tv Bloomberg Surveillance Bloomberg November 10, 2015 5:00am-7:01am EST
>> no mission is impossible. david cameron unveils his plan to -- new membership. as chinese slowdown emerges -- continues to decline. the question for investors is when people in china will act again. key merkeled by advisor. good morning, this is bloomberg surveillance. i am francine lacqua with tom keene. commodity prices are coming
out and we're waiting on an energy outlook report. but it is off china and that is the theme for this hour. general saltiness. sogginess. david cameron is still the european union in must agree to irreversible changes that would give the u.k. greater autonomy. in a speech today, he said the eu needs to cut the regulatory burden on businesses. he says national parliament should have a greater say over lawmaking. stop the eu wants to immigrants from -- four years. that will take place. european governments are admitting their policies on immigration are not working. new structuresng
to deal with refugees. so far, just a few more than 100 of the 160,000 asylum-seekers have been sent to homes in other countries. india wants to be one of the first countries to buy -- from the u.s. india was the second-largest buyer and u.s. weapons last year. a federal appeals court has failed to -- president obama's plan. the board refused to let the plan begin. the judge has said that states like texas put probably end up winning the lawsuit. the next that maybe the supreme court. there was a record-breaking night at the art auction. -- went for the most ever. it was the second highest price
ever for a buyer at auction. the chime -- the buyer was chinese. there are all news today on bloomberg.com. francine: i heard tom boss that painting. tom: i did. let's do a data check. we have a very important guest on china here with us this morning. yield in aled to little bit, from the excitement over the jobs report. the euro is weaker. this is a big deal. someone is pushing against parity and they are looking for strong euro and the weak dollar. that will be an interesting outlier in the nymex. onto the second screen, i will do two things. euroonger yen versus the and gold is well under 1100.
francine: this is the european market, so there is a little bit of pressure. we are trying to figure out what it means for the federal bank action and for a lot of stocks in europe. and the portuguese is the one that i am most interested in. i want to show you that because david cameron did finally put out his points to renegotiate. this was after the left-wingers tried to overthrow the government. tom: we will show a couple of important charts on the terminal there. let's go over to the bloomberg terminal. portugal is way back without the german heels. we have a long-term yields here of economic stability. the prices up 12%. the real news here is that we have come in with a week real has kept thet yields below where it was during the good times.
showine: i also want to you a closer portugal. on october election four. if you look at portugal, which is doing fairly better than italy, the italian yield is unchanged whereas portugal is under pressure because of political instability. richard haass wilderness in the next hour to look at the unsettled news that we got on portugal. soon. will talk to him i have three things in my head. francine: our guest host for the hour is donald straszheim. he heads the china research team. thank you for joining us. a lot of people will be wondering what's next. inflationary pressures are here, they are getting more aggressive. be confident they will have a good handle on it? donald: i'm sure they are going
to ease, they have done six rate cuts so far. more to come. there is a big fiscal push and there is more to come. that thisi have seen can be a parallel to what the fed is doing. are we going to see a zero bound on interest rates? donald: that is not new. they have been on this for a long time. the economy has been no good this year, as everybody knows. at the age word summary of china is, economic reform is out and economic reef -- economic rescue is in. nickel, i gotk at this off the hd news flow this morning. how do you measure the commodity temperature within china? do you do it through data? were you looking at the
bloomberg terminal? [laughter] guess the politically correct answer is to look at the bloomberg terminal. andlook at commodity prices supply and demand factors. we look at the export-import factors. tom: will they continue disinflation with commodities? donald: it does not look good. it is important for people to distinguish between steel, copper and aluminum. within this, does this link into the finance and banking sector like we assume with oil now? does that go into their financial system or are commodities discrete because of the discrete government? donald: they are discrete in that sense. the big commodity producers are not profit maximizers.
they continue to produce and they don't watch market signals. they have a different agenda. that is why in steel it is so serious. francine: they have huge that debt. is it likely that we see a credit crunch? donald: we are already seeing the beginnings of something that is getting sinister, at least. it is getting worse. i don't believe this is going to end up as something that is systemic in china. francine: why? donald: because the state still has lots of maneuvering room, more so than the u.s. or europe or japan. how do you handle deflation risks? do, in they can and will some ways, exactly what the rest of the world is doing. they will push hard, and how
effective that will be, we don't know. it hasn't been that effective in my view in the rest of the world. currency,ok at the how does -- play into this? to their advantage given to the commodity implosion or a weak economy? a pipe dreamis not and the devaluation that occurred on august 11 had nothing to do with the imf. that issue has been put to bed, this is all about trade and the last thing i will say about this is that the euro is too strong for half of the country in euro land and now the dollar is too strong for the yuan. withwe will talk that donald straszheim. and coming up, david bloom. is an exceptionally
the business flash, here is vonnie quinn. -- china may knee need to add more stimulus to ease deflation. it is the 44th month in a row that they have dropped. china's central bank has cut interest rates six times in the last year. striking flight attendants at lufthansa have ignored a new offer. they were offered a more than 1 -- a one-time payment worth more than $300,000. they are striking of a plan to curb retirement benefits. today, long-haul flights are affected. folks like it has offered $1000 to owners of cars with the emissions problem. now they are trying to talk to dealers who are stuck with cars that can't be sold. and noffering them cash interest loans. francine: let's check on the
euro nearing a six-month high. a raise from the fed is looking likely. joining us from london is david bloom. it is great to have you on the program, as always. fed, you say we are going to see u.s. dollar weakness ahead. look, i going to tell me that you think they are going to raise rates? and thethree years ago euro is going down? really, they are going to cut rates? we know that is going to happen. francine: so why are we not going to see parity? is priced in. it
we are not that down in financial markets. oh, it is so obvious that the euro is going lower. we know that, that is why we have gone from 142 105. what about next year? it is all priced in. francine: whatever it takes. mario draghi it was in london, he showed up and said, whatever it takes. why can he not move the euro? you few keep pulling a rabbit out of a hat, eventually it gets boring. two whenne from 140 under five. now he is going to drive it down? no way. i think you will find out that the u.s. economy that is normalizing isn't as strong as you think it is. itre going to find out that
is savage, this tightening. these are obvious things that will raise rates. you see where the euro is the idea is 107, that david bloom is that the outlier. everyone else is looking for the euro. within that is the 10 year yields. saying with steve major that we will not see a fed rate increase in december? david: of course we will. we have been forecasting that for six months. we know they're going to raise rates in december. but once they said raises rates, we will go to 75 or maybe 1%. you will find out that the u.s. economy isn't -- tom: one of our themes is china.
