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tv   Bloomberg Surveillance  Bloomberg  November 30, 2018 4:00am-7:00am EST

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♪ francine: dinner and diplomacy. is at the g20 in buenos aires. and, fed minutes. jay powell setting the stage for further rate increases. and, we hear from the chief company, as this theresa may pushes for support ahead of that december 11 vote by primary. ♪ -- vote by parliament. ♪ francine: welcome to "bloomberg ," i am francine
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lacqua here in london. a lot of the focus is what president trump on president xi jinping will say over dinner in buenos aires. stocks in europe are down a touch. also, people are trying to repress what exactly the fed meant with the fomc minutes. what that will mean for treasuries. put treasuries because yesterday, they were briefly below 3%, now they are at 3.02% for 10 year yields. 1.2802, and oil may move, on the back of the opec meeting next week. conundrum to the saudi's, on whether they please donald trump, or whether they please treasuries. they will be talking about deutsche bank, currently it is down 2.2%. we also speak today uk's
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international trade secretary, saying he is now putting his weight behind the prime minister and urging his fellow mps to vote for the deal as well. let us get to the first word news markus karlsson. .ylor: markus: . markus: german authorities are investigating the reason for an electronics failure on chancellor angela merkel is laying about cut short her trip to the g20 summit. a government official said investigators are looking at all possible causes, following a german media report that the incident is being examined as a possible criminal act. forced to return to germany, where the plane landed heavily in cologne on a runway surrounded by fire trucks. federal reserve officials have signaled a more flexible approach and are gradually -- of gradual interest-rate increases, after a likely december hike. the minutes of the meeting show that perhaps all participants agreed to that another interest rate increase was warranted soon
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, but that the language for further increases would need to meeting.ed at the next the barclays ceo says he is confident of a bank will continue to do everything it does today, even if the u.k. crashes out of the eu without a deal. in an interview with bloombergtv, he says barclays is ready for brexit, which is set to take place in four months now. >> we have been hoping for an organized separation, but we have been preparing for a very hard one. whether it is contracts, capitals, we are set up comfortably. everything we're are doing today, we will be able to do it tomorrow, with our client base across europe and the u.k. . markus: the financial gauge of factoryeconomy showed activity continues to weaken.
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output expanded at its fastest space in more than 3.5 years in october, with the recovery in auto and electronics powering the expansion. korea, the central bank raised its key rate for the first time in a year, meanwhile, choosing to focus between the widening gap between korean and u.s. rates. points, up5 basis 1.25%. president, nicolas maduro, has ordered a 150% increase in the monthly minimum wage, the sixth hike this year. the country is in the midst of its worst ever economic crisis with acute shortages in food and medicine, and inflation of 199,000%. wageuela's new minimum pers after it's a $9.50
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month minimum wage. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am markus karlsson. this is bloomberg. ♪ francine: thank you very much. argentina is hosting heads of state from 20 nations, for a summit the riyadh the main event will be a dinner meeting tomorrow between the u.s. president am a and china's president, xi jinping, as they try to hash out a cease-fire in their trade war. our economics correspondents are at the summit. first of all, mike, when we get a deal between president trump and president xi? >> i wish i knew. [laughter] nobody really knows at this point, it is all up to president trump. the u.s. president did arrive here late last night, in, as twe onea blaze of tw
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cancelinge hist meeting with vladimir putin over ukraines,, and the other raising himself, saying that the american people are very well represented since he is here. and that the meetings would be successful. does that leave that he will get a deal with china over trade? there are reports that the two sides have been talking of trump was putting tariffs in next inch for the chinese agreeing to buy more u.s. goods. earlier this week, the president said that he thought there was virtually no chance of a deal, but leaving the white house yesterday, he sounded more optimistic. >> i think we are very close to doing something with china. i don't know that i want to do rightcause what we have now, is billions and billions of dollars coming into the united states in the form of tariffs, or taxes. so i really don't know, but i will tell you that i think china wants to make a deal. themopen to making a deal
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about frankly, i like the deal we have right now. michael: if you want to trade in that committee you are probably in the options market, because at this point, nobody has any clue. we will not have an answer until saturday night after dinner. francine: so everyone shows up to the g20, how much of the focus will be on brexit, and how much will be on oil and saudi arabia? michael: it is interesting, a lot of focus will be on oil because i'm be as will meet with vladimir putin. two big oil producers. will they come up with some kind of production deal, mbs and vladimir putin? theresa may is in the center of things, she was the last to arrive last night. angela merkel, of course, will get here later today due to problems. we understand about theresa may will spend some time telling the other g20 leaders -- never mind what the treasury said or what the bank of england said, this
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will be a great deal for the global economy, because it will make bridge in a better trading partner. british pm tost visit buenos aires, 36 years after the falklands war, and she will also come across of the prince of saudi arabia, home she strongly criticized over the murder of jamal khashoggi, and vladimir putin. the first time they are crossing paths since the sun is very -- the salisbury poisoning? jeremy: mike, thank you so much. let us keep the conversation on trade. joining us now is ahead of fx strategy at cibc, jeremy stretch. you have so many key players, geopolitics, apart from the trade -- the possible deal between president xi and trump, is there
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anything also can expect? jeremy: the communique has been readied prior to the leaders arriving, but it doesn't look like that will be the case this time around. it will be fascinating to see you forget some kind of joint agreements this time. there are so many variables, as you just touched upon. it does leave markets very nervous. an easing into get the trade tensions? people are hoping that trump will not leave a nasty aftertaste, by saying that he could still do more. i think markets are hoping we can see a dialing down in the trade tensions. francine: so how should we look at this? is there is a trade deal, then ,hings are ratcheted down, or we understand he has a piece of paper saying that you should put --a 5% tariffs on carmakers
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25% tariffs on carmakers? jeremy: yes, there is that undertone in terms of issues and relations for tariffs to europe as well. if we can see a dialing down in the trade rhetoric, it will provide an optimistic tone for the global trade assumptions for 2019. it also puts a little but more impetus and onus on some of the other central banks to consider some degree of monetary tightening. a foot cannot see global trade looking optimistic in terms of a backdrop, that it provides more opportunities in terms of those currencies that are globally correlated. if we come out of the weekend with the global outlook looking a little better, then i think those currencies which will be benefiting in terms of global trade tensions dissipating, and those currencies which will see an impact in terms of central banks. francine: our markets question
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on mliv, i urge everyone to go on to mliv . this is what we are asking. which assets will move the most on a cease-fire in the trade tensions? jeremy: in the currency would be looking at those that are very much correlated. , something like the australian dollar an obvious favorite in terms of that particular paradox. classes,of other asset i would look at those that would be benefiting from the presumption of trade activity being a little more optimistic. francine: have about the fed next week? they are data dependent, but i have seen some traders who think that the market has priced too much dovish mess from what we heard of jay powell statement? jeremy: we do have a tendency of seeing the market rush from one side of the boat to the other. saying, the fed are getting to that end of the cycle and maybe the market got a little bit ahead of itself. having said that, it is interesting the way the dollar
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particularly, reacted yesterday. it is a market that is losing for signs of a data deceleration, to vindicate their forecast. if there will be data holding up to the back end of the year, looking for employment growth next week, that might be carrying over a market repricing. it may be the case that the market has become a little bit too dovish. we are assuming three hikes from here, one next month, then two in 2019 to read the market may have gone too ambitious internet repricing due to expectations in that context. francine: thank you, jeremy. coming up later today, we speaks to the uk's international trade secretary, he is said to support theresa may on her brexit deal. this may be a turning point for the vote on brexit on december 11. this is bloomberg. ♪
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♪ francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua, here in london. let's get to the business flash. >> goldman sachs is said to be facing scrutiny on allegations that some executives dodge internal controls while helping malaysia's 1mdb investment fund raise millions,. which later went missing investigation of the bank is the extent up. some people could be sanctioned. previously said it believes the money he was raising for 1mdb would be used for development projects.
