Said Deutsche Bank ceo is to be losing support from top investors. Anna welcome everybody. This is bloomberg daybreak europe. Im anna edwards. Manus im manus cranny. This is the s p 500. The u. S. Market is in a bull run. 10 years ago was the anniversary of the last bull market. Past decade,in the it is up over 100 . What made up that rally . Reinvested dividends. That was 40 of the overall gains. The rest came from the share price gains. By the way, we havent had a 2 move in the s p 500 so far this year. Weve had positive returns every month for 10 months and we havent had that in the history of the s p 500. This is a lesson for the Financial Adviser why you want to be in long stocks. Anna all that talk in september, once again we are in that mode of things for october. A great line of the daily profit talking about what happens when you get all highs on equity markets. Analysts bringing down their earnings estimates. The daily profit column sees in the market in the u. S. On the risk radar, this is where we are. Its hard to get a clear signal. Weve had so many markets close. We have some of them back today. Japan. South korea. A big boost as south korea played catchup. The dollar is interesting. We see little move down. Pboc has called for a push on with its reform agenda. The yuan is a bit stronger. Thats the reason for this many settle for the dollar. Manus dollaryen at the dot of your screen. From the political diversions between call u. K. And yuke and abe. Cs . He moving on from abenomi im not sure. It does suggest that the market is getting ready for a dissipated abe. That hasnt stopped the boj having conversations during the election. Bloomberg first world news update. Thanks. Turkey fors blamed instigating the latest crisis and says the revolution will officialshow quickly explain why to turkish employees on american outposts were detained. The state department has stayed silent. The ambassador to turkey issued a video statement on youtube. Issuingl stop nonimmigrant visas in turkey. Theresa mayinister cabinetsupport from members. Many praised her strategy. She outlined contingency plans for leaving the eu without the ideal a deal. That was rebutted by the european commission. As election campaigning gets underway in japan, the leader of the opposition says she is unsure whether Donald Trumps administration is stable due to the many personal personnel changes. Her comments came as she affirmed the importance of a u. S. Japan alliance. She also criticized shinzo on abesnomic policy economic policy. Nomics is not sufficient. Private sector standing on her own feet is better than relying on fiscal packages. Saudi arabias Energy Ministry says that there may be allocation cuts next month. They hope to balance the market. It says it will make an unprecedented, of five and barrels a day. 00 they say theyre showing leadership. Northern californias rife withg region is wildfires that have killed at least 10 people. Its one of the states most scenic and treasured destinations. Grewornias Wine Industry soldllion tourists and 31. 4 billion dollars last year. Global news 24 hours a day. Powered by more than 2700 journalists and analysts in over 120 countries. You can find more top stories on bloomberg at top. Manus thank you very much. Were standing by in hong kong. Own feet. Ding on her get beyond fiscal stimulus. How to the market take it . Marketo have japanese numbers relatively sanguine. Its a tepid start. The longest run of gains since september. You have asian stocks at a threeweek high. The korean market is back online. It had a 10 day break. Is happeningally for chinese stocks. They are ahead of next weeks party congress. We have consumer and Health Care Stocks advancing on the mainland as well as in hong kong. Pulling backng is some of the losses we saw on monday. In japan, investors are sanguine despite the scandal involving kobe steel. 200 customers may be affected. We want to show you one of those customers. Ih i still sliding after it said it used kobe steel aluminum in airplane engine parts. Sato holdings under pressure. Near 1 billion. Check out samsung gaining nearly 4 . Buyers are amidst this rally. Chip prices have been declining since midaugust. They are rallying with the open of the korea markets. Anna thats an update on the asian trading session. Lets talk about catalonia. The break from spain faces its moment of truth. Later, parliament will consider a declaration of independence that risks a backlash from madrid as well as economic meltdown and international isolation. Manus maria, good morning to you. Run us through the scenarios. Will they go for a symbolic butowledgment of secession throw out an olive branch the same time . Exactly. Thats a good question. At this point we do not know. The tension we are seeing, we know he is going to consider a symbolic declaration of independence. Will say we think the vote is valid, but not actually vote on the law that