Transcripts For BLOOMBERG Bloomberg Surveillance 20240714

Pmi data for the euro area. Look at european equities. We are trading down. 8 . The forecast was 52 so it is a miss on the composite. We are already seeing Euro Weakness ahead of this so we might see a leg lower in the euro. European equities on the back foot which is a divergence what we have seen with u. S. Futures. Mixed messages over the weekend over whether there is optimism or pessimism coming in over trade talks. He drop of the 10year yield brent crude is coming off the highs from earlier. Concerns around iran and the speed of saudi a ramp saudi aramco. We are live at the Labour Party Conference to speak to the director general. That interview with Carolyn Fairbairn is that 9 45. Viviana and the u. K. , that is where we begin. Boris johnson is the latest leader to say iran was behind the attack on saudi arabia. He made the comments to the u. N. General assembly. The comments coming at eight tough time for tehran. It. Denies i am not confident, i am confident that we can not start one. I am confident that whoever starts one will not be the one who finishes. Viviana oil on the rise as doubts remain on how quickly it saysa can officials are privately in emergency talks. President donald trump appears this is ae that phone call to ukraines president. Oft call is now the subject a president ial investigation. Trump repeatedly asked the president to investigate the son of the democratic president ial hopeful. Dmp. Che bank is to they will continue to manage the platform until clients have been migrated over as part of the executor0 staff trade. Execute their trade. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Cook has filed for administration leaving tens of thousands of children stranded abroad. The travel company failed to complete a lastminute deal for additional funding collapsing under a mountain of debt. All vacations have been canceled. The government will work to bring holidaymakers back home calling it the largest repatriation in peacetime history. Joining us now is deirdre hutton. I know you are part of all of this repatriation, what advice do you have for travelers . Deirdre look, i will answer your question but can i say it is an incredibly sad day . Thomas cook is the worlds oldest travel company. 22,000 people using their jobs, 9000 of those in the u. K. But you are right, we have been the Civil Aviation authority running the repacked ration. It is a huge operation. Airports to, 55 bring back 155,000 passengers. Not a single one of those passengers are stranded. Everyone will be brought home at or around the time that they were originally going to fly anyway. What they need to do is go to will givee and that them all of the information they need. Their new flight will be loaded on their website 72 hours before they were due to come home. Nejra what about travelers who have holidays booked and waiting to go on them . Anybody who is booked to go out on a holiday on thomas cook from now, there holiday will not happen and they should not go to the airport. There will be no thomas cook flights of any sort from the point at which the company went into liquidation at 2 00 this morning. I am afraid their holidays are not going to happen. Deirdre how could people claim back the money that they booked . People who have actual production will be able to reclaim their holidays. They should also go to the website which will give all of the information about refunds. Our complete focuses on the repatriation because it is a huge exercise. We will start on the refund exercise which we expect will take two months to complete. Nejra the huge repacked ration operation, how is how much is that going to cost . Who is going to pay . Deirdre well, obviously i cannot pin down the cost but the repacked ration we did two years ago cost 50 million. Thegest thing since biggest repatriation ever. The airlineto build pretty much from nothing. The cost will be carried by government. From the funds that come through the nejra are you concerned that the downfall that thomas cook has gone through might be one that faces other travel and tour operators . Look, this is a hugely consumers are getting such good value for the holidays. Thomas cook has faced a lot of competition. Entrants. New lowcost as one commentator put it, it has been operating on a brochure basis. I think for a particular reason, there is nobody else major on our watchlist. Nejra deirdre hutton, all thanks to you. Lets get the latest on exit. Brexit johnson will start diplomacy today. He will start to push for a exit deal on the sideline. Back in the u. K. Numbers of the Opposition Labour Party is readying for a fight. Jeremy corbyn is facing the campaign for remain in the event of a second referendum. Lets head to lighten or anna edwards is at the conference. It is really shaping up to be a busy week for labor. Anna absolutely. Welcome to brighton. The labor market gathering for the conference and the divisions over brexit are huge and still at large over the events. We heard that Jeremy Corbyn once the back of the members of the labour party. Lets remember Jeremy Corbyn is set to be a general election. He wants to go to brussels as the new Prime Minister. Negotiate a brexit deal that he likes that he thinks is credible that lives up to the labour party test. Then put a vote to the people and run that up against the other option on the ballot paper. That is what Jeremy Corbyn wants. Remain is the only path forward, the path needs to be more proremain. He certainly said that he cannot see any other deal other than remain dividing the same level of benefits to the u. K. Economy. That is an area of disagreement that is at the heart of what has been decided here. More than three years since the brexit vote. We dont have a firm policy of leave or remain from the uks official opposition party. Mix, update in the on renationalization. We dont have a formula on how investors will be recompensated. There are a lot of other policy items on the agenda. It wants to block a new deal brexit. That is something that will return to the house of commons in the middle of october. That is in the hands of the supreme court. We look to london for guidance. The brexit decision hanging heavy over the south coast of england and the Labour Party Conference. Nejra anna edwards, thank you so much. Joining me is Valentin Marinov. Welcome. What are you looking for at the Labour Party Conference that might affect or not affect your sterling call . Valentin the party will throw its weight around the remain vote, any potential second referendum. Far, there is more evidence there are two key divisions and that is a negative because where we see the support for brexit at any cost, the same time those opposing the no deal brexit potentially supporting remain are quite divided. That is likely to shift further the likelihood of the potential outcomes of really going into any potential elections and that anyway will support the party of the moment of supporting brexit at any cost and by implication could lead to a situation where we have a no deal brexit. My concern going into the speech by corbyn later on is to be no deal brexit risks may intensify as a result of the location of development negative development of the pound. Prefer a way to shore the pound against dollar. Potentially even gold if investors like to consider that. Ber sterling, we may flirting with a recession in the euro zone. Whole andone as a with ecb running out of options, that is not the best mix for any currency. And may not be the best way to express a bearish sterling view. You will be targeting the return flows to 120 especially given that the risks ahead of a inential lack of action november may favor a no deal brexit. You may see the tory reemerging as the winner in the coalition which could ultimately mean even weaker pound. Nejra Valentin Marinov stays with us for the hour. Stay with surveillance. Plenty coming up including we will talk trade after cant after channel china canceled plans. We get the latest on saudi. This is bloomberg. Nejra economics, finance, politics, this is bloomberg surveillance. I am nejra cehic. Trade groups from china and the u. S. Have held constructive talks according to Chinas Ministry of commerce. It comes after markets after u. S. President donald trump said he is looking for complete trade deal. Sentiment was knocked right chinas cancellation in the american heart land. We learned that was done at the request of the u. S. With me, Valentin Marinov. I get the sense that markets, investors not sure what to make of this because you so weakness in the asian sessions. Also when i was looking at the yuan, the officer was strengthening. What is happening . Reaction the neva jerk the kneejerk reaction. Or delay was not triggered signaling deterioration in the relationship between the two ahead of the official talks due to start in early october. Markets likely to remain jittery. We do not expect any rates through any soon. The two parties still far apart. Intellectual Property Rights and secondly u. S. Politics is very much driving. Being that trump has been exploding the protectionist , his popularity ahead of the president ial elections and think he may want to use that particular theme for a bit longer provided the u. S. Economy is holding firm. So far it does seem the u. S. Consumer is doing well. A president has all the intent to continue the nationalistic rhetoric to boost his popularity in the polls. No, we are not optimistic heading into the official talks. The markets likely to remain nejra if youre not optimistic heading into the talks, which currency pair do you wish to express that through . Valentin the japanese yen is becausewe would prefer the fact that many the repatriation for an important reason is the fact that the boj is out of options when it comes to further cuts into negative territory or even more qe. That makes the yen very attractive. The australian dollar, you could have a short of yen which could as the as a hedge that trade war escalates farther. Nejra do you think the fed is going to need to cut more beyond one more cut this year . What does that mean for the dollar . Valentin given how important the uncertain surrounding those trade negotiations have been in driving rates, i think that further escalation that will likely mean youll have to cut one more time before yearend. Of the expectation because there is a global uncertainty, the u. S. Businesses will continue to suffer. This more dovish members will likely increase. As result the rates will likely gradually declined from here. Also against nejra Valentin Marinov stays with us. Next week if the situation on saudi as oil resumes gains on rising tension. This is bloomberg. Nejra this is bloomberg surveillance. I am nejra cehic. Around is refusing to rule out war and the middle east at the u. S. Sent military aid to saudi arabia. Doubts remain over how fast saudi arabia will be able to restore output. Lets bring in yousef gamal eldin. Us. T to have you with what were your takeaways . Yousef the first thing