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the ceo of barclays is warning regulators to take heed of the markets -- corporate debt markets "fallen angels" problem. he says that if credit quality were to redo to rerate in the u.s. and europe, rating agencies might downgrade corporate bonds. >> if there were to be a real deterioration in credit quality in the united states, and europe, and you start having a significant amount of that bbb issuance falling into high-yield, the high-yield market does not have the capacity to absorb what is sitting above them in the bbb markets, something that both regulators and bankers need to on .cused markus: and that is your bloomberg business flash. francine: thank you very much, marcus. the minutes of the fed november that most all
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participants agree that another rate increase is likely to be alsod soon, but officials said that their language regarding expectations for further hikes may need to be meeting.at the coming what does that mean for the dollar? jeremy stretch from cibc is still with us. what does that mean for the dollar russia mark jeremy: i think there is a presumption that if we will see the federal reserve maintain a much more sanguine backdrop in terms of the policy, they are a little more reluctant to continue this pace of raising rates once a quarter. it takes a little bit of impetus out of the dollar, particularly if we start to see a global orientation at looking a bit more constructive compared to the current environment, and we see it leading to the discussion of other banks as not to adjust their interest rates. the slower pace of growth in the u.s. leads to a less activist fed.
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that leads us to a cheaper dollar. francine: what if inflation was back with a vengeance? the inflation we have been waiting for the last five months, all of a sudden, shows up in 2019. what is the probability of that? jeremy: i think one of the key issues for central banks, been the has tightening of the labor markets, and the lack of follow-through we are seeing with a wage growth. we see a substantial repricing in terms of inflation expect haitians. that best expectations. aat will be weighing down -- repricing in terms of inflation expectations. we will see average earnings and wage growth -- if we see average earnings and wage growth picked up, that will make an impact. but if we see a labor market probablyull, we will see a moderation in the wage growth, but i don't think it will in itself be a factor that
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would cause the fed to a change their fan. francine: up next, we talk about what michael cohen's guilty plea means, and. what it does not mean that discussion is up next. this is bloomberg. ♪
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♪ francine: you're watching "bloomberg surveillance." i am francine lacqua, here in london. special counsel robert mueller has for the first time publicly connected the 2016 trump
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presidential campaign, and the president's property business, .o the russian government his former lawyer, michael:, now admits he spoke to russian officials as a late -- as late as 2016. president trump spoke out before departing for the g20, calling life. >> what he is trying to do is get a reduced sentence. he is lying about a project that everybody knew about. we were very open with it. we were thinking about opening a building, it was an option. we decided -- i decided ultimately not to do it. there would have been nothing it.g if i did do francine: for more on all of this and what a good men for the robert mueller investigation, we bring in our senior writer, stephanie baker. thank you for making us smarter about what is going on in the u.s., as always. how significant is this? stephanie: probably the most
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significant turn in the mother investigation since it started 18 months ago. now, robert mueller has a fully cooperating witness who was part of trumps in a circle for more than a decade. tohael cohen was known regularly tip record his conversations with donald trump, he most likely has a lot of documentary evidence like emails and texts that can buttress his testimony. he spent more than 70 hours with the investigators. what we saw yesterday, this 10 page document by robert mueller outlining what cohen had lied about, maybe only the tip of the iceberg, and i think the significant thing here is that we don't know for instance, whether or not trumps written answers to the questions, cohen has not michael contradicted those answers. trump's sonesident
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has given testimony behind closed doors, and we do not know if trump may have contradicted what trump junior said. there is legal jeopardy for his son as well. francine: what do we know about the house of representatives? stephanie: this was a scoop up by my colleague in washington dc, getting a document of that is basically talking points of how the gop will counter democrat efforts to subpoena trump organization officials, trump campaign officials. ,t is very much as we expected they will be positioning a democratic moves as overreach and interfering with the president and his ability to do his job. i think it highlights the difficulty the democrats are in, that they are under huge pressure from their base to hold the president accountable in a way that the
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republican-controlled congress up to now, has not. time, theysame cannot seem to be overreaching. it will be a delicate balancing act. francine: stephanie, thank you so much. up next, buzz on brexit. we hear what the chief executive of this company has to say about the risk of a n no deal scenario. around thellow country to see what the possibility of a return is for voting for theresa may. this is bloomberg. ♪
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francine: economics, finance, politics. this is "bloomberg surveillance."
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netflix is developing animated shows based on charlie and the chocolate factory, matilda and the big friendly giant. why the housing market may be in even worse shape than it looks. the latest on deutsche bank as the headquarters were rated yesterday -- raided yesterday. the fed is said to step up their probe over goldman and compliance failures. markus: president donald trump says he is very close to doing something with china ahead of a planned meeting with president g xi jinping. officials from both countries have been working on the content of a possible deal to be announced. without a deal, china is facing higher tariffs on $200 billion
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worth of exports to the u.s. german authorities are for aigating the reason failure on angela merkel's lane that cut short her trip to the g20 summit. investigators are looking at all possible causes. beingcident is investigated as a possible criminal act. a series of electrical malfunctions forced the pilots to return to germany or the plane landed heavily in cologne surrounded by fire trucks. fed officials have signaled a more flexible approach in their rate increases after a likely december hike. another rate increase was likely to be born soon. their language regarding expectations for further gradual increases may need to be modified and coming meetings.
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-- in coming meetings. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm markus karlsson, this is bloomberg. francine: we are just getting breaking news out of deutsche bank. this is a share price move. the share price hitting an all-time low, 8.03 euros. it was at exactly this time that we first found out about the raid. we knew that 170 prosecutors were involved in the raids. this has to do with the panama papers. it was nothing linked yesterday to danske bank. the raids are continuing. theresa may says national divisions in the u.k. will widen if lawmakers don't back it brexit deal in parliament. as she flew to the g20 summit, the prime minister rolled out a second referendum and said the alternative to her deal is no
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deal. >> if there is a real hard brexit where there is not an understanding between the european union and the u.k. on an orderly separation of the rules of trade, i think the governor, while it is very hard to predict, i think that is as good of an estimate as what might happen. i think you're seeing it in where the sterling is trading. this is a dicey time. i think the sooner we can find clarity as to how the exit will occur in an orderly fashion, i think is very important for the united kingdom's economy. i don't think the governor is
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exaggerating. i think we all need to listen quite carefully to that. >> how do you plan for that? do you have to plan for a hard brexit no matter what? >> the sunday after the referendum vote, which is on a thursday, the whole executive met preparinging, for a hard brexit almost two years ago. we have been hoping for an organized separation, but we have been preparing for a very hard one. what we did in ireland was significantly expanded the capacity; of that bank subsidiary in dublin. we are in the process right now with relicensing all of our as brancheseurope of our bank in london to branches of our bank in dublin. we will move 1000 200 people
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from a british bank to a european bank without moving a single body. whether it is contracts are capital, we are basically set up so comfortably in front of march of next year, if there's a hard brexit, we will be able to do tomorrow everything we are doing today with our client base across europe and the u.k.. brexit,ere were a hard how would barclays look different? we have been told basically that the banks can survive, that they are in good enough shape. surviving and looking the same are two different things. voteen the referendum occurred, we had a situation room or war room where we brought together people, lawyers, risk managers from all over the bank and think about what might happen if there is some kind of economic shock like the referendum was or like a hard brexit would be. we are doing that right now.
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what happens if we are financing a restaurant chain in the u.k., which is importing fresh goods from farmers in europe. and all of a sudden, those fresh goods arrive at a border and cap across the border. who is responsible for that and what is our risk? what industries will be particularly hurt. we are very large provider of credit to the agricultural industry in the u.k. 25 percent of every agricultural loan in the u.k. comes from barclays. every farmer today gets a union. from the european that stops in a hard brexit in one day. we are thinking of all those contingencies. i think we are in very good shape as a bank. we have capital to whether almost anything. we have been very prudent since the referendum, but we want to be here to help the united kingdom go through whatever comes its way, hard brexit or
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not. francine: that was the barclays chief executive speaking with our very own david westin. we will talk about governor carney and what it does to pound in just a second. do you have a spreadsheet when you look at every mp and which way they will vote? >> it has almost become that sort of scenario. you end up trying to understand and identify the way the mood music is playing out. what i'm going to find myself doing over the next week-10 days is trying to keep a tally as to who is going to be voting in which direction. the bigger the margin of defeat for the prime minister, we have seen that she will be defeated on the 11th, that will have an impact in the market reaction. francine: what did you make of what governor carney said? it was pretty dire and difficult
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economic agenda if we don't get a deal. >> absolutely. there has been a lot of attention on the numbers. we are not political analysts. i think what we should look at is what happens if the deal or some variant of it goes through? then economists have to make too big judgments about the u.k. how does investment pick up because you're on your terms it up and flatlining since the referendum. second, how big is the labor supply shop going to be? immigration data out yesterday and we see net migration falling. we should focus on the deal. francine: how much do we know about investments not actually having been here in the becausent, in the u.k.
