Markets are set to break today. Manus welcome to bloomberg daybreak europe. Right here in the city of london. Santander missed in terms of net income but had long ratio dropping, statoil going for a cash dividend. That could signal a big turning point in the oil market. Those are your two opens. Lets give you the rest of the breaking news. When it comes to the nordic, continuing to see synchronize growth in the domestic markets. Markets remain margins remain stable. In 844. 1t had penciled Million Euros. Improved. Lity has management buffer increased by 180 basis points, the highest ever in terms of capital. This is the bank that said last month it would move its headquarters to helsinki from stockholm after complaining about swedens strict regulatory environment. The intention is to save 1. 3 billion in costs by moving their headquarters. Structurally they can bring down the cost and increase efficiency. Those are the questions we will put to casper von koskull after 6 30 a. M. This morning. Lets talk about one of the worlds biggest brewers, heineken miss their numbers this morning. More robust growth expected, organic revenue missing considerably, 3. 6 . The market had penciled in 5. 6 . Earnings per share is a little bit better. Miller they took over earlier in the year. Theyve had natural disasters in mexico and the u. S. So the adjusted ebitda rises, thats a miss for anheuser busch. In terms of hyundai. We have some breaking news, thirdquarter operating profits comes in at 1. 2 trillion one, the market had penciled in 1. 4 trillion won. Thirdquarter bring profit beat estimates. 5 . Uncertainty in the business environment, perhaps which will hold them back. The rede them headline comes in at 828 Million Euros. 844market had penciled in million. And abss for nordea inveb. Mario draghi, what will he do today . What is his mission . His mission is to deliver a soft landing, but of course the fx market has to be primed for perhaps something more aggressive. Have the euro just coming off a twoyear high. Barnstormingtely the ratio, calls outnumber puts by 2 to 1. Lower than last went into the decisionmaking mode. Reinvestment will be the key issue for the markets. Dont forget the European Central bank needs to reinvest about a billion euros through 2018. That could be the softening part for the ecb story. Lets show you whats going on with the risk radar, s p rang a bell and moved by the most in seven weeks. Should you get that perturbed about the s p dropping a little bit . Politics, going at donald trump, volatility the lowest in this quarter, the lowest on record. Google, will be very much in focus. We dont often talk about aluminum, but look at this, at a fiveyear high. Stockpiles in warehouses in london down by nearly 50 . For 2017 come6. 8 up from 6. 4 . Saying the only way to make a fair deal is to terminate it. And thes the peso canadian under pressure. Much more results to come, and Juliette Saly will get you up to speed with your first word news. President donald trump is saying hes thinking about giving janet yellen another term as fed chair. He said think shes quite terrific if you look at the markets. According to three people familiar with the matter, he does not intend to a point gary to lead the fed. Package stopped short of addressing the islamic republics compliance with the multinational accord designed to curb its new pure program. The two bills marked the first action from congress against iran since President Trump this month refused to certify the country is complying with the terms of the nuclear pact. A third measure addressing Ballistic Missiles is set for a vote today. China has begun marketing is first dollar bonds since 2004 in a week when this leaders outline a greater role for the nation on the world stage. The spread of 3040 basis points over treasuries. The same amount will be offered at a premium of 4050 basis points. The e. U. Has agreed to start internal preparations for the possibility of brexit negotiations, failing to reach a breakthrough at a summit. The 27 governments without britain agreed to start on the prospect to allow trade talks to begin at the end of the year. Peopleto familiar familiar, preparations will positivecase of a more outcome. Spain set for critical 48 hours as cattle on separatist need to n a make or break decision that could ease tensions or declare catalonia a sovereign republic. The turkish lira is Holding Losses against the u. S. Dollar, the German Government set to be to restrict financing over an escalating political dispute. Berlin is actively working to cut funding to turkey from the countries stateowned ksw banks. During the and the bank for reconstruction and development. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the. Loomberg at top the regional benchmark index was down by about. 10 . Upside coming through from china come up. 8 and the nikkei 26 after yesterdays loss, both again and Japanese Equities are higher, the nikkei up by. 3 . Level and5900 point look at the cost the, at the kospi. Message operator in tokyo of almost 16 . Ratings of great including from , on the shanghai composite after thirdquarter earnings soared. Credit suisse sees up broader rally in consumer stocks in china. Fortescue falling in sydney by more than 4 . It had to cut its price target saying steel mills in china continuing to play pay premiums, having impact on the bottom line there. Days tuned into the right for breaking news. Nokia delivered their numbers, five point 4 billion and the estimate was for 6. 4 billion. They talk about seeing him more Challenging Market conditions going through the rest of 2017. They see a decline in the Network Market for this year, a contraction of 4 5 . Originally they saw the market contracting by 3 5 . Its going to get a little better but will contract between 2 5 . The outlook from nokia is perhaps where the market will express its opinion. Top line numbers on nordea. Come, 6000ob cuts to job cuts, 2000 of those will be consultants. They expect a total transformation caused of 150 Million Euros. That will be taken in the fourth quarter. Saying the cost based gradually byline below 4. 