tv Bloomberg Surveillance Bloomberg March 13, 2019 4:00am-7:00am EDT
whether to exit without a deal. here is where futures are lining up ahead of the open. ftse 100 is down nearly 0.5%. cac 40 futures down. london will take center stage again for all of europe today as we have the crucial vote. now, the markets are beginning to open. ftse 100 is opening to the downside. we had the momentum coming from asia off the back foot. even though they started the week why positive, still waiting on the rest of the continent to open. spain opening to the downside. weighing heavily on the spanish benchmark there. they had earnings sales growi -- growth really slowing. the cac 40, as well, down. let's sic a look at what is going on in the sector picture. you can see it is a sea of red.
we are seeing negative momentum into the start of the open. i want to focus on energy. we have the oil price rallying. i want to see how that is going to affect. we see some green. how that will affect oil majors. they are all talking in houston. consumer discretionary in the red. we had earnings reported. adidas reported earnings. europe is ang that problem for them. matt, what are you seeing across individual movers? matt: right now, we are looking at brent to the downside. 397 stocks are falling. you take a look at the winners this morning in terms of points, you will see that sap is adding the most points. think of santander, standard adding points as well. then you have some consumer staple stocks. nestlé is adding points this morning.
tell building. all adding to it would be a gain if it were not down. let's take a look at the losers. the biggest point deductions. right here at the top. down 3.8%. you also have british american tobacco, after losing a case in canada, getting protection after defeat in a smoking case. that is falling this morning. then you have some of the other banks. .sbc falling really helping track the stoxx 600 down. anna? markets,t, european opening lower. in britain, the pound is on firmer footing as brexit plans
were rejected by parliament yet again. the new language around the irish backstop failed to win voters among lawmakers. i profoundly regret the decision this house has taken tonight. i continue to believe that the best outcome is that the united kingdom leave the european union in orderly fashion with a deal. >> the government has been defeated again by an enormous majority and they must accept their proposal is clearly dead and does not have the support of this house. quite clearly no deal must be taken off the table. this is a humiliating defeat for the government this evening and this deal should not come back again. >> with your vast knowledge of parliamentary history, can you identify a single case since the american war of independence in which a prime minister has been
defeated and continues? today, lawmakers will continue to vote on whether to take the no deal option off the table. , the house of commons will be asked about extending article 50. isning us now with analysis the head of macro strategy at state street. very good to have you with us. theoubt you are watching twists and turns of the pound yesterday. we have seen the pound gaining a little bit of ground. you don't think that the pound strength is going to be long-lasting because you think fair value has been eroded. >> i think it is more of the longer-term story. yout after the referendum, had a really strong fair value case to make for sterling. first of all, it has rallied against the euro and the dollar.
second of all, the fair value estimation based upon relative prices has come in quite a lot over the last year, 18 months, simply because of the results of the weaker pound over the last couple years. inflation rates relative to the rest of the world have run higher. the long-term fair value case is still there, it is just much weaker. you will get some overshoot to fair value. long-lasting, more importantly. matt: is there any positive scenario for the u.k. economy? the choices seem to be hard brexit or delay? timothy: i suspect you have a net positive versus the status quo. we have done significant damage to the investment environment and it is not as though is if
you get a fully positive outcome in the next couple months that 100% of the delayed or curtailed investment will come rushing back in. a lot of it will. it will be a growth positive scenario. looking where trend growth is, we have taken a shift lower. i suspect it will take a long time to do so. i was reading something which suggested one strategy saying the trend lower in gilt yields is set to continue due to haven demand in the u.k. is part of the story, but you have high conviction on your underweight guilt call on a positive brexit outcome. talk us through that. i think even on a negative, you will get positive performance. natural demand, but it is more on a relative basis. the probabilities do favor a
solid outcome. for us, it is the highest conviction way of playing the story. sterling is so volatile day today. the equity view is so tied to the sterling view. the rate view is a little easier to think around? matt: is there any way to value sterling post-brexit? tim: what you can do is rely on , thatf the methodologies sterling is a little bit undervalued. somewhat probably say quite a bit undervalued.
there are other factors to consider in that model. the notion of what the u.k.'s external balance situation is, which is still to be determined, with the u.k. rate environment is, which is still to be determined. it is a very difficult assessment to make. easy,n do it relatively but the problem with exchange rates is that they are dependent on dozens of variables, so i think it is always a hard thing to do in the best of times. what you are talking about now is a cloudy environment as far as what the u.k. relationship to the eu and the rest of the world looks like and that makes it even more of a guessing game, i would say. tim, thank you so much. timothy stays with us in our london studio for more. up next, we will bring you the stocks on the move. we have been watching the owner of the zara clothing chain trading down this morning. numbers outweighing the return
it is a bit of pressure on the retail sector this morning. let's start with inditex, the owner of zara, down nearly 4.5% this morning. the slowest space in five years even as they are boosting cash to shareholders. it is not helping the stock today. a do you just down nearly 5.5% this morning. they are seeing slowing sales. maybe retro footwear is losing momentum. the ceo saying europe is a problem for them. he also said the linkup with kanye west. aberdeen is to the up this morning. dualas they scrapped the structure for ceo. matt: all right. thanks very much. annmarie looking at some of the big movers of the session. european indexes are mixed at the open. futures signal a lower start for the u.s. with investors voicing
concerns over the direction of global growth. tim graf, head of macro strategy for emea at state street, is still with us. i read an interesting story. nejra flagged an interesting story to me this morning about morgan stanley and bank of america saying it is time to play the contrarian move on european stocks and so long. long because they are valued so poorly. what do you think about this big contrarian play by european stocks? tim: for us, it is not quite the time for that yet. when you look at european share valuation relative to earnings, the multiple is really in line with long-term historic averages. you are looking at trend earnings, multiples. it is so one of our favorite underweights. positive case you can make is
the ecb does remain committed to the banking system. that is the key variable for european stocks when you look at them on an index basis. if there is to be index outperformance, it is likely to have to come from the financial sector. we still see that is under pressure for the very near term. i suppose assuming they are supported for the very long-term, that is how you can build a better relative case. i think that is a big if still and not one we are willing to embrace quite yet. anna: we talk a lot about the japanification of rates or the japanification of the european economy. the question we are is trying to establish what does it mean if we see german bond yields getting lower and lower and lower. what does it tell you about the amount that the german economy, about the eurozone economy? it does notface,
really tell me a lot i did not already know because there is this ongoing slowdown in europe. what it tells me more is this slowdown that they have at their disposal. this is part two of a long-term european bullish equity case if fiscal space is to be eventually and of stimulate growth monetary policy is not necessary out of bullets. maybe less effective when you are at the zero bound. if it is not exhausted, certainly well used. that would make me far more optimistic if they were using on the back of this move that space toward simulating the american isnomy in a way that monetary policy going forward. matt: though it is terribly unlikely. the germans are very unlikely to spend any money for the next century or so.
