Disagrees. As ecb bond buying divides opinion, we will hear from Christine Lagarde, plus how negative yields are impacting the Worlds LargestSovereign Wealth Fund. Matt i know what the big news for you was last night. Number in the u. S. Showing manufacturers in contraction was fascinating. It definitely moved markets. If you are, even sitting in the u. K. , there is no doubt that was one of the biggest market moving things yesterday in terms of increasing fears, changing the price on futures. We will discuss that. Matt we will touch on brexit. We are going to be going down to westminster throughout the morning and following the fall out of last nights vote. Lets take a look at the market numbers right now, starting with asian equity indexes after those big drops in u. S. Stocks. We see asian stocks rising. Yen bouncing back a little bit. Just an hour ago. To sellare more willing safe haven assets in the last 60 minutes. Crude oil i think fascinating. Weakness we have seen in crude oil, the stockpile reserves that are out there and the increase of opec production not helping oil at all. Down toe of nymex wti 54 dollars . 26 per barrel. Bouncewe could see a back from losses in the u. S. Session yesterday. We saw stocks lower after data showed a contraction for august in the u. S. The yield curve went positive after quite a few days of being inverted. That seemed to be more what was going on on the front end of the curve including the two year yield outpacing the 10 year. That says something about expectations of the fed. Cable on a second day of gains, back from its lowest since 2016 yesterday. We have seen a humiliating defeat for Boris Johnson, looking like we could move to an election now. Lets discuss that. Boris johnson says he will bring forward a motion for an early general election after tory rebels and Opposition Mps defeated the government in their attempt to block johnson from pursuing a no deal brexit. The house of commons voted 328 to 301 to take control of the agenda. They can bring forward a bill seeking to delay the exit date. Jeremy corbyn says the bill should be passed before an election is held. Here is what the Prime Minister and labor leader had to say after the vote. I dont want an and election. I dont believe the right honorable gentleman wants an election. He wants to table a motion for a general election, fine. Get the bill through first in order to prevent in order to take no deal off the table. That is legit drama. Joining us from westminster is my coanchor anna edwards. You have been up since dark and early following this. Im sure you are glued to the headlines yesterday as well. In . Much trouble is bojo votes,ainly by the remember, this is the first vote into his premiership. He loses this first vote. It was not even about he brought. Really dramatic scenes in westminster. We seem to be limping closer to a general election. We have to wait for other votes in the days ahead, but we are going to see a vote on this plan by the Rebel Alliance to block no deal through legislation. They want that voted on today. Could we also see votes around the general election . Boris johnson is setting in motion a general election. Arguably he has been planning this for some time in some of the giveaways he has been talking about from a policy perspective. Support. Labour party thats why he needs Jeremy Corbyn to agree to go to the polls. Ase might be spinning this planned, a nice purge for the now see boris losing his majority. That happened before the vote. He now leads a limping minority government. Party 21 mps from his defying the government, voting with that alliance to block no deal, including the former chancellor. No shortage of drama here in westminster. If this bill is passed into law, as far as i understand, if an election goes ahead and Boris Johnson were to win, he could repeal that law. Talk to us about how inevitable a general election actually is, and if we do go to one, how that changes the prospect of hard brexit. Not inevitable, but things seem to be coalescing in that direction. All kinds of paths seem to be leading to some kind of general election. The labour party will not jump in and say a general election, bring it on. They do not trust Boris Johnson to rule out no deal in the short term. They also dont trust him to stick to an agreed date. The labour party does not trust Boris Johnson. ,f there is a general election the legislation could be repealed. Nothat case, we could see deal anyway. Even if we follow the rebels path and no deal is pushed into the future, what happens after january 31 . This alliance is a ragtag bunch. It includes people from across the political spectrum. They probably agree on very little other than stopping no deal. Nejra great to have you with us. Anna will continue coverage all day. Now lets ask the question on mliv, how would hard brexit hit global assets . The pound 6 lower than soon after the 2016 referendum. The chart showing sterling implied volatility extending its climb, making it the highest among developed market currencies. Great to have you with us. You were listening to our conversation. Let me address the issue of a general election. Do you see that as an inevitable outcome . The Current Parliament cannot seemingly produce an outcome, be or deal brexit. Presumably next month. Yesterday, dipping below 120 and bouncing right back up. Markets are saying no deal brexit is less likely. Thats why they are devaluing the currency more. Do you agree . It is a very interesting question. I had a lot of discussions yesterday about what has been driving the pound weaker late last week. Rebound. A couple of explanations. One is the prospect for having Prime Minister johnson for a bit longer in a no deal brexit, which is negative for the pound, but there is also that group of clients arguing that also reflects the prospect of Prime MinisterJeremy Corbyn with a brexit deal, but also less popular economic policies. Sterling lessmake attractive for foreign investors. It is a lose lose situation for the pound. Brexit seem that no deal under Prime Minister johnson may be only part of the story. Does that mean you would not be targeting sterling to have any sort of meaningful