8 billion 2021. Will talk to the ceo a little later in the program. Our top story, a top Market Making the story today, they will discuss how and when to bring in the Bond Buying Program. Economist see a ninemonth extension of qe from january at around 30 billion euros a month. But theres potential for a variety of outcomes. Good morning. We finally got here. I question is fairly straightforward. Dragmario draghi create a hi put today . There so many different ways this can go. Im not convinced that any of them will necessarily result in any kind of major move for the euro, certainly a major move to the downside, based on price action just yesterday where we had u. S. Yields higher relative to european yields. The markets are very comfortable with what they are expecting from mario draghi. For him to be more aggressive, yes, it could result in eurodollar moving to the point imbut one key making to clients is the eurodollar move weve had this year is less about the traditional driver of fx Interest Rate spreads and more about expectations about what is coming. Its more about a shift in sentiment. Theres a lot that has taken place and the correlation between shortterm yield spreads and eurodollar has weakened as the euro has gone by. In that sense, eurodollar price action on rate expectations might be shortlived today. Manus i started the show with the ratio for the euro dollar perhaps itsxtent, all in the price. What did catch my eye, why not go meeting by meeting . Youd say to mario, i think you should think about being maybe not data dependent, to choose how you taper on a meeting by meeting basis. What ive suggested this week is that they should go that way. In thehe risk lies consensus view, its dropped from 6230. A pretty substantial drop initially. I think theres a lot to be said for being more cautious in the early stages and taking a leaf in the way they adopted tapering. If mario draghi was to announced byy would cut qe purchases 10 billion starting in january, and then give Forward Guidance on emphasizing to the markets that they believe qe purchases would continue for most of this year and leave it at that, and then if meeting by meeting, along with having, reassuring the markets that the qe purchases would continue for thats this year, meeting the consensus in the market of nine months but starting at a higher rate. 10 difference in going billion per press Conference Meeting is about 20 billion more fromthe plan after cutting 6230 and then going straight for nine months. There is a lot to be said for that. I was in washington for the presentation on the Monetary Policy. He emphasized the importance of sequencing and Forward Guidance. Persistence, patience, and prudence. In terms of the will pass Forward Guidance, then no rate increase until way past the end of that. That is crucially important. Its got to be an emphasis on that and what draghi is going to try to do is push the rate expectation a little further into the distance. He might try to push it a little further, but its going to be a tough ask. Manus the other thing for us, let me just hold on that because i want to bring our viewers the number from Deutsche Bank when it comes to changing strategy. This is a bank as had a fairly tough time. Profit, 933r pretax Million Euros, but thirdquarter revenue, that is amiss. The topline growth has dropped in seven of the nine past quarters. Weve had a lack of market 6. 8ility, you revenue billion. , in it comes to capital terms of court equity tier one, the interesting thing will be how to how the fixed income Commodity Division does. 1. 51 billion. 1. 66rket had penciled in billion. The two chaps who are sober with turning task of around the marketplace, its an uphill task for them. That everybodyis is in the same boat. Its not just Deutsche Bank, but the bigger issue for Deutsche Bank is to convince your clients you can stay, and we will deliver the flow that you need to match your business. Miller will join matt out on location today at 9 45 a. M. U. K. Time. Revenue andn the the trading revenue of 1. 51 and the market had penciled in 1. 60 6 billion. Progress on the preparedness for an Asset Management ipo, this is one of the parts of the business Deutsche Bank is looking at most closely, progress on preparedness for an Asset Management ipo. Lets get back to my guest. One thing i saw in our own copy, calleds a backstop, its 15 billion euros of reinvest will be touring bonds that the ecb actually bought. Lets say they take it away, they take up 30, the next trade here is still a little bit bullish. I think the market understands all of this. Its these important moments that indicate the direction that policy is going. As weve seen from previous big events from Central Banks in terms of going into qe programs are coming out in any way, the markets tend to price in that whole action very quickly and well in advance of the actual full change of policy taken place. It is still a key event although the markets understand with the Reinvestment Program that there will still be substantial by in a 2018. Believer, willa inflation return . And hit target . Europe thanso in say the United States or the u. K. You got to look specifically at sources of domestically generated inflation for a sustainable stored to come through. When you look at the United Kingdom where you have unit labor costs growing at 3. 1 on average over the last four quarters in the average during the last growth cycle was 3 , thats telling you that domestically generated inflation is coming to the u. K. Theres not the same evidence in the u. K. Yet. A thirdquarter loss of one point 4 billion euros. A Share Buyback program will continue as planned. Ofect a thirdquarter loss 1. 4 billion due to natural disasters, the cost of irma and hurricanes. Juliette saly will get us up to speed with the business flash. Santanders thirdquarter profit has fallen after charges, the fading leader thatased in june and compares with a 1. 