what does that mean? do we just see bonds hovering around zero forever? don't use that space, i suspect it is going to be very hard. that has been the favorite call over the less couple years for contrarians, and it has not really worked. much the same way selling jgb's has not worked the last 20 years. if they fail to use the fiscal idiom,it is an overused but the demographic profile is not very healthy. the fiscal situation is less healthy than what you have seen over the last 20 years or so as far as moving fiscal policy. i'm afraid you are not going to see inflation expectations rise. as a result, term premium will not be put into rate markets and you will have you low yields for a very long time. all right. thanks very much. tim graf, head of macro strategy
at state street for emea. i want to take a look at the sectors on the move with the grr function for the stoxx 600 this morning. herea look at the gainers as far as the gaining sectors. you have oil and gas. auto parts and travel and leisure. losers include retail, household goods, and construction, and materials. ♪ this is bloomberg. ♪
matt: welcome back to "bloomberg markets." this is the european open. a mixed picture on the boards. not a heck of a lot of movement. head of macro strategy for emea at state street, tim gra, is still with usf, -- tim graf, is still with us. let me get your perspective on what is happening in trade. do you expect that the u.s. and china are going to move to a positive or move to an agreement here that can be a boost to stocks? tim: i suspect so. i think the reality is far cloudier. we are relying on panic notes and hearsay and tweets, which
are always quest in a bowl. -- questionable. i suspect it is in both parties'interests to reach an accord. an arrangement will boost equities, remove uncertainty in trade and equity, and so, therefore, it boosts the economy as he is approaching the reelection season. for china, the impact on trade and the regional growth outlook has been quite clear. i suspect it is in their interest to remove their uncertainty. i think these negotiators have their interests at heart. we have seen with brexit, with trade negotiations, with rhetoric around geopolitics, that sometimes countries don't act in their best interest or perceived best interest, but it does seem the likely path we are heading down. anna: tim, tax cuts and share buybacks and other matters, strong growth seems to have led
to u.s. outperformance of stocks over recent months or recent years even. how convinced are you about outperformance by u.s. equities from now? tim: yes, for us it is not just tax cuts and buybacks. the earnings and the return on profile remains on a relative basis the strongest out there. it does have the valuation concerns that have been out there for a couple of years now. it does have something of consensus risk behind it. everybody thinks what i just said, but that is the reality, especially when you are in a slow growth world elsewhere. in more trade dependent economies, such as the eurozone, china, as we are seeing in japan more recently, so i relative basis, the corporate earnings outlook for the u.s. being more of a closed economy that is less at risk from these threats of trade protectionism, it does stand to benefit a little bit longer, we think. matt: what about the dollar? since we got the last fed
minutes and then we got the ecb decision, we have really seen the range unchanged against the yen at 111, the euro it basically 1.13. you expect the dollar to move higher or lower? tim: over the near-term, i would struggle to be too bearish. i understand not really loving the dollar. it is a bit of a consensus, a bit expensive. but it is the rate dynamic and it is the relative health of the u.s. economy relative to places like europe, japan, china, where you do have this ability for the u.s. to grow at a sustainable rate that is far better than those economies. therefore, it might allow, the financial conditions remain conducive for the next 3-6 months, it might allow the fed to actually continue the rate normalization path. i suspect that is a pretty high bar for them to clear, especially given the rhetoric of late, but nevertheless, when you look at measures of core
inflation, they are still around target. the labor market, despite the big miss last week, when you look at an average basis, it is still pretty healthy. it is hard to see the case for a pronounced slowdown in the u.s. on a par with what we have seen in europe. for that reason, i struggle to be too bearish on the dollar. anna: you struggle to be bearish, tim. i was reading jeffrey gundlach. that increasing debt levels in the united states are going to weigh on the dollar. you don't buy into that? tim: not really. if that were the case, we would have seen treasury yields should higher over the last couple years, where we have been running since the end of last year -- the end of 2017 -- pro -cyclical fiscal policy, expanding budgets in an economic growth area. yet term premium on treasuries remains very depressed. absolute rates remain low for historic norms. there is demand for treasuries.
it is being demanded by domestics. you arert-term yields, actually getting decent risk-adjusted yield. so, there has been buyers coming in to support treasury. if there had not been the case, i could see his point. the flow support for treasuries right now -- and looking at yields and term premium -- that would suggest that is not the case, unless you move toward an mmt style highly expansionary fiscal policy, which is probably not going to happen for some time, if ever. matt: tim, i'm not going to get your take on the keto diet or ganghnam style, but do you expect this to last with mmt or is this a fleeting twitter trend? itself, concept of mmt to my mind, it is talking about expansionary fiscal policy in an era where growth and productivity that drives growth
remains sluggish and some attempt to correct for that. it is kind of the populist element of this taking hold, seeing that monetary policy has its limits sometimes does lead to greater inequality through asset price inflation, where lower tiers of income and wealth don't see that appreciation. it is the next phase of this populist movement and this zeitgeist we see. but to me, that is just thinking about it being fiscal expansionism when all of the policy tools seemingly have been exhausted. as a concept, mmt is probably a bit of a fad, but as part of the zeitgeist toward moving away from austerity untoward expansionary fiscal policy, i suspect we are going to be talking about this and other types of programs for a while. anna: ok. tim, thank you very much. , we are ending our conversation talking about mmt. where it might go from here.
head --pstick taught let's get your top headlines. parliament rejects theresa may's plan for a second time. ban spreads. india joins china and the eu in grounding the 737 max 8, despite assurances from the u.s. aviation regulator that the plane is safe. slump. shares fall after sales growth was slow.
the ceo tells us there is room for improvement. >> there is no doubt the european market has slowed down. but there is also no doubt there waiting to do a better job in your. we believe we can turn it around. matt: good morning and welcome to bloomberg markets. this is the european open. along with anna edwards. theresa may suffered a defeat yesterday. she lost by less than the previous time, but still by a substantial margin. she still limps on. she is increasingly losing her voice. with just 16 days to go until brexit date, the list of jobs to do is still expensive -- extensive.
there is an expectation that mps will vote to take no deal off the table. we enter into a round of try andy where we establish what it is u.k. mps want to see taking here. it doesn't tell us what the and -- endtion is destination is. keep an eye on the amendments today. there can be a short extension followed by a limbo period for a couple of years. that is where we are on brexit at the moment, we heard from the government today about with a tariff regime would look like
for the united kingdom if we did see a no deal brexit. let's get the bloomberg first word news update on broader news. : the u.k. has published a temporary tariff plan in the event of a no deal brexit. the governments of any wouldists -- tariffs apply to any goods imported from northern ireland. thailand and india has become the latest nations to ban only 737 max 8 jets from their airspace. investigators try to understand why an ethiopian airlines plane crashed on sunday. u.s. regulators reiterated their
support for the aircraft, saying the 737 max shows no systemic performance issues. opec officials are said to have more u.s. investors that attempt to crack down -- attempts to m.ack down on the parents, university coaches and a college counselor are among those charged in a criminal conspiracy. wealthy parents are at left to have paid bribes of up to $6.5 million each to help their parents -- kids cheat on entrance exams.
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. this is bloomberg. thanks very much. debra mao with your bloomberg first word news. back to our top story. brexit and theresa may's deal has caught up in smoke. british lawmakers will vote today on whether to leave the european union without a deal in may's plan theresa what taken heavily defeated in parliament, even though she put new language on the irish backstop that failed to win lawmakers over. if the house of commons rules out a no deal brexit, lawmakers will then vote tomorrow on whether to ask the eu for more time. but let me be clear, voting against leaving without a deal,
and for an extension does not solve the problem we face. eu will want to know about an extension. the: joining us now is chief economist at the confederation of british industry. it ishe eu is asked, going to say no problem because nobody wants to be responsible for pushing britain out of the eu without a deal. how do you think that billy is going to affect british industry? i think what is most important for british industry at the moment is absolutely taking no deal off the table. that is what we need to see happen in parliament today. we do need to move to call for an extension. think what we need to see in that extension is a credible
plan. i think just extending without a plan doesn't give businesses any reassurance that we won't then face a no deal brexit at the end of june. if they have a credible plan, what are they have already put that forward? isn't that the issue? rain: i think this is where we need to see both parties coming together and really working on this. i think theresa may does need to get rid of her red lines. we need to look at this a fresh. we also need the labour party to come forward with a genuine spirit of compromise. what is most important over the next couple of months is that we get a withdrawal agreement and d so that we can have time to negotiate our relationship with the european union. anna: good morning to you. redlinestheresa may's from an economic perspective would you recommend she get rid of? rain: when we talk to
businesses, and we have seen it today with all of the conversations about what might happen with our terrace regime regime, is we absolutely should be a part of some sort of customs union with the eu. we have always said that should be the plan until or unless something better comes onto the table. we absolutely need to think about our access to the single market. there has been so much focus on goods, but 18% of our economy is centered on services. at the moment, we have no idea how data will move across borders, our engineers, scientists and designers will be able to provide services to our major customers across the european union in two weeks time. suggested, we have heard about what the government in the with tariffs event of a notice brexit.