that stands out is how sophisticated and surgical these strikes were you go to these facilities and we look at the stabilization and the damage was just on the portion of the wider area. Point number two, the damage is extensive to some of these tickler towers. The third point is you have every consumable resource being deployed by saudi aramco in terms of trying to get these facilities back up and running. Hundreds of men around these areas are working aroundtheclock and we understand parts are being flown in. Some of these structures may have to be replaced. There is skepticism about the timeline from saudi aramco. Bit gued that is a that it is a bit optimistic. There are some who say they can achieve this by the end of the year. Nejra in terms of further tensions, we have comment from both iran and Saudi Foreign ministers over the weekend. Boris johnson has weighed in as well. What have we learned . Being the tensions are ratcheted up even further. We are in for quite a row over the next few days at the u. N. General assembly. A lot of heads of states are going to get their chance to share their views on this issue. You have the Saudi Foreign minister banking it clear that they are going to wait until the investigators are finished and make their conclusion. They are going to make a recommendation on how to respond. Secretary of state, mr. Pompeo, is describing this as a state on state act of war. An appropriate response is going to be put together. You have the british Prime Minister chipping in on this and saying even the u. K. Deployment of military assets is a possibility. The iranian offering and olive offer ying they will we will see how that works out. Nejra yousef gamal eldin, thank you so much. Up next, mario draghi will appear in the relevant today. In the Parliament Today. The pmi data has missed in the euro is below 110. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Nejra thomas collapses. The British Government promises the biggest repatriation at the british cooperator goes under. Boris johnson merkel, macron the sidelines of the yuan general assembly. Can he move frexit talks forward . Tensions between the u. S. And around fuel another rise in oil. This is bloomberg surveillance. I am nejra cehic. Lets check in on the biggest stock movers. We have to kick it off with Deutsche Bank. It is down nearly 4 . A completed its deal to transfer the prime brokerage business to bnp paribas. About 1000 deutsche employees left the move over to french bank over the next couple of years. Thomas cook, its pain is its rival gain. Easyjet surging on the news of thomas cooks collapse. It is leaving a lot of holiday years around the world stuck in the u. K. And the u. K. Is working on bringing them home. Nejra let get the bloomberg first word news with viviana hurtado. Viviana we begin with chinas cancellation of a visit to america. It was done at the request of the u. S. Learned chinas vice premier plans to visit washington d. C. And the second week of october. Over to the u. K. , we are waiting for the u. S. The u. K. Supreme thets decision on whether Prime Minister acted lawfully when suspended parliament. A ruling isnt expected until the afternoon at the earliest. In the United States, donald trump acknowledging he discussed former Vice President joe biden in the phone call with the ukrainian Prime Minister. The president said the question was about the discussion was about corruption. Police and protesters clashing again in hong kong on sunday. Violence erupted in several parts of the city as unrest continues for a 16th straight week. Hong kong is bracing for a surgeon demonstrations. Demonstrations. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Nejra . Nejra lets focus on the euro area and Mario Draghis appearance in the Parliament Today will provide investors the chance to assess his time as president of the ecb. There was a big mess from many with pmi sliding into suffering its worst downturn in almost seven years. Valentin marinov is still with us. Weve got the euro area numbers. It was a miss. Manufacturing, services and the euro has taken another leg down. We are below 110. Valentin on the one hand you have the data which is continuing to disappoint. Nothing seems to be stopping the deterioration. In addition we have a central bank that is rapidly running out of options. Draghi likes to say that the ecb is willing and able to address the problems in the euro zone. But investors are quite skeptical. It is sad for the president given the amount effort he has put into saving the euro to see it all being kind of a challenge in such a way towards the end of his election career. Nejra is germany headed toward a recession . Valentin we think it is quite likely. We dont think it is going to grow into a more sustained downturn or spread into other countries or many other countries in the euro zone. We expect growth in the euro zone after the fall. On the back of that, the ecb may have to do a bit more and we do expect under the rate cut on the cards. 60 basis points. The Bigger Picture still is the ecb is running out of options and, indeed, their ammunition is running very low with all eyes on the euro zone government. Mores opening targeted fiscal stimulus which help will help prop up the economy. Nejra ec the ecb is running out of tools. How effective do you think the resumption of qe is going to be . And the other measures . Valentin the effectiveness is affect. On the stock it has been pretty dominant. , the draghiy presentation was underwhelming. According to our estimates, if the ecb sticks with the Current Issue limits, it cannot have a qe lasting for more than 12 months. It could buy more private assets. It is not a significant increase. Qe flow side of the reinvesting and likely keep yields suppressed. Ultimately going to keep easing and keep financial conditions easing. The way where is that growth going to come from . Even that Consumer Confidence has can severed has recovered. We do need that end investor to emerge. That buyer an investor has to be the government. The is only get on back to fiscal stimulus as the instigator of recovery. Before that the ecb could be hopeful to smooth as the economy decelerates. Downturn. D to a sharp nejra i remember. We talked after the decision. If you expect further euro would it be more euroyen or another currency . Valentin it is a great funding currency. The ecb certainly helping that a great deal. Eurodollar is still appealing. That is our concern with eurodollar and particularly valuation. It is quite undervalued at the moment to the tune of 5 . Really pushing it lower may work for a time. Ultimately the longerterm, higher for eurodollar. The yen is signal for the euro looking rather cheap. The euroyen may be the preferred option. Stayned before longer for an extended period of time. A perfect storm may be indeed looming large. We have a deteriorating economy and a central bank that is out of options. The tier rating economy, how much of the euro zones problems are structural and homegrown . The biggest structural issue here is the gradual occasion of the euro zone was a factor which will keep yield up current or at lower levels for much longer. The other funding currency now ae yuan, that place will have lasting negative impact on the currency. Investors are looking for cheaper ways to fund the trade. A single upturn a cyclical upturn. That could help us stabilize but that is the best we could hope for at the moment. The factor that drove the euro come in the could event of sharp acceleration of risk aversion. Markets are very short euro. Similar to the end we could see the euro depreciating under those circumstances. Nejra in terms of best case scenario, more is being rating written about monetary cooperation. We are hopeful that in government will be trying to address some of the hedge some of the headwinds we have been seeing. The German Government deployed the fiscal stimulus. Doesnt seem like much but it should be taken into account of the country discussing the new eu budget. A lot of emphasis will be given to spending money from the in thecloser to home eurozone. As a result, there will be more money made available to spend in the core countries of the european union. You could talk about some of the fiscal activism already next year. We wont have to wait too long for that to happen. Nejra they certainly already started. Thank you so much, Valentin Marinov. Coming up, the biggest names in business and government will gather this week for the annual Global Business forum in new york. We will hear from roll and policymakers including joey votto jenny biden jamie dimon. All of that and more live on bloomberg. We are live at the u. K. Labour Party Conference. This is bloomberg. Nejra this is bloomberg surveillance. I am nejra cehic in london. Lets get the Bloomberg Business flash. Viviana Deutsche Bank is transferring its brokerage business to bnp. They will continue to manage the platform until clients have been migrated over. Over 1000 staff will move to bnp as a part of the deal. Some directors want out of newman to step down as ceo. Officials tied to its largest shareholders are behind the move. The board mediate could come as early as this week. Representatives climbing to comment. That is your Bloomberg Business flash. Nejra lets bring you more from the u. K. Labour Party Conference where brexit is on the agenda. Jeremy corbyn is facing calls to campaign for remain in the event of a second referendum. Earlier and edwards spoke to John Mcdonnell. Jeremy the process which we can bring the Party Together. It is a logical sequence is about labor related government seeing what deal is available from the eu and bringing it back to the people. Remain. Of a deal, in terms of the party, we can take the decision once we know what the alternative deal is. I cannot see that. We will see. Brightents go live to and anna edwards. Great to see you. Anna i am joined by Carolyn Fairbairn. Talk us through which business season this relationship. Very good to see you. Let me ask, we heard John Mcdonnell setting out what he thinks Jeremy Corbyn is after. Do you think business understands . Carolyn the problem for business is they want to have far more certainty. Lens on every announcement is does that take them closer to certainty. Businesses want a deal. Want to be up to move on. Welcoment is while we labors position on Customs Union on the kind of the kind of deal they want, we do want more clarity and more certainty. Anna do you want to remain . If we have another referendum that hits an unknown version of brexit, is it something you need to think about . Do you think that ship has sailed . Carolyn we are memsic organization, therefore we would we are to our members a membership organization. Therefore, we would go back to our members. If there were another referendum we would go back to our members and ask them. A lot of must see areas you agree with the labour party. You do see some areas preventing no deal brexit. What other areas of policy do you find Common Ground . Carolyn we think there has been a good