Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

You have the u. K. Election. On the back of the most recent polls, still can say still saying the conservatives have a Comfortable Lead over the conservatives over the labour partys. Ecb and its new president meet on thursday. This is the stock we are watching out for down 61 . The chief executive quits and they canceled the dividend. Coming up, we will discuss the report on septembers repo prices. Up at 9 30 a. M. London time. This get to bloomberg first word news. Viviana yesterday hundreds of thousands of people joining hong kongs biggest demonstration in months. Popular unrest will continue. Organizers say 800,000 people marched through the city. Police putting the number at 180,000. The rally was the first promoted by the civil human rights front. The mayhem in the u. S. Repo market in september was not just a temporary hiccup. Ended in part up because the u. S. Banks now hold more of their liquid assets then treasuries. This is relative. The bif warning this problem reduces their ability to find funding at short notice. We will speak to the head of the monetary and Economic Department at the bif. 9 30is at 9 30 a. M. A. M. London time. About 50 people and taurus were on or around white island and taurus were on or around white island at the time. Miles off thes 30 coast of new zealand. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Francine the Prime Minister Boris Johnson returning to his key election message that only he can deal with brexit. The conservative party in thursdays u. K. Election, johnson was urging supporters not to be complacent. The Opposition Labour Party said it will put money in your pockets and power in your hands. Joining us for the hour is peter dixon. Very excited about the u. K. Election week. , equally excited about the lack of sleep coming. David, you look at the polls. What is the margin of error . Is it almost a done deal for the conservatives . David if you look at the average at the polls, there has been a big spread, they are looking at 10 . They are close to getting a majority. Johnson has to be at least 6 ahead. Not that said. T. That is not deadse three days to go. There could be something that blows up. Something could change the minds of people. When you look at the spread of the polls, that tells you people have not made up their minds. Johnson is going to come back with the majority. Not yet in the bag. Francine when you look at the election, peter, a lot of it is on personality. It is a changed society because it is going to be far less much more than farright. Peter after whether society has changed that much, it is more questionable. A lot of people are going to the selection thinking and it does feel like we are going to get the Prime Minister they like the most. There are lots of changes going on. Change is that the top of the agenda. Francine what do we know all the candidates are doing . Election is on thursday. Are they campaigning . Trying to note tread on any landmines. Labor toryey marginals they are hoping to snatch from labor. Mr. Corbyn is in wales. Remember, these elections are going to come down the haves and the seeks. Positives have their approach to these places. We are going to see a lot of numbers of the cabinet propping up their labor unit. A bit of frenetic activity but really trying to avoid saying anything that will put people off. Francine are the markets to cert are the markets to certain about a conservative when conservative win. Peter it feels like we get a shortterm bounce. Perhaps in sterling. I am not sure about equities. The real work starts next year. Brexit itn that could be a potential for a wobble sometime next month. There is the next deadline in the middle of next year. Francine david, there was a belief that if the tories were brexit. Ould water down if johnson and when, if johnson did not win david the conservative party is a broad range of opinion. The first bit he is going to get done is the signing. The kind of harder talk is what does brexit mean in the future. There is no agreement in the conservative party on that. 150 seaty do get a majority. Closer to a 1020 seat majority. He may have the same problem that theresa may faced. They are going to have another deadline at the end of the year. We could fall back on a no deal brexit. The idea that this is resolved, regardless the majority. Francine what happens after that . I have a great way of tracking the polls. To poundwhat happens given we dont know what mr. Draghi wants next . If you can lift some of the political uncertainty, maybe the pound spends a little bit. The upside would be limited. A full agreement signed by the end of january. The rest of the year is going to be characterized what we do next. That is going to be very interesting. Francine peter, december 12, the election, we will have a new government in place for days after that. How quickly do they choose a bank of england governor . Peter unless they have already chosen one and they are waiting until after the election to make the announcement, time is really short. Parliament will be out of action until the eighth of january. At that point, weve got less than four weeks to get the government in place. A possibility that carney may be asked to extend his term. Francine i like that. Thank you both for joining us. Us. R dixon stays with coming up make sure you catch our special coverage of thursdays election. We will bring you the latest at 10 00 p. M. London time. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Lets get to the Bloomberg Business flash. Plunging after a company ceo quit. This follows poor production performance ats flagship site at its black sheep its flagship site in ghana. Buy sanofi. To the deal the last market price. The agreement underscores the french drug giants efforts to build its portfolio, innovative therapies, and a fastgrowing cancer field. International flavors emerging as a contender to purchase duponts nutrition is this. Iff is challenging this 25 billion division. Dupont could reach an agreement. That is the Bloomberg Business flash. Francine thank you so much, viviana. Chinas exports specter to selloff as they do a combination of trade war. This was the 12 monthly decline. Lets keep it on trade. Eter dixon from commerzbank december 15 is a big day because tariffs either drop or they dont. Is it a maker drake is it a make or break point . In,r if the tariffs kick it is just ratcheting up the whole debate. Bothe past we have said sides have been able to back down. We are not hearing any indication from the white house that they are willing to turn around. Francine we also have some pretty bad Economic Data out of china. How bad is it . It is a 23 decline on exports to the u. S. Is the u. S. Consumer going to feel that at christmas . Peter the problem here is the trait disputes because china wants more. It just points to the export numbers. We have seen the Chinese Government slow. We have seen gdp growth less than 6 . Obviously, the u. S. Seems to be ahead. At the same time, if china goes up francine what does it to to gdp . What does it do to gdp . We stand this Holding Pattern . Peter in regard to the u. S. , probably quite some time. The u. S. Is big enough and slow enough and is a very large to messing margin very large domestic market. In the grand scheme of things, that is fine. Something,six point so it is not hurting the u. S. At the moment. Prices go up and if china does retaliate, things could get a lot nastier. Francine if we have a phase one , does the market rally . Peter i think theres a potential for a rally. The markets probably think that theres a possibility we wont get the worst outcome. Having said that, they are not sure. Any possibility the tariffs will be revoked, then that could be good for markets. Francine what does it mean for the fed . Peter in terms of where the fed stands at the moment. We wait and see. Question that we also discussed on our markets live log, should markets be pricing in a 2020 move . Peter yes. There is a strong possibility that if the u. S. Continues lose a bit of momentum at a point where the cycle is extended, it is under pressure to do more from the white house, theres a possibility we could see a rate move next year. Just an insurance policy to keep the economy going. You could imagine the pressure from the white house will be extremely intense. Francine when you look at the markets, do you worry about asset levels . We can explain the prices away by the fact that Interest Rates are so low. That means markets are very sensitive to Interest Rate moves. We are not going to get any hikes next year so the potential for downturn seems to be quite limited. Volatile rate cuts could give us a little extra lift. So, the probability suggests longerterm,in the equities out there. Francine peter dixon stays with us. Movementong kong shows no signs of slowing. We are live next. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua. Hundreds of thousands of people joined hong kongs biggest demonstrations and a sign of and rest will continue. Organizers said that 800,000 people marched through the city on sunday. By very latest we are joined stephen, when are we expecting what are we expecting into the new year . Stephen probably more of the same. The two Big Questions going into , by the way the first time they were approved given approval by the police to march. The two Big Questions were, is still havet, does it momentum following the overwhelming District Council elections a couple of weeks ago . The other one is, does it have broad support . Many people here in hong kong do not support the violent elements. Ishatically, the answers yes, the momentum is continuing as some 800,000 people according to the organizers showed up and that several milelong march from Victoria Park to central. Also, the momentum and support are both there. 