troops to the southern border of mexico by the end of the week, escalating his response to a caravan heading toward the u.s.. the move just days before the midterm alexis -- elections comes as they con

tom keene in new york. we look at emerging markets because of what is happening in brazil and overlaying that is the move in u.s. treasuries and any market moves that would be on the back of the price of oil. would say the u.s. treasury market is making things happen. the china news overnight will be front and center. would point out, columbus day in the united states, so many people off. francine: u.s. treasuries not trading. i have one board. tom: equities, bonds, currencies commodities right now. we capitulate the follow-on from u.s. higher yields. futures decidedly negative. bond dynamics are not going to be shown in the data check today. weaker euro. oil weaker as well. let me go to this screen. out.it really blows that is a huge equity move in the vix from a 14 level up to 16.51. bond markets closed. as you noted, brazil front and center. renminbi, we are really getting there quickly. let me go over to the bloomberg. this chart breaks six surveillance chart rules. a way to forget about the axis. this

tom: i am tom keene in new york. francine lacqua in london. the president of turkey speaks to his justice and development party in ankara. the headlines are out. you can see this across bloomberg. you can see the market move. futures deteriorating. during the speech, we sought dow break under 25,000. a little dollar weakness. i saw the 10-year yield move five basis points lower. that is an abrupt move. it is a joy to have david riley with us. what do you do with your portfolio today? i am not going to sell because of mr. erdogan or mohammad bin salman, but am i going to sell because david riley says things are ugly? >> things are pretty ugly at the moment. i think we have moved into a higher volatility regime. ist of the reason for that because we are entering the end of that quantitative easing era. u.s. rates have been moving higher. for globaldelta growth. growth isbout china what is spilling over into european growth, assets and equities at the moment. invested,o is stay but look for quality, look for where you are getting paid for the ris

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. 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 mus

keene. tom: i looked at usmca and the dictate of what president trump has clearly advocated. that brings in canada and mexico. i do not want to get you in trouble, do canada and mexico cave into the rhetoric of president trump, and is that something we will see in the coming years as the president looks at multilateral and brings it to a unilateral approach? >> it is hard for me to say or make any comment, because we have not had a chance to review it. it has been in the making for 13 months, so it is obvious there must have been back-and-forth and trade-offs, and that is the point of negotiations. about,ngs i am pleased one it exists, and to have this agreement, trilateral agreement between mexico, u.s., and canada is a very positive. i'm encouraged because not so long ago many of us were in fear that there would be nothing, but there is an agreement. number two, the services are also partly or entirely -- i have not read it yet -- covered. and i think that is showing the way, like tpp was

francine: david folkerts-landau versus tom keene, 1-0. could we see a big fall if something were to go wrong? the concern is you are negotiating a theresa may negotiating with her own party, and also negotiating with labour, and with the eu. david: if the negotiations go badly and no agreement is reached, that will undercut parliament. 25,ould see it going 131-1 and stabilize and gradually find its way back up and the market will react to that. francine: what will be economy look like in 10 years? is it a tax haven? ,oes it become a services singapore like-based economy? david: it will be an export driven economy. u.k. is internationally -- has international outlook, u.k. much more global than the european union which is inward looking. u.k. will need to do trade agreements with the rest of the world, canada, u.s., japan. and use its outstanding education system and technology -- i do not like to compare it to singapore -- you could have the possibility of financial services, u.k. was a global financial center before the europeans or even

francine lacqua, i'm tom keene in new york. of lebrate the anointment alexander of morgan stanley. 48 months of forecast. she that is lowest standard error. that is an extraordinary accomplishment. i thought i would show you the why here. retail sales, going to focus on retail salings when you didn't know who she was, that's what .ade her famous ellen what is the state of retail sales? >> came in softer than expected but over all an ok report. it didn't show broad declines. there was one large decline that i think needs to be watched. i'm watchful but not worried. it is food services. . in the retail sales report, it captures a good chunk of overall spending that we do each month. it has the dining out category. when that declines, it can be sometimes households don't field well. tom: seamless. come on. you go thai food. we got that. tell me about the tax cut. i thought we had more money in our pocket. is it working? what you see the it mean? >> it has given households more disposable income but also raised the savings a lot as

keene. tom: i looked at usmca and the dictate of what president trump has clearly advocated. it is an effort that brings in canada and mexico. i do not want to get you in trouble, but did canada and mexico cave into the rhetoric of president trump, and is that something we will see in the coming years as the president looks at multilateral and brings it to a unilateral approach? >> it is hard for me to say or make any comment about the agreement, because we have not had a chance to review it. it has been in the making for 13 months, so it is obvious there must have been back-and-forth, bargaining, and trade-offs, and that is the point of negotiations. two things i am pleased about, one it exists, and to have this agreement, trilateral agreement between mexico, u.s., and canada is a very positive signal. i'm encouraged because not so long ago many of us were in fear that there would be nothing, but there is an agreement. number two, the services are also partly or entirely -- i have not read

