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tv   Bloomberg Surveillance  Bloomberg  December 7, 2018 4:00am-7:01am EST

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leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. francine: stemming the bleeding. global stocks post modest gains. theresa may is said to weigh changing the day as a parliament is certain to reject the deal. opec talks end without an agreement on production costs. ministers are reconvening now. we are live in vienna. welcome to "bloomberg surveillance." we are seeing a little bit of
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green. the stoxx 600 gaining. a lot of the focus will be on the trade tensions. a lot the focus will be on whether the fed can continue normalizing interest rates into 2019. the u.s. payroll numbers really key to give us an indication of the strength of the u.s. economy and what that means for jay powell. he also gave a speech yesterday with -- which markets are looking through with a fine tooth comb. the u.s. 10-year staying at around 2.9%. theresa may may delay the brexit vote. and a lot of focus on oil. later on, we speak with the white house economic adviser larry kudlow. don't miss that interview. let's get straight to the bloomberg first word news. >> thanks very much. here is what is happening. u.k. prime minister reportedly weighing a plan to postpone the vote on the brexit deal with a
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hope of avoiding a landslide defeat in parliament. she has been meeting with parliament all week. the u.k. is on course to crash out of the eu in march without a deal if the vote goes down. her office is saying that the vote is still set to take place next tuesday. fed chairman jay powell is to -- delivering a bullish economy ahead of the latest payroll numbers in his speech to a housing conference. he is saying the economy is performing very well overall with strong job creation and gradually rising wages. economists are expecting a modest rise despite some data indicating otherwise. the opec talks ended without a deal on oil production cuts for the first time in nearly five years. after two days of discussions in vienna, the saudi energy minister says he is not confident of an agreement when opec countries meet with her -- the -- later today.
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the proposed cut of one million barrels per day has been left dangling with uncertainty. now, russian new jason c -- news agency is reporting that the russian minister -- >> are you confident you have an agreement set for tomorrow? >> back in the u.s., president trump is reportedly going to name heather nauert as ambassador to the u.n., who is a fox news anchor formerly and has little political or policy experience. global news 24 hours per day on air and at tictoc on twitter.
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this is bloomberg. francine? francine: thank you. european equities are rebounding u.s. futures points down after a rally yesterday. at one point, it was the worst drop since february. what does this mean for investors? guests what some of our >> have had to say. is likelyly -- >> it that everybody is running to capital preservation than the expectation of growth in yields. i'm not sure whether this is a precedent to a crack or a fissure. >> we need to recognize that that is the nature of the beast.
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investors are walking on egg shells right now. they have become hypersensitive to developments with regard to trade, both positive and negative. that is actually not a bad thing. for much of this year, investors were hypersensitive to positive developments, but not negative developments. i did not think that was appropriately priced in. now we have a laced -- at least in more appropriate balance between upside and downside. >> the lack of panic bid in the option markets is really interesting. think it is also a little bit of a reminder that the volatility surface is shifting higher, but the volatility goes both ways. it does not have to be that the market is only going down. i think the volatility will continue. i'm going to be optimistic when it settles into whatever the new environment is. what tends to happen in the private equity industry, the market pauses, there is a spread
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that sellers want to buy in the old market. i think we will see in your term slowdown, but once we settle into the new era, i'm very excited about private equities at that time. francine: let's keep the conversation on the markets ahead of the jobs data later today. is our us this morning guest. thank you for coming on. what will dictate what rates do in the next year? it is all about the fed. how important is the jobs report? >> it is. then again, i don't know how the market is going to react today. if we get a week number, the fed is going to be more dovish. it means that risk assets could bounce. if we get a bad number, it should be good, but it could be perceived to be bad because it could turn the fed more hawkish, so today is really a tossup.
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i think the action we have seen over the last few days has told us there are a lot of positioning adjustments going on. francine: what are the markets worried about? are they worried about the fed and monetary policy? where are they worried about trade? questionis primarily a of what the underlying economy is doing and trade is a big part of it. we do have these very pronounced end of cycle fears in the market and we do see that in the shape of the curve and we have discussed that a number of times on this show already. the market is paying particular attention to the fed. are they cognizant that those fears exist and therefore may be more open to trying to end the soft planning? or are they just looking at what the current momentum is actually suggesting. the u.s. is not slowing down. francine: what is the one thing that you think would stop the fed hiking and this is our mliv
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question of the day. people are interested whether there is a particular data point. ralf: i'm not sure it is going to be the labor market. if you think the labor market is a lagging indicator, typically. if you get a terrible number today that suggests that extraordinary period of job creation might be coming to an end, then clearly that would be it. more generally speaking, what i'm looking at is the question of how quickly the u.s. is decelerating back to trend. we know that the u.s. is going to slow down over the course of the next year. the question is by how much? another four quarters of meaningfully above potential growth, which is what our forecasts imply is going to make it difficult for the fed to stop. francine: think you so much. we are also getting breaking news out of opec. opec prepared for some further days of talks on oil production with noer talks ended
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deal as russia resisted the calls from saudi arabia to commit to some big output cuts. we are understanding from delegates that opec talks will focus on about one million barrels per day on combined cuts. that will maybe be enough to stabilize the markets. we will have a look at what crude oil is doing. later today, we also speak with the white house economic adviser, larry kudlow. we will be talking to him about jobs. don't miss that interview. this is bloomberg. ♪
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economics, finance, politics, this is "bloomberg surveillance." let's focus on europe now.
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the french government is to deploy 89,000 police officers across the country. says many arester support the cause of law and order. merkel's long exit from politics continues today as her party gathers in hamburg to elect a new leader. the cdu is said to choose between a local favorite and the conservative candidate. whoever comes out on top will be seen as germany's unofficial chancellor and waiting. let's get straight to our bloomberg team. matt miller is in hamburg. what is the likely outcome from the vote? the surprising thing is that no one is really tipping one or the other as a winner.
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he wants to bring this party back to its conservative roots. he has been recommended by wolfgang schaeuble, the former finance minister and that has to carry a lot of weight. , the otherr hand candidate has been recognized by the current economy minister and she is angela merkel's chosen successor, hand-picked. these 1001convince delegates that she will continue the sort of big picture success power,el's 13 years in maybe she will be the winner. so far, it is really completely split. no one is picking one or the other to win. paris, what isto the latest in terms of how big and how violent the protests
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over the weekend could become? presidenthe french normally would not say anything about that. that is the odyssey of the protest movement. you just cannot tell the size or scope. you have the people on the side who have nothing to do with that movement, they are not here to protest higher spending, they are just here to destroy. these writers are the ones that thedifficult -- rioters are ones that are difficult for the french authorities to corral. i'm afraid it's going to be vague.
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francine: still with us is ralf. do investors start to question whether france is reform of all and what europe does next? ralf: i think it is the latter more than the former. a number of important reforms have already been passed. already, if you are still outstanding. the concern is about the parliamentary elections. what does it mean for institutional reform? francine: what does it mean as an investor? ralf: not good things. france was open for a conversation and germany was not
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at the time. germany may or may not be sorting out. france has lost the ability to really push ahead. we still faced with an institutional agenda that is far from complete. if we look at what financial markets are telling us, there is always the risk of monsters under the bed and there are shops out there. what would europe do in the next shock? the answer is not much. fiscal and monetary policy are not there. the institutional architecture is not complete. things don't look great. francine: at this point, what would it take -- what would it take for the ecb to actually hold off normalizing? ralf: an impossibility. i don't believe there is anything really at this point that will stop the ecb from
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announcing the end of qe next week. just politically too difficult. we are too close to the limit not just in germany, but in a number of countries. up next, opec talks end without a deal for the first time in nearly five years. we are live in vienna with the latest next. t next. ♪
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francine: this is "bloomberg
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surveillance." oil remains under pressure as we get more headlines out of opec. delegates say they are talking about one million barrels per day cuts from the opec countries. oil minister of russia discussed opec talks several times with putin on thursdays. let's bring in our correspondent on the ground. why is russia not committing to the cuts? annmarie: good morning. it seems to be that russia is playing a bit of hardball and they waiting for opec to decide how much willing -- they are willing to put into the group cut and how much opec+ can add. are hoping that opec could cut about 650,000 and an additional 350,000 from non-opec. russia would bet the brunt of this. they are looking at russia potentially 150,000-200,000.