800,000 are what the organizers are saying. Police say it is close to 180,000. That is still a large turnout for a pity of for a city of 7 million. Where do we go into 2020 if the local government does not give into any of the consent . No concessions as carrie lam is not done. Prodemocracy lawmakers say this is going to continue. Last forosys this may generations to come claudia mo says this may last for generations to come. Francine how does beijing handle the protests in the coming quarter . Stephen beijing has been pretty steadfast and persistent that carrie lam stays in the job and the violence must and. That is the interesting part because for the most part the rally was fairly peaceful. There were smaller, radical elements did resort to vandalism. The court of final appeal had some vandalism. On the other side of the highway, the bank of china tower had some graffiti scrawled on it. For the most part, the large rally and march was peaceful. Et me read you a quote it is interesting because he is hong kongs delicate to china delegate to china. He says, there wasnt a lot of violence, so now they honored their side of it. Now it is up to carrie lam to give a response. Carrie lam will have her Weekly Press Conference tomorrow. Francine thank you so much. Stephen engle in hong kong. Lets go back to peter dixon. When you look at the fallout from hong kong, i dont know pricing because there is ramifications due to trait. Peter it is largely a politics thing. It starts to impact upon markets to the extent it becomes politicized by donald trump leading into the fed negotiations. That is difficult to get a handle on. The markets are looking at this thinking, it is a china issue. It will impact upon china and we it a clear idea what is going on. Francine coming we speak to the bif and talk repo in the markets. This is bloomberg. Francine blame game. A major report says septembers repo crisis was fueled by big banks and hedge funds. Days from the u. K. Election, and the conservative party is ahead of all the polls. But the labour party closes the gap. China exports unexpectedly drop as the clock sticks down to a key trade deadline. The morning, good afternoon, good evening. This is bloomberg surveillance. Im Francine Lacqua in london. Thats check on the european stock movers with dani burger. clinch the final takeover of day shareholders have 55 of shares. The one less turtle here is ams hurdle the one last here is ams holds ams shares on the other hand are declining today. , sharesgainer is tesco up 22 . They are looking at possibly selling their thailand and malaysia operations, looking closer to home, focusing on their core operations. According to these reports, tesco could fetch as much as 9 billion for the malaysian and thai operations. They said they would receive a lot of inbound interest. Lost more than half of its market value, shares down more than 70 . They say for performance has come in below expectations. They are seeing their ceo and director of exportation of exploration resign. With the 70 drop, we are seeing the biggest drop on record, francine. Francine thank you so much, dani burger with the biggest movers. Lets go to first word news with viviana hurtado. Viviana only he can deliver brexit this is the key essence from Boris Johnson, polls showing his majority heading into the u. K. Election. Johnson will urge supporters not to be complacent with opinion polls. The Opposition Labour Party will tell voters they will put money in your pocket and power in your hands. An eruption by an offshore new zealand volcano killing one person and injuring dozens more. Many tourists were on or around white island. White island lies about 30 miles off the coast of new zealands north island. India lawmakers are said to improve legislation to prevent muslim migrants from gaining citizenship. It is the latest move in modis hardline program. The proposal allows citizenship kh, buddhists. K muslims are excluded. Francine the u. S. Market in september, not just a heritage a temporary hiccup. The market was in part because the u. S. Banks hold more of their liquid assets and treasuries relative to what they the bas warns that the structural problem reduces their ability to supply funding on short notice. Joining us from switzerland is thank you for joining us. I guess what people want to know is how do they get so badly so quickly come and could it happen again . Thank you very much. Thank you for having me. What we say in the court of review that just came out that the quarter review that just came out is that it came to a confluence of temporary factors but also structural factors, which is what we tend to exercise. Temporary factors led to a withdrawal of excess liquidity from the system. These were largely anticipated, so they cannot really fully explain what happened. In the quarterly review, we emphasize the structural factors. Let me mention a couple of them. One is, as you mentioned, that the big four banks in the u. S. Have become the marginal lenders to the repo market, replacing money market funds. Be lessnks proved to willing, at least recently, to provide funding on short notice. There are a number of possible explanations for that. No one really knows the full story. One is changes in Risk Management within the banks. They have become more after the crisis. There has been much more emphasis on proper Risk Management within institutions. A second is what i would call a certain atrophy of the ability of these banks at short notice to provide funding. This is because after a period of superabundant excess reserve, there is a loss of expertise in the markets not just changes in the infrastructure, but were generally. Mechanismscause the to the number of hurdles they have to pass in order to be able to provide the funding have probably increased, so that institutions are less able than they were in the past to profit from very shortterm profit opportunities. The second has to do not so much with the supply side but with the demand side. And here, there is a much bigger recently we have seen how hedge funds have been very cash hungry using to finance themselves to exploit some arbitrage opportunities between the cash and the futures markets , and Interest Rate swaps. In the process of doing that, they have been taking a considerable amount of leverage. Francine given what you just told us, can it happen again, or have precautions been taken . Claudio on the one hand, we know that the particular quarter that ends at the end of the year, there tend to be repercussions on the repo market, and that is likely to happen again. At the same time, after the current incidence, the authorities are better prepared to deal with those tensions and provide a necessary amount of liquidity to ease problems in the market. Francine i wanted to also get your response on inflation targets. Is this the right time for the ecb to change inflation goals . Claudio it is the right time to come up with a strategy. What the final outcome is, i cannot say. Francine would you recommend to not change the inflation measure to take that or advantage of housing costs . Claudio it is not so much for specificommend outcomes. Ecb to it is up to the come up with the best strategy. Francine when you look at the repo market and the fact that they are fueled by big banks and hedge funds, have you spoken to any other parts of the market where we could see something similar . How can we be sure that it does not get repeated in another part of the economy . Onedio there is one part, Market Segment that we have been watching closely, and that is the fx swaps. Fx swaps very closely are related to the repo market, and they have become more closely related, the result of the fact that the majority of the the maturity of the fx swaps has been declining. As you know, the fx swaps as a result of that have been the main contributors to the increasing fx volumes we have seen over the last three years. We had regular surveys on this. The qr goes into details. The fx swap market is huge. We are used to seeing only the component of dollar borrowing by nonu. S. Players by nonus players on the Balance Sheet component. To give you an example, the residentsof nonus outside the United States on Balance Sheetss on the order of 13 trillion. The amount of equivalent borrowing in fx swaps is probably larger. We know that fx swaps came under stress during the Global Financial crisis, and i expect that should tensions again arise in markets, fx swaps, together possibly with repo, fx swaps will be at the center of the tensions. So much forank you joining us today. Claudio borio. In london host him very soon. Expected to reveal the 2020 get, and entrance resolving tensions in crimea. And just days from the general election, we expect the campaign in the u. K. To heat up on all side. More next. This is bloomberg. Francine this is bloomberg surveillance. Lets get straight to the Bloomberg Business in new york city with viviana hurtado. Viviana the londonbased companys ceo quit. This follows core production performance at the flagship site in ghana. The resignation coming after a year of disappointment. And kenyan uganda also faces delays. Billion to buys ignore fits from santa fe. Underscores the in thedrug giant effort fastgrowing and lucrative cancer field. Consideringt is selling its divisions in thailand and malaysia. After receiving what he calls inbound interest. Tesco tylan is the largest type of tesco thailand is the largest type of its kind. That is the Bloomberg Business flash. Francine thank you so much. France is gearing up for a second week of protests against tension reform f pension reform. Planning further disruption across the country. Set to government prevent the prevention the pension reform set on wednesday. Our guests join us. Still with us, peter dixon from commerzbank. Jeremy, great to have you on the program. Want . O the protesters where will they end, and is it actually reform mobile . Thank you for having me. It seems that right now the labor unions have what they want is basically the government thisndamentally abandon reform of pension plans. You really have to feel ambivalent about the second question, is france reform mobile . This is a decent effort and you really have to feel sorry for Emmanuel Macron because the inaction on the pension front is what led to this confrontation. You cannot possibly claim nine you cannot possibly blame macron for this pay there is no real understanding of Public Opinion of what is going to happen. Details are set to be given on wednesday. What youre seeing all over the place has led to all kinds of rumors, opposition, and it has not really contributed to reform in france right now, i think. Francine jeremy ghez, what is the track record of president macron can . Has he delivered some of the things he said he would . Jeremy i think he has on quite a few fronts. Since last year he has been very much concentrated on all kinds of protests related to the yellow vest and now related to this question of pension reform. As you know, when you claim to be antiestablishment, when you try to build the brand image around this idea of saying i am going to be very different than all the others, you will have basically politics in a very different way. Unfortunately, this feels like business as usual in france, and i think macron has been unable to overcome that right now. Where does this leave us in terms of the markets . Do the markets look at this and say i am not that keen on investing in france at the moment . Peter i dont think they think that, but i think they look at france as part of the euro zone story, which says there are parts of the euro zone we have seen before. Macron haseen slow, run into difficulties in the past 12 months with reform in france, and it answers the picture that if you are an international investor, looking to where you want to put money, there are some question marks. Francine jeremy, when do we know whether president macron will go ahead of this . By the end of the week . When the protests as i down . That is right. Tomorrow is a very special day this week because it is the day. Here there are new protests i think the government is counting how many people will be in tomorrow compare it in the streets tomorrow compared to last thursday and they will have a sense of where the government stands. Do they want to go ahead, do they want to go ahead with the arm wrestling match, or is it backing off . Tuesday into wednesday night will be quite crucial in understanding where this reform goes. Francine what is the opposition like to president macron . The president ial elections are still some time away . It is interesting. So far in the parts that i have seen, Emmanuel Macron faces one component which is one opponent which is Marine Le Pen, the leader he faced in the second round in the 2017 elections. What is interesting today is that Marine Le Pen is still very present. To have on the far left. You have on the right a couple of figures, not entirely sure basically where this opposition stands. You understand that there is opposition to the reform, but it is not entirely sure that we have constructed alternatives right now. Macronite that, emmanuel may be able to surf on that lack of alternatives. Francine thank you so much. Ghez, from hec paris. Coming up, the era of the entral bank, policymakers dwindling options next. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. After more than 10 years of crisis fighting, including this years rush to support weakening global growth, Central Banks have little room to maneuver. Ecbmberg expects both the and the fed to hold rates steady. Peter dixon joins us from commerzbank. Mistakes,k at policy in the world of geopolitics, leaving that to one side where things can go wrong, how sure are you that there are no policy mistakes happening with Central Banks . Peter i think we are fair to criticize Central Banks. Think Central Banks have had to deal with the financial crisis of 2008, they had to deal with it on their own. They very had they had very little support from fiscal policy. You could argue about whether they should have raised rates earlier and you can argue about being pushedrates into negative territory. The problem is, they do not always have a choice. Francine but what does it mean for markets . Our markets now assuming that the fed doesnt hike for the next couple of years . And what happens if they do . Jeremy as you said, peter as you said, i think the likelihood is that the fed will not be hiking anytime soon. Is more likely we will get a rate cut next year than a hike. If we were to get a fed rate that would mean i think that the u. S. Economy is in a good state. And it is growing rapidly than we would anticipate. Probably a good thing. It would mean that the markets go up before they come down again. But i do think that the point at raises rates again is the point where the markets selloff. Francine are we going to see bonds and stocks going back to what they used to do four or five years ago, track each other . Peter i think they probably will, yes. However, if you look at the pattern, the global pattern, they have been pretty miserable and they will remain ready miserable as long as Interest Rates are in this territory. Stocks remain the only game in town. You might see a move toward ,onds at a time of uncertainty but i think from an investor point of view, there is not much intention to be there. Francine where would it be then . Peter it has to be in stocks. So longle fact is that as equities dont collapse or are expected to collapse, so long as Central Banks maintain Interest Rates, negative or low rates, that is going to be good for earnings. So i think there is a little bit of juice to be squeezed out of this lemon. I am not massively bullish on stocks for the next 12 months, but every year for the last 10 years it is the absence of alternatives. Stocks do you look at . Do you look at sectors, with m a . I think the tech sector has been the Great Success story over the last decade. There is probably more to be done there, given the size of those stocks. But obviously there are some signs of weakness, given the given which the laxativ the extent to which china is slowing. I think there is probably a lot of potential because in terms of what it is doing to the retail sector, is giving the product from the consumer, which is where it could look at over the next years. Francine . Dixon, from commerzbank. Bloomberg surveillance continues in the next hour, tom keene here in london, getting u. K. Elections. The First Press Conference for Christine Lagarde will be this thursday. We will look at that and the u. K. Election. That is sunday come of course. Moreis when we could get terrace between the u. S. And china. This is bloomberg. Francine blame game. A major report says septembers repo prices were set by hedge funds. A day before election, the conservative party is head is ahead in the polls. But the labour party closes the gap. Chinas exports unexpectedly drop in september as we ticked down to a key trade deadline. Good morning, good afternoon, good evening. Tom keene showing up for election coverage. Tom, there has been a lot going on in the repo market. We knew that you were coming, so we want to talk about markets. We look at the polls, the u. K. Election, we have trade tariffs on sunday and the ecb with tom tom the gap also thursday. Over the weekend, extra tom over the we can come extort neri protest in hong kong. I know we will go to hong kong as well, but reading up on the british election, i am praised pleased to report that i am more confused than i was five days ago. Francine lets get straight to bloomberg first word news in new york city with viviana hurtado. Viviana in the u. K. , Prime Minister Boris Johnson goes into the final days of the Election Campaign focused on his key message. Johnson maintains only he can deliver brexit. Polls showing the conservative party on track to win a majority. Johnson will urge supporters not to be complacent about thursdays election p the fbi is calling the shooting out of the floor and a naval base an act of terrorism. A Saudi Air Force officer in the u. S. Shot and killed three naval personnel he was then killed by a sheriffs deputy. Saudi arabia is promising to cooperate in the investigation. Some republicans are calling for the u. S. Contemporary halt Training Programs involving Foreign Service members. At least five people were killed when a volcano erupt it on new zealand erupted on new zealands white island. Many are believed to have been from a cruise ship. White island is about 30 miles off the east coast of new zealands north island. To hong kong, the largest prodemocracy rally in months. That signals more unrest to come in 2020. Hundreds of thousands of protesters flooding the citys downtown streets. The march was largely peaceful. Carrie lam has refused to give into protesters demands. Global news 24 hours a day, on air and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, viviana hurtado. This is bloomberg. Francine . Tom . Tom thank you so much. Equities, bonds, currencies, commodities. One screen, pretty much stasis in the market, which is a bit of a surprise after that bankup ngup u. S. Jobs report. Francine if you look at sterling, it is holding up to gains because the polls are suggesting a victory for Boris Johnson with the majority. If you think about it, most polls give it about a 10 gap between labor and the conservatives. But a 6 gap for the majority. Things could move quickly, and i am looking at u. S. Futures edging lower, bonds rising. Show the conservative party will win a majority in thursdays u. K. Election. Johnson will urge supporters not to be complacent with the opinion polls wrong last time. Telling reuters they will put money in your parking and power in your hands. Ouring us know from london, guest. John, i dont know if the markets are too biased, but they expect a tory majority. What if they dont get it . If they dont get it, it is a Hung Parliament. I think you have to wonder whether or not the Brexit Agreement will go through. You have to question what will be the path of fiscal policy. This to me is not good, getting anything other from a tory majority from the markets standpoint. Francine what does it mean for pound . John i think the pound will move down a bit. Chart that mr. Normand knows quite well. From minister john major really pushing against some of the johnson tone. Lehman lows, down we go. Exit with a blue circle. What i am seeing here is a breakout from this ugly range of x number of years. Breakoutu explain the wrapped around Prime Minister johnson, wrapped around all the details of brexit . John if you have a tory aboutty, it is also fiscal stimulus, which is guaranteed under the next government. Tom so you think a fiscal stimulus is guaranteed, any flavor of a johnson victory . John yes. I think the next part of the narrative tom so i can afford harrods tonight . John there is a lot of uncertainty around the arrangement with e. U. After the period ends. Francine you can see the diversions since july 2019. We are looking at the polls, conservatives are on top. There are two days left of campaigning. Can the pole shift . I think the important thing is they can. There can be a big event that will change the race. More likely is that the on the day, voters go into the voting booth and they say who am i going to vote for . Options,tween two Boris Johnson and Jeremy Corbyn. I think there will be a little bit of a boost on the day because they have a high threshold in so many seats. That they could have that on the day change. Francine if boards johnson has a clear majority, what happens with trade and the e. U. . What happens with that stroll agreement . It is not a done deal, is it . Phanie it is they want there, the big issue is broadly guarantee more with the u. K. More broadly in nature. The majority does matter here because in a way a smaller majority am aware you saw the role, and the fact that youre getting new mps coming in into the seats, it might be more difficult to get this agreement, which they say they can do in six months, which seems totally unrealistic. Ithis weekend i glanced guess it is marginal monday, the idea that the Prime Minister and mr. Corbyn are out in those marginal districts countrywide. Tell me about the dynamic you see in scotland, and northern ireland, in the northern marginal strength of either party as we go three days away. Way,anie i think in a scotland is a bit of an exception to the rule. They have their own Political Parties with their own dynamics, so to an extent, traditionally labor has had a Strong Performance in scotland but lost that more than five years ago now. Many itand, you see how could potentially pick up. Maybe there is a smattering of conservatives and some of the lead areas because it provides that kind of frexit. But i think it is the northern english constituencies that are really interesting because they are the places where we look back over the last 10 years. There has17 been gradual building up of support there. I think it is for the conservatives and labor, to fight it out in the northern and midlands constituencies that would have been labor hard lines in these areas. Tom i cannot really say enough about the global audience how fascinating this election is. N normand knows that you not only in the United Kingdom but on your view to 2020, what is the marginal distinction now