bounceback from here . How would you trade around the currency pair or so . The outlook will remain subdued. There are certain Downside Risks on the table. Down the road, depending what the political outcome is going to be, we could experience a cautious rebound. That will depend on the ability of the economy to deal with a no deal brexit or to deal with less supportive labor economic policies. Also, quite important at this stage to highlight the downside for the pound may not be as accentuated as we saw before for a range of reasons. We think in cable we are at a level which is consistent with our longterm fair value for no deal brexit outcome implying that a lot of negatives are already in the price. Markets are pretty sure the currency. Very different from 2016 is that the pound is weakening at a time ann gilt yields are at alltime low and stocks are bellying rallying. Conditions in the u. K. Ultimate should mean the markets are helping the economy deal with the political risks ahead. It is very different from 2016 when the pound was selling off and gilt yields were soaring. People are talking about a balanced payment crisis. As a whole, the combination of those factors limits the downside to a degree. Both sides also mention here the fact that if you want to sell the pound, what exact idea by . A few years back, you would have said the euro, the political drama. The economy was recovering. Eurosterling should go higher. Zone is flirting with recession. The ecb is about to start using again. The fed is cutting rates. The context has shifted as well. Overall, the outlook may not improve materially anytime soon. Be aswnside risk may not significant as we thought before. Anna do you see the matt do you see the same kind of fair value when you look at the pound in yen or euros . Currencyerall, the that may struggle the most against the pound should be the hero the euro. From a relative centralbank policy outlook, fundamental outlook, the euro may struggle the most. It seems like eurosterling might not have as much to gain as cable. The sterling selloff dollar he presumably likes of yen, but also safe havens like the swiss franc maybe the biggest beneficiaries here. Would you also be looking at euro balls because of brexit . Isinvestors see the pound generally oversold which has corrected quite a lot. In contrast, the case of the euro, we are still dealing with multi year lows. Longd see appetite for positions as a proxy hedge for a no deal brexit. Economic links are there. Is, the euro zone where it flirting with recession, it may and thateal brexit could weigh on the euro, fuel euro volatility. Going to stay with us. Valentin marinov is our guest cohost for the hour. Now i want to get the bloomberg first word news. European Central Bank Policymakers are expressing skepticism over the need to resume bond purchases. The latest told french media the ecb does not have to use all its policy instruments at the same time. The central bank faces internal debate over policy easing ahead of its easing next week its meeting next week. Giuseppe conte said to form a government. He is set to bring a Government Program today. 70 underwater after being battered by hurricane dorian. The bahamas are still conducting rescue missions on the island of grand bahama. The Prime Minister said it is not looking good and he expects catastrophic damage. Meanwhile, the u. S. Has declared an emergency in North Carolina as dorian heads to the coast. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra thank you so much. Coming up, interviews galore. You wont want to miss these happening right here on bloomberg tv. We will be speaking with the ceo of the World LargestSovereign Wealth Fund. A little later, we will be talking to the eu trade commissioner and getting her thoughts on the slowdown in europe and the deepening trade impasse. Least, we are not going to speak to the president of Emirates Airlines ahead of the World Aviation festival. Dont miss these exclusive interviews. Work,ou are traveling to cap Bloomberg Radio live on your mobile device or dab digital in the london area. This is bloomberg. Matt this is bloomberg daybreak europe. Lets get a check on the markets in asia. It has been mixed, but as we see that gain in u. S. Equity futures, upside in the afternoon session. Stocks jumping the most in two weeks. A little bit of bargainhunting for the stocks that have been hit the hardest due to the protest. Chinas share market getting a boost on the back of the pmi numbers for august coming in better than expected. Suggesting some expansion. Australian stocks under pressure, off by half of 1 Health Stocks laggard. We have seen the aussie dollar rise after Second Quarter gdp came in line with estimates. 1. 4 if we canof have a look at my chart for this gdp read in australia. That is due to the fact we have seen Government Spending coming through. Noting even though it was in line with estimates, it is the weakest pace of growth we have seen since the Third Quarter 2009, which was of course right in the middle of the Global Financial crisis. Markets still suggesting the rba may need to pump more stimulus in by the end of the year. Now lets get the Bloomberg Business flash. Walmart has promised to curtail ammunition sales after deadly source shootings store shootings. Sales oflso stop handguns in alaska, the only te where it is still walmart is also requesting customers refrain from openly carrying firearms in its stores. Samsung is preparing to unveil its second foldable device next year. The new phone will have a 6. 