soggy that oil may be this morning. is janet affected by the commodity disinflation and does that get you to a strong euro? i think you had a previous speaker on inflation and deflation at the next thing you're saying, everything is all right in the united states. we could find out that we are in the deflation world and that means we will not raise rates that high. everything affects the u.s. so we will let get the massive tightening. the tightening will be cutting rates. the ecb will be loosening freights. so we select one side loosening and a very dovish tightening. the dollar rail is over. david bloom in good form there.
actually, we talked about divergence. what is your killer play? if you think the market is pricing is in, what is the killer trade? david: some of the killer trades soundsrling, that interesting because we think it is going down because we have a referendum which is going to be harmful for sterling. and wehero is going up are having a reversal of sterling. that will be very bad for the u.k.. tom: thank you so much. that was david bloom with hsbc. donald straszheim, you have seen people go down in flames -- is this the time to be bold and make outlier calls? i think it is a matter of whether you are trying to find a limb to jump to work it out on.
me like there is a lot of issues in the global economy. every major economy in the world -- and i am not looking for that limb. francine: i like that. when of the things we have been trying to figure out, is that actually there is a concern that the fed could delay the hike in if they doch something in december and so they will have to hike much sooner. donald: maybe. they have been thinking about this for a long time. we all have. nobody knows, quite frankly, if they are going to raise or not. nobody knows what will happen in march or june. everybody has a perspective and the guy who you just had on here, he has a strong view that couldn't possibly be wrong. come on. tom: that is what we like on aloomberg surveillance,"
here. austerity't stand for budgets if they aren't compensated by robust growth brought about by supply-side tax cuts and deregulation. much to they had recommend it, not least because it is the best antidote to political extremism. let's go back to our guest host for the hour. donald, when you look at this, to me it feels like 2014. austerity in europe has worked for the seven countries. for a: this will last while, still. the economy doesn't look very strong to me. you have seen all of these repair actions for five-six years. tom: yeah. donald: it hasn't given much fruit yes. -- fruit yet. what struck me about the animal spirit in the nominal gdp
is that, we are not clearing our markets. years, he surprised by how slow it has been to clear the fiscal markets? donald: i have been surprised. and the problem is that this will continue to drag on for a long time to come. so i am not looking for some half, 2016 -- tom: did you see any urgency in lima? francine: no, the problem is with qe. qe could have stopped this, right? say you: right, but you don't have to do much, you don't have to round up my voters because mario draghi is here. donald: this is a losing strategy, long-term. in a short-term, it is a delaying strategy. tom: fascinating.
you wonder where we will be in a year with this. particularly with the tensions in china. u.k.,ne: right but in the a lot of people are saying that austerity is hurting. tonext, a trusted advisor merkel, michael fuchs will be joining us to talk about refugees and china. this is "bloomberg surveillance," streaming on bloomberg.com. ♪
since selling its stake in verizon last year, it generates half the revenue in europe. forident obama's plan immigrants has hit a roadblock as 26 states fight to derail it. and as that is giving black friday to the u.s.. holiday butd the say they won't bieber to this time around. bloomberg get to the first word news. vonnie quinn? is challenging angela merkel on immigration. trump says that she needs to make it clear. -- the opposition is hurting her, politically. the party of opposition leader says it is heading for a
landslide victory. backedmilitary government. they are expected to win 80% of the seats being contested in element. it may take one week or longer to count the votes. president obama has lost another round of the fight to keep more than 5 million undocumented immigrants in the states. -- will not let the program begin. states fighting the plan would probably win the case. that oil couldws still be on the ocean floor. the spill hurt the microbes that were helping to clean it up, and last month, bp agreed to pay more than $20 billion in fines to help resolve the disaster. david cameron wants to resume the relationship with the european union. today he calls for them to make irreversible changes that would give the u.k. more autonomy. somehow, we should reform.
i say, why? i do not deny that seeking changes would require the agreement of offices and all of the concerns. but an impossible one? i do not believe so. vonnie: one of his main demands was more control over migration. he wants to bar eu migrants from welfare benefits for four years. on these andore other breaking stories 24 hours a day at the new bloomberg.com. tom: thank you so much. francine, set up the calendar. was reelected and eastern outside and looks lovely. set up the calendar? francine: this is something that -- was mentioning yesterday. david cameron made a promise that he would put a referendum it'll probably be in the
next 18 months, he wants to stay in the eu. so now yes to convince the european public that he is stressed to get what he wants and he will renegotiate and come back and say yes, we want to stay in. tom: where is mr. corbett on this? he thinks they metal too much. so actually, we know that jeremy corbyn wasn't pro-europe and now he is not. it is risky, it is a risky business and i'm not sure whether i was david cameron, if i would regret that. own economicas its political experiment and we had the all clear after the greek crisis. we have portugal happening here, and we will talk to richard
haass about that. but it is continued european instability. of -- been four years this ani wouldn't call all clear. this is an ongoing problem. you have monetary union without fiscal union. you have all kinds of different perspectives from everybody in the european union. we are going to be talking about this in 10 years. tom: is ireland part of europe? vonnie: it is a different currency, for a start. tom: is ireland part of europe? vonnie: let's take a step back. i know it is easy, when you sit in new york -- francine: you have a of countries that have to come together.