would create an independent republic. Theres also the option when he goes full on ahead, declares a republic, annex a vote, gets the as vote the yes vote has majority in the catalan parliament. And this would be declared. What would they do next . How could madrid react, then . The catalan president defends what he said, but how could broccoli react . The spanish Prime Minister react . The Justice Minister yesterday said if they see anything that says unilateral, we are going to have to invoke article 155. We get a symbolic declaration of independence and declared the republic but dont vote the law, what is the legal value . Technically, they havent actually declared anything because they havent voted the law. For madrid its going to be about what he does behind the scenes today. Thank you very much, maria, in barcelona. Max kettner joins us. Great to see you. We could see the symbolic. Cknowledgment of succession what is the worst Case Scenario for the markets if thats what happens . They knowledge they want independence, makes a symbolic statement, but offers an olive branch. WorstCase Scenario . Max the worstCase Scenario is , becauses they are out if you look at what markets are pricing, you look at the equity market, you look at the rate market, a lot of the reactions we have seen to the referendum has artie been taken out. A risk reward perspective, it doesnt look to convincing to time to go with peripherals in spanish bonds. There would be massive relief if he didnt do anything. Was a very only symbolic step, you can artie have some severe repercussions on the bond market. When you look at what we see from catalan business of weeks, its an quite phenomenal. Sevenrted last week with cap the land businesses on the only one of them is based there. Fundse other cats long have moved their headquarters to the rest of spain. The optics look very bad. You can understand why without making any statement about politics. It reduces volatility and exposure to uncertainty. Its not great for catalonia for thats be happening. Max you can understand why witht making any statement about politics. What the government has been saying, the productive segment of the economy is still there. Thats a bit of wishful thinking. They say its just the headquarters. Just wishful thinking. It would increase uncertainty of it went through. Moving,eadquarters are a productive segment of the economy is still working from catalonia. Nothing will change. Thats wishful thinking. Even if they declared independence, even if they go and record speed towards the European Union and want to rejoin, the Spanish Government has to say yes. While the european governments have to sign off. If caps on he wants to join the European Union. Manus thats the worstCase Scenario. The ucb was still be there. What you make of this proposition . Spain is too risky so you want to buy portugal. I put portugal versus spain. S p have moved on portugal. This portugal over spain, the you buy that proposition . This intrigued my market bond market story. Max mercilessly, versus , that has comed along way. At these levels, where you have peripheral spreads not been affected apart from Spanish Government bonds themselves, when you look at spreads, there hasnt been a lot of repercussion. If we put that into a wider context, what we can see is, until a month ago, youre talking a european integration. 120 andlooking towards then 125, 130 on eurodollar. Manus is that gone . When they look at 117 and 118 in europe, that looks a bit fairer. 116 looks a bit fairer than towards 125. Not think we will see a simple retracement towards 130. The levels that we are now, the upper end of the range we have been trading since the start of qe, that is a fair level than 125 or 130. Anna the politics have been weighing on the euro. Thank you again, max. Is is daybreak europe manus you can turn into Bloomberg Radio. They have an interview with holidays challenger. Hallenger. Anna we look at how theresa mays speech will impact her challengers. This is bloomberg. Manus you are looking at a live shot of singapore. P. M. 19 asian stocks hitting a threeweek high. Japan and south korea have returned from their holidays. Thats going to be the asian markets at a little news coming through from the secretarygeneral of opec. Anna saying they have had exploratory meetings with shale firms in houston. No discernible impact on oil prices at the moment in the asian session, but worth keeping an eye on that one. If relationships between those two parties were to transpire. Inventories forecasted, were waiting for a little bit of data. The european ministers are gathering in luxembourg. Anna Justin Trudeau meets donald trump. Theyll be talking about the about bombardier. Manus meetings of the ims and the world bank are also happening. Japans kobe steel has unleashed least an industrial scandal thats reverberated across asia. Thats after saying it falsified data dealing