Britain’s $160 Billion Super-Rich Exodus, Bolsonaro Leads Brazil Vote

>> NEWSMAKERS AND MARKET MOVERS. THIS IS "THE PULSE." WITH FRANCINE LACQUA. FRANCINE: GOOD MORNING AND WELCOME TO "THE PULSE." A PRETTY PACKED AGENDA START THE WEEK AND ELECTION SURPRISE IN BRAZIL IS A LOT OF TALK ABOUT CONFUSION RISKING EUROPE AFTER THE BOND SELLOFF. WE DISCUSS BUT FIRST THE SPANISH PRIME MINISTER HAS CALLED A SNAP ELECTION AFTER PARLIAMENT REJECTED HIS HOUSING PLAN EXPECTED TO QUELL PROTESTS ACROSS THE REGION. >> HAVING INFORMED THE HEAD OF STATE WE DECIDED TO CONVENE AN EXTRAORDINARY MEETING OF THE COUNCIL OF MINISTERS IS VERY MORNING AND CALL A GENERAL ELECTION TO BE HELD ON SUNDAY, NOVEMBER 29 IN ACCORDANCE WITH ESTABLISHED BY LAW. FRANCINE: LET'S BRING IN BLOOMBERG'S SPAIN BUREAU CHIEF. CERTAINLY NOVEMBER 29 IS BASICALLY AROUND THE CORNER. DOES THE GOVERNMENT THINK THEY CAN WIN THIS OR DID THEY HAVE NO OTHER CHOICE? >> I THINK THE GOVERNMENT HAS HOPE THAT THIS IS THE BEST OPPORTUNITY THEY HAVE TWO WIN IT OR AT LEAST PUT UP A FIGHT. THEY HAD VERY LITTLE POLICY TO SHOW FOR THEIR GOVERNMENT BECAUSE THEY WEREN'T ABLE TO PASS LEGISLATION. THE LOSS IN PARLIAMENT ON FRIDAY GAVE THEM SOME HOPE THAT THEY AT LEAST HAD A NARRATIVE TO BUILD TO MOBILIZE VOTERS ON THE LEFT SO THEY THINK THEY HAVE A CHANCE. NOW HOW REALISTIC IS THAT, WAS A SURPRISE OR NOT HE CALLED IT IT WOULD'VE BEEN A SURPRISE ON THURSDAY BUT I THINK AFTER THE DEFEAT ON FRIDAY, THE PRESSURE RUMORS FROM HIS AIDES AND ASSISTANCE TO TAKE THIS OPPORTUNITY SEEMED KIND OF OBVIOUS THAT THIS WAS THE MOMENTUM. FRANCINE: WHO IS LEADING IN THE POLLS? RODERIGO: THE POLLS ARE CLEARLY BEING LED BY THE BP WHICH IS THE CONSERVATIVE PARTY THAT HAS ALTERNATED WITH THE SOCIALISTS. BUT THEY ARE ALSO GOING TO HAVE TO FORM A GOVERNMENT WITH THE FAR RIGHT GROUP. IN SPAIN YOU NEED 170 SIX LAWMAKERS TO GOVERN AND FORM A GOVERNMENT. THESE TWO PARTIES COMBINING FOR ABOUT 200 SO THEY WOULD HAVE A VERY AMPLE MAJORITY AND IF SANCHEZ CANNOT CAPITALIZE ON THIS. CLEARLY IT WOULD BE A GOVERNMENT LED BY THEM WITH VIOXX AS A JUNIOR PARTNER. WE EXPECTED THIS TO HAPPEN FOUR YEARS AGO. WE WILL SEE IF THIS TIME AROUND THEY CAN INDEED FORM A GOVERNMENT. FRANCINE: RODERIGO THANK YOU SO MUCH. JOINING US IS THE RBC BLUEBAY'S HEAD OF MARKETS AND THE FACT, THANK YOU FOR JOINING US. A LOT IN TERMS OF GLOBAL BOND YIELDS AND THIS COULD BE THE FRENCH PRESENCE ELECTION OR WHAT'S HAPPENING IN SPAIN IT JUST SEEMS ALL THESE TROUBLES ARE COMING AT THE FOREFRONT. >> YOU SEE GLOBAL FACTORS AS YOU MENTIONED. I THINK BOND MARKET INVESTORS AND BROADER EQUITY INVESTORS NEED TO BE ABLE TO DISENTANGLE THOSE EFFECTS. I THINK THE GLOBAL STORE WE'VE SEEN IS ABOUT CAPITAL REPRICING HIGHER AND THAT WILL CONTINUE TO BE THE CASE. IF YOU LOOK AT THE U.S. IT'S BEEN A REAL YIELD STORY I THINK NOW ARE GETTING TO THE STAGE WHERE THESE IDIOSYNCRATIC MOVES MATTER MORE. FRANCINE: COULD YOU SEE STRESS OVER FRANCE AFFECTING WESTERN EUROPE. IT WAS THE FIRST WANT TO TOUCH 6% OF THE 30 YEAR. VIVEK: TRUE BUT IF YOU LOOK AT THE U.K. AND THE MOVE RELATIVE TO THE U.S. SINCE I GUESS THE ROUNDABOUT THE START OF THE AROUND CONFLICT OVERALL THE U.K. HAS MOVE -- THAT'S NOT THE CASE WHEN IT COMES TO EUROPE WHERE THEY'VE GENERALLY MOVED A BIT LESS. YOU ARE RIGHT, THERE WAS A GLOBAL PRESSURE BUT I DON'T THINK A 6% YIELD IN AND OF ITSELF MATTERS AS MUCH. ULTIMATELY I THINK IT'S LIKE WHAT IS THE LEVEL OF RAISE AND INFLATION DATA. FOR THE U.K. THERE IS A BIT OF A TERM PREMIUM EXPECTED GIVEN WHAT WAS SEEN OF THE LAST FEW YEARS THAT AS TIME GOES ON MAY BE THE UNWINDING OF THAT MIGHT BE DIFFERENT. FRANCINE: WE HAD SOME DATA OUT OF THE U.S.. THE FED IS LIKELY TO RAISE RATES IN YOUR EYES, WHAT DOES THAT MEAN FOR GLOBAL MARKETS? PAULINA: FIRST IT'S IMPORTANT TO ACKNOWLEDGE HIGH YIELDS GENERALLY TEST A NUMBER OF DIFFERENT COUNTRIES AND WE ARE IN A HIGH-YIELD ENVIRONMENT FOR LONGER BECAUSE THE ONLY COUNTRY THAT ADDRESSED INFLATION WAS CHINA. FOR US WE THINK ULTIMATELY THE TRAJECTORY OF THEIR PERFORMANCE WILL BE DRIVEN BY FISCAL WHICH LIKE IN EUROPE ACTS AS THE MAIN ANCHOR IN THE GOOD NEWS IS A MAJORITY OF EMERGING MARKETS HAVE MOVED INTO POSITIVE FISCAL TREND ALTHOUGH WE DO HAVE A NUMBER OF COUNTRIES IN LATIN AMERICA THAT CONTINUE TO CAUSE -- MAKE INVESTORS QUESTION WHETHER FISCAL TIGHTENING IS POSSIBLE. >> DO YOU WORRY ABOUT ENTRENCHED INFLATION THE U.S. AND THIS IS NOT THE PRICE OF OIL BUT IT IS SOMETHING THAT'S MORE DEEPLY ROOTED