that is your biggest mystery . Unknown intonknown the first number of months into 2020 . John the biggest unknown is the u. S. Democratic primary. It is not so much a macroeconomic phenomenon. The data is higher. Tom so you have become a political strategist in the last three weeks . Stephanie you did john you do have these primaries and a widespread of candidates with nobody really in the lead. You can still have this Political Risk jump into the frame and impact markets. Jpncine john normand of morgan, Stephanie Kelly of aberdeen investments. Stay with us. After the polls close, we will bring you the latest starting at 5 00 p. M. In new york, 10 a clock p. M. In london, and this is bloomberg. Stand onricans always the side of freedom and democracy. That includes not only the hong kong story, but as you know, disturbances and disruptions on the chinese mainland with various groups as well. Having said that, having said that, i dont think those issues are interfering with trade talks. Kudlow, a good conversation with jon ferro on friday. Globalt convey to the audience, how much the capital is on the same page with the reports in china. John normand is on our desk here at Queen Victoria street with jp morgan. How does jp morgan amend strategy, given 1000 people on the street in hong kong this weekend. Dont tell me there is an amendment. John we does have we do have an amended strategy, we have a view that the markets will move up alongside data. But with risk bias around it, you have to say the hong kong issue is a negative wildcard. Even though the u. S. Is trying to distinction between trade policy and it is possible that the chinese respond to what is happening in hong kong, either inhibits arriving at a deal with the u. S. , or the u. S. Application of that deal could scuttle the deal once it gets agreed to. This is something to keep an eye on. This,tephanie, a part of there is this question of how do you amend given a lack of confidence, a lack of will . What do you do with china so fragile in terms of protests and also trade uncertainty . The waye to be honest, we think about a lot of this, and how does hong kong play into trade, we have a lot of scenarios for this. Over the weekend we were firing back and forth emails across our Research Team around questioning , what does it mean if this starts to have an impact . That classic question, can trade exist in a vacuum . We are all very focused on tariffs. For human rights reasons and nonrights reasons, it continues to escalate. That will be the story in the next five or 10 years. What is the reader cross between trade and what is happening in hong kong . If the u. S. Goes harder on hong kong, protesters on china, do the chinese make it hard on trade . Think it is probably another element that goes into the mix. It is not just a hong kong issue, but they also took issue with a took action around the treatment of muslims in china. I think these are just elements that add to an unreasonable view of the world, which is that in agreement. Are on how to build an economy and how that should be. And then they will build a good trade agreement. I think it is the cause of any kind of phase one deal not happening. It is unlikely or less it has been pretty clear that trump is not pushing hard for the hong kong act. It is not the act that he came up with. Are aware ofhinese that, but it does not help the tensions that already exist in this relationship, which is that we need to see this as what it is come a really long term thing that investors need to be thinking about not just in the next two weeks at over the next 20 years. Francine john, do you agree . John i do. It is important to recognize that this is no longer a discussion between trump and xi jinping. It is a conversation between trump and xi jinping and the u. S. Congress. Tom is their currency, their currency dynamic that same as other nations . Will it react to the news flow normally . John no, it has always been a managed currency, highly managed. Under any kind of new trade agreement, it will remain highly managed because the u. S. Is hyper focused on this idea of currency manipulation. It ends up being a more neutral asset in a world that is very uncertain. Normandwhat is the trilemma . Do they watch their Balance Sheet of cash, able to then the and manipulate youan . John i think it is more the equity market. The currency is not going to move because one is bearish on how the trade situation plays out. When are youn, expecting bonds to go back to something that we are more used to . When do they go back to tracking each other . John they will stay disconnected for an extremely long time. I think you can have equities remain on that path for the next year and bonds moving sideways essentially because for once you will not have Central Banks tightening when the Global Economy is slumps. Is slumped. And that kind of environment, you will get a disconnect between bonds and stocks. Tom john normand with us from jp kelly. Including this monday before the United Kingdom and election. One of the real tangible and surprising distractions is not so much protest in hong kong. It is the size of the protests. Absolutely extraordinary in the Central District and along the highway. Continuing with us from london. This is bloomberg. Viviana this is bloomberg surveillance. Strong ort a Business Investment in the thirdquarter, expanding at a much quarter faster pace than reported. In the three months through september, japanese gdp rising at an annual rate of 1. 8 per the First Reading was. 2 , the show growth is being powered and japan. Emerging as a strong contender to purchase duponts division. Islands kerry Group Negotiating with dupont. The division has been valued at about 25 billion per dupont shareholders would retain a stake in the business. And sanofi is speeding up its push into cancer treatments are the french firm a giant agreed for 2. 5 billion. Sanofi says it will accelerate 17 drug programs, almost half of them in cancer treatments. That is your Bloomberg Business flash. Tom the process count always varies between those for and against. The protest count always varies between those for and against. ,tephen engle is in hong kong counting all the protesters this weekend. Let me start with the general question. What was different this time . Stephen the big two questions going into this weekend was, could this protest movement, for lack of better terminology, keep the momentum following District Council elections which saw prodemocracy candidates overwhelmingly defeat pro establishment, probeijing candidates p the other one is, does it still have the six months of violence, does that still have broad support . Most people in the city of 7. 5 million do not support the violence, but they do support the protection of their Civil Liberties and the maintenance, maintaining their rights under the basic law. They feel that some of that has eroded because of the china input. Thats because of less china input. Quitef that was resolved resoundingly yesterday. The momentum is still there, and there is broad support. Use our children, parents, and grandchildren all come out en ma is 8000 orr it 183,000. It was quite a show of solidarity. Do i dare use that term . Lets use that term. If you look at carrie lam and what happens to her in 2020, will china replace her . Is there an elegant way of replacing her . If she does get replaced, with whom . Want to they do not give the impression that the local government is giving in to violence per that is why they say the violence must stop. Keep in mind, calling for violence to stop is not a solution, it is a plea to an end result. There has not been a government willing to meet the other four main demands of the protesters. Protestesters and the candidates that we have spoken to following the rally say this is going to continue. A legislator said this may last for generations to come rate another lawmaker said now the movement being peaceful yesterday, now it is up to carrie lam to at least address some of the main concerns. That is we are in a stalemate. HaveStephen Engle, you been on the china watch. If i look at the video yesterday, it shows the big change which is all those cell phones being held up within the protesters. How is the technology, the social media, and those hundreds of thousands of cell phones how have they changed this debate . Stephen absolutely, it has changed here just like around the world. Everyone with a cell phone is a journalist in some ways. And send these videos out, they get passed around. The organizers. There is no figurehead really of this movement. They have used telegram, instant messaging system. It is quite a unique phenomenon. Francine thank you so much, Stephen Engle in hong kong. Coming up, france gears up for another week of disruptions after 800,000 protesters hit the streets. Up next, we discussed the battle s president Emmanuel Macron reform plans. This is 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. Bloomberg surveillance all this week from london. Francine, 10 00 p. M. Show as well as jonathan ferro. That is when the polls break, 10 00 p. M. Francine people can still vote until 9 00 p. M. And then at 10 00 p. M. We have the exit boat. We either know there is a big majority so it is a done deal or you go into Hung Parliament. I dont really care about the election right now. I know it is your birthday. I got you a banana. 120 thousand pounds. Just for you. If you are hungry, you can have the duct tape. Tom this is what marcel would do. This is what francine would like. Francine it is going to be coverage cave u. K. Went to eat the banana. Lets get to first word news. Viviana it is hard to follow that but we do. We follow that with an act of terrorism. That is how authorities are treating the shooting at the Pensacola Naval air station. They want to know if the saudi government was acting as part of a larger network. Three u. S. Navy personnel were shot and killed before a sheriffs deputy killed the attacker. The gunman was in the u. S. To learn to fly. Some republicans with the program he was trending in temporarily suspended. Today u. S. House investigators making their closing arguments in the democrats case against president donald trump. At the same time, debating how far they want to go in drafting articles of them. Of impeachment. Jerry nadler sang the president is likely to be accused of abuse of power and obstruction. President trump is downplaying north koreas recent missile test. The president tweeting kim jongun has far too much to lose by acting in a hostile manner toward the u. S. He says north korea must denuclearize as promised. North korea says that is no longer on the table. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. France is gearing up for a second week of protest against pension reform. 