Europe. No manufacturing data, another litmus test of the u. S. Economy. We will speak to the fomc member member very soon. Retaliation, the u. S. Will slap tariffs on european goods including craft whiskey and wine after a green light for 70 billion of product. Uniting brexiteers, Boris Johnson presents his exit proposal to parliament with signs he has two new borders for the backstop that is gaining traction domestically very what will the e. U. Say . Matt we are less than a halfhour open away from the open. 1502. Trading for the question many are asking is why has not gold climbed further . One of the reasons could be because of the chinese on holiday. Another reason is the curve is steepening and that is a reason investors could look to fixed Income Investment rather than precious metal. Look at the futures in terms of equity index. We are looking at european futures trading lower, gas futures on. 3 . Cash futures unchanged with the ftse is down. 4 . S p futures are higher but it could be the same kind of head fake we saw yesterday. What do you see in the gmm . Anna good point because we were talking of u. S. Futures in a positive direction but it didnt because we saw the ftse and the cac ended up down, the worst day for european equities year to date, european stocks ending down more than 3 . Really stunning moves to the downside for europe. Will we see any of that replicated today . European markets taking their leave from what we see in asia but we are without big markets. South korea and china are closed. Interesting to see the swiss bank not being bought on a day where we are nervous. We are not seeing investors piling into that safe haven. The pound changed a little bit, down. 2 on the latest rumblings around brexit. The two border solution, how is it going down . The gms, it was the term of private payrolls data to spook the markets after we saw manufacturing data spook the markets earlier. Today we get Services Data. Will it spook the markets or will it reassure things are not spreading . We will see the movement here into fixed income, Government Debt and the results of the nervousness in fixed assets and equities. You see a sway of sovereign bonds moving up and yields moving down. Lets look now at the bloomberg market life strategist who joins us from singapore. One indicator of how nervous the markets were yesterday, my colleague told me 587 stocks on the stoxx 600 ended in the red. This was stunning. Do we feel we have reached a line in the sand or have to wait for Services Data . It is set up for another volatile day. We have had this week the u. S. Market in particular has been rocked by budgie data. This is setting back the s p 500 in particular. What we have been seeing today is once again we have had the tradingfutures in asia, day,ll gain, 0. 2 all relatively quietly. Same thing yesterday and then a big slide when the data came out. People are pretty nervous. Doesnt take much to set up a bit of a panic. Of course it is the beginning of october and it has been various times a core month for equity markets, less year in particular. October was terrible. People have bad memories. And then you have the yield a new agech is development, people getting serious about the possibility of the yield curve swinging to more positive direction as you mentioned in relation to gold. That could up and cross trades people have on portfolios which are skewed towards long bond divisions, the 10 year sector. There is a lot of adjustments going on which hasnt fully played out. Certainly just because it has been relatively quiet for s p futures in your asia in asia doesnt mean the same wont happen in europe later today. Matt let me get responses from you to the question of the day, you mentioned the yield curve steepening. How far is it going to go . My dental would be, my addendum would be, does this make it different from last year;s Fourth Quarter . Last years Fourth Quarter . We could see a drop in equities like we saw in the end of 2018. Mark one thing that is different is the situation of the fed. They have started cutting. There are situations where the fed could be looking at 75 basis points. The curve steepen a lot. We have the fed speaker coming up, Charles Evans, he will shed more light on where the fed is going. Much. Thank you very Mark Cranfield in singapore. You can get his work and the work of his team by typing mliv go. We will speak to the voting fomc member Charles Evans after yesterday hearing about disappointment in the economy from john williams. Will that narrative continue . We will find out. This is bloomberg. Anna welcome back. 20 minutes until the start of equity trading. The euro stoxx moving 3 , futures futures were down a little bit. Some of the markets are closed in germany. Lets get to madrid where our colleague guy johnson is with the fed president Charles Evans. Thank you. We are joined on Bloomberg Television and radio by chicago fed president Charles Evans. Good morning and welcome to madrid. The last 48 hours have seen a significant repricing of the october 30 meeting as a result of manufacturing i is him data we saw tuesday. We are now at over 80 chance of a cut by 25 basis points at that