we have heard a little bit about protections for car production in agriculture and country, but not for other sectors of the economy. which sectors do you think would suffer from increased global competition if we did see a new brexit? rain: i think what this just shows is there hasn't been the sort of consultation with business that you would expect. it is really good that they have been thinking through how it might impact the car industry, ceramics industry, but actually, what would it mean for toy manufacturers, furniture manufacturers? there would be so many businesses that would be affected by a change in our tariff schedule. it just comes back to this that this needs to remain a some radical discussion. we cannot be faced with a notice brexit in two weeks time with no time for businesses to prepare. we know if we were in a no deal scenario, we would see a big impact on currency, a big increase in inflation, and a
loss of access to our major trading partner. we really need to think what that means not just for tariffs, but for our wider service sector economy as well. matt: in the event that this moves forward as expected, no deal gets loaded down, and extension is asked for in , how are your members going to go forward? they have still got to continue on or shut down, right? rain: businesses are inherently pragmatic. they are used to dealing with risk and uncertainty. they are used to just trying to focus on what makes, what is important to grow their business, how they need to get investment, how they adopt new technologies. having this huge uncertainty around brexit makes it so much more difficult for businesses to make those plans. this is something that is very
much in the control of u.k. parliament, u.k. government. we should be able to come up with a credible plan at this stage and move on to having a transition arrangement, and being able to negotiate our long-term future with the european union. that is what is most important. newton, thanks very much for joining us. up next, we will bring you some of the stocks on the move. an italian soccer team progressed to the quarterfinals of the champions league. this is bloomberg. ♪
anna: welcome back. talk about brexit and the impact this is going to have on businesses that have high exposure to the u.k. market. the house of commons has rejected theresa may's deal on brexit. we see a vote today on no deal and whether that should be taken off the table. let's talk to the ceo of akzonobel. very good to have you with us. let me ask you about a no deal brexit. what impact would that have on
your business? we heard this morning about the u.k. government would put in place protections for the car industry, agriculture. what kind of impact with that have on your company? orthe biggest impacts, negative impact is the uncertainty about whatever is going to be the outcome, the no deal or any extension or whatever. we have been doing whatever we could be doing in the sense that we have been building more inventory for what the u.k. is concerned. we have somewhat of a positive sheltered situation because most of what we sell in the u.k., we produce in the u.k. new this to say in the total uncertainty about what is going to happen, you can't keep waiting for every type of contingency going forward. we would be more protection. we really are in dire need of having some certainty about with the features going to hold. protection,ms of
you say you produce in the u.k. to the u.k. market. would you be concerned on a notice brexit about foreign competition increasingly coming into the market? --doesn't look like this look at this the government's plan to do anything to protect pay production. thierry: i think that doesn't scare is that much, although paint is also a very local product. you are shipping a lot of liquid, so that is probably less of an issue. what we have been suffering with over the last two plus years is the weakness of the pound. for a euro-based company, that hurts. second is consumer confidence. we have had those impacts much bigger. what do you think about when you look at the u.k. market, your business there?
will you be shrinking it post-brexit, adding to it in some of the built on m&a deals you are doing, or just leave it as it is? u.k. market us, the is a key market with our household names in their segment. it is a very important market. it is just shy of one billion euros a year. we have been looking at producers,s on other so that remains the case. everything has to be looked through a spectrum of what is the next four or five years of the u.k.? that makes it a bit more difficult. 4s, the u.k. remains important. i have been on record to say this will be alive after any scenario brexit, but we are looking forward to increase certainty as to what this is going to look like.
matt: how about the possibility of bolt on m&a outside the u.k.? what are the key portfolio gaps you are looking to fill in 2019? thierry: we are on this improvement plan for the company , which meansities having a certain profit target by 2020. we are well on our way to achieve that. what we did is really an in-depth analysis of our business. they are also looking at m&a, how they can play a role. last year, the company did about 10 m&a deals from small ones to significant ones. they were all surgically addressing an improvement opportunity within those businesses. there has also been some corrections we have had to make where he did quite some steps last year in 2018. the same has been outside of the u.k., outside of your even --
europe even. one of the three largest players in the world, and we not only want to keep that position but also come out a bit more strong than we had in the past. anna: we are always looking to clues as to how week the eurozone economy is going to get from here, whether we see any bottoming out in the. what can you tell us about pockets of weakness in the eurozone? ierry: more or less steady as she goes. nor are there really black spots. our biggest worry has been around china, a market that is very important for us and has been somewhat lukewarm over the last 12 months. if you really specifically would look at the u.k., the u.k. market consumer confidence has been relatively restrained, not surprisingly given the
uncertainty about what is going to happen. also, decorative paint goes along when people move houses or move into a new house. that is when you see a bit of a spike in the consumption of decorative paint. softer. been somewhat given the real impact in size of theycts in the market, have been gaining some market despite their list on position already -- u.k. despite a strong position already. the market in france is probably the most difficult one and has been like that for probably 10 years right now. europe is more or less okish across the board, whereas it is in some of the asian markets where we see more concerns at this specific moment in time. matt: the u.k. market a little bit soft, but you are gaining
market share to offset that. you know the story in the eu. thanks very much for your time this morning. akzonobeleo of joining us. annmarie: i want to kick it off with you dentists, up more than 70%, hit its highest ever on record this morning, beating madrid. i know quite a lot of people in the newsroom excited about that win. operating profit beat the highest estimates. downside.o the they say they are still in contact with that individual. anna: thank you. coming up, bands for the boeing 737 max spread across asia and
we are now 55 minutes into the trading day. looking at a mixed picture in terms of equities in europe and the u.k., not a lot of movement there in one direction or the other. the list of countries grounding the boeing 737 max continues to grow. india, thailand and new zealand have joined several other asian countries and the eu by issuing a blanket ban of the bands from -- planes from their airspace. the interesting thing at this point isn't who else is banning -- who isu isn't n't banning it. states,ave the united the faa, boeing saying they have no reason to believe this aircraft is safe. matt: i'm just looking at some
stats here. southwest airlines has 34 of these jets. american airlines has 24. there are that many flying in the u.s. 60 is still enough. do you think passengers are going to refuse to get on them? >> i think passengers will be concerned about this, and i think we have seen on social media passengers asking if they can find out if they are flying on them and is it safe. the response we have heard is yes. we have no information to believe that it is not safe. political pressure is starting to build. out,beth warren speaking mitt romney saying perhaps the u.s. should consider grounding this aircraft until results can be found. matt: you can check out opinion stuff on the terminal.
by parliament, the options narrow. backing boeing. the faa says the 737 max is skyward the. -- skyworthy. there is no doubt that the european market has slowed down, but there is also no doubt that we need to do a better job in europe. do believe we can turn it around. we believe it is very much in our own destiny. francine: this is "bloomberg surveillance." good morning and good afternoon if you are watching from asia. tom keene is in new york. there will be another vote, not on the deal but on making sure there is a nobel brexit later today. there are various amendments. will hear hopefully from the government on with the strategy to deal with brexit now is. tom: is it possible that prime minister's government falls today or tomorrow?
francine: it's always a possibility. we are looking again at the numbers so we will see what the options are. there is an overarching theme that i don't know this morning who would want this job. first, before we get back to brexit, let's get straight to the bloomberg first word news in new york city. day, anotherher brexit vote where there is a lot at stake for theresa may. after rejecting the agreement, today, parliament decides whether to leave the country out of the european union. lawmakers could also give themselves a chance to delay brexit in the hopes of getting better terms. an extension could set off a chain of events that could take down may's government. on the. is doubling down safety of the boeing 737 max in the wake of the crash in ethiopia. if necessary, they say they will
take action. more than 40 countries have temporarily taken the 737 max out of service. a new report says kim jong-un's regime in north korea is using global banks to undermine united nations sanctions. jpmorgan is one of the banks named. the bank hasn't responded. today, paul manafort faces another sentencing in federal court, this time it is in washington, d.c. where he pleaded guilty to two conspiracy counts. he could get up to five years for each conspiracy count. 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. this is bloomberg. tom: thanks so much. a little bit of move,
particularly in interest rates. late yesterday, futures were actually higher. curve flattening over the last few days. points, the difference between the two-year and 10 year yield is point 149 percentage points. stronger euro. the vix at 13.72. maybe less fear would be an indication. there is the 30 year u.s. field into a lower yield. even saw it to 99 yesterday. yesterday. a 299 letting go to the bloomberg and show you a united kingdom chart. i wasn't aware of this chart. i know this is a chart 10 on would know well. it is -- tim would know well.
