tv Bloomberg Surveillance Bloomberg November 3, 2016 5:00am-7:01am EDT
day. the uk's central bank is said to leave rates unchanged but what about inflation? brexit rolling, and the next hour -- ruling comes. the pound gains ahead of the ruling. surveillancemberg ." i am francine lacqua, tom keene in new york. it is all about the pound and the u.s. presidential election. tom: the fed meeting yesterday. meetingank of england more important than this court ruling we're supposed to have in london? 50/50 because we will get some crucial inflation data from mark carney and at the same time, the ruling may put political angst once again. tom: i want to suggest there is so much going on within
economics, finance, and investment but is america exhausted by a stunning game last night? it will truly get super bowl ratings. francine: well. politics, sports has been amazing. government british is bracing for a court ruling in the lawsuit challenging brexit. in about an hour three judges will roll whether theresa may can begin the u.k. exit from the european union without permission from parliament. wasish parliament overwhelmingly eu. egypt has taken the unprecedented move of letting its currency trade freely. the measures move egypt closer to getting the $12 billion loan from the imf. federal reserve policy makers
have telegraphed their intent to raise interest rates. the fed says it needs only some further evidence that employment is on track before hiking the rates. what they do not know is what impact next tuesday's election will have. our kids priced in an 80% chance of a fed move next month -- markets priced in an 80% chance of a fed move next month. the report has ordered an investigation into the dealings with the prominent family. in chicago they are partying like it is 1908. they won their first world series in 108 years, beating that cleveland indians in a decisive game that went 10 innings. the cubs are their first team in trailingo win after 3-1. global news 24 hours a day,
powered by our 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: we will do a little bit more on the cubs later that really quite extraordinary. we could talk about it on and on and on and francine would throw something at me. francine: cross atlantic, i would not miss. i would still hit you. tom: let's do a data check, equities, bonds, commodities, currencies. , reallyeaker and oil beginning to get my attention, soggy on the oil. vix nearing the 20 level and 2.136 --is a stunning 1.236. francine: i love that you looked at the mexican peso versus the dollar. euro-peso look at the
because that may be the winner next week if you are looking at extreme currency moves. with gold we are seeing once again a flight to safety. it was gaining about an hour and a half ago. the yen higher. , theyyptian currency switch to a freely floated exchange rate. tom: we are going to do this, it is not a big deal but it is symbolic to see the egyptians float their currency. we will have more on that later. let's go to the bloomberg. we go to clinton trump. we have shown this like four times on the fed meeting show yesterday, the fed decision. the blue line is maybe structural weakness in peso, the redline is a trump surge up three months ago. the three debates are the circles and that gives you the scope of the surge, and it has continued to lag up a weaker
peso against the dollar. francine: it is an extraordinary set. i really do think that apart from brexit, it is the only story in town. the sovereign bond index is in blue. this is what you see, dollar-yen in purple. we circled it for the last five days as a safe haven. you can really see as the polls in the u.s. are changing and becoming tighter, safe havens are where investors want to be. .et's get to rob would the problem is you have this going on the election, and then he'll actually have a lot of uncertainty about inflation in the u.k. -- and then you actually have a lot of uncertainty about inflation in the u.k.. rob: we have the court decision coming not long. also mark carney issue, what he
continues to do for inflation unit i guess is with the markets seemingly to challenge the view of bank of england credibility he is going to have to enforce that today. i do not think you can really do anything else in the near term so no rate hike in a cautious message. francine: tom said what is more important, a court ruling or mark carney? rob: i think the court ruling because what mark carney says is artie pretty white is already prettily -- already pretty widely accepted. in the long run whether or not the government, parliament has to vote on triggering article 50 is not such a big deal because it sounds like they would vote to trigger it. ofarly it raises the chance extra parliamentary involvement in the process and i think that is what markets are watching for.
tom: what is your house call on u.k. gdp and on sterling a year out or so? is there some confusion on where these vectors are going. where are your -- what is your call? rob: i expect gdp growth to slow almost continuously. fourtht .3 in the quarter, .1 in the first quarter, and continuing. we think triggering article 50 will be a big deal for the currency because as the discussion shows, our are still hanging on the possibility that the u.k. will not trigger this. i think when the u.k. triggers article 50 which we expect to come when theresa may said it is going to come, we think that will be a big moment and sterling could head to 1.15. tom: good summary. i want to summarize this today. if we look at the current
account in the next of britain coming up -- and the angst of britain coming up, it is not so much about the level of the current account. and then you add on the money flows. but the chronic nature we are going to see and the current account deficit. do you believe it will be chronic, or can britain do better than the gloom right now? rob: i think you are right. the current account deficit is obviously a huge deal. i think what brexit does is a couple things. long-held investor perceptions of the u.k. as an extremely stable place that always takes the right policy decisions. that is what allows it to run a large current account deficit so that puts a challenge on that continuing. the second thing is brexit itself challenges a number of
big industries like finance, business services. the currentaway account deficit is even bigger than in that chart. and the reaction are challenging the sustainability of the current account deficit and that is partly what you see with sterling. will it continue? i think that is up to markets and what politicians say. i think if they continue down this hard brexit route, they could cause the current account deficit to close its quicker than six months ago. francine: thank you very much, rob wood. we will bring you full coverage of the boe decision when it comes. we are expecting mark carney two starts begin at 8:30 a.m. new york but we also get the court ruling on brexit. this is bloomberg. ♪
francine: this is "bloomberg surveillance." i am francine lacqua in london, tom keene in new york. taylor: facebook suggested it will not be able to repeatedly third quarter that blew past estimates. they say the company's cost will drive -- will rise significantly next year while revenues will fall. earlier they reported that corley are -- quarterly sales rose. shares of the adidas fell the most in formats. they have been hurt by currency swings and spending more in retail outlets to keep it shoes in front of customers. shares had risen 63% this year before today.