80 4 billion euro average of five analyst estimates compiled by bloomberg. Standard charter ceo said hes talking to regulators and saudi arabia about a banking license. Is lender has a license and seeking to become more active in the oilrich nation. Only a handful of International Banks such as jpmorgan and Deutsche Bank have licenses to open branches in saudi arabia. Our production in the u. K. Fell 4. 1 in september, the fifth monthly drop this year. The decline led by 14 drop in domestic demand for british made vehicles called production to follow 2. 2 through the first nine months of 2017. The lack of progress in brexit negotiations is raising alarm the industry which is dependent in part on supplies from the consonant. From the continent. Clients harging saying they misappropriated 290 thousand dollars by falsifying expense report so investors in private equity funds into paying for him to attend friends weddings and to get his haircut. His lawyer said he strongly disputes the claims. Thats your Bloomberg Business flash. President donald trump says hes thinking about giving janet yellen another term at the as he balances his desire to put his stamp on the central bank with the risk of changing leadership amid a stock market rally. He does not intend to appoint gary to the job, according cohen ton end gary the job. He vacillates between getting on really well and saying theyre doing very well together. I had her conversation with someone yesterday as i walked out the door and they set actually, once people join the federal reserve, they are not as loose and easy to do things as their model suggests. Wants toou think trump continuity . Ntity or i dont know, to be honest. I think he is just enjoying it. When it comes to some of the really big economic decisions since he has become president , some of the big goals, hes more on the cautious side perhaps, so far. Perhaps hes listening to some of those key players that are around him when it comes to financial markets. In that sense you could argue he may go for a more cautious to citizen and that would a more cautious decision. The outlier initially would be john taylor but a point i made this weekend that youve made reference to is, the taylor rule, so much of that is based on your some in terms of what the real federal lines rate is. The fed itself at the moment is deliberating about that. Janet yellen has mentioned that potentially could be as low as 0 at the moment. It is certainly lower than it used to be. Plugin 0 into the taylor rule, you come up with a rate thats only marginally higher than where we are. 1 , youre more or less in line with where its going for 2018. There is still that big decision and deliberation about where the neutral rate is. That see who does a point. Is still with me. Have president Mario Draghis news conference, full coverage from the scene. Ceo, joined by nor casper von koskull explains. Tokyo atlive shot of 2 30 in the afternoon. Dollaryen moving a little bit lower, down. 3 . Janet yellen part of the consideration as mr. Trump makes moderately positive comments in regard to janet yellen. Sales coming in at 8. 03, the market had penciled in 8. 42 . Of these on the agricultural side of the business. The estimate was for 2. 12 alien dollars in terms of sales, a little bit lighter. Will dig a little deeper into the bayer numbers. Thats later on today. In the meantime, in the studio will cut staffea , thirdquarter earnings 828 billion euros below the estimates. Joining us for his first interview of the day is casper. On koskull, ceo of nordea thanks for taking the time to join me this morning. Talk me for youre thinking, 6000 jobs are to go. What geographies will they hit . I understand that 2000 of those will be consultants. Talk me through the cuts, the cost, and the repercussions. Casper this is part of our big transformation on this journey for the last two years. Weve made massive investments and will continue to do in replacing our core bank system. The cuts are a transformation more than anything else, its not a costcutting exercise. Its about creating a new operating model and centralizing functions and doing a lot more, creating future banking. These cuts are a result of that. This is something you will see in the whole industry Going Forward. Of theis this the end job cuts are the beginning of a transformation journey, as you say . Can we expect more from you . What were now looking at in the next three or four years, and longterm the industry will have less staff. At the same time were reducing staff, we are recruiting a lot of new step in the areas that weve not had before. The industry is changing and that means that in the long run, the industry will have less people. Lets talk about the consequences for the business in terms of your decision to relocate the business. There are press stories that you are losing deposits, that the capitals moving out of the bank and customers are leaving. Give me an update in terms of the reality in you see, the flow of money of deposits and customers leaving nordea. Casper theres a lot of noise in this, and we expected that. We had similar reactions in. Orway, finland, and denmark there was a perception that we would move to sweden, which was completely false. Major not result in losses and i look at the Third Quarter and now i look at sweden , the inflow of mortgage lending is unchanged, up somewhat. I see no difference in deposits either in sweden. Theres a lot of noise, and its my job to explain to our swedish clientele that nothing is actually changing. We are not leaving sweden and nothing will change with our customers. I dont want to lose a single customer. Manus respect that and i understand the reassurance, but the market wants to know if is what youre deposits drop by and how much you have lost. As i said, its unchanged in terms of the trend and we have a net inflow of mortgage lending. In the numbers, we dont see it. I dont deny that there would be single customers that would leave. Some. Emotional to in the numbers, i dont see it, and we work hard throughout the organization to explain to customers that it is not changing. Phenomenon inar norway, finland, and denmark just a gear ago and it did