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it is quite difficult to get a handle on how much investment has either not arrived yet, held back or not put in at all. simon: it has weekend. look at the surveys and they have been very weak at times with the official data. if we get a deal and transition is guaranteed, that gives firms some clarity over the next two years or so. an investment on that sort of horizon may be taken off the shelf. if you're looking at a multimillion pound investment, the declaration is maybe not sufficient to start their. --there. francine: what happens to pound? does it go to 110 or 115? jeremy: it really does depend on the nextpens over an
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couple of weeks in terms of the issues that have been raised. if we can start to see some unlocking over business investment, you start to see a more positive trajectory in sterling. risk; of a no deal, you become more pessimistic. thank you both. both stay with us. this is what we are looking at for deutsche bank. those shares hitting an all-time low. 8.03. on the bankg raids continue. it has lost 6% of its value in the last 24 hours. oil is set for its worst month in a decade. we set you up for the key meeting in vienna next week. this is bloomberg. ♪
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francine: oil is on track for its worst month in a decade with futures down some 21% since november. another factor hunting the oil market is the specter of expanding crude piles. jeremy and simon are still with us. we will talk about the impact this has on inflation. how can we be so sure this is all a supply concern? it was it was demand and the first signal of a significant worldwide downturn? have seen global
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demand expectations being gradually lower across the course of 2018. i think we can assume that global prospects are going to be slightly more moderated in terms of 19 and 20. from the demand side, you can make the case for lower demand prices. to get that unfortunate nexus of influences which is causing this aggressive repricing. francine: where do you do the range? it was headed toward 100, and now we are significantly repricing. simon: a 10% drop in the oil price puts inflation the year after. on the other hand, it is maybe a little more muted in the u.k. maybe 1.2%inking
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inflation next october. that is when mr. draghi gets through the summer and we start taking about rate rises. that level of inflation makes it very difficult for ecb. francine: how much does actually push through inflation? is there lacking time? simon: absolutely. you get the peak affect after about a year and then it drops out. eurozone inflation next may is going to fall very sharply from the 2% we are seeing right now. eurozone inflation later. it is a problem. francine: is there a sweet spot for oil, a magic price that would keep saudi arabia, russia and president draghi happy? jeremy: that is a very difficult question to oanswer. that, it is very
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difficult to get to that dynamic because of these overall differentials in terms of the index. is a dollar story in the sense that that is the other archetypal effect because it is influence. when the dollar is fluctuating, it does have an independent influence in terms of dollar-based commodity prices. francine: if we see the price of commodities going down, which we are not seeing and france because we had all those blockades. does it influence wage growth as well? jeremy: of course it does. it means you get a higher real sense income. it is supportive of consumption. when you have a low, breakeven oil price, it is ok. but for the saudi's, you could be looking at double-digit deficits. francine: what does it mean for
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emerging markets? jeremy: it comes down to the fiscal pressures. there are those that are beneficiaries. net benefit in terms of the lower cost of the oil implementation. francine: they people for joining us. continues.e raid deutsche bank shares fall. this is bloomberg. ♪
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francine: economics, finance, politics. this is "bloomberg surveillance." let's get a check on the markets. rie: i will play this morning, it was up 15%.
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this as the company sells just under half stake in its fiber to home investors. that company certainly getting a boost today on that. automakers really under pressure this morning. at the stoxx 600, they are the biggest laggards across the industry groups. daimler down 3%. they were cut by hsbc. for us to get the downside, down automakers. autos are going to be really front and center today and monday. they are a sensitive sector when you talk about trade. as you know, we have president trump meeting xi tomorrow evening and buenos aires.
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francine: thank you so much. annmarie was just talking about deutsche bank. the big stock we are watching today. german shares are hitting an all-time low as police are continuing their riads. -- raids. offices are being searched for possible money-laundering. first of all, what happens next? this started exactly 24 hours ago where we first found out there were police cars in front of deutsche bank headquarters. how many more raids are we expecting? end think it is going to today. it was a big raid yesterday. you should have seen that the police cars lined up in front of the building with flashing lights. you could see them out of the window of our office here. it is not as spectacular today.
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i guess the police officers today will take whatever they didn't find yesterday. it should end today. the question is then, what will they do with the material? it is not clear yet who is involved. suspects anded two a press release and say more people will probably get into this. will any topis, management be drawn into this newest and latest scandal, if you will. francine: i was going to ask you, what does it mean for the leadership? do we know if it was under their watch that this happened? steve: that is a difficult answer. to what we know is that the two suspects identified only by age and not by name, that one of them worked in the anti-financial crime unit. told, works in the private wealth unit.
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these activities and prosecutors are looking at activity taken place between 2013 and 2018. the ceo now has been head of the private wealth or retail between 2015 and 2018 now. the question really is, how much did they know, how much could they have known? those are the questions we will need to answer over the coming days and weeks. francine: thank you so much. let's get straight to the bloomberg business flash. the ceo of barclays is warning regulators to take heed of the corporate debt markets fallen angels problem. in an interview with bloombergtv, he says that of
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credit quality were to deteriorate in the u.s. or europe, rating agencies could downgrade triple digit bonds. >> if there were to be a military ration and credit -- credit deterioration in credit quality, the high-yield market doesn't have the capacity to absorb sitting above them in the triple be market. that is something both regulators and backers need to be focused on. markus: goldman sachs is said to be facing more scrutiny over allegations that some executives dodged internal controls. we were told the federal reserve is stepping up its investigation of the bank and some individuals. the fed doesn't have the powers of a criminal prosecutor, but it can sanction people involved in banking scandals. goldman has previously believed that the money would be a used
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for development projects. that is the bloomberg business flash. francine: thank you so much. we are just getting a tweet by president trump. he is basically saying that he is a very good developer. against all odds, i decided to run for president and continue to run my business very cool. it seems like he is defending his business interests. this is bloomberg. ♪
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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. francine: dinner and diplomacy. president trump says he is close
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to a trade deal. deutsche bank shares dropped to an all-time low as prosecutors say the raids continue. barclays indicates it is very prepared for a very hard brexit. we will hear from the chief executive as theresa may pushes for support ahead of that december 11 vote in parliament. this is "bloomberg surveillance." i'm francine lacqua in london, tom keene in new york. there are quite a lot of market moves to watch out for. deutsche bank at a record low after more raids. i would also look at oil ahead of the opec meeting next week. is the eliteit meet to greet and banal cyrus. -- in buenos aires. i would also notice a complete distraction around the michael cohen/mueller headlines made
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yesterday. francine: we will have to get more on that. trade. talk on we are also getting a little bit of inflation data out of the european union. let's get straight to the bloomberg first world news. welcome to the family. >> thank you very much. here is what is happening. is raisingrump expectations that the u.s. and china will be able to work out a cease-fire in their trade war. he will have dinner tomorrow at the g20 summit in argentina. president trump says he is very close to doing something with china. officials of both countries have been working very close for a possible deal. president trump let's insert disapproval of russia's seizure of ukrainian ships, while at the same time, he avoids the awkward task of delivering a tough message in person. meanwhile, germany's chancellor is finally on her way to the g20. an electronic failure on her
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plane forced the pilot to turn around and return to germany yesterday. the problem is being investigated. authorities telling a german news agency there were no signs of sabotage. policymakers are signaling they will be taking a more flexible approach in a gradual interest-rate increases. they're likely to raise interest rates next month. this comes from a minutes of last month's fed meeting. . global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hemorrhagic, this is bloomberg. one screen.o to that is a big deal. that comes in nicely from 22 basis points. a new curve flattening. euro, not a story. we are all watching deutsche
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bank. francine: you are right. this is why we like surveillance because tom and i sometimes don't disagree. i think oil market is hedging on one by lemma which is to the saudi's want to bust the budget? . argentina hosting heads of state from the g20 nations for a summit where the real show is happening on the sidelines. michael, they either get along and we get less tensions, or they don't and a tensions
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escalate. do we have any sign as to which way it could go? michael: we don't.all we know is that earlier in the week, donald trump that there is very little chance they could reach any kind of agreement. earlier, and he said they were very close to an agreement, he does didn't know if they wanted to do it. we'll have to wait until they sit down with each other and see what donald trump's gut tells them about whether they should make a deal or not. the cast of characters who will attend the meeting is having an effect on wall street. the markets went up yesterday and he was headed back in. tell where we are actually going with this. there are 20 leaders and a lot of them are controversial. we have president erdogan and the saudi crown prince and we
