Is ready for a long political battle. Host hong kong drops its bid for the lse. It is too challenging of a deal to pull off. The brexit outlook remains murky at best. We are nimble. We are in limbo, and that is not a good thing. Host they discussed the british divorce from europe. If i am right, the u. K. Will come back and rejoin the european union. Host jay powell says the fed is planning to expand its Balance Sheet. They came out and said we are doing this, be prepared. Host and an exclusive conversation with Robert Kaplan shedding more light on Monetary Policy. This cutting we are doing should be limited, restrained, and modest. Host it is all straight ahead on bloomberg best. Hello and welcome, i am nejra cehic and this is bloomberg best. Your weekly review of the most important Business News, analysis and interviews around the world. Let us start with a day by day look at the top headlines. With the u. S. And china set to talk trade in washington this week, investors were optimistic there would be progress towards a deal. But a bloomberg report threw some cold water on those hopes. Chinese and u. S. Negotiators are preparing to restart long stalled trade talks this week in washington. We are learning china is going into the talks with new reluctance about a broader trade deal. China is apparently going to walk into the trade talks this week not going to talk about industrial policy or subsidies. Those of you that have followed all of this for a long time will say to yourself isnt that the core of the u. S. Complaint . You are right. It is. That is the core of the complaint. This sort of signals that china is looking for not big deal or no deal but little deal or no deal. The grand ambition on the talks seems to have muted a little bit. The ambassador is pretty realistic about what he can achieve in these negotiations. A wholesale remodeling of chinas economy was never on the table. But getting reluctance from the chinese side that anything on subsidies will be discussed or anything that resembles a concession on this will make it hard for him and trump to sell the deal at home. The Trump Administration has blacklisted eight chinese tech companies, accusing them of human rights violations. What has the Trump Administration done to restrict business around these companies . The Trump Administration took a similar move today as it did against a company like huawei, putting it on a blacklist. U. S. Companies are restricted from do is doing business with these companies on the blacklist. The Trump Administration announced these are chinese surveillance firms, ai firms over human rights violations. The white house exploring restricting Pension Funds from investing in chinese stocks. The white house has taken off one of the more extreme options, the delisting of Chinese Companies here in the United States. There no longer talking about that, but they are talking about applying pressure on index providers like msci to reduce the weightings of Chinese Companies in the emerging Market Indices and federal government worker Pension Funds to avoid investing in china. The idea being, and this is something pushed by the hawks in the white house, to restrict the flow of American Capital into Chinese Markets and Chinese Companies. The Trump Administration slapped visa bans on chinese officials. State Department Officials say the visa ban is unrelated to the trade talks due to begin on thursday. But the stock market and investors do not seem to believe that. They say this individual action, the visa restrictions, are not linked to the trade talks, what is clear is that u. S. Officials see all of these things as part and parcel of the same thing putting more pressure on china and leading chinese officials know they are very serious and that they will play hardball. They think this gives them leverage and a tougher negotiating position heading into thursday. Chairman powell said the central bank will reserve purchases of treasury securities. It is an effort to avoid the repeat of the turmoil you saw in money markets. I went to emphasize that growth of the Balance Sheet should in no way be confused with a largescale Asset Purchase Program that we deployed after the financial crisis. He kept pretty close to his vest any plans to cut rates this month. But he was able to trigger a steepening in the yield curve, especially the spread between twoyear rates and 10 year rates. It was kind of surprising for markets that we heard from Jerome Powell in such advance of the october 30 rate decision. He came out and said we are doing this, be prepared. The combination of the advance notice plus the term repo operations that continue to come out will inundate the short end and make sure the repo madness we had does not continue on. President trumps counterattack against House Democrats is taking shape. The administration stonewalling the widening impeachment inquiry. A white house lawyer declared it unconstitutional and invalid. What happens now . President trump signaling he is prepared for a long political battle against House Democrats as they continue to try to investigate him for the impeachment inquiry. The behindthescenes notion of that letter suggests that republicans have calculated that politically speaking, they are daring democrats to challenge them in the courts. Democrats for their part say bring it on. Theyre looking at polls that suggest that increasingly the American People are behind speaker pelosis decision to investigate into this impeachment inquiry. The