the world's second-largest energy company is forecasting demand for oil could peak in as little as five years. --al dutch shell numeral believes demand will peak before supply. exxon mobil says global demand for oil will rise about 20% through the year 2040. that is your bloomberg business flash. realthere seems to be a tone about a lot of companies doing better than expected. i see it story after story where there to be an adjustment. facebook last night got hammered, but the shell oil captures my attention. francine: facebook was because they think the next 12 months will be tougher. the problem when you beat growth,ions, is it real because your investments were right, or cost-cutting? tom: let's begin our coverage of washington. washington, is our
d c bureau chief good morning what is the level of panic within the clinton campaign? megan: i would not describe it as panic. i would describe it as heightened awareness. moving seen my -- money into states that have not put money in before it -- probably in before. if they are looking at arizona, new mexico, colorado. in virginia they are not trending toward them as well. does donald trump have more pathways to 270 than he did before? tom: i want to congratulate you on the pole yesterday. i think it was the most nuanced pole ever. it showed not so much clinton and trump, but the back story of these other two candidates, jill stein to join us in the next
hour. how important is it for these two ager candidates to yank votes from the minor candidates? megan: very important, because what we have been seeing in the early voting -- and one third of the electorate has artie voted -- gary johnson has been trending much lower than we expected. that is going to be a huge factor. what we have been trying to model is who he is going to take votes away. is he going to take votes from hillary clinton or that move from donald trump? what kind of libertarian impulse comes behind him. very pulls 4% that is a different electoral count if he pulls in 10%. this kind of race which has changed dramatically since last friday, this is going to be one of the deciding factors. , i think ourts
poll was incredibly accurate showing this movement of a group that mitt romney one by 5% in 2012 but lost the election. brock obama carried it -- barack obama carried it in 2008. when you look at clinton, she leads an average of 12.3% amongst white college graduates. usually that vote in history has gone to the republican candidate. can she win on that alone? megan: if that number turns out to be true that she is up by 12% , she is going to win this election, no question about it. what we are always trying to figure out about brexit, is there an under polling for donald trump alone noncollege educated whites?
or remodeling the turnout appropriately -- are we modeling the turnout appropriately? outdisenfranchised may come in greater numbers than ever before. college educated whites is a known population and we can model from prior elections decades, but what we cannot factor in is, is there the secret group that is going to be mobilized and come out in favor of him? that is going to tilt the scales as well as we see this tightening particularly in states like florida, pennsylvania, michigan, wisconsin, and colorado. francine: is the turnout depending on the weather? do people in the states vote differently from the u.k.? megan: i think a lot of people walk or drive. it is going to be the weather but also this enthusiasm gap. when we look at game changing
narratives the last friday letter from comey and whether people feel, i want her to win or want him to win, they need to cross that hurdle. tom: francine, when we go and vote, megan. we take the surveillance limo with the great coupon mustard to pouponling -- grey mustard to the polling place. megan: can i give a comes shout out? 108 years. tom: we are a little sleep deprived. we will speak with the candidate of the green party coming up, jill stein of boston and i believe of chicago as well. perhaps she will go for the cubs' vote. this is bloomberg. ♪
francine: this is "bloomberg surveillance." francine lacqua in london, tom keene in new york. reddit swiss shares -- credit down. shares facing -- i spoke to tijane thiam. billionve almost 31 swiss francs of assets this year, up 40% on the previous year. we think that is a strong performance. we said we would drive costs down and we are well in track to beat the 2016 target.
francine: so far he has eliminated thousands of jobs, slashed assets, and cut the securities business to focus on wealth management. spring and michael moore and we are back with rob wood. they were not very good in equities for last quarter. it was quite a visible, and i know there was an asset disposal, but overall they were ok results. what is going on? michael: i think there was an expectation after you had better ask -- better than expected results from deutsche bank and barclays that deutsche bank would surprise -- it's credit suisse would surprise. people are looking at the trading results they had, the worst trading results among the global banks. i think people are perhaps
concerned about the continuing trend of that. you had analysts talk about this was the worst equity performance there decade, so i think is some feeling that maybe in this restructuring they are losing some business. francine: a couple of days ago we were talking about credit suisse. and hed about cost cuts said he would like to understand more about how credit suisse would share these costs with some of the rivals, so i asked the ceo. >> that is not new and i'm not the first one to talk about it. it is clearly difficult to execute which is why there are not many examples, but we are looking at that and that area to drive -- that area to drive costs down. francine: the capital ratio increased and some are saying if it is increasing you need to ipo the swiss unit, and the ceo said yes, that is the plan. , the ipould go there
of the swiss unit i think is urgency required. let's bring up a chart with david herro, particularly brilliant on glencore. jpmorgan up top is how you get things done in north america, credit suisse just cannot get it done. what is the immediacy given your comments on trading for these guys to merge? i do not get why the boards are not saying, what are we going to do relatively soonest? that means combinations. why can't credit suisse get there? michael: i think that is a capital rule issue. the capital treatment would be punishing if they were to merge. tom: agreed. michael: i think regulators have talked about encouraging domestic combinations but they have not seemed to be as excited about the idea of major global
investment banks joining up. they have been trying to force those banks to get smaller and not bigger. i think it is largely a anylatory issue and i think kind of synergies and cost savings you would have from that might be offset by the capital treatment. francine: thank you so much, michael moore. we are back with robert wood. on sitsatzker later down with peter hancock at 10:00 a.m. in new york. this is bloomberg, watching markets on the move, policy asked, and havens. ♪
i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. francine: these are the royal courts of justice. i was at university five minutes from there and i spent a lot of time. it is grandiose and quite
proposing, and where people want to find out if the high court will rule in favor or against theresa may to prevent her from using her executive power to start the process of leaving the european use in without consultation of parliament. at decision and rolling in a half an hour and we are expecting the pound to move on the back of that. let's get straight to the bloomberg first word news. an assistant attorney general allegedly gave the hillary clinton campaign ahaz up on a congressional hearing over her use of a primeval e-mail campaign a heads up on a congressional hearing over her use of a private e-mail server. is on track to become the first republican presidential nominee in generations to lose among white voters with a college degree. that may be enough to deliver
the election to hillary clinton. clinton has an average 12 point lead among white college grads. republicans have one that group since the dawn of modern exit polling in 1956. new concerns about a so-called big brother datafile in france. they are creating a database with personal information of citizens. data could be abused by politicians or subject to hacking. in chicago, they are partying like it is 1909. the chicago cubs have won their ,irst world series in 108 years beating the cleveland innings in a decisive game that went 10 innings. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much.