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the problem is middle eastern ampanies -- countries need higher oil price. russia's budget is in surplus and they are ok with a lower oil price. when you look at oil price in rubles, it is much better than it is in dollars. opec countries meet until noon. francine: what is market sentiment? it seems echo lot of traders were taken on the wrong foot yesterday. annmarie: yes, that's right. many ministers did not confident. they are not confident there will be a deal.
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some say the saudi says that the bar so high that if a deal does not come through, they can blame everyone, it would not just be the kingdom's fault. they are also saying they are walking a very fine line and the fact that the saudi's are having trouble defying the call from the president's lower oil prices given his support for the kingdom following the killing of jamal khashoggi. analysts also said this is classic vladimir putin company wants to keep people waiting and remain a stronghold. one thing for sure is that this opec is very different. taken cannot seem to act without the backing of russia. francine: thank you so much. annmarie on the ground for us in opec vienna. let's keep the conversation going. ralf is still with us. the concern is that this does
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not really translate to core inflation. i don't know if it helps central banks or not. ralf: who knows. i think when you to be clear about what is driving oil prices at the moment. it is a supply discussion. francine: are we sure about that? ralf: certainly by the price action of recent weeks, the fact that iran sanctions were not as stringently enforced as at a major impact, and the fact that opec seems to be struggling to come up with a deal to cut production also seems to be a force. lower prices are a good thing world economy because it is due to supply, not to demand collapsing elsewhere. francine: i have heard a couple of whispers, what if it is a demand concern. what are the data points where you can see this? ralf: german ip this morning.
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china isown we have in already quite visible in the euro and in nato for sure. it is the reason why we don't believe the weakness is entirely due to cars. in that sense, i'm not sure whether oil is telling us much that we don't already know. from that perspective, i would look at the mechanics of oil. they have been very important for europe this year in the sense that one of the reasons why domestic demand has disappointed is because headline has accelerated because oil prices were higher. purchasing power and disposable incomes were lower. if that is said to reverse next year, that ought to be good for underlying domestic demand, which is one of the reasons we are still optimistic about
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europe. if that were to change because the opec cuts are more significant or iran sanctions are enforced more dramatically, it would add another nail to the coffin of the european growth story. francine: thank you so much. ralf stays with us. up next, we will talk brexit. theresa may weighs pushing back the vote on her brexit deal. she says there is no room for renegotiations with the european union. plenty more on that and i'm looking at a little bit of market moves. definitely the big story of the day will be u.s. jobs. what does it mean for treasuries? of course, we will continue following every development from vienna on opec, wti, $51. ♪ ♪ there's no place like home ♪
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argh! i'm trying... ♪ yippiekiyay. ♪
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mom. ♪ comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. francine: this is "bloomberg surveillance."
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i'm francine lacqua. we are keeping our eye on what is happening in opec. if there is any moment, we will go straight to vienna. back to what is happening on tictoc. lyft arrives first in the to go public. despite the risk of potential blowback in trade talks with beijing, more details about the developing story and our most read stories on the bloomberg terminal. tesla is set to plan using a stock and cash mix to pay debts. we are also getting breaking news out of the boe. u.k. twelve-month inflation expectations rising to 3.2%.
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it is difficult to take that go 200 wayse could that brexit could develop at this point. you see pound on the back of those expectations over the next 12 months. that's get straight to the bloomberg first word news. >> thank you very much. fed chairman jay powell is delivering a bullish assessment of the u.s. economy and labor market ahead of the latest payroll numbers. he says overall the economy is performing very well with strong job creation and gradually rising wages. economists are expecting a moderate rise to payrolls later this week. nearly first time in five years, opec talks of ended without a deal on oil production cut. the saudi energy minister is saying he is not confident of an agreement when opec countries meet.
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delegates will focus on cutting one million barrels per day, 650,000 from opec members, and 350,000 from the wider group. >> any recommendations? >> not yet. target?u have roughly a one million barrels per day? >> probably. they are still debating distribution. >> are you confident you have an agreement set for tomorrow. >> no, i'm not confident. >>'s opec struggle to manage prices is difficult due to a surge in oil producers. -- in the u.s. all of this is thanks to an unprecedented boom in the supply in the permian basin in texas and new mexico, along with higher production in north dakota and pennsylvania.
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angela merkel is overseeing the transition of the german government. social conservatives are vowing to regain territory last to the alternative for deutsche land. the vote among cdu delegates takes place this afternoon. global news 24 hours per day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. theresa may is hoping to avoid a major political crisis in the u.k.. she has been meeting with lawmakers all week amid predictions are deal will go down in defeat, putting the u.k. on course to crash out of the eu in march without a deal.
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despite talks of a possible delay, may's office says the deal is set to death vote is set to take place next tuesday. otehelp us -- the v is that you place next tuesday. all right, david. i'm not sure what is going on. a we have a vote, do not have vote? what is the way forward without a vote? david: she is insisting the vote will happen next tuesday, but we are hearing that there are thoughts -- this has beenmrs. may's prime tactic. through two years of this, she has been the master kicking the can down the road. it seems to be the strategy is you take the heat out of the argument somewhat, everyone comes down, then people rally behind her. she has got to go to the european council meeting. the numbers at the moment show
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that this vote is pretty much unwinnable as it stands. something is going to have to shift in the coming days to make it a possibility she can get anything through. francine: again, what are the options? she gets voted down on tuesday. the markets take, then -- tank, then there is a second vote. is there anything you can give her? david: the eu report from bloomberg this morning, from brussels, the eu leaders are considering whether they can offer something. be all it takes to change the game. i think going back to the vote on tuesday, one thing everyone is starting to look at is the margin of defeat. it may be a certain she is going to lose. , that is only 15 lawmakers whose minds she has to change in only -- order to win to get a second run at it.
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if it is 80, 90, 100, maybe if it is dead -- maybe it is dead. maybe markets of a very averse reaction. this is the famous theory that it sharpens everyone's mind and eventually she gets the thing over the line. francine: how do you see it going as a credit specialist? does it move the dial? or do we expect the markets to wake up march 28 and say ouch? ralf: i really struggle with the whole topic. [laughter] francine: perfect. this is why we get you on. ralf: for the insight. are fundamentally different bills. it was very easy even without the market turmoil we had in between for lawmakers to change their mind and vote it through even though they rejected the first because there were billions made available. is the second bill going to
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look like that theresa may puts in front of the house of commons? we don't know because we don't know with the eu is able to give the on some kind of short assurances. the second thing i struggle with is the whole thing seems circular. we are worrying about not getting this through and the results crashing out. no one likes the backstop. the backstop only kicks in if we can't come to an agreement with 2022 or whenever the now current deadline of the transition period is. if we can't come to an agreement with the eu, then we also crash out, in a way. francine: what you are telling me is that the market needs to start pricing in the crashing out. ralf: i'm not sure necessarily share the view that because of the potential amendments to the meaningful vote that make it no it is averted is the vote might not happen in one of the ways in which you end up with no
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deal is by going through a general election or second referendum. francine: or a change in leadership. the three questions we have been asking you for the last 12 months is is she safe? is there going to be a leadership challenge? is there going to be a fresh election? ralf: i don't think we can ever call her premiership safe. it has been in a state of precariousness ever since that election last year. that tableany people these famous letters. david: we could find ourselves in the run-up to christmas with tory leadership campaign and a vote of no-confidence and a general election on the cards. really, we are in uncharted waters in terms of the sort of chaos that could in sue after next week. francine: great, christmas canceled, we are all at westminster. thank you. stay with "surveillance."
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plenty coming up. we will speak to the chief executive of a russian miner about gold. a little bit later on after the arrest of the hauwei ceo, the company -- cfo, the company is now said to be making concessions in the u k ♪ ♪
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francine: this is "bloomberg surveillance." we are just getting live pictures out of the cdu conference, angela merkel opening that party convention in hamburg. a lot press coverage, especially domestically, about who will be the winner.