constructive engagement. Other areas, infrastructure spending. The commitment to a massive skills upgrade for a apprenticeship levy. There are lots of areas where we agree. There are areas where we have real concern. Anna let me focus on those concerns. Which policies of renationalization to increase taxation, which other policies that break . Who we are so went to stand some of the objectives behind the policy. Program of renationalization for industries. Not to worklicy desk policy that has been proven not to work in the past. In the hundreds of billions. There are 8 million holders who would be compensated. The biggest concern is coming out of brexit, the biggest priority for our country is getting to zero. So far about skills retraining. Why chew up all of that government and Single Service ties on the most Extensive Program that we have seen ever in this country . Not the right priority. Anna any formula by which the private sector would be compensated when those businesses have renationalized. It would be up to parliament to decide. Is there a formula under which this would be ok . Can you not have a policy . Isolyn that reformulation in the normas concern for business is an enormous concern for business. Im worried it is about the future. If you are an investor in the u. K. , there is already a question mark that the brexit has created. Add to that the idea that you could lose your assets at below market rate. It is the biggest red flag over the country. That is a major concern. , theu are going to do this compensation could be at market rate. The aim is this, to have an employee more engaged with business objectives. Carolyn we are huge supporters of that. Already has an Employee Share scheme. E will put some ideas this particular scheme would be incredibly damaging for our country. Renationalization will affect british and foreign firms. It will affect between it will pull billions of pounds out of there also serve reasons why this is a bad idea. If there Dividend Payment is cut, many Share Ownership schemes pay much more than that. The this is going to the treasury. We will create something that will work rather than ideology which doesnt survive the test in the real world. Is a big story we are covering it bloomberg. Does it way into the extent in which government should be involved in collapsing businesses in the travel sector anywhere else . Carolyn when Companies Like this fail, there of 150,000 people who are stranded. Questions. Does raise the government has not bailed out toms cook for businesses they will happen. When the dust settles, there was going to be question about the balance of responsibility between public and private. The important thing will be the relationship between public and private. Anna Carolyn Fairbairn joining us here. A lot of meetings taking place. Nejra anna edwards at the Labour Party Conference. Next, ipo mania. Companies after some highprofile, how will they get on . Details next. This is bloomberg. Nejra economics, finance and politics. This is bloomberg surveillance. Attention returns to Public Markets as companies are set to price offerings and offer some highprofile performances and how these Companies Fair . With details, dani burger. Lets kick it off with ab inbev. Is seeking to raise as much is 4. 8 million and that will make it the biggest second desk secondbiggest ipo. That is half of what the were talking earlier this year. In hong kong, we have henley us. Henluius. This is going to test Investor Sentiment since these are the first listings in hong kong since july. Team viewer, a big one. The biggest in europe this year. Expected to raise between 1. 4 billion euro 1. 4 billion and 2. 3 billion euros. Peloton is seeking to raise as much as 1. 2 billion. There skepticism on wall street. Investors are mixed. Speaking of skepticism we have to talk about we work. Hase working company delayed its ipo amid doubts on valuation, on governments. It might be postponed until at least october. Lets jump into the charts because it has been a tough environment for new listings. Given that recent ipos tend to be bigger and more mature. Sentiment in the broader markets, the 10year yield below 170. U. S. Futures lower. Bloomberg surveillance. This is bloomberg. Francine brexit goes states oes stateside. The British Government promises the largest repatriation in history. Disappointing data. Manufacturing and Services Numbers for the euro zone come in far short of estimates. European stocks extend declines. Good morning, everyone. Good morning if you are watching from a vision of from asia. Lacqua come alive with tom keene francine lacqua, live with tom keene. Tom the brexit thing is a big deal. What is really front and center is this repo thing. We are going to go through that through all of our hours today. We will speak with mr. Dudley at the connect like a. M. Our at the 10 00 a. M. Hour. Tomorrow, a conversation with Christine Lagarde about her time at the imf and some of the Lessons Learned in dealing with a lot of the World Leaders. Tom very good. Why dont we go to first word right now . Heres viviana hurtado. Viviana President Donald Trump skipping the Climate Change debate at the United Nations. The secondary general saying even though donald trump is passing the lead, the u. S. Can still pull its weight. In the race for the white house, Elizabeth Warren overtaken joe biden as the frontrunner in the latest iowa poll in the iowa caucuses. The senator has support of 22 of likely participants. Former Vice President joe biden was second with 20 . The wall street journal reports that full repairs in saudi may take several months. Over to kenya. At least seven have died and many others hospitalized after a school collapsed in they rarely in nairobi. More than a hundred students are enrolled at the school. Officials say it is not immediately clear what caused the building to collapse. 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. Im viviana hurtado. This is bloomberg. Tom thanks so much. Right to it, with yields in south korea, with grim tread data. Grim trade data. We will get to the dollar in a moment. Oil, pretty much stasis. Brent crude 64. 61 a barrel. The vix, a little bit of a difficult ending. The dollar index has been the quiet story today. In euro swissie, this is what the pros look at to look at low yield and strong dollar in europe. It has really broken down, not down to new weakness, but getting there quickly. Francine the other thing pros look at, especially when there is market sentiment, european stocks at the moment reversing their advance. We did have disappointing data in the euro area. We are looking at the pound not only because i am here and i have to take tom out to lunch come about because Boris Johnson to lunch, but because Boris Johnson. Will meet with World Leaders taylor looking at the 10 year treasury yield because Boris Johnson will meet with World Leaders. Looking at the 10 year treasury yield. Treasuries generally turning higher, but looking at the tenure, we are actually weaker. Tom that gets your attention. To get to our guests this morning, i want to set up a chart all through the morning and onto our conversation with bill dudley nader. This is the bill dudley later. This is the fed Balance Sheet. This is not academic research. This is the trend of what a lot of people wanted, qe ending us back to some form of lower Balance Sheet. The other idea was to flatline, which we are learning about. This little blip here is all of the action last week. Up we go to some fort of model of where we are heading. Blackrocks head of etf coverage in london, and on our set this morning, Julia Coronado with some wonderful fed experience as well. I want to look forward, but ive got to look back first. Was it a successful week for the new york fed . It may have been ugly, but it was a successful week, right . Julia defends on how we define success. Got leave the they got the liquidity that the market needed. Calmstely, i think that the waters and gets short rates back down to where they want. Tom im going to go to one of the great hearts of the matter, and this is may be in the friday zeitgeist as well. We have big banks with a lot of liquidity that really dont want to push it out. The fed would like them to push it out, and they are not. Why arent they . Julia there are regulatory areons because they systemically important institutions. They have to hold an extra liquidity buffer. They are under extra scrutiny. It is something that the fed is aware of, but the fed as a committee made these decision to test the balance of what equilibrium is. They made that decision. They dont want to stop early. They wanted to push down as far as they could go, and they waited for a liquidity event to inform that they it they are getting close to that Balance Sheet. Im a little surprised that they are surprised the big banks are hoarding liquidity. Ultimately, they are going to have to keep more liquidity in the system than they thought. Francine does it actually point to weakness in the Financial System that we werent expecting . How much weakness is there . Julia i dont think there is an issue of weakness. The treasury was issuing a lot of bills and soaking up a lot of the cash in the system. That was the trigger for the volatility. I think what we are in is a world with excess reserves. The fed is the primary source of a lot of liquidity. Theyve decided to stick with that regime. This isnt a 2008 signal, i dont believe. I think it is an event that informs them they need to keep more liquidity in the system. Tom let me ask you francine let me ask you what this means for china. The repo rate in china following the most in six weeks because the pboc was out of cash, so there is a worldwide read across. Julia yes, and there is a liquidity crunch in china as well. They have their own situation of deleveraging, and that brings with it funding needs, so they have been experiencing volatility as well. To thislisten discussion of Central Banks, whether it is the fed or maybe all of the challenges of the ecb. Francine speaking with Christine Lagarde tomorrow. What should we do away from the economic talk . Blackrock,ategy for or does the repo battle, the repo debate, does it change the blackrock view . Guest exactly what we just talked about, in terms of reasons behind last weeks repo market volatility, there are things we can put our finger on. We feel like there is good reason behind why we have seen repair rates backing up. What is really important to note is that we are 10 years in to this recovery. The system is quite tight. Thereare pieces here and that is coming under significant strain, and we need to put a lot of attention to those places for signs of potentially things going out of control, which is why we think as we continue to stay invested in markets, it is portfoliotant for resilience by also staying invested in exposures that give you diversification, such as gold and government bonds, because things could go wrong. Sometimes we dont see that coming. Tom where are you expressing this in government bonds . Where does