consistent fory 40 years, and then with the advent of euro, we go a little further, and then it stops. the income in the men's kingdom, inflation and -- united kingdom, inflation-adjusted. this gap is some of the agony you are hearing from people. francine: of course, in the case of a no deal brexit, that completely changes. it was interesting yesterday to have at least a little bit of insight. we understand the pay would not impose tariffs. the intake parliament votes today on whether or not it was to leave the eu with no deal in place. the government announced this morning it won't apply tariffs to most goods imported in the country in the event of a no deal.
i think he has a secret spreadsheet looking at which way things will go in terms of votes. where are we now? does theresa may's government survive this week? rob: i think the government survives. i think probably theresa may survives. there are people talking about whether to throw her overboard, but for what? from within her party. they are the only people who can do it, in a way. the problem is, what do you do then? facing any prime minister and to get any deal through our structural. -- are structural. although it is hard to see how this prime minister can get this it also does it mean changing does anything.
it was significant last night that may said that we will have the vote today as promised and it, and will implement everyone expects parliament to vote by a similarly large margin tomorrow to ask for a delay. at that point, we expect may to go and ask for it. we expect the eu to agree to a short delay. no deal on march 29 looks unlikely at this point. ofdeal in the second half may, that is possible. what the eu fears is i think what is possible is the fear of rolling requests in the u.k. i think it is entirely plausible. david cameronr
walking out about black door at walkeding street, and he out the door with grace and dignity after the collapse. he resigned. what is the difference between and thisesigning then primal call i see in the media asking why won't prime minister may resign? why doesn't she just say, this didn't work out, let's let somebody else doing? because there is a strong case that david cameron walking out when he did just left a huge mess to someone else, in this case, for theresa may. i think she would say that if she walks away now, it doesn't solve anything. it is hard to imagine any successor she might have from the cabinet who would have more support in parliament then she has. most of the likely candidates less.likely have her argument is that somebody
has to do this job, i'm here, let me do it. francine: would an extension be attached to anything? it is very difficult politically for brussels to say that is it, we not going to write you an extension. but will they require a template -- basically, why are we extending? rob: right. i think may have to go back and say something more than, we would like a bit more time for geoffrey cox to try to get a bit more. can the eu give a little bit more? maybe the brexiteers could be satisfied with slightly more assurances. i know that sounds ridiculous, but that would just hint yesterday that they might be ready to take something. a climbe looking for down this time is day yesterday. another option is she says i am
going, we will replace me, or i am going, we have a general rule election. after that, the new government has got to work out his position in it and that looking somewhere rather like this. there is a school of thought to ask for two years and start again. that would be difficult. tom: thank you so much for your wisdom. greatly appreciate the work you and the brexit team are doing. what do you see in the city with all of the fed is going on down the road, a modest three subway stops. what do you see in the financial part of london? is there plans here to leave? are there plans to wait it out? what is the tony see every day?
geoff: it is business as usual, really. if anything, my train is more packed as far as people are concerned. i don't think there is too much attrition. what is more important is their exasperation, and i think that is reflected in client conversations as well. tom: where is this headed and within the client conversations, i assume there is brexit exhaustion. the besttton says, outcome is to go another two years. i don't think brussels wants to do that, but do the people? bearing in mind it is ubs, we have a lot of international clients. i think that is where the opportunity is for the u.k. right now. clients are under position in the u.k.
they have got limited amount of exposure to sterling. they just need a layer of uncertainty. they know there is value in the u.k.. i think they are waiting for that certainty before they really pull the trigger. francine: what does this all mean for pound? geoff: again, we are not rolling any scenario out right now. forecasts a high degree of uncertainty. if there is a no deal, we can see and move below 120. are weent valuations, interested in adding to sterling positions? not really. i think for now, sterling is trading on a day-to-day basis. francine: thank you so much, yu ofy you -- geoffrey ubs stays with us for the hour.
does mr. barnier tell everybody what to do, or is there actual debate in brussels? maria: there is a very real debate here, and it is very funny how things are so different compared to london because the new here in brussels is just bleak. they think the u.k. was given a second chance. this was obviously not the case, and that the chances of a no deal have actually risen. today, the message we have heard is that every country in the eu now needs to prepare for a no deal. no deal chances have risen. if anything, it is a very short extension that you would consider. tom: angela merkel has been very strident of a support of prime minister may. do you see a nation difference across europe? isn't germany or poland or somebody else that actually supports prime minister may? : again, i would say the
only friend she has is the dutch prime minister. that is because they have a very interlinked business relationship. say, euwhat brexiteers unity is holding strong. 27y have to agree that the of them have to come unanimously. they would favor a very short extension, nothing beyond may. what i hear in brussels is that chances of no deal have actually risen. much,ne: thank you so maria tadeo joining us from brussels. whether no deal will definitely be taken off the table with that vote this evening. joining us now is a professor of european law at the university of cambridge. thank you. it seems lawyers have taken over.
it was really the attorney general that put this deal debt. what would it take for him to reverse his stance? >> it's good news for lawyers because we finally recognize the value of law. what theem was that u.k. had asked for was that we would have a unilateral exit from the backstop. the backstop is what regulates the relations between the north and south. what the brexiteers don't want is to be trapped into that backstop forever. the eu says it is like an insurance policy and you don't want to have a hole in your insurance policy just when you need it most. the u.k. was trying to say we want an exit and the eu says no. what quebec was a real fudge and it basically said we could sort of get an extension. francine: if you speak to people in the eu, they say the goal
post that they pay has been launching has changed. before, they were saying, what if the eu is unreasonable, we want out.and now they want to unilaterally get out of the backstop . this is a completely different demand. >> the trouble is that you don't to the language of reasonableness in the text. the attorney general, they're a good english lawyer wanted to put this magical term reasonableness in there because it is a common law concept, therefore the court of justice should have no say. what they were trying to box was make sure the court of justice in luxembourg has no control over this at all because the european court of justice is the real big face the brexiteers don't like. francine: but then who would be the arbiter? catherine: that is the problem.
there's an arbitration mechanism that has 10 in the k and five independence -- u.k. and five independents. that is ultimately for the court of justice. francine: the law in the u.k. is very different from loss outside the u.k. and other european countries. i don't know whether we have lost half of our international audience. it is crazy that we are discussing amendments and how they would be interpreted when this should be a political decision. ctheatherine: this is where it s interesting. the attorney general said on the law, we have not got what we wanted. the politicians said no. that is what goes back to your original point about the lawyers. this is where you have a dovetailing of law and politics and it is missing. francine: thank you so much for
joining us today. tom: it is a very fluid story today, and of course that vote later today at westminster. in strasburg, mr. barnier speaks. it will be very important. we will have headlines coming up as well. mr. barnier driving the brussels story forward as we heard from maria tadeo. exceptionally important discussion with the chairman of strategic advisory form, global council and a former u.k. trade commissioner in the 6:00 hour. this is bloomberg. stay with us. ♪
>> discussions between the eu and the u.k. government. tom: primal scream from strasburg. the headline just crossing. mr. bernie asked whether the united kingdom still wants to leave the european union. this is an extraordinary headline after what we have seen for almost two years as a drive forward to the vote today in parliament. i should say this evening in parliament. on to another that possibly tomorrow. says it is the only possible exit deal for the u.k.