it is not politics -- there are less to be desired politics in the united states. let's go to berlin. they have to negotiate with the u.k.,it david lough joins us. -- michael, great to have you here on the program. i'm trying to educate some of my u.s. colleagues as to why the eu will get through this. of the people who said that it doesn't matter whether we stay together or not. what are your thoughts on the u.k.? can the eu survive if the u.k. left? everybody would survive, it is not a question of whether he would survive, but how we would survive. i don't think it would be good for europe. it would be for the u.k..
i am really fighting for having the u.k. in the eu. i think it is necessary. not unimaginable, i'm am afraid it would be bad for both sides but even more for the u.k. there was airport yesterday for morgan stanley saying this is very costly for the u.k. and also for europe, it is not good. germans, we want the u.k. to stay in because the u.k. is one of our most important partners for a liberal market. francine: right, david cameron put together for today. -- together cointreau points today. will that be a redline for angela merkel? i am quite sure we are willing to negotiate with david cameron.
of course, we do have certain alliances. while we are a humanitarian society in europe, we have to make sure that we help people if it is necessary. but only if it is necessary. it cannot be the case that each andeverybody can step in say that it is unbearable. francine: we spoke a few times about the greek crisis and you only summary that they have to stick to the plan. that theyd are you could be toppled by left-wingers? i am not quite sure as far as greece is concerned. we haveerned because set certain milestones in order from aout the money certain package. but i've a feeling that greece is reluctant to follow the rules as far as the agreements that we have made with them.
i am optimistic because the situation is much better than it used to be. -- greece issome going down by 1.3 percent, maybe even 1.8%. that is on the small-scale but it is picking up and the gdp is growing and the situation is getting slightly better. we hope that they are fighting for the right people. francine: we have to go to the thean people who are backbone of the german economy. strike a concern to them? will they be able to keep the euro at an affordable level? michael: the euro at the moment is for our expert driven industry.
the lower it is, the easier it is to sell. that is obvious. but for the importers, it is getting difficult. they have low oil prices which makes life easier. being 46-40n that seven dollars per barrel. -- $46-40 seven dollars per barrel. gas prices are going down. and low interest rates, that is good. michael fuchs, thank you so much for being here. he is a key advisor to angela merkel. we are trying to figure out how they will renegotiate with david cameron. tom: there it is on david cameron, being a chapter mouth today. we will continue this discussion later.
francine: this is "bloomberg francine the" i am choir here in new york with tom keene. -- didthe break promising that he would take me for a drink at the mandarin. china is gearing up for one of the biggest day in retail. with the viceoke president of the global operations about what he has repaired. 11-11 is onete or
of the biggest days in china. we have to be ready for this. 2 we have prepared about million smart phones that we can sell them in one single day. francine: emily chang joins us now live from beijing. singles day is a mass shopping fest? emily: a method shopping day at an excuse for everybody to buy something for themselves. i am here in front of the iconic olympic venue where in 2008, michael phelps 18 gold medals. you can see that behind me on the eve of singles day. alibaba is having a giant gala affair to kick off what is the biggest shopping day of the year here.
it dwarfs cyber monday. francine: what do people buy? is it refrigerators? or is it something that is more unique? emily: look, it is everything. the top category is baby and maternity. but everything from electronics to health core equipment and air purifiers are supposed to be a hot item tomorrow. ined on the air quality beijing today, i can understand why. there are products across the board. there are a number of international bands -- international brands like apple and cosco. but the vast majority of transactions will be happening in china. alibaba once you make this a global holiday. thank you so much. that was emily chang in beijing.
even if you are not single, you can shop. tom: donald straszheim is here return and i look at the of the consumer in china and diane waiting. i'm getting older. when is it going to happen? dimmer switch. a it is not an on-off switch. this is a long-term process and the whole economy has been built on building. you borrow money and you build something. it is a long process. what is the behavioral distinction between a chinese shopper at the u.s. shopper smart -- u.s. shopper? there is a behind precautionary savings rate because there is no public sector safety net. there is very little labor safety net.
when you only have one child, you had to take care of yourself. francine: how significant is it that they have abandoned the one child plan? we know that it will take years to change. donald: it takes 20 years to grow a worker. or as i say, 12 years to grow a 16-year-old olympic gymnast. but that is a different topic. it is a long process. tom: you hear americans talk about alibaba. it is big over here. them, whatk about don't we see that you observe every day in china? e-commerce is far more important in china than it is here. jack ma got two things right when he started this company. one was that he anticipated that they would tilt -- they would
an infrastructure allowing delivery and he realized that it is helpful they are willing to purchases.tronic it is a long way for this to continue to expand. it is eroding regular shopping, rapidly. me, and isomeone told have never been able to confirm this -- but they don't have any more cubicles in bloomingdale's and macy's. because you go in, you take pictures and post them on social media and then you decide whether or not to buy that dress or whatever. so the dynamics of very different to how we shop here in the u.s. donald: i haven't heard that, but it is plausible to me. you see it everywhere. varietyink the biggest
is that china is excessively stored with luxury space. francine: donald straszheim, thank you so much. check out tom keene on social media. tom: i think of my bow ties race on social media feedback. francine: later today, i will be on bloomberg speaking with -- this is "bloomberg surveillance," streaming on your tv and phone and bloomberg.com. ♪
tom: we greet the morning, there someme soggy nests -- soginess in the market. normallly have more temperatures here after the greatest indian summer since time began. it does still continue. beautiful new york. paper thatticle in a says that winter clothes are on sale. because of the good weather we have had. to the business flash with vonnie quinn. vonnie: thank you.
casino stocks have fallen in hong kong. macau is suffering the worst downturn in its history. it is a sign that retailers may be backing off the holiday frenzy. will close in thanksgiving for the first time. the chain said it made the decision after rolling out a new recruitment campaign. expanding hours on thanksgiving, many are now rethinking. the second two largest railroad in canada is considering a takeover. canadian pacific has held early-stage talks with norfolk southern. that is the bloomberg business flash. tom: very good. there is an oil review out today. francine, help me here. i'm like, why are they doing this?