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you can see the chancellor of germany opening this party convention in hamburg. let's get straight to the bloomberg business flash. >> thank you very much. shares have been plunging. the second profit warning for the german health care company in as many months. comes as a failed takeover ways on earnings. currencies have continued their after the traded fund would continue to the end of the year. taking it to the lowest level since the end of 2017. a plan to make the ruling by
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february 27. the plan to push through the mammoth debt for equity restructuring. it is a sign they are likely to file for insolvency in a move that could put the remaining business at risk after regulators are seeing a probe ins to it -- into its account last month and by following up by saying they would not allow a relisting. tesla is about to hit the road in europe with drivers able to buy the new model three. reservations opening up at 1000 euros with the netherlands, norway, sweden, switzerland, and france to be the first to receive those cars. tesla fans will have to wait as the company is focusing on european markets that drive on the right side. that is the bloomberg business flash. francine: thank you so much. the international gold miner has mines and projects in russia, west africa, and cause extent --
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it is almost fully owned by a russian billionaire. given all of the geopolitical turmoil and fresh sanctions through russia, what could this mean for the business? joining us now is the chief executive of north gold --nordgold. thank you for giving us a little bit of time. it is ipoed and now it is private. are the thoughts of bringing it back to the market? beingare actually used to a private company. there are benefits to being a private business. the long-term goal is to become a public company and have access to equity markets and use shares for possible transactions. we have been looking at building new minds. to have a successful ipo, you have to have a strong interest in gold and gold equities. the gold market is kind of stable. we could call it a little bit anemic.
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i think at this point, we will be looking for probably stronger momentum on the gold price and interest in gold equities to consider listing. the gold stability, which is not a bad word in these kind of markets, if you are stable, at least it is positive. when do you see the resurgence of gold coming back? >> it is a good question. it is very difficult to predict the gold price. on the supply side, we see a very constrained situation. gold production is growing very slightly, about 1% per year. hopefully, we will see more demand, but i cannot say, it is very difficult to predict. is it difficult being a russian company because of sanctions and various numbers of factors? rubel volatility. is that a key factor in deciding whether to list or not? >> it actually is not difficult. we are an international company and we operate in west africa, we have projects all over the world.
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we operate according to international best practices. we have not been impacted by sanctions or the political. francine: do investors make a between companies that have investors that of been sanctioned or not? >> neither owner nor our company have been sanctioned, so we are not affected by this. francine: talk about ruble volatility and how that impacts your ability to do things operationally. >> it does. half our business is in russia. in our margin, we are sufficient to sustain more significant volatility on the ruble side. obviously, the ruble fluctuation is dependent on the oil price, dependent on the sanctions, another microeconomic factors.
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it is very difficult to predict. francine: you also have a project in guiana. how would you finance this? >> this is very exciting. we have launched three minds over the last six years. launching new mines is a very important strategy for us. we lost a large project and the next project -- we launched a large project in russia and we are doing a next project in french guiana and the output will be over 200,000 pounds over 10 years. we have the potential to expand the reserve base. it is a french territory in south america. it would be the largest mining years. in many it will be the largest investment in french guiana as well, private investment. it will generate over 700 direct jobs. around 3000 indirect jobs. francine: how do you finance it? >> we finance it through our balance sheet.
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we have sufficient capacity and is a cash flow generation is also very strong. francine: do you worry about the world economy in general? gold is a great hedge when it comes to inflation expectations. we are hearing that 2019, we could see a global slowdown. how much time do you spend looking at the world economy and what it means for demand and output? >> not so much. i think gold has been consistently stable over the last many years. there are many factors that impacted on the positive and negative side. crisisber the 2008, 2009 . 25% of the cash flows for the entire business that year because gold was cyclical and in a slump that generated very good profits. francine: what is the ideal price for dollars into her dollar dependent? >> of gold price? francine: the gold because it is priced in the dollar. if the dollar is too strong, it has an impact on how much you
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sell the thing for. >> certainly, for the weaker dollar, we have the gold price going up. it is very dependent on the relationship between strength of the dollar and other currencies. generally, we benefit when the dollar is weak and we generate better margins. francine: is there an ideal dollar price? a sweet spot? >> it is impossible to predict and i think our margin is sufficient to operate in a wide range of currency. francine: it is so interesting. think is a much for coming in. that is the chief executive of nordgold. >> think is a much. francine: up next, hauwei is reported to have caved into british security officials' demands. we talked. this is bloomberg. this is bloomberg. ♪
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francine: this is "bloomberg surveillance." angela merkel opening the cdu party conference just a short while ago. isling for cdu party unity the convention gets underway and they will elect a new leader later on today. let's get on to technology. hauwei cfo's arrest in canada has provoked outrage from china.
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china and the u.s. are at a critical point in trade talks. extradition to the u.s. of a potential violations of american sanctions on iran. reportedly caving in to demands from british security officials to address serious risks in its software and equipment as it tries to avoid getting banned from supplying 5g telecom equipment. coming on.o much for first of all, what is the biggest concern for hauwei? >> it is access to u.s. technology. what we saw when zte endured troubles earlier this year, they were found guilty of breaking sanctions on iran and they did not execute the response to the punishment effectively enough, so the u.s. tod we will cut off access technology. when it comes to fiber optics,
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which is really important for high-speed internet, the lasers which pump into that are made by largely u.s. companies. francine: what does that mean for u.s. companies? could it benefit u.s. companies? alex: not necessarily. the u.s. companies might lose if hauwei gets cut out of the market because they are suppliers to them. but it is a lot to do with u.s. soft power. hauwei makes some of the best telecommunications equipment out there. it is also quite cheap. it goes into sub-saharan african countries, countries in europe, and very good pricing, which then gives china is certain amount of influence in those markets. francine: even if they are suppliers, if i may consumer and i would rather have apple then hauwei, is it the same suppliers the benefit? alex: it is not about the phones, it is about 5g powers -- towers. francine: doesn't it have an impact on consumer psychology? alex: i don't think so. already in the u.k., in europe, hauwei does not have significant
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market share. when they market their phones in europe, you don't see hauwei written on them. they are called something else. that is partly to do with the fact that hauwei is hard to pronounce if you have never seen the word before. i don't think that consumer psychology plays into this at all. it is very much to do with the bigger part of the business, the network equipment. francine: thank you so much. that is alex webb looking at technology for bloomberg opinion. we are getting breaking news from the french interior minister head of the massive protests expected tomorrow in france and especially in paris. the french interior minister saying there are 99,000 police officials deployed for tomorrow, more than what we were initially briefed on. harris chief said it was -- our paris chief said it was the first time in a long time that the french president said he was worried about the protests tomorrow. this is what it is looking like may move on the back of the opec
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meeting. we are looking at oil, s&p futures, and we are trying to figure out whether theresa may will continue with that vote on december 11 in the houses of parliament or not. looking at u.s. stock futures actually rebounding in europe, but pretty much unchanged. they were down in touch, they were up a touch. you could argue that over the last two hours, they have been moving sideways. "bloomberg surveillance" continues. tom keene joints me out of new york. we will be talking to the cohead of global m&a and j.p. morgan chase to read that interview coming up at 10:30 a.m. london time. we will ask him about financing and whether the fed 2019 changes the m&a option. this is bloomberg. ♪
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leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. click or visit a retail store today. comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. francine: it is a relief rally
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for european stocks. futures point lower ahead of the jobs reports. delaying the inevitable. theresa may changing day of her brexit day as parliament is certain to reject it. opec talks end without agreement on reduction costs. ministers are reconvening now. we're live in vienna. good morning. this is bloomberg "surveillance." tom, a lot going on today. mostly the u.s. jobs reports but brexit left, right and center and theresa may coming under severe pressure for possibly delaying that vote. tom: the european stories plural tool are really extraordinary. francine: i'm looking at france. let's not forget france. we're expecting some massive protests that could turn
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violent. they are deploying 99,000 to deal with the upheaval tomorrow. let's get straight to the first word news. >> thank you very much. muscles atlexing its the opec meeting in vienna. so far mossscow refusing to commit to the big output curb that saudi arabia is demanding. the trump administration arranging the arrest of huawei's c.f.o. canada arresting at the same time interrupt was dineing with jinping in buenos aires. the white house is saying they did not know in advance. jerome powell coming out with a bullish assessment of the u.s.