this is bloomberg. ♪ ♪ ♪ ♪ tom: we welcome all of you worldwide. tom keene in new york. markets on the move, yield higher. e.m. crushed this morning. turkish lira backing up. francine did a nice job on that in the last pour. bloomberg business week has broken a important story, a military espionage in the hacking of apple and amazon and is a cover of bloomberg business week and will be one of the great themes of the day in washington and yes, the kavanaugh hearing as well. we'll get to that in a moment. i really want to draw your attention to this important story by jordan robertson and mykal riley and bloomberg business week will join us in 10 minute. first alert news, here's taylor rigs. taylor: they've received the results of the sexual assault allegations on supreme court nominee brett kavanaugh. the report is being sent to the senate where they'll review it today. the senate republicans could hold a vote and he be confirmed over the weekend. and ence accuses china said it has coercive measures and part of the trump administration campaign to increase pressure on bei

keene. tom: i look at usmca, and the dictate of what president trump has very clearly advocated. it is an effort that brings in canada and mexico. i do not want to get you in trouble, but i got to ask. did canada and mexico cave into the rhetoric of president trump, and is that something we will see in the coming years as the president looks at multilateral and brings it over to a unilateral approach? christine: >> it is hard for me to say, to make any comment about the agreement, because we have not had a chance to review it. i has read -- i have read the same articles that have been out. but it has been in the making for 13 months, so it is obvious there must have been back-and-forth, bargaining, and trade-offs, and that is the point about negotiations. two things i am quite pleased about. one is that it exists. and to have this trilateral agreement between mexico, u.s., in canada is, i think a very , positive signal. i am encouraged with that. because not so long ago, many of us were in f

coming up, tom keene joins me out of new york. this is bloomberg. ♪ --ncine: looking for s&p futures point to a firmer open. ubs profits top estimates by more than 25%. we will speak to the chief executive. tesla sores and free trade after .osting "bloomberg surveillance." this is"bloomberg surveillance." -- this is "bloomberg surveillance." we will do some extra market tax. the route that started over the the last couple of days is deepening in asia. we will do cross assets for sure because we don't to the correlations that you usually see in panic. we have a great set of guests through the morning to talk about these odd correlations in the market. we take pride that we go across asset here looking at the equity markets right now. francine: we will get for the markets and get through extra data. i'm looking forward to seeing your bloomberg. warns that more packages containing suspected bombs may still be in circulation. agents are investigating the mailing of devices to target a conservative verbal attack, including former pre

all of these indicators -- excuse me, the vector, as tom keene says, is not pointing up. it is moving lower. think we are going to get to the end of the year and see the fed's preferred inflation gauge just off of 2%. your you are not on inflation target, which is the argument the president is making, why do we need to keep tightening policy at the current pace? guy: there is an argument that the fed is doing a fantastic job, generating really decent lowth, we have unemployment. we are not getting inflation here because it is perfectly timing the rate hikes to compensate for the growth that we are seeing and the tax stimulus that is coming in. monetary policy act with a long and variable leg, so we can use the past tense and say the fed has vertically calibrated policy, and when we look at the has not beend moving as rapidly as in 2018, for instance. there is a case to be made that maybe they should be considering moving slower. to hitting their mandate, so if we are just off of 2%, jay powell and company are going to say well, we are close to our target. that is the main

tom keene in new york. we look at geopolitics, the week that was, brexit, and china. tom: a real mystery that gdp. 2019 iferesting into they stay at the 6% level. how globalow economics will react if we see a 5% print on china gdp. we are not there yet. it is something to be considered. francine: you are right. what is also to be considered is regulators and authorities and china saying that whatever happens they will prevent it financial meltdown. for first word news in new york city, taylor riggs. taylor: china's economic growth slowed more than expected in the third quarter. the government admits what it calls the severe international situation is having an impact. 6.5% from yeare ago, the slowest pace since 2009. industrial output came up short. top financial officials moved to shore up officials from the banking and insurance regulator said abnormal fluctuations in the market do not reflect the country's economic fundamentals. chinese stocks have fallen this year to a four-year low. saudi arabia reportedly may blame a top intelligence official close to crown prin

caroline: that was the imf's christine lagarde speaking with tom keene. aston martin has lowered the price range for its planned ipo in london this week. the carmaker made famous by james bond movies has cut the top and by 11%. analysts had been skeptical that aston martin would reach its previous goal. luxury home builders in the u.k. are about to get squeezed. theresa may is looking to impose higher taxes on foreigners. about half of all residential transactions in london. but by the today company with the most exposure to london. that is your business flash update. come over from the u.k. the british love to talk about the property markets. joe: the irish border fund might happen, i saw something about using blockchain. romaine: if they work cannabis in, we have the trifecta. caroline: that would be a novelty. has this overcome something that has been in the u.s. as well? hasn't been in the u.k. much, but the idea of high end being hit -- maybe it is not so much a brexit issue but a global eco-issue. meanwhile, a trade deal name. new details on the agr