BECAUSE OF THE AI GOING FORWARD? POLINA: SHORT ANSWER IS NO. IF YOU THINK ABOUT THE COMPARISON WITH COUNTRIES THAT HAVE INDUSTRIALIZED AI LIKE CHINA WE HAVEN'T SEEN THAT TRANSLATED INTO SUSTAINED INFLATION. ULTIMATELY THE BIGGEST CHALLENGE IN THIS PART OF THE CYCLE IN OUR VIEW IS LESS INFLATION FOR GLOBAL EMERGING MARKETS BUT ABILITY TO TIGHTEN FISCAL. FRANCINE: WHERE DO YOU SEE THE STICKING POINT? VIVEK: INFLATION IN AND OF ITSELF I THINK IS PRICED TO THE UPSIDE FOR THE MARKET BUT I WOULD ARGUE COMING INTO THIS YEAR THE AMOUNT OF CUTS PRICED INTO GLOBAL BOND YIELDS WAS TOO MUCH AND IF ANYTHING THE AMOUNT OF HEIGHT MIGHT ALSO BE A LITTLE BIT TOO MUCH AND THAT MORE BROADLY IS AN ENVIRONMENT OF EFFECTIVELY MARKETS OVERREACTING TO INCOMING MARKET DATA BECAUSE OF ALL THE GEOPOLITICAL WERE TALKING ABOUT OUR LITTLE MORE PREVALENT. FOR ME WHERE WE SEE IT YIELDS COULD INDEED GO A LITTLE BIT FURTHER STILL BUT THE NATURE OF THE YIELD RISE MATTERS. I THINK IF THIS IS YIELDS BEING DRIVEN BY EFFECTIVELY CREATED PROSPECTS BY THE AI WAVE BUT DOESN'T NEED. >> WE SAW THIS RISE QUITE QUICKLY. IF WE SEE SIX AND A HALF OR 7% ON YIELDS WHAT BREAKS? VIVEK: YOU WILL BE LOOKING AT COMPANIES THAT ARE BETTER ABLE TO SUSTAIN THAT PRICE. THAT COMPETITION FOR CAPITAL STORY BOOKS OF THE HIGHER RETURN ON INVESTMENT CAPITAL TO ISSUE MORE DEBT AS PART OF THE AI BUILD OUT THAT ENVIRONMENT IS ONE WERE PERHAPS WE SEE GREATER DIFFERENTIATION WHERE THERE IS THE HAVE-NOTS. I THINK IT IS TRUE TO SAY THAT NOT EVERYBODY GLOBALLY WOULD BE ABLE TO COPE WITH HIGH-YIELD ENVIRONMENT. FRANCINE: STILL DEBATING THE 10 REASONS HOW MUCH IS THAT HAVE TO DO WITH CORPORATE DEBT AND WHAT DOES THAT MEAN FOR EMERGING MARKETS? >> ULTIMATELY IN THE SHORT TERM IT IS INFLATION IN PARTICULAR IN THE U.S. AND EUROPE TO A LARGE EXTENT WHICH COMES FROM THE ENERGY PROBLEM THAT HAS NOT BEEN ADDRESSED. WE KNOW IT TAKES TIME TO ADDRESS THE ENERGY PROBLEM. ALTHOUGH GIVEN THIS SITUATION AND THE STRAIT OF HORMUZ WITH A NUMBER OF COUNTRIES THAT PREPARE TO ADDRESS THAT CHALLENGE AND I THINK IN TWO YEARS TIME WE WILL BE TALKING TO DIFFERENT OIL PRICE ENVIRONMENT. THE OTHER CHALLENGE IS REALLY THE ABILITY TO FUND YOURSELF OF THE ENVIRONMENT OF HIGH RATES. WE WOULD REALLY HAVE TO DIFFERENTIATE BETWEEN ASIA WERE POOR RATES ARE THE LOWEST LEVEL THEREFORE FINDING VERY COMFORTABLE FUNDING ENVIRONMENT. AND THE REST OF THE WORLD WERE REAL RATES ARE ELEVATED. ULTIMATELY FOR US IF COUNTRIES ARE ABLE TO IMPROVE THEIR FISCAL THE REAL RATE IN MOST EMERGING MARKETS ARE LIKELY TO COME DOWN GIVEN THE HIGH ON THE REAL RATES. THE SAME IS TRUE FOR THE U.S. AS WELL AS EUROPE. FRANCINE: IF YOU LOOK AT SOME OF THE STRESS POINTS IT'S KIND OF DISTILLED THE U.K. WITH THIS UNKNOWN OF WHAT HAPPENS IN THE BUDGET. VIVEK: THE U.K.'S BEEN A MICROCOSM OF WHAT'S BEEN GOING ON GLOBALLY. THE IDEA OF THE SENSITIVITY TO THE INFLATION SHOCKS WE ALSO HAVE THE SORT OF LEGACY TO SOME DEGREE OF THE MARKET AND A GREATER ROLE FOCUSING ON THE U.K. FROM A TERM PREMIUM PERSPECTIVE. A LOT OF EYES ARE GOING TO BE ON THE BUDGET AND I THINK YOU'VE SEEN WHAT'S BEEN GOING ON THUS FAR TALKING ABOUT WHAT HAPPENS IN THE FUTURE FOR THE NEXT ELECTION VERSUS THE REALITY OF THE VERY NEAR TERM. I THINK THAT'S A MARKET BE WATCHING FOR. FOR US THE U.K. STORY IS ONE MORE ON THE RIGHT SIDE PERHAPS A BIT OF CAUTION IN THE NEAR TERM AS A RESULT OF THAT UNCERTAINTY. IN THE LONGER TERM THERE'S A BUNCH OF TERM PREMIUM PRICED IN THAT MAY BE MORE SETTLED IN OTHER REGIONS AND IF THAT WERE TO STABILIZE AN OPPORTUNITY TO CARRY BASIS. FRANCINE: THANK YOU TO YOU BOTH. STAY WITH US BECAUSE FORMER BRAZIL PRESIDENT YEAH YOUR BOLSONARO WAS SENTENCED TO 20 YEARS FOR A COUP NOW HIS SON IS ON TRACK TO POTENTIALLY WIN THE PRESIDENTIAL ELECTION. THAT'S COMING UP NEXT, THIS IS BLOOMBERG. FRANCINE: WELCOME BACK LET'S TURN TO THE BIG STORY IN EMERGING MARKETS. IN A SURPRISE RESULT FROM BRAZIL'S ELECTION. FLAVIO BOLSONARO SURGED AHEAD OF PRESIDENT LULA DA SILVA IN THE FIRST ROUND OF VOTING. LET'S BRING IN OUR EXECUTIVE. FOLLOWING THIS VERY CLOSELY. GOOD MORNING HOW UNEXPECTED WAS THE RESULT AND DOES HISTORY TELL US HE'S LIKELY TO WIN? I THINK WE MAY HAVE JUST LOST HER. WE WILL GET BACK IN JUST THE NEXT COUPLE OF MINUTES THIS IS WHAT HAPPENS, BOLSONARO, FLAVIO TAKING A SURPRISE LEAD OVER LULA DA SILVA MAKING HIM THE FAVORITE TO WIN THE RUNOFF. LET'S GET STRAIGHT TO VIVEK AND POLINA. IT'S REALLY A FIGHT BETWEEN TWO UP DIAMETRICALLY