bottom line . Democrats hope to wrap this up by the end of the calendar year. Republicans just said, as illustrated by that letter, maybe that the longer this goes on, the better. China is open to reaching a partial trade deal with the u. S. Bloomberg has learned that in return, beijing would offer noncore concessions like purchasing more farm products. We are definitely seeing this bloomberg scoop have influence across the markets. What you have is china coming to washington with the same offer they have had all along for donald trump. We will make some agricultural purchases, some Energy Purchases and we will see how it goes from there, hoping that will buy them some time. I think the market is taking it as a positive sign. I am not sure it is entirely such a big step forward. The big story of the day trade talks resuming today in washington between the u. S. And china and bloomberg has learned the white house may roll out a previously negotiated currency agreement with beijing as part of a partial deal. The tariff increase at for next week may be suspended. President trump will meet with the ambassador tomorrow. He said china wants a deal. To me, it is surprising that the chinese have come at all. The mood music around these talks is extremely negative. We have had a very good negotiation with china. They will be speaking later but they are basically wrapping it up. We are going to see them tomorrow, right here, and it is going very well. A massive move in cable over the last couple of days. The biggest pop since december 2008. And potential breakthrough in the United Kingdom after a meeting between the irish Prime Minister and boris johnson. They see a pathway towards an agreement. The chief negotiator recommended the two sides discuss drafts of an agreement in secret. Negotiations have entered a critical stage and they are the highest level. We do not actually know the new text and we probably will not know how things are really shaping up until monday. We have to treat this very carefully because the threat of a no deal brexit is still on the table. The biggest question mark is, if we do get a deal between the United Kingdom and the eu, the u. K. Parliament would have to approve it. Every time it has been put to a vote, it has been rejected. We have a deal, phase one. The u. S. And china have announced an agreement on the outlines of a partial trade accord. President trump says he and the chinese leader could sign it next month in chile. Here is what we know is in the deal. Fx is part of the deal. Agriculture purchases scaled over two years. Ip in the deal. Here is what is not in the deal. Huawei, Chinese Industrial subsidies and chinese tech transfers. We have had a tremendous negotiation, a complex negotiation. Something that will be great for both countries. Let us get real this is not really a deal. It is the agreement of a scope of a deal that has yet to be worked out. Even if that deal works out as the reports are played out, what this is going to amount to is not really a deescalation of tensions. Just a nonescalation. It means the existing tariffs and sanctions will not really be rolled back based on what we have heard so far. The new sanctions that have been threatened by the administration will not come into effect. When one thinks of the broader issue that underlie the tensions between the countries, there does not seem to have been that much progress. If you think about the implications for businesses that want to reduce uncertainty, i dont think we have made much progress at all. Nejra still ahead, as we review the week on bloomberg best an exclusive interview with Robert Kaplan. Moving modestly now gives us the best chance to avoid a more severe slowing. Nejra and talks about brexit in london and the ceo spotlight falls on our next guest. Up next, more of the top headlines the controversy causes issues between china and the nba. A tweet caused havoc in the last few days. Nejra this is bloomberg. Nejra this is bloomberg best, and i am nejra cehic. Lets return to our global tour of the top business stories. We have an intense geopolitical drama involving turkey, the u. S. , and the conflict in syria. It appears to be a major policy shift for the u. S. Turkish military will be moving into syria and the u. S. Will be stepping aside. Walk us through the significance of this. What can we expect out of turkey . Donald trump just told president erdogan that the troops will stand aside as the Turkish Military launches an operation against the u. S. Kurdish allies in syria. On the one hand, the forces have been a close ally of america in its fight against Islamic State in syria. On the other hand, turkey, a major nato ally in washington, considers the Kurdish Group to be a major Security Threat because of its links to groups that turkey has been fighting against for decades, the pkk. The biggest selloff so far. We can see that around 11 38 was when it took a leg weaker. President trump put out a tweet writing as i have stated strongly before and just reiterated, that if turkey does anything that i consider to be offlimits, i will destroy their economy as i have done before. The president seemed to give turkey the green light initially to attack Kurdish Forces in Northern Syria and republicans balked at it including lindsey graham. He seemed to push back against the president. What is the latest . It has been an unusually high pushback for republican senators, not just the two or three that is known to needle the president once in a while. I