with strength and durability on aluminium and copper used in cars and aircraft. Companies said they had these materials from kobe steel which beenthey might have subject to these falsifications. Moving anks ceo is losing the support of some investors. Speaking on condition of anonymity, three of the banks three of the 10 largest stakeholders say they want to see a turnaround in trading. Said that should he not be able to deliver at the annual Shareholder Meeting in may, an external candidate may be the best option to replace it. A spokesperson for Deutsche Bank declined to comment. Thirdquarter Sales Beat Estimates as the Worlds Largest luxury goods maker got a boost from rihannas cosmetics line. Parisbased company compared 9 9 analysts by median by analysts. Theresa may played to brexit hardliners in a conservative party saying that she may leave europe without a brexit agreement. Anna referring to the eu demand for an agreement, they said the ball is entirely in the eu court. Max cap there is still with us. Our analyst is still with us. Max, where is the ball . To beeither place, honest. Its more with the uks court so to speak. So farat we have heard from the u. K. Government, nothing is clear so far. We have all helped, including the european governments, that we have a bit more clarity. That really hasnt come through. That is reflected in Market Pricing at the moment. Is this smart game theory or economic terrorism . Whenthat question you look at the complexion, 10 days ago we were in florence proffering a method metaphorical of a branch. Now we are leaning towards the brexiteers. Is it smart or economic terrorism . Leaning more towards the economic terrorism even though i dont like to say that word. Often, ive heard of phrase, theres an inoperative solution. What is that . To one simple thing. What is this . Do you want to be more like switzerland . What do you want . Manus a unique free trade agreement. Anna wants to be creative. Creative, andl be unique. Give us a bit more. Something more concrete. The issue is we still do not know what that is. You put onchance do no deal and in terms of your Investment Strategy what chance do you put on no deal . We were talking about the contingency data point in place from day one. Read a pieceted to granular what could happen on day one when there is no deal. Running up to that. Once we understand what is that has to be done, then we can come up with a better plan. You tell me what i need to plan for. What is the risk that we enough with no deal . Max thats what ive been saying. These tell me what are going to do. Dont tell me i have to be nominative or creative. Tell me what the planets. I think the probability of no deal is a very high probability. Is evenl likely have the day before, if we dont have a deal the data for the. When, we will likely have this overnight agreement in brussels. An extension of the negotiation. Period. Iation a better option than no deal at all. Both the European Union and Great Britain know what is at stake. Manus lets talk about the markets. There are getting negative again. Hedge funds are long. The Options Market is sure. Whats the conflict . What we had towards cable, we are headed towards 135 orbit above. Hand, it was based on the bank of englands comment to completearket is in terms of rate hikes. The other is the markets are coming back with the dollar story. Look, theres nothing coming from the dollar. Jump out. Ave to we will up. More from him after the break. Manus it is 6 30 a. M. In london. It is 2 30 p. M. In tokyo. More on japan in a moment. s promontory document does not get a mention in terms of Monetary Policy. What is the Options Market join us . Well talk about that the second. Good morning. We are seeing gains in asian agents overall. Were seeing gains in japan, coming back me holiday. The white line showing that the asian gauge is looking cheap versus the s p 500 even after the surge. Thats something to bear in mind. We talk about losses, we see dollar weakness today. The dollar losing against most of its g10 peers. Its actually dropping below its hundred Day Moving Average as well. Tracking higher in treasury yields. Treasury yields fairly steady. Around 2. 