OPPOSED VISIONS OF THE WORLD AND THEIR CLOSENESS TO PRESIDENT TRUMP. POLINA: IT IS VERY EXCITING TO SEE WHAT'S HAPPENING IN BRAZIL. PERHAPS IT'S THE LAST POSITIVE PIECE OF NEWS ON THE LATIN AMERICAN CONTINENT WE'VE BEEN OBSERVING FOR A OF YEARS NOW WHERE LATIN AMERICA FIRSTLY SINCE 2016 WITH THE BACK YARD POLICY OF DONALD TRUMP AND BOLSONARO IS LEADING THE WAY JUST COMPLETE THAT CIRCLE IF YOU WILL HAVE TURNED AROUND WE'VE SEEN FOR TWO DECADES IN THE LATIN AMERICA REGION. FRANCINE: BECAUSE OF STRONGER TIES WITH THE UNITED STATES AND STRONGER GROWTH BECAUSE IT ALSO LEANS COMPLETELY TO ONE SIDE. POLINA: -- I FEEL IT'S IMPORTANT TO CONSIDER THE U.S. IS A KEY COUNTERPOINT IN THIS BUT ULTIMATELY A LOT OF THE CHALLENGES THAT COUNTRIES HAVE A DOMESTIC BASED AND FLAVIO HAS A BIG TASK TO ADDRESS THE FISCAL DEFICIT IN THE COUNTRY WHICH IS THE ELEPHANT IN THE ROOM. -- NOW IN OUR VIEW WE HAVE A GOOD TAILWIND AND SUPPORT FOR THE PRESIDENT TO DO SO BUT ULTIMATELY THE KEY QUESTION WILL BE WHETHER THE CONGRESS CAN BE FISCALLY TIGHT AND IN THAT CONTEXT WE THINK BRAZIL CAN HAVE THE BEST TOTAL RETURN PROJECTION FOR THE NEXT 12 MONTHS ACROSS GLOBAL MARKETS AS WELL AS PERHAPS EQUITIES BUT IT REMAINS TO BE SEEN WHETHER FLYWHEEL CAN DELIVER. FRANCINE: WHAT YOU THINK HE CAN DELIVER? HAVING A COMPLETE SHIFT, WHAT CAN YOU ACHIEVE? POLINA: WE THINK HE CAN IMPROVE RELATIONSHIPS WITH THE U.S.. WE THINK THAT HE CAN BE PRAGMATIC IN THAT CONTEXT. WE SEEN COUNTRIES LIKE COLUMBIA OR ARGENTINA WHICH HAVE TURNED TO THE RIGHT AND SEEN A POSITIVE TAILWIND WITH THE TRADE DEALS THEY'VE SIGNED OR IMPROVEMENT IN THE FUNDING SITUATION IN THAT THEY HAVE ARRANGED WITH THE U.S. BUT AGAIN DOMESTICALLY I THINK THAT'S WHERE ULTIMATELY IT'S TOO EARLY TO JUDGE HOW MUCH FISCAL TIGHTENING HE CAN DELIVER. WE HAVE DOUBTS THE CONGRESS CAN BE FISCALLY CONSERVATIVE. FRANCINE: LET'S TRY AGAIN WITH THEIR EXECUTIVE EDITOR ON THE LATEST NEWS WITH BRAZIL. IF YOU CAN HEAR ME HOW UNEXPECTED IS THE RESULT AND HIS HISTORY TELL US FLAVIO BOLSONARO IS LIKELY TO WIN? >> THE SHORT ANSWER IS YES. GOING AND IT WAS AN EXTREMELY TIGHT RACE AND RIGHT NOW THE ODDS WERE ON BOLSONARO SNATCHING IT AND WIDENED THAT LEAD CONSIDERABLY. THE PERSON WHO SORT OF ONE OF THE FIRST ROUND WOULD GO ON TO WIN IN THE SECOND ROUND AND GIVEN THE OTHERS IN THE ELECTION, OF THOSE VOTES WILL NOW GO TO BOLSONARO. WHAT WE ARE SEEING HERE IS THE END OF LULA DA SILVA FOR LACK OF A BETTER WORD. A REMARKABLE POLITICIAN WHO IS NO STRANGER TO COME BACKS, HE'S DONE IT BEFORE, HE SQUEAKED BY THE PREVIOUS ELECTION AND SOMEONE WHO DEFIED POLITICAL ODDS. A TIRED LULA PROMISING MORE OF THE SAME TO THE BRAZILIAN VOTER HAS MOVED ON FROM THOSE POLICIES AND I THINK NOW WOULD WE ARE SEEING IS A TALE OF SUCCESSION. IT'S THE BOLSONAROS AND THIS WILL OBVIOUSLY BE VERY WELCOME NEWS TO DONALD TRUMP HIS DONROE DOCTRINE AND THE INFLUENCE HE WANTS TO EXERT IN THE REGION. FRANCINE: WHAT WOULD A BOLSONARO VICTORY MEAN FOR BRAZIL ON THE WORLD STAGE? WE'RE CHECKING THEM TO BE CLOSE TO DONALD TRUMP WHAT ABOUT CHINA? >> WELL OBVIOUSLY LULA WAS CLOSE TO CHINA AND WITH BOLSONARO WILL SEE A SIMILAR ALLIANCE TO JAVIER MILLET. I THINK BRAZIL CAN EXPECT SOME WELCOME RELIEF ON TARIFFS, THAT WAS A HUGE SOURCE OF TENSION ON THE ECONOMIC PERSPECTIVE, TRUMP WILL TRY TO EASE TARIFFS ON BRAZIL AND THERE WILL BE AN EXTREMELY INTERESTING G20 THE TRUMP WILL BE HOSTING IN MIAMI LATER THIS YEAR THAT WE SEE SORT OF A CONSOLIDATION OF THE KIND OF SUPPORT THAT HE SEES AND I THINK ANOTHER THING TO LOOK OUT FOR GEOPOLITICALLY IS WHAT THIS WILL MEAN FOR BRICKS. THEY'VE TRIED TO POSITION THEMSELVES AS A COUNTERPOINT TO THE G7 BUT THE PRESENCE OF BOLSONARO IS GOING TO CONFUSE THAT. FRANCINE: THE VERY LATEST ON BRAZIL. WE LOOK AT BRAZIL IN GENERAL WERE CHECKING SOME MARKET SWINGS SO CLOSE WE THOUGHT. ARE WE STILL GOING TO SEE MARKET SWINGS AND IF FLAVIO BOLSONARO GETS IN PLACE HOW QUICKLY DO IS HE A BIG DIFFERENCE? POLINA: WE EXPECT MARKETS TO MOVE QUITE STRONGLY GIVEN THE BIGGEST DISLOCATION HAS BEEN IN THE LOCAL RACES. THAT'S WHAT WE EXPECT TO SEE THE BIGGEST OUTPERFORMANCE PERHAPS SIMILAR TO WHAT WE'VE SEEN EARLY IN THE YEAR. AS WE'VE SEEN THE BIG RALLY IN THE RISK ASSETS IN THE PULLBACK. WHAT CAN ACTUALLY BE ACHIEVED AND AGAIN TO ME THIS IS A GOOD PLAYBOOK FOR BRAZIL AS WELL MONITORING WHAT HAD BEEN ACHIEVED IN THE LAST 12 MONTHS BOTH IN THE FISCAL SIDE AND ON GROWTH. BRAZIL HAS GROWN IN CONSUMPTION BUT REMAINS TO BE SEEN IF