services,me u.k. pmi better than expected. composite better than expected. we are trying to figure out exactly what brexit meant and for the moment it has not been much but a lot of economists saying it will be harder as we continue along this path. rob wood is still with us. when you look at pmi services they both beat for the month of october. where we too sensationalist in predicting the effect of brexit or has it just been postponed? rob: a bit of both, probably. it is also worth remembering that a lot happened over the past four months that would change the view of where the u.k. is heading. theresa may was expected -- elected on the 11th of july with a conservative party leadership was not scheduled to end until september so that is one of the events. that happened and changed the
outlook but this is definitely better than expected. that has been the case since july. yes, i think the pre-referendum forecast, clearly the uncertainty is not coming through as expected. tom: help us with the polarity of the united kingdom. booms and does better than good over the next article 50, 2, 3, four years, how does that filter out to the rest of the united kingdom? rob: i think london in some ways can be a place apart given the different industries in london versus the rest of the country. i guess a stronger london does help tax revenues and help the rest of the country, but it can sometimes appear a place apart with london doing relatively well compared to the rest of the u.k. it is a mixed picture. we need to move it on
to look at gold, as investors flock to havens. let's bring in john meyer. you look at gold a lot and a lot of it has to do with political jitters. there is nothing fundamental about the demand driving a price. john: the indian harvest was good this year and demand has been surprisingly good. we see ongoing binary -- buying in china, but the dominant story is donald trump, what happens to the u.s. dollar, what action the federal reserve takes, and clearly the market is extremely concerned about the outcome of the u.s. election. the uncertainty that might create within global markets and the effect that will have on the u.s. dollar, and the effect for gold and other metals. francine: what happens to gold by the end of the year? john: it looks like it is going
to continue to rise. over the summer we expected gold to set some lower levels and it did not actually go there so that was a positive sign. we had ongoing buying for etf's. sometimes i get worried as we have had 100,000 ounces added to dts for almost a few months -- added to dts for almost a few months. to etf'sy -- added for a few months. the more uncertainty there is in an economy like the u.s., the most important in the world, the more gold eagle are going to talk away. is adjusted inflation of gold. it is a gorgeous market for gold. we have a sustained price of gold much different than the craziness of the 1980's in the
middle of the chart. when i look at seymour pierce and and your action in smaller also --panies, it is almost about entrepreneurial spirit. what is the entrepreneurial spirit of small mining and small mining investment? john: these guys have had a tough time in the market had an apocalyptic moment in recent years. these guys put their houses in arer, cut costs, and now we seeing strong rises in these smaller companies as they start to ramp up production. they regain confidence and they start to come the momentum in investment continues to push ahead. tom: which geography is the most interesting right now? we all have our stereotypes of the unsinkable molly brown and the rocky mountains. where is the unsinkable molly brown and leadville, colorado in
2018? john: if we look at the move in gold it would be equitable. i think it is all over the place. there is no new mining camp that has been discovered. andee bhp are exploring north canada. -- in north canada. the world is very much open to mining right now and we are even seen people exploring for gold in france, which we have not seen for a while. there is some interesting places . spain is looking quite good. dare i say it, some might look to go back into russia although it is off the investment list for a few years. latin america is still looking very prospective. peru, great places to go. francine: rob, what is your take on gold? rob: a lot of
uncertainty across the markets based on the u.s. election whether it is bonds, currencies, or gold. it reminds me a little bit of the brexit vote. , where is ther tip point on gold where little guys stop going to ecuador? where is the tip point on the price of gold where these guys lose their spirit? john: if we fall back below $1100, gold miners are resilient . they have been through tough times before. we had gold down to $250 an ounce when gordon brown was selling it and these guys picked themselves up and got back into the game. they know how to shut things down and conserve cash. their markets are drip feeding them with money. we had a placement that was four times oversubscribed last week.
the first time we have seen that for a few years. the i want to bring up chart again, as he mentions prime minister brown. here is that great disinflation of gold in the 1990's and early 2000's. we forget how cheap gold was back when i was not buying you that gold watch at harrods. francine: that is so last year, but thank you, i think there is a compliment their. five or six years ago a lot of people were saying that was threat tohe biggest chancellor brown's decision, to sell all that gold. when you look at the price of gold and the volatility, i do not know whether you feel the same, rob. rob: the question of whether that was time to fix the u.s. -- , it reserves against gold seems it has taken that turn. tom: john meyer, thank you very
much. d will stay with us as we go forward to a bank of england meeting and parliamentary action , or at least a judicial action which will be most interesting. not a small item for the united kingdom. a conversation with the controversial laureate, paul krugman, days before the election. we will do that in the 3:00 p.m. hour. ♪
step of allowing its currency to trade freely and measures to stabilize its economy. egypt-pound, this is the one that is most traded, the 12 . they are trying to negotiate with the imf. let's get to yousef gamal el-din. still with us is rob lloyd. -- rob wood. this is a huge deal. authorities have been kicking the can down the road and this is the last piece in the puzzle. christine lagarde had told us it was a matter of weeks within months, and there is a real dollar shortage in the country to the extent that companies cannot really operate. we are talking about major car brands unable to sell previous -- premier car brands.