keene. breaking down the results from charles peabody, who is negative on banks, worried about bad volatility. this is bloomberg. ♪ >> this is "bloomberg: daybreak," sears has collapsed into bankruptcy, with over $10 billion in debt. their biggest shareholder stepped down immediately as ceo. they plan to stay in business after 600 million dollars in new loans. carl icahn has come out against the plan of dell to return to the public markets, he argues that the proposed transaction undervalues shares and that their $22 million proposal calls for the computer maker to buy out tracking stock before listing its own shares on the stock exchange. there is a big merger in the defense industry in paris, technologies becoming the largest defense contractor in the u.s. a market value of more than $33 billion. it's known for communications and electronics and they get more than two thirds of the revenue from the u.s. government. that's your bloomberg business flash. david? david: bank of america, less

tom keene joins me out of new york. we have a full market roundup. this is bloomberg. ♪ francine: after the selloff, u.s. equities climbed to a lower open. executiveeats chief jess says the results are better than any bank this quarter. a different story for deutsche bank. barrel.es below $76 a the saudi oil minister says they are in produce as much as you can mode. "bloomberg surveillance." we continue looking at geopolitics, tax cuts in the u.s., markets, also the situation in italy and brexit. tom: what a great lineup of guests today to talk about the cross asset nature. the confusion of the markets we see out there waiting in right now. francine: it certainly is. let's get straight to bloomberg first word news in new york city. kailey: the president told reporters he wants to receive a bipartisan recommendation on penalties. he called the conflicting accounts from the saudi's one of the worst coverups in history. the u.s. is revoking or blocking the for 21 suspects in the killing. president trump has that up his attack on federal reserve chairm

good morning, i am tom keene. just another story percolating is gam. help our global audience with this lending story. what is -- london story. what is gam? it is have based here and have based in europe. wonderland -- we understand that it is holding informal talks with potential buyers for all of the business or parts of the business as it explores options to stabilize. there are two stories, one is the theme which is do you need bigger asset managers but the other one is specific to gam after they had to suspend one of their star fund managers. tom: let's get scale on the news of the day with our "first word news." taylor: forecasters are doubling down on their warning about hurricane michael. the national hurricane center said the hurricane had turned into a life-threatening category four storm bearing down on the florida panhandle. officials say the hurricane has gotten even stronger. people along the gulf of mexico coast have been told to evacuate. hurricane has cut gulf oil production by 40%. investors may be underestimating the risk of a financ

keene was on- tom the radio with me this morning and provided an accurate description of the early market, where i think that people are thinking that despite those, we still get some sort of agreement reached. sterling will go higher. it's a very binary choice here. sterling is going to fall. if some sort of accommodation is reached, they will essentially kicked japan and the grandness of european fashion with sterling rallying. a reasonable proposition for a three-month horizon. that'she perceived d-day approaching, i think that people are for better or for worse tending to view the actors as rational and it is generally speaking and irrational decision for the sides to come to some sort of accord. the problem of course remains the irish border, where rationality isn't necessarily part of the asian. we are talking about deep cultural divides their that have historically separated the republic from northern ireland, it had been healed by the good friday agreement. it's sort of an impossible trinity in terms of what the u.k. want. personally i think that the optimism, while understandable

our transport correspondent, tom burridge has been round a test track to find out more. my first ever drive in an electric. there is, thankfully, a chill mode that does reduce power somewhat, which i'm very keen to turn on, as teslas are quite potent. you want me to drive in chill mode? sounds all right to me! instinctively, i would like to buy an electric car. but i'm waiting for the right moment. when is the right moment? if you're driving up and down the motorway every day, long trips, it's probably a little bit too early, but for the vast majority of people nowadays, there is an electric car that suits them. so will and his colleagues are on a mission to answer an important question. now, manufacturers publish official ranges for all electric cars, butjust like fuel economy figures for petrol and diesels, these are typically very optimistic. what we're trying to do is give electric car buyers, or potential electric car buyers, a realistic figure that they can achieve, real—world driving. the same conditions are applied to each vehicle. this is quite a high—tech p

our transport correspondent, tom burridge, has been round a test track to find out more. my my first ever drive in an electric. there is, thankfully, a chill mode that does reduce power somewhat, which i'm very keen to turn on, as they're quite potent. you want me to drive in chill mode? instinctively, i would like to buy an electric car. but i'm waiting for the right moment. when is the right moment? if you're driving up and down the motorway every day, long trips, it's probably a bit too early but for the vast majority of people nowadays, there is an electric car that suits them. so will and his colleagues are on a mission to answer an important question. manufacturers publish official ranges for all electric cars, but just like fuel economy figures for petrol and diesel, these are typically very optimistic. what we're trying to do is give electric car buyers, or potential electric car buyers, or potential electric car buyers, or potential electric car buyers, a realistic figure they can achieve, real—world driving. car buyers, a realistic figure they can achieve, rea