we have a wonderful deal and that is to have the perspective ubs.offrey yu of are they in recession? yet.rey: technically, not you need two straight courses. they need to domestic investment to pick up. they need the global trade situation to improve. maybe some signs of stabilization, but the euro is telling me something else and the ecb is telling you something else. is: the romance of this is what hall and thomas cromwell wondering over to antwerp. it is a lot more complicated than that in a complicated economy. what are you and your brexit experts focused on in terms of service sector transfers that will come out of this disaster? geoffrey: the u.k. service
sector remains a competitive element for the u.k. post-brexit. as far as the financial services community is concerned, we have seen movement. static.ly, nothing is that is the beauty of this city.always look ahead . always innovate. one side moves outdoors disruptive and more will come through. tom: we are thrilled you are with us. stay with us, worldwide. coming up, operation varsity blues. it is college admissions. junior needs to go to school with a terra-cotta roof. this is bloomberg. ♪ want more from your entertainment experience?
just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should.
discussing the future of brexit with members of the european union. he says, we cannot go any willer and the e.u. 27 steer away from the u.k. government, the talks are done and dusted. he continues to speak. thecine: three days after second fatal crash of a boeing 737 max in less than three months, the list of companies banning them is growing. they are a nor has been ignoring assessments by the u.s. faa that the plane is safe. but it's decision, they decided plane. grounding the is this a global standoff? it seems like a u.s. regulator
against the rest of the world. who is right? >> way will not know until we until we will not know get further information from the information that is going on with the ethiopian airline crash. that is creating concern in the public. expressed have concerns about flying the 737 max. a lot of factors have played in on deciding this suspension, but i think safety was foremost in their minds. any idea of we have who will pay for this? does boeing compensate the airline? kyunghee: i think that is something that has to be discussed with boeing. at the forefront, and will be the airlines themselves that
have to take on the losses that might have rise from this suspension. it is something that might be discussed later down the road once we get more clarification on the safety. tom: you have been doing this over a decade and you have wonderful knowledge on the regulatory structure of aviation and shift holding -- ship welding -- building in asia. or do they listen to the faa the united states of america? kyunghee: the faa is a regulator not just in southeast asia but in asia, they closely follow the guidelines. that is because the faa is the one that certifies most of the boeing planes they operate. whate watch very closely
faa does. weause of the similarities have seen in the accident that happened over the weekend, there is a growing sense of concern , fiveame aircraft model months after the first crash, that has created concern and the regulators and airlines are taking precautionary measures in order to prevent anything happening further. tom: greatly appreciate it. on the aviation story of the moment. without question, my interview of the day, i am looking forward to this at the eleven o'clock our. -- 11:00even o'clock lahood.y the former transportation secretary. ago,na: almost three years
the u.k. voted to leave the european union and still parliament cannot agree how to do it. lawmakers overwhelmingly rejected the latest proposal. today's vote on whether the e.u. -- the u.k. should leave the e.u. with no deal or delay brexit. may morning a delay -- warning a delay may lead to know brexit. bank opposing a possible merger with commerzbank. labor representatives on the highest oversight body say a merger could result in massive job losses. up to 30,000 jobs could be at risk. in california, governor gavin newsom announced a moratorium on the death penalty, granting a reprieve to more than 700 inmates.
in 2016, voters rejected a ballot measure that would have ended the death penalty. executive bill he wasan on leave after associated with a conspiracy. asand others were charged they were allegedly paid to help exams andheat on who did note deemed play sports. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. -- iim so shocked by this am so shocked by this. i will keep my opinion out of the college bribery scandal.
legendary coach at bowdoin years ago said, you have to come and skate at bowdoin, which was a fabulous hockey program, still is. you used to go to bowdoin. there were kids that were gifted andthletics, music, art, even like you gifted in history. your thoughts on the fact you did not play history -- play hockey at bowdoin. james: i learned how to play hockey at voting -- vote in -- at bowdoin and i played for a while. i injured my knee. it is difficult for me to keep my personal feelings out because i had a daughter -- i still do -- i had to send her to university and she graduated
last year. i have covered a lot of scandals and crimes and blowups. i cannot remember having the same kind of visceral feeling about anything. the elites here who have anything anyway, the fact that they feel like they need to pay someone off to get their kids into a prestigious university, as if that will guarantee their life success. convey the emotion of this for so many of all walks of life across america. francine was mentioning it on the break that it is just imaginable. jonathan ferro had much of the same comments. explain the difference between a history degree in a wonderful, tough to get into institution at bowdoin versus harvard or harvey mudd on the west coast or
whatever. what are you buying at these elite schools? jim: that is a great question, it really is. you are buying the network, more than anything else. you are buying the prestige. acasionally, you are buying top-notch program, but really what you are doing is getting a half a step higher on the ladder. you are buying into a launchpad that like connections in anything, gets you the opportunity and you have to prove yourself. and went to moron harvard, unless your father is a powerful politician, then experience will out. if you are a talented person who did not go to a prestigious university, you will get the
opportunity and prove yourself. what you are buying is that an initial access to the network and the launchpad. francine: right. i do not know if you called this a sting. it was kind of an investigation. do we have any idea whether the people involved who took the money and admitted students on a different basis, would get removed? jim: these guys, this is a federal indictment. it is not civil. it is less about will people lose their jobs then will people go to jail or what kind of punishment or how much broader will this be? this is the end of the first chapter of the story. tom: well said. as we heard from authorities in boston yesterday, this is decidedly not the end of this
three years. profit growth was the slowest in five years. growth to slow by as much as three percentage points. sneakers have boosted their company, but the models are easing in europe. nike is gaining ground with new products. tom: thank you so much. with the uproar that we have over the education system, it is interesting to have with us geoffrey yu of ubs. are a high-powered academic at a high-powered investment firm and you see this, the best and brightest and highest striving around the world. what you think about this education scandal? geoffrey: if you think about the
political implications and the reason why populism is such a driving force now, one rule for one set, one role for the other , this isor the other where the establishment institutions need to take a hard look at how society has developed. the politics we are seeing here, the fractious nature of society will only get worse so hopefully this will be a big wake-up call. that is what investors are looking for. not think you were expecting education in the u.s. questions. when you look at the divide between the haves and have-nots, is there anything the central bank should be aware of? some of the qe that has been there for such a long time? geoffrey: central banks should be open and they will be right
in saying the policy procedures and remedies should be incumbent upon the lawmakers, the political establishment, rather than central banks. the ecb often points out central banks make the conditions to make reform easier but whether that happens is up to the political establishment and they have fallen short. francine: we look at populism, and this goes back to the idea of unfairness and that you have been left behind because of technology or globalism, or the markets good at understanding the effect of that populism in four to five years? geoffrey: in hindsight, markets underestimate the effect of populism over the last two years which led to some of the political decisions. isa forward-looking basis,
their track record getting better? i would treat that with skepticism. at least it is on investors' radar and when they price assets , hopefully that will be more important. tom: geoffrey yu, thank you so much. raghuram raja coming up in a few minutes on the scandal in the united states and his new book. matthew hornbook of morgan stanley, this is exceptionally timely with the reasonably more cautious view of morgan stanley on the market. stay with us, from london, westminster, and new york, this is bloomberg. ♪
is raghuram raja. rajan. he is with the university of chicago, and i cannot say enough about "the third pillar." congratulations. onoughout your book community is a discussion of education. your chicago is so elite, these parents on the west coast were not even trying to get their kids into chicago. they were looking at other lower schools like in cambridge, massachusetts. your thoughts on the desperation to buy academics in america. raghuram: this is very worrisome, because on the one -- weit is queuing
already have a skewing of opportunities. you have to go to elite schools to get a elite jobs. for most of us out there, it is hard to take the first step. then you learn it is not just about legacies and preparations, schools which help you prepare your applications, but buying your way ian illegally through corruption. that is really a blow to the system and we need to clean this up. tom: you had a most interesting childhood in india. like many others, he traveled with your world father for diplomacy and enforcement in india. place those students took, is it a place of someone from the middle class or the place of someone who just went below that level of whatever
school and they just eked out not going to that fancy school? raghuram: it is a concern that so many people don't get a chance to get into the schools because first, you need a level of ambition in the schools sometimes outside the big cities. to progress the way is to go to ivy league schools and get wonderful jobs. many students do not have that ambition because they do not have good access to college counselors to tell them that is out there waiting for you. there is lots of scholarships. the nexthey hear that, step of doing the college tests, writing the applications, getting past those hurdles is very difficult. when you hear there are separate whole lot creates a of new anxiety over and above what we are ready had. francine: professor, does this
seed populism? these kind of scandals that the rich can get whatever they want, will it lead to people voting for more extreme parties? raghuram: of course. the sense the system is skewed even before you add on corruption is already there, that the elite look after themselves. but only meritocracy the children of the successful get a chance at being successful because of the extreme importance of a really good education. given that, when you add onto that corruption, what is populism but the control -- corruption of the elite. they are not working for us. it leads to a significant distress in the system. my sense is this is one of those
scandals which has to be cleaned up quickly. francine: thank you -- professor, congratulations again on your book, which is our book of the year. banks,u look at central and you do not believe they should do any more qe, if there was a downturn what should they do instead? raghuram: certainly, the fed and china still have some room to cut interest rates. i think part of the normalization was in a sense to create some of that buffer. the problem with the ecb and bank of japan as they are into negative rates. as far as qe goes, they have done whatever they could and whatever modest effect it has had is pretty much out there. there is more in the central bank tank and we will have to look for other instruments. tom: if you look at carleton
college in minnesota, this is an acclaimed overlords institution of the midwest just like in chicago. if you go from carleton to the london school of economics, you are doing pretty well in terms of acuity. offfrey yu wandered out lsc -- lse.o these schools have mathematics, engineering, and all their courses, andfancy their kids are going by with second rate degrees. isn't that what we are talking about? geoffrey: it is about the network in the access to the next layer. the training becomes on-the-job. you can learn stuff from the books.