blackrock own full faith and credit bonds . Wei well, what we currently have in terms of the view on government bonds is a preference for european government bonds at this moment because of the expectation for the ecb to potentially surprise to the upside versus expectation, toecially as we head over incoming ecb president Christine Lagarde, who could continue the easing tendency. We also see the benefit of holding u. S. Government bonds any to incoming ecb portfolio, even the have seen yield compression a very long way. They couldome lower, go even lower when markets come under pressure. One may think that they degree of repricing is significant, but we have seen over and over again this year that the diversification benefits government bonds versus equity markets so far this year. You both, Julia Coronado and wei li. Both stay with us. Tomorrow we will hear from incoming ecb president Christine Lagarde, outgoing imf. This is bloomberg. Which we cans by come together is a logical , seeing what deal is available from the eu, and then putting it back to the people, in terms of a deal and remain. Can jeremy is saying, we take that decision, once we know what the other at a deal is. I cant say that we could get a better deal than remain, but we will see. Laboure that was the conference in brighton, with the u. K. Shadow chancellor. Anna edwards interviewing him. If you look at some of the pitfalls, if you assume that there is an election from now until the end of december, you have to spend a little bit of time focusing on what the labour party is and what they stand for in brexit. Jeremy corbyn has been very and big with very ambiguous. Technically, he doesnt want to lose any votes because there have been people that are pro brexit but labour. Denisi John Mcdonnell, see johnd then you mcdonnell, considered to be the brains behind the operation, who says we may not get a better deal than remain, but once a second referendum. Or in athey have a say, parliamentary system, are they to the side . Francine they are so far behind anyone, they have a crucial role to play if you have parliament with the brexiteers and the remainers. So if they can coalesce and try to find a government of unity, then they have huge power to try and play through and see it through to either extend or delay, or go to a general election. Lets get back to our guests, julio court guests, Julia Coronado of Macro Policy Perspectives and wei li of blackrock. Thed this be a shock to system, or is it u. K. Contained . Is one ofhink it already many shocks to the system. I think we are fully in the cycle where businesses have to grapple in the capex cycle where businesses have to grapple with uncertainty in the system. We are not going to get a magic brexit solution by october 31. We can expect this to be dragging on. The solution wont be clear, and there will probably be many more years of working this out. That leaves a lot of business is having to grapple with not knowing what the rules of the road are going to be years down. The same applies to the u. S. China trade war, and many other potential trade conflicts. I think we are in a world of a lot of Political Uncertainty that is now a salient part of doing business. It is not just a risk. It is a reality. I think that is the mosaic it fits in. We saw the pmis this morning. It is starting to weigh on the ability to invest and the ability to do business. Francine i dont know whether we have a probability attached to a no deal supposed to a deal or extension, but what does it mean for your appetite in u. K. Assets . Wei what we have seen so far over the course of the last few weeks is the chances of no deal has decreased quite a bit, which is why we seen the cable about 1. 24. But we are starting to hear from clients increasingly that there is a bit of brexit fatigue. It is really hard to bet on the outcome because nobody knows what will eventually happen, so increasingly, what they are coming to us is, can you help me analyze my portfolio so we dont have binary exposure to the outcome of brexit and u. K. Politics, so that i can think of broadly diversifying my portfolio through this cliff edge kind of date target at the end of october . In terms of flows, we have seen investors shying away from u. K. Barring the exception of a few interests in u. K. Government bonds, and that has more to do with the fact that the boe is becoming quite a bit more dovish in comparison with before. Li and Julia Coronado, we will come back with our conversation and what we see in the markets. Coming up, this is an important interview for those in the united kingdom. 3 00abour party at the p. M. New york our. We will be there on brexit fatigue. This is bloomberg. Viviana you are watching bloomberg surveillance. Thomas cook zero bonds plunging. Of their more than 2 3 value after the company collapsed under piles of debt. Thomas cook has canceled all flights and vacations. The British Government plans to charter planes to bring home more than 150,000 stranded customers. Directors want adam newman to step down as ceo after the firm delayed its muchanticipated ipo. A Board Meeting could come as early as this week. Representatives for both companies declining to comment. Google bracing for another landmark privacy decision from the eu. Ofrts may clarify the scope the right to be forgotten law that passed five years ago. It forces Tech Companies to delete links to personal information on request. The court questioning if the right should apply globally. They could reach a decision as early as tuesday. That is your Bloomberg Business flash. Tom thank you so much. Francine lacqua and tom keene in new york, getting ready for an International Week of translation in midtown manhattan. Youvey, francine got the scooter thing going . Surveillance scooter, not electric. Tom you have no idea how bad new york streets are. Julia coronado is with us, and wei li with blackrock as well. I want to talk about risk. There is a visible risk wei li, and the invisible risks out there. On a mathematical basis, do we know where we are and where we are going . Knowwell, we cant precisely where we are and where were going at the same time through the certainty principle, but we pay a lot of attention to geopolitical developments so far this year. We have a political signpost dashboard trying to capture to what extent markets and News Coverage are paying attention to specific risk events, and currently, trade tension between u. S. And china, as well as the middle east goals tension is ulfy much middle east g tension is very much out there getting attention, and that is why we continue to push for resilience in portfolios. Tom part of this, whether it is the trade numbers overnight that were grim, are we working within risks we can measure inside the are youndogenous, or worried about exhaustion us andks about exhaustion shocks . Exogenous exogenous risk of shocks has risen. How much is trade uncertainty weighing on the economy . The estimate is that it is going to subtract 1 off of gdp growth. How much trade uncertainty there is an translated it into gdp, and a lot of it is still ahead of us. Weve already seen it subtract from investments, and that is a primary channel through business investment. Francine are we risking a recession or just a slowdown of Global Growth that is much deeper than we realize . Wei if we look at potential impacts of trade, translating to growing atis still low 2 , so we are talking about a situation where roast is where growth is slowing down, but it is still growing. We are late cycle in the u. S. Economy, but our study actually shows that assets, risk asset performance at this part of the cycle, actually tends to be quite ok, higher than the average throughout the cycle. What we are witnessing from clients is that even though they dont like every thing they are seeing, they want to stay invested for fear of missing out. Tom this has been wonderful. Ei li, thank you so much we will continue with dr. Coronado. Coming up later, and exceptionally timely interview. Jon ferro and i will speak with deadly, former president of the new york fed. This is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Francine this is bloomberg surveillance. The biggest names in business and government will gather here in new york. We will hear from top Bank Executives, World Leaders, and policymakers. We will speak to jamie simon, Narendra Modi, mark carney, Christine Lagarde, and more. If you had to pick the top stories, it would be something , negative rates, and trade. And you saw that in houston some of the ramifications there, but more than that, negative ofes were at a Tipping Point , how does this experiment continue . Francine to be fair, weve had that for quite some time in japan, and theyve said this is not really working. Onto corporate news. Thomas cook has collapsed under debt. The travel company has filed for administration after talks with creditors failed. All flights and bookings have been canceled. The government is working to bring home hundreds of thousands of stranded vacationers. Trading has been suspended, and eurobonds have plunged more than 70 . Joining us for more is our european stock reporter. Why did this happen now . This is a huge collapse, the biggest repatriation of u. K. Citizens in peacetime. 150,000 tourists had to be brought back home. Thats right. It is quite a story today. Thomas cook was actually in talks, and until last week, they were supposed to bailout the company for about 1. 1 billion. Last week, tomic cook last week, thomas cook and its investors announced they would need more for the bailout to work. They stepped back and he talks collapsed. Is of the reasons, there Global Economic uncertainty, and also, it might be thinking that the returns it might get from this investment might not be that high. Francine tom and i were talking about it before coming on air. This is the highest profile casualty of the decades long shift in the travel business, but why did they not see this coming. Could they have not prevented travelers from traveling to their destination . Reporter youre absolutely right. I think everyone saw this coming. We been watching the stock in this company for about a year now, and it has certainly been in trouble. The main reason is too much leverage. They were very confident they were going to see a pickup in business, so they just kept going. The rates are very low, so Many Companies borrow, but they did not see a steady stream of revenue that made up for the debt burden. Eventually it collapsed under its 2 billion pounds of debt. Tom were they ever profitable . My memory of them, and for americans, this is hugely foreign, but where they ever profitable, or were they always just staggering quarter to quarter . Reporter it is a 170yearold british company. It is legendary. It was huge in the 1970s. My grandparents friends used to use them. , now almost no one buys these package tours. People use sites like expedia and booking. Com. It is all about Online Travel resources which are much cheaper to use. Tom thank you. I used thomas cook wants to book a trip downtown. Francine it didnt go great, either. [laughter] tom let us get to our new york city first word news with viviana hurtado. Viviana democrats are ramping up pressure on President Donald Trump after a phone call with ukraines president. U. S. House Speaker Nancy Pelosi signaling her readiness to take stronger action against the president. The speaker calling the president s moves a grave new chapter of lawlessness. Adam schiff called the actions a profound violation. Trump said he has no intention of meeting iranian president rouhani come but leaving the door open president rouhani, but leaving the door open. This week, british Prime Minister Boris Johnson hopes to nail down a brexit deal on the sidelines of the United Nations general assembly. In addition to meeting with key eu leaders, he is also planning to meet with President Donald Trump to discuss a freetrade agreement with the United States. Over the weekend in hong kong, protests escalating. Violence erecting in several parts of the city as unrest continued for a 16th straight erupting in several parts of the city as unrest continued for a 16th straight week in hong kong. 