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saying the economy is performing well and the labor market is strong. the government is out with november jobs figures at 8:30 this morning new york time. economists are saying the unemployment rate probably held at 3.7%, the lowest since 1969. trees amark may postpone the vote on her brexit deal. may has discussed her options with ministers that include asking the e.u. for a better deal or offering lawmakers a bigger say over the most con tense, part of that agreement. powered by more than 2700 . urnalists and analysts tom: what day yesterday. the volatility. the agitation. the gyration of yesterday and
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futures negative eight. don't memorize that number. it will change. euro flat. oil a story of vienna. there is brent. 5977. the 10-year yield to me is the story of the week. 2.88%. francine: i like you're looking at bitcoin, tom. i'll move on to what's happening in europe. also looking at oil. oil pretty important because opec said they can't cut one million barrels ast a day. tom: i don't want to waste a lot of time on this. we have two important guests but here is the bitcoin chart and the move from 3,000 up to 19,000, pretty much lineared down and then the great waste and that we saw in 2018.
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this is a drip function. lows 3,303 cents. i don't know if there is something mystical about that. let me very quickly get rid of my markers and pull this out. there is the november 15 gyration. that is a beyond elegant trend further south. francine: i like that a lot. let me bring in my terminal. it having some technical -- is like a friday. this is live. this is what you can do with the bloomberg terminal, tom. do it live and it still works just in the nick of time. stock investors may be watching the wrong curve.
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a strategist said it is not the interest rate gap investors should be truly worried about. no basically short and long-term treasury yields. he said how much corporations are paying to borrow. tom: i noticed a bloomberg headline on the credit default swap, the measurement of risk on deutsche bank. a good guest to speak to with a very smart research know, patrick armstrong, we continue to drag him on air because he has some granularity. what are you doing on a 1,600 dow day point agitation. what do you actually do in the office when you have the volatility like what we saw yesterday? >> we didn't do much in equities. we think equities are responding
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properly to what we think is a hawkish -- what we did is a -- n two at the points. it is as low as it has been in 10 years now. we're getting an option that there is going to be a steepening. if you get a recession, the fed cuts. inflation, you get the rise. very attractive. tom: i want to go to your brilliant note. you have a column for percent aisle evaluation. discuss the s&p 500 now. >> if you look at earnings, the easy one that everyone talks about. the s&p is in line with its median. trading at about 18 times. that is pretty normal. eebda, ook at sales and
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measures it is still more expensive than it was in the tech bubble. profit margins have never been higher. we think those turn into headwinds. if you have wage growth, that is going to lead to compression and i think it will keep moving along at 5% to 6% which won't lead to significant earnings growth. francine: where do we do the correction? >> i think the correction is healthy. i don't think the fed should be pausing because of it. it is what the fed created through its quantitative easing program. they are not extreme bubbles. they are just very, very expensive. francine: if the market is down
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another 6, 7, 10% is that an ok territory? >> that is the point where it gets to ok territory. at that point europe and japan get to compelling to very, very cheap. if they get down further, you're looking at japan, who has never been cheaper on earnings. we're talking about the u.s., japan has never been cheaper. the u.s. is still expensive despite its contraction. if i want to look for equities. tom: thank you so much. we're glad you're with us as we drive forward on so much of the news today, particularly on the european continent. we'll shift to america. later today, lawrence cud low will join john ferro across all platform. kudlow growing his way to a better america.
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this is bloomberg. ♪
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>> this is bloomberg "surveillance." let's get the bloomberg business flash now. german healthcare company is plummeting after coming out with its second profit warning in two months. they said they won't meet their profit goals in 2020. legal proceedings are continuing over a takeover gone wrong for an injected drug unit in north america. bitcoin falling as much as 8%. below 3,400. that is the lowest in more than a year. investors reacting after the
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security and exchange commission are dashing hopes. chairman former nissan carlos ghosn set to be indicted monday. meanwhile he is still the c.e.o. of republican all the. we have learned the french automaker will be reaching the first conclusions of the pay managers will be disclosed. francine: thank you so much. angela merkel's long exit from olitics continues today. whoever comes out on top will be seen as germany's unofficial hancellor.
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matt, are we underestimating the impact that the next person head to the e.u. will have on the future path of europe? >> well, i think there could be a very strong impact because a.k.k. would probably continue to lead in the style of angela merkel which is very pro european union for example where the other would try to take votes back from the far right wing party in germany. that could part him from leaders in brussels. germany is one of the core countries of the e.u. it is incredibly important to the way brussels works. if you get more friction there, it could cause some real waves. tom: is this a generational shift for the conservative right party?
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>> it is not. merz is from the previous generation. 16 years ago he was pushed out of power by angela merkel. if he were to come back, he would try to bring the party back to the conservative route. if a.k.k. wins instead, it is more business as usual the third candidate is very young, seen as the up and coming leader. probably won't win this time. he is going to have to try again in four more years. francine: thank you so much. matt miller covering the c.d.u. ote in hamburg for us today. thank you for sticking around. welcome to the program. when you look at germany, you have germany with the c.d.u. leadership. you have france with 99,000
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police on the ground in case protests turn violent. what do you worry about the most? >> i worry about italy in the long run. france is in a crisis that is stronger whan we expected to happen. it not just about -- started against the diesel tax but it is about macron's way of governing and this is a protest against the sort of almost absolute power that he enjoys. on the basis of what works in the first round of the election, only 25% support. the power he enjoys is extraordinary. there is now a huge backlash. that can turn violent over the weekend. francine: what does that mean for the future of worrell power? - world power?
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does it mean that the world will shift significantly, more than a turn in italy? >> i think the implications for the e.u. are troubling. we have brexit. we have france in trouble. germany is going to be a pull of leadership no matter how that election goes tonight. italy is trying to address the fiscal issues but none of the problems they are facing is going away. we're talking about cosmetics about whether the budget goes down by a decimal point or two. nothing of substance. france is at the moment in a position where it cannot provide leadership. that is the problem for the e.u. germany is in a transitional phase. francine: is it something against macron as a president? it looks like he is enjoying too
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much power. >> it is more about macron himself. his style of government. so far we are not seeing any intelligent responses by him. he postponed a deal for six months. we have not seen the political thing that is needed. his political experience is very limited and it looks to me that he is not up to the job basically of dealing with the situation for which he has politically not been prepared. tom: i have about two hours of questions here. let me go back to your wheelhouse and your expert's on germany and the german people as well. in 1957, the rise of the c.d.u. no experiments. is that the attitude of the c.d.u. in 2018? is it no experiments, we're going to do it the way we have always done it or are they going to shift to address the pop lace?