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also have theresa may was a probably field a lot of questions when it comes to brexit. what will be market moving away from trade and china? the biggest potential market mover is the meeting between vladimir putin in the saudi prince because both are very big oil producers. the question is, will they reach any kind of production agreement to lower production and raise prices. does that mean he would like to see less oil on the market and higher prices? that is going to be taking place on saturday as well. theresa may is going to tell the rest of the g20, never mind what treasury in the bank of england says, this is going to be a good deal brexit for the world economy. we will see how people react to that. tom: you were with reagan and
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gorbachev in iceland. i believe my recollection was reagan was not tweeting. you have a president in buenos aires who is. it, i'm a very good developer, happily living my life when i see our country going in the wrong direction. against all odds, i decided to run for president and continue to run my business very legal and cool. talked about it on the campaign trail. the president goes on to say, lightly looked at doing a building somewhere in russia, put up zero money and guarantees ended under the project. witchhunt! is this president focused on g20? is.ael: one hopes he obviously, he is very concerned about michael guilty plea yesterday and it is a bit of a distraction for him. on the other hand, this has been wasg on since mueller
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appointed a special prosecutor early in the president's term. he does have a lot of important meetings here, including the xi meeting he will have to focus on. tom: very quickly, through the busy weekend for our viewers worldwide, where in the weekend timeslot do we really need to pay attention to buenos aires? nightl: late on saturday u.s. time when the dinner breaks out between president trump and xi jinping, we might get some indication. neither side is planning to make a statement then, but that could change. we may see something after the dinner or as donald trump flies back to the united states. we might see a tweet. francine: we are already seeing a couple of tweets. thank you very much. michael is our bloomberg
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international economics and policy correspondent. for more on xi and trump's meeting we are joined by tori brown. thank you for joining us. which side has the most to lose if the trade wars escalate, and what does that mean for who will give in more? six month ago, i would've said china has more pressure on it because it seems like the trade war is starting to have an impact on the chinese economy. goes to china with a lot of pressure on it. china is not a particularly open environment. there is all the pressure on him. it seems like mr. trump is very inre of outwitted xi jinping the last couple of months and created quite a lot of
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confusion. i suppose we are going to see a kind of dinner over the next couple of days where there is going to be a lot of posturing. the underlying structural issues are of great symmetry between the u.s. and china and the u.s. feeling more and more like it is time to deal with this. wrong?e: what if it goes we also understand that president trump has on his desk in the oval office a document which says that he should put some tariffs on carmakers, everyone apart from canada and mexico. if this meeting with president xi doesn't go well, are you expecting more aggressive action from the u.s.? kerry: they have kept their promise is so far. when trump said he would put tariffs on, he put tariffs on. thatid pretty clearly
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exports on $200 billion worth of --orts to the u.s. will have will go into effect. no one seems to know the ultimate outcome of this, economically and that is where this will be finally decided. whether there is going to be a big hit on the american economy. general motors is starting to say they're going to close plants. that hasn't hit an impact on trump's space. at the moment, america feels emboldened and related to make a message is it was a more equitable and reciprocal relationship. that is the core narrative, and it really depends on whether xi jinping can deliver that. tom: you have an extraordinary experience in china, including a re in inner mongolia a few years ago.
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can you explain the character of the political patience of the beijing leadership? we toss out the word patients. the chinese are patient. i don't know what i am talking about. defined chinese patients around president xi's actions. kerry: they are patient inasmuch as the chinese people's big historic moment is imminent. this is the xi jinping core politics that china has her night don and is getting into a great power position. but makes people patient, the chinese middle class are not patient if their economy is going badly in the house prices are falling. they are no more patient than middle classes anywhere else, probably less. this is a dynamic that xi jinping talks into.
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no one really knows how they are going to respond to this. , i think at the moment he doesn't look super secure. it is not like he is better than he was six months ago. the american pushback has unsettled him. tom: thank you so much. thrilled to have kerry with us with perspective on this important dinner. it is great to have you guys here wrapped around all of this international relations. how is pimco changed its definition of changes for investment given this news flow? is that the tried-and-true institutional three-year or five-year view, or is there a change? gene: i think there has been very little change. like most investors, we are
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trying to weed through the political noise and decide what is signal and what is noise. a lot of this has been noise. i think the set up to this g20 is one where, a little bit like the fed, we have created a low bar for success. the market is set up to rally on something that is probably pretty marginal and not really game changing. we continue to look at the same old ranges on treasuries and other fixed income assets and think, they are not particularly attractive after the rally. let's see what comes out of it, that we are expecting it to be a very long road with a few bumps along the way. tom: what is so interesting here is every houses call hinges on dollar direction. summarize your conviction on u.s. dollar into 2019. >> we have a pretty bearish view on the dollar. that is largely predicated on two things.
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first of all, we think the fiscal stimulus, which has been a very middle-of-the-road stimulus in the sense that it hasn't really provided any significant and hansen into the u.s. potential growth trajectory, it's good to start later in 2019 unexposed big vulnerabilities in the u.s. .conomy cycle,adjust it for the meaning the u.s. is right now at full employment, it becomes even more frightening. the second thing, i think what has been happening over the past year, largely related to the fiscal stimulus, is we have seen a massive divergence between and -- u.s. rates and rates from the rest of the world. rates have been rising because there has been a lot of hype about the fiscal stimulus in the u.s..
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i think the market has been far too complacent about monetary tightening and the rest of the world. we are in a relatively normalized phase and economic fundamentals look quite healthy. we think there is going to be a repricing. these two factors are going to push the dollar lower. francine: do you think the markets were to dovish on the jay powell comments? thate misread something, the markets misread what he was saying? gene: i'm not sure i would call it a misread. i would think of it more as a set up in the wake of a major tightening. it is not surprising the fed is going to sound a little bit more cautious. i think if you had asked us a year ago, we would have said as the fed approaches some semblance of neutrality, they're going to become more data dependent. that is what they are doing. the change in his language was, a month ago, he talked about we
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are a long way from neutral. , this time he said we are close to the bottom end of neutral. we think when we actually look at the data and are more circumspect on the dollar, the economy still looks pretty strong relative to the rest of the world. we also don't rule out that we are going to get more structural stimulus next year. u.s. exceptionalism make you going. francine: i think it was deutsche bank that said powells remarks were misunderstood by the markets. vasileios: there is always a risewe could see a sharp in inflation. all of the things that have been thrown at the market, fiscal you are, everywhere,
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still seeing that they must be somewhere along the road a structural change between the economic variables, between wage growth and the passing through .o actual inflation there is a risk that could disrupt markets because if we see an acceleration and deflation, the fed is going to push back quite dramatically, rising rates quite fastly. again,. it is a risk it is by no means a central scenario. tom: very quickly as we look to next year with all the distractions again, we are enjoying a single digit stock market. did we finally model and the permanence of a single digit trend or can maybe more optimistic? gene: i would probably not be more optimistic. you can always come up with a scenario. i think we're still in an environment where monetary
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conditions are tightening and volatility is generally going up. we have just gone through the most volatile quarter of earnings growth in the last 10 years or last nine years. i think that is a trend and is a constraint. tom: very good. vasileios with us. we have seen the crisis in argentina and it always speaks to opportunity. it is extraordinary, the argentinian story on economics from huge prosperity before world war i to a muddling along an outright collapse we have seen. is it the mother of all team opportunities? vasileios: it could be. i think for me, the biggest opportunity lies in brazil. conditional on all of these reforms being passed through. i think it is a bit too early
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given where inflation is and where interest rates are. i would stay in the sidelines for now waiting to see what comes out in terms of reforms and economic development. i think brazil on a risk reward profile is a bit more attractive. francine: thank you both. us. stay with coming up, u.k.'s secretary of state for international trade. he gave a speech this morning. his comments were put out to the media and he was saying that they should back the theresa may -- to face a stable brexit. deutsche bank shares are down some on the back of more raids. this is bloomberg. ♪
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francine: this is "bloomberg surveillance." we have been looking at deutsche bank share prices. last time we checked, it was at 803, a record low. raidcutors resume to the todays. employees of face a prospect that some of their annual bonus will be swept away by scandal. joining us now is young patrick barnett -- jan-patrick barnett.