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. Im viviana hurtado. This is bloomberg. Tom thanks so much. Im glad you did the hong kong protests, an important story over the weekend. Right now we want to pick it up on politics and explain to a global audience what is going on. I thought it would go domestic and narrow here. Dione. Do that with ej when republicans held congress over president obamas aministration, it seems like missing box of staples might be enough to launch 100 subpoenas in months of hearings. The gop electorate is dominated by trump supporters. Provides protection from opponents inside their own party and from their own voters. That is a remarkable statement. Has known the 14 shades of republican parties since lincoln. What an extraordinary statement by ej dionne. It really covers the weekend we just observed. We are getting to a completely new Majority Party calculus. Trumpshis is donald Republican Party, and no doubt about it. Controversyrainian is kind of like a replay of the mueller report. If you look hard and long enough, it confuses the public, and the gop leadership is not speaking up. Tom it is not the traditional issue. It is a battle within the Republican Party. May i suggest, an almost oneparty nation . Marty well, i think it is probably multiple parties, and dont forget there is a split in the Democratic Party as well. Maybe you saw over the weekend that those with warren that Elizabeth Warren is ahead in iowa. If joe biden cannot win the iowa primary, he is in big trouble. The whole issue of how progressive the democrats get versus mainstream democrat is an important issue on who is going to be the next president. Francine can we just go back to ukraine . President trump is basically accused of courting foreign help to discredit a rival. Who does it make a difference to if this is true . Marty clearly admix a difference to the democratic leadership. There has been reluctance to going down the impeachment route. This may be a step too far. But significantly, you are not getting any republicans saying this is too much. Francine right. So what does it take for someone in the Republican Party to say i think this is too much . Marty for those of us who watch this, you sort of wonder when it does get too much. We will just have to see how it plays out. Tom dr. Coronado with us as well this morning. I would say your world is the heart of Marty Schenkers world, in that the outrage in america over 10 or 14 years has been subpar gdp, a gdp that is an acceptable. Within your prism as a leading macro economist, is to point politically acceptable to both parties . Julia there is always a politician who will promise you better, but in order to deliver better than a slow growth economy, which is the reality in an aging society, you are going to have to really unleash a lot of fiscal stimulus. Tom i thought we just did that. Julia we did, and it is not sustainable. 3 gdp is not sustainable in the u. S. That is a political reality that there is always somebody trying to promise they can. It is just not a reality we can achieve over the longer run. Francine what is acceptable to the u. S. Voter . If trump is spending so much time trying to manage the to present, as , long as the job market stays hold, find . 2 , as long as the job market stays hold, fine . Julia basically, consumers are feeling pretty good. It is a very strong job market. It is a decent economy. Theres a lot of other issues under the surface, but there isnt a huge wave of laborhantment, so the market is probably the most important thing, that its strong and delivers decent wage growth. Marty to me, the democrats refusal the democrats refusal to acknowledge any of the benefits of Donald Trumps policies is the reason they could not take the white house. The refuse to a knowledge any of the achievements of donald trump. The economy is doing well. Employment is at record lows. But they constantly talk about his irrational behavior rather than acknowledge his achievements. Francine Julia Coronado, Marty Schenker both stay with us. Coming up, today former you end to carry former u. N. Secretarygeneral bunki secretarygeneral ban kimoon. This is bloomberg. Those are passengers at mallorca airport. Keep an eye on the stranded u. K. Passengers stranded because of the thomas cook collapse. It is the first time in peace time that the u. K. Government will repatriate travelers stranded on vacations. About 20,000 jobs are at risk at thomas cook. There are 150,000 to 160,000 passengers stranded. Tom , the ugly american tom mi the ugly american . I didnt even know where it was on the map, and i have read all the books. Francine you have to come to london a bit more. We will go on holiday in mallorca. Refusing to rule out war in the middle east after additional military aid was sent to saudi arabia. Doubts remain over how fast saudi arabia will be able to restore loss output. Joining us from london is bloombergs iran reporter. You make us smarter about some of the zeitgeist in iran overall. We are expecting President Trump to give a speech at the u. N. Tomorrow, iran left, right and center. Whether the iran foreign minister and president will walk out . Reporter i havent got any information on what their response will be. We know that president rouhani left a few hours ago from tehran to go to new york. He left with a much smaller entourage than normal because most of his staff, all of his deputies, i think a large number of the traveling press corps from iran were denied visas by the u. S. Government, according to iranian news reports. With a fargoing smaller team this year, and he is obviously speaking thursday. Im not sure what the reaction will be, whether they will even be in the chamber. We will have to wait and see. Surely, iran is going to be a major plank of trumps speech tomorrow. Francine irans foreign minister refused to rule out war. The u. S. Seems to be working on a diplomatic resolution, but says they are ready to take action. Was the Iranian Foreign minister speaking to a largely domestic audience . Golnar he said hes not confident that things wont escalate into a war. He says he cant say that there wont be a war. But after that, i think there have been some efforts in tehran from other officials to kind of clarify that position slightly. Morning,uhani this before he left for the united saying thatehran hes got some kind of Peace Initiative he wants to bring to the u. N. , something to compete with the u. S. Naval coalition and this coalition to galvanize defenses on behalf of the United States and saudi arabia in the region. Rouhani is coming to the United Nations with a competing plan, something that is going to involve all of the states of the persian gulf to join iran and try and come up with some kind and atement for peace, least ease tensions and hostilities in the region. Tom thank you so much. Greatly appreciated. Julia coronado continues with us, and martin schenker, our chief content officer, with his many years in washington. What are the politics of the president s speech tomorrow . Is he just going through the motions, or is there a real message to be had tomorrow . Stage. Well, he loves the he will probably try to extend his vision of a u. S. Centric world, in which regions take care of themselves as opposed to movedobal vision that has politics in the last 40 years. Tom buried over the weekend was a remarkable site. The president of the United States in houston with the really interesting leadership of india. I cant imagine that i would ever say what i just said, but there it was. Marty its kind of interesting when we talk about the normalization of the odd. There was a time when nobody meddled in anybody elses election politics, but there it was for all to see. It is quite extraordinary. Francine what will this you in general a simile be remembered for, iran . Climate change . Tom traffic. Marty stays at the ritz the entire week and cant get home. Francine but if you look at policy, it is different. The traffic is always really bad. Marty francine, youre absolutely right. The traffic is always horrendous. It is just more horrendous this particular week. But i think the dynamics between donald trump and the rest of the world wont be the thing that come out of this. Do the iranians walk out when donald trump comes up to speak . Of brexit and north korea and the rest of the hotspots of the world sort of take a back to the personality and the vision of donald trump. I think his interactions with the rest of the world will be what comes out of this. Francine but if you look at the Climate Change summit, getting a snub from President Trump, but also president bolsonaro of brazil. Marty the rest of the world sort of leaves them behind. Are owner Michael Bloomberg has made the point it is consumers that are going to dictate Climate Policy rather than politicians, and i think you are seeing that in actions throughout the worlds cities, states and countries. Francine thank you both. Julia coronado from macropers pectives and Marty Schenker of bloomberg stay with us. We will hear from indias others. Modi and all of that and much more, talking about brexit, emerging markets, and the world economy. This is bloomberg. Viviana this is bloomberg surveillance. Deutsche bank is transferring its prime brokerage business to bnp. The german lender will continue to manage the platform until clients have been migrated over. As part of the deal, 1000 staff will move to bnp. Say theynd facebook removed 365 fake accounts linked to spains conservative popular party. They say the accounts were used to influence Public Opinion and spread spam. Twitter says the accounts were identified as falsely boosting public sentiment online in spain. The accounts were active before spains april 29 general election. Saudi aramco naming more tanks to work as book runners more banks to work as book runners on its ipos. And ubs. Ude barclays that is the Bloomberg