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>> they are not shifting. no experiments. that's the world this which we are in. there is a choice between two leaders. one more conservative than the other. it is an interesting choice. merz is the more conservative of the two and also the more pro european of the two. it is two very interesting candidates who would bring the c.d. numbings different directions. i don't think any of the choices is dramatic. probably not is another merkel as people try to put her down. she is certainly more modern and more western. she is from the western state that is closest to france. merkel is more of a traditional conservative. they are very pro european in a sense. that doesn't mean necessarily
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that it is good for the e.u. or he eurozone. he didn't exactly help the eurozone during difficult moments. tom: thrilled that you're with us today. coming up later with the jobs report, with the gyrations of the market, a wonderful time to talk to one of the great iptthists out there. synthesists out there. i believe mr. ferro will do that in the 9:00 hour. this is bloomberg. ♪ bloomberg. ♪
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francine: theresa may is said to be weighing a plan to postpone the vote until september 11. et's get back to our guests. patrick, i want to get your market reaction. but first, you're theresa may. do you come out weaker if you postpone the vote or do you come out weaker if you lose it by a
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landslide? >> that is a good question. i can see her reasoning for not doing this, for keeping to the schedule of the vote because by postponing the vote she admits defeat and then her position is even weaker. going for a vote and a narrow defeat, she might have a second chance to renegotiate it. there is a case for sticking with it. if she is going to lose by 100 or 200, then she would be in so much trouble she could be immediately ousted from her position. francine: we were just talking about france, italy. we were talking about germany and now brexit. what does this mean? > we're worried about the u.k. we're shot 250 stocks. the integrated supply chains, sourcing materials from the e.u. around the world, if we have the
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cliff edge, mid cap companies will find it difficult to produce what they are producing. they are going to face a weaker sterling as well. that is the one area that is particularly at risk. francine: what would give you a glimmer of hope of a smooth transition -- before december 31? >> i think delaying the vote, extending article 50 and saying we're going back to europe. nobody likes this deal. there is a few things we have to do and hope she can get some give from the e.u. to placate somebody. if she has the vote right now, you think she is admitting defeat? if she has the vote, she is going to have a similar defeat. the conservatives at that point, all the people who want to leave the conservative party. francine: is there anything the e.u. can give the u.k. now fingerprint >> right now it captain. it will probably start to give
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something to the e.u. if there was a defeat in the first round. i think the e.u. will always be open to a second vote. i don't think they will easily extend article 50 if the purpose s to renegotiate the deal. if the u.k. were to hold a referendum on the deal, if there was a ratification delay, but for political uncertainty, it makes no sense at all. francine: thank you both. coming up in the next hour, a conversation with a private bank global head of investments. that is coming up in 30 minutes from now. this is bloomberg. ♪
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tom: in america, we think of a four-year presidency, a two term
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eight-year presidency. for angela merkel it has been 13 years as chancellor of the german experiment. of course bringing together of west and east germany and before that her leadership of a fractured c.d.u. the conservative right party of germany. she speaks to her people here for one final time. this is really quite a moment going back to the history of the two major political parties in germany, isn't it? francine: yeah, it is. it is interesting, tom, to see there is no clear winner. it is interesting to see exactly who threw their weight behind who. we understand there was a speech on one of the candidates that may actually change. it is interesting to see also depending on who wins whether angela merkel can stay on as chancellor. you look at her rilery.
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some commentators say it is pretty difficult for her to work with him as her chancellor and him c.d.u. party leader. i think we'll have more on the vote at 2:00 p.m. london time. tom: investment and wealth management in london, he is -- we look at this and look at germany as a foundation of european capitalism. it has been a foundation of demographics as well. will germany drive forward european capitalism over the next decade? >> i think actually the market is overreacting to the global trade tension which is we think china and the u.s. are going to remain the epicenter of going forward. europe is taking a step backward. europe may get some free wins if the trump administration goes hard on intellectual property. it will still be able to trade
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with china and the u.s. and take a switzerland post of almost being neutral. it has been probably too much given that backdrop. it is not going to be a global -- there is going to be a slowdown in global trade which germany is reliant on. mr. trump: francine, matthew miller was speaking earlier, i have seen this term used, mini merkel. it is fascinating to see how these entrenched partieses including the oddities in france deal with the new right across all of europe. francine: you're right, tom. if you look at what is at play for the c.d.u. leadership you have first of all a group of powerful conservatives which of course are led by the former finance minister that have
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basically under his jurisdiction, stepped down from the leadership, offering basically a chance to take back control. merz, r candidate, a.k.k., it idate, would be called into question. that is what markets should be focusing on. if merz gets it, could she stay on as chancellor? >> i'm not informed enough. it would not seem like a natural blend. francine: what do you worry about in europe? europe actually in 2017 was kind over the darling of the world. today we're looking at protests in france. the budget in italy. merkel's leadership maybe being taken out of control. is 2019 the year europe does worse than the rest of the world?
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>> i think 2018 europe has done worse than the developed world. growing at 1.5%. that is nothing to be jumping up an down about. it is performing as it should be. it is not outperforming the way t was in 2017. there has not been a global recession but there has been a geopolitical recession. i don't think it turns into a recession next year. 1.45% growth, is not making anybody happy. the u.s., great for the short-term. appeases people. francine: angela merkel talking there saying that germany and the c.d.u. are facing challenging times. also talking about the far right party challenge. what about the economics? if you look at the trade war
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where does germany sit? >> germany sits in a sweet spot. trump talked a lot of rhetoric on all of these german cars he sees on fifth avenue. they have not materialized. it is not going to change demand for u.s. autos in europe. that is an easy win they can do. but the u.s. can't fight everyone. i think their focus will be on china. that's where their real issues are. europe can be a beneficiary continuing to trade with both sides. europe may get a win from that. tom: thank you so much. we welcome all of you in the early morning of the united states and mid-morning across much of europe. many stories including this farewell speech of chancellor merkel. >> thank you very much. the u.s. is not the only country that has issued from the chinese
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equipment maker huawei. they have caved into demands and will address serious risks in its software and equipment. there have been concerns their gear could enable chinese buying. their c.f.o. has been arrested in canada. william barr may be coming back for a second tour of duty. bloomberg learning barr is likely the choice to replace jeff sessions as the top law enforcement officer. in another appointment, he decided to name heather nauert as u.s. nikki haley ambassador. she is a former anchor and correspondent for fox news.
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global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom and francine? francine: thank you so much, uma. brent crude has recovered some ground in the last hour. talks ended without a deal on production curbs as russia resists the cut that saudi rabia was demanding. why have the russians not been on side? >> good morning, francine. it is getting very political and the russians in principle told me on tuesday they want to cut but he said last night walking out of the opec headquarters behind me they are not yet there on the numbers.
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what's happening in russia is we have a weak ruble. they have a budget surplus. a kremlin official said they don't want this to dip down to consumers. what's happening behind me is a very high level bilateral meeting. these two, i saw a picture of what is going on. clearly high level. they have briefing notes in front o them. it seems like the russians are trying to get the iranians onboard. if they cannot get their house in order, iran does not want to cut, russia will not be able to join a deal. francine: following the opec decision very closely in vienna. let's get back to patrick armstrong. what again does this mean for the world economy? is it an inflation story? how does the opec meeting translate into your investment world? >> those are the only equities
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i've been buying. if you look at the u.s. 10-year yield, they have mapped each other exactly. i don't know if it is the right conclusion. i don't think it is demand falling off. it is just too much supply. oil has a lot of self-balancing factors. opec being one of them. what is interesting, fascinating, you have seen brent prices fall 17% at front end but then the prices were up 6% in the same period. that is good news for oil companies. you're getting a stable long-term price on the curve. the integrated companies paying 6% dividend yield. i think they are very attractive companies. tom: i would count the shifts of the last eight weeks but we only have 21 minutes left in hour. we would have to go, go, go.
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it is absolutely remarkable. what is the fed to do if we buy the idea that the central banker to the rledwo, we have gone 80 to 50 on oil. you know what the bond market has done. on and on and on. yen hasn't cracked. what is a good central bank to do? >> powell changed the narrative slight loifer the last month. we were a long way from neutral and now we're close to neutral a month later. we have the jobs numbers today and the wage growth numbers today. i don't see much -- the confidence number is high and jobs growth is going to be very high today, we expect. it has been a market pricing environment. if you see the 10-year invert, i saw some inversion yesterday, that is saying a recession is coming, i don't think that is the right conclusion. there are a lot of technical factors driving selling.
