Chinas gdp is front and center. Its a huge deal. Right now, we need to get to our first word news. Isnie chinas economy staying close to the forecast. Slowest poorlyhe expansion since 2009. That is set to off set exports. The Chinese Government wants it to grow 7 year. Thed is taking site at biggest play since the civil war. They are backed by a ring in special forces and russian airstrikes. Wave ofuld be another refugees heading west. The palestinians are giving up a wave of attacks on israelis. One israeli soldier was killed and 10 people wounded. The attacker was shot and killed in police say they shot and killed a foreigner by mistake. The Iranian Nuclear deal has now taken effect. All sides will have to start delivering on a promises they made. That means a limiting 95 of your rich enriched uranium stocks. The west is getting ready to lift economic sanctions. This may be the end of the road for a Stephen Harper after a decade in power. Canadians vote today. The poll suggests the liberal party will be the next prime minister. Those are your top headlines. Tom a lot of elections. The canadian one is interesting. Its been followed worldwide. Theproxy for some of tensions out there. Theres no question about that. Lets move on to the 10 year yield. 2. 04 . Movingy thing it really is gold. Elevated, not mere 1200 it, but we are getting there. We had the news friday, the speculation of the finance manager minister. That is an abrupt move for those who were already out the door friday at noon it. Come on in here. Lets take a look at china. To 2007. 999 china is doing so much to divide a stimulus. They did not have a democratic debate. Printing it suggests management. The good time and the bad time, this is a good time to bring in the hong kong office. We are talking about a grind in china gdp. What is a level of concern in beijing to go under 7 . Theyve let it go just below the 7 mark. It would be close to 7 before the year is out. We saw something about a mixed bag. Its showing that the new drivers is coming along well. Of the old China Economy are still struggling. Manufacturing is in a told him. Its quite a mixed picture here. Francine what do we know about the real figure western mark how much was this inflated . A lot of traders are treating this with skepticism. There is always skepticism around chinese data. That is healthy. They set a growth target. We still have growth come in very close to 7 . You wouldve thought that wouldve taken a big hit from the stock market. Services were the main contributors to growth in the quarter. Skepticism is there. What we need in china is more highfrequency ratings. We need more innovation sector. There are some new data points about the economy rather than depending on some of these old growth readings. Tom there such a sharp difference between Service Sector growth and manufacturing growth. We have been in every nation. Give us the distinction of chinas separation between better than good service and egg more challenging manufacturing recession. You are right. We have the two speed economy. Its getting larger and larger in terms of the size of the economy. Its not enough to offset the kind of heavy investment we see in manufacturing and all of the old components. The old drivers of chinas economy, there is not enough to offset that yet. Factories remain marred in deflation. Exports continue to struggle. Things justside of as enough to fill the whole. Francine Larry Hathaway is with us. He is the chief economist. His firsts one of interviews. Its great to have you on the program. We are talking about services and manufacturing. If you look at the demand, its much lower. Larry its great to be here. Thank you. Rings truee heard about china. Manufacturing is we can service is stronger. That is a global phenomenon. Production is weak everywhere. From that perspective, thats no great surprise. Its gratifying to see Services Growing Faster in china. That echoes what we see in other economies. There is a structural story to this. We are in that next wave of chinese development. It was always going to be much more services oriented. It is coming in the neck of time. Francine that means the transition is working western mark 6. 9 , as long as its above 6 . Are you ok with that . Larry its convenient in that its close to the target of 7 . Wehink the skepticism that incurred is correct. I think the figures are probably higher than the true numbers would suggest. There is still something that is correct in the characterization. They are rebalancing. The consumer is holding in because nominal wages are growing at a rapid rate. Inflation is very close to zero. It is supporting consumption and that helps the services sector. Tom how does your view fold into investments . You did that for years. Weve got a little bit of green on the screen. We have some right of the screen. It looks like a big model and a churn on this monday. How committed are you to equities forward . There isthink that significant returns across most major liquid markets. In the last 45 years, its run its course. Thats true for equities which apart from emerging markets are trading on fair to rich valuations. That is true in fixed income as well. I think we really begin with the idea that expecting returns should be low. Felt macro is being more is in the higher volatility that ensued in august and has continued since then. Its a function of another number of things. Means expectedn returns adjusted are very poor. The real art here is trying to build a diversified portfolio. Tom the question is, do our viewers stay in the market committed with expectation of single digit return or are they supposed to be building cash right now to mark . Larry i think you have to adjust their expectations. They are going to have to look at it. Participation as well as other strategies that are perhaps more market neutral. I think these two things are the core of portfolio construction going forward. Later, this is a very important interview. Michael mckee speaks to