7 inch display that shrinks to a square when it is folded. It will be more affordable and thinner than this year yes yearsfold area this galaxy fold. U. S. Sales of a car will end in 2020, the latest move by the to reduce exposure to the american car market. That is your Bloomberg Business flash. Nejra donald trump is trying to get china to agree to a trade deal before the president ial election next november. He tweeted if he won, a deal would get tougher. U. S. Manufacturing unexpectedly contracted in august, coming in below 50. The week data provided traders with ammunition to pile pressure on the fed. Meanwhile, Eric Rosengren does not see the need for any immediate action. Becomee headwinds could more appreciable. If they start slowing down the economy, we should react once we see it in the data. I dont think we should anticipate necessarily thats going to happen. As long as we are going around 2 , i dont see as much of a need for immediate policy action. Is stillentin marinov with us. We heard Eric Rosengren, but banks are predicting 50 basis point cut at the next meeting, 100 basis point cut through the end of the year. What do you expect from the Federal Reserve . Thistin two rate cuts year in september and december, 25 basis points each. I think what could matter for the markets much more is how preemptive the fed will be down the road. Like the fed will be less proactive, more reacting to the economic development. To me, that is not good news for the market. They are hoping the powell puts will prop up stocks. There will be a time gap between the data deterioration and the fed reaction function, during which risky assets, stock markets, risk related currencies could be exposed to risk aversion. Nejra im guessing you think the fed could disappoint markets somewhat. Does that concern you it could spill over into the dog the job market . Valentin manufacturing is only a small part of the economy. We are talking about where than 10 . The number is smaller than that. That is part of the u. S. Economy that is the most exposed to the global trade. To try to highlight the resilience of the u. S. Consumer,n terms of Market ImpactMarket Participants will be focusing on how the u. S. Consumer sharing under the changing conditions, the service as part of the economy is performing, they feel that is what makes the balance of risk in favor of more aggressive bond practice. Where we spend at the moment, yes, manufacturing is not doing well. The rest of the economy is seemingly ok. I guess the answer is the fed will be in wait and see mode rather than acting proactively. Matt even if they acted proactively and preemptively, do you expect to see weakening impact on the dollar . The dollar index continues to hold up despite expectations of fed cut area fed cuts. Part and parcel. Unwarranted tightening. Financial conditions could come on the back of dollar appreciation. The dollar will be an important driver of what the fed is doing. The reaction function is going to drive the dollar. The dollar is supported by highyielding safe haven currency. It is difficult to imagine a isnario where the dollar under sustained selling pressure unless the fed comes out very aggressively. Stayingalentin marinov with us. Coming up, interviews galore. Do not miss. This is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Nejra this is bloomberg daybreak europe. Morning. D Prime MinisterBoris Johnson said he will bring forward a motion for early general election. He comes after tory rebels and operation Opposition Mps defeated the government in their attempt to block johnson from pursuing a no deal brexit. The house of commons voted 308301 to take control of the agenda which means i can bring forward a bill seeking to delay the u. K. s exit date from october 31. The leader of the opposition, Jeremy Corbyn said the bill should be passed before an election is held. Heres what the Prime Minister and the labor leader had to say on the prospect of a snap poll after the vote. I dont want an election, the public dont want an election. But if the houseboats for this bill tomorrow, the public will have to vote who have to choose. To table a motion for a general election. First inill through no deal off the table. Bloombergss is anchor anna edwards. Great to have you with us again. Talk us through the steps that would take us through general election. How much more likely is it . Seem to be edging in that direction. Another historic defeat for the government, the first time in a few hundred years that a Prime Minister has lost the first vote that has been brought on his agenda in the house of commons. A really Interesting Development and high drama. We are inching toward a general election but it is not at all certain that we get there. Prime minister Boris Johnson said he will start the process. That means he needs the support of two thirds of the house. It is a minority government so we need support from the Opposition Labor Party to bring a general election forward. He might are not might are might not get that. Jeremy corbyn said he will get that if the house has time to pass the legislation before hand but that is crucial. So with the lack of trust in the house of commons they wont just call the election. They dont trust Boris Johnson not to change the date at a later point. Many roads do seem to lead to that general election but the path by which to get there remains uncertain. Matt what about the tory party . Yesterday in a the lib demsg to and if im not mistaken, he has fired ours going to fire 20 of the Rebel Alliance that you talk about, or of his own rebels. What is with the disintegration of the conservative party . Fired 21 rebels last night, they have all been brought out from the conservative party including people who were in the cabinet under theresa may. Former chancellor fitment philip hammond, these are big names. The business secretary graig clark also gone. People who have spent decades in nowconservative party accusing him of trying to change the party. They say it is not they have changed but the party that has moved away from him, conservative party that they no longer recognize. Whether were watching the disintegration of the conservative party or forcing them coalesce around a brexit message to take on with more strength the brexit party, we will have to see over the days ahead. Some amazing names going from the conservative party yesterday in that purge, including the grandson of Winston Churchill who was thrown out of the party yesterday. Nejra anna edwards in westminster, thank you so much. Lets check on the markets around the world. Starting traders try to work at whether the increased risk of no deal brexit is there materially. Indian socks faltering after the latest week gdp numbers but youre looking at signals that it is not yet time to buy. I dont know if it has to do war, orxit, the trade all of this together leading to uncertainty. Theres a wonderful chart that speaks about seems to suggest the cross battle thats happened. The previous two times it happened it led to a big fall and if that were to happen, even though it has come up quite a bit, a lot of point a lot of people look at the Indian Markets and say it has deescalated so much. It in absolute terms look at the terms, multiples, 21 times as of august. 