Whether we are any closer to a phase one deal between the u. S. And china. The s p 500 hitting another reluctant record, i would call it, and u. S. Futures on the front foot. The euro study. We sought strengthen steady. We saw it strengthen against the dollar yesterday. 1070 right now. General concern about growth in u. S. Stockpiles, meaning it is trading at 56. 96. Coming up, we speak to the managing director of the fund,ational monetary Kristalina Georgieva. Dont miss that. Markets pushing down the 10 year treasury yield last week. Lets get the bloomberg first word news. Today, the public hearings of the impeachment inquiry start again. The u. S. House Intelligence Committee plans to hear from 8 witnesses this week. They are examining if the president lied to special counsel robert mueller. This comes as President Trump says he is strongly considering testifying in the investigation. The u. S. Reversing its stance that Israels West Bank settlements are illegal. The move is a big policy shift for the u. S. And the latest political offering to israel since donald took Office Donald trump took office. It could give a boost to Prime MinisterBenjamin Netanyahu but is likely a further setback for the Palestinian Peace process. A possible end in sight to the political deadlock in spain. Separatists looking into a deal that would put Pedro Sanchez in power. It is prepared supporters for the possibility. There is a hook. They want direct talks over the future of catalonia. Bolivias ousted president has weighed in on who is the countrys rightful leader. Answer the nations president lacks legitimacy. He says a senator elected by the chamber is the legal head of state, adding that the Current Administration has no constitutional right to rule. He has not had any contact with them. I dont have any channel. As far as i know, the only communication is between legislators and legislators from the right wing that took part in the coup. They do have contact in order to set some rules probably. Global news 24 hours a day, onair and on tictoc on twitter, powered by more than 2700 journalists in over 120 countries. This is bloomberg. President trump says he discussed negative Interest Rates and the economy with Jerome Powell yesterday. The president tweeted that he again called for lower rates to compete with other countries and said that to stronger dollar is hurting manufacturing and Growth Dollar isong a hurting manufacturing and growth. Eric rosengrant spoke exclusively to bloomberg. I am not so sure we needed quite so much accommodation at this time. I am a little bit worried that we have less room than we otherwise would have if we were to have a big negative shock. I would say it is not just the short end of the market or the long end of the market. It is a lot lower than what we were experiencing prior to the last recession, which means even quantitative easing will have some limited effect, given that that could quite easily get down to zero more quickly than we are expecting. Nejra joining us for the hours europeanth, head of rate strategy at ubs. What do you make of eric rosengrants argument when your call is for three rate cuts from the fed in 2020. John i think one of the points he is making is that historically speaking, they dont have a lot of room to maneuver compared to other Central Banks. They are in a much more fortunate position. They do have some room to maneuver. I think it is right that they tread carefully and use the ammunition they have sparingly, make sure they need it. His view is at this point they have done plenty if not a little bit more than they needed to. The reason we expect them to do more in due course is because we think the economy will demand it. He talked of the possibility of more quantitative easing, not saying that he thought it was impotent it was imminent. There is unawareness these tools might an awareness these tools might be needed in the future. Yes. so the fact that you said three rate cuts in the first half of next year it says to me that you expected those to be more preemptive rather than reacting to where the u. S. Economy is right now. If will the market take that they are seen as three preemptive rate cuts . John we will get the minutes this week from the last meeting. We think they will say we believe we have done enough for now. There were dissenters to the last three rate cuts. The committee is probably comfortable with where things are. The reason we think they are going to go again is because we think growth will slow materially in the u. S. In the first half of next year. Significant slowing from the recent pace. With inflation a little bit softer perhaps than they would like to see it, we think they will need to do something. Onlyiew is they are halfway through the cycle adjustment. Nejra both front and back and yields rubbing significantly . John yes. 10 year yields around 1. 