they have five years and in 15 years they have it gaining and the headline is that they will increase opec's percentage of to 44%.n from 40% but it is one big crystal ball. francine: it is. i was surprised that in the next aroundths, we see oil $60 and that does not impact production with shale. tom: we have donald straszheim here with us. the marginal player here on oil commodities. are they like their own mini opec? why can't they frack? donald: they can but the biggest reserves are out west. it is a desert. tom: the middle of nowhere. donald: they are never going to get any oil out of there. tom: we have to inflict this on
donald straszheim. we did this a few weeks ago. it is early in the year and i'm working on the book of the year. commodities long-term inflation adjustment. there is the china boom. we come down in 2009 and then we are back again. can the government in china control commodity prices? donald: no, they can't. no, the problem is that demand is weak in china and they are fighting that. demand around the world is not strong either. and a big commodity producers in china are not profit maximizers. they continue to produce. tom: this was so good that i put that on my twitter. it was just brilliant. what is the
correlation like between how much china consumes in oil and there are also talks that we could be looking as gasoline in 2017? do they match up when you look at numbers? donald: the way to think about energy demand in china is that energy is about .6% slower. between .6% and .67% it is the polar and wind. francine: but there was a story out saying that china and middle east will make up for the oil -- so how much do you in for from the oil price in china? donald: you can in for quite a lot. those little numbers that i indicated -- but you do have to think about all of these energy sources together when you make
these conclusions about oil. tom: donald straszheim, thank you so much. we would love to continue our discussions with donald straszheim. we have a great our for you next, richard haass will join us , the president of the council on foreign relations. we saw him talk about the middle east. but there is important news out andurope on the portugal even spain. we will start with europe in the next hour with ambassador hoss. the futures can curate modeling -- curate moderately. this is "bloomberg surveillance." ♪
socialist portugal. america debates boots on the ground. in this hour, richard haas on the council on foreign relations. how much can we borrow from the trust? there will be no more champagne. a fabulous book on his struggle with money. good morning, everyone. this is bloomberg "surveillance" live in new york. it is tuesday, november 10. i'm tom keene. with me, francine lacqua. we are going to do church appeared westminster is his grave. simple. what a complex guy. francine: he was such a statement, that you would argue when you look at elections in portugal and spain, the overthrowing of the government in portugal. that we need a statesmanlike churchill. tom: i go back to jenkins by on churchill. this is a new book. no more champagne. it is very important that you look at his accounts, so damn
good. francine: right. but it does go back to the economy and the fact that maybe he overspend but he had a vision. we need leaders. is that fair? tom: his order of alcohol at yalta is something. hole new meeting to the word bubble. tom: let's put that on twitter. federal appeals judges upheld orders from lower courts. the ruling say the 26 states fighting to stop the plan would probably win the case. president'sto the executive order. that could set up a showdown in the supreme court. british prime minister david cameron is telling the european to"n to agree irreversible changes of it wants the u.k. to stay in the fold. needs to ease business
regulations, and he said national parliaments should have a greater state over -- say over e.u. lawmaking. of black football players at the university of missouri will return to practice today. they walked out demanding the resignation of the university's president. student leaders accuse the president of not addressing racial issues. the president quit yesterday. the primetime lineup tonight fourth republican presidential debate. ben carson will lead a field of 8 on the stage at milwaukee. the sponsors, foxbusiness and the wall street journal, narrowed the field based on recent polls. the event starts at 9:00 eastern. candidatesfour other starts at 7:00. you can get more on these and breaking stories 24 hours a day at the new bloomberg.com. tom: thank you so much. let's get to the data check
quickly. equities, currencies, commodities. -6 on futures. crude oil we are watching. a churn again. ball gazes out on american west texas. this is portugal. francine, is it certain the socialists are going to take over? francine: we think there is an alliance with the opposition parties, the leftist parties. look at this, right? right here was the election october 4. it took several months. we know it was a weak government. why we care is because we think that guys that will overthrow the government will go -- with g o anti-of study. tom: long-term portugal, here is the spike up. down we go. that is enough on portugal this morning. we are thrilled to bring you this morning someone who has been out front on the complexities and the nuances of the middle east debate. richard haas is associated with
various republican administrations but he has taken a bipartisan approach and analysis at the council on foreign relations to the middle east. how polarized is the debate now, or is everybody sort of on the same page of analysis? the debate iss: polarized but not simply between democrats and republicans -- between democrats and democrats. there is no intellectual or political consensus about what this country ought to be doing in the world right now. tom: presidents are overcome by events. we are pivoting to damascus. what is the action plan in the final months, not weeks, let's say months of this presidency? ambassador haass: sometimes in foreign policy, you have of sides, what you want to accomplish. sometimes it is simply what you want to avoid. syria is a failed state. there is no chance of restoring a national government. avemost we have an encl
working with a few errors. the russians are working to short the government. isis has its piece. cohen was brilliant this weekend in the new york times about the absolute intractable affairs on the syrian-turkish border. this is going back centuries, right? abassador haass: it's on collision course. basede a kurdish strategy. the turks, their priority is not going after isis. we are on a collision course with recently reelected government of mr. erdogan. francine: you describe a mess. ambassador haass: to use the technical word, a mess. francine: how do you get russia on board? it seems to me sitting from where i usually am in london, the u.s. needs to use russia in some way. ambassador haass: i do not think we should be against what russia is doing in damascus to shore up this government is not a bad
idea. we do not want the black flag of a caliphate over damascus. you cannot support assad, because that will fuel isis. at some points we have got to get russia to pivot away from assad -- francine: how do you do that? ambassador haass: the bomb will get mr. putin's attention. isnk about appeared rusher 15% muslim. it does not want its own population radicalized. -- think about it. russia is 15% muslim. a bomb onif we saw that plane over sinai, you do not think it will actually make the russians say to vladimir putin, enough. we do not want to get involved. ambassador haass: not yet. he has a cushion of support. tom: when i look at this, in one of your essays, you said we do not want to bring damascus down. what do you mean by that? we are the point where we cannot illuminate the government which we thought was topic one. ambassador haass: we we want to
of power but out we do not want to see libya. not enough to oust government. the hard part is putting in some authority in its place. tom: in baghdad a few years ago. ambassador haass: we do not want to learn it again in syria. what you will have -- will happen as you will see the black flag. what isis is above all is a momentum play. tom: in -- and to your point, help me with us, you speak to our military. i have done a lecture, i think they have the coast guard and senior officer of the navy in attendance. our military does not speak about isis like they do about everything else. there is a different tone. describe how the pentagon views the atomic state. islamicor haass: the state is not simply a terrorist organization. it does have elements of the state. it controls territory, it raises revenues. it it has a vision of how society ought to be organized. these long state is going to be with us not just for days, weeks or months but years to come.