COMPANIES DELIVER SUSTAINED DOUBLE-DIGIT GROWTH GOING FORWARD. FRANCINE: BROADLY THIS MAY HAVE AN IMPACT ON EMERGING MARKETS? VIVEK: WE'VE BEEN OVERWEIGHT EMERGING MARKETS MORE BROADLY THE PAST COUPLE OF MONTHS. IT'S NOT BECAUSE WE WERE ANTICIPATING THIS RESULT BUT THERE IS A BROADER STORY HERE SOME STRUCTURAL FORCES AI STORY AND THAT IN EMERGING PERSPECTIVE I THINK SOMETIMES IS UNDERAPPRECIATED. THAT MEANS ASIA, SOME OF THE CHINA NAMES HAVE AN OPPORTUNITY HERE. THERE'S ALSO A PHYSICAL STRUCTURE ELEMENT IN SUPPORT OF THE BROADER AI STORY. FRANCINE: WE'VE COVERED A LOT OF GROUND FROM BONDS TO BRAZIL. NOW, YEMEN'S LAUNCHED A FULL-SCALE EFFORT FROM HOUTHI FORCES. IT ALSO FALLS ESCALATION IN FIGHTING SINCE EARLY SEPTEMBER WHEN THE HOUTHIS CAPTURED STRATEGIC AREAS. LET'S BRING IN ABEER ABU OMAR. WHY HAS THIS STEP IN TAKEN NOW? ABEER: YOU ALLUDED TO IT, THE HOUTHIS HAVE BEEN SEIZING ASSETS IN THE CRUCIAL WATERWAY KNEW THE. EXPORTING THE ORAL BARREL SINCE THE START OF THIS WAR. THE SAUDI'S HAVE SET OUT ON A BOLD INTENTION HERE NOT ONLY DO THEY WANT TO REGAIN THE ASSETS THAT HAVE BEEN TAKEN HOLD OF THEY LAY OUT A POTENTIAL TO WIPE OUT THE HOUTHIS. THIS IS A PARALLEL WAR THAT'S BEEN GOING ON BETWEEN THE SAUDI LED COALITION AND HOUTHIS FOR OVER A DECADE AT THIS POINT SO IT WILL BE QUITE A TASK FOR THEM TO GO THROUGH THAT AND I GUESS IT REMAINS TO BE SEEN WHETHER IT WILL BE A SUCCESSFUL FEAT BUT FOR THE TIME BEING THE GOAL HERE IS FOR THE SAUDI LED COALITION TO REGAIN THE ASSETS THAT THE HOUTHIS HAVE BEEN SEIZING IN THE RED SEA OVER THE PAST MONTH OR SO AS YOU POINTED OUT SINCE THE BEGINNING OF SEPTEMBER. FRANCINE: WHAT IS HAPPENING WITH OIL? WHY AREN'T PRICES FALLING FASTER DESPITE FLOWS ALMOST RETURNING TO NORMAL? ABEER: OIL PRICES ARE MODERATING TODAY, WE SEE A SLIGHT DROP BUT STILL AROUND $100 A BARREL AND WITH EVERYTHING THAT'S BEEN HAPPENING TO BRING DOWN OIL PRICES AND THE REPORTS WE'VE SEEN GOLDMAN AND JP MORGAN SAYING THE CRUDE EXPORTS THROUGH THE STRAIT OF HORMUZ ARE AT 98 PERCENT YOU'D EXPECT OIL TO DROP MUCH FURTHER THAN WHAT IS NOW BUT OUR BLOOMBERG NEWS COLLEAGUES HAVE LAID OUT A FEW REASONS WHY THAT IS NOT HAPPENING. THE FIRST AND MOST IMPORTANT IS FEAR. THERE IS STILL A LOT OF JITTERS AROUND THE SITUATION IS NOT RESOLVED IN THE STRAIT OF HORMUZ. TRADERS ARE SO VERY CAUTIOUS AROUND THE FACT WE MIGHT SEE RESUME HOSTILITIES ESPECIALLY WITH PRESIDENT TRUMP KIND OF LAYING OUT AN INTENTION THAT WE COULD SEE A RETURN TO A FULL-FLEDGED WAR AFTER THE MIDTERM ELECTIONS. SOME COME FROM INFLATION PRODUCING TRANSIT COSTS THAT HAVE ACCELERATED MUCH HIGHER SINCE THE START OF THIS WAR SO THOSE ARE SOME OF THE REASONS WE ARE SEEING OIL STILL ROAMING AROUND $100 A BARREL FOR BRENT AT LEAST. FRANCINE: THANK YOU SO MUCH. NOW TO SOME OTHER TOP STORIES RUSSIA SAYS IT WILL STEP UP ATTACKS ON UKRAINIAN INFRASTRUCTURE. THE WARNING CAME THE SAME DAY RUSSIAN FORCES STRUCK ACROSS THE RIVER IN KIEV FOR A SECOND TIME AS WELL AS OTHER INFRASTRUCTURE. IT FALLS FOR ZALESKI TO INCREASE STRIKES AGAINST RUSSIAN OIL REFINERIES. THE COPILOT ACCUSED OF TRYING TO SEIZE CONTROL OF A FLY DUBAI FLIGHT PREVIOUSLY FLEW FOR OMAN AIR AND WAS DISMISSED FOR ENGAGING IN WHAT WERE CONSIDERED RADICAL VIEWS. INVESTIGATORS SAY HE ATTACKED THE CAPTAIN OF THE FLIGHT TO TEL AVIV WITH TOOL STORED IN THE COCKPIT. COMING UP FROM A SNAP ELECTION IN SPAIN TO POTENTIAL SHIFT IN BRAZIL. LOTS TO DISCUSS, THAT'S NEXT AND THIS IS BLOOMBERG. FRANCINE: GOOD MORNING AND WELCOME TO "THE PULSE." THE SPANISH -- THE SPANISH PRIME MINISTER CALLING A SNAP ELECTION OF THE PARLIAMENT REJECTED A HOUSING PLAN THAT HIS GOVERNMENT WOULD HOPE QUELL PROTESTS. IT FALLS TO A 17 MONTH LOW AS INVESTORS CONCERN OVER POLITICAL RISKS IN THE REGION INTENSIFIES. PLUS BOLSONARO SURGES WITH A SURPRISE LEAD IN BRAZILS ELECTION MAKING AND THE FAVORITE TO BE PRESIDENT LULA IN THE FINAL ROUND OF THE ELECTION. POLITICS DOMINATED THE AGENDA WITH BOTH SIDES OF THE ATLANTIC THE SPANISH PRIME MINISTER CALLING IN EARLY ELECTION AND BRAZILS PRESIDENTIAL ELECTION THERE'S BEEN SURPRISINGLY STRONG SHOWING FOR FLAVIO BOLSONARO. TINA FORDHAM OFFER OF A NEW BOOK IT IS SHORT, IT'S FUNNY IT'S CALLED MAD WORLD A GEOSTRATEGIC -- GEO STRATEGY SURVIVAL GUIDE. TINA THANK YOU SO MUCH, CONGRATULATIONS ON THE BOOK. AS A ONE TOPICS TO ASK YOU ABOUT. WE SURPRISED WHAT WAS HAPPENING IN BRAZIL? IF YOU LOOK AT HISTORY IF YOU BELIEVE IN THE FIRST ROUND IT'S FAIRLY LIKELY BECOME PRESIDENT. TINA: I'VE