the most important stuff you learn is sitting next to the traders. if you cannot get into the first tier of schools, getting into the next tier becomes even higher. the opportunity set, the access of life, where people can learn and get a solid grounding, that is where policymakers need to focus. francine: beautifully said, geoffrey yu of ubs and raghuram rajan. ,e will speak with chris leslie a member of the u.k. parliament from the newly formed independence group. this is bloomberg. ♪
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a vote today and tomorrow. an expert says a no deals will take united kingdom trade back to the 19th century. need minister may may unanimous brussels approval. boeing flight manual was "criminally insufficient." it is a bad case of harvard or the university of chicago, or the terra-cotta of stanford. parents pay to play so junior can get a spot. 2.3 gpa, no problem. good morning, this is bloomberg "surveillance," live from new york. i am tom keene with francine lacqua outside parliament.
these kids that were rowing could never do the head of the charts. give me a brexit update. , as ane: as a foreigner european, this is fascinating. a lot of people are shocked because the system is very different and you did not really get scholarships or you do not get in because you are good at rowing. places are usually more academic. we will find out with more investigation if it is the same in the u.k. as the u.s. i hope not. a vote today on brexit. you see what i did? i moved to something else we are trying to figure out, which is will almostiament unanimously vote for a no deal brexit. there isn't another -- there is
another vote tomorrow. we look at a possible extension and that is what theresa may will ask brussels in the coming days. tom: on rowing, we say good morning to tabor academy in marion, massachusetts. for your first word news, here is viviana hurtado. viviana: another day, another brexit vote with there is a lot at stake for prime minister theresa may. parliament decides whether to leave the country out of the e.u. lawmakers could give themselves a chance to delay brexit in the hopes of getting better terms. an exit could take down may's government. down on thedoubling safety of the boeing 737 max in the wake of the crash in ethiopia, it saying they see no safety issues.
if necessary, they will take more action. more than 40 countries have temporarily taken it out of service. kim jong-un's regime as you being global banks in illegal deals to undermine united nations sanctions. fundsn. saying the transfer prohibited items. trump campaign chairman paul manafort facing another sentencing in federal court in washington, d.c. where he pleaded guilty to two conspiracy counts. last week, a sympathetic judge gave him less than four years and he could have gotten up to 24. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: thank you so much.
boeing, right near the 1:00 p.m. lows as yesterday. curve flattening and low interest rates this morning. 30 year bond, 3.01%. ,hat is two basis points up from a 2.99%. sterling with a little enthusiasm this morning. francine: the u.k. parliament votes today on whether or not to leave the e.u. with no deal after another crushing deal for theresa may's brexit deal last night. just schankel men joins us from london. is an extension pretty much inevitable? that is what the attorney general told us yesterday after a vote. vote andave a no deal after that we expect to have a vote on whether or not parliament will delay it by the
23rd of may. anncine: will the e.u. grant extension? will they add attachments? we will give you an extra couple of weeks or months if this happens? jess: the e.u. has said they will grant the delay if they have a reason to. they do not want to see a deal a for the sake of it, a continuation of the back-and-forth and indecision in u.k. parliament. labour is hoping to see a softening of her red lines on a labor union and customs. tom: thank you. a third vote tomorrow. we are thrilled to bring you n, without question
our book of the summer. onis an extraordinary book the search for community worldwide. he is at the university of chicago. i want to talk about page 242 where you may exit -- mention populism, and do you have any idea how it ends? raghuram: there is an underlying he doesn't underlying feeling that people want to take control. -- underlying feeling that people want to take control. my worry is that a lot of this feeling is not just about take control back into london, but there is a sense in which they want to take control back from london into the communities. the natural culmination of this process of respecting the
feeling of the populace is push far back down to the locality. i do not know if countries are ready for it. to be theinly seems message of people voting for brexit. francine: we are hoping to find out if they no deal brexit is taken off the table, but we have no clear insight on what kind of brexit they want. how should the bank of england deal with this uncertainty? raghuram: central banks in general deal with situations of uncertainty by pumping the system with the necessarily -- makingry liquidity and sure the larger players have built up liquidity. you stand ready to provide what liquidity is needed. there is not a lot of room on interest rates that any central bank has today, but certainly
assure the system that you are behind it and ready to supported , and that way ease concerns that in the short run there will be stresses in the system. that is pretty much what a central bank can do and much depends on what happens politically. -- orne: do you think would you like to be boe governor? mark carney is waiting to leave. if you were offered the job, would you take it? is iram: the only answer am very happy at the university of chicago. tom: that was a very political answer, not acceptable for bloomberg "surveillance." if i go back to "the third pillar," and this is about economic growth, per capita real income in the united kingdom, it
is a tight, long linear regression. flat.0 roughly, it goes how do we get the line to go back up to begin to restore the third pillar? raghuram: there are two issues. one issue is overall growth and in the u.k. one concern is about enhancing productivity growth which has been flatlining. the distribution of growth, a lot of the growth in the u.k. centers around the mega-city london. in some of the northern areas, you have communities that growth has not touched, even after the recovery from the crisis. we need to think about spreading growth, how do we get growth to the places it has been left behind. that is a whole different set of
arguments rather than do we increase fiscal or monetary stimulus? it is about, how do we locate roads in those areas, place those measures? it is a whole different ballgame. francine: thank you so much, professor, raghuram rajan. i urge everyone to pick up "the third pillar." the u.k. shadow treasury minister, we will talk about the options after the huge defeat in parliament yesterday. do we go to a general election or second referendum? that is coming up at 6:30 a.m. new york. this is bloomberg. ♪
♪ >> this house will have to answer that question -- does it wish to revoke article 50? does it want to hold a second referendum? or does it want to leave with a deal? these are on enviable choices. the decision that the house is made this evening, they are choices that must now be faced. francine: a pretty rowdy house of commons yesterday, that was prime minister theresa may. i am francine lacqua live from westminster. we are trying to understand the fallout from the vote, what the next steps are for the house of commons and whether theresa may and her government can survive. leslie, aned by chris
u.k. member of parliament from the independent group. are you disappointed there were no more defections for that independent group? mr. leslie: we have time. eight of us from the labour party decided our patience ran out and we decided to become independent. three members of the conservative party simultaneously. mp's andlabour conservative mps are absolutely tired of the leadership, looking at the internal party advantage. it will be interesting to see how that goes. francine: are they sick and tired of the prime minister? can they topple her? mr. leslie: the problem is that you are seeing populism shifting to what were parties more in the center ground to the ideological
fringe. if prime minister theresa may goes, you will probably get more right wing conservative mps and moderates will not like that. ,imilarly, in the labour party a move to the hard left supporting brexit, enabling brexit, a lot of labour mps want to have another referendum. that may also split the party. francine: it seems we have the same number of options as a couple of months ago. it could still happen mid-may or june. mr. leslie: i think the mps will take control of the situation. your american viewers will be more -- will know about a and antive branch executive, and we are not used to that. if mps say we want to
methodically go through the brexit options and perhaps put that option on a ballot paper for a public vote, it is an option. francine: given what we have seen in the vote, what would parliament agree on? what kind of brexit deal would congress -- parliament vote on? mr. leslie: the prime minister put tohave heard deal the public against staying in the e.u. francine: isn't that a headache? mr. leslie: no one wants to get into this situation, but when elected representatives cannot agree, where else do you go but say, are you sure you want to proceed or call it off? francine: given what you have no deal brexit chances are still increasing?