not impact our numbers. We getevery time together, ask you this question and you reassure me about the sweezy about the swedish Housing Market. We want to know how housing is doing around the world. Its down a little bit in sweden as of late. Is there anything prop occasional in the price move that you seen, maybe you have tweaked some of your lending standards. Tell me what youre seeing at the front end of that market. Casper there is somewhat of a markettion here and in a weve seen saw weve seen softness in the Housing Market which is healthy that we see it. We have long said that we are more cautious and we have grown less than the market in the last years and court is because of this reason. I dont see any dramatic risk here but maybe a leveling off and slight correction which a think is very helpful. Fews i imagine you spent a Committee Meetings discussing method and what it means. What are the ramifications of ofhod for nordea terms caution, research, and preparedness . Casper weve invested heavily into this. As a piece of legislation, particularly the Consumer Protection side, there are elements that concern me that will impact the functioning of the markets. In termsld regulation of potential consequences that we will see after the fact. The full consequences are not known to anybody yet, really. Briefly, about the Investment Banking side, how are those ambitions developing . The german landscape, a lot of volatility there Deutsche Bank and commerzbank. Is this your opportunity to effect more efficient Investment Banking ambition . Years wever the last have invested in Investment Banking franchise and have moved from a challenger in the Nordic Region to a clear number one. Thats a position we intend to keep. We see that across the asset. Lasses we are the leader and we intend to retain that position am very proud of the position we have achieved. Manus we wish you well in the transformation. Never easy when you have to announce job cuts within the institution. Well have much more on the Bank Earnings season as they continue today. Workplace, ceo of and well see how european banking landscape is looking. A couple of lines coming through, telefonica coming in at. 0 9 billion. Nokia missed but telefonica missing in terms of the estimates on oibda. About 17 billion euros. Special charges for continued operations. Adjusted ebitda will be slightly above the level of the prior adjusted ebitda , the market had penciled in 2. 12. Nejra asian Equities Trading sideways in this session. Weve not seen a move up more than. 2 either way. Asian stock follow till it he has fallen to its lowest on record. Column at the headline level looking at the benchmark. A little more movement in chinese bonds. 10 year yield has gone up to 3. 8 . Some strategist targeting 4 for this. Even before reach the level we were already at a 2015 hi on the 10 year chinese shield. We talked about it being ecb day. The euro gaining against most of its major peers, higher against the dollar for a third day but ever so slightly weaker against the yen. Highand almost twoyear before the ecb meeting. Some questions over whether and when we will get a bit of a retracement either against the yen or the dollar if it get any kind of possible dovish surprise from the ecb today. Demand for euro calls gaining traction. Threemonth risk reversals. Earlier this month the Options Market turned bullish on the euro for the First Time Since 2009 and that is still where we are right now. The Options Market pricing for a higher euro. Manus Derek Halpenny is the head of Global Markets research. Before we take our leave from markwe wrote a lot about carney year but he joined the pantheon of mishaps in terms of rate hikes. November is a shoe in at 90 on the probability. This and a number of people have chastised me and said it would not be a misstep by carney to raise rates. Do you agree . Derek its definitely different. Trichet, it was primarily crude prices. Core inflation was very different. I mentioned earlier the developing story on the miscalculation of unit labor costs. Over the last four quarters on average annual basis its over 3 . That tells you the risk of a lead generated inflation or higher than what the bank of england previously thought. If you look at the data on a sixmonth basis, were seeing Wage Inflation a 3 . A level that is consistent with building risks of the mystically generated inflation. The other element where there could be a mistake is on brexit, of course. Likeank of england is everyone else, cannot predict where the negotiations will go. For the bank of england not to act, they would have to pull back and say wont do anything until the brexit negotiations are complete. That simply is not possible for the bank of england. The risk is based on this unknown, but certainly on the domestic data, there is some justification. Usus thanks for being with this morning, Derek Halpenny. Talking to everyone who has an opinion in riyadh. Erik schatzker is there. A great job by you and the team so far this week. You have a special guest this morning. Im here with david coceoein, cofounder and of the Carlyle Group, who just made a big announcement yesterday. David, its a time of succession at carlisle. Feeling that this moment of transition was coming. Why did you decide now is the time to move on . Our firm is in very good shape. We did not want to give our successors a lot of problems. Arey, we are 68, bill and i 68. At some point chronologically it makes sense to have a transition. We have people who have worked with us for a long time. We will stills day involved in the firm. Cocio. L also serve as we do let the new people run the firm as of january 1. How much leeway will you give them . A fair amount. We dont want to be helicopter parents and hover. Tell us what you want us to do, but you guys run this thing day today. This was largely a decision that was years to make. Decide, you personally could haveat he happened at 67 or 69, why did it happen at 68 . That it wasto feel time to hand over the reins to younger people. We didnt want to wait until it was too late and