President trump talking about trade gave us an insight into the u. S. And china in terms of negotiations. A lot of focus is on what is happening in hong kong with heightened tensions playing their part in a selloff. The u. S. 10 year yield is at 1. 1010. Eurodollar at coming up, we speak to a bank chief executive a little bit later on. Lets get straight to bloomberg first word news here in london. 3g capital is said to have submitted a bid for an elevator business. That comes as a surprise with 3g having made a name for itself buying food giants. They understand the elevator unit could fetch more than 15 billion euros. They are still debating a minority or majority stake. Hong kong has announced a suspension of all schools in the city. This as the security chief warns of unthinkable consequences if violence continues. Early commuters packed on to the first trains amidst calls to impede rushhour traffic. The International Energy agency says Global Oil Demand will likely plateau around the year 2030. It says the current growth rate of 1 will hold for the next five years. But they see lower demand growth in the 2030s once the use of oilbased fuels in passenger cars has peaked. In lebanon, the president has sparked public anger by calling on demonstrators to go home. His comments saw a new surge of unrest which claimed the first death. He urged to stop being negative, warning that if protests continue, lebanon could die. Protesters reacted across the country, restating demands for the removal of corrupt leaders. New delhi is choking once again. The air quality reading rose above 400 on tuesday, eight times the internationally accepted safe level. Wind is blowing from the northwest have brought smoke from burning fields in nearby states, pressuring the government to find a solution. World Health Organization data last year showed india had the 10 most polluted cities in the world. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine . Francine thanks, sebastian. President trump has renewed his assault on the fed, saying policymakers are hurting the economy. Speaking at the Economic Club in new york, he also made the case for negative Interest Rates, saying the u. S. Is at a competitive disadvantage because the fed has failed to follow other Central Banks. We are competing against these other countries nonetheless. The Federal Reserve does not let us play at that game. It puts us at a competitive disadvantage to other countries. I did this despite a near Record Number of rate increases and quantitative tightening by the Federal Reserve since i won the election. It increases eight increases in total, which were far too fast an increase, and to slow a decrease. Too slow a decrease. Many are getting paid when they pay off alone. Who has ever heard of such a thing . Give me some of that. I want some of that money. Our Federal Reserve does not let us do it. [applause] thank you, thank you. The smart people are clapping. Anna the other big issue francine the other big issue the fed has to contend with is the world trade war. Joining us are our guests. When you speak to any bank chief executive, they say negative rates are killing me and the u. S. Has an unfair advantage. Does the rhetoric from President Trump put pressure on the fed or do they ignore . Processing. L trever i am almost speechless at the banality of this idea that america is at a competitive disadvantage that its economy is so strong it doesnt have to have negative Interest Rates. The whole room mustve been full of people saying, this guy does not understand the very basics of what he is talking about. Francine sick so the fed ignores so the fed ignores . Trevor the fed ignores. Likeine it seems to be 2020 elections. U. S. Andou look at the their relation with china, a lot of two and fro, you do this and i do that. The new norm we find is longterm. Even if we find shortterm resolution to the tariffs, it will be this back and forth between these countries. Francine will we have some kind of resolution . Will the chinese economy withstand this two steps backward one step forward . Catherine the longterm situation is simplistically make America Great again versus made in china. You have these two economies competing in highend, value manufacturing sectors. This is not going to change anytime soon. Francine what does it mean for investors and markets . Trevor the important thing is we are insight of the 2020 election. We think we are at the cusp where nasty trump turns into nice trump as far as the markets are concerned. Six months ago, it was almost in his interest to cut up a rough on trade and sheriffs. Tariffs. A reason they cut was the uncertainty emanating from the white house. He has managed to get rate cuts just when he needs them. We are at the cusp where he starts to cheerlead the stock market. We have had a few treats tweets about giving alltime highs as though he is this beneficial grandfather. I think we will see more of that. So i think the phase i trade deal is about trump being able to pivot. Francine what does china do in all of this . The pboc is there. They have not put all the stimulus in place they had a couple of years ago. Can they manage the economy . Catherine it is key to manage it. Do, the word that comes up the most is stability a highfrequency search, the where the comes up the most is stability. They are trying to tweak fiscally and monetarily. Consumer underpin the and see the cycle turn. We still have to gain this volatility because of the new norm regarding the relationship. Francine let me bring you to my chart. To be go to this go to cash in this environment . Margins seem to be reversing and falling. Trevor we are almost maximum positive equities. At theiness cycle is right moment when growth is starting to pick up. The Housing