the 13 to the u.s. dollar is a provisional rate. we expect the fx currency auction at 1:00 p.m. local time in egypt, they are going to do an auction and leave it to market forces to determine so it could go up or weaken further. we are hearing from renaissance capital it could strengthen because they believe the value is more in the 11 range. francine: i was looking at the note for coming on air. they really say it is basically the imf requested last week that they need to deliver on this currency policy, then they need to remove some of the subsidies, and we talk about the program. are they on track or is this baby steps? andef: this is a major step the have tried to leave it till the very end because of the political capital they will lose. egyptians are already under massive pressure. inflation is at multiyear highs and it has been a tough time.
they have implemented subsidy reforms with a few outstanding and we expect more information not just on the subsidy programs but on the exchange rate as the day proceeds. francine: was it expected that we would have such a currency move? it went from the second-most expensive emerging market currency to the third cheapest. yousef: it was expected. you can see where the 12 month is trading at the 17 mark. we already had a devaluation in the beginning of the year and that is your red circle. this is the second time they moved that this is the big one and the one they have been signaling, whispers in the market and now it has finally come through. we will see how investors continue to react on the egyptian stock exchange which has been up quite a bit. agree this is absolutely historic. it shows the quiet power of the imf.
here is where we are on the spot price of egyptian pound. at 13, where we are which i guess is where we are going. here is the optimism of ren cap, and here is the black market near 18 to the dollar. what exactly does that mean? if i am in cairo on the street is that what i'm going to trade dollars for? yousef: pretty much because it is difficult to source dollars, and it has been a headache for officials. it has been trying to close down a lot of these dealers but because of the lack of liquidity , they just keep springing up. ultimately when you ask around you find somebody who has dollars, and they give you a certain rate. they collate that information and that is what we refer to as our black-market rate which usually trades just above the 12 month non-deliverable forwards. tom: help me with the
administration of the government. i spoke to him at length at davos if you years ago and i found it extraordinary the politics in the history of egypt folded in toward his desire to be normal capitalism. the lesson update on that given this historic float. yousef: it has been a difficult drive. tremendous pressure. he have to keep in mind that egypt is an economy that depends on tourism and remittances from abroad and the suez canal income. they have not really moved much in the last couple of years. not all the fault of the egyptian authorities, a lot of it due to external variables. what the administration has had to deal with his a difficult does is autlook difficult economic outlook and trying to reinvigorate growth.
until that imf loan comes through foreign investors have developed a wait and see attitude. they did not want to put a lot of money to work. if you look at how many foreigners own stock in the egyptian exchange or how many take part in the treasury auction, it is still at a minimum, and we will see if those numbers come up now that the government finally has moved on what has been seen a key stumbling block to bringing egypt possibly back to that emerging market arena and to the limelight. , thank youousef, id. so -- yousef gamal el-din, thank you very much. mark carney, inflation forecast, and in 10 minutes we are expecting that court decision to come on whether theresa may can go at it alone or needs to ask parliament to approve brexit. markets,on bloomberg michael mckee had a conversation
"bloomberg surveillance," on international relations, politics, indians, chicago cubs. francine lacqua board on baseball, in london, i am tom keene in new york. is takingr france steps to halt a slide in its market share. they will create a new long-haul unit. simplify awill also flight operations and work more closely with employees. there's a report that valeant pharmaceuticals may sell some of its assets part of the bausch & lomb unit which could bring inasmuch is to run a half billion dollars. valeant is sending -- selling businesses to reduce their debt. francine: thank you so much. a panel of senior judges will rule on the challenge to prime minister theresa may's plan.
we are back with rob would from bank of america. we are deciding whether she needs parliamentary approval because it seems unlikely she will get it to get on with brexit. that is why the pound is expected to move on the back, but there will be a million appeals from here. rob: there is a lot of questions. if theresa may were to ask for parliamentary approval it seems likely she would get it. there are probably a majority of members who would vote to trigger article 50 and if you look across the u.k., the vast majority of parliamentary constituents are in favor of the u.k. leaving the e.u.. the issue that she will probably get the authority to do it. question is what else will she need to do? will there be a man stacked on requiring for instance -- amendments stacked on requiring issue isnment -- the
not really that it delays article 50 triggering. what it does do is if the government loses it, a potentially increases parliamentary involvement in the process which means you get a slightly softer brexit. i am not so sure but i think that is the way the market will interpret it. tom: i will let you interpret the politics of britain. i do not get it. we spoke to lord -- yesterday. >> when i think is urgently required is a statement from the u.k. government as to where it stands which ought to be debated in the house of commons and parliament. the second thing we need to have, i know there is an ill feeling and people were taken aback by this decision, but we need to have a grown-up conversation between the united kingdom and the european union and other member states as to
how we resolve this. tom: alistair darling, i am confused about this. prime minister may runs parliament. her party runs parliament, right? rob: her party runs the government. she has the majority in parliament. they are trying to do is avoid a parliamentary vote on article 50 because they do not want to discuss their negotiating position with the e.u. in parliament. the government is trying to push this through by executive order. this is what the court case is about, trying to prevent that from happening. francine: the difference is that if you look at party politics, there is a faction in the tory party that love theresa may at pro-brexit,hat was but the majority are not necessarily for a brexit. that will be the distinction. is: i think another issue
where parliamentarian stood before the referendum and where they stand now. parliament might well have supported remain before the referendum but the people have spoken with this result, and that has brought a lot of members of parliament behind the idea that this needs to be respected, the decision. you cannot ask people to vote in a referendum and do the exact opposite. tom: absolutely bizarre. very valuable. rob lloyd is with bank of america merrill lynch. robood -- coming up, stephanie flanders, robert engle, and jill stein. ♪
the bank of england the backdrop? a brexit court ruling in the future. mr. trump gains on secretary clinton. gold searches. the dow below 18,000. kent donald trump scored two runs in the top of the 10? america of which -- riveted. the drama of the clubs and indians. the greatest game in a small history. good morning. surveillance"berg from london and new york. so this court ruling is a big deal. it is a huge deal. when you think about what it could entail, it could give hope to some people. if we do have a ruling say that theresa may needs to put the brexit ruling to parliament, it
could make the pound positive. the headline right now across the terminal. "london judges start reading brexit ruling." francine: it springs a back to when i was a young law student. you have a judge and there is a reading and it is literally a piece of paper and it could go on for 15-20 minutes to explain their rationale before they actually tell you what they have decided. tom: is it the thing in the movies? with the wakes? a serious deal? francine: it is a serious deal. it is the first step. whatever the decision is today could get a field to-three times to go to the top court. but again, this is a big deal because it gives you a flavor of the mood in this country. tom: absolutely. we will follow this through the
hour and give you expert perspective as we can. now, the first word news with taylor riggs. taylor: egypt has taken an unprecedented move of letting currency trade freely. they announce there is a sweeping measure to stabilize the economy. one of them is a three percentage point increase in raising rates. the federal reserve policymakers have telegraphed their intent to raise interest rates. the fed says it only needs some they are onf that track before hiking rates. but what officials don't know is what the impact next tuesday's election will have. investors have priced in an 80% chance for next month. tols for president zuma reside are growing. saying that they may have reached the ethics code.