37 area. Also in the fx markets, we are keeping an eye on the u. N. It had ties premium for the daily fixing in a month. Has one month implied volatility. You can see that spiking. We are expecting a little bit more volatility. We have the Central Bank Governors say that it wants the yuan to have more Market Forces behind it. Perhaps that is what is driving the volatility. Anna, manus. Abes party and koikes party are shaping up to be the main contenders for Japans National election this month. Manus they are staking out key differences on taxes, nuclear power, and the military alliance with the u. S. Has been added to the mix. I do not disagree that the basis of japan security is the alliance with the u. S. Having served as defense minister, i have no differences with the Prime Minister or the ldp in terms of diplomacy and national security. I am not yet sure whether the Trump Administration is stable. There are extremely dynamic personnel changes in the main white house posts. Alongside the american people, i want to look carefully at what kind of administration is so bp administration this will be. On Climate Change she has advanced considerably. I hear theyll be talks between the u. S. And china on north korea. There willhere be a positive side, but its unsure what the future will be. Far, shouldnto be the next governor of the bank of japan decides on the exit . The easing of fiscal packages brought only a marginal improvement in the economy. They are not commensurate to the efforts we have made. I do not think rapid policy changes are desirable since that could destabilize the market, we must think carefully about the exit strategy. Abenomics is not sufficient. Privateboosting the sector, standing on our own feet, is a much healthier way rather than relying on extraordinary policies of fiscal packages. Today sayseleased the popularity of your party has gone down. One factor is the splintering of the Democratic Party has given voters more choice. Il now, there was no and no alternative to the abe administration. This shows that the nation wants change. Anna that was the tokyo koike. R, yuriko case are koikes chances . I think its not only that but if you look at the poll that came out yesterday, there was a bit of a disappointment for ms. Spear. Koike. Supportgo she had 90 and it went down to 13 . Support 19 support and it went out of 30 . Thats a bit of a fall. She blames it on the emergence of a new left party. See e on a and antiabe vote is split. Manus where is she going to lean into . Sales tax . Education . Mother policy . Where is she going to go . You are not going three be talking about Monetary Policy because the voters are taking about that very much. I think the problem for ms. Koike is she also left the conservative party and its going to be difficult to create a difference between herself and the ldp. The differences are smaller than they first appear. Has previously talked about the salestax. He could change his mind again. The shift in the past few days, including in that interview, she starts to talk much more about scandals and the crony issues. Thats dangerous for her. If you look at other opposition parties of them the same thing, they have succeeded in bringing popularity but havent gained in gaining backing for themselves. Vote for me because the other guys crooked, that doesnt work. Anna thank you very much. To make you aware, japans election is two weeks away. Koike must decide today she will run. Daybreak asia will be live from tokyo on october 20 with extensive analysis. Ets bring in max kettner he is still with us. Koikes power surge has dropped from 19 to 13. Toe we always all raced the conclusion that abe has flunked this election . What prison the look at it through . Max i like to look at the approval or disApproval Ratings. What you can see, from the beginning of summer this year, you have the Approval Ratings crash for abe and the disapproval rate rise substantially. That seems to be turning at the moment. That might be some good news for a day. Country, we have seen how elections can pan out that were different expected. U. K. , we werethe talking about a nonevent election as well. Maybe it doesnt pan out that well. Reason reason they has not decd Monetary Policy as such a big issue is because thats not something the average voter will care about. Brexit,. K. , you have you have slumping relearning. Were going to do monetary easing. What does that say to the average voter . Not much at all. The average voter cares about growth. How you get around there . Away from Monetary Policy and inflation. We have had six quarters of growth in japan, which has been something of a turnaround. But you would argue it is not up to scratch compared to other parts of the world. Max most recently have seen a bit of an uptick, but if you look at economic theory and population growth in japan, it looks only logical that japan is growing less than other economies. Perspective,that you will see difficulties having japan grow by 2 or more. Theyre going to find it tough to get back to the 2 inflation target. Came in his wins it was her there. Have a go at that bond. This is the japanese government bond. This is one year. The view from the market is there getting short the long end of the curve. Three scenarios. Ldp suffers minor losses, they lose the majority but they maintain the majority but lose seats, they lose the majority to get altogether majority altogether. Thats the risk. You if this is the scenario want to play you should short the low part of the car. Thats the trade. Thats the number one trade. Anna lets talk about what is going on the united states. Bond markets closed their