Business flash. Tom very good. Thanks so much. Oury schenker with us come chief content officer, and Julia Coronado with macropolicy perspectives. She was way out front on calling for dampened gdp. I want to reset for october and get to the october 30 meeting. The reset is the silliness of the dots, all agree. We could talk for an hour about the silliness of the dots, and this thing that is forward guidance. We are migrating toward the coronado regime, which is risk management. Explained that. Julia chair powell was pressed on this repeatedly during his press conference. They dont want to give forward guidance. He said several times we are going to take this meeting by meeting. As you say, the dots dont really give good guidance. The median. Didnt show rate cuts in june, and they have the median dot didnt show rate cuts in june, and they have cut twice since then. It is about how they assess the risks to the outlook. Francine we had one guest last week suggesting the chairs dot should be much larger than the other ones. Are we closer to some kind of agreement, or at least a truce . Marty it doesnt seem like we are and we are any closer, but everyone is trying to read the tea leaves of negotiations. Ultimately donald trump will decide if there is a trade deal or not. You are not getting a lot of political pressure for there to be agreement. The democrats are not up in arms over this china trade issue. So donald trump feels he is winning this trade war, and he doesnt see any reason, he said so himself, that he necessarily needs agreement. Tom the news today is korean data plummeting, and german data really wasnt all that good. This is so much winning, i cant stand it. Julia the risk is that it gets out of his ability to control this sort of pendulum weve been swinging on, from optimism to pessimism, just as the markets start sliding. He announces some sort of positive development. Ultimately, what we are dealing with his actual tariffs, and a lot of actual uncertainty weigh on the economy. Tom we will have to leave it there. Think you so much thank you so much. Bill and bauder billing bauder bill bauder of citigroup. Tom this morning, call it what you will. Quantitative tightening it is so over. The fed could or should. Of citigroup, later this morning. The former new york fed president , william dudley. Grim export and export data. Germany, too. And call it last mover disadvantage. Good morning, everyone. This is bloomberg surveillance, live from our World Headquarters in new york. Francie likewise is in for the weeks festivities as wealth or it i believe tomorrow you speak with madame lagardere. Francine yes, tomorrow, speaking with Christine Lagarde. We are trying to figure out we are still looking at repo, iranu. S. Ing at the tensions, and we had pretty bad Economic Data with an impact on europe. Tom the data i thought was important, with germany and south korea again. We will dive into the purchaserepurchase agreement with william bauder. Right now in new york city, your first word news with viviana hurtado. Viviana President Trump is addressing the Climate Change debate if the United Nations. Is companieschief sees filling the u. S. Government void on climate. Growing Department Says tensions with iran are being addressed. I think the president has indicated all options are on the table, and he continues to be with his National Security team to explore these options. We are looking to build an International Coalition to respond to irans aggressive activity. We know that the secretary, icon pao come has said is physically twossible for the who these conduct this attack. Trumpa president donald meeting with Prime Minister of india modi. Mr. Trump vowing that two countries will conduct joint military exercises and for Space Exploration per this week, Boris Johnson hopes to nail down a brexit deal on the sidelines of the u. N. Ga writing new york. In addition right in new york. Johnson is also slated to meet with donald trump, this to discuss a freetrade agreement with the United States. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am vivianatries, hurtado. This is bloomberg. Tom equities, bonds, currencies, commodities. Some nice nuance and foreignexchange. Negative six on futures, we are now flat on the equity. Inodollar, i will get to it a minute. Oil turning with brent crude under 65. Angst on friday. 15. 35. Dollar strength, it is fractional and not up to recent record Straight Record strength. It is expressed most interestingly in a strong swiss franc. The pros look at europe euroswiss he, it is called. Francine looking at european stocks, they are down we had disciplining data that seems to be overshadowing easing concerns about relations between america and china, but on america and china, something we need to take two seconds on is that there was a prime visit by a chinese delegation that was canceled by the u. S. People are trying to figure out what that means for trade talks. The euro is sliding, and im 1. 2436. At the pound, tom over the weekend, there was no other topper for global wall street, which was to be smarter in the arcane complication of trust agreements. The shortest trust, busy aliens of dollars overnight. We are thrilled to but zillions of dollars overnight. Citigroup, theof joining with Brown University on the politics of the moment, talking with Wendy Schiller about it as well. Villa bauder, this is so far away from your textbooks at yale. It is the u. S. Balance sheet, a huge triage, an expansion in the option nala of what we do from quantitative tightening in the option nalality of what we o for quantitative tightening. There is a temporary expansion of liability of assets. It is not a reversal, a move back to quantitative easing, this is one off dealing, a small mess. Sure i will hear that from dr. Dudley at 10 00. But the arching theme is all of these Central Banks bring in paper, and that supports the price and keeps them down. Is this a policy for a lease, or do you suggest it could permeate through society and join negative real rates in the u. S. And negative nominal rates in europe. How is this working out . Llem the central bank have to read learn the art of managing excess reserves without having the most it the massive glut of executive reserves. Well. Does perfectly with a minimal amount of reserves. We will file figure out how to do it again. Has beenor one embarrassing, but nothing to be unduly concerned about. Moreine we want to talk about politics with wendy, but is there something ugly . You say that it is a little bit technical and we should not worry about it. When the plumbing does not work i am talking but the repo rate is there something that is wrong with liquidity . Willem i dont think so. This is the manifestation of the learning process, Central Banks theye to relearn the have to undertaken on a daily basis this will be a daily event. Francine lets go to Wendy Schiller from Brown University, chair of political science. When you look at the world and the uncertainty because of geopolitics, trades, korea, brexit, now there is iran. Which is the one that markets misunderstand or are too complacent about. Nobody likes uncertainty. Business does not like uncertainty, but politicians do not like uncertainty either because it makes voters nervous. That is a big concern for everybody, at least in washington these days, how will voters perceive it . Right now the republicans are holding firm. They still believe in trump there they are not unduly affected by the trade situation. By the tradected situation. They are still not abandoning the republicans. As long as that partisan filter holds, the republicans do not feel as nervous or at however, it seems to be cracking overall. In other words, general confidence in the economy if lending tightens up, Mortgage Rates are going to go down. But nonetheless, if things start to shift, we do not know how quickly that nervousness will manifest on the republican side. Tom the heart of the matter, as i mentioned with professor on the is the efficacy part of the american public. Are we processing economics for the elite and the banks come even that is a good thing , even if that is a good thing, or are we pushing it aside for the retirees and middle class . Wendy we have to think about the bulge of voters. People who are retired vote in large numbers, so they have a disproportionate impact compared to everybody else. The unemployment situation is still really good. That rightink about now, the voters are not unhappy with this. But it does but if it starts to slide, trump will understandably lame wall street. It has been a good target for a long time and that will continue will understandably blame wall street. That has become a good target for a long time and will continue to be. Tom we have had comments from you before. It comes down to the relationship of these institutions, the new york fed, and the Federal Reserve as well with the broader american public. Is that tom honored timehonored relationship from 1812 risk echo that from 1912 at risk . The relationship between wall street and main street has never been great in this country. There is always underlying concern that wall street is working at the expense of of main street. In a great financial crisis, and sentiment was boosted, it is making an occasional come back. This would not be dramatized. This is as old as the fed. Wendy one thing we have been francine one thing we have been watching for in politics is that President Trump and president modi are almost hand in hand on this Border Security over the weekend. Ist does that actually that a signal for u. S. Voters . What does it mean in terms of International Relations . Willem i think it is clear that the United States attaches great importance to the development of the relationship with india. Going to be a major Global Economic power. It is already an important economic player. Prelude to a much deeper engagement in a range of fields, from space travel to tariffs, in which the u. S. And india are going to act. Bencine we will back with Willem Buiter, and also Wendy Schiller. Coming up tomorrow, will hear from Christine Lagarde, asking her about her time at the imf. This is bloomberg. Viviana you are watching bloomberg surveillance. Gains, as traders ssess the middle east situatio peered doubts remained over how quickly the Saudi Arabian kingdom can store lost output. Crude increased half a percent after its biggest weekly advance since january. Adam newman is wanted to step down from the ceo after softbank is also behind the move. A Board Meeting could come as early as this week. Representative survey of both companies declining to come in. Bonds are plunging in early trading. Travel company collapsed under a pile of debt. Cook canceled all flights. It left more than 150,000 stranded customers. That is the Bloomberg Business flesh. Francine thank you so much. In the race for the white house, Elizabeth Warren has overtaken joe biden as the front runner according to the latest iowa polls in the iowa caucuses. The massachusetts senator has 22 of likely participants