8. Nejra yields dropping is what i mean. John we think they get as low as 1 by the middle of next year. Beyond that, we think they start to pick up again. We see this as a bit of an air pocket for the u. S. Particularly, but the u. S. Economy as well. We think the first half of next year will be problematic, headwinds. Tariffs have already been implemented between the u. S. And china continue to bite. Beyond that, we think growth reaccelerates into 2021 at the moment. This is only a temporary slowing but it will acquire that policy response require that policy response in our view. Nejra in terms of what President Trump and jay powell discussed, we understand that negative Interest Rates were discussed. Could we see negative rates in the u. S. . Is that something you are modeling our . John not at this stage is that something you are modeling at all . John not at this stage. We still only see the fed funds target rate going down to 1 . There is still some more room before we start having that debate. Clearly, if growth were to really fall over, whether in the u. S. Or more widely, that might become more of a focus in due course. We are not where we used to be on rates, but they clearly still have significant room for maneuvering before that becomes a real conversation. Our view is the fed will to act purely on economics which starts to look a bit more promising after the first half of next year. Nejra if things get material worse, fiscal will have to pick up. John wraith of ubs staying with us. Coming up, we speak to the managing director of the International Monetary fund, Kristalina Georgieva. Dont miss that interview at 9 30 a. M. London time. This is bloomberg. Economics, finance, politics, this is Bloomberg Markets european open this is bloomberg surveillance. 100 protesters remain sounder remain surrounded by police at Polytechnic University. Speaking earlier, chief executive carrie lam called for a peaceful resolution to the standoff. If the protesters are coming out in a peaceful manner in other words, they stop violence, they give up their weapons, they take the advice of the policeman , then there is no situation that that sort of violence will happen. Nejra joining us now from hong kong is jody schneider, bloombergs Senior International editor. Great to have you with us. What are the prospects for any kind of peaceful resolution to the standoff that just seems to be getting worse by the day . It is hard to see how it is a peaceful ending to this, given chaotic clashes occurred over the past few days, particularly yesterday, where we saw fires raging, cars on fire, teargas in the air. Today, we have seen less of that. We are not exactly sure how many protesters are still on the campus. Some say more than 100, we have heard 60. There are still some protesters there. As we just heard carrie lam say, she says she hopes it will end with them voluntarily leaving and it not being a chaotic outcome. They dont seem to be leaving. The campus is still surrounded by police. Nejra of course, we heard from carrie lam. We just heard a clip from her morning. Efing this she covered a number of topics, including the cleanup on the weekend by the Chinese Peoples Liberation Army and also the fact that the government wants to hold the District Council election on sunday as scheduled. What were some of her main messages . Was aboutst message Polytechnic University and saying that the protesters needed to leave, that this was only going to go well if they left, that the police were in a reactive stance. She mentioned the cleanup in response to a question during the briefing. She mentioned the cleanup by members of the chinese peoples Liberations Army garrison here in hong kong saying that it was just a cleanup effort that they have done voluntarily and charity work in the past. When asked whether this could mean more, signaled that them being more involved in hong kong and in the unrest, she said not right now. Those words right now some people in hong kong pause. Nejra what did Mitch Mcconnell have to add to the debate . We heard from him as well. Thats right. Mitch mcconnell, who is the Senate Majority leader, a republican, basically called on andident trump to stand up stand for the protesters. We have not yet heard from President Trump in recent days on this. We also heard from the u. S. Secretary of state, mike pompeo, who did speak in favor of ending things peacefully. He actually mentioned the standoff at Polytechnic University and said it was important that this end without violence. Nejra appreciate your time. Thank you so much. Lets get the Bloomberg Business flash. Heres Viviana Hurtado in new york. Emirates is considering an order for boeings 787 but the decision is likely months away. The Airlines President continues Airlines President continues to say that will drag on the airline. We will start seeing a more consolidated industry as far as the airlines are concerned, more efficient, less of them, and perhaps more efficient usage of their inventory. 2021, 2022istic in but 2020 will be difficult. Will startk, wework cutting jobs in the u. S. In an strugglingstave off more news could come on friday, on the companys chairman is expected to tease a fiveyear plan for the company. Wework declined to comment on these potential cuts. That is your Bloomberg Business flash. Nejra Boris Johnson and Jeremy Corbyn will face off in their first election, tv Election Debate this evening. It comes as Jeremy Corbyn seeks to reverse the Prime Ministers opinion poll lead. Johnsons party is 14 points in corbyns. Jeremy yesterday saw the three main u. K. Wide party try to move business at the conference. One of the advantages of voting conservative in this election is that we can and will get it done and get it done in a matter of weeks. We have a deal that is ready to go, just add hot water, stir in part. It is there. What we are offering this country is to negotiate a trade deal with the European Union, which