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if there is a shift, i think you could see a slowdown in hikes and an increase in the reduction of the balance sheet. the hikes affecting the economy more. if you are worried about economic growth and wants to remain, not backing off from the overheating market, that is the lever he has to pull. francine: thank you so much. patrick armstrong stays with us. cristerna.hernan we'll talk about what industries need to merge asap. this is bloomberg. ♪
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francine: this is bloomberg
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"surveillance." i'm francine lacqua in london. tom keene is in new york. we're looking at politics. we're looking at brexit and of course u.s. jobs and also m&a. 2013 brought the return of the mega deal. this includes disney's $18 billion acquisition of 20th century fox and the deal with time warner. now the beginning of cautious optimism in the m&a market ahead. hernan cristerna is the global head. cautious optimism. i never know what that means. you're worried but you're trying to be optimistic but or optimistic but careful. >> let me try to explain. 2018 has been a great year for m&a. up 30% over the last year. this is going to be the second best year ever. we thought it was going to
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exceed 2007 but it is just short of that level. it has been a decelerating market. essentially during fourth quarter we see that the market is down this is still a very active market. it has been a very good market but through the year it has been a decelerating market. francine: are we late stage cycle in m&a? >> we're not early stage cycle. i feel good that next year is going to be very active. i see companies playing offense as well as defense. market is great. my company is doing great. i'm in control of my portfolio. i'm going to support earnings growth with external growth. i see c.e.o.s saying i need to re-- i want to disrupt my sales. i'm going to use m&a to facilitate that process. i'm going to level what are still are sources of funding for
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that strategy. i need to proactively simplify my portfolio to focus on what i'm really good at. i want to be ahead and prevent activist investors and i also want to do deals to the extent that i can retain synergies to help me through a rainy day in case there is actually a slowdown in the market. when you put all of that together it is going to be a very active market but what is going to hurt and we're going to see less of is some of these 10 million deals. tom: looking into m&a in 2019, when you were at harvard business school, you took that course in the same year, lemmings off a cliff. what's the big mistake you see ow by the financial people and corporations? >> i think our clients, they are focused on or concerned about is the $10 billion plus deals that
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francine just mentioned. the concern is that we're in a very substantial, very complicated regulatory environment whether it is u.s., china, brexit, industrial policies. somewhat nationalistic strategic industries. the deal has taken a long time to get apriveed. engaging in a large transaction that might take a long time to get approved if it is approved at all. i know what i'm buying today. i just don't know what i'm buying two years from now. i think that is where there is caution in the market. if you look at the shape and the competition over the market shoesh the year, the good in there have been approximately over 1,700 of those deals. ese deals are -- account for
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42. i think what i expect for next year, opposed to 40, we're going to see something closer to 20 but i still think there is going be significant flow in that 1-25 billion bracket. francine: we need to talk brecks i. are you seeing a slowdown in the m&a because of brexit? >> i see repercussions in the m&a market for anything which is lacking confidence and lack of certainty. so i worry about brexit but i also worry about u.s.-china. i worry about industrial policy. i worry about definition of strategic sectors. i don't have a specific read on brexit. francine: you haven't seen a brexit effect? your u.k. investors, are they saying i want to buy this company. let's just wait a bit for the next 12 months. >> i think the brexit effect is a lack of confidence, lack of
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certainty effect. sfroip can i ask you quickly, is there a chinese revival? a chinese appetite for european assets? because of the trade war between china and the u.s.? >> i have a view that china is pragmatic. i feel that china has been pragmatic in the leadup to the g-20 to the extent that a couple large deals, disney, fox, those deals got approved by the chinese regulator just before buenos aires. i think china is being pragmatic. i think they know what they need to do and i'm optimistic these disputes between the u.s. and china will move forward in the right direction and i think that will be good for the revival of china m&a activity. francine: talk to me about financing. are buyers worried about it? >> even though we're in an environment where rates are
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increasing, i think fundamentally funding is very cheap. there is a sense for the next months funding is going to remain cheap. people want to take advantage of that cheap funding to execute their deals. francine: hernan cristerna of john a.: morgan. n j.p. morgan. this is bloomberg. ♪
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tom: bloomberg "surveillance." we need to take a look across the world to india. our executive producer at bloomberg news in mumbai touches upon the miracle 7% plus indian g.d.p. is it sustainable into 2019? >> well, tom, the fact of the matter remains that the g.d.p. growth for india is slowing
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signs of moderation. we are growing at 7.1%. it has come off from an 8.2 level. there is a serious disconnect between what the headline numbers shows and the reality on the ground. there is joblessness. in the week when the number was announced, 100,000 farmers from across the country
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tom: this morning, market
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nearlity and gyration of a 16 point dollar thursday. this friday brings a jobs report. opec meets in germany. in friday brings chaos. in washington, all anticipate friday will bring more from mr. robert mueller. this is "bloomberg surveillance." i'm tom keene in new york. francine lock francine lacqua is here. 99,000 security forces in paris tomorrow. members: 99,000 police being deployed. that was the figure we were given an hour ago from the interior minister in france.
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they are stressed about the fact it could get out of control. this is the first protest we see after the government backed down on the tax. they backed down on fuel you would have thought it would of been quieter. there is a lot more anxiousness out there. may be the number is 89,000, but a marginal 10,000, who is counting? good firstting on a word news. russia flexing muscles at the opec meeting. so far moscow is refusing to commit what saudi arabia is demanding. they are meeting today. -- trump administration
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someone assting president trump is in buenos aires. authorities have accused the man of u.s. sanctions on iran. with anowell came out assessment of u.s. economy debut for the monthly jobs report is due out. he tells us the they were market is strong and the housing sector is performing well. the report is coming out at 8:30. economists are saying the unemployment rate is at 3.7%, lowest since 1969. postponing may be a vote on the brexit deal. she has discussed options with her ministers that also include asking the eu for a better deal
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or offering lawmakers a bigger say in the contentious parts of the agreement. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm uma pemmaraju. this is bloomberg. tom: at chris bonds, currencies, bonds,ties, -- currencies, commodities. we are watching this. a 50 handle earlier but no 49 handle. everyone is focused on vienna. at 26.2 10comes in year yield is the big change for the week. i will get a chart on bitcoin. like to findould that out we are looking at bitcoin.
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there is movement coming to european stocks. they are up again at 1.2%. a lot of the focus is on the u.s. 10 year. i am looking at oil extending gains. we know a lot of the ministers are at the opec meeting. will get to vienna shortly. cdu,a merkel in front of and the cdu members of the party will vote shortly to elect the new leader. this is not the final speech of angela merkel. shields to finish her term. wins, it willho be difficult for they chancellor to work with them and we will keep a close eye on that. tom: it is history made for germany. me why i wasn't doing more with bit corn. it is tangential to most people.
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the stasis through the summer of 2018, and if i can take the markers away which i can do, i get this. this is absolutely textbook. the mathematics of that dive on bitcoin from 6000 is extraordinary. we go down to 3300 this morning. differentthis is a chart and we are talking about inversion. what companies are paying to borrow, and it is much less than at other times. you need to look at equities and the yield inversion to see whether this is actual stress or symptomatic of something else. tom: let us begin no with a look at the markets -- begin now with
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a look at the markets. david balin is looking at quiet money and not to lose money. they try to do that at city private bank where he is global head of all investments. thing in the report for next year is let's focus on not losing money. have we given up high single-digit gains? david: expectation for next year is gold markets could be up 7%. reassureds need to be about what the earnings outlook is for companies. that is right where i went. david: what is unusual is we expect both 8% gains in the u.s. and gains in dollars overseas. that is a relatively stable backdrop given the gyrations in the market.
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in terms of safeguarding, clients need to build quality but should not be abandoning a longer-term view of how to make profits in their portfolios. francine: are you expecting more of a correction in markets? our answer is no. if we were to look over the next three months, six months, and 12 months, we will have a more volatile ride but we will find markets higher over the course of that time. it will be more differentiated in terms of where people make profits in industries and sectors, but in general i think markets are higher. francine: where do you see value? componentse are two to safeguarding assets. one is about going to sectors like health care that have a long-term earnings trend that goes well beyond what is happening this year or next year.
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there are many sectors from biotechnology to farming to generic drugs. there is outright quality in terms of what you put into your portfolio. companies whose balance sheets are healthy and have a strategy to become more efficient, both are doable. given where we are in markets, they are volatile, that is what we want. tom: given where we are, your colleague is so good at linking in economics. bring up this chart. i will finish this chart with michael mckee later in the hour. it is a template of america. this is the unemployment rate back to harry truman. that is an extraordinary set of data with all of the agony. read christine harper's new wonderful book on paul volcker. down we go from the remarkable 10% rate to where we are now.