we didnt want to wait until people said, these guys should go. and why these guys . Bland, he is an extraordinarily talented person i recruited glen. They have very good people skills and we are confident they will do a good job. What are you doing to avoid the g. E. Curse . Three of the best managers left at g. E. The same thing has happened at kkr. What is carlisle doing about this risk . David im not aware of anybody who is a senior person who is not happy with this. I dont expect any senior people to leave. People leave firms from time to time, but i dont believe anyone will leave this firm because of this decision. It is hard to succeed a founder. You know that. You guys are entrepreneurs at heart. The people who you hire cannot be the same. They are not made of the same dna as you three. How does Carlyle Group keep its edge . Do i entered interviewed someone who has increased the market cap by 250 billion in 3. 5 years. We think these people have instincts as well. They have entrepreneurial instincts, so we are comfortable they will do a good job. A 170 billione asset manager and has delivered returns to its shareholders. It has not done some other things as well, like diversify. What do you hope they do differently than the three of you have done . They may make different mistakes, but they were probably not make the same mistakes we have done. On the whole, the firm has done quite well. We built one of the Largest Global private equity firms. We are pleased with where we are, but we didnt make everything work perfectly. You have to keep trying. Doing hing you are trying is doing very well, you probably arent trying enough things. I dont want people to watch and say these guys are going to do this and we will get there ahead of them. Its not my decision to announce these things. Betweenabout the debate diversification and focus . Carlyle group has made a number of efforts to branch out into other areas. A couple of them have been successful, several of them have not been successful. Is diversification still the mantra, or is focused better . Every time you decide to diversify and do something different, it isnt always going to work. Microsoft, apple, amazon, facebook, they all diversify their core business. Sometimes those things work and sometimes they dont work. Carlyle group is a very focused firm. Is been so much of your time with clients. Were any of your major shareholders or large limited partners involved in any way with this transition decision . Did you seek their advice . Their we did not see advice because we sensed over the years that they were very happy with what we were doing. We did telegraph in our conferences that we thought transition at some point was going to happen. No one was saying that is terrible. They said its probably a good idea. Does it surprise you that Carlyle Group is the first to actually give to new people ceo titles . Ple co all of your peers confront the same challenge. David mitt romney gave up thane to two people. Forpublicly traded firms the first to do exactly this. Everybody has to do is right for them. I dont know of what is right for us is right for the others. Why is it that you are becoming coexecutive chairman as opposed to taking one step further back and just becoming cochairmen . It feels like supervised play versus unsupervised play. The kids are in the classroom, the teachers are down the hall. David i dont think that is a fair analogy. Meeting withbe investors and doing interviews like this for our firm. Its not fair to say we will only be showing up at the board meetings. How much time would you say you spend on Carlyle Group Business Today and how much after the transition takes place in january . 4050 hours on philanthropic things. I may do Different Things that Carlyle Group. I may have more time to travel than before. I wont be on the earnings calls. You spend more time here in saudi arabia . I have to imagine you would not mind getting a 120 billion check. We are always happy to take their money assuming we can do it good job for them. Before wevested here think in addition to investing in the United States, investing in emerging markets is an attractive opportunity. Blackstone came here with an infrastructure peach. What is it Carlyle Group wants saudi arabia to understand it can do better than anybody else . We can do good things in a number of areas. I dont want to make my presentation to you, but if someday youre running a Sovereign Wealth Fund i will make my presentation to you. I will keep my comments to them directly. Manages 170oup billion. Of from zero a 1987. Going back to schwartzman, we had a conversation yesterday and he said blackstone has intentions, plans, if you will, of doubling its assets in the next five years directly 800 billion. Itsblackstone has double assets over the past five years. Does Carlyle Group plan to be in five years . David im not going to Say Something we have not publicly told others. We think our firm is in very good shape. We continue to grow and our quality of investments will continue to be very good but i dont have a specific number. Steve said its possible for blackstone to become a 20 trillion firm. Many years ago people thought if you manage more than 20 billion it is too big. I dont think 1 trillion is too big. Where we will be five or 10 years from now but i dont think we will be too big. Rock is 6 trillion or Something Like that under management. Its hard to say. Very ambitious only think we can do a very good job for our investors. We dont have any limits. Thank you very much for spending time with me here in riyadh. Making the transition to coexecutive chairman. Manus its all about transition planning. Thank you very much to eric shatzer erik schatzker. Stay tuned because we have more conversations for you. We have the governor of the saudi arabia and Monetary Authority later on. Theres one stock we will be keenly focused on, it is Deutsche Bank. They come in with sales and trading revenues lower for 2017. A tough day i had to convince investors. Its Mario Draghis decision day. Our investors raced for the big reveal from the European Central bank . This is bloomberg. You will find out, right here. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing Xfinity Mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. Manus Deutsche Bank mrs. Estimates. Estimates. Ecb holds its most important meeting of the year. Investors await news on the scale bond purchases. When well they and . Fed chair countdown. President donald trump said he is still thinking about giving janet yellen another term but is said to decide against gary cohn. The worlds secondlargest economy marketed its First Sovereign dollar ons in 13 years. One of the most eagerly anticipated debt sales this year. Youre welcome to bloomberg daybreak europe, our flagship morning show right here in the city of london. Barclays numbers are crossing the bloomberg. Pretax profit 1. 1 billion pounds, thirdquarter net operating profit 4. 4 6 billion pounds. A rings is setting up fenced bank, the u. K. Will be a separate part of Barclays Bank so ring fencing comes into operation. The entities will operate alongside but independently. This is a breaking news headline from barclays, they are going for ring fencing and the entities will operate alongside but independently. Pretax profit 1. 1 billion. The market pencil than 8. 3 7 the thirdunds for quarter, that is at a pretax level. We are i hope ready to speak to just staley, he is getting settled into the seat to discuss these numbers. Showll join us live on the in a few minutes. Well get into the questions as the day go on. It is each tv day. Lets have a look at futures. Rising equity markets around the european complex. This is how we look on ecb day. London up by. 2 of 1 , the ibex, we are waiting here, what is the next step for catalonia . The ibex is up by 1. 2 . It is an edge resting complexion to what happened in the risk radar. The biggest drop in u. S. Equities and seven weeks, there are a number of individual mosts that will be the pressing to keep an eye on. You have tortured bank trading nordia is cutting jobs. Are go chemical in Banking Sector move, we were look at theing to see barclays numbers,the the biggest drop in seven weeks, should we make that much of a hoopla over a small drop of 1 . We have aluminum at a high and the peso drops the dollar rallies as nafta, saying the only way to make a fair deal is terminated. There is one man in charge of lays, doing me now, staley. Me now, jes lets talk through the structural changes that you are proposing to make. Welcome to bloomberg. You are ring front seat. Take me through what it will look like in five years time. This is completely in the restructuring of barclays and setting up the new factor to reflect what our regulators have asked us to do. We have barclays the group, below that we have two entities, barclays u. K. Which is our u. K. Consumer and Small Business bank and barclays international, the diversified transit budget consumer and wholesale bank. They are both supported by a service company. In total we have 81,000 employees area this is the new structure where we have both the wholesale bank but they are separated as legal entities. Manus lets talk about the results, 1. 1 billion pounds, the 87ket had penciled in billion pounds. Deutsche banks numbers are dropping, how did you do . Tax, it problems before was up 32 versus the Third Quarter of last year and the profits were up 44 . We are pleased with the progression. The banks profitability in terms of her return on capital and the first nine months of this year was over 7 versus 4 last year. New targets, with we are setting a new profitability target for 2019 at 9 . And 2020 at 10 . But like the rest of the industry in the corporate and investment bank, trading in the markets business was muted. Volatility was low, volumes were low. Like most of the industry, and our markets business, we had revenues off in the mid20 level. When you net out certain adjustments. I presume you will face the same ones on the conference call. What is the toleration from shareholders, talking about return. A think we have a goal and objective to deliver the cost of capital. That is why we are extending the target for ourselves that in 2019 we will deliver and Overall Group return on equity, 9 and 10 in 2020. The corporate and the investment to make a significant contribution. We recognize the strategy of barclays is to be a diversified Level Institution where you have proof a profitable consumer, we have a profitable payments business. Goods are growing, we cobrand yesterday the uber, on thewith back of winning their mandate with American Airlines last year. We will grow from varieties versus across the group. Profitability is also a goal of this management. Manus can we drill in more, you talked about the u. K. And the credit card is this, i want to understand, consumers are under a bit of pressure. We have inflation and wages under pressure, we understand. Are you seeing any pressure in terms of repayments, are we going to see perhaps you be more prudent and make more reserves for defaults . Jes everyone is focused on a somewhat Slower Growth of the u. K. Economy although the last quarter was surprisingly reasonably well. Expecting a return to monetaryrmalized policy soon. People are focused on the degree of consumer unsecured borrowing and the u. K. , we are aware of it. On the one hand we are open for our clients and customers, we want to continue to extend credit across the u. K. We are looking at things like consumer confidence, the level of consumer debt, we are adjusting our underwriting standards accordingly. Manus would you disagree that as ceos, you and your peers, there is no spiral of complacency. Youre not complacency you are not complacent. Jes i do not think we are. We want to maintain appropriately conserved conservative underwriting standards. Improved the capital ratio, north of 11 . It is now north of 13 . Where a much stronger, better capitalized bank and we were 12 months ago. We are keeping our eye on the u. K. Consumer as is the bank of england as we prudently should. We also want to stay open for business with