800,000 protesters took to the streets last thursday. Labor unions are planning for the disruption across the country. The Prime Minister is set to present the pension reform in full on wednesday. Still with us, Stephanie Kelly. If you look at the reform, the pictures of the strikes are quite striking. They would scare a couple of investors. Is france reformable . I think this is the question that is asked in every single french presidency, French Election cycle. What we know is generally speaking, french voters are aware there are systemic issues that need to be solved but once you go down this road, this is exactly anyway what you would expect when you try to shift the Pension System. We dont have the details for precisely what it looks like, but the reality is, in france, anyone with live there myself included is aware that striking is frequent. But what were seeing in the moment is much more intense and it reflects the fact that pension reform affects people across jobs. That is why youre seeing multiple sectors being drawn into these strikes. Francine is Emmanuel Macron falling short of the reforms you promised or is now a good time for investors to go with . I guess he is falling short of what people would have expected when he was elected a couple of years ago. I tend to distinguish what is going not inference domestically and the performance of french assets, meaning french bonds are very secure because of the qe program and negative rates in europe as a must a complete disconnect between credit fundamentals where the path of growth and what happens in that bond were market. Multinationals, not geared so much domestic but the global cycle. Tom i say this with james dimon sitting on a put them somewhere near brexit, talking about the city, talking about the expansion of Financial Services across a Banking System in europe which we can all agree is deeply troubled update us on how populism, whether it is french or the United Kingdom, look at this, folks, the sun this morning, very big ty corbin. How does this populism filtered to the daytoday grind . It is not really about the daytoday, it is about the once every two or for your resume change. Tom is this a resume change right now and the United Kingdom . I think it has already happened in around the brexit vote whereas a vote for johnson is more about some sort of continuity. The real populist threat is what is going that i think of the u. S. People dont really think of the u. S. As a populist country, but you have ideas being spread by certain candidates that sort of make its way into tom everyone hates the new england patriots. Francine stephanie and i dont really care about the new england patriots. What we do care is whether we will see reforms in the eu and the next couple of quarters. Stephanie, with this looming populism, is it going to be more difficult for europe already in the midst of a trade war to get back on its feet . I think it is always challenging to make policy given the number of different parties that have different views, different countries. I think what is happening we talked about populism, but we need to talk about it in the context of fragmentation. This is around not just these orthodox policies, but traditional strongholds centrist parties losing grip and having to work in coalitions, having to slightly alter their decisionmaking style. All of those things will have a natural effect, increasing the sand and the wheels that is european decisionmaking. Francine john, where do you see value . Is there any and european bonds . Slightly of places like italy and spain because that is where they are spread. For the most part, when you talk about value, this is an equity discussion. These are the markets and sectors that are slightly cheap. Not really in fixed income. We havephanie, since you in edinboro, what we look for over the next auto days in scotland . What is it that our audience worldwide should focus on . I think the interesting question is going to be around the impact of either the conservative government on independent sentiment in scotland, especially i think brexit has specifically had an effect i kind of overall view people maintain around whether scotland should the independent or not. And then even with the labor government, get the same questions with spanish independence coming into the fold because if labor wanted to rule a minority with support by the s p, which i think is the only way labor would be able to rule out all month if indeed that happened, i think that is a place where he also started to get questions because the s p has said they will lend their support so long as they can have an independence referendum. Theyre looking for one this year, but i dont think that is feasible at all. Those questions come on the table much more and i think this is the election that triggers that debate. Once again, no matter the outcome. Francine Stephanie Kelly, thank you, john norman stays with us. Take a look at some of the events happening today. Saudi arabia is expected to reveal its 2020 budget in paris. , pruden,esident macron zelinski, and angela merkel. U. K. Leaders make their final push out of thursdays election. We will let plenty more and all of the stories. This is bloomberg. Viviana lets get your Bloomberg Business flash. The new trade deal with u. S. And canada must respect the country socalled redline. The Mexican Government is rejecting the u. S. Demand for American Labor inspectors south of the border. Plus, it is balking at proposals on steel and aluminum. U. S. House Speaker Nancy Pelosi says a trade you will be brought up for a vote only when it includes strong enforcement provisions. To fund reportable fall short of its 108 billion target. The failure of big bets by the first fund has hurt the pension fund. Somethings massive investment in we were triggered a multibilliondollar write down. The term has to provide a 9. 5 billion rescue package. Goldman sachs raising its press forecast for brent oil. Goldman citing the decision by opec lets to take aim at the market shortterm imbalances. The Bank Increases estimate prime 60 a barrel to 63. That is your Bloomberg Business flash. Tom greatly appreciated this morning from new york. With us on the debts, john morgan of jp morgan here in london. What you do is you correlate all of the different asset classes. What are the linkages of the market right now . Right now i think the degree to which most markets outside of bonds are moving with the growth numbers. That is a pretty standard relationship. When people realize historically bond yields use to move with growth and now they are not, have to make a call as to whether or not yields will be higher or flat. It is a very different central bank than in the past. Tom i had the Wonderful Services upper british air this weekend and there was government came with me to get in line. One thing we talked about, which i think is very much public come is the efficacy of Central Bank Strategy nation to nation to adjust and amend any given monetary theory or monetary wish or that. Banks powerful . Do they have ammo into next year . A few of them do. The fed does because rates are above zero. Francine for now. A number are capable of easing as well. Im zero confidence in the ecbs ability to tom interesting. I think have to be honest about what the central bank has. This cutting rates and buying assets. You have to question what is the option here . Francine will u. S. Interest rates ever go negative . Definitely could. Even if the fed is not cutting rates to negative levels like the ecb and the boj, you just have a scarcity of positive assets. When the next recession comes, it would not surprise me to see extreme levels on u. S. Treasury. It is only thing that can really rally from a positive strand standpoint. Francine the ecb understands this is a problem for the banks. Would that be fair . They understand that is the one obvious side effect of the policies. Youve not seen the other side effects, which are an increase in Household Savings rates because rates are negative, Interest Rates are negative. What isre use your confidence in equities . So much is the lack of inflation that is been forced into a bubble and selected assets. Are equities not so much fairly priced or normally priced . Just to go against that, do you see bubble characteristics . I think bubble characteristics anywhere in the sense that all of the growth assets, equities, credit, some traded high valuations, not extreme. Meaning you want to see assets at two stigmas along ortwo spreads below. Tom and the control room, tell our guests know greek letters. Two stigmas. I have vis telling us hedge funds are leveraging up. Im thinking of summoned johnson. Simon johnson. Does that leverage factor 2006 . Ofnowhere near that in terms degrees. Because the Hedge Fund Community is quite wide and broad in terms of the types of investment styles, you can have the macro community increasing exposure, which maybe what theyre referring to. The equity crowd fund hedge crowd is not. Tom we forget 20062007. Francine is there risk the repo will happen again . You should worry the fed has potentially misjudged the demand demand in the fun. They will provide ad hoc repo if they need to. It can always happen was that i doubt it happens to the degree it occurred a couple months ago and that it persists as long. Tom john normand with us. We will continue with jp morgan as well. Later today im a Goldman Sachs really with an effort on gold over the weekend. Jeff currie is here with head of commodities. Look at that on daybreak. This is bloomberg. Good morning, everyone. Thank you for joining us on this thursday. Special coverage at 10 00 p. M. , our Government Team i talked to david and they are fired up. Francine i know. They are fired up. A lot can happen in two days, but the polls are well, they have been stuck for the last week. Tom we talked about alaska. Right now were talking about repo markets. What is different now . It is repo and i get it, it is hedge funds in the statement is pretty aggressive. Is it redux 2006 . I think it is a little different in the sense we are not fearing, as you know back back then, firms failing. The bsi highlight some insightful things. They seem to be tapping funding more true to treasury repo. A little bit complicated. A new clearing. Tom he mentioned the word sigma. He is in the timeout chair. Longnd the others of 2006, at the government in trouble. The rationalization for hedge fund, short duration. Discuss. A lot of these repo are just overnight, which theyre going through a cleared option that was created after the crisis which is good to reduce counterparty credit risk. The vis, when you guys just had on tv saying they are like starved for cash and going here to more options for leverage and the compilation of things on the banking side, which we will talk on. Tom what is so important as it was jp morgan six other banks fault until this report by bis. Talking about the big banks as being out of whack. Francine the concern is my first of all, they recognized lightly. Took aey realized it, it long time to fix. Next time, will they be on it quicker or will there even be a next time . They are on it come ongoing, as john knows. They are adding editing daily. They started buying treasury bills directly to add liquidity. They have done a lot. They were a little late, people feel like, to get on it. How do we