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have hadood thing we the success? this is great news, right? david: this is great news. if you look purely at the data of unemployment and what it means for consumer spending. the headwinds that this crosses has to do with the fed, growth rates, and the deficit. there are many colliding forces coming through and we will put the brakes on the economy. forces, my colliding you mentioned a couple challenges, francine is dealing onh 18 stories in europe populism this weekend. the bottom line is we collide to the central bank. do you expect normality on december 19, or will they surprise us? david: what is the expectation. tom: it has shifted. david: they have shifted at the top but what chairman powell
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said yesterday is that we are seeing strong growth and strong economy and the united states. i agree that is what we are seeing. they will respond to the data. for our clients, we try to respond to what the data is and that is that the economy is strong and the wall street headwinds have continued and will continue through 2019. c sittingl in with the the same seat and he gave us the same thing. coming up, lawrence kudlow .n what was on for dinner this is bloomberg. stay with us. this is bloomberg. ♪
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>> this is bloomberg surveillance. let's get the "bloomberg business flash." a second warning. they say they will not meet financial goes through 2020. sluggish growth domestically and legal proceedings are continuing over a takeover gone wrong for its drug unit in north america. cryptocurrency resuming a site today. bitcoin falling to below 3400. that is the lowest in more than a year. investors reacting after the securities and exchange commission dashing hopes that an
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exchange traded fund would appear before the end of the year. nissan ceoormer being indicted. on newtors are planning charges. he is still the chairman of ceo -- and ceo of renault. of first conclusions of whether they pay package of other top managers work "bloomberg business flash." properly disclosed. work.s the tom that is your "bloomberg business flash." tom: a lot going on in europe. tomorrow, the mystery of the vote for brexit in parliament. we stay on markets and we are thrilled to have david balin from citigroup.
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gina martin adams is also joining us the chief exi . a lot of people are watching and listening and they will say, what do we do? do something. this weekainful as bad asn, it is not as october. technicals in november were not as satisfying. tom: that is massive jargon. index, somewhere between 23 and 25, similar to october and november. if you look at the number of stocks hitting woes, look at growth and momentum. in october and has continued to get lower. it feels so much worse than it is.
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part of that is because of where we were last week at this time. we were talking about maybe the fed will rescue us all and save the day. we got news over the weekend opec was going to cut production. a little potential movement on trade in a positive direction. that has shifted rapidly and it has investors thinking this is a terrible situation. i also think the inversion on the short end of the curve is being this interpretative of an impact on the economy and having an immediate impact on the market. looking back in history, the short-term and version happen in 1998 and 2005. we are in a rush to predate the cycle. a lot is about psychology and not about what is going on. david: there is no doubt that is the case. that is a great summary which is the summary and the noise
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problem. never did we talk about earnings or what will drive the economy to go slower. how companies are spending and investing. all of this when you be the data is positive. not just in the united states, elsewhere. that is exactly right. clients have to be mindful they should not trade in and out of these markets. what i fear from private investors is that i have to get out of my way right now. they are much more likely to lose money because they will not capture whatever upside there will be over the next six to 12 months. it is important to be a patient investor and for most folks to not look at the market to the greek that we do -- to the degree that we do. francine: depending on what we get in terms of payroll today, does the market think the fed
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will hike less and that is a positive for the market or the other way around? it is unclear how it is interpreted. we aree: we are --gina: at a crossroad and suggesting the fed needs to ease that it doesn't price the outlook for slow growth or a recession. you need to see a goldilocks type of report, just enough itwth with signals that won't accelerate at a rapid pace which would be interpreted as tying the hands of the fed into tighter policy. over the last several weeks, we have gone from pricing three 2019 two closer to one, and i am hearing whispers from a lot of people that maybe the fed will go in december, which seems unlikely considering the economic data. yesterday, we have better information or strong
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information for the economy side. that will keep the fed tightening, maybe not as much in 2019 as we thought a couple months ago, but it is a fine line with this report. gina martin adams with us and david balin. coming up, a conversation on investment and particularly with fixed income. david hunt is pgim chief executive officer in the 11:00 hour. this is bloomberg. ♪
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tom: good morning. francine lacqua in london. on tuesday and wednesday, francine there will be a vote. francine: maybe. tom: maybe. francine: there was meant to be a vote, and theresa may may postpone it. david balin is with us. and amorize david frost fancy chart going back a million years of depression. this happens to be the dow, not the spx. by it, hold it, and the one word is patients. -- nobody has it. david: you want to own a basket
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of equities when you think of long-term growth. equities or as. mix between u.s. and global would be better and sharper than that. if you want to get a great long-term return, you need to increase your exposure. tom: are you going into more em? would saynversation i is everyone is long on em except for a few. david: just a very small amount. of key is rotation, the idea buying asia when it is down, buying em and rotating your portfolio over time. when you look at a chart like this, it reminds you of the absolute need to have long-term views. tom: let's get francine in here. francine: we look at emerging
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markets, is that under pressure is putting in place something different than five or six years ago? david: the concerns we have about economic growth translate into emerging markets in the form of energy. it is a headwind for places like mexico and brazil. the overall commodity cycle will favor these countries because i imagine the chinese will take steps to boost spending in the face of slowdowns and a trade war. when we look to 2019, we think it will be a theme for investors and what we will see their. there. look at the fact that the dollar will peak in 2019, this suggests a major portion there. the number one factor we talk to our clients about is that the
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u.s. is 55% of world capitalization, 50% of gdp, 5% of population. this is at a peak. if clients think they will stay there, they are mistaken. you have to be diversified. why not diversify into stocks that are cheaper? we are seeing clients do this. we have seen 11 of the last 12 months, clients have been investors. the u.k. government is saying the brexit vote in parliament will go ahead as planned on tuesday. we will have plenty more on brexit and the vote. this is bloomberg. ♪
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i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools
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that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome.
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francine: there was talk that the government and theresa may would postpone the vote on tuesday. the u.k. government confirming that the brexit vote in parliament will go ahead as planned on tuesday. we are getting more headlines with the government saying it will consider an amendment on the backstop which is the main concern. people that had been opposed to the deal say that if they go into the -- they wouldn't go into the agreement because it would be voted out on the backstop. at the moment, the vote will go ahead in parliament tuesday as expected. let's go to the had a political risk. thank you for joining us. we were talking about brexit. where will brexit go?
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what will prevail? said, it is impossible to say it right now. there are so many options. depending on how the vote goes and what prime minister may does afterwards and whether she decides to go back to brussels and what brussels does, many options out there. i don't think anyone knows what will happen. francine: what is the easiest ?nd most elegant solution does she try to get concessions from the eu? is there anything the eu would give her? >> it is true that if she delays the vote she will kick the can down the road and nothing much would change. there is much opposition to her deal and if she does not renegotiate in the meantime, why would anything change in a delayed vote? on the other hand, in brussels, there is no reason why the eu would change the red lines.