BEEN FOLLOWING BRAZILIAN ELECTION FOR 25 YEARS AND LULA HAS BEEN A CONSTANT THROUGHOUT THAT MORE OR LESS. THE TWO POINT LEAD IN THE FIRST ROUND LEADING TO A RUNOFF TELLS US A COUPLE OF THINGS. MAYBE THIS NARRATIVE ABOUT LATIN AMERICA MOVING TO THE RIGHT AND THAT ZEITGEIST HAS SOMETHING TO IT. BUT A TWO POINT LEAD ISN'T YOU KNOW QUITE LANDSLIDE TERRITORY. IT ALSO TELLS US ABOUT THE PREDICTION MARKETS AND HOW DIFFICULT WHETHER ITS PRODUCTION MARKETS OR POLLSTERS WE REALLY HAVE TO REMEMBER THAT YOU HAVE A THREE POINT MARGIN OF ERROR IN THE BEST OF TIMES. FRANCINE: THIS LEANING TO THE RIGHT I DON'T KNOW IF IT'S SOMETHING WE ARE SEEING ACROSS A LOT OF PARTS OF THE WORLD AND IS IT THE TRUMP EFFECT? IS IT TIES WITH THE U.S. IN DONALD TRUMP OR IS IT JUST BECAUSE OF ECONOMIC CONCERNS? >> I TEND TO THINK IT'S CYCLICAL. LET AMERICA HAS DISTINCT CONCERNS FROM WHAT'S HAPPENING IN EUROPE BUT IT'S BEEN MY VIEW FOR A LONG TIME TRADITIONAL CENTERLEFT PARTIES AND ESPECIALLY MORE SOCIALIST PARTIES ARE GOING TO REALLY STRUGGLE IN THE CURRENT GEOPOLITICAL ENVIRONMENT JUST BECAUSE THERE IS LESS TO GIVE AWAY AND MORE CONSTRAINTS. WE SEE BOND MARKETS ARE BEING TOUGH ON COUNTRIES AT THE MOMENT. BUT I'M VERY CAUTIOUS ABOUT GROWING PATTERNS THAT ARE GLOBAL BECAUSE IT ALWAYS COMES DOWN TO DOMESTICATE CONCERNS LIKE WE SAW IN SPAIN. FRANCINE: IF YOU LOOK AT BRAZIL THIS BASICALLY GIVES THE U.S. AND OTHER ACCESS FOR DONALD TRUMP. HOW PROBLEMATIC IS IT FOR EUROPE? TINA: EUROPE DOES NOT PAY A LOT OF ATTENTION TO LATIN AMERICA SO I'M NOT SURE IT POSES ANY MORE CHALLENGES ON TOP OF WHAT EUROPE IS CONTENDING WITH. I THINK THE IDEA THAT THERE ARE BENEFITS IF YOU ARE IN LATIN AMERICA HEMISPHERE TO STRONGER TIES WITH TRUMP, THE G20 WAS MENTIONED, THAT THAT COULD BE POSITIVE BUT REMEMBER U.S. HEADING INTO THE MIDTERMS HOW LONG MIGHT A TRUMP EFFECT BENEFIT NORTH AMERICA IF THE TIDE IS GOING A DIFFERENT WAY IN THE UNITED STATES? >> WE'VE SEEN PRESIDENT TRUMP CAMPAIGNING ON FRIDAY, A LOT OF BIG CITIES AND WERE EXPECTING RALLIES BUT WHAT IS HIS NARRATIVE? TINA: HE'S IS THE COUNTRY'S HOT AND THE BEST POSITION IT'S EVER BEEN IN THE POLLS ARE TELLING A VERY DIFFERENT STORY. I'VE NOTICED HOW CAUTIOUS YOU IS POLLSTERS ARE RIGHT NOW ABOUT MAKING BIG CALLS AND THAT RELATES TO MY PREVIOUS COMMENTS ABOUT THAT MARGIN OF ERROR. REMEMBER IT'S ONE THING TO LOOK AT THE GENERIC BALLOT AND SEE THAT PRESIDENT TRUMP IS UNPOPULAR AND HIS POLICIES ARE BLAMED DIRECTLY FOR INFLATION AND THE AFFORDABILITY CRISIS, OF THE IRAN WAR IS INCREDIBLY UNPOPULAR. 80% OF AMERICANS ARE AGAINST IT. DOES THAT TRANSLATE INTO THE MATH TO FLIP THOSE SIX SENATE SEATS THAT WILL TRANSLATE INTO THIS BLUE WAVE OR BLUE TSUNAMI. NOBODY IS REALLY CALLING IT. AS WE GET CLOSER I THINK THAT NARRATIVE WILL GAIN MOMENTUM. FRANCINE: WILL PRESIDENT TRUMP RESPECT THE RESULT OF THEY GO AGAINST HIM? TINA: THAT IS THE BIG QUESTION. FEWER PEOPLE ARE ASKING ME THAT. A YEAR AGO IT EVERY INVESTOR EVENT OR BOARD MEETING I WAS ASKED IF THE U.S. WILL RESPECT THE RESULTS AND I THINK WE WILL NOT SEE INTERVENTION TO BLOCK BUT LET'S REMEMBER THERE'S THE KIND OF BIG YOU KNOW BLACK SWAN EVENT SOMETHING LIKE MARTIAL LAW BEING DECLARED IT'S MORE LIKELY THAT A SINGLE STATE OR A COUPLE OF STATES MIGHT HAVE SOME COMPLAINTS ABOUT IRREGULARITY BUT IT ALWAYS DEPENDS ON THE MARGIN AND THAT'S WHERE FOR EXAMPLE THE HUNGARIAN EXAMPLE WAS IMPORTANT BECAUSE IT CHANGED A LOT OF THE MACHINERY AND THE MECHANICS AROUND ELECTIONS. HE WAS STILL FORCED TO LEAVE BECAUSE THE MARGIN WAS BIG ENOUGH. THAT'S WHAT DEMOCRATS WILL BE HOPING FOR A KIND OF UNSALABLE LEAD. FRANCINE: OVER THE WEEKEND WE HAD NEWS THE U.S. WAS PULLING BOMBERS FROM RAF FORCES AND BASES IN THE U.K.? WHAT'S THAT ABOUT? TINA: THERE WERE INITIAL REPORTS THAT WAS MAYBE BE SOMETHING AS PETROL FUMES BUT A COUPLE OF IRANIAN NATIONALS WHO HAD GAINED A SILENT HERE IN THE U.K. THE OF A SMALL BOAT VERY CONTENTIOUS ISSUE HERE AND THEN VERY QUICKLY WE SAW OVER THE WEEKEND THOSE BE 10 BOMBERS WERE MOVED SWIFTLY OFF THE U.K. AIRBASE. ONE VARIABLE I AM LOOKING FOR IS WHETHER THE GOVERNMENT, THE BRITISH GOVERNMENT MIGHT ADJUST ITS VIEWS AND ALLOW THEM TO BE BASED IN GARCIA WHICH HAS BEEN ANOTHER POINT OF CONTENTION. BUT IT POINTS TO SOMETHING I'VE BEEN WARNING ABOUT WHICH IS IRAN'S CAPACITY TO INFLICT PAIN AND RETALIATE THE MARKETS HAVE BEEN VERY FOCUSED ON THE U.S. OBVIOUSLY BEING THE MUCH MORE POWERFUL MILITARY POWER IN THIS DYNAMIC, BUT IRAN CAN STILL