it is a worthy adversary in both syria and iraq. i'm worried it spreads. tom: how does -- do you contain it? ambassador haass: you put it on the defensive through air partner. you need from partners. strong groups who can work with who can push it back. the kurds might be such a group. tom: i think of -- at stale or -- at stanford and what he did after 9/11 controlling flows of money. ambassador haass: in the areas they can control, they can rob banks, kidnap people, sell some oil. they can receive money from around the world from sympathizers amongst a billion plus muslims. francine: talk about sympathizes. it seems like it is a well oiled p.r. machine. how do you stop that? prime minister cameron: ambassador haass: you have to compete with it. this is a battle for the hearts and minds of young, alienated men. francine: we don't have a
unified state against it. the u.s., the european union very fragmented. you have russia taking different lines. ambassador haass: it is not up to governments. it is up to individual mosques. up to families to talk to their kids. aere is not going to be centralized response. this is a network. you cannot have a single anti- isis movement. tom: when i look at what we should do and project within the middle east, what would you ask from john kerry? you have exhausted the irani an talks. what does he do in his final months? ambassador haass: not to spend all his keller's on the middle east. we should be spending time in asia dealing with china -- don't spend all his calories on middle east. the biggest are two good -- the biggest are teacher challenge is in asia. what is going on in your. ukraine, you still have greece, portugal and spain.
the united states needs to reestablish its position there. got to talk to the american people about our role. american unpredictability. people are watching our debates. it is not a reassuring image for the rest of the world when they are watching american politics. it raises fundamental questions. tom: we'll come back to that because rfrancine said the same thing. richard haas with us. lots of talk about. francine: i'm looking forward to continue the conversation. later on on today on go, i will speak with a ceo. we talk strategy, job cuts. he wants to spin off the swiss bank. we talks was ahead of his interview ahead of the summit in new york. this is bloomberg "surveillance" bloomberg tv, streaming on your tablet coming phone and bloomberg.com. ♪
tom: good morning. bloomberg "surveillance" washington, d.c., on a beautiful november morning as well. lots to talk about on our international relations and on the domestic linkages to our foreign policy. we do that with richard haas. right now let's get to our bloomberg business flash. here's vonnie quinn. vonnie: the uaw's contract with ford will do more than boost workers pay. it is part of the call requiring ford to invest $9 billion in the u.s. members must vote in the proposal. a court ruling could force general motors to pay million more --- millions more in damages. gm could be liable. gm'sawsuit stemmed from defective ignition switches. the plaintiff would have to prove the company covered up the
problems. otle restaurants that were forced to close could reopen later this week. the shutdown affected 43 restaurants. the latest has found no trace of bacteria. francine: the oil market will remain over supplied until the end of the decade according to the international agency energy. let's head back to london and managing editor on energy and commodities will kennedy. are saying is it is about demand and supply and there is nothing more to it. but we are not expecting fracking to be less, and not expecting opec to cut. will: everywhere the iae, which advises the world's richest nations, puts together long-term trends. this is the first time they have done it since oil prices crashed. in the next two years, there have been note dramatic changes
but after 2020, opec's policies will start to bear fruit. their share of the oil market is going to start to climb steadily from 41% to 44%. big beneficiaries -- iraq and iran. tom: what is their quality of their crystal ball gazing out five or 15 years? to me, it is fraught with risk. will: of course you're right. i'm sure if you read the report two years ago you would have been warning about the dangers of continued high prices. prices tanked. but, you know, there is some value in looking at how changes, the long-term shifts. highlight for you today is that china has been the private global engine market. they put a lot of emphasis on india taking over as china slows. tom: good luck with that. let's look at the chart. this is the one of the most famous charts. through then of oil
1950's and 1960's. here is opec. down we go. what is important in 1986 we went down and we stayed low forever. up we go -- the china boom. richard haass, this is about longer and lower forever, whatever the phrase is. that is the way commodities work. ambassador haass: this is the new normal. you have relatively low growth. that is a reality. you have natural gas. alternative is becoming more significant. you've got american fracking. i think this idea that opec supplies of be the key to oil prices is way off. tom: the chart of the year. oil,ame feel as you see in but this includes industrial metals. down we go. francine: looking at that chart, and looking at the oil chart, i wonder if oil is much more
political the we have given credit to this is. saudi-iran standoff. the u.s. frackers not giving in. inassador haass: saudis particular. one of the real questions about long-term oil price is saudi arabia itself. they have the world's critical producer. will that remain the case? could something like the islamic state target saudi arabia, problems in the eastern province s which are largely shia. the answer is yes. the single biggest question when you look at oil prices over the next decade is what happens in saudi arabia. tom: that is the marginal producer, the marginal cultural part on oil. we are focused on turkey and iran. how should we focus on saudi arabia? what is the analysis we should apply to the royalty? have ador haass: you wildly divided royal family among the generations. you have got saudi arabia embarked on what i would call a misguided wra of choice in yemen -- war of choice in yemen.