the San Francisco fed president John Williams. Surprisesams always in his interviews. That is 2 00 your time. I cant figure at the time zones right now. I dont know what time it is in london. Its monday. It is surveillance. Good morning. Tom i left my wallet in london. It took my wallet. Its a great day in london. Every day i was there was great. We had a great time in london. Thanks to all of our team over there. We need to get to bloomberg. Here is vonnie quinn. Shes right next to me. Ohiobased maker is in talks to buy a german competitor. They build hardware and software for atms and a cash registers. Revenue about 70 of from europe. Looking at twore volkswagen offices in france. Omputers were seized in raids nearly one million cars in france may have the software. Andi goes public this week the ipo is expected. They are expected to trade on the New York Stock Exchange on wednesday. They will have a market value of almost 10 billion. Francine everybody wants a piece of ferrari. Harare, its ferrari. Undertakes the biggest management shakeup in 10 years. They are scaling back the trading empire. For more, lets bring in nicholas comfort. This is a drastic move. The reason is we get rid of the people that were very close. He just wants people who are more risk compliant orb risk averse. Not so focused on revenue. Nicholas its going to be a mix of these factors. Management reputation a did suffer from other legacy issues facing the bank. Takebecause he wants to the bank in a new direction and make radical changes to individual parts of the bank. Managers may see something different. Thats going to lead to their departure. Francine what will Deutsche Bank look like a year from now . Do we have a clearly laid out plan that they wont be an Investment Bank . Nicholas everybody is waiting for the strategy position in 10 days time. Thes when we will see roadmap for the bank. Clearly, he is building on strategy announced by his own assessor in april. Will he scale it back more . What are his plans . Bank . Bout the consumer will he be investing there . I look at the announcements over the weekend. Do you just assume there will be major layoffs in new york city as they separate Wealth Management out and get new responsibilities to managers in new york . Nicholas i think if there are any layoffs in new york, it would be more on the investment taking side. Its an area where they will be pushing. In the Investment Bank, there are different opinions. Some people would like to see a radical retrenchment. Some people say they need to stick it out. Within the tea leaves over the weekend, you nailed it. What is the tendency . Nicholas i think he is going to be making test the Investment Bank, including the u. S. Actual jobot of the losses will be elsewhere in the world. Maybe we will see a lot in the back office across the units. The bank has a huge number of consultants. That is really where we are going to see the headcount go down. Francine i love the way tom have to bring it back to the u. S. This is a huge european bank. We are still trying to figure out. What is the number one challenge before, depart from the investment rate. You have to make it more manageable. Nicholas the number one issue is capital. Absolutely. That is how they are going to face rising charges and take risk. Thats going to push down the capital ratio. They are the most leveraged european bank. That is something that investors are not happy about at the moment. Risk toaway from leverage ratio on the balance sheet. If i may add one more, cost. This is a strategic battleground. Everybody was to hear details about net reduction in cost. Cost savings in the past, they have done well. They really failed to achieve a net savings. Francine thank you so much for coming on. Coming up later this morning, we sit down with jpmorgan it chase ceo jamie dimon. This is bloomberg surveillance. Tom good morning, everyone. Its bloomberg surveillance. Good evening to those of you in hong kong. I thought it was fog, but its pollution. Its beautiful this morning. This is from one of the great thinkers on capitalism in america. Its a fascinating read in the financial times. Its called a strong free press is our best event against kearny capitalism. Its very different than the read i guess you could say its the idealized version. Tom its ugly, but we get it done. I think mr. Churchill once quoted america on that. Discuss the open press. Francine he is not mentioning any a countries that have a problem with this. France has media part. They focus on investigative journalism. As you read the morning press every day . Are we less and less free . Larry three cheers for the free press. A problem. S its an age old one. Shedding light in the dark corners where impropriety takes place is always a good thing. I first encountered it during the Asian Financial crisis working out of that part of the world. Thats where the term crony capitalism had its roots. Ive would say this, we live in an unequal time. The age of plutocracy is how some people call it. That is also probably undesirable. Dollars,ount votes and that is probably an undesirable outcome. Im not going to defend crony thatalism, i would say sometimes there are little hidden benefits in this as well. In the aftermath of the populism of the financial crisis, there has not been a big backlash against global trade. When you think what it takes to elect a public official, say a president of the United States, its a lot of money. The money may be swaying political opinion in desirable directions. Its a complex picture is all i am saying. It,cine when you look at he was not mentioning a lot of the european states and countries that still have in some ways a problem because there is not that clear clarity. That is a concern going forward. Well get back to larry halfway in a couple of minutes. Coming up, roberto joins us. That is at 6 00 new york time. And is bloomberg tv bloomberg surveillance. One of the main stories we have today is on china. Ferreri is selling 10 of the firm. Update on that next. I just had a horrible nightmare. My companys entire network went down, and i was home in bed, unaware. But that would never happen. Comcast business monitors my Companys Network 24 hours a day and calls and emails me if something, like this scary storm, takes it offline. So i can rest easy. What. You dont have a desk bed . Dont be left in the dark. Get proactive alerts 24 7. Comcast business. Built for business. Bloomberg surveillance. New york is in the distance. You can see all the fans of curtis granderson. He is having a career year out there. Tigerswith the detroit from before. The mets were rocking it last night. I love the way he plays the game. I also love the way vonnie quinn says the news. At i was looking lets move to china. It appears that the stimulus are keeping the economy on track. The gdp rose at an annual rate of 6. 