are joe biden is second with 20 . We are back with Willem Buiter, and Wendy Schiller from Brown University. Wendy, is it all about democrats figuring out whether they need or whether there is a candidate who is more centrist that can be donald trump or whether there is a candidate who is more farleft . Wendy it is more talking about charisma and rousing voters on the campaign trail. Elizabeth warren has performed much better than pretty much anybody thought she could on the direct campaign trail. She is attracting a lot of support. It resonates in iowa and there are issues with trade. And the farmers do not get everything they need, there is a possibility she could pull voters and farmers away from donald trump. That is the appeal of Elizabeth Warren. Biden will have to counter it. It has been a surprise to the Democratic Party. Biden will have to counter it, and the biggest loser right now is Bernie Sanders. Rancine professor schiller, who would you vote for if you are centrist . Francine going back to the center wendy going back to the center, that is a big challenge for a. Tom after the conventions, do we recalibrate back to the center, to the teaching courses that brown, or is that done . Wendy in the general election, you recalibrate. Moderate democrats, independents , they figure it out, with the economy and their pocketbook. But in the primaries, it has been this way for a while, but the most left and right voters are the ones to get out the door. They can determine the nominee, but it is a long game. Tom how does the senator from massachusetts do that . Wendy well, that is a very big question. I think she is focused most of all on winning the nomination. If she wins new hampshire, which would be the expectation, to take that away from Bernie Sanders . She can win the nomination. You pick a more moderate vp. I am not sure that wins the race for you, but the democrats are counting on a downturn in the economy so that theyre more economic populism message works against donald trump. Tom Willem Buiter francine Willem Buiter, how difficult is it to determine what a president warren means for the economy echo willem i didnt hear the question, sorry. Elizabeth warren is the nominee, what does it mean for Economic Policy in the u. S. . Willem Elizabeth Warren as president would mean a big reversal in the deregulation policies. For the rest, it would make a huge difference because the house and the senate will continue to be divided, the democrats and the republicans. Permanent state of semi paralysis that we have thator the last 10 years would likely continue. But on the deregulation side, she would achieve major changes. Wendy schiller, one final question to you if i could. We have got to get to another debate. What does the senator from massachusetts do with the senator from vermont and the next debate . How does she handle the narrowness and yet in immediacy of Bernie Sanders . Wendy i think she keeps doing what she is doing. Her big advantage is that she has a record on Consumer Protection well before she got to the senate. But then she has continued to pound that in the senate and she has things to show for that. That is the big difference. She has a plan for everything. She has credibility on an issue that is of increasing concern for voters, whereas sanders does not have that established credibility. She needs to stay on that and make yourself as credible as possible. That is her edge on Bernie Sanders right now. Tom Wendy Schiller at Brown University. We will continue here, a wonderful time of year in new york. If you are not out in the streets, it is sporting out there this morning. This is lexington avenue. Much worse five minutes ago, but area inhis 15 block of midtown manhattan. Francine look while the screen francine look while with Christine Lagarde. This is bloomberg. Erg. Tom good morning, everyone. Bloomberg surveillance. We welcome you to our studios in new york. Francine lacqua, you are here for a week of United Nations festivities, including legal bloomberg including the Bloomberg Global summit as well. Willem buiter is here with citigroup. Many things to talk about, but one of them is the dollar. Only go to frankel and the rest as well. Where, is a point this dollar the same as that dollar, or is it a new dollar . The chart is simple trading range for four years, the dollar has been in a broad trading range, there is the fear of Dollar Strength. Is it a new dollar . Willem no, it is the same old dollar because it is the same old u. S. At the very end of a very long recovery, the u. S. Is loosening policies. But probably on balance, loosening it less in months. Have moreeurope, we data points. Two i think some underlying new Dollar Strength is not at all surprising. Tom your colleague catherine man owns the phrase dysfunction when it comes to the chinese dialectic. How dysfunctional are we right now when expressed with the dollar . Willem i dont think there is any great dysfunctionality. It would be good if policies could be signaled more clearly. Has given up on any attempts to give longerterm guidance, and it is just hiding behind this datadriven. Again, things are relatively minor issues. Overall, the u. S. Economy, a lively european economy is still in good shape compared to strength. It is likely to favor the dollar. Francine is the fed right to cut Interest Rates as an insurance policy . Willem i think they have done just about what i would have done at this point. I see no obvious reason, unless there is dramatic change, in were summing in worsening the Economic Data. Tom Willem Buiter, thank you so much. A stronger dollar today, not up to new highs. A stronger dollar as well. Francine stay with bloomberg because there is plenty coming up. We will hear from top Bank Executives, including jamie dimon, michael corbat. That is life. T. Michael corbet. We will also talk about negative rates, forays into wall street clients. All that and much more right here on bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Francine this is bloomberg surveillance. Good morning. If you are listening to radio. Some of our debt from our european headquarters, our bloomberg Global Business form kicks off on wednesday. We will talk to Bank Executives and policymakers, including jamie dimon, david solomon, mark carney, Christine Lagarde, among others. Stay tuned for that. The conversation will be on trade come on brexit, and it will be on negative rates and the banking landscape. Tom very good. It will be most interesting, to say the least. Later today, we will speak with the new york fed president , the former new york fed president , william dudley. And the uproar over his two essays for bloomberg unfed independence as well. We are looking forward to that. Our first word news, with vivienne hurtado. Viviana in the race for the white house, Elizabeth Warren has overtaken joe biden as the front runner. This in the latest iowa polls p the iowa caucuses, the massachusetts senator has support of 22 percent of likely participants. Joe biden was second with 20 . Democrats are ramping up pressure on donald trump after nancy pelosi signaling stronger action against the president to the speaker calling the president s moves a grave new chapter of lawlessness or the House Intelligence Committee chairman, adam schiff, calling his actions a violation. In hong kong, protests have escalated. Violence erupt in in several parts of the city violence erupting in several parts of the city for a 15th straight week. Several transit hubs have been shuttered across the region. Hong kong is bracing for a surge in demonstrations. Thronesdent game of fans, that would be tom and francine, camera phones won best drama for the fourth time in the emmys. Comedy st that show won four awards. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries, i am viviana hurtado. This is bloomberg. Conferencehe annual for the u. K. Labor party is off to a rocky start. Sometimes they parallel game of thrones purge Jeremy Corbyn is struggling to keep his Party Together as senior members are looking for an unambiguous success. John mcdonnell speaks with an edwards. The process i wish we could bring the Party Together, maybe the country as well. , lessa logical sequence about the government and saying what is available for the e. U. At that point in time and then putting it back to the people. So in terms of a central deal, what jeremy is saying is that as a party we can make that decision once we know what the alternative deal is. Acannot see how we could get better deal, but we will see. Francine lets go straight to edwardss to honor edwards. Na are the days of labor under Jeremy Corbyn actually number . Ann there was talk over the weekend over there is talk weekend that maybe the party is getting ready for a postcorbin era. That has been denied by leadership. Plowing ahead are with a Jeremy Corbyn labor party, very much to the left of center of the recent history of the labour party, very confused on the International Audience im sure on brexit. What Jeremy Corbyn wants them to go with him on his a pitch that says we will have a general election, there will be a labor government, and the labor Prime Minister goes to brussels to negotiate the best exit deal he can, that Jeremy Corbyn can. You give the people the choice on the ballot. Once again, the labour party not having to come back down to decide. Why you have this tension at the top. Francine so it is quite odd and i dont know if we have seen anything like it there will be two votes, one vote on monday to figure out exactly what the labour party wants. That they are not behind Jeremy Corbyn. To be aere was going vote tonight. Over the weekend we had outspoken critics of Jeremy Corbyn. The backdrop is that the other center camen the out more unashamedly for a referendum, and may be remain or may believe. There were many disgruntled people in the labour party, the membership of which is very much more remain, and they want to leaders to come in on that. Jeremy corbyn is trying to cap the two sides of the Party Together. How close are the remaining laborites the associated with the democrats . Are they linked at the hip or are they not on speaking terms . Has lost labour party more than 10 mps sent to last Labour Party Conference. Some of that has to do with brexit, some of that has to do with antisemitism and other reasons. But certainly it is to do with the leftleaning nature of the party now, and the influence it is under, and some mps in the labour party do not see a future in it anymore, and they have 52 of it. I would like to say we were not see any more of that, but it seems likely that will happen. Just as from the conservative party, some members of parliament there feeling that is too right and they need to left of center. Francine bloombergs anna edwards there for us. Stay tuned for her interview with the labour party shadow. That is at 8 00 p. M. In london p lets get back to our guest host, cameron price, special economic advisor. Cameron, welcome to surveillance. Willem buiter, thank you for staying with us. If you look at the economy of