yesterday of course. Back in action today. Give us an update. About your expectation what the trump and mistreating can deliver fiscally. How much does that matter to you . How much excitation the market are already based around delivery. Max a couple weeks ago, i wouldve said, the market is too complacent. The market is not expecting anything from the fiscal front in the u. S. , im not too sure anymore. The feds price are ready with 80 probability for december. I think expectations are quite high now. Done. Mething to be i dont biggest going to be the big shot. At the end of the theyll be something gradual. It will take more time than we currently think. Im not too sure if you will have calls from 235 at the moment going all the way to 272 the end of the year. I be careful about these calls. That 2. 4 when the end is nine. About the total return. The total return of the s p over the past decade up over a hundred percent. 60 of it is price. Think that the group is long euros equities or is there a difference in your view. Long euro actually equities and underrate the u. S. Equities. Euro will stay at the levels are go little bit lower. Thats one thing. I think from a more global perspective, what we can see from this chart is effectively the whole cycle we have so far since the crisis has been long bond proxies in the equity market. You been long real estate come along telecom long real estate, long telecom. I dont think thats the right strategy for the next year. If inflation is finally coming target,wards the 2 there may be two or three rate hikes next year that are not priced yet. Being invested bought properties is not the right strategy. Anna thank you. He states it is here on daybreak europe. After the show will be talking to him. If youre traveling to work, you can turn into Bloomberg Radio on your speaker. We talk brexit . Anna absolutely. George maceo is said to be losing investor support and push for the banks around. Manus we talk brexit . Rihanna boost sales. He will tell you how the pop star caused thirdquarter sales. This is bloomberg. Anna this is bloomberg daybreak europe. That is suggesting we could be a little bit firmer at the start of the next trading day. Lvmh has the thirdquarter sales targets. It has sold more products online. Max is still with us. Good morning. When we look at these numbers from louis vuitton, a good set online, luxury seems to be on the up here. I think it is. We have a huge number of macro indicators, Industry Indicators which have continued to see it. Though theres been a lot of comments in the market of the comparables are getting higher, we see huge success. Reporthis is the first that matters, i guess. Punching above its weight. We need to see how china has been doing or how Chinese Tourists have been spending their money. What are we meeting between the lines . In the information we have so far. Jd. Com talkeen about luxury goods, a huge amount of growth coming through from digital. Waiting to hear more about that this afternoon. If you look at what is happening in fashion at letter leather retail,d selective theyre are the ones who are expected to have good growth. We have 13 growth from fashion and leather goods. Max is representing what she just said. Far outstripping. Lets look at the chart. How do you look at luxury . How do you segregated and believe in it . We have is synchronized growth story. Is it true luxury . I think in broader terms its Consumer Discretionary. You can see as soon as the cycle is a bit more synchronized to get that through. Goods,y luxury luxury but Consumer Discretionary on a global scale. This is the first time in the cycle that youve got developed markets. Growing and synchronizing. That helps Consumer Discretionary across the sectors and the luxury goods. Anna 12 sales group growth, how does that compare to the peer group . Is it all down to rihanna . Whats been said about discretionary generate, we see very high entry from things like estee lauder. There are names like rihanna who are doing very well across the board. It is growing at double the pace. It is Cross Category and it is all regions. Arranges content the beauty range. Thank you so much. Lets change tack a little book and talk about germany. Anna chief executive officer of Deutsche Bank is losing support of some investors just seven months into Deutsche Banks latest turnaround plan. Speaking on condition of anonymity, they said they want to see a turnaround in the next few quarters if the ceo wants to keep his job. Manus we are bringing in russell on this story. Good to see you. Why are these investors concern . Deutsche bank may be losing flow business and Investment Banking. He hasnt met some of the top shareholders. What is vexing the roster . Yes. As you mentioned, its only been seven months since the latest Restructuring Plan. Investors are already losing patience. The Investment Banking side has been shown signs of turning around the