think that led to the tweet which can be read as they walk back of his Statement Last night which was more of a blank check for Turkish Forces to move into Northern Syria. The mood in congress is that the kurds no one will want to be an ally of the United States if we pull up stakes and walk away with short notice like that. Turkey has begun its military offensive into northeast syria days after President Trump said the u. S. Will not stand in the way. President trump released a statement in the last hour saying he was not endorsing the turkish operation. He told president erdogan of turkey that he thought it was a bad idea. But the u. S. Forces are Still Standing down and trying to move out of harms way at this point. Chinas state broadcaster said it would immediately halt broadcast of the nbas games after nba commissioner adam silver said he supports the Houston Rockets general managers freedom of speech after he showed support for the hong kong prodemocracy protesters. This is another example of a Company Caught in the fray of the protesters. The nba arguably has the most at stake here. To put things into perspective, the nba said last year they had 800 Million Viewers in china. That is nearly 2. 5 times the population of the United States and they have been notching doubledigit growth in china since 2008. Whether it is the nba or other brands, they are caught in this lose lose situation where they are at risk of losing fans in one of their biggest markets rbc as kowtowing to the chinese government. More Chinese Companies are cutting ties with the nba as the fallout continues from a tweet sent by one of its executives. It seems the nba and china at this point are on something of a collision course. You have adam silver expressing regret that it has come to this stage but really sticking by that commitment to freedom of speech. That is what the nba stands for. This looks like an unusual event because it was based on not a corporate error, but a single individual, a manager of one of the 30 franchises of the nba. A single individuals seven word tweet causing havoc in the last few days. You need to understand that the sensitivities of china are so strong that if you violate them, you will pay the price. The latest fed minutes show policymakers had begun debating how far the rate Cutting Campaign should extend. Even as they agreed to lower rates last month. A few participants are saying they are uncomfortable about the gap between Market Expectations and the feds appropriate path. Do you think the fed is leading the markets around on a leash . That has been happening for quite a wild, powell in 2018, increasing Interest Rates four times. And then suddenly he switches on january 4, saying he is going to be very dovish because the difference was in the second half of december the market created. The fed is following a policy where the equity market dictates what they will do with little to do with the economy and inflation which are supposed to be their main targets. Now, to germany where a jump in manufacturing fueled surprise improvement. This was in Industrial Production after two months of decline. The outlook for europes largest economy remains troubled with production down 4 on the year and shrinking factory orders. It is signaling there is no turning point in sight. Factory orders are down for the 15th consecutive month now and Business Confidence in germany is down to a decade low now, which is not surprising given all of the news about the ongoing trade war and the uncertainty about the possible half brexit that is around here. Every economist now, almost everyone now thinks that germany has entered a technical recession in the third quarter. The euro area finance ministers agreed on the final key elements of a budget for the currency bloc. What kind of deal are we looking at . Does it make the difference . That is the question and it actually is a small budget. It has been in the making for two years. It has been watered down many times. There is a deal but the french government, which has put forward this idea many times, will tell you that it can get bigger. We are looking at 20 billion euros that will be used to facilitate investment and promote reforms in the euro area. But the question is can this help the euro economy . The answer is probably no. The positive spin from the french government is the Macron Administration says any agreement is always good news and can get bigger. Two missiles struck an Iranian Oil Tanker off saudi radium arabian red sea coast. The Tanker Company accused the saudi arabia of the attack but later withdrew that claim. This is the latest as escalation in a series of attacks that have happened in the region on shipping and oil installations. What is interesting is the oil market reaction. They are not as important as they used to be. The market seems very focused on the prospect of oversupply next year and less focused for the time being on the geopolitical risks. Nejra this is bloomberg best and i am nejra cehic. Fed watchers had much to consider this week from the fmoc minutes and chairman powells comments. We traveled to texas for an exclusive conversation about Monetary Policy with Robert Kaplan. When you start hearing people like me and others saying i am agnostic about whether we move from here, that would tell you that if nothing changes, we are going to stay where we are. But i think we have so much uncertainty and so much policy uncertainty, i think it would be wise for us not to over telegraph where we