meeting. Is it over reaction to one piece of data . Charles i think it was important. I am openminded and i will learn more before the meeting at the end of this month but i would they the highest them number was the isam number, for manufacturing we received a number of reports over many months about trade uncertainty, how Manufacturing Enterprises were reticent to expand capacity, Capital Expenditures have been very weak. On theore confirmation reports we have been seeing and it will be important to see the progression from here. Not a hugecturing is part of the u. S. Economy but it is a significant part. Charles it is. In my midwestern district we have more manufacturing than average. I have heard more reports about this and the weaknesses and what comes from the trade uncertainties. I would say think about Monetary Policy and the right positioning. I think that the fomc has been at to at what point one point looked like restrictive positioning, now we e accommodative tradition accommodative position and whether it is the right one or not, we will have to do with it and see. Guy data dependent. Charles that is right. Sounds like we see that say that all the time and always looking at the economy but it is the job. Fundamentals, which are good for the u. S. , consumer spending, labor market is good, though it has moderated recently but the Unemployment Rate is 3. 7 . There are good fundamentals but business spending has been weaker. Uy the consumer is important nevertheless it is the fed if the fed waits until there are signs the consumer is beginning to roll over, isnt it too late . Charles that would be an important concern. We are trying to get ahead of this. We have repositioned policy from being heading for slightly restrictive policy to one that is accommodative. The question is how accommodative we need to be. Still Risk Management i would say the weakness in the ism and manufacturing increases concerns. I looking at that data. At the moment it looks like, my twook for this year is point 25 . Growth is 1. 75 . This is a pretty great good growth outlook. The question is whether we can navigate the uncertainties as some of the shocks that come our way and get the growth pattern or whether it is Something Else that pushes us to the side. That is why we moved to a more accommodating policy. We will have discussion whether more is needed. Guy you are a Voting Member and it would be remiss if i didnt ask if the manufacturing data edged you closer to voting for a cut in october. Charles it comes down to whether or not my outlook changed substantially and it is only one number. It is a progression of not positive numbers. There are Business Records which have made me nervous. Ahave supported the move to more accommodative stance. We have cut twice this year. It is a bigger move from a restrictive standpoint when you think of what we were going towards as of the end of last year. We are wellpositioned for a modest adjustment and headwinds to the economy. If something more severe happens, we will make adjustments. Speed foris the stall the u. S. Economy . Charles i am not wellversed in quantifying that. Are looking for 2 growth Going Forward over the next several quarters. That is good. It is slightly above trend, so it is not stalling at all. The labor market will be important. I will expect moderation in employment numbers because the labor force dissipation rate has increased already, a lot and businesses continue to tell us they are having trouble finding workers they are looking for. They are competing for them. The lower skilled levels, but not showing up in strong wage pressures. There could be more room to run for the labor markets, but we are at a mature expansion point. Guy breakeven continues to push lower and lower. The market is not indicating the fed will hit a deflation target. Is it a concern . Charles i am very concerned. I would have argued this spring even before i was nervous about economic headwinds, there was a good argument for more accommodative Monetary Policy to ensure we get inflation up to 2 . We should be overshooting it at this point in the cycle. We have under run 2 . We have indicated our objective is symmetric. We should spend time above and below 2 . We should be averaging 2 . We have not averaged 2 . If we took actions to ensure we 2. 25 is, 2. 25 not a challenge given the symmetry. We would be more assured we would get the two if we found headwinds. Guy if you trying to aim higher , at least you could get the 2 . Guy do you think Monetary Policy needs to be more accommodative given where we are now and where breakevens are and signaling whether we are going to go . Charles i put all of these considerations into the mix and i have those two reasons that inflation has been underperforming as well as Risk Management aspect, even though the Unemployment Rate is 3. 