be leslie: i think mps will clear, we will not crash out with no deal. the prime minister tomorrow will probably be instructed, or may say we want to extend past the 29th of march. periodxtend for a short or to the autumn? leslie, u.k.is independent group member of parliament. we continue our discussion on brexit to try to understand a way forward. trade talks between the u.k. and e.u. will continue on the withdrawal agreement. iniffs will not be imposed the case of a no deal brexit. we are joined by lord peter mandelson.
us.k you for joining is an extension inevitable, and will the e.u. ask for conditions? lord mandelson: an extension looks inevitable, but i do not believe the european union will automatically sign up to a short extension, where there is no possibility of finding an agreement, or an indefinite extension without a clear revocation of the article 50 application by the united kingdom to leave the european union. i think the e.u. will want to consider clearly the purpose of such an extension and discuss that in robust terms with the british government. francine: what is the purpose of an extension? do we have any insight into what the rationale for asking an
becausen is, or is it they cannot get anything through the parliament? lord mandelson: that is the rationale. the entire political system is in a state of paralysis. the reason for that is not just complexitythe innate of the issues we are struggling with an hour attempt to unplug the u.k. economy from our biggest and nearest home export market, but because also the british cabinet is not unanimous in its view about how we should leave the european union. inre is no majority parliament for how we should leave the european union. because of that, an extension seems obvious, but the european union will not simply want to and watch it drift
inexorably onwards as britain continues what amounts to the biggest political crisis we have faced in peacetime history. they have their own lives, work, and affairs to get on with. the prospect for europe of having britain sitting on its doorstep, not being able to go standd because as things we would simply blow up the unable toonomy, but reverse either under this prime minister because that would blow up our own conservative party. not sitpean union will back and allow this to continue indefinitely. the e.u. do you think can give anything more to the u.k.? it could be something in the wording or something that would get the u.k. at of the backstop if the other side were unreasonable? are we talking legal terms?
lord mandelson: there is no wording that could finesse what is a fundamental difference within the cabinet and within parliament between those who are basically the hardliners who want a clear-cut, clean break between britain and the european union, and those who want not all the wiring to be pulled out, but more surgical, rational, period of adjustment over time. the difference between those who feel the huge disruption that would be involved in the first course is one we can live with and get over fairly quickly, and those who believe it would be tantamount to pushing britain and its economy over a precipice into an abyss below.
it is not a matter of wording from brussels that will provide a solution to this impasse. that impasse has to be found in britain, within the british government and parliament. until that happens, i do not think we have any prospect of in ourng this paralysis politics. francine: let me give you options on how to get over the impasse. a new tory leader, general election, a no deal brexit, or a second referendum -- what is more likely? lord mandelson: i think a no deal brexit will be ruled out by parliament today and the government will have to accept that as parliaments will. live in al parliamentary democracy and the government has to base its actions on the will of
parliament. , yes, it isection possible, but if theresa may falls, a new conservative prime minister might want to take the whole thing back to the country, get a renewed mandate and reconfigured house of commons with a majority emerging out of that for some deal they might put forward. the conservatives would be nervous about that because i think the british public will not thank them for the mess they have delivered us into an coming back to them to get a different mandate after they failed to deliver the first one. a referendum again is possible. i do not relish the prospect of that, but it is a matter of political necessity, almost legitimacy for any outcome in this brexit process, that it is
finally signed off by the british public. unless the british public do this, there will be no ending to the struggle that will continue within the different political points of view in parliament. at the end of the day, the british people launched this process of brexit and at the end of the day, whatever that determination is, the british people will have to sign it off. francine: what can labour do? we heard jeremy corbyn first wanted general elections, then he seemed to be behind the idea of a second referendum and now he is going back to general elections. what theonfused about labour party its leaders want now? lord mandelson: i am a member of the labour party but do not speak for it. the predominant opinion in the labour party is that we must have the least disruptive form
of brexit, one that mitigates, reduces the risks and inevitable damage to our trade and jobs and livelihoods, but that is not an option that theresa may is putting to the house of commons and not one on which they can vote. viewly, there is a probably of the same size among labour mp's that whatever the outcome, the british people need to confirm that is what they actually want to see happen. we are dealing with an outcome that is very difficult from what people were expected or promised when they voted in 2016. we are facing an outcome that will be far less reduced in its value from britain than the deal we are to members of the european union.
given that we have moved so far away from the deal we have presently or what was promised or expected when we left, it is right in principle and frankly legitimacy that the british people are gone back to and asked their view. , there was a very narrow difference between those who voted for brexit, about 17 million people and those who million.inst, 16 22 million did not voted all. francine: lord peter mandelson, thank you so much. we continue our brexit coverage. ♪
the u.k. voted to leave the european union but parliament cannot agree how to do it. lawmakers overwhelmingly rejecting the latest proposal. today they will vote on whether the e.u. should leave with no deal. the other option is to delay brexit. a delay could lead to a second referendum or no brexit. some of deutsche bank's supervisory members opposing a merger with commerzbank. representatives say a merger could result in massive job losses. up to 30,000 jobs could be at risk. in california, governor gavin newsom announced a moratorium on the death penalty, granting a reprieve to more than 700 inmates on death row. in 2017,ornia --
bill toians rejected a end capital punishment. tpg putting bill mcglashan on leave after he was charged in a conspiracy in connection to some of the nation's most exclusive colleges. test takers allegedly were paid to help students cheat on interest exams and coaches were paid to designate students as athletic recruits even though they did not play the sports involved. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: thank you so much. let's get more on the boeing 737 backstory, the list of countries temporarily banning the craft is growing.
thailand and india are among the latest, and assessments by the faa that the plane is safe. while the faa's credibility is on the line, regulators stand by ther decision in grounding boeing 737 max. george ferguson is with us. great to have you. it seems the u.s. is going one way and everyone else is going the other way. the airplane is in a lot fleetsrport -- american and has been operated safely here for probably the last six months or so. the faa is looking at that and thinking the aircraft is ok to operate. the challenge is some of the u.s. pilot unions have come out and said they are concerned about this anti-stall system and
it puts a heavier workload on a pilot at crucial times like take off. the rest of the world has taken less of a tolerance of risk. it looks like the faa is isolated here. i am concerned that they will have to give in. francine: why is the faa saying this? economy or thee bottom line of boeing into consideration, or do they have a different way of training pilots? see the u.s. carriers as operating it safely. i think that will be their stance. they should not be taking in the financial considerations of boeing. they are charged with safety. it is a rough position the faa has taken. much do we know
about who will have to pay the damages or costs lost, revenue lost because the fleet was grounded? george: i think if it does come out -- we are still in early days in the address above a -- addis ababa investigation. if this is boeing's fault, there will break desk there will be a bunch of remuneration to airlines. of course, to families as well. we do not think it will threaten boeing's existence. they have a fair amount of cash on the balance sheet. airplanes crash and companies that make them survive those events. boeing will be responsible for some remuneration, i think. francine: what are you hearing
about how quickly we will hear what happened through the black box? george: i think this will take a week or so. the faa wants to accelerate this. last night in the states, i saw a reporting that the faa and the opie and authority -- ethiopian authorities are discussing where the black locks will be opened. the faa is focused, given that they are one of the few who think they are can be operated safely. they can figure out whether or not they should change their stance or stay where they are and say the airplane can be operated. francine: george ferguson, bloomberg intelligence senior airline analyst. the former u.s. transportation secretary will join bloomberg,
♪ this is bloomberg "surveillance." i am francine lacqua outside parliament in london. we will have much more on brexit as parliament votes whether to leave the e.u. with no deal in place. this comes after another crushing defeat from the brexit deal last night. the profoundly regret decision this house has taken tonight and i continue to believe by far the best outcome is the united kingdom leaves the european union in an orderly fashion. >> the government has been
defeated by an enormous majority and they must accept their deal is clearly dead and does not have the support of this house. quite clearly, no deal must be taken off the table. speaker, for the government, this deal should not come back anyway or shape. >> can you identify a single case, say since the american war of independence, and which a prime minister has been twice defeated and continued with the same policy? francine: joining us now for more on brexit is anneliese u.k. shattered treasury minister. we are trying to figure a -- shadow treasury minister. we are trying to figure out the next step.
