Dropping as the british Prime Minister found herself under renewed pressure as brexit talks also in a very crucial moment. What also i am looking at is a little bit of subdued ftse. The overall european indices moving sideways, a little bit on the lower side. I dont often look at bitcoin, but slumping significantly after the cancellation of a Technology Upgrade, prompting some users to switch. First, lets get to the bloomberg first word news. Nejra u. S. President donald trump has said he has a great little restaurant just a great relationship with the president of the philippines as he ignored questions about narcotics. In saudi arabia, a senior official has said king salman is not looking to abdicate in favor of his son. Wasaid abdication unthinkable, especially because the king enjoys perfect health. Haslebanese Prime Minister dismissed speculation he is being held against his will in saudi arabia and plans to return home within days. He made his first Public Comments since his surprise resignation. We will be talking to Christine Lagarde described the china move as a positive development. The fact that it is considering to remove at least partially those barriers and then gradually eliminate those threshold, that is an indication of two things, openness and also strengthen confidence in their own system. South koreas foreign has said pyongyang must show signs it is moving away from ofvocation for any talks denuclearization can start. The sanctions are working. That may because in them to recalculate. It could mean they are finetuning some technical aspect of what further provocation that might have up their sleeve. They may have up their sleeve. It is good. Nejra global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am nejra cehic. This is bloomberg. Francine lets start in the u. K. The pound has dropped as recent may faces challenges to her leadership. Mpsany as 40 conservative have a great to sign a letter of noconfidence in theresa may. Does that is just short of the 48 that would be needed. Our reporter joined us. Also joins us is peter kinsella. He is our guest host for the next 30 minutes. David, thank you as well for joining us. 40 sounds like it is very close. 48 can be difficult to reach. Consider where the conservative party finds itself. Very difficult negotiations going on with brussels. Does anyone really want to trigger that . There has to be another election. In that constant and that context, maybe that eight is a bigger hurdle than it might sound. Francine does it weaken her position in her negotiating deals with brussels . Reporter all of this stuff, whether letters calling for her all of it weakens her hand. The question about the bill is hanging over the u. K. And she is in an increasing weakness. I cant think of something that strengthened her hand. Francine as three think she can do to regain authority . There was quite a lot of talk about the labor from the labour party. Reporter it is about day when you have to rely on the labour party to shore up your position for a conservative Prime Minister. That highlights her weakness. What can she do . There was talks about doing a reshuffle. She has had a reshuffle forced on her by some of these scandals, and she hasnt been able to change the deck. We have a budget next week. It is on the 22nd. That historically is the time the government sets out its agenda, puts out eyecatching policies, rechange the game. Does she have any leeway to do this this time do that this time . Probably not. Francine how do you trade pound on this . What do you look at . I think boe is pricing at this stage. The optics surrounding sterling are horrific at the moment. There is no good news coming from the political side. At least so far. One thing to note is the u. K. Has a history of playing this card, the domestic political uncertainty. There is a bit of that involved as well. The problem for brussels is, if we get another general election down the line, who do they want to be negotiating with . The prospect of the labor government doesnt give the markets a lot of faith in sterling. Francine where does sterling trade from here . Peter if you look at sterling, it has trended ok. Itnt been awful hasnt done an awful lot. I think we are likely to get a deal done in december between the u. K. Antie. U. A lot of between the u. K. And you e. U. Tween the u. K. And if you have ever been to an auction, you wait until the last second before you put in a bid. Francine if she does get a concession in december, does it mean her position is safe . Happens, thereat is an important point there, which is what is your point out of this. They dont want to be negotiating with the hard brexiteers. Merkel may come to her aid and try to move these talks forward next month. There has got to be some concessions on the british side. This isnt going to happen unless british britain changes its position. Francine is it just a transition to . Is it just a transition do . Is it just a transition deal . Peter it will give us the Building Blocks of something done. Francine what happens to the pound . Peter sterling would lift, a two percent or 3 move. We still have this uncertainty. We dont know what the trade situation is going to look like. That will be priced in. Francine david, thank you so much. Peter kinsella stays with us. Up next, we hear from Patrick Harker about the shape of the yield curve and the timing of the next hike. We also talked opportunities in activist investing. This is bloomberg. Francine this is bloomberg surveillance. Nejra Emirates Airlines has committed to buying Boeings Dreamliners at a point of 51 billion. That came as a blow to airbus, which was to announce its own deal with the carrier. Emirates said it would buy 43 liners. It is not dissimilar to the 359. Perhaps it has better economics. Uber has approved softbanks offer to buy a multibilliondollar stake in the company