gives a credible leave option alongside remain to put that to a referendum. Numeral democrats are absolutely going to try to stop a brexit liberal democrats are absolutely going to try to stop brexit and use our strength to bring much more reason to british politics. If we get a working majority, we can get Parliament Working for you. We can then unleash the potential of the whole country. Properly functioning Public Sector that provides the health care, the social care, and education that is so essential to all of our lives. That is the areas that we will be campaigning very strongly on. We are not in the business of putting into number 10 somebody who is so obviously unfit to do that job as Jeremy Corbyn or Boris Johnson. Anwhiles, hsbc meanwhile, hsbcs david bloom says you cannot have a Boris Johnson and Jeremy Corbyn winning and a Hung Parliament and we dont know which one it is. You have three different views that could have dramatic impacts on sterling. On the 13th of december, whatever sterling is traded at now, it will not be trading like that that day. Francine still with us nejra still with us is john wraith. John sterling will not be here come the other side of the election. It has been moving significantly. Some outcomes are becoming in the markets mind more likely than others. I think that is the way that currencies always trade. They are pricing in the average range of property probabilities. Sterling has been appreciating because it makes the resolution at least nearterm at the current phase of brexit more likely. Nejra he sees sterling at 1. 45 at the end of 2020 on a deal, 1. 10 on no deal. What it really go that high would it really go that i . That high . 1. 35 we think it may go to in a fairly short space of time. We get the majority for the conservatives, the deal goes through, gets ratified, that confirmation takes it to that sort of level. It probably hobbles around there for the first half of next year. As we get into the second half, it will very quickly come into focus that the transition period is due to end. By july, if there is a Mutual Understanding that an extension might be needed, it is agreed then to make sure we dont have these cliff edges. The current Prime Minister of the current government says we will not answer an extension to the current period. They dont have parliament pushing them to do that. If they only do it choose to in due course by pointing to economic risk. Any extension request of the transition period comes at the very end of next year. That is serious cliff edge concerns, headwinds for growth and investment, they u. K. Economy slowing again in the second half of next year. Where is the downside on the Downside Risk . John it depends on what the Downside Risks are and where it materializes . A Hung Parliament is just a sort of ongoing process like we have seen over recent months . Sterling loses ground, but in a way . Of fairly orderly a big majority for labor we would suggest for some overseas investors would be a cause of concern . Some of the policies around nationalization and not knowing what that might ultimately lead to . It points to less of a risk of brexit happening, which is seen as a positive for sterling . . Its very hard to know sterling. Its very hard to know. No conclusive outlook is priced in at this point. Nejra john wraith from ubs stays with us. We speak to the managing director of the International Monetary fund, Kristalina Georgieva. Up next, we will get the latest on the global trade outlook. This is bloomberg. Nejra this is bloomberg surveillance. Im nejra cehic in london. The trade wars drag on the two biggest economies will likely fade in 2020, according to goldman sachs. What do we get by the end of the signed of phase one deal , tariffs paused and rolled back on tariffs . John we certainly do not think we get the rollback. That, in our view, is too optimistic. Although there has been relatively good news recently, the tariffs that have already been implemented are in the pipeline and will bite harder in the first half of next year. Youre starting to see effects on some of the impacts on tariffs implemented in terms of Capital Spending and hiring slowing down in the u. S. , trade volumes leveling off. For us, although we may be through the worst of it, we still think from the point of view of the u. S. Economy, you are going to see incremental slowing in the first half of next year because of what is already in the pipeline. Nejra if we do get the phase one deal past and a pause on the december tariff, is that enough to take the 10 year treasury yield above 2 . John we think a lot of that news has already been priced in an arguably the market has a ready gone too far. For us, yields are likely to end the year lower than where they are at the moment. Nejra john wraith from ubs stays with us. We speak to the managing director of the International Monetary fund, Kristalina Georgieva. That is next. This is bloomberg. Nejra powell goes to the white house. President trump says he posttest he protested high Interest Rates. Hong kong Police Surround protesters in a university standoff. Carrie lam calls for calm. Boris johnson and Jeremy Corbyn go head2head in the first debate. This is bloomberg surveillance. Im nejra cehic in london. Lets get the bloomberg first word news with Viviana Hurtado. President donald trump protesting u. S. Interest rates when he met with Jerome Powell. He sa