7 and im looking for trend growth of other headwinds are stronger than i was expecting earlier in the year and late last year. That argues for the accommodative moves. I will listen to everyones perspectives, firm up my own about the outlook for the economy and ask myself, do we need still more accommodative Monetary Policy to achieve these objectives, assuming we will be able to navigate the more minor shocks that will come our way over the next six to 18 months. The major shocks is trade and the slowdown in global trade. To what extent do you think the manufacturing number we have seen is down to the fact we are seeing the current trade environment feeding through into u. S. Companies . Charles the trade uncertainty has been very important. I have talked to so many business executives, manufacturing executives, who have indicated there is a good deal of uncertainty. One way or another the conversation is sort of dancing around concerns about supply chains and where they are located, how many times they have to cross the border in order to achieve strategic aims as they have played it all out. They have investments in place. If they had to reinvest, they would have to know where to quitest, and it would be a capital loss if they had to completely redo it. In the environment i think everyone has been more cautious and we have not seen an increase in Business Investment we had expected on the heels of very aggressive, strong tax cuts in Corporate Tax reform. The architects were strongly suggesting we would see an increase in Business Investment and we havent seen that. Something has held it back, trade uncertainty being one. Guy the cuts you have delivered, have a offset that would work new they upset that . Charles they would make it a little more attractive, certainly to ease concerns businesses would have. It is modestly positioning. It will not, all of a sudden, be a panacea. If there is another shock that ,rovides a substantial headwind our modest policy adjustments are not enough to offset that. I am still optimistic something will happen. Guy lets talk about the repo markets. Those have recovered from 2008, but we had elevated heart rates when we saw the elevated cost shoot through the roof. To yours get faster . Wasles the volatility unexpected. What you could have expected, there were Corporate Tax payments on the calendar from a long time ago. I think the way money flows out of Corporate Bank accounts, then it is off to the sides to make those payments and it ends up in the treasury account not in the banks so the level of reserves that were available for funding, repo operations were not as high. They were concentrated in a small number of large Financial Institutions and the willingness of institutions to arbitrage the small changes and sometimes large changes is different from what i might have guessed they would have been years ago. The realtor environment have adjusted things. The structure of Financial Markets has also evolved to appoint where we need to better appreciate the size of our reserves, what it should be, and this environment to help provide consistency for support of repo. We are looking at guy likely to be another similar environment at the end of the year can you say with a degree of certainty the fed will have made adjustments to its Balance Sheet and the new york fed will be more alert, that it will not happen again . Charles we will have many conversations. The new york fed, the desk has been aggressive. They put together strong programs. I think you could easily have expected there would be funding issues. The greater appreciation for how the reserves are concentrated, for how certain players dont have the same incentives to arbitrage things like they did in the past what it means for how we should design our reserves and perhaps augment its level. We have been as a committee trying to understand what the efficient and effective size of our Balance Sheets should be. We have to ask whether or not it should be larger. We need bigger buffers. Even then we have to understand how the reserves are allocated across different financial players who are willing to arbitrage those rates. There are many issues in play. We heard commentary from participants in the Financial Markets. From thosete heard commentaries, this is what you need to be concerned about, they are in this lease and on this. It is, we are all learning about it. Guy Charles Evans, thank you very much indeed. Back to you. Matt thank you for that excellent interview area fascinating to hear evidence is very concerned with the inflation outlook. Also fascinating that he is not earlier with the phrase that has grown popular in recent days which is stall speed. He thinks the inflation is running at more than 2 and it will be more than 2 next year. We will look at the key events to watch out for today. This is bloomberg. Anna two minutes away from the start of equity trading. Hong kong in the qatari negative territory. Antimask laws after the cabinet meeting. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Into theinute to go start of the cash trading day. Good morning, everyone. You are watching the european open. A negative one, a lot of concern about Global Growth, u. S. Manufacturing maybe bleeding into the services sector. We will have data on that later. And indications of what is going on in asia, china down 2 , the pound taking another lay down on concerns of Boris Johnsons latest plan, and some are slightly higher, and the futures, turning a bit more positive. The u. S. 10year yields drifting downward, and we have seen more appetite for Government Debt as a result of the risk assets, people getting out of stocks and into the bond market. This is the picture. We did have this negative picture coming through. The futures are open, cac futures higher at the start, ftse futures something flat. Could we be a little bit mixed in the early hours of todays session . We are looking for the european afternoon before we get pmi and manufacturing numbers. They will be closely watched as a gauge of what kind of damage somebody headwinds to the Global Economy, including the global strayed trade, is doing. Youre stocks opening pretty xx openinguro sto pretty flat. This is a day when markets have been pretty nervous over in asia about what is going on in the Global Growth story, and we saw extensive selling of european stocks in yesterdays session, and we saw the cac and the ftse down, the dutch market down by 2 10 of 1 . Matt a public holiday, but is hard at work, and he has got your stock movers. Matt . Matt i have got your individual movers, and you are right, you will not see any german stocks trading today. You do see you choose trading, dax futures trading. We do have cac bonds trading in germany, but knows that for by, so as a result, the way, a cool fact that our resident markets goober pointed out this morning, yesterday our markets guru, yesterday, we had the most losers since 2016. Today, we see some winners here. Airbus is one of those, very interestingly, as we get the tariffs coming through from the europe, so the, u. S. Is putting tariffs on airbus, airplanes, and some other goods because of what the wto ruled was illegal subsidies to airbus, and now, the eu is going to retaliate for the u. S. Retaliation. Take a look at the losers here, because we have got 11 stocks, top, int the fact, 10 of the 11 are british stocks, so i think wpp is going x dividend. This will draw down the ftse, closed, and dax is we see other futures going up. European markets in general then, even after an early tray down, our trading pretty mixed, but with some green arrows. For example, the euro stoxx 50 is up, european services, pmi today, and then we are going to get u. S. Pmis and u. S. Nonmanufacturing ism data. Joining us is john, a head avenue strategy at saxo bank. Strategy at saxo bank. We have some really negative data points out of there, and we are getting some really negative political headlines that seem to mean that stocks in the u. S. Are underperforming the rest of the world since august. What do you think that does to the dollar . The dollar is going to be turning in q4. That is our outlook for it. We think the fed will have to and will get ahead of the community. It is really the focus here in the immediate future, even more than the economic data. Of course, those two things will drive together, and weak data will hasten the pace of fed cuts. I think the issue with the dollar is does the fed deliver when it needs to, not just on the rate that, which i think is pretty much guaranteed for the fmoc, but will we see some announcement of qe that suggests they are getting on top of the reserves in the system . Anna good morning to you, john. Let me ask you, because we just heard from the fed with guy johnson, Charles Evans, he said there was a confirmation of the fomc. The market is expecting too much datatober, this week already foreseen by the fomc, but markets have not responded in that way, and if anything, markets have sort of rallied in 10 minutes with the european trading session, so what is your expectation then for the next few meetings of the fed . John well, again, if we see a confirmation of the week manufacturing data points today, especially close to 50, especially if we see very ugly payrolls, i think we are already there, about 100 for a rate cut in october, so we have to see the data, of course, but there are key focus points here, and it is the liquidity situation, what measures they are going to take to get on top of the liquidity, with the emergency repos into the end of the quarter, and these will be going into the end of the year, as well. Say thatdid hear evans he thinks the outlook is pretty good, but there is a lot of uncertainty, and that makes sense. You do not expect a Voting Member of the fed to come out on Live Television and say we are headed for a recession or he is terrified about the inflation outlook. Obviously, he cannot do that. He did say he was very concerned about inflation. What do you make of that . John the fed had an asymmetric target, so their policy will be adjusted according to where inflation is, and with oil prices having come down recently the last few months, the outlook for inflation is not terribly high here. Anna let me ask you a little bit about the dollar. You have got a lot to say about the dollar. I have got a chart here that shows the strength we have seen in the greenback since 2017, certainly in the last, what, year or so. What are you expecting to see with the dollar . We realize Monetary Policy has been a failure. It would be an end of the Monetary Policy experiment. That sounds like when people rush into a haven like the dollar, but you think things are