get three yearend . Is it going to be outsized more than normal yearend . Has the fed, what theyve done, is it enough . Francine is there another part of the market like with the plumbing system that we should worry about . I heard this in some of my other reporting and the bis mentioned it, and i dont mean it as an insult, but managing daily liquidity was a daily thing for always before the crisis. Now they talk about it like, you been out ofhave practice. I dont know if that is true, but that is something to look at. Tom were you out of practice at jp morgan . This happens months ago and weeks ago and everybody goes after the big Banks Holding their cash. You guys were victims of regulation, the rules changed, didnt they . Theres a question of participation. The participation is partly driven by the Regulatory Environment. In some ways that environment makes the system saved her, but it can create dislocations and other areas and i think the fed is trying to find the right balance. They have not quite found it yet. Tom what does it do to Market Participants that are not, as liz engine come overnight . What does it do to someone one week, one month, one year . In general, theyre concerned about the liquidity environment because they understand the Regulatory Environment has affected the way banks engage as counterparties. Im not sure there is one solution to this problem. Some people higher than average cast balances cash balances. Francine s are part of the market and liquidity we should especially worry about . Is it brokerages in liquidity . Like john said, there are a lot of participants. From what i understand, it is not this Time One Group that is causing issues that we need to worry about. It is widespread. John also mentioned the fed is trying to get they got to the primary dealers, looking at maybe a repo facility that would be there all the time, and who the counterparty speed to get into a wider swat of participants . There is no one Little Corner where there is issues. Francine thank you both for an important conversation. Liz mccormick and john normand. Im next, we will focus on the u. K. Election. We are three days awayelection,f campaigning. People say anything can happen but so far leaders have been pretty much on message. Tom has been fully briefed on the u. K. Election. He is expecting movement. The big question is, if we have a Hung Parliament, when will governor . Mark carney is expected to leave at the end of january. We will look at the markets and look at the ecb. 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 wifi up there . Uhh. 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 local xfinity store today. Tom this morning, in search of the marginal voter. No one trust the polls. Therey are over brexit. Will be fiscal stimulus. This monday, markets are quiet after the u. S. Jobs report. In washington, the president considers another week of an impeachment debate. Good morning, this is bloomberg surveillance. We are in london this week. Thrilled you are with this. You wonder, francine, 10 00 p. M. Thursday night, when jonathan ferro, guy johnson, and anna edwards, what they will be talking about. Francine it is either landslide or clear majority. You will see something very clear in the exit poll at 10 00 p. M. Or you go through the night because theres no clear winner so you see a Hung Parliament. Every vote will count. Every vote counting will be important to the markets. Tom i cannot convey enough how different this structure is to anything we see in the United States. In new york city with our monday first word news, here is viviana. Viviana all he can deliver brexit, that is Prime Minister Boris Johnson ski message in the final days of the Election Campaign. Polls showing the conservative party on track to win a majority. Johnson will urge his supporters not to be complacent about thursdays election. The fbi calling the shooting at a Florida Naval base in act of terrorism. The Saudi Air Force officer in the u. S. For training shot and killed three u. S. Table personnel. He was then killed by a sheriffs deputy. Saudi arabia is promising to cooperate in the investigation. Some republicans are calling for the u. S. To temporarily halt the Training Programs involving Foreign Servicemembers. A volcano eruption on new zealands white island killed at least five people. Dozens more are heard. About 50 people were on the island. Many are believed to have been from a cruise ship. It is about 30 miles off the east of new zealands north island. Hong kong, that is the largest prodemocracy rally. The singles signals more unrest to come. Hundreds of thousands of protesters flooding downtown streets. It was largely peaceful. Carrie lam refusing to give it protesters demands. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Whichuiet markets today, is an advantage given all that is going on in the news. Equity show this is often fabulous u. S. Jobs report on friday. Euro touching 111. Francine . Francine i want to look at the pound because that can move on the back of the final days of campaigning before the election on thursday. For the moment, strengthening as polls are still showing the u. K. Conservative party on course to win a majority. Im also looking at equities. They are drifting a little in europe. A lot of the focus will be on Central Banks. And the tariff deadline on sunday. Tom this is tradeweighted sterling. We will be showing this a lot to the week as it shows the effort back to john major. Boy, has he come out pushing against Prime Ministers johnson. Mr. Mager in 1992 with a surge of sterling, the boom of the United Kingdom. The lehman crash. Brexit. Sterlingttle bit of over the johnson era. The johnsoncking up era, Boris Johnson entering the final days of campaigning with a Pretty Healthy lee. We charted it. There are a number of polls. The blue is the conservatives. Since julyeen on top 2019. A reminder in the 2017 elections, those polls were wrong and the Opposition Labour Party has not really given up hope. The Prime Minister Boris Johnson returning to key election message only he can deliver brexit. Polls show his conservatives are on course to win a majority. And johnson will urge supporters not to be complacent with the opinion polls wrong last time. Opposition leaders will tell you they will put money in your pocket and power in your hands. Joining us now is andrew adonis. Is this really referendum under Jeremy Corbyn . Terms of what will matter to the country after thursday, a referendum on brexit. The big decision the next parliament will take is whether to proceed with brexit, which will happen if Boris Johnson gets a majority, or move to referendum if he does not gain power. Majority of the voting members of the house of commons. If Boris Johnson gets that, his Brexit Agreement will go through. If you get 320 or fewer, it does not matter what the commendation of the Opposition Party is, there will be a referendum because there wont be a majority for the brexit deal. That is the biggest one that matters. As far as the polls are roughlyd, theyre in a similar position as last time. A healthy tory lead at this stage but not so overwhelming that there is tactical voting. Tactical voting a seat by seat. Francine do you even recognize her labour party . I keep coming back to the Biggest Issue time and again is brexit. Programses have rival and is a big tax bend on the part of the labour party, but unless theres an outright labor majority which, frankly, is not in the realm of the possible at this stage of the election then most of that labor manifesto would have to be negotiated with other parties anyway. The big decision that will be taken probably within a week of the election is whether to proceed with brexit or to call a referendum which would probably happen next summer. It is my view, whichever of those happens, theres a high possibility of another general election after that anyway because the essential mandate of this election will be for brexit and i think every thing will be up for grabs after that. Tom your blade labor, tony blair 1997. A new dawn is breaking, is it not . Are we in the vicinity of a new dawn with this important election . Then we thought it was going to be a bright and happy dawn. Where is what were seeing is deep, deep pessimism on the part of the british voters in this election and the business community, too. Whether brexit goes ahead or doesnt go ahead, theres a huge amount of National Rebuilding to take place after this thursday, and it is nothing like their bright optimism that we had with tony blair in 1997. And tony blair, that most people would welcome him back with open arms at the moment if we could have that kind of aggressive social democrat that did so well in 1990s. Tom i thought of you this week and with Prime Ministers comment Prime Minister johnsons comment. I believe your father was a waiter. Migrationjohnsons mean to the dynamics of the nation if he keeps a waiter from cyprus out of the country . It is bad news. That is part of why brexit is such an issue. My generation, majority people in london, our first or Second Generation immigrants. That is why london is such a vibrant city. It has had massive tom how do you sell it when they dont believe in it . It is a big issue in this election and how migration is going to be managed in the next narration will be crucial. It is not directly related to the eu because most migration into london does not come from the other 27 eu nations, comes from beyond that. Even though there is a confidence being played on many voters in this election if you leave the eu you stop immigration, it is not in fact true. What we do with our immigration policy, which largely depends on immigration outside of europe, will be a huge issue after thursday. Francine you were in the remain camp. If Boris Johnson becomes leader, do you fold up and say, lets just go with it . A lot depends on his majority. If he is a small majority come all of the different stages of brexit implementing Withdrawal Agreement is on the very first stage of brexit. After that will be legislation, the next year there will be trade negotiations on a wholly new trade deal, Security Agreement with European Union after. Everyone thinks that will be hazardous. Is he going to want to stay in Something Like the Customs Union in a Single Market or divert substantially . These are questions of which we dont have any answers at the moment nobody knows. , and this is the inside, very communist tone to it of another time and place, mr. Corbyn as well. N asmentioned mr. Corby well. What happens on friday with your party given any kind of conservative majority . Any flavor of majority . At the moment, it is not clear what the election is going to be. Theres a very significant prospect of a Hung Parliament. Tom and then does mr. Corbin continue . I think you will because there will be negotiations between the parties as what will happen. Though the practical effect of their not being a conservative market that will be far more important than that fate of the individual leaders. Francine andrew adonis, thank you so much. Catch