the u. K. , it is slowly going down. There is no doubt that the fear and uncertainty about brexit are already weighing, especially on the business end of things. Capex is weakening. There is massive uncertainty that could be resolved. Francine what does that mean for markets . Is it contained if something bad happens . On exactlyit depends what happens. Certainly the market has been positioning short sterling on the basis that it is sort of a circus or a clown show, and that view has been materialized in the actual events. You get to a point where there are no marginal sellers. We have reached that over the last week or two. The sterling has appreciated on anodyne comment from jeanclaude juncker. Sterling has sort of bounced over the last week or two. We should not read too much into the legitimate optimism since the outcome of the month. Tom what is your exposure and london to all this repurchase agreement . Is it a global exposure or is it discrete to the new york fed . Cameron it should be relatively contained to the u. S. It is very interesting, but it is also quite technical about the transmission mechanism of Monetary Policy. I think it speaks insofar as there is a global impact, it speaks to the need to coordinate between Bank Regulations and, on the one hand, Monetary Policy on the other hand. Thenub of the issue is that way the fed conducts Monetary Policy now conflicts with the incentive the banks get from global regulators. In terms of certain Bank Reserves. Central banks are extremely valuable assets, and banks are much more loath to deploy them in the reflow market than they would have been before the crisis. The fact that the fed has designed this policy of abundant reserves, not necessarily totally ignoring what the bias and the regulations are saying and incentivizing banks to behave, but there needs to be more coordination between the two to get an effective policy mechanism. Both of them will stay with us. Coming up tomorrow, we hear from the ecb the outgoing managing director of the imf. An extensive conversation. This is bloomberg. Tom bloomberg surveillance. Francine lacqua and tom keene in new york. All of global wall street riveted to what is going on in the socalled repurchase agreement market. We are wiser with Willem Buiter with us. Willem buiter of citigroup, of course, looking at the macro economics. You heard him earlier saying it is a kerfuffle. Cameron crise of bloomberg Market Strategist as well. That shows china assets as well. I took them out. Fed, ecb, ands. , boj assets as well, 14 trillion large. , wheret logarithmic slope matters. I guess we flattened out here little bit. Cameron crise, is this about the shift from qt to wherever we are going . Is that the heart of the matter as we identify qe4 . Cameron qe4 and tom it seems like a larger Balance Sheet to identify cameron that is not to eat. Qe. Hat is not we are going to grow assets by x amount. We are talking about shifting toward organic growth, targeting the liability side of the Balance Sheet because the assets are backed by liabilities. Those include not only Bank Reserves, which is what Central Banks print. It prints, if you will when they bond buy bonds for banks. Demand for crash the public demand for hard cash, and also tom a lot of good work over the weekend. Mentioned to Willem Buiter before, cameron crise, the distinguishing feature is many really big banks are reticent to go into the markets. Have you identified where that reticence comes from . Cameron yeah, from regulation. Stick that fast for the american Financial System . Cameron ultimately, it is going to have to be that the fed is going to have to adjust how it conducts policy. One through targeting, if you will, not the asset side but the liability side, saying we want Bank Reserves to be steady. So as demand for currency goes up or as the treasury essentially deposits money in their account, that would mean that the asset side would have to go up and the fed would have to purchase security. When it comes to day to day liquidity, this goes back to the precrisis era, when there was no abundant reserves. When there was a shortterm need for liquidity, the fed would conduct operations. Given how opaque things are now, they probably need to have a permanent repo facility, which there has been some discussion about. It is the obvious solution and alongld align fed policy with the fed track on the ecb, where there is a floor and a ceiling. It is a corridor rather than a current floor system. Francine the concern is that there is not a permanent fix and the and that we could have serious financial repercussions to the rest of the system . Fix is notpermanent actually that difficult. If they implement a permanent repo facility, that means the bank that needs cash would tender treasuries for the fed and get cash in return. It is a fairly simple and not particularly difficult process to implement. Absolutely. It is amazing that there is an issue. You have to stop operating a corridor system again. To do that, the way to do that is to stand ready to provide funds to banks who need it. End of story. Tom do we have a nostalgia to go back to another time . I agree with cameron on the efficacy as we infuse this policy. Nostalgia hereh to try to get the gdp back in the 2006 bottle . Willem i hope not because that is going to be impossible. Massively where increased reserves are the norm, because of the relations, you , but are they to historical precrisis standards tom why are ubs and Credit Suisse having this problem . Why arent they having problems like this in switzerland . Cameron because the transmission mechanism policies are different. The thing to understand about the u. S. And the repo market is, youre talking about going back to 2006, 2007. Inthat time the repo market the United States was 100 the size of the treasury market. Now it is 23 . That is the function not only of treasury issues going up, but the disincentives applied to banks. Repo is a very low margin business, and it is not an effective use of a banks Balance Sheet. The most valuable commodity in the world these days are the bank Balance Sheets. There are these disincentives for banks to grow them. The hurdle rate is higher than it was 10 years ago. Francine what is the repo market like in china . Combined like 100 billion you on youan . Cameron that is 14 billion. It is small money, right . Francine but do they have similar issues in china, or is it different . Cameron they do have liquidity squeezes from time to time the irony is that before the crisis there was loads of volatility in the fed funds rate, and the repo rates on a day to day basis. We have become so accustomed in this world of abundant reserves from short lines to flat lines, we have forgotten what it is like. Tom francine Willem Buiter and cameron crise, they both stay with us. We are on the lookout for any shifts in regular in labor Party Policies as it runs into the evening london time. That vote on brexit starts in about 12 minutes from now. Then tomorrow, the shift to new york for the u. N. General assembly to kick off. We will discuss everything from Climate Change to geopolitics, and watch out for the trump speech possibly on iran. On wednesday, bloomberg hosts the annual business forum. Finally on friday, the new Italian Government will unveil a new economic program. All that and much more ahead. This is bloomberg. Viviana you are watching bloomberg surveillance. Get your Bloomberg Business flesh. A former its we spanking star was followed by detectives and a fight broke out in broad daylight. He says he was being shadowed and snapped photos of the detectives with his smartphone. If detectives wanted to see he was going to get Credit Suisse staff to join him at ubs. Deutsche bank is transferring its business to bnp. 1000 staff will move to bnp as part of the deal. Lend brokerage is set to cash and securities and execute their trade. That is the Bloomberg Business flesh. Wework board once the executive to step down as chief executive wants the cheek of executive to step down. A Board Meeting could come as this week. The heads of both companies declined to come. Kris bryant writes for bloomberg opinion. It seems like every day there is something that makes it more difficult for wework to hold on an ipo. Chris indeed. This is a very radical step, and will it be enough to save the ipo . If anything, it will probably worry investors even more. This late stage, the fact is, wework is considering getting rid of adam newman, certainly as the ceo, perhaps giving him an honorary title, suggesting this is a company in disarray. The Board Members have cold feet at this late stage of frankly terrible purpose, recent days about the culture and governance of the company. They, too, have questions to answer. I am sure a new ceo may bring some stability, but there is a huge question mark about whether they can get this ipo away before the end of the year. They need the cash, but can they do it that quickly . I have serious doubts. Tom the infighting francine the infightings that 6 billion loan contingent on the deal. Where do we go from here . Indeed. Equity, wework needs and we work as a fundamentally cash burning business and we expect to remain so for some years to come. The fact that they are only now deciding perhaps we need a ceo smacks of desperation in this instance. We do not know yet whether they will beget able they will be able to get it away. He could decide to get rid of the board if it so pleased him. Bringing up a chart. Price up, yield down. This is price down, yield up. The yield right now. Chris, this bond speaks volumes. What will the board do if the price of that bond rakes down to an over 9 yield . Breaks downat bond to an over 9 yield . Chris you are right, those are metrics that we can monitor. Investors are very worried. They want this ipo to go ahead because it would raise badly needed funding for the company. Right now, instead, we have disarray, a company who does not who does not even know what the lead of it will be before the end of the week. Thank you, chris. Kris bryant with an update on the we company as well. We thank all of you for watching this morning. Important interviews coming up, and with a number of interviews coming up with Christine Lagarde. This morning, john farrow i, a conversation with william dudley, the former president of the new york fed. On politics and the independence of the fed, that we will address directly the uproar over the repo markets. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Alix we work, we stress, we done. A fall from grace from the start of darling. Slow down like its 2012. Germany hit with the worst slow 2012. Ince in Prime Minister Narendra Modi takes texas by storm with praise from President Trump. We talk about one of the Largest Investments into u. S. Infrastructure. If you live in new york, remember, you are not going to be i going to be able to get anywhere with cabs. S p futures go nowhere. Can we reach a new record . That is the question if you are in the equity market. Part of the market is about go buy bonds