oil in the high 40's. they are going into debt margins. it is the world's largest welfare state. saudi arabia is a bargain between the political authorities and religious parties. tom: a bargain between us and them. ambassador haass: so many bargains are beginning to fray. tom: we will return and talk about how the u.s. ties in to our international relations. will kennedy thank you so much on the iae and the oil report. look for his workout on bloomberg. bloomberg go, she is not arthur levitt. lucky her. she is mary jo white. she will be on at 9:00 a.m. in new york. 2:00 in london. mary jo white, what a fractious stew she has. at our securities and exchange commission. stay with us. bloomberg "surveillance" ♪
tom: good morning, everyone. live bloomberg "surveillance" washington, d.c. wakes up to a most interesting november. the gop debates tonight. the president has been busy writing up a storm at 6000 pennsylvania avenue. please note, president obama's essay a trade deal that will benefit working families. opines.ident we have taken economy that was in freefall and returned it to a study growth and job creation. we put ourselves in position to restore america's promise. not only now but for decades to
come. that is what i believe this trade agreement will help us do." i guess he read richard haas's book. that is basically the same ambassador haass. with critics from republicans and democrats. you have got to put america in order before you project ou international relations. rambassador haass: foreign policy begins at home. here.ins we have got to reestablish the base. that means the economy, schools, infrastructure and all the rest. -- allt h the tpp is an economic plus. argument issident's the job's relationship to u.s. exporters and by large others have access to us. tpp does not change that. it changes our access to them. tom: this president and the next president has to have a greater theory. the idea about working in a post-american world and where is that post-american
world right now? it is inr haass: disarray. this world is as messy as it gets, particularly in the middle east, but we are seeing large elements in europe. latin america is drifting. asian is the biggest question. stable for the time being. but you have made moving pieces. the question is -- can we corral others and work with others to come up with a shared definition of what is ordered? -- order? tom: there is a part of the party that wants to -- ambassador haass: parts of both parties that want to turn inward. you have to cost limit the case of why the world matters. this is not something we simply do for others as an active philanthropy. this is something we do for ourselves or the united states cannot prosper literally and figuratively as a giant gated community. we have got to make the case of why the world matters and why we need an engaged foreign policy. francine: wise the present making the case? it seems to be obvious to me. where i am sitting in london, this would be a done deal. if you look at the editorial again, i said many times this is the right thing for our economy for working americans but i am
not asking you to take my word? for it. why does he be explaining ambassador haass: because large elements of his own party disagree with him. he has got the unions against hemp your he has a large part of the left, look at bernie sanders the unions against him. touches the constituency, if you build in detroit. if you are a farmer or rancher. if you are small business owner, those are the constituencies he has to sell. what is the constituency unspoken here? ambassador haass: it is the problem with trade in this sense. are most of uses but we do not feel it. those who see themselves disadvantaged by trade or in many cases they think they are, it is really by technological innovation. they are passionately against it. you have got in on even playing field of the anti-s feel more strongly. what the president has to do is make the case to most americans, you may not realize, but this is good for you. tom: can you have a pro-trade
republican? they will have six more debates. ambassador haass: for sure. tom: jeb bush has been silent. ambassador haass: marco rubio, most of the establishment is protracted if it -- and when tpp passes, it will be on the backs of the republican votes. you will have a minority of the democratic party. tom: how is this debate seen in london? francine: all of this conversation makes me think again that it isn't that much more difficult to be a middle ground politician because we are seeing extremes. and this is something that because of the state of the global economy in the last five years, is even being reinforced. tom: fabulous. very good. we will have much more. the president -- a trade deal for working families. covered on "with all due respect." ♪ the only way to get better is to challenge yourself,
it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. tom: good morning, everyone. bloomberg "surveillance" francine joining us for a few days in new york. that is a good and beautiful thing. vonnie quinn with us as well. with our first word news. supreme court battle
could be a head over present obama's immigration plants. an appeals plant upholding lower court orders that stalled his plan. the president issued an executive order in november to say 5 million people from deportation. 26 states sued to block that order. the senate is expected to pass a bill today that would ban moving guantánamo bay prisoners to the united states. there are 112 prisoners still there. congress would have to sign off on any new u.s. facilities for those prisoners. prime minister says the european union needs to make big changes to keep his country in the fall. david cameron spoke outlining the steps he thinks that e.u. should take. prime minister cameron: there are those who say that what we
are embarked on his mission impossible. i do not deny seeking changes which require the agreement of 27 democracies all with their own concerns is a big task. but an impossible one? i do not believe so for a minute. ritain will vote sometime in 2017 on whether the u.k. will stay in the union. india was to become one of the first countries to buy armed predator drone's from the u.s. and help india hunt for militants in pakistan. india was the second-largest buyer of u.s. weapons last year. just eightbe candidates appearing tonight during the fourth republican presidential debate. the sponsors fox business and the wall street journal narrowed the field based on surveys. there is a focused be on ben carson. the main event starts at 9:00 eastern. four lowerith rated candidates starts at 7:00. you can get these breaking stories at the new bloomberg.com. tom: watching the euro. 1.0727. a little soggy next to it today.
print. towards a 106 onto our biggest -- single biggest chart. sometimes you do not know what the outcome is going to be. this stunned me. i had forgotten how lost a pin is. this is topline gdp. in the white line, the real gdp plus inflation. in japan, it is the real gdp plus deflation. there is a clinic that everybody -- we do not want to be that red line. what a difference in animal spirit back 20 years. ambassador haass: talk about the lost decades. just sad. japan has so underperforms. it also is a powerful lesson now is to limit military policy. to cannot ride -- limits monetary policy. francine: is it the limits of monetary policy or have they been unlucky? ambassador haass: it is not
about lucky. this is about an unwillingness to do structural reform. japan has been highly inflexible economy, immigration is off. the political books. you cannot do that. you have not been willing to have any type of labor mobility. women have not a chance until rezoning to enter the workplace. it is just, it's paid an enormous price for its rigidity. francine: they are doing this great financial experiment at the worst time because we are in a deflationary spiral. tom: let's add the fourth leg of abenomics. what is going to jumpstart them. ambassador haass: there is not a fourth leg. they have done the monetary. they're unwilling to do the third which is structural reform. until they do structural reform, that red line is not going to change. tom: could china force this? does china have so much mass within tpp not being china, does china respond and force reports hand to jumpstart growth? ambassador haass: what china
will do. to slow down and china reinforces her increases the pressure on japan. threeain, japan has had decades of pressure and it has not responded. -- oncee such a thing an economy reaches a certain high level of gdp per capita, i think it reduces the urgency to jumpstart. because of becomes the opposite of the willingness to undertake risk. tom: to your point on deflation, there is a money illusion out of england ages ago. an inflation illusion. and a deflation illusion. evenrces real gdp up though it is less than real. it makes it almost an artificial state they have had to deal with. ambassador haass: what it does is it is a disincentive to reform because things are not sufficiently bad to get people up in the morning willing to contemplate risk, to basically get out of the political safe spot. it is a message for any advanced democracy. a sclerosis that sets in.