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how many more raids can we expect? -patrick: i guess it is over for today. secondary is just necessary to handle the huge amount of paperwork and data they may have to confiscate in that raid. i guess it is going to be over today. francine: how much do we know about whether leadership was actually involved? how far back to these raids actually go? jan-patrick: they go back as early as this year. it takes a couple of more days for the prosecutors to gain more information and gain information on how much was charged and how
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much people know. every management, especially the new ceo might be a little bit tainted by these fed headlines. tom: this is the song and dance. we are thrilled to have you with us on the dark side before you joined the structure of bloomberg news. what is the institution on share price? does it away 2019? -patrick: i wouldn't call it the dark side. share price matters to
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sentiment. it is hard for investors to buy into a company where you have this higher amount of uncertainty and he always run the risk when you invest in the company and it goes the wrong direction. what is wrong with you? that is the best thing right now for the stock of deutsche bank, it is hard for people to make a brave move here. tom: thank you so much. in buenos aires, there will be a need to great. a busy morning for the president of the united states. please stay with us. ♪
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front and center, the saturday late meetings where we will have mr. trump meeting with the leader of china. before that, the usual pageantry. francine: although, they are expecting to hear remarks from the president. i wonder whether he will talk about trade or the other issues at the g20. this is president macri of argentina, welcoming everyone. we understand that theresa may will tell the president of .rgentina here is the president of argentina. >> we took 30 years to convince you to come down. i invited you over 30 years to visit the city and beautiful
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country. i have to wait for you to become president and for the g20 to be held here to get you to come. argentina is happy to have you. this is a great opportunity. thank you for the support we have received from the united states and your government during this past year, we have been going through some difficult times and your support hasyour support for this helped us build a better future. we would like to thank you for all of the work we're doing together in fields such as education, defense, and with regards to domestic security, the fight against organized crime and drug trafficking. and the work we are doing headway, we making see progress which we hope will
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continue for the rest of our term in office. let me also tell you that leading investors are u.s. companies and we hope they will continue to invest in argentina and they will help us build quality jobs. we are getting more citizens from around the world. the company that is exporting the most tourist argentina is the united states -- most tourists to argentina is the united states. thank you for visiting us. meetingbeen having a and i'm sure we will find more ways to work together and cooperate. thank you for being here. i think i understood you better in your language. say that i have been
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or a longith him f time, many years. and iw each other well did business with his family, his father, a friend of mine. the westside railroad yards and it was a successful jobs, one of the largest jobs in manhattan. that was in my civilian jobs. little did i know that his son would become the president. little did you realize that i would become president. we have known each other a long while. we have been talking about lots of good things for argentina and the united states, including trade and military purchases. we have a lot to talk about, including old times. it is a great honor to be with you.
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a great family and you are doing a fantastic job. thank you. tom: the president of the united states in argentina. we are looking forward to erik schatzker's interview with president macri. all eyes at this g20 on every comment mr. trump will make, not only about 220 but also i would butest -- about the g20 also i would suggest about these distractions in washington. you wonder what mr. mueller will do. francine: i happen trying to follow all of these briefings on the g20. each of the countries have briefed reporters and that was
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interesting, the people that we know, president macri and argentina want to get to the bottom of journalist jamal khashoggi. says it is crucial to solve the murder and the crown prince will be in argentina and we're trying to figure out whether president macri will plan to meet with the saudi crown prince in a bilateral. tom: let us continue with our this, geneing in frieda and vasileios gkionakis. if i look over here at the terminal, i'm going to see 3.02% on the 10 year yield. looking forward to clipping a coupon? which will it be? like thehink we still
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u.s. market relative to any other sovereign fixed income market on offer in developed economy space. 3% feels low for where we are in the economy so from that perspective, we are neutral. choicehad to give us a between europe, japan, u.s., we would take the u.s. tom: you have got to make bets for next year. the elephant in the room is china at the margin. how do you fold china politics and china trade economics into your 2019 view? vasileios: that is one of the wildcards. there are a couple of other. look, no one has a crystal ball. up with ao come
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scenario and assess what has been happening so far. i agree with what has been discussed about china. china is moving in the direction where it would like to move ahead with some sort of compromise. it has initiated some fiscal stimulus. ahead with move watering down of the trade war escalation and internally with boosting the domestic us economy -- domestic economy so we get a slowdown but not a hard landing. when you say your central scenario, you factor in you are still going to be moving along some trade frictions but in the end you're going to have some paring down of trade discussions and there is going to be a soft landing in china which means it is unlikely it is going to be disruptive for markets. francine: what if we have
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tariffs on carmakers? does that change the way you view portfolios? gene: we are set up cautiously. we are assuming of the risks they can materialize, a number will. issue,th this tariff -- there is a low bar for leaders to kick the can down the road but we still expect tariffs to come. think it will be a risk off event. francine: what does it mean for treasuries? gene: treasuries stand out positively. francine: thank you for joining us. gene frieda and vasileios gkionakis stay with us. just staley is warning regulators to take heed of a corporate debt market -- just staley is warning regulators to take heed of a corporate debt
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market. minimum capital requirement by 100 basis points in a stress says that had an economic shock far greater than what we experience in 2008. it is almost and unconcealed will economic crisis put in front of that. the bank of england approved our capital plan. we reiterated our in-state ratio at 13%. the stress tests are helpful. they are educational for us. it is how the regulator can manage the risk profile of the banking industry overall. there is a healthy collaboration between the fed, the european central bank, and the bank of england. a stress test is healthy.
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people have to look what is in that and put probability to it. the likelihood we have an economic crisis to that degree is remote. >> we hear a lot of leveraged loans now. central bankers are warning thus ♪ ♪ us. is it getting dangerous for the system overall, the level? >> we have not changed our risk limits for leveraged loans since 2014. our position on our balance sheet are down 25%. are not making underwriting commitments anywhere near what .he street was in 2006 i do believe and i agree that the size of the triple b market and the debt stack versus the
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size of the high-yield market means if there were to be a two tier ration in credit quality -- ioration in credit -- the, the junk mark it junk market does not have the capacity to absorb what is sitting above them and that is something both regulators and bankers need to be focused on. >> how much resides in the banking system as such? >> it is by and large held by nonbanks. it is insurance companies, pension funds. the banks leave on their talent than they did pre-financial crisis. david westint was speaking with the chief executive of barclays.
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coming up, we will talk about the trade war, that president xi-president trump meeting. that interview is coming up at 6:00 a.m. new york. this is "bloomberg." ♪
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francine: this is bloomberg surveillance. let us get to first word news. is hintingent trump there could be a trade agreement with china. the president flying to argentina for the g20 summit. he is said to have dinner with president xi jinping tomorrow. president trump said he is close to doing something with china.