an investigation has been ordered into the actions. party like it is 1908. the cubs won their first series by beating the indians in a decisive game seven in cleveland when with 10 innings. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. tom: thank you. we will talk about this later that i suggest massive and record ratings across the nation last night. just extraordinary. let's go to a data check. morning, megan murphy of the washington news bureau. diehard cubs fan. the dollar weakness. 1.1097.,
oil has been weaker. the second screen here. 19.39, still migrates in a trump fashion. investigatorskly, over the race. i want to look at the euro-pazo because these are the most extremes. egypt's currency is tumbling as floatingch to freely exchange rates and you can see that gold is down a touch but actually still up on the three-day move. election is the thermometer. we have mentioned this time and time again. you can barely see that line on the screen and i made faint on purpose. the red line is the previous trump search. the clinton surged stronger mexican peso and then we reverse
abruptly over the last 6-7 days with a new trump enthusiasm. francine? francine: i actually went for a pound terminal. i'm looking at the euro pound. have these judges actually talking about the decision so what they're doing at the moment is distancing themselves from politics. what they have said so far. so we don't have a ruling get what they are reading out there thinking. it is common. it does not express any desirability about leaving the eu. at the moment, they are saying they except that article 50 is your revocable. i will bring you any more headlines but this is what will move the euro-pound or dollar-pound. joining us now is stephanie flanders from j.p. morgan asset management.
for our global audience, it translates this moment where the judiciary meets the legislator of parliament in this system of britain? stephanie: i think it is one of aree moments where we reminded that this brexit thing, which was talked about in a general way -- francine: we are getting the real ruling. they lose it over the article 50 vote. this is significant. they can still appeal. is interesting. because what you mentioned youre, about it being revocable with article 50, that is a key point. one of the points was that if you enter article 50, then you are on a path to leaving which cannot change because you are
out, whether you have a deal or not, i think the suggestion was that it was overwriting parliament's freedom to revoke its own laws. because the law of being in the eu is enshrined in the u.k. legislation. so i think it will be significant. you you enter that process, are out -- then you need to give parliament the vote before you trigger article 50. we shouldn't assume that this means that britain may not leave the eu. remember, the mps voting for this are people who know their own consistencies. those who voted to stay or leave the eu. and i think there was a general feeling, even though the constituencies to stay in the eu would feel that they have to respect it. francine: and this is the first step. a significant step that there could be an appeal.
i believe there could be two appeals. the pound isll, surging. surging on the news that the government has lost the lawsuit over article 50. however my chart -- i am looking at the ftse. has beenok at that, it a racing some of the gains that we saw today. so it is and it was always going to play out more on the pound. but it is interesting that markets are not taking this adds significant change at the moment. stephanie: the markets have been going up on the basis assuming that we would leave because of the currency effect and every thing else. so if we see the equity market moves in oxygen election's will continue to see that. francine: we often need to find an expert view. we knew the judge profiles and we knew that by and large they were against brexit, which is why they said it was an apolitical decision, if they
were not going to be tainted by their own personal political views. but this will cause ripples. stephanie: one of the things where i would warn against the initial reaction which we may be are seeing in the rise of the pound, which would suggest somehow that were exit is less certain. i really think we need to focus on how that vote is going to go since we don't have a deal on the table. if you have a vote before you see what the shape of the deal is, i would say that makes it even more likely that they would just vote for article 50. because they have nothing to vote on. but it will say that the prime minister has to show her hand a little bit more. have a bit more transparency about the deals. more debate domestically. before we get to article 50. but really, i would not assume that the pound is up from here and i would not assume that we are not leaving the eu. i would assume that we have
major uncertainty. i want you to frame that for us as a proxy with sterling. there we are before brexit. down we go. there is an extrapolation here to the 120 level. there are two views. the consensus view led by hsbc one point 10 depreciation. a weaker sterling and i believe it is john norman's call. but correct me if i'm wrong. there is another view that london and the united kingdom will do fine. a 130day, posited sterling. give us further news? stephanie, i want you to address the divergence of the opinions you have seen. are just again, we hearing that these are bloomberg headlines that the supreme court, the u.k. supreme court, has already set aside time for the brexit appeal.