9 in the third order. That is better than forecast. It was the slowest expansion in seven years. They have cut Interest Rates five times in the last year. The u. K. Is getting ready for a windfall during its visit from a the chinese president. The amount of investment they will announce during the trip he will bese to staying at buckingham palace. The attacker who killed a soldier with an wasnt arab citizen of israel with no record of militant activity. He opened fire at a bus station. At least 11 other people were wounded. At least 40 new palestinians and eight israelis have died in the latest round of violence there. Merkel says there has been project on turkeys willingness to work with europe on the refugee crisis. Turkey cant do it alone. We spoke about sharing the burden. Turkey has received Little International support so far from a great effort. Turkey has been left in the lurch by its international partners. Turkey has taken in 2 million refugees from syria. Germany to earned draft a plan for the United NationsClimate Control summit six six weeks from now, Global Leaders meet in paris to reach agreements on how to cut fossil fool use fuel use. Those are your top headlines. How tom waslove here in london last week and he is all global. Now he is talking about the mets. We want to talk about rugby. We will talk about that in a while. The chinese president makes his first statement to the u. K. Our next guest says that its a golden opportunity to foster that relationship. The previous and work for the world bank. He is a professor at the London School of economics. Still with us is larry halfway. Thank you for sticking around. When you look at the lavish ceremony that comes with his visit to the u. K. , the u. K. Wants that special relationship. He is staying at buckingham palace. That is not given to everyone. Inits the first time decades that the present has visited u. K. Its equally important for china. Is ink whats interesting terms of economic cooperation, there is a large scope. The u. K. Has an International Financial center and china is undergoing financial globalization. It really needs the u. K. China the u. K. Is looking for investments. They are sticking a stronger relationship and parts of the world other than the u. S. International partners. Francine he is talking up the special relationship the u. K. Is trying to sponsor with china. Can they have both . Larry its a complex situation for the u. K. Now. The u. S. Relationship dates back centuries. I think will always be first amongst equals. The u. K. Has clear economic interests to china. Thats going to bring conflict with the United States. Francine how does the u. K. Play this . They still want that special relationship with the United States . China was to be accepted as a world power. Does this do a long way . Its very important for china. Friendship, mutual trust. A commitment to a longterm relationship. Endorsement is very important for china in terms of building its you international image. On that basis, the economic interest will give pragmatism. They really care about openness. They care about globalization. There is a lot of room for mutual benefit. Booki look at the classic marks his revenge. If you bring that to china, do you see an adaptation of their government to capitalism, given the grinding slow down we are seeing an Economic Growth . Absolutely. There is a lot of at that adaptation. Its responding to internal pressure to givmore human rights. Governance, in terms of adapting to market economies, its absolutely changing. Tom i read your time at ubs. You had Jonathan Anderson on the watch. He wrote billion articles on a the fiction of urban enrolled there. What does china look like right now . Arry we just heard it its a country in transition. That process of urbanization is very much underway. Half of the population is in a rural area. That will change in the coming decades and china will look more like the west in that sense. That is going to be a source of tremendous growth opportunity. It will be a source of certain social stresses and strains. Things are not accomplished easy. What is required for that to be handled successfully is brought it financial stability. Thats were big questions,. Can it pull this off of years to come without some dislocation . I think the jury is out. Francine it seems to have a handle fairly doesnt have a handle . Now they seem to be firmly understanding what the problems are and trying to fix them. Larry i think they understood the challenges all along. There is an inherent conflict right now in chinese policymaking, economic policymaking. There is a desire for minimum growth to ensure adequate job creation. On the other hand, they are rebalancing the economy. Those two can come into contact. They have done the exact same thing that are working against its rebounding. I think that is the big challenge over the coming years. Francine thank you so much for now. Later, Michael Mckee sits down with John Williams. That interview will be live from our San Francisco studio at 2 00 eastern. This is bloomberg surveillance. Francine it this is bloomberg surveillanc