for one of the largest private startup deals ever. Would proceed with the tender offer and the coming weeks to buy up to 9 billion in shares from existing investors. The deal could fall through if theyre not enough interested sellers. Alibaba generated a Record Record sales as the ecommerce giant worked with more traditional retailers. The Chinese Company also hosted Goldman NicoleNicole Kidman and pharrell williams. Says he Patrick Harker doesnt want to see an inversion in the u. S. Yield curve. Speaking to bloomberg, he said he expects to be supportive of the u. S. Rate hike next month. There are a lot of likely suspects here. One is simply that other banks continue to be highly accommodative, and that is one of the reasons we are seeing the long and flatten. The long and fun. I am concerned about that. The pace has to be gradual. If it is gradual, do you think we will not see any inversion of the curve . Avoid any like to inversion of the curve. My goal is to remove accommodations in a way we dont run the risk of inverting the yield curve. Does it concern you to see the yield curve this flat . Ically that is it fine that is a sign the economy is slowing down. The expansion has grown long in the tooth. We are starting to see tight labor markets, unemployment at 4. 1 . Our forecast is we will dip below 4 before coming back up. We are seeing a lot of tightness in labor markets, a lot of other growth. This expansion has been quite remarkable for how long it has gone on, and a continued steady pace of job growth. It is it has also possibly been remarkable for what we have seen in the stock market during this expansion. As the Balance Sheet has increased, we have seen stocks go up. You confident we wont thing that we wont see that correlation maintained . For our Balance Sheet normalization, we are trying to do this in a way that is as boring as watching paint dry. We want to make this slow, steady. Put that on autopilot and use changes in the fed funds rate as the control variables. The thing we will either increase or decrease. I dont see us playing with sheetdoing the balance normalization. Easy, clear, concise, and communicate clearly what we are doing. Harkere that is patrick. How should investors be positioning themselves ahead of the meeting . How do you explain the flattening yield curve . Traditionally, it gave an idea of impending recession. I found his comments interesting when he said we are not going to have an inverted yield curve. Markets should not discount what he said. They would go at a slower rate. You will struggle to get higher u. S. 10year yields. We have a low inflationary outlook. We are at low growth. We have Central Banks continuing to be very highly accommodative. There is pressure to get yields dumping into treasuries. Are jumping. Which means . Peter it can continue for a while. The worry at this stage for the if they continue to lift the front end of the curve, the backend doesnt do a lot. Skepticism regarding the extent of rate hikes they can do next year. I think the market is still underpricing the extent of rate hikes next year. We are likely to get at least two. The reduce in the trade would be the front end rather than the back. This chart is a spread between the twoyear and 10 year in the u. S. The red that is the recessionary environment in the u. S. The slope continues . Peter it could for a while. The curve wont have a signal thing a signaling effect as it did in the past. The problem for investors will be looking at the actual underlying data. That has been reasonably good. If it is, we can be confident things will continue as it has been. Cant youyou cant read too much into the yield curve. Francine thank you so much. Peter stays with us. The pound dropping a little bit further as the british Prime Minister finds herself under renewed pressure as brexit talks are getting underway. 1 asn see it is sliding sentiment seems to be selling on u. K. Political outlook. Up next, bitcoin. The cryptocurrency tumbles. We will explain the move next. This is bloomberg. Francine you are watching bloomberg surveillance. Lets look at the coin. It has been on a tear this year, however it has plunged since late friday with the cancellation of a Technology Upgrade. Has jumped nearly 40 since friday bitcoin cash has jumped nearly 40 since friday. What exactly happened . This was an upgrade we were expecting that never happened. Reporter the issue with good going over the last the issue with bitcoin has been scalability. How can it process all the demand that has that is being put into it . August in august there was a split in there was a new form of bitcoin that can handle the volume in a different way. That was supposed to happen again last week. By not happening, it freaked out a lot of investors who were worried that traditional bitcoin wouldnt be able to scale the weight was promising. That prompted a flood into bitcoin cash, which is a new 1 which is the new one from august. You saw the spike over. You saw spike over period of hours. In july, there has been a debate in the Bitcoin Community on how you can scale the process. It takes more than 10 minutes to process a single transaction on bitcoin. In 2017, that is not feasible. Scientistse computer , but the different way to do that. Thatame know and became known as bitcoin cash. This debate becomes arcane in computer science, but it is roiling the community right now and they are trying to figure out the best way to create scalability. They thought this new fork that as coming was going to be leap forward, but there was disagreement in the community. That is why decided that is why they decided to cancel. Francine peter, how does this affect your world . You need to look at it . Peter i definitely need to look at it. Have been. When coco crisp came out, when cryptocurrency came out, the success would depend on how quickly people used it to transact. People have done that. It is definitely a game changer. I dont think you can call it a store of values yet. For me, the Bitcoin Technology block chain has a value. Whether you can say bitcoin itself has a value, i am not sure. Francine how long do you give it, 2, 3 years . Peter two or three years is reasonable. The point of scalability is key. What you will see as more and more people using it. That is where the ultimate value will go. A small investment in bitcoin would make sense. Because it is transformative technology. Francine peter, thank you for joining us. Up next, we talk opportunities on the periphery and activist investing. Joseph marie oughourlians fund was voted the most active in europe. We will keep an eye on what happened with the brexit. Quite a lot of concern is being priced into sterling. Sterling under pressure. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. This is bloomberg surveillance. Lets get straight to the bloomberg first word news. Nejra u. S. President donald trump has said he has a great relationship with the president of the philippines as he ignored questions about narcotics. Dinner, Rodrigo Duterte think love songs. Speaking to bloomberg, he expects to be supportive of a rate hike next month. There are a lot of likely suck specs there. One is likely suspects there. Continue to beks accommodative, and that is one of the reasons we are seeing the long and platinum. I am concerned about that. That is where the pace of removal accommodation has to be gradual. Nejra in saudi arabia, a senior official has said king salman is not looking to advocate looking to abdicate in favor of his son. Unaid abdicate and was becausee, especially the king enjoys perfect health. Says hes Prime Minister is not being held against his will in saudi arabia and plans to return home. The pound has weakened after 40 conservative members of parliament has a good have agreed to sign a letter of noconfidence in theresa may. She is struggling to maintain her grip on power after the resignation of two cabinet ministers, calls to sack boris johnson, and as the e. U. Races the prospect raises these prospect of talks feeling. Raises the prospect of talks feeling. Christine lagarde described the china move as a positive event. The fact it is considering to remove at least partially those barriers and then gradually eliminate those threshold, that is an indication of openness and better strengthen confidence in their own system. Nejra global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im nejra cehic. This is bloomberg. Francine lets talk Political Risk in europe. Italy has an election coming up. The latest polling shows the Populace Party getting support, currently leading the polls. It is also not over in catalonia. The plan to restore stability and is on preventing separatists from winning the majority in the election. On Prime Minister called for december 21. Polls suggest that vote could be a knife edge. How do you position your portfolio have those risks . Joseph marie oughourlian is the and is with us. They do so much for coming on. Opportunity or not in your . Joseph opportunity or not in europe. . Joseph we think about questions are attractive. Earnings are depressed and now you are seeing the recovery coming through, so you see earnings upgrades this year, first time in 7, 8 years. We still like the area. Francine three or four years ago, you are positive on europe. You were positive on europe. Is it now too crowded . Joseph it is not as valued as it was three or four years ago. When we were talking about it at the time, there was skepticism and the risk was not completely off the table. E have made progress at the time, a lot of the economy as we were talking about were still in recession. Even italy is going. Greece is growing. The Political Risk was all over europe. The macron election was a bit of turning point for the e. U. I am less worried about the rest of the elections and the risk you mentioned. Francine are we to complacent . Came in and people said this is the resurgence of youth and hope. Actually, it is going to be difficult for the president of france to do stuff in his country. Joseph it will be. France is not an easy country to reform. None of these countries are easy to reform, but he is actually doing more in a couple of months and probably most of the french governments happened last 30 years. French governments have in the last 30 years. As far as catalonia is concerned, i think that story is quickly fading. Crashed against the reality of the economy. You see more than 1500 copies moved headquarters 1500 companies moved headquarters away. About how rhetorical great it was going to be to have a free catalonia, i think that has crashed. I think it is difficult to predict elections, but i think in december we should have a clear majority of people voting partiesthe separatist that have lied to people for a long time. Italy is a concern. The sicilian elections showed the candidate seen as the reformist in the italian politics got slaughtered. We have to see. It is early days. Elections probably wont happen until february, march. Italian elections have never been really big market movers. Day, to usef the the famous words, everything must change so that the in changes. So that nothing changes. Francine you can say that about u. K. Politics. Joseph i am more worried about u. K. Or u. S. Politics, to be honest. Everyone has been focused on Southern Europe and the populist , spain, italy. What you have seen as those risks have receded. Democracythis young has done very well to whether through all of these crises. U. K. U. S. , we are struggling more. Francine when you look at greece, and i know you were invested in greece, are you concerned we still dont have a it isment in germany and crucial to know who the next finance minister is to find out their stance with some of the periphery is