jeremy corbyn wanted a general election been shifted to a referendum and now we are back on a general election. anneliese: we need to have a general election. we have enormous economic problems in our country. we have got to have that general election. when it comes to brexit specifically, the priority is clear that the deal did not pass. we wanted to make sure a catastrophic deal did not happen so we are forcing the government to solicit us as the opposition and to listen to the country. we need to have a relationship and customs union with the rest of the e.u. francine: do we need a second referendum? anneliese: what would actually be a third referendum may well
be necessary if there is a political impasse that cannot be broken. we have not seen this government listening to other people in parliament or other businesses outside of parliament. francine: what kind of extension -- this seems to be the way we are going -- would labour support? and to what end? anneliese: we really need to know, if there is going to be an extension, that that would have to be tied to concrete action by the government in particular for commitment to listen to the opposition and business and others, and set out a timetable for doing that. optimalon is sub because it elections are coming up. other reasons mean that any extension will cause continued uncertainty for businesses. union,e: in the customs
why go through with brexit at all? anneliese: when i was knocking on doors during the referendum and a lot of people who voted to leave said they would be happy to remain within the customs union. leaving one is you get extra bureaucracy and paperwork. francine: why would someone have voted for brexit if they want to stay in the customs union? anneliese: they were talking about issues of political control around areas that are not related to customs. people i speak to are happy about having facilitated trade with the rest of the e.u.. it happens to be the more political aspects they are not happy with so having a customs union is a sensible way forward. francine: how do you see it running out? if you were to bet on something out?panning
if you were to bet on something? anneliese: it would be foolish for me to make a decision -- prediction. our government is prepared for the eventuality. it is likely we will have an extension for round three months. we need to make sure we have mitigating measures. francine: our business is prepared? they are not. anneliese: many are not. larger ones are, smaller ones are not. haute --need to have a code for trading with the rest of the european union. francine: a lot of small businesses tell us they are not sure what to do if they stockpile and do they lose money? anneliese: all of this is being created, untold costs for
business in terms of stockpiling and drank to create potentially new systems. many have been waiting to see and it has been deeply irresponsible of the government running down the clock for two years, not setting out that meaningful vote until now. you had one that failed and a long time to wait until the second. this should have started out much earlier. francine: the government was hoping it would focus people's minds if it was closer to the deadline. anneliese: it is brinksmanship. francine: coming up a little bit speak tobloomberg, we the chair of the u.k. house of commons treasury committee at 10:00 a.m. in new york, 2:00 p.m. in london. it will be interesting to have her opinion on what happens to the tory party. this is bloomberg. ♪
♪ viviana: this is bloomberg "surveillance." is ramping up for what could be one of the five biggest ppos ever in the u.s. -- ipos ever in the u.s. several banks, a lot -- among them bank of america and morgan stanley could lead the ipo. it could be valued at $120 billion. it is a big break for pg&e. they will not face criminal charges. they burned hundreds of thousands of acres in the wine country. it was determined there it quit and caused -- equipment cause the problems.
21sty's purchase of century fox's entertainment assets is one step closer. the companies must agree to sell the spot -- sell the fox sports programming and rights in the country. it is another blow to the british auto industry. nissan well quit taking their -- weeks ago, nissan abandon a plan to build the suv in sunderland. that is the bloomberg business flash. francine: thank you so much. let's get straight to kevin cirilli, chief washington correspondent, about everything going on in washington. the admissions scandals, i do
not know what the zeitgeist is in washington today. is it all about the admissions scandal and whether that needs that needs toer change the way people communicate? kevin: it has dominated the discussion in washington and outside, as lawmakers grapple with what to do about higher education as a whole. the chief counselor to president to eatingyanne conway criticism of two of the criticism-- tweeting of two of the actresses about their roles in the scandal. there has always been a concern about where is the scrutiny not of big banks or big tech, but big higher ed institutions. that is where this debate could be headed. the schools have said they had
nothing to do with this, but a lot of questions surrounding higher education and the role. just weeks away until ivy league schools release their acceptance letters for the fall. the fallout from boeing reverberating around washington. francine: i want to ask you about going in a second. does -- boeing in the second. scandal education change the outlook for 2020? point,that is a great and on the point of nepotism, that has been one of the issues at the grassroots level on both sides of the political ideological spectrum. i think in terms of higher education reform, we have seen this come into account on the left and right.
from the conservative perspective, they argue higher education has gone too far to the left and is pushing more socialist programs. -- from theht, left, concerns of nepotism. there has been a concerted nonpartisan effort to look into the issue of foreign in higher education institutions, whether it is senator chris coons or congressman jim banks. they are asking higher ed systems to investigate the role of china underwriting some of these educational situations at these universities. francine: it is just amazing. thank you for the briefing. we will get back to kevin and talk about boeing.
we will talk more about brexit. in westminster when we expect a vote on putting off no deal, that is later today. talk about whether the e.u. would agree to an extension if it was not attached to conditions, and what those would be? >> an extension for what? in the house of commons, there is not any majority or any constructive deal. there is a collaboration between the remainders who do not want any deal and the labour party who wants the government to change. in the house of commons, that is not a good situation. there is no need or purpose for an extension. we hope until the upcoming two weeks, this clarification can
come so that we can have a limited extension. you can see, the political situation has been difficult in the u.k.. e.u.ey were to go to the and say, we do not have a plan but we do not want to crash out, would it be difficult for brussels to say, we cannot extend? elmar: britain has asked to go out. they delivered for article 50 in two years time and they should have thought about this before, not afterwards. now they have to come off the plane and we will not have a clarification. and thesition government will have to talk to each other. a clarification for what purpose? and willlarification not allow the house of commons
to continue to behave in the same way they have in the last few years. couldne: a clarification be, we need more time to sort it out on our side. what brussels rather see a no deal brexit? elmar: time to sort it out. do you think if it will last longer the british parties will agree? they had all the time in the world to do that. now they should start to talk to each other. thatine: some are saying if the u.k. were to organize elections, it would almost be a second referendum without being a second referendum. with that be fair? elmar: there was a second referendum in may. -- normally,eve
the prime minister calls for new elections and they do it within four or five weeks. there is no purpose to do so. make a decision. we will extend. francine: thank you so much. they just need to give ar brock.tion, mr. elm we will let you go back to the session in strasburg. plenty more from brexit and westminster, and bloomberg for out -- throughout the day. not miss our interviews with the chief executive of jpmorgan tomorrow. ♪
the faa comes under pressure. theer ted cruz adds to senate chorus calling for the grounding of the aircraft. maynext mode after theresa 's vote after theresa may final brexit plan fails. david: welcome to "bloomberg daybreak." i'm delighted to be bat back with alix steel. well done. we hadwere flying back, this scandal break. like,when i saw it, i was oh, yeah? doesn't phase me.