019 compared to the average we have come off a bit but we are still some time away from hitting that tenure averages. Thanks very much for that. The markets have a lot to digest they from weak u. S. Data to latest uncertainty on trade talks. Walk us through it. Are seeing a bit of reprieve in asian equities compared to what we saw yesterday, the dow closing down more than 1 . As you mentioned, that week and you fracturing data indicating contraction for august. Is the u. S. Joining the slew of bad data we have seen in factories around the world . Up, we are seeing some strength and some of the asian markets. The benchmark is higher. Australia is down nearly. 5 this morning. Growtha showing that slowed the most since the financial crisis. The Australian Dollar higher. Traders saying its better than expected. Sovereign bonds are seeing a bit of a rally. Silver is up 1 . In the month of august, silver rose 13 payment lets look at for a moment, bnp out with saying gold will crack 1600 a ton and saying the fed they think will embark on a quartet of Interest Rate cuts. That would be the highest we have seen gold in six years. We have already seen gold be the safe haven asset as the trade war continues and that undermines what is going on stayaying rates will negative territory in that will be a big appetite to hold onto Something Like gold. Nejra great to have you with us, thank you so might. Lets get the bloomberg first word news with Tom Mackenzie in beijing. In italy, the Prime Minister set to form his next government after grassroots members of the fivestar movement backed the alliance with the Democratic Party an online vote. He is now due to bring a list of ministers and Government Programs to the president today. President trump is telling china to do a trade deal before next years president ial election or face even tougher negotiations if he wins a second term. He tweeted, think what happened to china when i went. The deal would get much tougher. It comes as washington and beijing are struggling on agreeing on the timing for the next meeting. The finance minister met with officials in washington as part of a plan to offer a ran a 15 going dollar economic package to keep a deal with a ran alive. The Trump Administration says that would be a nonstarter. People is 70 000 underwater after being battered by hurricane dorian. The bahamas is still conducting rescue missions on the island of grand bahama. The deputy Prime Minister said it is not looking good, we expect catastrophic damage. Meanwhile the u. S. Has declared emergency in North Carolina as dorian heads to the coast. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tom mackenzie in beijing, thank you so much. French magazine was told the central bank doesnt have to use all its policy talk at once. The comments make the debate over stimulus even more divided. Ballantine is still with us. How significant are these comments in terms of making you hesitant in thinking the ecb will deliver on the markets expectations . Hes the fifth governing Council Member in the last week or so to openly question the need for very nextssive monetary easing week, be it in the form of rate increasing the issue of limits in the to extend the ecb Balance Sheet and highlighting a range of views of the governing council even know other members would like a more homogenous message. You get a sense that not everyone is really on board with any decision that may come or that the ecb will announce next week which could mean more aggressive monetary easing or monetary stimulus. From the investors point of used ase euro has been a finding currency for so long and all of that was predicated on the expectation that the ecb will be aggressively dovish forever. There is no consensus really call. Certainly a wakeup piecethere is an opinion out saying both the ecb and the Federal Reserve will most likely take more stimulus measures this month, regardless of what their analysis tells them about the potential impact of the economy. In other words, the market is the tail that wags the dog here. My question is, what would happen if they didnt . What if the ecb didnt go further negative with rates, didnt bring back a bond purchase program, and simply held tight . Just for the record, on your last point, if the be is cuts rates and they say we could extend the Balance Sheet but not necessarily increase the limits, that in itself will be seen as a hawkish a prize. From that point of view you can easily see yields in the euros on moving higher. You would think the rate differential will start widening aggressively. This could help the euro regain pound. Ound against the the question would be how sustainable such a move would be especially if the euros on set data continues to deteriorate. Theres concern that the ecb is falling behind the curve in making matters worse down the road. Ultimately the kneejerk reaction would be the euro higher, but the jury will still be out as to whether that will bear out the beginning of an theend for the euro because euro data continues to come in rather disappointing. Is the approach by Central Banks, the risks are starting to outweigh the benefits. So what approach should the ecb take if it can take any approach when the benefits would outweigh the risk . Has shown time and again that talk is cheap. It comes across as a credible message. If you cannot sway the governing council in favor of aggressive monetary stimulus next week i think he will try to promise the market that this will come. This is the best he could do given the circumstances. Whether the risk down the road will continue to mount and this will ultimately shift the balance of the governing council remains to be seen. In other words, i cannot disagree that we are at the stage of