turning . John it could be partially true, the haven aspect. The dollar would prove a safe haven as it often does against maybe less liquid currencies and at. , but if you look Monetary Policy and the fact that we think the fed will deliver, and the Trump Administration will help them an 8 r, we are running at external deficit that nobody can absorb, we see it turning certainly against the japanese policyreceipt think is going to pivot, and then we have rate cuts, a lower Interest Rate that needs to be cut down to more or less parity with its peers globally. Anna ok, interesting and we will pick up on the euro side coming up. John hardy stays with us. Up next on the program, a lot to tell you about, including what we are seeing in relation to the wto story, and we are following the announcement of u. S. Tariffs. It is hitting some companies, and as you may expect, they are falling on aircraft manufacturers and their suppliers, but it is not hitting others as much as you may have expected. Point or is up seven this sector is up 7. 5 . This is bloomberg. Welcome back to bloomberg markets, european open, 10 minutes into the trading day, outside of germany. Of course, here, it is a holiday, unification day, and you can see the streets are pretty empty, but we will be celebrating later on. Around the rest of europe, we do see some interesting mixed action, some gains, even though we saw, at least in the early futures trade, some losses. Lets go to dani burger and talk about the individual ones. Dani . Dani we were talking just before the break how some are gaining, and one of them is airbus, up more than 3 . Morgan stanley is giving a little bit of insight into why this is rallying, and specifically airbus, the u. S. Putting an additional 10 tariff on goods there, but Morgan Stanley said this was actually the most benign possible outcome, still a lot of ounce Downside Risk baked in. H m, they have had their first quarterly gain in two years, so a turnaround for h m, which has really been struggling with the rest of the retail sector. It looks like they are making some pretty solid progress and getting rid of their extra inventory, but the same is not true for ted baker, falling today about 30 , trading on a 2012 low. Eyave warned of a possible slowdown. This is i shift to Online Shopping. They this is a shift to Online Shopping and saw the resignation of their founder, so all of that is turning into a pretty big warning from ted baker. Anna thank you very much. Thats get to one of the stories been talking about, donald trump announcing billions of dollars of tariffs, given the green light from the wto, as much as 7. 5 billion of european experts hit with the levees that are due to come into force on october 18. We are joined by a bloomberg wto reporter in geneva. Rate to have you with us to explain what is going on, because perhaps we would see some stocks affected by this falling on the open, but many of them are on the rise. The extent of these tariffs is not as great as it could have been. Is that the vibe we are getting . Correct. S European Companies are digesting the new tariffs here, and the sense is the u. S. Really was restrained in imposing these tariffs. Expectations were they could be as high as 100 , whereas the u. S. Actually imposed 10 tariffs on aircraft from airbus and 10 tariffs on goods like french wine, scotch whiskey, and spanish olives. There were also some key exclusions from the list that were not expected, including leather goods, french spirits, and french champagne. That would be good for companies expecting a pretty big blow from these tariffs. Matt maybe it was the block of cheese to pompeo that affected tariffs. Walk me through this. The wto is allowing the u. S. To retaliate against the eu for unfair subsidies to airbus, but i know the eu now wants to retaliate against the u. S. For that retaliation. What do you expect from brussels . Part andis is just parcel of the largest wto trade dispute that has been going on has sinnedbut the eu by providing unfair subsidies perspective airspace manufacturers. Now, the u. S. Case was timed about six to nine months ahead of the eu case, so the eu must wait until maybe the first half of 2020 until it can retaliate against u. S. Goods. Sock this is slightly separate, with the fears around a trade war, if you think of trade wars in a similar vein to what we have seen with china, this is something that has been going through the wto for a long time, so the global infrastructure, it has the backing of the global infrastructure, and it is it linked intos the broad tensions between the u. S. And europe that could still happen, i guess . Bryce it could still happen. It is too soon to say. Again, with the u. S. , the tariffs were quite restrained, so there is a long way for escalation if they feel the eu is not engaging. Until then, there will be negotiations between the eu and the u. S. To try to settle this agreement amicably. If that does not happen, then there is a potential for escalation on both the u. S. And the eu side. That may not bring to the level of the u. S. China trade war, but time will tell. Much, ourthanks very wto reporter in geneva, bryce, just the person you need on a day like this when you get all of the news from the wto, and you watch stocks reacting. John hardy with saxo bank is still with us. John, we are getting september spanish numbers. Falling,eptember, still growing, falling, and risk , soa little higher at 53. 