Market is strong, leading indicators are rising. We think it is a positive outlook. Profit margins may have peaked, but that can happen a long time before a recession. What we are looking at is three minicycles. Les each time, you had Central Banks step in stimulus. We think this expansion will run a bit further. Negativeot be too because of the peaking of margins. We are at the moment where if we see dips caused by geopolitical stress, we are likely to buy rather than sell into the selloff. Agree . E do you a lotine what is likely is a pivot away from developed into em, specifically chinese. What is important to remember is the glue growing growing influence of the chinese equity investor. Historically, they were very momentum driven. Time, especially as receipt reforms to the chinese pension system, we will get focus on the total return strategy. Bias of aave the home domestic Investor Base android think minority shareholders. That is ultimately good for foreign investors. But looking at valuations, chinese versus u. S. Equities, because global foot follows are so heavily underweight asia and china, you could see a pivot back towards our region. Francine thank you both for joining us. Catherine and trevor both stay with us. In the meantime, these are high pictures of venice the second highest tide ever has hit the city after heavy rains. We were looking at pictures yesterday with people in wellington boots. Coming up, we speak to the San Francisco fed president at 7 30 p. M. Yucatan. U. K. Time. This is bloomberg. Francine economics, finance, politics this is bloomberg surveillance. Lets get more on the markets and how they are being affected. So with us is catherine from fidelity and trevor from Royal London Asset management. We were talking about market functions and how the trade war impacts Central Banks. When will we see a recession . Are we going to see a bottoming and a this trend normalization of Interest Rates in the next two years or is that too late . Catherine thats a tricky question, but definitely we are on a downward trend. Central banks are clearly monitoring the space. , thewe look at china policies they are doing, it is to revive domestic sentiment which has faltered because of the headwinds of the relationship as well as debt. It is such a big issue. The costs were so high people were not reinvesting so it needs that cycle to kick in. Francine what are you expecting in the next couple of months . Is there something in the market that will provide good value . Trevor well, i think we are at the point where people are starting to look for guidance. Value stocks, industrials are starting to get better guidance. A friend was at a conference and every manufacture said they thought inventories would be rebuilt and they were expecting a pickup. I think that kind of value stock run will probably carry on. But if the economy is firming up, you will get growth sectors like tech doing well. Francine the worry about liquidity . Trevor in what sense . Francine as we saw in the repo of something worry scary markets . Trevor you can always get something happening which can result in a lack of liquidity. A lot of institutions tend to stop trading to try and leave a gap so we dont have to get involved when markets are thin. Generally speaking, i dont think liquidity is bad. If we saw tightening of Interest Rates, you would start to worry but now we have had easing. It is looking better again. Francine where d. C. Opportunity in 2020 . Catherine i agree with trevor. Value sectors. Across the world, level values have not been as attractive the mid 70s. If you have companies where the fundamentals are attractive, going back to my point about the crowded trade, what is going to be the catalyst for a reversion . So catalyst stocks in china are looking attractive and midcap names. Foreigners have shied away when we saw the almighty rally and dip. Both pockets looking interesting. Francine what do you do with europe . I have had people coming in saying europe can only recover. Today, i look at the spanish stocks. Trevor spain has got a special situation with the elections. We are constructive about europe. We are all over european equities in our global funds. European retail sales are among the strongest in the world. Sings ust starting starting to see things like sentiment in germany improve. Europe is looking reasonably priced. Japan is looking good. The dog that did not bark was drive. Es tax i wondering if at some stage we get extra stimulus from china. I take what catherine said on board, they are trying to be micro. But the riots in hong kong are deftly a sign of this slowdown china has been experiencing. At some point, you wonder if there is extra stimulus coming because of that. Francine catherine, Fidelity Investment director and trevor greeted from Royal London Asset management. Up next, we talk trade and growth with the oecd secretarygeneral. Thats up shortly. This is bloomberg. Francine this is bloomberg surveillance. Ratcheting upp is the pressure on china by warning he will potentially raise tariffs if trade talks fail. He said in new york, beijing is desperate to reach an accord with that will only happen if it is good for the u. S. Joining us from the oecd is the secretarygeneral of the oecd, joining us in paris that you for joining us. What do you see the Global Economy going through next year . We are not forecasting a recession, but we see slower growth. One year ago, we were forecasting almost 4 growth for 2019 and 2020. 2. 9 ,e are forecasting meaning we have shaved off more than 1 of the worlds growth. That is mostly because of trade tensions because of decisions on tariffs and duties. This trade war and the uncertainty it creates. Uncertainty is the greatest enemy of growth because it stifles investment. Investment was growing at 5 but now it is barely 1 . Trade was at 5. 