u. K. Customers as clients. Manus youre taking me along the journey you want to go. Lets talk about mark carney. Do you think he should raise november and in your opinion, you see the consumer handle that. Lets see where those two are first of all. Jes at the imf meetings in washington a week or so the general consensus from all the Central Banks, the bank of england, the fed, the European Central bank, Economic Growth is gotten to a point where Central Banks are beginning to return to a more normalized Monetary Policy. Is going to mean his Interest Rates do need to rise. At aest rates are historically low level, they have been this way from austin decade. It is time to begin to normalize Monetary Policy and that will mean some rise in Interest Rates. We think it will be in a way to adoes not challenge significant way the u. K. Consumer or borrower. Manus if you set down with mark carney and said i think you should do one and then hold back because of brexit, would that that be your far side recommendation . Jes we will leave the dietary policy to the governor of the bank of england. We will respond to any moves but normalizing Monetary Policy will be a good thing for the Global Economy and a good thing for the u. K. And a good thing for [inaudible] manus setting new targets which assess, for mel as an interviewer, i want to know what that means were dividend policy. You said you may need another year and a half to generate acceptable returns. What does that mean for the dividend policy . Of if you go back to march 2016, we set targets to define the completion of the restructure of barclays, putting the sale to reducing the Balance Sheet by 300 billion pounds to reducing the headcount by 60,000 people. Closing our noncore unit, we have accomplished all of that but within the last two years and now it is time to focus on profitability. That is why we set the target of 2020. For slowly the management focused on generating better returns across the barclays platform. With respect to dividends we our capitals management policy at the yearend result, that is next for very. I believe the dividend question to next february. Manus help me with this, the moden banks are in change as well. You are in change mode also. The flow of business, i am looking at what we are breaking down here. Your market revenue dropped by 31 , macro is down, equities down 24 and credit down 22 . Are you losing customers or what is happening with the landscape of customers on the Investment Banking side . Jes we close the noncore business come at that had 23 billion pounds of riskweighted assets in it. We did incorporate some of that assets back into the corporate and the investment bank. If you adjust for that our markets business was down. 5 . It is not something that we want to see a better performance there, it has an has not impact our market share, our market share is held in their given with the other banks have done. All of us expect a return to more normalized levels of volatility and fall use in recovery and market revenues across the Investment Banking space. Manus just to finish off with a markets question, you have been in these markets many years, you have seen many highs and many lows, you have lived through the crisis. What i want to know is what irks you the most, record after record in the s p or the amount volatility,gainst 2 trillion. One ford 1. 4 trillion was the bet. Are you worried about markets as wego into 2017 or should join you . Jes we are coming out of an historic experiment in using Monetary Policy to drive Economic Growth. We have been running at low levels of risk free Interest Rates for a long time. That does some funny things to as it values across all markets. As we begin to unwind that Monetary Policy of such easing, we would have to keep a watchful eye on asset valuations across all markets. Very much forou taking the time to join us here on bloomberg and give us what is a very robust update on the state of play down there on have much moree on the interview circuit this morning. Ofjust had jes, the cfos Deutsche Bank. You do not want to miss those conversations. Our market story of the day is the European Central bank, they will discuss how and when they will bring the Bond Buying Program to an end. It is one of the most hotly anticipated decisions of Mario Draghis tenure. Are a range of potential outcomes. David sain is with us. It is a very important day for you. Zahn is with us. How is it that mario draghi creates, threads the needle in such a way that there is a draghi put, it is soft. David they will do it incredibly slowly, they will drop to 30 billion or 40 billion a month in january and do for to that for nine months. I do not think the ecb will be raising Interest Rates while draghi as chair. That will probably be late 19, early 2020 that they will think about raising Interest Rates because they are nohwh nowhee near their inflation target. Been relatively underwhelming in that respect. They are overly ambitious and times terms of the timeline for inflation . We can have a discussion of whether to present is the right target. That is what they are going to aim to achieve. Their own forecast looking into 2019, they do not see themselves getting at it. They day to take their foot off the accelerator a little bit. They need to be accommodative. They will continue with qe into 19 at a lower pace and they will also do Interest Rates much later. Averagehere are the on 15 billion euros worth of bonds maturing each month next year. That is also a bolster or a backstop to the market it but we need more detail. Should we get that today . David they will continue to reinvest maturities and do that Going Forward and do have a lot coming due in 18 and 19 and that is why they will massage it down into 2018 into 19 and they will still need doing bond eyeing using materials and Interest Rates. Manus do think that he can do avoid that . Es he david what he has done he hasically if he i made announcements and has been dovish. One of the main concerns as they do not want volatility in Interest Rates but they do not want the euro to go up too