development of the global economy, we just dont see it. We will do what it takes and so on. It is a bit premature to expect the Central Banks to try dovished the already market expectations. Ust youll be sticking with on this important day for the markets. Miss the q a with the next president of the European Central bank. We will bring you live coverage of Christine Lagarde in front of the european parliamentary lawmakers here on bloomberg television. That starts at 9 30 a. M. London time, 10 30 on the continent. Firm announce it would list on the public market, a rare move for private Equity Company to vote their shares. They tend to act more aggressively than their privately traded peers. Here with more is dani burger. It would be the biggest ipo of private equity firm in more than a decade. Sources have told me that it will give the current owners more liquidity. The going public tends to come with side effects. Listed firms see themselves as perpetually undervalued. Pleasinges of shareholders they tend to aggressively increase the font size to boost management fees. You can see that here in the shaded areas. A bunch of these firms go public, and then we also see not we see they tend to raise more unique types of funds. These are the public firms in the orange. We move out to when they actually start to list and go public here, in 2018. The have an average of eight unique funds per firm compared to 2. 3. This just shows you how greasy they tend to get come we might see eq t follow in those steps. Nejra a great round up. Coming up next, we will speak to the cohead of the Strategic Investment Group at j. P. Morgan, at a leverage finance conference here in london. This is bloomberg. This is bloomberg daybreak europe. Matt im matt miller here in berlin. Good wednesday morning. Lets focus on leverage finance. More than 75 issuing companies are london for j. P. Morgans european highyield and Leveraged Finance conference. So far, 2019 has been a lackluster year for highyield bond and leveraged loan sales in the region. Collectively they are down 23 billion euros compared to last your. What does the rest of 2019 hold for the sector . Joining us is the cohead of Strategic Investors group at j. P. Morgan. Welcome to the program. Let me ask you the question we just posed their, what does the rest of 2019 hold for the leveraged loan industry . Morning, matt. We expect in increased effect increase activity. We already saw strong increase in q2 in both the equity market and the debt market. We saw a lot of activity. Buyouts of big announced from public to private and we expect those to hit the market. Thats why were hosting our conference today. Areenerally investors desperately looking for yield, do you think this could spur higher Risk Financing so bond sales have a lower rate to borrowers . Is that on your radar . Klaus we dont expect this but we expect private industry has raised a lot of new funds, increasing from 600 million to 1. 3 trillion. So we expect more activity but not a credit bubble. Matt and really cheap financing, right . Flow rates have to help borrowers like private equity that can actually get the loans. Klaus we are expecting lower for longer. Central banks continue to support the market and we expect it to stay. If you compare who went into the year, we were all expecting a slight interest rise, but overall it has come down around 200 basis points. Nejra what about corporate restricting to carveouts . What do you expect with that for 2019 and next year . Klaus we expect the trend to continue to be busy. I dont know if youve looked at the most recent data. Ofare seeing more than 50 the active campaigns are not in the u. S. But outside. There are almost 600 campaigns going on and we expect to drive even more carveouts. Activity to come across europe which will help private equity funds to invest in dry powder and be active in the market. Matt weve seen an increase in activism in europe and in private equity cannot buy out of controlling stake of a firm, will they increasingly take a practicestake and then activist shareholding . Klaus thats actually a very good question. What we have seen is the private equity funds have done a lot of fundraising on the normal by outside. A lot of Industry Companies want business divest the but potentially have the option to bite back. Funds raising minority money. Those are on the traditional by outside. People are investing in fastgrowing asset. It is now coming into europe. Nejra is it going to get more difficult to find financing for cyclical buyouts . Investors are getting more worried about a turn in the economic cycle. Klaus of course the capital structure has to be right. They can of course put more equity behind so the financing should work out. There are different ways of financing, people are happy to take a Minority Stake or buying 51 of a company and managing it. So to answer your question, investors are more choosy or selective but on the other hand, redemptions are coming up and we believe it still a valid market. Matt what are the hot sectors for activity that we should be watching this year . Is growth areas, one related sectors, consumer tech, and also services. On the other hand, as Interest Rates are going down there is a lot of focus on yields. Areas like real estate you see a lot of activity. Recent transactions like buyouts or public to private. Three quarters of the market are focused on those. Others focus on more defensive areas. Biggesthat is the concern for investors that you talk to on a daily basis right now . Klaus there are three areas that you guys focus on, number one is brexit, the trade war between the u. S. And china, and the third one might be around elections. It is a factor that impacts investors and its difficult for them to judge the outcome of some of these events that might create some volatility in the markets. Nejra great to have you with us, thank you so much for joining us. , will be speaking to the ceo of the Worlds LargestSovereign Wealth Fund at 10 30 a. M. London time. E will bring exclusives the former ecb president will join us from the event for his first interview of the day. Were also at the World Economic forum in cape town where we will speak to the World Trade OrganizationDeputy Director and the South AfricanBank Governor as well. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Nejra good morning from london. Im nejra cehic. Matt im matt miller in berlin. This is bloomberg daybreak europe and these are todays top stories. A snap. Edges toward election as the house of commons takes control of the agenda in a bid to block a no deal brexit. It means parliament is on the brink of wrecking any deal we might be able to get. Matt dissent everywhere. The trade war bites as u. S. Factory data plummets. Eric rosengren says the fed doesnt need to ask yet but if market disagrees. As ecb bond buying divides opinion, we will hear from Christine Lagarde. How are yields impacting the worlds biggest Sovereign Wealth Fund . We will speak with norways Yngve Slyngstad exclusively. Nejra welcome. In the u. K. , we are waking up to increased general election risk with Orest Johnson suffering a defeat in terms of his brexit plans the globally, the data out of the u. S. Very disappointing manufacturing data out of the u. S. Our first guest points out it is not really a huge part manufacturing is no longer a huge part of the u. S. Economy. Nonetheless, because of that and other weak data points in the u. S. And in europe, markets are expecting action from the ecb and fed this month. Questioncause the becomes, does the weakness in manufacturing spill over into services and hit the jobs market . 11 of the economy is manufacturing compared to 17 pen percent for the consumption. We bounced back a little on the futures inferred terms of s p , dow, and nasdaq. European futures getting a little lift, so we have a little risk coming back to these markets. Is it a dead cat bounce or something more meaningful . It is simply the prospect of stimulus you are pointing to giving and the markets a list. Lift. At the bondlook futures trade this morning after big dips in yields yesterday. Maybe we will see them bounce back a little bit. That looks like the case for bunds. Investor selling the futures, buying italian btp futures as we see yields below 90 right now and the u. S. 10 year bond yields dropped yesterday. Today, we see yields bouncing back a little bit has some of the safe haven bid ebbs. We are getting headlines across from the royal bank of scotland saying the eight provisions totaling it made provisions totaling 5. 8 billion pounds. The volume of ppi claims in august were significantly higher. We are looking at royal bank of scotland headlines that may be able to move the stock in the markets this morning. Lets check on the markets in asia with Juliette Saly in singapore. It has beeniette mixed in asia. We had a positive read come through in the thai hsing pmi out of august from china and the yuan fix stronger than expected for the 11th day. The nikkei, closing firmer by. 1 . Have a look at hong kong. The international saying you are seeing bargainhunting, the likes of Property Developers wh group, Companies Hit hard in the crossfires of the trade war. Hong kong having its best day in two weeks. A good again in the aussie dollar today, although australian is lower. Gdp coming in line with estimates, giving a little reprieve to the rba for now but it was the weakest growth since the Third Quarter of 2009. On the equity and currency front, here is what it looks like but in bonds, as we know, on the short end of the curve in terms of jgb, they are in negative territory and it looks like the longer end of the curve could start to join that party. We saw a record low on the yield on the 20year today. It is less than four basis points toward negative and the 30year yield, about 11 basis points away from getting into the negative territory. Analysts, saying this will happen because you are seeing a lot of foreign funds by into jgbs. It looks like it happens with the longer curve. Benector 1. 6 trillion could added to the worlds growing pile of negative debt. Nejra Juliette Saly in singapore, thank you. We cant get away from the negative yielding debt. Boris johnson said he will bring forward a motion for an early general election after tory mpsls and opposition defeated the government in an attempt to block johnson for pursuing a note of brexit. 328301 vote to take control of the agenda, meaning they can see to delay the u. K. s exit date. It should be said passed before an election is held. There is what the Prime Minister and labor leader had to say about a snap poll after the vote. I dont want an election. The public doesnt want an election. I dont believe the right honorable general and gentleman wants an election but we will have to choose who coaster brussels to take this country forward. Motionants to table a for a general election. Fine. Order toill through in prevent in order to take no deal off the table. Nejra joining us from westminster is bloombergs anchor for the european open anna edwards. Lots of scenarios we are trying to work out what it means for sterling. What would a corbyn government mean for cable . Really interesting to see the pound moving all over the place yesterday amongst the drama in the house of commons around no deal. Analysts seemed quite quick to conclude if we saw a no deal taken off the table, in some form, that leads to some upside to sterling. Youve got to overlay on that and analysts have been doing that for some time the possibility of a Jeremy Corbyn government. The Jeremy Corbyns position has been a little murky that they are clear they dont want no deal. On that front, they seem sterling friendly. So much so analysts at citi and Deutsche Bank seem to be coming around to the conclusion a corbyn government would be the lesser of two evils. Interesting to note the background volatility in sterling at this point. One of my colleagues pointing out to month volatility on sterling is higher than the mexican peso and the argentine peso. Stunning developments in terms of the volatility. When you talk about the possibility of a corbyn government and you might not be talking about him on his own or the labour party on its own. It might have to be a coalition and that would blunt the edges of a socialist agenda for the u. K. Matt what should we expect this week . What does your week look like . Well, the rest of this week looks up in the air based buthe voting of yesterday, today we are expecting to see the rebels having taken control yesterday will be bringing their legislation to the floor. We will see a vote on whether or no deal should be taken off the table and then will we see the government bring their own vote on a general election . How quickly will not happen . How much confidence will Jeremy Corbyn need and the details around that election . The date, for example, before he agrees to give it. He does need to back the Prime Minister in any call for a general election because we know we would not see a general election until 2022. We know very murky, and parliament will be suspended at some point next week. Parliamentarians have very few days to do anything before we get the start of prorogation. Butgs look very uncertain, a lot will depend on the way the vote goes and how quickly the government want to ask the house whether it will back a general election. Matt thanks very much. Bloombergs anna edwards in westminster. I believe she will be planted there the next couple of weeks. Joining us, david page, senior economist for the u. K. And u. S. At axa Investment Managers. Your thoughts on what we saw last night, and does this bring us any closer to blocking the possibility of a hard brexit . Absolutely. What we saw last night was becoming fully expected. Extension ofd an article 50 to allow for general election and a now things to be shaping taking shape around their view. Whether we get down the line remains to be seen but what we have seen from the governments reaction day or two before where it suggested it would fall back on the idea of an early election suggests the government thinks the parliament can stop it. We wont be surprised if we see a vote going through concerning legislation today so the legislation is likely to go johnsonand that pushes and the government were pushing for the election. The question of if the election falls before after that 31st. Labor says they will commit to there is legislation going through but it is not clear what requirements they will need on top of that. If you saw a conservative victory in the middle of october, there would be nothing to stop them. That wouldnt take no deal off the table and we are not sure how labor will play that but the election we think is an inevitability but the question is timing. Nejra you do see the election as an inevitability. We were getting slightly different responses. See an case, do you election as sterling positive or negative . Weve just heard about how some of the market are seeing the prospects of a corbyn government but johnson is leading in the polls. David the difficulty for johnson despite his lead is the tories dont have natural allies in parliament so they will need to win outright. Havent seen clear wins for some time whereas labor could see a second referendum Style Coalition without the party. That, i think, makes it difficult for the government. From the labor perspective, i think we are in a situation where that should be positive or seen as positive for sterling. Aat we are doing is moving worstcase scenario for sterling perspective and the more chance you have of that coming about matt ive got to break in here. Hong kong leader carrie lam is now formally withdrawing the extradition bill that caused kicked off protests 14 weeks ago, this according to the south China Morning post. Carrie lam formally withdrawing the extradition bill. It had been shelled, but was still there. Shelved, but it was still there. You see the Msci Hong Kong rising on this news. We will see also the hong kong dollar moving higher on this and many assets connected to hong kong that had been under so much these protests and of the economy that has resulted, possibly rebounding today after we get this news. According to the south China Morning post a state influenced newspaper, will withdraw the extradition bill that kicked off all of this unrest, which lately has turned violent, has reduced tourism, has made doing business in the city a problem though i will is determinedster to open in hong kong. Haveheless, retail sales absolutely crashed and it has been a problem for the entire the fourth biggest equity market in the world, the 35th biggest economy in the world. Now im it will possibly see a little ease in the protest pressure. The jump we have seen in hong kong stocks, being led by Property Developers who might have been at more risk had discontinued. We will keep an eye on the news and Market Reaction but you wont want to miss these exclusive interviews happening right here on bloomberg tv. We will speak with the ceo of the Worlds LargestSovereign Wealth Fund on what he is his 1ng and divesting trillion in and out of at 10 30 london time. Later, sicilian mouse from and her thoughts cicilia malstrom. We will speak to the president of emirates hairline airline. And day withp, hq the next president of the European Central bank, Christine Lagarde will be in front of european lawmakers later. We will bring you that on bloomberg tv from 9 30 london time. This is bloomberg. Matt eight is 18 minutes past 8 00 in the morning in berlin. 7 18 in london. We are about one hour and 12 minutes from the market open. Im matt miller in berlin. This is bloomberg daybreak europe. Nejra nejra cehic in london. Hong kongs leader carrie lam is to formally withdraw the extradition bill. Joining us now is Bloomberg Stephen engle who will add context. Tell us what we know so far. Stephen we are hearing from the south China Morning post, reporting she has called a meeting with proestablishment legislative the in the next couple of hours and it is being learned she will formally withdraw the extradition bill that was the spark that led to this now13 on thef a role of unrest streets of hong kong that has boiled to the point of dividing the city, and there were five main demands and this was top of the list. Refusedcarrie lam has to meet any of those demands. Bill, after it was first seen that one Million People plus would hit the streets of hong kong, she said the bill was suspended but was not formally withdrawn. That meant to the protesters that