our special coverage of thursdays election after the polls close. We will bring that special coverage starting at 5 00 p. M. In london, 10 00 p. M. In london. This is bloomberg. Tom bloomberg surveillance. Good morning. It is a johnson rally. Lets rounded up to 132, maybe a signal of the election by a deep foreignexchange market as well. We welcome all of you to london. We are really, really you can feel Queen Victoria street lived up here as we go to thursday and then careful analysis on friday at westminster. Right now we are honored lord adonis is with us and continues with us, labor with tony blair decades ago. And now joining us, alberto gallo. Can value like you plague guilds . We are not playing it. The headlines are very binary. Generally we dont see a lot of value in sterling duration because either of the two governments, eventually both the tories were likely to win and labor, will need to spend more. We are coming from nearly a decade of austerity where the u. S. Has cut services to families across the countrys and there is a record hike in of quality, which means more spending. At some point, one government is going to try to spend his way out. Tom lets bring it over to lord adonis. Imphrase in america is, if elected, free beer. You just stated earlier we will have free beer either party, there will be a fiscal stimulus. Is it a fiscal stimulus that has impact and discreteness to it or not . Negotiated. Ll to be as far as the markets are concerned, the governments have already made clear there will be an expansion on health and education. That is factored in. The striking thing about the manifesto, it does not propose to go much beyond that. Theres a tussle going on between the chancellor and Boris Johnson because Boris Johnson loves bread and circuses, but it appears the chancellor has one that. Of the labour party comes, people will expect a further expansion beyond that. That will clearly have an effect on the markets. Francine why would you not trade . Do not believe the polls, alberto . Is it just too risky or too much price did . There are is a large chance of a small upside in sterling, in particular. Because the market believes a tory majority would lead to a better negotiation, more stable brexit deal. Im not so sure. In the shortterm, can have a rally. In the mediumterm, if you get a conservative majority, i think theres still a chance the market underestimates the execution risk. And the chances of a hard brexit, which would not have with labour. Francine are we focusing so much on the election that we are forgetting to remind ourselves there is an agreement, we need to ask for an extension no matter what happens, than the actual negotiating part with the eu about what kind of relationship we want . I agree with everything alberto has that. There will be a short sense of euphoria that at long last we have a decision, whether it is to ratify the agreement or go to a referendum. Then we go under christmas and we all have christmas turkey. But then in the new year, massive uncertainty will occur either way. If Boris Johnson is Prime Minister, what is the trade deal going to be . What is the relationship with eu going to be . If there is a referendum, people will wake up to, hey, maybe this wont go in the direction of romain. Either way, christmas euphoria followed by a new year of uncertainty. Turkey is thanksgiving. I want to talk about this week and i saw the statement of Clement Attlee four to five times. Let me talk about your labour party, your clear desire to get back to a blair tone as well. How far is Jeremy Corbyn or anyone after him from the romance, the misty haze have Clement Attlee . That was a different world. People were much more dependent on nationalized industries. Austerity was a way of life, and so on. Popularbor in line with aspirations, particularly peoples desire to get on and not to lead a life of our personal, public austerity. That dependent upon having a successful economy. That is why teddy bear and i would been united closely and campaigning in recent months since he was Prime Minister have been campaigning on this big issue of britain remaining in the mainstream of europe. That is how future in terms of businesses, technology we have to stay in europe. If we dont do by means of staying in the European Union, we have a Huge National challenge to remain sufficiently post our european markets and france, germany, spain, italy, that we dont become an isolationist power in the years ahead, which is the real threat. Francine lord adonis, thank you, and alberto gallo, stay with us. It is a big week for saudi arabia with the budget announcement. I think they start trading on wednesday. Coming up, jeff currie will discuss those and much more. This is bloomberg. Viviana lets get your business flash. International flavors emerging as a strong contender to purchase duponts nutrition division. Are negotiating with dupont. The division has been valued at about 25 billion dollars. Twoputt shareholders would retain a stake in the business. Up its pushingng cancer treatment. They agreed to bison torques for 2. 5 billion, more than double the u. S. Biotech Companies Last market price. Sanofi has said he would accelerate 17 drug programs, almost half of them in cancer. That is your Bloomberg Business flash. We we are in london but cannot forget the markets in america and the politics of washington as well. I took this from the washington post. It is quite good and spans across the British Culture and the American Culture and some of its differences. Americas politics are shaped by our Founding Fathers revolt against the british crown. Our Founding Fathers, those in grateful colonies for the british francine said that of me. The ungrateful colonials for the british justify their act. Betweenthe division right and left in america stems from the different meanings the two sides give to rights, liberty, freedom and with kevin cirilli, i was a high crimes and misdemeanors as well. Kevin, give us the monday and impeachment update here. It is about high crimes and misdemeanor. How far apart are those two definitions . They are worlds apart between republicans and democrats interpretation of that definition. Today there will be more hearings on capitol hill. The president s attorney, white House Counsel declining the invitation to testify before the house judiciary committee, as to President Trump. This is very much moving along. I was speaking with some staffers of the berries committees over the weekend. They spent all weekend drafting articles of impeachment. We dont know with a timetable for when the committees will have the articles of impeachment, but by all indication there will likely be about on the house floor for the articles of impeachment by the end of the calendar year. Tom what is the distinction the cabinet has chosen in no way to defend himself within this impeachment process . What does that mean . Kevin theyre having their defense happen in the senate. There laying the groundwork for that. Youre hearing from senator Lindsey Graham from south carolina, one of the chairman of the committees that will be looking into this matter once there is a senate trial. But there is an Interesting Development in the last 72 hours that i want to highlight, which was Vice President mike pence gave an interview to fox news. The Vice President suggested perhaps the Republican Party would be looking for democrats in the house to vote against impeachment. Remember when there was a procedural boat, there were four or five democrats who voted with republicans and the republicans who broke with the president. It would appear they would like to pick off maybe one or two moderate democrats and suburban districts like michigan, for example, to vote against impeachment and that would even lead them with stronger footing once they get to the senate trial. Francine theres a report from the inspector general. What are we expecting from that . Something that President Trump and his allies can seize on inside, look at the fbi, they were investigating us but for the wrong reasons . Any time the administration is able to talk about 2016 and the seeds for the investigation and the seeds for the Mueller Report as well as for this particular investigation they feel is a good day for them. That is what you see continue. They have pushed for there to be more calling on for there to be the passage of usmca. That has been one of the biggest unknowns right now is whether or not the impeachment that happens by the end of the calendar year is juxtaposed and coupled with the passage of usmca. Francine thank you so much, kevin cirilli. Coming up, plenty more in the protests and hong kong. In hong kong, possibly signaling more unrest in 2020. The movement shows no sign of slowing. We will be live in the city next. Looking at the impact it has had on hong kong, asking a couple of questions. Where does it leave carrie lam . Disruptrs calling to this mondays commute in workday but that did not materialize as of late morning. Plenty more on hong kong. This is bloomberg. Francine this is bloomberg surveillance. Tom is here covering the u. K. Election on thursday. On to hong kong, thousands of people join hong kongs biggest demonstration in months, and a sign that unrest will continue to the new year. The police put the number around 180,000. How much support do the protesters have from the people in hong kong . It is an interesting question. Over the last six months, we have seen momentum. We have seen in turn more violent from those large rallies million upwards of 2 estimated in june. The last six months, it has dwindled in size and increased in intensity with attacks on the police and vandalism and destroying public property. We saw the siege at the university here in hong kong. There was a risk in the protest movement of bifurcating the camps, those who support their desires but dont support the violence. Importanteekend was was to see whether there is still momentum for this protest movement and whether it has broad support. As you just said, these are of 800,000upwards people showed up yesterday in good weather and families of all ages. Parents and children and grandchildren showed up. It should send a fairly clear lam and thearrie government of hong kong that the overall sentiment is do not interfere, beijing. Keeping carrie lam, is that interfering by beijing were seen as interfering by protesters . Are you saying removing carrie lam . There is no indication that carrie lam is going to i think down the road, yes, it is something that people i have spoken to author record are advising carrie lam, indicating carrie lam probably does need to go. If you ask anybody in this society or many people in this society, they feel perhaps a fresh start from the government is necessary. Carrie lam in beijing, neither of them have given any indication that she will. If things die down as far as the violence, perhaps we could see a change in the leadership here. Given the messaging coming from beijing, there is no indication she will do so in the immediate future. Thank you so much. Right now in new york city with first word news, here is viviana hurtado. Authorities want to note the saudi gunman was acting as part of a larger network. Three naval personnel were killed. The gunman was in the u. S. To learn to fly. Want theblicans program he was training in temporarily suspended. House investigators are making their closing arguments in their impeachment inquiry against President Trump. They will have to decide how far they want to go in drafting articles of impeachment. Jerry nadler says bill president is likely to be accused of abuse of power and obstruction of justice. The president tweeting, kim jongun has far too much to lose by asking in a hostile manner towards the u. S. Mustys north korea denuclearize. North korea says that is no longer on the table. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im viviana hurtado. This is bloomberg. Francine thank you so much. After more than 10 years of crisis fighting, the Central Banks have little room for maneuvering. Interest rates are around the store close or negatives. Bloomberg intelligence expects the fed to hold rates steady. Welcome to the program. We will get on to some of the politics at play. What are you expecting for Central Banks . Qe infinite a environment. The question is what can they do differently next time . We know the fed and the ecb are implementing a Strategic Review of their policies. Like a superhero faced with a bigger threat, they will try to ask for new powers. Starting to be more aware of the side effects of negative rates. They want to do things differently, so perhaps more tearing, restart Interest Rates through the Banking System, and preferring qe to negative rates. There is widespread skepticism that negative rates are useful. They will try to change tactics, but they will still keep doing what they are doing. Francine a superhero is fine. If you have three superheroes fighting together, that would be useful. That would be useful. That is what it will take. Andan mess around with qe having a little more and a little longer. The ecb will need the Fiscal Authority to help them. That will not happen. It will not happen in the short run. It will happen in the long run. Im optimistic in 10 years there will be different policymaking. , it is inxt few years effect. Tom madame lagarde is off the radar. Maybe because of impeachment in washington. How critical is the set of appearances by lagarde in the next 10 days . I think she will tread with caution. She is determined to make this work. To change thed germans . Determined to change the germans. Determined to change the narrative on fiscal policy. I think her team will help her get a different narrative going. The germans have basically been insulting draghi. Germany or the belief that fiscal policy and Monetary Policy is totally separate. Tom who is conservative germany . Is it the elite comfortable with where euro is . Th it is different. Germantenders of the economics establishment, the german legal establishment, and the political establishment from splitd, the spd would be on this, but from the spd to the right. That would be a majority still. Francine how difficult is that coalition in germany . The coalition is in difficulty. Leadership. A new they want to renegotiate the treaty, but they dont want to rush things. If they were to rush things, there might be elections. The spd is in no mood to fight it. They want to have their cake and eating it. My guess is the coalition will expire at some early point, but not necessarily right away. Francine what does this all mean for euro . It means markets have been very optimistic on the fiscal stimulus scenario. A lot of talk about madame lagarde changing the germans and engineering fiscal stimulus, which would make the euro cheap, would make bunds too t ight. Duration has been widening. We think the basic case is not a fiscal stimulus. Ecb result, we think the will continue to upsize the program next year, not because it works, but because it is the only thing they can do in the near term. They may be more creative about it. Ory may buy more bank bonds try to get more juice to the Banking System, which is the transmission mechanism in europe, and at the moment it is still stuck. At the moment with think european bonds are not cheap at the moment. There is a support for Monetary Policy. Francine thank you. You are staying with us. Coming up, we will talk more about brexit, the u. K. Election, two days of campaigning, election on december 12. Polls show the conservatives in a comfortable majority. Will it stay that way . Do we trust the polls . This is bloomberg. Bloomberg. Tom good morning, everyone. Bloomberg surveillance in london. A lovely london towards election. Francine lacqua and tom keene. We are glad to go to statistical. Lets look at a morning mustread, which is a single best morning mustread right now. The basic idea is you need to know your statistics. The most notorious example is david cameron, who could easily be the breakfast referendum available on pulling data at the time. Ofnk about that hat trick Margaret Thatcher when she won a stunning landslide. Statistics as schools to help you ask questions. This is a brilliant essay about that sampling, sample size in the u. K. How often are we on our pulling . Polls, i read them all the time. I may pull junkie. That is why we brought you on. We need to understand what they do and they dont do. They help us ask questions. You need to explore the various themes. Polls are not forecasts. We have to look at other things other than the headlines. What i saw interesting last week is the variance. The variance was very high in the first part of the polls during this Election Campaign, but it has narrowed. If you look at the best full for labor and the best for the tories, it has not pulled away. There is not one at the moment that tells us a Hung Parliament is likely. Something would have to shift. Tom the technology of pulling works in london with the elites and the highspeed internet and all that, to that wonderful article in the New York Times government as you go north and more towards labor, does that have efficacy . We have Voter Movement in the south away from the conservatives and in the north towards the conservatives. The polling methods might capture these two constituencies in a different way. It is possible they might underestimate the tory support in the north. That is possible if you do online pulling. Polling. It is impossible to say if a person who has voted labor all their lives might really change. This makes me humble about trying to make the forecast. There is going to be a lot of movement happening. If we are lucky, they cancel out, but if we dont, they may be way off. Francine how much do the tories need to win this outright . Six Percentage Points is what they say unpredictable patterns. They capturee that some marginal seats in the north and dont lose some marginal seats in the north. I would not go with that 6 lead. Francine the markets are trading this like Boris Johnson s Prime Minister. With the majority. Information, the variance in the polls, that is the best information to date that we have. I am saying there are uncertainties that are stronger than they normally are, and we dont know how those very. This is a bigger uncertainty than there used to be. Tom i cannot say enough about his essay on the statistics of all of this. We are still watching the transactions to yearend. Company, a small transaction. Cancer therapeutics. Francine coming up, france ofrs up for another week protests. We discussed the battle over president macrons pension reforms. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. France gearing up for a second week of protests against pension reforms. Cause fo further disruption across the country. Wolfgang. Us is Emmanuel Macron wants to replace the 42 different Pension Systems france currently has with something that is more universal. Strikes and how much pushback will he get . This thursday anything to go by . Will we see that for the next couple months . We will. The protesters are determined. This is the real battle of the macron presidency. With theaw last year yellow vests, that may be more violent, but they were diffuse with what they wanted to achieve and different groups. He settled that quite well through his town hall appearances and policy. This is substantial. It affects the livelihood of , people who hoped they would get a larger pension earlier on. This is the main distributional battle of france in modern times. Francine will president macron back down . If he doesnt, will he eventually have the support of the citizens of france . He is the leader of the Political Center in france. The other Political Parties other than Marine Le Pen are weakened. Dowould be in a position to this. I would expect him not to back down, at least not completely, tomorrow. Theill certainly stick with principles. Therell probably be some kind of compromise he will make. He is a smart politician. I dont think he will compromise on the principle that would end his presidency if he did. The macron presidency is reform making. Francine how much reform is needed to attract Foreign Investors . That is a different question. I think france is quite attractive to Foreign Investors. I see france as in a better state than germany is. Every country has weak spots. France has their employment laws, the sustainability of the Pension System are issues that need to be addressed. What i prioritize this way he did . I would not. It is a choice he and other people in france have made in the 1990s had to resign over pension reform. This has been going on for a long time. This is the quintessential social policy battle in france over pensions because it is distribution. Francine on wednesday, we will know what this entails. When do we find out if the strikes will mean that the president will do a 180 or not . Will we leave it until after christmas . I think this will continue. I think the strikes will continue after christmas. That is the main weapon the unions have, disrupting traffic during christmas. It has massive economic impact. Disrupting the holiday traffic in paris is right up there. I would assume this confrontation is going to get worse before we are going to get resolution. I think the idea that this is going to be over tomorrow,z i dont think so. Francine thank you, wolfgang. All week, we have special coverage for the u. K. Elections on thursday. This is bloomberg. [ electrical buzzing ] [ dramatic music ] ahhhh ahhhh elliott. You came back alix china cracks widen. Central banks versus trade versus brexit. A huge week for Economic Data, and Central Banks face the backdrop of another u. K. Election. The repo blowup isnt over. The bank for International Settlements warns that the funding issue in september wasnt just a hiccup. Welcome to bloomberg daybreak on this monday, december 9. Im alix steel. In the markets, it is a very busy week on the abbott on the economic front, on the data front. S p futures down by about 0. 1 . Eurodollar is taking a little higher here, 1. 10. Yields lower in the u. S. By about two basis points. Time