we have a time frame according to a lawyer familiar with the matter saying that it will be heard between december 5-december 8. so this is the timeline. i was wondering whether this triggering ofe article 50. but we will have a decision by the end of the year. stephanie: it sounds like those who deal with the u.k. justice system in other ways would dream of having that kind of timeline as far as the appeal we are talking about so it is an accelerated timeline which shows the clearly understand importance of resolving this by the end of the year. but i think there is a possibility that it could go to the european court because the european court has some jurisdiction over the article 50 process and the constitutional requirements of each country and what they have to go through. so i'm sure we will have plenty more fun and games. maybe you should have carried on with the legislator training. [laughter]
francine: we will get back to this but for our viewers. first of all, the u.k. now must hold a hearing in parliament before the countdown to exit. this is according to a panel of judges that basically also say that this needs to be heard by the supreme court. will happen between december 5-december 8. so it is a lot about pound and about exit. but it is a nice break from the u.s. elections. because coming up, we see what they see in terms of an inflation forecast. full coverage of that decision when it passes at 8:00 a.m. in new york. ton we have mark carney set speak at 8:30 a.m. in new york. this is bloomberg. ♪
francine: breaking news. in the last six minutes, the u.k. voted that they must hold a hearing before the countdown to brexit. the judges set up the constitutional confrontation at the supreme court. it will happen between december 5-december 8. what does that mean for the pound? the ftse was down a bit but has gained a touch and now is back down. this is the big story of the day. we are back with stephanie kennedy simon.so the back ofllied on this. but actually we could end up with a situation when it is even harder than it could be. --nedy: it could leave to
parliament could be saddled with this and two reason make everything into parliament and then parliament will own the vote, to some extent. and an analysis in the last few days pointed out that parliament votes to indict the article 50. so certainly we do get more uncertainty. the market likes anything that slows the march to a hard brexit. but it does add up to an overwhelming majority vote for brexit. and therefore the mps will probably vote for an article 50. francine: does this just mean mayhem for the markets? kennedy: they will probably have to provide more information. and you will certainly see the championing of the 40 8% of who elected george osborne. being a bit more provocative in putting it into account.
here, simon, with the backdrop of the pmi statistics today. there is a lot of gloom out there. and i hear people push against great britain bloom. is this an idea in the zeitgeist this morning? simon: it certainly is. they showed some resilience over the summer. and set says it will be easier for the hard brexit pushing through that, on the basis that the economy was weak and people were losing their jobs. and that brexit would be harder to achieve on the harder end of the spectrum. stephanie: this is obviously a positive move because we will see the bank of england show the forecast that's the economy has done better than some thought but we haven't left the eu yet.
there are still signs of weakening investments and the uncertainty is causing -- people are paying a price for that. and we have rising inflation and the economy is still dependent on consumption. we haven't seen a rebound in -- i would i was caution against some of this positivity. to seet that we expect the economy fall off a cliff but in fact there was a report this week that was not so positive that suggested on reasonable assumptions that if we got a standard free trade agreement with europe, however long that takes to get, it could still imply a 25% fall in u.k. trade on both sides. so i caution that. i would be a bit skeptical. with your wonderful coverage on itv, help me with this headline. "the liberal democrat leader says the decision is a massive blow to the tory party.
i mean there are domestic politics that we globally would like to know. is this a massive blow to theresa may's party? there are a lot of different conservative parties at the moment. we had once you were happy and , thes who are not so happy george osborne's of this world. i would caution against the idea a hard is a blow against brexit because i really am concerned that the dynamics invoked in parliament, especially with hard-liners who put a lot of pressure on theresa self- she has to prove her all the time, i worry that she will be forced to close off the morehat may be soft brexit type would have liked to keep open. she might have to make promises that tie her hands in a negotiation. so it is a blow for her
authority. blow for ors a against the conservatives who are keen on a hard form of brexit, i'm not sure. tom: the latest headline is that britain has voted to leave the european union and "that is what we will do. we will bring things back to washington. presidential candidate jill stein has been an important voice, particularly for those in support of secretary clinton. we get an update in a moment. this is bloomberg. ♪
francine: this is a "bloomberg surveillance." about the high ruling but we also need to talk about mark carney who has a tough job ahead of him. this is a bank of england decision but actually, he has a whole new set of brexit problems to solve. this is my chart and it shows growth in white. consumer growth inflation could go up. we are back with stephanie flanders. you are a central banker and your growth is going down and inflation is going up and you are stuck? a wrinkle for mark carney today is actually that the short-term outlook for growth is looking significantly better than they had taught in august when they took the emergency action. so i think the story today will be quite a lot better growth in the very short term that wasn't in their forecast but as you
say, the striking feature will be the rise in inflation. and we will see how much they push it up next year on the basis on what happens to sterling and the import prices coming through. is an assumption built into the markets that pretty much any inflation rate, they are willing to tolerate it as long as they make the case that it is temporary. we saw mark carney back away from that last week and i suspect we will hear that today. yieldsalso have gilt coming up with potential questions about the stability of of its fiscalrms outlook and what is going on with the gilt market and how much it needs to do and how much it still needs from foreign investors. seemdon't think they can completely unmoved. at 4%.e: especially stephanie: right. but they have determined there will be a lasting hit to growth from brexit.