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that is raising expectations of a cease-fire in the trade war. both partieses of are praising robert mueller for getting a guilty plea. saying you cannot lie to congress. lawmakers are saying they want cohen back to answer more questions. he lied about the president's business plans and moscow. in mexico, the u.s. hope see incoming administration will list still tariffs by the end of the year. he says it is regrettable the duties are staying in place as the u.s.-mexico-canada prepare a new trade deal. it may take the u.s. congress at one year to ratify that. prime minister theresa may is predicting divisions over brexit will get worse or parliament rejects the plan. while flying to argentina, she is ruling out another referendum
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on brexit and signaled she would not resign. iran -- global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is "bloomberg." francine: japanese prosecutors have extended the jail executive of carlos ghosn. for is amid calls transparency in the probate led to the rest of one of the most visible corporate leaders. joining us now is an auto analyst. i do not know where we are. we looked to carlos ghosn being held for an extra 10 days and we understand the alliance are not replacing him yet. what does that tell us? daniel: i guess the fact that he is not being replace points to the fact that this has triggered or allowed to rise back up some
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tensions we have had for some time in this alliance. that stem from the fact ray know has this disproportionate influence but is a smaller company. it has got virtual control over nissan. exacerbated that tension by creating a situation where we no longer have a common chairman and that has allowed ceo to exert greater importance and that is causing this fraction. hear from press reports that president macron plans to ask the japanese prime minister for the investigations to be made transparent and to ask them about the reasons that led to the arrest. are you concerned this is
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because of japanese political pressure that the prosecutors arrested him? is,an: look, the situation there is a complicated set of allegations against him which we do not have a great deal of detail. is accused of misstating earnings but because we cannot see the evidence, it is hard to evaluate. the big risk here comes if you end up with a situation that renault does not fire mr. ghosn. he has been fired at nissan and mitsubishi. they know the details of the allegations. ghosn does time,
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appear to be denying these charges. you have got a conflict and if renault ends up siding with mr. that is going to question the legitimacy of these allegations and that is when you've got the making of a big rift. comment in your research report of volkswagen moving faster than daimler. moving?lt demian: do you mean with respect to electrification? tom: i do not know what the plan is. what is it? demian: their plan hinges on emerging market growth. that is their strength, they are not a premium automaker and they are not an automaker that has
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exposure to the profitable north american market. for them, it is about, can we grow in places like latin america and the middle east? they have got a 7% margin target. it is more about growth. you're going to ignore this situation which we have got with the merger and the potential structural things they can do to value,value -- to unlock if you want to buy renault, you need to believe in emerging market growth. tom: thank you so much. ofian flowers on the story mr ghosn. there is too much to speak of. to look for president putin to arrive at the airport in buenos aires. use the pageantry of the
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meetings, always important. coming up, a timely conversation from a republican of the minority from little rock, arkansas. looking forward to speaking to the congressman. this is "bloomberg." ♪
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uma: this is bloomberg surveillance. let us get the business flash. is steppingreserve up its investigation into goldman sachs in that scandal over 1mdb. the fed it wants to know how todman executives dodge internal controls and helped malaysian authorities raise billions of dollars. one former goldman executive has played guilty. -- has pleaded guilty. the airline this docking is president pay 20% for three months. another executive is getting a temporary pay cut. at&t is taking on netflix, putting its new collection of property tax -- properties to
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work, ruling out streaming services. one will be movies only, another will have original programming. the third will have content license from other companies. those are set to launch next year. francine: thank you. theresa may says national divisions in the u.k. will widen if lawmakers do not back her brexit deal. minister rolled out a second referendum in set the alternative to her deal is no deal. with us is gene frieda and vasileios gkionakis. thank you for sticking around. what aspectk at classes lose the most on the back of a deal or no deal, what is it? gene: i think our first mover would be the pound. there is an asymmetry in terms of rates moving up on a soft brexit versus rates
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rallying on a hard brexit. equity market, i do have a view. i think it is sterling with the equity market where it -- equity market. ftse 100, we seem to have a negative correlation. you get a ftse 100 rallying. inis messy, the one we are because no decision is easy now. gridlock, how we s arefrom there, the path going to be obscure. it is not easy to get a second referendum. extensionneed an because you were not able to get everything in place before the 30th of march. francine: that would be the least of her worries, right? they grant an
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extension, they will probably want to know the question. you're going into the issue as to how the question needs to be framed. what worries me is if we keep on keeping the countdown in the road, we keep on a road in business incentives. francine: we had a pretty dire economic forecast. no deal prevent the ecb from doing what they said they would do in terms of qe? gene: i think they are done. the bar for continuing qe is argueven though you can they should not be ending at this stage. if you have a shot from italy, that is another story. that is the least of europe's worries now. tom: gene frieda, and vasileios gkionakis. lots to talk about here.
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michael mckee in point osiris. in argentina. vladimir putin is expected to touched him. julia coronado will drive forward your interest rate discussion in the next hour with macro policy perspective. there is lots going on, including a distress price change on deutsche bank, moving down. we are watching that. stay with us. this is "bloomberg." ♪
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tom: this morning, the pageantry of a g20 meeting. this meeting is original.
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trump will dine with xi. our michael mckee in buenos aires. do not cry for me michael cohen. thursday was not just another thursday for mr. mueller. will beday, there whispers in the g20, the president has tweeted this morning. chairman powell will not speak today. the 10 year yield will speak for mr. powell. this is bloomberg surveillance from new york and london. francine lacqua. i am going to be direct, prime minister may looked exhausted moving into the g20. she is distracted by the brexit battle, isn't she? who did: i do not know not look exhausted after the couple of months she has been through. a lot of people pointing to her resilience, the fact that she goes through the g20 and is
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thinking about the votes. the currency markets and across the local spears, does she have enough support in parliament on december 11 to get the vote through? exit --nother probe pre-brexit person putting his weight behind the minister. tom: the italian headline breaking right now. it looks to a contraction. from your work, is italy in recession? francine: italy is not growing as much as it could. we are seeing the crunch from trade. was year, the gdp in italy 1.5%, export lead. as soon as you have trade tensions, the italian economy will suffer and because of the budget fight, investors probably taking out. tom: we go to the friday
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dynamics of first word news. is raisingent trump expectations that the u.s. and china will be able to work out a cease-fire in their trade war. the president will have dinner with president xi jinping tomorrow at the g20 summit. president trump says he is close to doing something with china. officials have been working for weeks on a deal. president trump's cancel a meeting with vladimir putin accomplishes two things. it lets him show disapproval of russia's seizure of ukrainian ships. at the same time, the president avoids the task of delivering a tough message in person. germany's chancellor angela merkel is on her way to the g20. an electronics failure on the airbus forced pilots to turn around and return to germany . the problem is being investigated, authorities telling a news agency there were no signs of sabotage. federal reserve policymakers are signaling they will be taking a
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more flexible approach in gradual interest-rate increases. they're likely to raise rates next month. this comes from the minutes of last month's fed meeting. officials expecting growth to continue. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is "bloomberg." tom: thanks. equities, bonds, currencies, commodities. -11 onkeep it simple, the future. oil with a bit down. x.49 handle on nyme we saw it. to see that again would be something. francine: what i'm looking at our treasuries. treasuries, stocks on the downside in europe.
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little on the downside. everyone is waiting to see what happens at the g20, not only with oil but with trade. maybe chancellor merkel distracted by deutsche bank. thent to look at a chart on rationalizations of deutsche bank along the way. up here, $80 per share. nice rebound back to trend and then we roll over 8.09. printt sure what a 7.99 means. that would be something to say the least. we will have more on deutsche bank through the day. and it would be helpful if we spoke to someone who knows the lay of the land. he is the bureau chief and he
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greets the world. spoke to you,we argentina was on the precipice with imf. it is a call mark -- is it a a calmer economy -- economy? downe currency has calmed but there is those lingering question, will president macri when election and what does that mean for markets? can they be convinced this country will be on the right path? opm: we just saw the photo of president macri and erik schatzker in conversation with him later. what is the story you are looking at away from the chinese-u.s. meeting? >> the big one is oil.
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we have seen swings. it is close to $50. annie type of meeting between president putin and the crown prince of saudi arabia will have some impact on oil markets when they reopened. that is important. you have the prime minister of the u.k. and she is coming here to sell her vision of brexit. she wants to sell it to the other world leaders saying it is good for the global economy. going tor merkel is get here a day late but she is meeting with president putin tomorrow. there are lots of things that could impact markets. this morning, we are expecting the leaders from europe to discuss saudi arabia and what has been going on since the murder. francine: good morning from london. we were hearing from president macri greeting president trump.
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and thes argentina president need from the international community now? they want to sell this vision that argentina is a player in the g20 and they can host an event. they have had the finance ministers to discuss different kinds of trade deals. ofhave heard quite a bit conversation with different governments about military deals , trade deals. withtina signed a trade in the u.s. to export beef to the u.s. for the first time in 17 years. if they can come out with a few trade deals, agreements, this idea that they have a better future, president macri will be happy. tom: thank you so much.
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freya beamish has the job of working with pantheon economics. she has to deliver research on asia. is widely read because it talks about the basics of asia. jonathan ferro says he is focused on newcastle football tomorrow. that is a big deal. the big deal is the lack of inflation in asia. you laid out a lack of inflation in asia. how dire is that? there are headwinds to that in terms of china because we have got the swine flu added in. that is going to cause the pboc a headache next year. on the point, manufacturing side, what we are seeing from korea, china, in the pmi showsand
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the increase in the margin might be slowing down. we're looking at inflation coming down. the only thing that is going to stop it is the depreciation in the remnimbi. this is critical, the linkage of inflation and global nominal gdp realities, do they filter in to an assumed weakness in remnimbi which implies strong u.s. dollar? what we arenk seeing is that the chinese economy is weakening. there is no sign of that turning around. that is feeding through into the nominal trade data that we're seeing across asia, going forward in terms of the leading indicators. a turnaroundto see
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in terms of fixed asset investment in china, demand coming back in. from local government bond issuance that was being pumped into infrastructure investment. we start to see that coming through. local debt government issuance has dropped off a cliff and there is no sign of monetary conditions improving as we had thated to see earlier and has petered out with the slow down in local government conditions. yet ins no end in sight terms of leading indicators to china's slowdown. the only potential backstop is that the chinese authorities are seeing this and while monetary policy attempts to change things successful,not been what we might see is an attempt to close down capacity.