japan is a warning for what can happen when a country gets comfortable and is unwilling to reform. francine: in europe, there is a lot of concern that way be -- we may become the next of pan. it is also a demographics problem. they cannot pay for pensions. -- we may become the next japan. ambassador haass: immigration is off the books. people are not willing to have more kids because they are worried about education and housing. you see a couple of percent increase in female participation in the workforce. a little more flexibility. that has been the one positive department under abe. can that be expanded and what else? women-omics cannot be the third arrow. tom: richard haas with us on japan. tomorrow, the great capitalists of chicago's -- school will join. we will talk italian football or the lack thereof. tomorrow. stay with us as futures -3. it is bloomberg "surveillance" ♪
welcome back. here are some of the current stories you can check out on bloomberg.com. the chinese tech maker says they plan to sell as many as julian phones for singles day. china's version of cyber monday. internet company tencent posted a record third quarter profit. doubled.ad sales millennials are saying goodbye to big banks. last year, community banks saw a 5% increase and account holders ages 18-34 while large regional banks saw a 60% decrease over the same period. you have to watch those millennials. they want to do good in the world. tom: they like the big banks.
it makes for easy debt transfers. that is what i would say. this is a joy. here is a fabulous book thsatat snuck up on me. another book on churchill. just what we need. "no more champagne." this is something we knew for more jenkins one volume, but you have taken it much further. it is not that he was broke in later life, he spent his entire life shaped by money. the early shape churchill, the churchill that americans do not know? risk.l, he loved and he adopted high risk positions in his public and private life. he wasn't really born into money. people think he was. but he made his first million himself. first million in today's money. by the age of 25 by writing.
tom: tell francine. jump in here. francine: he is considered one of the great statesman. what he have survived social media? >> absolutely not. but he would've adapted his behavior. he was a creature of his times. francine: but he was larger-than-life. >> he was larger-than-life, absolutely. he even then, he was aware of his image. and he did what he could to control his image. he was very careful to put that cigar in his mouth before he went outside. have adapted,uld maybe rather slowly but he would've adapted. tom: roy jenkins touches on this and david locke nails it. it is chartwell. his summer place. chartwell was attracting no interest even at a reduced price of 20,000 pounds. and the pile of unpaid bills had
risen above 3000 pounds. the storm clouds were gathering. how did this affect his day-to-day life in the crucible of the 1930's when they were worried about the small matter of hitler in germany? how did the money thing fold into the day-to-day? david: he seemed to be able to come heart analyze -- to compartmentalize it. in the 1930's, the politics comes back into his life. he had to step back from politics to try and write and get money into keep the bank and. they-- bank at bay. as hitler rises, he has to spend more time on politics but he did takes like crazy. his books. he entertains at lunch and dinner. tom: let me ask you the top decision -- the tough decision. i say this with respect for his contributions at yalta and before that. was winston churchill an alcoholic? the amount of liquor consumed in the jurgen analysis. it is stunning. david: but everybody who worked
closely with him says that he was never under the table. tom: exactly. avid: i spoke to one of his secretaries, she is still alive. she is absolutely insistent he was never under the table. which does not mean he was not an alcoholic. tom: but i think this is important point to make with the stereotypes of what the guy put down. gh.uestion for mr. lou ambassador haass: do you agree that churchill is the most significant person of the century? david: uh, you know, i think, i mean, it was only a very small moment in time. it was just in that 1939-1940, 1941. tom: was it only that window? >> that was the window which critically shaped -- [all talking over each other. ] tom: what did you learn about
his relationship with montgomery and eisenhower? he was the go-between between the madness of the american generals livid at montgomery, livid about antwerp and world word ii. how did churchill fit in there in the emotions and the egos as we lost thousands of people? david: churchill was good at handling generals. he came from a military family. he with and working with generals. he understood this sensitivity of generals. in eisenhower he had a terrific diplomat. francine: when you talk about brexit, i feel like i am having an out of body experience talking about churchill and champagne. talk about the statement. david cameron is trying to be a statesman. referendum.u. he is at pains and trying to renegotiate. he seems uneasy when you listen to him. mr. bismark,te
it was a blunder. it is mission misguided. i think he met a colossal mistake to have made this initiative -- an issue. to have promised this referendum by the end of 2017. it is not clear he is going to win it. the stakes are enormous, if he loses, it did does not just have tremendous contribution -- effects for britain. i think then scotland leaves. scotland is not stay in the united kingdom kingdoms. the stakes are colossal. francine: why did he get it so wrong in your eyes? did he not have enough confidence to say i can win the may elections without calling for our referendum? ambassador haass: he overpaid the price to keep party unity. the process of marginalizing itself by going to the extreme left under mr. corbyn. what's bizarre is what he is not worthrope is it.