francine: stephanie flanders, thank you so much. she stays with us. a headline -- we need to get to the bottom of that. whether the market is expecting something like that? tom: quickly, throw up the chart. 124. strength now through 124. in time for me to come to new york. we will bring you full coverage of the decision when it crosses. really hear from mark carney with the decision at 8:00 a.m. in new york and then we hear from him afterwards. ♪
the first word news is an update on the court ruling. taylor: three judges in london have handed theresa may a step back over brexit. they ruled that the u.k. must hold a vote in parliament before starting a two-year countdown to leaving the european union. she wants to start the process by and voted -- process by invoking article 50. we will have more on this story in a moment. an assistant attorney general gave the hillary clinton campaign a heads up over a hearing on her use of an e-mail server. the heads up was an alert about a hearing that had been announced publicly. still, it adds to republican concerns. and partying like it is 1908. the cubs won the first series
since 1908 and they beat the indians in a decisive game seven which went 10 innings. the cubs became the first team in three decades after trailing 3-1. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you. to thering you back brexit ruling. we are joined now from outside the courthouse. for joining us, patrick. so how much of a surprise was this? patrick co -- patrick: i think it is remarkable. rarely has a job in this -- rarely has a judge been asked to answer a political question. i think most people were letting them to let the government decide to the supreme court but it is not so.
francine: and what is also amazing is that we have a timeline. it is a between december 5-december 8. do we know how far this could go? itthis a possibility that could be pushed back to the european central court of justice? it looks like, as you say, the government's lawyer in court says the supreme court has a four day block in december to hear the case. that is the highest court in the land and they will make the final decision. normally takes them 12 weeks once they hear a case like that. but i have been speaking to the legal teams and they expect a decision by mid-january. politics ofat the this moment and i ask, is the court politically structured? when you look at the judges inside the historic building,
can you tell a tory judge and a labor judge? no, it doesn't work the same way in the u.k.. it is very important that these people are seeing as -- people are seen as a political. the most senior judge in the ,and is seen untouchable politically. and they are very hard to read. they gave fairy little away. --: what would you suggest and i know this is an unfair question -- but what is the strategy of the government now, as they go to the early december hearing? it actually is quite tricky to figure this out. we weren't sure if the government would appeal or not. i think the way the economy has gone, there is a little less pressure on the government here because it would be unprecedented for parliament to
stand in the way. and down the economy is working out a lot better than people had expected so i say it would be very strange for it to be overturned. dallas patrick gower in front of the royal court of justice. and we're getting new news saying that the government will appeal the hearing. that is expected because they have kept those days open to hear them. keene's point, we don't have political claimants with judges, but have you seen any sentiment shifting? r, when he comes on here is still pro brexit. that's true. but if you step back, i think they were very clear. and even the lawyers bring in the case said look, we voted for brexit. but we felt very strongly about
parliamentary control. and that was one of the themes the brexit which has struck the other side is strange. a lot of the argument for leaving was to give sovereignty back to parliament and to give .ontrol back if you really believe in parliament then you should believe that parliament should have a vote on the process. that will be a revocable. an irreversible path out of something. and you do have to give parliament a vote. francine: so if you are an international investor, you could be spooked by this because as you were saying, theresa may has to give parliament and option. thehe could say, this is option that is a hard brexit and you vote or not. stephanie: and this is what has been tricky. you mayy with that, just have -- it is pure
speculation -- but you could have a motion that says this house votes to respect the people's will from the of 2016.m in june and if that is all it is, then there will be a vote. history made today in london and again, we see the continued advance of sterling. absolutely stunning. certainly, unimaginable as far as a week ago. coming up, we turned back to the politics of the united states of america. jill stein will join us. days, thirdof county party votes are critical to clinton and trump. this is bloomberg. ♪
francine: this is a "bloomberg surveillance." coming up shortly is "bloomberg jonathan, nice to have you back. does this delay prime minister mays plans? the next question -- if they lose the appeal, does it shape her approach towards brexit at a time when the market was that they are drifting towards a hard brexit? i would say the subtle thing is the stronger pound. and if you are the bank of england, how on earth do you put together an economic forecast with this political backdrop? that is the challenge for governor carney. jonathan ferro, great to have you back. -- it is a different
our change. because of the shift. her voice became important because of the primaries but there is an immediate moment in this moment before the election. stein, the presidential candidate for the green party. joining us. stephanie flanders i'm sure will voice in here. wonderful to have you back. what i want to know is, how do you shift in the days before the election as you see donald trump gain on secretary clinton? i think the american people are still not happy with her choices. they are the most disliked candidates in history. and with each passing day there are more revelations that hillary clinton is the queen of corruption and that donald trump himself is a walking scandal.
and i think the american people are more hungry than ever for politics of integrity and for real solutions that would put as aconomy back on track productive economy. tom: here is the metric we follow. it looks like a medical chart. ring that up if you would anthony? here is the trump surge. it is shown by the mexican peso. and this comes to all of the emotion you just spoke of. the three debates are in the blue circle. ross perot had a certain prophecy as a third-party candidate and this time we have two third-party candidates. what would you like to see from yourself and from gary johnson in the coming days as you affect the election? what is point of view, important here is to let the american people know that their vote really does count. i urge people not to throw your
vote away on a failed two-party system but to invest your vote in a system and movement for change. we are at the threshold of 5%. we did reach 5% according to a political poll and if we reach 5%, it means we have matching funds for the 2020 election. tom: i will take your point on 5% being critical. so many americans, as we saw with bernie sanders and with donald trump, fed up with the system. great. what do you do in the battleground states? and are you going to lose a battleground state for the secretary? that i've the polls seen, governor johnson and i together neutralize each other out and we essentially do not have an impact on the difference between clinton and trump. we are in a losing battle here. it is a race to the bottom between the greater and lesser
evil. the politics here delivered everything we are afraid of and politicians do not have an entitlement to our votes. the american people were clamoring and still are clamoring for other voices and choices. francine: and that is undeniable. about 5%, do you not feel that with the race being so close with six days for the election that a vote for you would be a vote for donald trump? actually, not. i think the only answer is a truly progressive agenda as bernie sanders himself said. the only solution to the right-wing surge is actually answering the real economic drivers of that incredible stress which drives. francine: even if he becomes president? i think it is a race to
the bottom. where did the search come from? it came from the wall street crash. the groundwork for that was laid by the clintons and wall street deregulation. i think we will see more of the same if the clintons come into office. we will see more of what has been driving this incredible economic hardship. the same thing in europe. this stuff doesn't come out of nowhere. the offobalization and shoring of jobs and driving down of wages. we need an economy that works for the ordinary people. francine: i understand that 100%. come january 21 or january 22, it will be user donald trump or hillary clinton in the white house. who is the less of the two evils in your mind? a choice between a proto-fascist and a warmonger. and either pathway is extremely disruptive.