5 , now it is negative. In a very we are serious situation, caused mainly by these uncertainties related to the trade tensions. Francine overall, is confidence improving . With confidence it is a trend that will be here to stay . Confidence is like a roller coaster. One day, it looks like we may have an agreement and then it goes up and the stock market sores soars. Then theres a statement suggesting the agreement is not so imminent and it goes down like a lead balloon. So it means confidence is very vulnerable, brittle. It is subject to any statement, any comment. ,here are no fundamentals here basically because the fundamentals themselves are not in place and so many things could go wrong. The Downside Risk is still very high. Francine what could go wrong in europe . Are you worried germany is still resisting calls for more fiscal stimulus . The question of europe is really a matter of coordinating Economic Policy better, because there is an element of coordination to the european commission. There is the question of the biggest economy, germany, whether it can be more expansionary, more stimulative by going into even the small deficit that is allowed under the german constitution that would involve about 12 billion or something beyond the balancedbudget. A number of is that countries also have room because they are paying less interest on their debt. That creates some room without affecting their fiscal positions. Some, like the netherlands, have some room in their fiscal be mildlynd can expansionary without losing control of debt to move in the right direction. But there are also regulatory issues and issues of finishing what i would call the big market s like energy and telecom, and of course, the Banking Union. The latest signals from the minister of finance from germany is that germany may consider positively the creation of a system. Francine thank you for joining us. He is the secretarygeneral of the oecd, joining us at paris. Coming up, a chief executive interview. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Francine substantial threat. President trump says the u. S. Will increase tariffs on china. Stocks stumble. The u. S. President also lays into jay powell, and 3g capital is set to make a whopper bid for for the lyft unit. It afternoon and good evening if you are watching from asia. Im Francine Lacqua. This is bloomberg surveillance. We are getting data out of the u. K. This is inflation from october, that inflation rate falling 1. 5 . We were forecasting a 1. 6 . Falling to 1. 6 . Apologies for that. Lets go to first word news with sebastian. Sebastian President Trump is ratcheting up pressure on china saying that he will ratchet up he will increase tariffs if they do not reach a deal. He also said it is hurting the economy by not deploying negative rates. Pres. Trump it is going to 15 very soon. I tell this to larry and everybody. If we dont make a deal, we will substantially raise those tariffs. They will be raised very substantially. That is going to be true for other countries that mistreat us, too because we have been mistreated by so many countries. Sebastian the secured issue earlier commuters packed onto the first trains to impede rushhour traffic in a show of anger over Police Tactics and hong kong. Elon musk says tesla will round out its Global Manufacturing network with a factory in berlin. The electric car boss said the german plant is set in europe, and will build both factories and vehicles. Union leader has named a new chairman. He joined the board in 2015, having previously held the ceo position. The announcement extended the revamp of the International Energy says Global Oil Demand will laterally plateau around 2030. It says the current growth rate of 1 will hold for the next five years but the iea says low demand growth in the 2013 will happen once the use of autobased fuels has picked. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am120 countries, sebastian salek, and this is bloomberg. Francine a new target has been outlined for 2019 to 2023. The Italian Investment Bank is planning to distribute as much as much asuros 2. 5 billion euros. It is also looking at opportunities to speed up growth. I am glad to be joined by alberto nagel, who joins us from milan. Thank you for joining us on bloomberg surveillance. Talk to me more about m a. What are you looking at and what is it for . Alberto good morning, francine. Thank you for having us today. Plan whered to the we want to have a bigger proportion of revenue in the capital business, so m a day our weste can expand management activity in the activity in cid. Francine but how much do you need acquisitions, and is the industry and the sector ready and ripe for consolidation . Or is it something you need to get a better deal or support regulation was the echo support regulation wise . It is quite an important number in terms of growth. We do need m a to accomplish our can the system is changing in italy because, as youy big. The vast majority is with italian families that used to keep a lot of with the below zero, new product and new Service Model is needed, and investing in technology, adding advisor, is the best way to go in this business. But there can be also opportunity in terms of m a, in particular in distribution, management, a deal to that can be of certain size. Target is not there, but it will come in the next 18 months. Look at when you wealth management, is it too much of a competitive market, a competitive segment . Because you have so many rivals focusing on wealth management. Alberto i dont think it is too crowded. First of all because of the size and because of the fact that two thirds of the market, of the 4 trillion that i mentione