bank is continuing to lose market share. To be fair, its a difficult climate. Fixed income trading, bonds trading. The low rates, low volatility, and low volume. He has an uphill battle there. Another part of the Restructuring Plan was to reintegrate postbank in the domestic retail banking. Projected that to take five years to fully implement. That is going to be a real drag on costs. Investors dont have the patience to wait around for that. Anna thank you very much. Stay with us. In terms of the Banking Sector in europe. We have this story around Deutsche Bank. The Deutsche Bank magens team have had to do with a lot of legacy issues and that is hasthing that across europe been a case. Legacy issues from the financial crisis had had to be dealt with. Its a lot more than the equivalent in the u. S. Qe has to do the ecbs policy, it has to do with legacy issues, the u. S. Financials now look a little more attractive than european banks. Notably from an earnings perspective from a total return perspective over the next six to 12 months. Onput a piece two months ago allocation of equities on a global scale and we said financials look quite attractive but thats mostly in the u. S. , not in europe. They are based on a bit of more expectation coming through from the fed and not so much of the ecb. We have jpmorgan, citigroup, bank of america, and blackrock. The residence of what are Deutsche Bank editor has said to us, its been a tough quarter, and im going to go to switzerland and sit down with some ceos. The flow in the market is critical. Matching business with client needs, is as is going to pull these banks back . Max for the q3 earnings season, you have an expectation of negative Earnings Growth. To the quarterck in 2016, that was a pickup in Trading Volume because we had a. Ickup in tipperary equity that is not in the case in 2017. I would reckon that across the banking industry, you have Trading Industries down a little and that will drag down the overall Earnings Growth number in the u. S. The expectations are too high. Maybe they will be met and exceeded but i wouldnt be super surprised to see negative Earnings Growth. Anna is theyll sector a function of the trade environment in the earnings is it . When we look for to other business lines taking over the story . The Trading Volumes are a function of light hasnt been reduced in a number of european banks area the volatile number. Perspective, in european banks, as long as we do have rates at these depressed really coming through for much change there, it is unlikely we will see a huge pickup from retail business. Manus thank you for being with us this morning. From theax kettner team over at comic bank. Kommetbank. We are a little bit higher on the asian equities. The talkross over to more about politics in ex parte show. More companies flee catalonia. Back. Manus catalonias moment of truth. Parliament considers a declaration of independence in barcelona. Anna mays backup plan. Cabinet support from hardliners. Manus campaigning gets underway. Is rival yuriko koike worried about the lack of unity in the white house. I am not yet sure whether the Trump Administration is stable. There are dynamic personnel changes in the white house. Is losingsche bank support of investors seven months in. Manus welcome to bloomberg daybreak europe, our flagship show. Im manus cranny. Anna im anna edwards. That weresome markets closed back in business today. With a positive handover from the asian session. Some of that is backward looking. Close atpans topix the highest level since 2007. It is going to be a hard one. We are running into politics in japan. Japanese investors are selling bonds in the u. S. Lets look at the msci asia. As japan returns from holidays, it has been the best run sense 2009. The s p 500 dollar is slightly better off. One big explanation of that move, you mentioned the dollar is down for the third day. , reducing exposure by investors as there is a call for a push on reform. They want to double down on those reforms. That has led to a little softness in the dollar. Suffer . Will the dollar manus we are running into this election with abe. Risk ofs are seeing a poor results from abe. Theres also a move of japanese investors out of u. S. Bonds. They are selling those bonds. Anna lets look at the bond markets. We will be talking to petr cech well. Chatwell. We are focused on what is going on in spain as well. Ecb is a backstop. Ets go to Desley Humphrey desley the u. S. Has blamed turkey for the latest crisis between the two countries. Two turkish employees at an american outpost while the white house and state Department Stay silent. Issued ars to turkey video statement on youtube. The mc stopped issuing nonimmigrant visas in turkey that roiled markets and prompted a retaliatory response. Theresa mayinister has won support from critics. Her strategy was praised after she outlined contingency plans eu leading leaving the without