it is important coming out of this race that we have momentum and that we hit the ground running with h rue opposition party. and my campaign is only one that lobbyistrrupted by money or corporate money and buy a super pac. we have the only agenda that actually meets the needs of the american people. and the solutions. a snapshot to show of the real economy. i don't know if you have seen this. but this might be my chart of the year. average, wer moving with 4%e from america real gdp down and we are down ,lmost 42% in economic growth year over year, down to a stunning 1.9%. overgoes to the debate populism. am i correct that within the green party, you suggest we should eliminate the electoral college?
how do you feel about a close versus aial race different mathematics? jill: absolutely. i think we get much closer to democracy and we make every vote count. tom: is this too much democracy? jill: no. i believe we need a voting reform so we are not trapped by the politics. most people are voting against the candidate they fear most. but we need a moral compass and democracy needs our values. a simple reform would allow you to rank your choices. so if your first choice loses, your vote gets reassigned to your second choice. this is a no-brainer reforms that would free up voters to bring their value into this election? if we can't express our value and a presidential campaign, when can we bring them? francine: you feel in any way that you would be an impediment
to the first woman being elected president? think the great advantage in this race, the inconvenient truth, is that people actually have a choice to vote for a woman who is not an imperialist or a corporatist and you actually supports an agenda for women. hillary clinton walks the -- talks the talk but she dismantled -- the social safety net. it was dissolved. the povertyention wages in haiti. this is not an agenda for women. you so much. congratulations on a wonderful race as we go up to the election. dr. jill stein is with the green party. kathleen hays is an important and timely conversation.
tom: good morning. this is "bloomberg surveillance." finally has some stability. i guess that is good news for secretary clinton. stirling is without question the story of the day. 1.23 blowing through with the important court ruling in london. we will have much more on that in a few moments. stephanie flanders is here with us in london. we will get to her with the final thoughts on london but first, we digress with robert engle. one of truly our best at measuring volatility and the correlations of the market. you weren't in the movie, "the big short?"
iceman was on yesterday and he said we would not redo the foolishness of 2006-2007. what is a characteristic of the quiet him he markets with the new volatility, and what does signal of strong correlations? we follow that a lot at nyu and we look at the correlations and how they are changing. the volatility is pretty low. it does move up every now and vix is goinge the up relative to air volatility measures which means that is something that it is worried about for the future, which i suppose is the election next week. but other than that, the volatilities are manageable. tom: are the markets more visible now? we have less surprises? we have the ability to have less junk conditions or less brutal
moves? i don't think this volatility measure is going to protect you against big moves. but what it will give you is the ability for better risk management. so you can actually see them coming and adjust your portfolio. and that is one of the things that is really done in the market. tom: one thing we did not see coming is the tumult in london. stephanie flanders, please give us final thoughts here on what we will see off the court ruling today. how will this affect the markets and your jpmorgan? stephanie: i said earlier that we have to be cautious when we see a big move out of this. whether it is stirling or the fundamental direction of the u.k.. because the headline that parliament will vote and theresa
may hasn't got her way suggests that brexit has become less certain or less hard but i don't think that will be the fundamental take away. and i wouldn't normally get into short-term pound predictions but i wonder whether this rally will continue given that we have all the fundamental uncertainty and we will probably have a vote in parliament to trigger article 50. francine: and what are the chances of a general election? i've seen a couple of notes saying this will bring a general election and even if we do have a general election, to be assumed that theresa may stays in power? so nothing will change? hadhanie: i think there been a feeling that theresa may would be tested over the next year or two because of the overwhelming temptation given the weakness of the opposition to commit her position. but an election is also an opportunity to be transparent. and she doesn't want to go
there. tom: we have had a crazy day. stephanie flanders, thank you for your valuable perspective fargo,ert engle -- wells this is rumored but they say the securities and exchange commission will investigate their sales practices. francine, this comes off the end and career for john stumpf all the practices within their loans and businesses. that is what we see in america. a follow on and in follow-on of investigations when our too big to fail bank knows something wrong. francine: i am typing furiously because i am trying to find a pre-market open. this feels extremely significant . we don't know the scope itself. investigating sales practices -- it doesn't mean they will find anything but, you know, what they are investigating is probably abuses that we heard
about with the run up that led. consider as we look at the story through the morning, arthur levitt making clear and committing this ongoing set of stories. and also the idea of wells fargo retaining confidence within their institutional and retail depositors. much more on the securities exchange commission and wells fargo through the day. the bank of england. their announcement in the 8:00 hour and the follow-on of the important court ruling. governor carney at 8:30 this morning. this is bloomberg. ♪
this thursday, november 3. i am jonathan ferro alongside david westin. on this side of the atlantic, election jitters and a seven-day losing streak on the s&p 500 in focus. unchanged in the futures market. the cable rate with a stronger pound in a court decision in focus. david: this is what you need to know. the court decision is a big setback for theresa may. the u.k. high court says it must go through parliament before triggering article 50. in the next hour we get the bank decision andrate the latest growth and inflation forecasts. the decision comes at 12:00 noon london time with mark carney's press conference starting 30 minutes after that. the federal reserve leaving rates on hold ahead of the u.s. election, giving a subtle n