much. If the euro goes up significantly it will have a hit to inflation. Seen the have already movement in the euro, the market , fascinating. These are the put to call ratios call to put ratios. At two to trading one, this is going into todays decision. Do you think the euro is priced for the consensus view which is 60 to 30, go to september and give a nice lean of language to say we are there, we might not raise rates. We have not hit 124 a while. Pricedeuro per fully for consensus . David the market is looking at what draghi will say and how dovish he is and what he talks about Interest Rates. He will reaffirm we will have to finish qe which is in early 19 and then we will do Interest Rate hikes substantially later than that. That is going to be the focus which will keep the euro under pressure. Manus we have a little bit more to get through with david zahn. Juliette saly has your Bloomberg Business flash. Juliette Deutsche Bank has reported a bigger than expected drop in thirdquarter trading revenue as europes largest s keeps bank keep losing ground to rivals. Will hear from the cfo at 9 45 a. M. U. K. Time. Thirdquarter profits have fallen. And income fell to 1. 6 billion euros in the three months through september. That compares to 1. 8 4 billion euro average to with five estimates compiled by bloomberg. Antera joint is at 8 30 a. M. U. K. Time. The swedish banks that it will take a charge of up to 115 Million Euros in the fourth quarter. 2000 fulltime employees. Tolagers said he is talking regulars in saudi arabia about a banking license. They have a license from the Capital Markets authority and they are seeking to become more active in the oilrich nation. Only a handful of International Banks such as jpmorgan, Deutsche Bank and bnp paragraph have haveraph pariba licenses to open. Manus done it donald trump is thinking of giving janet yellen another term. Of changing leadership amid a stock rally. Trump does not intend to appoint gary cohn. Here we are, another day, another story that trump perhaps wants to make his mark but he calls janet yellen terrific. The continuity trade could be very much live. Seed we have to wait to who he does announce. He is going to want somebody who will move us back to more normal policy at a gradual pace and he wants a strong growth in the u. S. And as we have discussed, all Central Banks are moving at a gradual pace to get back to mourn him allies policy. Having we will have a new head of the fed and head of the , they will continue the policies that the predecessors have set to get us back to more normal policy but it will take a long time. Manus it will take a very long time. We have written lots about a variety of people seeing a doomsday scenario for the bond market. Here we are, 2. 43 , we have been higher than this this year. We have seen a little bit of movement this week. This is not a runaway bond market. Would you join jeffrey gun lock in saying we are near capitulation point, the moment of truth is coming, is there a moment of truth or reckoning coming to the bond market . David i do not think there will be a moment of truth in the future. We have an accommodative central bank who will the continuing to qe innds and will have japan, we have flow rates in the u. K. And the fed is moving very slowly. All of this means we have strong growth, accommodative policy globally, and we have low inflation. Unless one of those changes dramatically it is difficult to say that the bond market is going to sell off dramatically. Manus we range bound for the t, this is slightly term longerterm perspective for everybody. We have taken this all the way back to 1987. You do not believe the are you part of the history crowd, part of the yellen crowd when it comes to inflation, with oil near 60 a barrel you do not believe there could be a buildup in inflation coming . David most people would hope there is a buildup to inflation coming and that maybe what they are looking for. The inflation is not feeding through as people would expect. Labor markets are fairly robust in the u. S. And in europe and we are not seeing that feedthrough into Wage Inflation. I think we are range bound. Weve if we saw the 10year boom up 1 that is probably the top of the range. I do not see a dramatic move higher. Because we continue to have this accommodation. Manus we mentioned 1 . Bunds at 12 . 6 at 1 . E up 4. 7ook up the price, percent. How quickly could you get to 1 . David the ecb has no problem with that, they do not want to see the move in a violent fashion. Qe could drift higher over the next six to 12 months but i do not think it will be happening today or the next couple of days. Manus i got excited with china coming back with the billion dollar euro offer. Do you think this is a moment for the chinese in the bond markets . David china has not issued in dollars for a long time. People want to ask is that issuer, it is a good diversify diversifier. Manus they are not rated in terms of the spread. David with they want to access a Global Markets, they would want to continue to develop market liquidity and bonds. Itestors would want to buy because it is a name that Everyone Wants to get diversification to. It is interesting but [inaudible] manus wheres the trade in pound, what it unsettle the gilt market in any way . Gilts are trading on inflation which we are seeing as much higher and that means the mpc should be hiking rates. On the offset we have brexit. Exit is such a big unknown that i do not expect to see the central bank do very much before we have more certainty on brexit. That maybe sometime in the future. Thank you. Continuing his conversation with the Bloomberg Radio team. Go to let go. E is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Guy good morning and welcome. You are watching bloomberg markets, this is the european oakland open. We will bring you the first trade of the day. In front for. A couple of reasons why, let me tell you about them because it is a big day for europes banks. Will this man deliver, what will mr. Draghi tell us . We will find out at 1 45 p. M. Cet. We will take that live for