CAUSE A LOT OF PROBLEMS. FRANCINE: SPAIN'S PREMISE OR CALLING ELECTIONS. THIS IS THE LAST SOCIALIST GOVERNMENT STANDING IN EUROPE. TINA: NOT ONLY THAT, PETER SANCHEZ HAD TAKEN A STAND AGAINST PRESIDENT TRUMP WHICH WAS QUITE BRAVE. MOST OF THE EU MEMBER STATE AND NATIONAL GOVERNMENTS WERE ATTEMPTING TO TRY AND PLACATE TRUMP FOR A LONG TIME, NOT PEDRO SANCHEZ. HE ALSO TOOK A TOUGH STAND AGAINST ISRAEL. BUT THAT'S NOT WHAT ULTIMATELY LED HIM TO CALL FOR EARLY ELECTIONS. THE HOUSING AND AFFORDABILITY CRISIS THE SPANISH VERSION IS WHAT ULTIMATELY PROMPTED THEM. YOU DON'T CALL EARLY ELECTIONS UNLESS YOU THINK YOU CAN WIN SO IT IS A BIG GAMBLE BUT MORE BROADLY IT KICKS OFF THIS EU ELECTION SEASON COMING UP, SPAIN WILL GO FIRST IT LOOKS LIKE NOVEMBER 29 AND THEN FRANCE, ITALY, POLAND, GERMAN PRESIDENTIAL ELECTIONS. WHO KNOWS WHAT ELSE WILL FOLLOW AND THEN WE ARE GOING TO SEE WHETHER EUROPEAN POPULIST PARTIES END UP CONSOLIDATING THEIR LEAD AND BOTHERING FINANCIAL MARKETS. FRANCINE: BOND MARKETS HAVE TAKEN NOTICE. IS THERE CONCERNS OR MARKETS ARE WORRIED ABOUT THE PRESIDENTIAL ELECTION BUT THEY ARE ALSO WORRIED ABOUT THE LEGISLATION THAT COMES AFTER. TINA: FRENCH ELECTIONS ARE A WHOLE SEASON AREN'T THEY BECAUSE ARE A COUPLE OF ROUNDS AND NAILBITING MOMENTS AND I'VE BEEN FOLLOWING THESE ELECTIONS WERE 25 YEARS, CAN MAINSTREAM PARTIES HOLD THE LINE OR IS 2027 THE YEAR THAT POPULIST PARTY ENDS UP IN A MAJORITY POSITION. NO POLLSTERS ARE TAKING A VIEW ON THIS. MARKETS HAVE TO WORK WITH LIMITED INFORMATION AND TRY TO PRICE IT. ONE OF MY CEO CLIENTS SAID TO ME LAST WEEK AMERICAN CEO SAID OF COURSE EUROPE WILL CRATER. I THINK THAT IS THE KIND OF VIEW THAT IS PROBABLY PREDOMINANT AMONGST BUSINESS LEADERS. I THINK THAT THAT IS MISPLACED THOUGH BECAUSE YOU HAVE A DIFFERENT SYSTEM IN EUROPE WITH PARLIAMENTARY ELECTIONS, MULTIPARTY GOVERNMENTS, POSSIBLY BECOMING MORE MAINSTREAM BUT BOND MARKETS WILL CERTAINLY WORRY ABOUT IT. THIS FISCAL ARE HIGH AND THEY DON'T LIKE THE SOUND OF POLICIES. FRANCINE: TERRIFIC BRIEFING FROM ALL THE POLITICS AROUND THE WORLD. TINA FORDHAM. ALSO A NEW BOOK. THE TIMES NEWSPAPER'S REPORTING THE U.K. IS SET TO IMPOSE TARIFFS ON CHINESE ELECTRIC VEHICLES. THE MOVE WOULD MEET A KEY DEMAND SO LET'S GET MORE WITH OUR AUTOS COVERAGE ACROSS EUROPE AND THE MIDDLE EAST BUT THANK YOU FOR JOINING US. IF THIS PROVES TO BE THE CASE HOW BIG OF A BLOW WOULD BE FOR CHINESE EV MAKERS? >> IT WOULD BE A PRETTY BIG BLOW IF YOU LOOK AT THE NUMBERS. LAST MONTH IN SEPTEMBER CHINESE CARS MADE UP 23% OF TOTAL SALES IN THE U.K. ALONE AND THEY ALSO HAD THE BEST-SELLING MODEL THE INFAMOUS TEEMU RANGE ROVER WAS THE MOST POPULAR CAR IN THE U.K.. WHAT THAT ALSO TELLS US IS THE ONGOING SIGNIFICANT PRESSURE WITHIN CHINA THE MARKET THERE IS SLUMPING, THERE IS A GLUT OF CARS, A GLUT OF CARMAKERS LOOKING FOR AREAS WHERE THEY CAN EXPORT. IN THE MOST LUCRATIVE ONE OF THEM HAS BEEN EUROPE WITH OUR PARTIAL TARIFFS AND NO TARIFFS ON THE U.K. WHICH IS WHY THE U.K.'S THE BIGGEST EUROPEAN MAJOR MARKET FOR CHINESE CARMAKERS RIGHT NOW. >> IS IT BECAUSE THEY'RE CONCERNED ABOUT CHINESE EV MAKERS ARE TOO THEY WANT TO GET CLOSER TO THE EU AND WERE THE RISKS ARE THE U.K. IF IT FOLLOWS THIS? >> THE U.K. IS RESPONDING HERE ON BEHALF OF ITS HOME CAR MAKING INDUSTRY IN THE U.K.. IT DOES NOT HAVE A NATIONAL CHAMPION CARMAKER ANYMORE BUT THERE'S STILL PLENTY OF CARMAKERS IN THE U.K. AND ABOUT HALF OF THOSE BEING PULLED TO THE EU. AND THOSE FACED SIGNIFICANT ADVANTAGES COVERING THE MADE IN EUROPE TO HAVE BOOKS SO TO SPEAK. THE MOST SIGNIFICANT OF THEM IS A LOSING OUT ON BEING ABLE TO TAP TAX INCENTIVES AND OTHER INCENTIVES AS PART OF ACCESSING CORPORATE PATH AND CORPORATE CALF LEADS MAKE UP THE BULK OF SALES IN GERMANY AND THE NETHERLANDS, IN FRANCE. THE KEY MARKETS IN EUROPE. FRANCINE: THE VERY LATEST ON SOME OF THESE CARS AND POTENTIAL SETBACK AMONGST -- AGAINST CHINESE EV MAKERS. WHETHER U.K.'S'S UBER RICH ARE HEADING FOR THE EXIT. ARE THEY REALLY? WE DISCUSS THAT NEXT, THIS IS BLOOMBERG. ♪ >> I THINK WE DON'T HAVE ANY MORE LUXURY OF HAVING HUMAN FIGHT AGAINST HUMAN. THERE WILL BE A BIGGER ISSUE OF HUMAN AGAINST SUPER INTELLIGENCE THAT IF THE SUPER INTELLIGENCE BECOMES SO SMART AND IF THE USAGE BUT BAD HUMAN USE THE WRONG USAGE, THIS CAN BECOME SUPER DANGEROUS. FRANCINE: THAT WAS THE FOUNDER AND CHIEF EXECUTIVE OF SOFTBANK ONE OF THE BIGGEST INVESTORS IN AI SPEAKING ABOUT SAFETY RISKS AS MACHINES QUICKLY GAIN MORE. JOINING