a deal. May says the ball is in the eus court. As a campaigning gets underway in japan, the leader of the Opposition Party of hope says she is unsure whether Donald Trumps administration is stable , due to many personnel changes since the president took office. Criticized abes economic policy. Abenomics is not sufficient. I believe in standing on our own feet, a much healthier weight rather than relying on extraordinary policies of fiscal packages. Saudi arabia, deepest cuts in History Month to reduce Global Oil Industries and balance the market. Cutsll make unprecedented of 560,000 barrels a day. The kingdom says it is showing leadership ahead of the key opec meeting at the end of november. Global news powered by 2700 journalists and analysts in more than 120 countries. Can find more stories on the bloomberg at top. Manus thank you. Anna lets check in on action in the asian market. The nikkei is closing up 0. 6 . That is the longest run since december. The topics is closing at the highest level since july, 2007. We have the yen fairly steady. The stocks in seoul are rallying 1. 7 today. Outside of south korea you have , andiday rally in china ahead of next weeks party congress. Is pulling back some of the losses. 200 customers could be affected by the slide in tokyo after it used kobe steel. There is speculation they will win orders, rising as much as 7. 3 . , afterl, Lg Electronics the release of its earnings, it slid back down 3 after thirdquarter operating profits fell. Expectations of record profits for samsung. A big boost for the asian benchmark. Manus thank you. The catalan governments determination to break from spain faces day of reckoning. The declaration of independence risks of backlash from madrid. What are the possible scenarios today in what the separatists are going to say . Good morning. Huge expectations as we wait for catalan regional president. He is meant to address parliament at 6 00 p. M. He could say this is more of a symbolic declaration. We are going to act on it but to create an independent republican 48 hours. It removes the unilateral declaration and removes the 48 hour deadline. The more radical side want to vote and enact the law. Manus the bottom line is, how is rajoy going to react to this . How do you think he will react . With all the potential calamitous implications. Tomorrow will be a response to this. The Prime Minister said if we get anything that looks like a unilateral declaration, any document that carries the word unilateral, this is the end game. This was suspend the regional president and autonomy. Andegional precedent autonomy. After that they will call a regional election. Symbolicet a ,eclaration of independence what is rajoy going to do . Symbolic, it just needs to be stopped now. That is something we will have to keep an eye on. Is he going to go for a symbolic move were actually vote for the law . Anna thank you. Lets talk rate strategy, with peter chatwell. Is that a buy opportunity from the spanish story . Thats how we look at it. We look at it as a constitutional issue. If we look through the noise, it should prove to be limited fiscal impact to the Spanish Government. Once a look at the value on the government bonds. Back, itas got your would have wider implications on the european economy. You should factor in that the ecb cap withdraws quickly as it is planning to. Anna it is going to have a an impact on the timing for the ecb . If it gets bigger . Peter if it turns into a crisis for spain, it will be a crisis for spains trading partners. It would be a reason to slow down the reduction of qe. What constitutes crisis . I was a article 155 being aiggered is likely to cause crisis. It will cause significant uncertainty for the Business Community that therefore will drag on the economy. Manus i couldnt get max kettner on board with this trade earlier. S p has moved beyond jump for portugal. Crisis moment,e would bond traders exit spain and go into portugal, italy, and germany . If there peripheral, was a crisis . There is a significant difference between the liquidity of the two markets. If an investor was going to move out of spain, it would be a combination of france and italy. That would give them similar yield, but would give them similar level of liquidity. Manus and it would give them an escape hatch into went wrong in france and italy . Well they would do very if the economy of the euro area continues to improve. This could be an attractive. Rait trade tighten. Ld continue to there is some asymmetry there, but you are giving up liquidity. Manus it is not going to earn a bonus on this years portugal train spain. This could impact on the timing if there is a crisis. If there is not such a big yours, euro wide, what are assumptions around ecb . The japanese Quantitative Easing Program has had a tax on europe as well. What is your expectations . Paper to 40made billion that they would execute for an additional six