it could be revived at some point in the current legislative session, which expires in july of next year. Plenty of time for the government if things died down to bring back that bill. Now it looks as if she is finally acquiescing to the top demand of the protest group. She will officially scrap this legislation. She had previously said it was dead, but again, not officially withdrawn. The other main demand by the prodemocracy camp is have an independent inquiry into alleged Police Excessive violence. That, she is not giving into saying there is already a mechanism for police complaints. Ae has not acquiesced to declassification of certain protests as being riots which carry longer prison sentences for those convicted. The protesters also want the government to release those who have been detained so far. More than 1000 arrests have been made by police. Again, a broader demand, they want full universal sovereignty in hong kong which is a faroff goal probably. Matt it is important to put peoplentext how many came out on the streets to protest this measure. You just quoted the figure of over one Million People. I believe hong kong has a total population of 7 million. That would be the equivalent to 50 million americans marching on washington, d. C. It is a massive slice of the population and it is also a very small island. Last 13 weeks, how much economic disruption have these protests caused . Stephen two parts to the question. The economic side, already the financial secretary has ratcheted down the fullyear growth forecast. The original forecast was for 2 to 3 for gdp and that would be in a challenging environment with this trade war. Hong kong is an international proxy to china so it suffers when trade flow suffer. Already they were thinking 2 to 3 but they ratcheted that to 0. 3 . Many others are saying it will go into a technical recession. Weve seen retail sales dropped by double digits in august when the protests really turned violent. We are seeing in some cases at hotels, singledigit occupancy booking is way off, retail sales down seven consecutive months. This hong kong economy has been suffering. As for size and scope of the protests, we have to ignore knowledge it is a small minority of the protesters who are turning to violence late in the evening usually and they are being provocative with the police. But when you have one Million People show up estimated, but one of those rallies, then a week or two, an estimated 2 Million People show up from all walks of life and all ages. Ive seen children in strollers to families to grandparents. This is a city of 7. 4 million. That is nearly 30 , one third of this population. Extraordinarybeen to witness from all over the globe. Kudos to you for covering everyday. How might we expect china to respond to all of this . Stephen you see a little bit of a ride smile with wry smile it ise people are saying probably china that ordered this to happen because yesterday, we had carrie lam come out and say even after a voice recording was released by reuters where she is heard saying if she was allowed to, she would have resigned after a heartfelt apology. However, she came out yesterday and said i have never submitted my resignation to the Central Government of china. It was a way of reading it that china would not allow her to do such a move. She has also been asked repeatedly at press conferences by the news media whether she has the authority to resign, or the authority to withdraw the bill. She has not answered that question. She has never said i have the with 30 the authority. She did say she had the authority to resign if she chooses. Anyway, a lot of people are saying at this point, it is china who is pulling the strings and perhaps they have said offered an olive branch here. Nejra stephen engle, our chief north asia correspondent updating us on the latest news out of hong kong. David page from axa Investment Managers is with us. We were asking the question the other day how much potential hong kong had to impact the global economy. How much does it figure into your global modeling . David what we are seeing today is a complex situation and it is unclear the next steps but it is against the global backdrop where investors are looking at economies across the globe. We can see tensions with trade with the u. S. And china, in europe and the economies. Then to see the scale of disruption in hong kong, that has weighed on global sentiment. A resolution would be a positive factor . Matt how important is the economy in hong kong . For asianearly a hub businesses, the fourth biggest equity market but it is only the 35th largest economy globally and in the face of the giant u. S. China trade war, how pr events on this island . David that depends on how the situation unravels and at the moment, it adds to the backdrop of weakness we see coming through but the key drivers when we are looking at a world that is moving toward negative rates, i think that is relatively a small factor and what we are a slowdown more in in trade talks across the region specifically and the impacts coming through their and the impact on global trade, and that is when we look at things like manufacturing and the blowback that deceleration is having on u. S. Manufacturing, as well. Briefly, how concerned are you that could spill over into the Services Sector and into the jobs sector . David some, but not too much. At the 1980s,ck it was the key indicator. The Service Sector has grown and it has become less than a guide. Itwould be comfortable if was in the 50s territory but it weak week manufacturing. We are not too concerned at this stage. Matt david, thank you for joining us. David page from axa. We have a ton of guests coming from the ecb everyone will want to watch. All hawkish on quantitative easing. It is an important thing to watch. Anna welcome to Bloomberg Markets the european open. We are live from our European Headquarters in the city of london. I am anna edwards alongside matt miller in berlin. Matt good morning. Today, the markets say wow, that took a long time. Hong kong removed the extradition bill according to the south China Morning post that kicked off the protests. The market opens in 30 minutes time