US IS BLOOMBERG SENIOR TECH REPORTER. ANOTHER DAY ANOTHER PROFILE WARNING ON AI. WHAT YOU MAKE OF WHAT SOFTBANK IS SAYING? >> I THINK HIS COMMENTS WERE FAIRLY CONSISTENT WITH WHAT WE'VE HEARD FROM THE LEADERSHIP OF ANTHROPIC AND SAM ALTMAN AND OPENAI IT TALKING ABOUT THE DANGERS TALKING ABOUT THE PUSH FOR INTERNATIONAL COOPERATION THAT WAS SORT OF HOW I INTERPRETED THE COMMENTS. LESS OF A THE SORT OF WHAT WE TALKED ABOUT THIS BROADER EXISTENTIAL RISK. CLEARLY SEEMED PARTICULARLY AS A JAPANESE INVESTORS HAD A LOT OF INTEREST IN COUNTRIES LIKE JAPAN HAVING MORE SAY IN THE AI CONVERSATION. I DO THINK THIS IS SOMETHING THAT IS OBVIOUSLY SPREADING ACROSS REGULATORS AND POLICYMAKERS AND POLITICIANS GETTING MORE CONCERNED HEARING A SLIGHTLY DIFFERENT TONE FROM EXECUTIVES AND INVESTORS IN THE SPACE. FRANCINE: A NICE PIECE LOOKING AT EUROPEAN DEFENSE. HOW ARE STOCKS DOING IN TERMS OF TRYING TO CAPITAL? >> IT'S ONE AREA WERE SOFTBANK HAS NOT PUT MONEY IN SO FAR IN DEFENSE. YOU ARE SEEING A LOT OF FOREIGN INVESTORS WHICH WAS A REPORT THAT CAME OUT THIS MORNING A RECORD NUMBER OF MONEY GOING INTO EUROPEAN DEFENSE TECH STARTUPS. WHAT I THOUGHT WAS INTERESTING WAS NOW THIS YEAR THERE IS A LARGER PERCENTAGE OF THAT MONEY FROM U.S. INVESTORS AS OPPOSED TO DOMESTIC EUROPEAN INVESTORS. SO USING LARGE VENTURE FIRMS COMPANIES LIKE GOLDMAN, BLACKSTONE GETTING INVOLVED INVESTING IN THESE DRONE MAKERS AND VARIOUS BATTLEFIELD TECH STARTUPS IN EUROPE THAT HAS RAISED THE POSSIBILITY OF CONCERN FROM OFFICIALS IN EUROPE ABOUT THIS THIS QUESTION OF SOVEREIGNTY OF OWNERSHIP. THESE ARE FAST-GROWING COMPANIES WITH A LOT OF PROMISE AND POTENTIAL AND A LOT OF THEM ARE PRIMARILY OWNED BY AMERICAN INVESTORS. FRANCINE: WHY IS IT U.S. CAPITOL? MARK: WE'VE DONE A LOT OF GOOD REPORTING OVER THE LACK OF STRONG CAPITAL MARKETS IN EUROPE, ABOUT THE VENTURE GROWTH COMPANIES THAT ARE RAISING A BILLION DOLLARS THERE'S NOT AS MUCH MONEY IN EUROPE AND I THINK INVESTORS IN THE U.S. ARE MUCH MORE KEEN TO INVEST IN WEAPONS AND DEFENSE TECHNOLOGY THAT'S CHANGING IN EUROPE YOU'RE SEEING SOME OF THE LARGER BANKS SHIFTING THEIR POLICY ON THAT. HISTORICALLY IT'S NOT BEEN AN AREA WHERE THEY HAVE INVESTED OR INVESTED AS QUICKLY AND STRONGLY. FRANCINE: THANK YOU SO MUCH MARKET. THE VERY LATEST ON HIS GREAT PIECE ON DEFENSE BUT ALSO ON MASAYOSHI SON. THE SUPERRICH FROM THE U.K. APPEARS TO BE UNDERWAY AS TAX CHANGES INTRODUCED BY THE LABOUR PARTY BEGIN TO BITE. BUSINESS FIGURES WORTH BILLIONS ARE LEAVING THE COUNTRY FOR TERRITORIES AT MONACO SWITZERLAND IN THE UAE. LET'S GET MORE ON THE BIG TAKE. THANK YOU BOTH FOR JOINING US. THERE'S ALWAYS THIS IDEA IT'S VERY DIFFICULT TO QUANTIFY. BUT YOU'RE SITTING ON NUMBERS THAT GIVE US A MORE EXACT PICTURE OF WHAT'S HAPPENING. >> AND EXACT PICTURE AT THE TOP END OF THE U.K.'S BILLIONAIRE ELITE. ABOUT 1000 FORTUNES OVERALL. THAT STARTS AT ABOUT 3 BILLION SO WERE TALKING ABOUT THE PREMIER LEAGUE OF BRITAIN'S WEALTH CLASS. AND WITHIN THAT GROUP WE HAVE ABOUT TEAMS WITH THEIR MEMBERS OF CURB THEIR TIES OR CUT THEIR TIES ENTIRELY TO THE U.K.. AND 106 $2 BILLION THIS IS A TIPPING POINT AND A SIGNIFICANT MOMENT FOR THE U.K. IS THAT NUMBER IS MORE THAN THE ONES WE HAVE ON THE INDEX. WHO STILL CALL THE U.K. HOME. THAT IS POTENTIALLY QUITE SIGNIFICANT. FRANCINE: THIS IS BECAUSE THEY GET THAT TAX ON ALL OTHER ASSETS ACROSS THE WORLD? >> THIS IS THE BIG BAZOOKA TAKEN TO THE ECONOMY IS EXPANDED REFORMS LAST YEAR SO THE CONSERVATIVE PARTY PROPOSED THESE IDEAS AND LABOR CAME AND BROUGHT THEM IN, NON-DOM'S OVERSEAS ASSETS. THAT'S 40% IT'S ONE OF THE HIGHEST IN DEVELOPED NATIONS. THAT'S WHY IT'S A BIG DEAL. IN THE U.S. THEY HAVE QUITE HIGH ENHANCED TAX RATE AS WELL. YOU COULD BE HAVING ONE MILLION ASSET YOU 40%. IT BECOMES SOMETIMES A DECISION TO FRANCINE: FRANCINE: MAKE. WHY DOES THIS MATTER JACK? JACK: WE CAN DEBATE THE MERITS OF TRICKLE-DOWN ECONOMICS ALL WE LIKE. THESE PEOPLE HAVE A HUGE AMOUNT OF DISPOSABLE INCOME AND MORE SPENDING POWER AND BEN HAS HAD A LOT OF GREAT REPORTING ON THESE FAMILY OFFICES AS WELL. VERY HIGH VALUE EMPLOYMENT BUT LET'S TAKE ONE ASSET CLASS HERE THE PROPERTY MARKET. WE'VE GOT ANOTHER STORY OUT TODAY LOOKING AT WHAT'S HAPPENED IN THE VERY TOP END OF LONDON'S PRIME PROPERTY MARKET SINCE ITS PEAK IN 2014. GOING BACK A WAY HERE. THESE PARTICULAR TAX CHANGES MORE PARTICULARLY BUT IN REAL TERMS THE DECLINE IN THE TOP END OF THE MARKET IS ALMOST 50 PERCENT. IF YOU WOULD SAID THAT IN 