months. Theres a chance they would do less for longer. A billion for 12 months is interesting scenario. It postpones when the market would expect the first rate hike. Becca turn out bullish for the market. There are a lot of factors at play. They could just keep the options open to keep everyone happy. Manus where you want to be on u. S. Versus qe . Peter u. S. Dollar, u. S. Treasuries. Manus this is the difference in the data. Run the are trades again. Peter i dont think dollar assets are going to poll perform well over the coming months. Give ration in the u. S. Is going to be trading poorly. You will lose money if you invest in treasuries because duration is going to sell off. You will also lose out if you dont have a currency hedge because the dollar will fall relative to the euro. Nna coming up next manus a couple stocks to watch. Thirdquarter sales on estimates. We are also keeping an eye on Deutsche Bank. Some of the investors have been talking to bloomberg. Manus the u. K. In european squabble. Theresa may publishes a contingency plan for exiting the eu. Details next. This is bloomberg. Anna it is 8 19 and berlin where the euro is trading a little higher. There is some weakness coming through in the dollar, thanks to moves and comments made by the psc. , a lot of markets have been close, that has brought a strong session in tokyo and in seoul. In your bond markets you have got the spanish bond market opening this morning. It is down at tech. We are waiting will they go for this moment of claiming independence . Dubai has just started trading. Mistake. Mit my we are up and running and divide. Dubai. Desley good morning. Across,l reverberated customers including toyota, honda, and subaru had used material from kobe steel. Boeing, which get some parts from subaru, says there is nothing to raise any safety concerns. Deutsche bank is losing some investors. Speaking on the condition of anonymity, they want to see a turnaround in the next few quarters particularly in the trading business to continue to back cryan. An extender candidate may be the best option to replace him. A spokesman from Deutsche Bank declined to comment. Largest luxury good maker, sales grew 12 for the parisbased maker of watches. That is your Bloomberg Business flash. Manus thank you. U. K. Prime minister theresa may outline contingency plans for leaving the European Union without a deal. May said she has made overtures to brussels, and the ball is in their court, referring to an agreement on an exit fee. Peter chatwell, head of european rates strategy, mizuho international. To move on to trade talks in october. How hard, how difficult to achieve is that going to be . How do you how much does that matter . Iser someone expects it going to need a crisis to get the talks moving for november. I am in the court. Needscs, any discussion to have its crisis. Said behinda may the scenes, things are more promising, more than they appear. This is often the case. You get the rhetoric, and what is happening in the negotiation. Manus lets get a glass of water for peter. Im going to do my favorite thing. This goes back to annas question. Wargaming strategy from theresa may, or is it just rip up the script moment . Assume it is ato negotiating tactic. When you price this into the economic impact, you have to outcomes, they are real. Negotiations are going to start breaking down. If we have to apply and uncertainty premium, a transitional deal, we have to think about the negative impact on the u. K. Economy being priced back in. The transitional deal was announced, a loss of the , were moreaders confident about how the u. K. Economy would look. If the transitional deal is back up for negotiation, if we have to start looking more closely at exiting onto wto rules, we have got to price that. We have to price in more uncertainty whether the bank of england can go ahead. There has been a bold suggestion about where they would had next. They are not entirely disconnected. If we see more of a political crisis, what chance is there for a rate hike . Peter and has a bigger impact in the nearterm. The november meeting, you can take that off the table. The economy is not Strong Enough englandor the bank of to hike rates. If he raises at 25 basis points in november, and is a crisis in brexit negotiations, tightening Monetary Policy as the economy is going to take another lurch downwards. It was a stimulus they did not need to do in the first place. The signal would be quite damaging. Anna thank you. Peter chatwell head of european rates strategy, mizuho international. Manus thats it for anna and i. Bloomberg markets european open is next. We are done. Good morning. Youre watching Bloomberg Markets european open. We will bring you the first trade of the day when the markets open. Im guy johnson. What are we watching . Crunch time in catalonia. Question, will they declare independence . The steel scandal spreads to subaru and mitsubishi