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the potential for winter pollution spikes coming through and that could close down production more. we could see pricing pressures coming through from that side. francine: what worries you when you look at chinese authorities , do they have,t is it a policy mistake you worry about or is it the fact they may not have enough tools to deal with the downturn but also take care of the dilemma with the outflows in the currency? freya: absolutely. they have got too many tools and they are trying to tweak at the margins and nothing is working. they sayorry is that we have tried this marginal approach and we are going to get back in there with the old guard type of stimulus. main difference now compared with previously is that the current account was zero.
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there was no surplus. there was even a deficit. they do not have the space to ratchet up investment in the way they have previously because that would be relying on capital inflows and that does not make in the world where looking at at the moment with the fed continuing to hike rates and the pboc going softer and if they could, they would be cutting rates at the moment with the intra-bank rate at the bottom. they cannot do that because of uld pull the remnimbi down. china cannot rely on foreigners to fund any kind of entry in the deficit and that puts them in a difficult campaign they do not want anyone putting himself into the twin deficit camps as the fed is continuing to hike rates.
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our position is the fed will continue to hike rates. francine: thank you so much. freya beamish there. u.k.g up, dr. liam fox, international secretary of trade gave a speech this morning. he was saying everyone in the conservative party should vote for theresa may's deal. we will talk about the reasons why and what she has promised in return. this is "bloomberg." ♪
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uma: this is bloomberg surveillance. let us get the business flash. we have breaking news, the
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marriott hotel chain has found unauthorized access to the guest reservation database. it began in 2014. marriott believes the database had information on 500 million guess. softbank are confident of their ability to gauge demand for that ipo of a japanese telecom business. for the first time ever, a stock will debut without a price range. softbank has said a stable preliminary figure. shares will begin trading december 19. and france, -- in france, he is trying to cut debt. it has agreed to sell just under half of its fiber unit for under $2 million. the buyer is a group of infrastructure investors. and germany, prosecutors resuming rates on deutsche bank looking for evidence of money laundering. prospect face and the that in your bonuses will be
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swept away by scandal. in 2016, they cut bonuses by 80%. the bank will pay competitively for performance. that is the business flash. tom: thank you. we're watching deutsche bank, 8.06. 7.99 would be something. what a week for economics and there is only one thing to do, i suggest you brush up on your dynamic stochastic economic theory. we can do that because we have julia coronado with us. i heard is chairman powell is not listening to the vice chair. he has thrown out the monetary theories and he has -- he is data dependent. is he the ghost of arthur burns? julia: that is too strong and interpretation. natural powell, it is
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when getting close to what you do not know, that you might slow down, watch the tea leaves more carefully. he called it feeling his way through a dark room. inconsistent. tom: you have been dead right against the inflation and calling for more tepid economic growth. that more tepid economical gdp and what data is critical? view isritical to that this global slowdown we are seeing unfold, led by china, spreading to europe. it is potentially spilling over into the u.s. we see tightening and financial conditions. that is a leading indicator.
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sensitive sectors are starting to plateau. housing has plateaued. we are seeing softening in. -- in capex. the consumers are going to be the last ones to know about the slowdown. francine: do you believe the slowdown can lead to something ugly? are we talking prerecession? look at the global pmi's, they have come off the highs and going down but are at levels that are consistent with moderate growth. talking aboutre china and that is where the uncertainty lies. will china be able to manage their slowdown? all of the ebbs and flows have been traced to the chinese.
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are they able to stabilize things? if so, we can achieve a soft landing. more to talk about on central banking with macro economic policy. this is a timely interview. with i will dive into this david westin. ceo harman, woodrow wilson but much more than that. astute on california politics. this is "bloomberg." ♪
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tom: thank you so much for being with us. aires, mckee in buenos francine in london and i am tom keene in new york. president trump is in beunos aires. financial stability, let us go to the beginning of the powell speech. there is an inflation mandate. there is a jobs mandate here. should financial stability be part of the julia coronado calculus? julia: financial stability came back. the panic, we had a number of financial crises that gave rise to the central bank and their job was financial stability and they were so good at it, it
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evolved into the dual mandate on job rates and unemployment. they are there to keep the system stable and allow it to grease the wheels of the economy. financial solvency, liquidity, 2007. can we discern solvency versus liquidity issues? julia: they are doing their best to develop a dashboard that allows them to disentangle that. what are the liquidity conditions, is there leverage that is fueling asset prices? the fed is not there to police asset prices but there is leverage -- but if there is leverage building up behind them, it can have systemic effects. tom: how about gop's stability? we are going to talk about -- we're going to talk with french
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from arkansas. looking forward to speaking with congressman hill, now in the minority. deutsche bank with a leg down, looking at 8.051 and a leg down. how about that? the rollover this morning of deutsche bank. michael mckee in buenos aires. we will have more from the meeting. putin is francine said scheduled to arrive. this is "bloomberg." ♪
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i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.
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my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. importantll be an
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conversation after his speech, myer chairman powell speech, conversation with the vice chairman of the federal reserve system. i want to drive forward the data dependency into the meetings of 2019. look for that in the 6:00 hour on monday. looking forward to this conversation. xtraordinary day, the news flow, the challenges in washington of michael cohen. we do have breaking news in europe. francine: more breaking news on deutsche bank. we understand there are more police raids of the german bank offices and those started yesterday morning around 9:00 monday morning. 9:00 thursday morning. the latest is that a board office is said to be
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rated. -- raided. when you look at who the , who could bekeup part of this, she was mentioned and so was tom patrick who runs operations in the americas. we will have to keep a close eye, deutsche bank shares at a record low. we are getting breaking news out union, sayingn the brexit deal is the only one possible. we are seeing pressure from all sides. theresa may, and ahead of this vote, you get one shot, it is this deal or no deal. the e.u. saying the same thing. let us get straight to first word news. uma: thank you. we have developing news here.
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another american company is reporting a giant data breach. marriott has learned up on tohorize stocks us -- access the guest reservation database. it began in 2014. marriott believes the database had information on 500 million guests. marriott is saying it does not believe the incident will affect his long-term financial health. thereent trump is hinting could be a trade agreement with china. the president is flying to argentina and will be having dinner with xi jinping tomorrow. the president said he is close to doing something with china. that is raising expectations of a cease-fire in the trade war. of three big german automakers are going to the white house tuesday to talk trade. the chiefs of volkswagen, bmw, and daimler will be meeting with government officials. president trump has threatened to raise tariffs on auto imports
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and the meeting could be a way to push the european union to a deal. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is "bloomberg." tom: thank you. with a numberged of really smart people on law and trump process. let us begin with timothy l. o'brien. nobody knows the president's finances like mr. o'brien. he said that michael cohen appears to be through with doing favors. say trump once told my attorneys during a hadsition that mr. sater brought investors to his trump tower office because he was thinking of investing in russia. twitterut that out on
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and i will do it also with an essay from noah feldman of harvard law school. noah feldman, the details of that emerged in the documents are fascinating. it remains significant that those were happening with mr. p office directly, a step closer. we go to kevin cirilli in washington who has to distill this. oft i find remarkable in all the essays is the detail of mr. mueller. or was business as usual yesterday more detailed? kevin: yesterday felt like a turning point. michael cohen taking back testimony he had testified before the senate intelligence committee and now saying his last communications about that moscow trump tower meeting did not occur in january but
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2016, alson june of being that meeting in trump tower with the russian attorney as well as donald trump, jr. and paul manafort. there could be new calls for michael cohen to testify publicly because of that changing course. republicans want to know why he lied. democrats want to hear more. he is cooperating with mueller. the president is in a g20 meeting and he has put out two tweets this morning. can you measure how distracted is the president in buenos aires. ? kevin: the market has priced the sin. if you look at -- has priced this in. we have seen him weigh in on domestic issues.
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we do not see much reaction in terms of the president waiting. -- of the present tweeting. he has cut that meeting tomorrow with president xi jinping and the one offs with president putin. that suggests that vladimir putin wanted a $50 million penthouse in that moscow tower. mueller is operating on one lane, the president in another. int night, they had a party trump tower in d.c. business as usual. aboutne: we have had news a secret plan to counter the probes in the house. what do we know about that? sourceevery republican have raised concerns about the scope of the investigation into the president with regards to the new congress.