2014 I WOULD NOT BE DRINKING COFFEE THIS MORNING I WOULD BE DRINKING SOMETHING ELSE. FRANCINE: I GUESS THE PROBLEM IS IF YOU WANT TO MAKE A FAIRER SOCIETY CAN YOU HAVE BOTH CAN MAKE THE SYSTEM FAIRER AND AT THE SAME TIME KEEP THE RICH YEAR SO THEY PAY TAXES AND YOU HAVE GROWTH? JACK: IT'S ALL ABOUT THE LAFFER CURVE AND THAT -- LEVEL. IT'S UNDOUBTEDLY THE CASE THAT WITH ALL THE POLITICAL PARTIES BOXING THEMSELVES IN BY MAKING THESE PLEDGES LIKE WE WON'T RAISE THE INCOME TAX WE ARE NOT IN RAISE VAT AND THESE CORE MAIN TAXES ALL THEY WANT IS THE ALTERNATIVE THEY HAVE TO DO THESE WEALTH TAXES, BUSINESS TAXES. BUSINESSES BEING THE BIG LOSER IN THIS FISCAL PICTURE THE LAST COUPLE OF YEARS. AND INEVITABLY THAT'S THE CONSEQUENCE. I COULD REALLY UPSET BEN'S AUDIENCE OF BILLIONAIRES. FRANCINE: GOOD TO BE CONTINUED EXIT IS? BEN: THE LATEST NUMBER IN THE BIG NAME WE ADD TO OUR LIST IS A HOMEGROWN TALENT HEDGE FUND HOUND -- FOUNDER HERE ONE OF OUR TOP UNIVERSITIES EARLIER THIS YEAR. AT THIS POTENTIAL TIPPING POINT WE ARE WEEKS AWAY FROM THE NEXT BUDGET IN LAST FEW ROUNDS HAVE MADE THOSE WHO ARE REMAINING HERE HYPERSENSITIVE TO ANY SENSE OF DIFFERENT CHANGE IN MOOD MUSIC AND TAX HIKES. IF THE U.K. CHANCEL IT WAS ANYTHING LIKE CAPITAL GAINS AGAIN THAT'S GOING TO MAKE FOLKS ON THE FENCE NOW POSSIBLY MAKE THAT DECISION AS WELL. FRANCINE: YOU ALSO TALK ABOUT THE REPUTATION OF THE U.K. CONSISTENTLY BASHED ON SOCIAL MEDIA. I SPEAK TO CHIEF EXECUTIVES WERE MILLIONAIRES AND BILLIONAIRES WHO JUST DON'T FEEL WELCOME HERE SO THE LOOK AT THE FINANCES BUT IT'S ALSO THIS GENERAL WEALTH IS NOT WELCOME IN THE U.K.. BEN: THIS IS THE OTHER SIDE OF THE COIN, YOU GOT SO MANY OTHER COUNTRIES MARKETING THEMSELVES AND ARTICLE HE MIGHT BE MORE PROACTIVE. CERTAINLY THE EXODUS -- EXIT OF CHRIS ROCCO'S. YOU FINANCE MINISTERS ON THE GROUND MEETING HIM. OTHER COUNTRIES ARE ACTIVELY MAKING EFFORTS TO COURT BRITAIN'S ELITE. IT'S MAYBE NOT SO MUCH THE CASE BRITAIN'S MAKING THEM LEAVE OR MAKING THEM WANT TO FEEL UNWELCOME IT'S MORE THAN OTHER COUNTRIES ARE BEING LIKED, TO ME AND COME TO US. OFFERING FAR BETTER SORT OF TAX INCENTIVES IN GREECE AND ATHENS EVEN THOSE WHO ARE EMBEDDED WOVEN INTO BRITISH SOCIETY THERE AS WELL. FRANCINE: THE FAMOUS RED CARPET MACRON WAS ROLLING OUT. JACK WHAT ARE WE EXPECTING? JACK: THERE WILL BE A FEW KIND OF KEY AREAS I THINK THAT BEN'S AUDIENCE IMAGINE CAPITAL GAINS. THAT'S ONE OF THOSE AREAS WHERE FOR GOOD REASON CAPITAL GAINS TAXES HAVE BEEN HISTORICALLY LOW IN INCOME TAXES THE LABOUR GOVERNMENT LOOK TO EQUALIZE THERE. ACUTELY FOCUSED ON POTENTIAL BACK TAXES WHETHER THAT SOMETHING MIGHT HAPPEN VIRTUALLY REEVES EXPECTING POLITICAL CAPITAL ARE NOT GOING THERE AND GETTING CREDIT FROM THE FINANCE FOR THAT BUT THAT IS A BIG QUESTION. WE DON'T THINK THE KEY THINGS WILL CHANGE SO IT WILL BE MORE WEALTH AND SELF. FRANCINE: A GOVERNMENT WE ARE STILL GETTING TO KNOW AS BUSINESS FRIENDLY? JACK: THE JURY IS STILL OUT. ANDY BURNHAM'S CONFERENCE SPEECH STEERED AWAY FROM A LOT OF THE TRICKIEST BUT AT THE SAME TIME THERE HAVE BEEN QUITE MINDFUL OF THE MARKET REACTION. BEN: IN THE LAST DAYS OF THE STAR IN REEVES PARTNERSHIP THERE WAS A GROWING SENSE OF THESE HUGE TAX HIKES REVIEW WORK. ON THE TABLE A POSSIBLE FOR 5 MILLION NEW INVESTOR VISA A POSSIBLE EXTENSION OF THE NEW SYSTEM AND PREFERENTIAL TAX SYSTEM EXTENDING ALMOST DOUBLING THE LENGTH TO MAKE IT MORE IN LINE WITH OUR MODELS. THAT'S THE BIG QUESTION FOR ME IS IS THAT STILL ON THE TABLE FOR BURNHAM, WE DON'T KNOW YET? FRANCINE: IT IS BILLIONAIRE BASHING GOOD FOR VOTERS? DO THEY VOTE FOR YOU MORE, THAT'S THE OPEN QUESTION. JACK: THE GREEN PARTY CONFERENCE GOING ON, THERE WAS A FAIR BIT OF IT, CLEARLY THEY THINK IT IS IT PLAYS VERY WELL TO THEIR BASE. FRANCINE: THANK YOU FOR JOINING US. A GREAT PIECE THERE IF YOU WANT TO GO AND READ THE QUICKTAKE. TOMORROW DON'T MISS AN EXCLUSIVE INTERVIEW WITH JPMORGAN CHASE CHAIRMAN AND CHIEF EXECUTIVE JAMIE DIMON OUR TOM MACKENZIE WILL DO THAT 2:00 P.M. LONDON TIME TOMORROW. A GOOD CONVERSATION ON BOND YIELDS BUT ALSO I'M SURE WE'LL GET TO MIDTERMS AND POLITICS. THIS IS THE PICTURES ACROSS THE BOARD. STOCKS ARE DRIFTING. QUITE A LOT OF UPHEAVAL THIS MORNING AND MOUNTAIN CONDUCT MOUNTING CONCERN OVER FINANCE. THE SENTIMENT WE'VE SEEN EURO WATCH OUT FOR THAT. A 17 MONTH LOW AGAINST THE DOLLAR. LOOKING AT BRAZILIAN ASSETS SET TO JUMP AFTER FLAVIO BOLSONARO FINISHING AHEAD. BLOOMBERG BRIEF IS NEXT, THIS IS BLOOMBERG. ♪