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they have been clear for several years, and they have no incentive to change them. maybe they will give for a political symbolic concession but not much after that. tom: there was a wonderful book on populism identified that it is different in each country. i get it for germany, poland, france. maybe i get it for francine's italy. i don't get it for the united kingdom. is there a populism in the united kingdom? .> there definitely is there is populism in every european country right now. as you said, it is on the rise and happening everywhere. look at france, germany, the u.k.. the certain extent, even u.k. --l in
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tuesday, ie go to believe there is a wednesday afterward unless the world ends as we know it in london. to see onu presume wednesday? with the uncertainties you mentioned, what would be the best outcome wednesday? >> let's say the best outcome would be that she wins the vote and can go ahead with the brexit deal. nobody is suggesting that is going to happen? >> that is right. the real question will be, how ?any votes will she lose will it be more than 100? will she decide to resign or face a leadership challenge or will he be not many votes and
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she will have a credible mandate go back to brussels to renegotiate. it all depends by the number of votes against her deal. francine: thank you. we are getting breaking news out of opec. according tolocked delegates we have been speaking to. up to what we heard yesterday from the saudi oil minister, there seemed to be consensus that russia was ready to cut oil production. theenly, we heard from saudi oil minister there was no deal on the table and now it seems the sticking point is russia. tom: fertility at $51 a barrel. we have not -- fragility at $51
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a barrel. i don't want over so that, just a touch. uma: here is first word news. uma:for the first time in five years, oh heck ending talks -- opecl production ending talks about oil production. todayinisters are meeting with russia and other allies about the saudi -- but the saudi minister says he is not confident there will be an agreement. the u.s. is not the only issue .hat -- company that has issues while way has caved in to demand to british security and will address serious issues in its software and equipment. there have been concerns that the gears -- there are alleged sanctions on iran. former u.s. attorney general
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william barr maybe talking -- coming back for a second to her. is presidentat he trump's choice to replace jeff sessions as attorney general. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm irma, as you -- i'm uma pemmaraju. this is bloomberg. tom: i have to read these tweets in in their entirety. robert mueller, james comey are best friends page just one of many robert mueller conflicts of interest. wasn't the woman in charge of prosecuting jerome corsi, who i do not know, it in charge of "legal" at the corrupt clinton administration witchhunt? will lower molars big-time
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conflict of interest be listed at the top of his republicans only report. andrew wiseman's -- will robert mueller's big time conflict of interest be listed at the top of his publicans only report. kevin cirilli, at what level is the president of the united states cornered this friday morning? kevin: i don't think he feels cornered and his tweets are indicative. james comey will be meeting behind closed doors in a private hearing with the members of the house of representatives. in the hearing, you will face tough questions, articulate from democrats about whether or not en werelike michael coh lying during original testimony. remember he has now flipped and is cooperating fully with the robert mueller team. see what will we see today? what is the agenda today? kevin: yesterday we got reports
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that william barr would be the nominee to place attorney general jeff sessions. he had served in the george h.w. bush administration. when i was looking to see the previous statements he has made, he has been pretty apolitical. he did speak publicly to the washington post a couple of months ago and criticized some forhe robert mueller team having made campaign donations to democrats. there is that element to his confirmation hearing should you face a confirmation hearing. that seems to be what is on the agenda. francine: in washington, how many people are talking about arrest. kevin: i went to the business roundtable event and there is a -- of
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statement from senator mark warner, a democrat from virginia and also someone with telecommunications experience. critical of the decision to have the huawei ceo arrested. tom: i totally agree it is different then zte. what is senator warner or the good senator from louisiana there is courtn in brooklyn in the east district court? kevin: they are not criticizing this administration for doing this. i was shook by that. there does not seem to be immediate criticism on capitol hill. the second point i would make with regard to senator warner, he will call for a national code
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, specifically the cybersecurity and cyber breaching. the talk around cyber is only intensifying. tom: kevin cirilli, thank you so much. muellerfor robert headlines during the day. david westin balance of power, the most interesting governor of colorado. look for that at the 12:00 noon hour. it is jobs day. stay with us. this is bloomberg. ♪
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>> let's get the bloomberg business flash here the chinese
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investor group has agreed to buy the maker of wilson tennis rackets and louisville slugger baseball bats. it is paying $5.2 billion in cash. one of the investors in a consortium is a billionaire founder, chip wilson. the biggest biotech ipo. shares of maternal -- ma oderna start today and sell shares today. it gives them a market value of $7.9 billion. the company is researching how to make personalized cancer vaccines. will be built in a factory in detroit that hasn't made anything in more than six years. the plant will build a new version of the grand cherokee. according to detroit news come up to 400 jobs may be created from all of this. that is the "bloomberg business flash."
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tom: this is a great privilege for francine and me. thin, 246 pages, your airplane book of the winter and into the spring season. you heard 18 reviews of it, all raving. keeping at it, paul volcker. what you need to know is volker had nothing to do with this book. unknown, shes almost literally led me by the hand day after day, don't do anything superficial, mr. chairman. christine harper joins us in celebration of keeping at it. what a joy and honor to deal with this unique chairman. how is he different from the other chairman? >> he is incredibly gracious, as you described. and down to earth
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man. book, -- he wrote the obviously, but second of all, he was a person who wanted to keep it short. tom: unlike you, you would have gone 600 pages. christine: absolutely. he also wanted it to have a title that wasn't pompous like some of the titles. to be ato the title plainspoken story pretty grubby new jersey and believes and public service. tom:. , he wants to play dumb, but he is with smart -- he wants to play dumb but he is very smart. does he think on rules and discretion, what will banking be?
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a wholee: there is chapter about accounting where he takes on the issue where he takes on common sense. in the u.s., we want to dictate every last detail. and a lot of the world, they say what is the principle you should be abiding by? ofis very much in the camp keeping people following commonsense principles when possible. there are cases when you need to have a rules, but he is frustrated by the level of lobbying that goes into creating rules that are overly complex. he told a great story when he became chairman of the fed, the truth in lending act, he had heard criticism. he said let's simplify this and get it down to 100 pages. he said go do it. they gave him a role and he put it out for comment, and all the comments were to add things.
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they were the same things who asked to make it simpler. sometimes this complexity is built in by the lobbyists. deal withhow would he an administration that seems to question central banks in christine: he had his own issues with people questioning his independence. we had an excerpt where he described in the book how he was called into the white house by then-president ronald reagan and james a baker the chief of staff, and basically baker told him don't raise rates before the election. this was in 1994. he wasn't planning to raise rates. it was a very awkward meeting. he didn't tell anyone. the idea that the fed chairman is under attack is not new, but what is new is how public it is
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and how frequent it is. he was quite impressed by jerome powell. he thinks they know what to do. tom: could we do a monthly thing with you? christine: of course. tom: 246 pages. it is a joy. all the other books are great, but this one is fabulous and its concision. olcker. day. jobs michael mckee is with us and david balin. stay with us. this is bloomberg. ♪
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tom: this is your fault. birthday.appy, happy francine: we celebrate you.
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happy birthday, tom. tom: happy birthday to you. i am onto london tuesday and wednesday. as you mentioned, they confirmed the vote for tuesday. francine: there you go. tom: could the control room lose the music, please. joining us is michael mckee saying they are wasting my time on their birthdays. michael, the single best chart is unemployment back to lbj here and we are headed toward the unemployment of dwight david eisenhower. .hat is remarkable are we really fully employed? michael: you and i are at the moment, and happy birthday to both of you. we are getting tight labor markets now.
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2.5% in the korean war. if you weren't in the military, you had a job. the fed is keeping and i on that. you heard jay powell say the economic conditions are strong in this country. tom: that is all the time we have because we had to play extended birthday music for francine lacqua. we will see you with important news at 8:30. the city private bank has said the quality of unemployment is remarkable. it is about optimism when times are tough. 10% unemployment rate, the world is coming to an end. is the market right that -- like that right now? david: i don't think so. the unemployed it rate is extremely low. toare not if not full, close it. we worry about wage inflation. tom: how do you develop
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optimism? david: we have to talk about the news, relentless news. days when there is not a political story going on, we spend a lot of time talking about what is happening right now. companies aren't like that and earnings aren't like that. investors have to have a longer view to navigate the markets we have. the data suggests there is a strong probability that earnings will carry us through and the strength of earnings and the ability of companies to continue to invest in innovate is there. the ipo that took place today is a perfect example, which is about health care and month of tea as well. andonalized health care tests and cancer treatments are right around the corner. they will become part of all of our lives in the next several .ears, right in front of us
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these are investable trends and we think of them as unstoppable. that is much more relevant to an investor of what is going on in terms of the chinese policy right this moment. tom: david balin, thank you so much. i want you to read that book from christine harper. coming up, i am sure lawrence kudlow has looked at the book. he is the economic advisor at the white house. he will try out what is widely presumed to be a good jobs report in the 9:00 hour with jon ferro. ?s this as good as it gets we will find out from lawrence kudlow. please stay with us. this is bloomberg. ♪
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♪ alix: big moves, no news.
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traders are left guessing, why? investors versus the fed, again. markets almost ice out hikes. jay powell says the economy is strong. john numbers today. russia joins opec. can the country break the standoff between saudi arabia and iran? welcome to "bloomberg daybreak," on december 7. david westin has a much-deserved day off. interesting session involving. european stocks rebounding. lowest level yesterday since 2016. u.s. futures not participating. lower 15 points. we erased all gains for the year yesterday. flatware we were when jay powell came out where we were a week ago.


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