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,ast night, in a public forum nancy pelosi said she wants to work with republicans where she can on issues. the president has been baiting rib -- democrats by saying either investigate -- you cannot do both. tom: we see all sorts of news flow out of plain osiris. aires.os right now, with us french hill. i looked at the shift of arkansas politics over the last 30 years from democrat to republican. what lessons can the national gop learn about how republicans can win again? french: you have listen to your constituents. beeny constituents have
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focused on the economy and results in washington. they want bipartisan success on immigration, they want to reform health care. these are the things i heard about all year while campaigning. emotion i had was with a democrat from michigan who made it clear to me this gm announcement is against every constituent. is your president helping america create jobs? is he helping america do trade that creates economic value? the regulatory reforms we have accomplished and the tax cut and the removal of the double taxation on american income earned abroad, those are helping bring jobs to the united states and grow the economy and create -- and increase the rate of economic growth. on trade, it is a mixed message.
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i'm glad the president is going to sign the new nafta agreement. i do not believe the going across the border with tariffs has been constructive. i do not think it helps them push his agenda for jobs or getting better trade deals abroad. francine: congressman, what do you think the next step in this is the president of the united states going to ratchet it up if he does not get what he wants from china? are we in a state of limbo? french: i do not know. i do have in my model that the president does increase tariffs on china in january to 25% and extends it to end products. that is something he has committed to do and that is something in my philosophy that is likely in january.
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tom: congressman hill, your president is labeled individual one. party needpublican individual one or is there a tipping point where the gop moves on from this president? french: i think what we ought to critical,year is there is an opportunity for president trump to work with nancy pelosi and do something like have a compromise he worked on all year on immigration and border security. that would be a win for democrats and republicans and take an issue we've talked about for 20 years and make improvements. that kind ofhave work between the administration and the incoming pelosi administration, i do not know what the course is going to be.
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i'm concerned it will be a logjam. tom: thanks so much. it is almost like a normal district. it surrounds of the city and looks normal. french hill of arkansas. noticing all of this, julia coronado. the macro perspective in every discussion is about economic growth. what kind of economy are we going to have next year? julia: we are going to be above 2% but we are going to see a slowdown. tom: you come off the bottom so you look optimistic. everybody else is above you. what is the distinction? julia: the distinction is a more global framework. -- we are in integrated member of the global economy and i am looking to china and the
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health of the global economy which has been a significant tailwind to u.s. business. tom: did you hear that in powell's speech? julia: we are hearing the concerns. they are looking at the tightening in financial conditions and the wavering in risk sentiment. tom: we have known each other for ages. what is the question you want to ask the vice-chairman right now? julia: i think what they are starting to tell us is they want uses betweener pa rate hikes. are they seeing signs they are closing in on neutral and does that make them want to slow down? great, if i get something from dr. coronado, i do have to pull an all nighter
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sunday. that is a beautiful thing. richard clarida, we will do that on monday. important moment in the g20 meetings and we will see that more through the day. luskovicz to join us from citigroup with a surprise index. this is "bloomberg." ♪
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uma: this is bloomberg surveillance. let us get the business flash. carlos ghosn will be spending time in a japanese jail. prosecutors have extended the detention of the former nissan chairman. arrested and jailed for 10 days and now they have added 10 days to that sentence. the federal reserve is stepping up its investigation into goldman sachs and that scandal over 1mdb. the fed wants to know how goldman executives dodged internal controls and helped malaysian authorities raise billions of dollars that went missing. one former goldman executive has pleaded guilty. that is the business flash. francine: thank you. to deutsche bank and shares of
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the lender dropped to a record low after offices were searched in a money laundering probe. we just got a headline that the board member was said to be raided. joining us now is a reporter from frankfurt. when you look at her, she is the chief risk officer. that she speculation may be removed from that. what do we know? she is chief regulatory officer, the one in compliance, anti-money laundering and the raid still going on is about money laundering. she is at the heart of this. we do not know if she has got involvement. we do not know if the
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accusations will prove to be true and we do not know her role in this. she has come under scrutiny in the past days and what is happening since yesterday is not helping her and i think there will be a decision on her future at the bank soon. to all of our radio listeners and tv viewers, we are seeing pictures of vladimir putin's plane. argentinaing down in to meet with the other g20 leaders. going back to deutsche bank, who is to blame? does it go to the top? steve: i think it is difficult for us to pin blame on specific people. what we know is that the
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prosecutors have said this is something going on since 2013 and into 2018. a lot of people have been involved. bankead of the retail before he became ceo, so the question is, how much is he involved? there are a lot of people. tom: i want to bring up two charts to show us where we are. the intraday chart showing the balance down. we are looking again at that 7.99 drama. the long-term picture for the board is 80 and it is a linear path. this second cave-in. where is the board or boards and what is the urgency into this weekend? steve: it is difficult to say.
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there is urgency with respect to what is going on now. people inside the banks say the focus of top management is to deliver this stuff to the prosecutor so this is over and they can focus on the business and then the questions, what does it mean? what are the implications in terms of strategy and senior personnel? those are the questions of their will be focusing on over the weekend. there will be calls to figure it out. arons, working saturday and sunday, no doubt. with us julia coronado. her economic wisdom is to lincoln monetary and fiscal policy. link that with my -- is to
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in monetary and fiscal policy. we do that with my chart. weak moment.ight twin deficits, the sum of the fiscal deficit and a trade deficit. the factor is, we rolled over. are we going to revisit the joys of the twin deficits? julia: it is the direction of travel. when you put a fiscal stimulus up full employment, we are going to have to import some of that and that will mean widening deficits. subtractct trade to .4% off of growth next year. tom: let us look at the signing we will see at the g20 meetings. by the flags of the united states, the flags of canada and mexico.
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there it is and we will see that moment. not my way orof the highway. there is a sense of bilateral. could that be the surprise of the next does years that we drift back to multilateral discussions? julia: that would be a surprise. it is not the mood we are in now. nafta negotiation is an example of we did not do a lot. if anything, there has been some rolling back. it was hardly transformational. are we likely to go back and embrace globalization? probably not. nowhere is that the popular thing, not among democrats or republicans. we are still going to have some degree of trade conflict, even if we get through this chinese
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current situation. francine: what does it mean for emerging markets? the emerging markets overall because china is distracted with their domestic policy, give less support to the people around them and you have dollar dynamics. julia: for emerging markets, china is essential, how well they navigate their slow down. the slowdown in china is not about the trade complex. it is about the credit bubble they have had an trying to manage that to a soft landing and that is a heroic task for any government. that has implications for emerging markets and new layer on the trade conflict and you put. an uncertain out -- we start to hear about companies localizing supply chains instead of streamlined global supply
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chains. that will benefit some and disadvantage others. francine: i want to bring all of our viewers and listeners to news on liam fox, we will start an interview with him. the u.k. prime minister receiving a boost from her cabinet member as she fights against the odds to win enough support to pass a crucial deal in parliament. that is liam fox telling politicians to back her vote. tom: we will have that through the weekend into monday. g20 front and center. michael mckee clear about the dinner on saturday night between trump and xi. maybe it is the non-dinner with mr. putin that will get the headlines. francine: we go back to briefings we have had, some of
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the leadership which he 20 to see whether mr. putin -- with to see whether mr. putin will meet with angela merkel. she will try to keep all of the bilaterals. this was a surprise when we heard about russia and the ukrainian soldiers. he will have pressure from the other countries to respond differently. withand on this friday, aires, then buenos signing of the new nafta. this is "bloomberg." stay with us. ♪ ♪ there's no place like home ♪
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argh! i'm trying... ♪ yippiekiyay. ♪
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mom. ♪ i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. ♪ alix: g20, trade, oil. officials kickoff.
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goldman sachs ones that the trade war -- warning of the trade war. pressure on xi. orders and imports drop. economic stress. investors raid deutsche bank. stock hitting record low. david: welcome to "bloomberg daybreak," on friday, november 30. we have been watching president vladimir putin landing in buenos aires. he is leaving the airport. the latest in a series of leaders. chancellor angela merkel had problems with the aircraft, she is flying commercial now, getting there for dinner. alix: i used to be terrified of planes. i cannot imagine being over water and having no communication. david: they had to fly back. alix:

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