what he is asking is so symbolic and small that it is not worth it. the pain-gain ratio is way off. tom: you are uniquely qualified to talk about the future of the city in london. are they at risk in david cameron's screws up brexit? he'll i don't think screw it up. i disagree slightly. he will win it. tom: is londoon at risk as world financial center with ease tensions away from brexit? david: it has been a risk before with the introduction of the euro. it is beautiful place. tom: francine, i asked you this question. what is the alternative besides london in europe? francine: you have to see whether paris -- you could have another government that tries to attract. david: london's has got decades of skills build up. francine: but referendums are completely unreliable.
ambassador haass: all i'm saying is most of the animal spirits are on the other side. right now it is not clear he can win it vote. i think it was mistake to put this in place. david: politicians have to take risk. churchill took risks. tom: this is a sleeper. reallye champagne" is a fabulous book on the span of churchill's career wrapped around how he was always looking for the next hamburger. david lough, congratulations. later on bloomberg , we continue the discussion. neil ferguson will be with us. office early volume on kissinger. up through 1968. maybe they will touch upon good sir winston as well. futures -3. stay with us worldwide. bloomberg "surveillance" ♪
new weakness in euro. that bear care for watchings. sterling cloning clearly -- sterling showing clearly francine cannot go home. vonnie: canada's second-largest railroad looking at a takeover of norfolk southern. canadian pacific and norfolk have had preliminary talks. it estimated value of $24 billion. h&m storestailer -- in the u.s. will close on the holiday for the first time. rei says it will not open on black friday. animal rights groups say seaworld ending orca shows this not go far enough. they say they will be displayed in a natural setting. activist say the whales should be released. whale killed the trainer five years ago. francine: thank you so much. now, let's get back to richard haass.
we have been talking about the middle east. we will go back to richard haass in a second. let's go to bloomberg with david westin. with a great interview. we will go with stephanie ruhle on the credit squeeze ceo. david: we welcome you to bloomberg to interview tidjane thiam, the ceo of credit suisse. we have mary jo white, the head of the sec. we have christine todd whitman, the former governor of new jersey and the spokesperson for the nuclear industry. if that is not enough we will talk about president obama's essay on tpp, was just came out short time ago. please say hello to our friend, richard haass. ambassador haass: good morning. tom: david westin, thank you so much. bloomberg coming up in the hour. we had a number -- of comments which is please talk to anotheror haass about visit to the white house. this is the president and benjamin netanyahu. this moment with the president and the prime minister yesterday
in the oval office. the two leaders a little less frosty. this is their first encounter -- this surprised me, october 2014. u.s.e agenda, the 10-year defense pact with israel. the middle east crisis and is always the israeli-palestinian peace process. richard haass, translate what is going on. ambassador haass: the israeli prime minister realized it was time to turn the corner somewhat in his relationship with the president, put aside the iran agreement. it is a done deal. the peace process has been sidelined for all sorts of reasons. what you have are two things. what is israel once a larger long-term military aid package. and suddenly, look at the region. israel gets up every day. has an unraveling adidas. -- u nraveling syria. question is about iran. so the israelis and americans have a shared interest in beginning to revive strategic operation because it is quite possible that 3:00 a.m. phone
call will come, and there will be a crisis in and around israel where they have to cooperate despite the lack of warmth and trust between these two individuals. francine: it has been a poisonous personal relationship between them. can they really get over it? ambassador haass: you do not have to like one another to do foreign policy. it helps. you have to find a way -- common interest and trust. this was a beginning of a kind let's put some things to the side and let's see what we cannot work out. the stakes are enormous. seriously, there could be a major crisis in 20 different places where vital u.s. and israeli interests are at stake for tom: part of this interest is the timeless idea of israel and egypt from 1967. is the israeli-egypt relationship broken, not only due to the recent events in sinai but the turmoil that we seen weekly in egypt? ambassador haass: the israeli-egyptian relationship is
pretty good. this government is immune from popular views. there is a lot of strategic cooperation going on between over terrorism. egypt's future is in doubt. this is a top-heavy government. they arrested one of the leading -- activists. it is an all or nothing political system. what worries me about egypt is whether at some point there is enough pushback against the government that you see growing amounts of instability. understand that he is not necessarily in control of his own government? that arrest came tangentially to his office. ambassador haass: i think he is control --- in control. you have things going on on the sinai that isis. arab world. of the there are elements beyond the capacity of this government to control. the government is politically brittle. that worries the israelis down the road. francine: talking about the
debate tonight. when you're sitting outside the u.s., your sometimes surprised, i'm putting to dramatically, that some of the crazies are out there. is this normal, because we are so far ahead of the u.s. elections? ofbassador haass: the array candidates is broader than usual to use a generous phrase. things are being said are more outside the mainstream. i think into trips in the last couple weeks overseas and i was isuck by the whole world watching. people are not feeling reassured. what it reminds them is they are reliant on the united states you can take united states less for granted. the political debate has gotten larger. we are less certain. and there is an unease with the rest of the world feels when they watch our conversation. they go, wow, if this person is elected, so much might be up for grabs. our security, our economies are so dependent on the americans. tom: do we find normality before the conventions? ambassador haass: democratic
party have a version of normalcy. republican party -- history would say yes. i have got to tell you. i have been wrong this time two things have remained abnormal far longer than people like the establishment types would have predicted. tom: this is been fabulous. let's do this as officten as you can. hs is at the council -- richard haass is at the council on foreign relations. look at the informative website sayfr, which i cannot enough about to brief you on some of these complex topics. bloomberg next. we continue the ballet on bloomberg "surveillance" on bloomberg radio. futures -2. are you with me tomorrow? francine: yes! tom: yes! francine in new york. ♪
christine todd whitman says no. and she is trying to revive it. welcome to bloomberg stephanie: i'm stephanie ruhle. we have a big day of bloomberg. it is the year ahead. summit. president obama himself writing a bloomberg view piece focused on tpp. david: the beginning of a campaign to get passage in congress. stephanie: this is a huge initiative. it is a huge initiative for us to a deliver you a very special morning. our d.c. bureau chief is in the house. i'm not going to say it is a huge deal p at i'm going to say it is a pretty good deal. a bloomberg favorite of mine is here. tim cook was speaking