9 here we see some weakness. What are we anticipating . I know you think we see a stronger euro, but what about the deteriorating economic picture for the euro zone . Wen in terms of momentum, might be momentum wise reaching some sort of level here. We see some stabilization in the services sector, still growing very slowly, as you indicated, but i think the european outlook is more about what are the relative policy moves here. The ecb, i think the rates when you look at core yields, we are only going to go lower if we experiment with radical ideas, like digital currency, in an effort to drive rates to 1 or 2 crazy like that, but i do not think that will happen. Of course, it is against qe, and the only way out of this is fiscal, and that tends to be positive. The eu runs the Worlds Largest surplus, so i see a reevaluation. A reevaluation. Revaluation. Hink negative weights rates are already destructive. Matt how do you see your sterling . I am looking to buy a used ducati. I earn euros. I will have to change that into pounds, so i am waiting for the pound to fall further. It has not happened for the past couple of months. Where do you see that pair going . John i think we end up with some sort of a delay. We end up with some sort of brexit, but mostly in name only. Perhaps outside the eu with special conditions that more or less look like the conditions before the exit. I think the risk is, talking about deficit countries and surplus countries, a persistent even the tremendous revaluation has failed to drive significant rebalancing in favor of improving the deficits, so i think we could see a oneoff. Once we see the shape of brexit, perhaps in january or after an election, whatever the situation is, a kneejerk reaction, perhaps towards the upside for the euro versus sterling, we could see 95 revisited, baby higher in euro sterling. Matt is planning his trip to ship field. Two sheffield. Irish media is saying that this cannot be the final landing place, and that is the way Boris Johnson has described it. He would like this to be the landing place, saying border checks are not acceptable, so clearly, there is a way to go, but you would expect that, whether a deal comes or not, we will see, what about what is based on what will happen over the next weeks or months . John moving parts. We are looking with a situation from a stronger dollar to a weaker dollar, so it could go to new lows. If we see the brexit extended for a while, but, again, assuming my euro dollar is correct, it will be modest, as i am concerned about a week sterling, so there may be less trauma there than we would sterling,about a weak so there may be less drama there than we would expect. Matt john at saxo bank. I want to point out that it is Russia Energy weak in moscow, and our crack will reporter is currently moderating a panel inis Russia Energy week moscow, and our crack oil reporter is currently moderating a panel, so we will continue to bring you headlines from this panel that she is moderating and any news we get out of the conference in moscow. This is bloomberg. Matt welcome back to bloomberg markets. Open, 23he european minutes into the trading day, and remember, the dax is close, gains in france, milan, and madrid, and the ftse is down. Now, it may be golden week in china, but it is not such a bright moment for the precious metal itself. The price of gold is up, but the annual holiday could be restricting its rally, according to our market writer. John hardy is the head of fx strategy at saxo bank. During golden week, at least during the last six years, the price of gold has taken a hit, because the buyers from china just are not active enough in the market. We also heard from someone this morning on the mliv blog that the steepening of the curve is affecting things as well. What do you think . John well, i think the outlook for gold, first of all, we have had a tremendous rally in Precious Metals and a rally that has seen positioning up to nearly unprecedented levels, so i think the setback so far has been pretty minor. It is pretty interesting, as has been key level, it erased again. The key outlook for gold is it is about real Interest Rates. Negative realr, rates, which i think is a significant risk. I think this story will be renewed. We talk about golden week timing. I think for this cycle, for the longer term, old and silver looking at significantly higher levels. And silver looking at significantly higher levels. Anna obviously being in the fx world, there is the swiss franc, and we have seen the euro gain against the swiss franc yesterday and again in this morning session, when equity markets were selling off, and you might be thinking that investors would be finding havens in the swiss franc. What is happening here . What is your thought process as you are thinking about that . Filingell, for now, i am it under interesting. There is a high correlation with some. We have seen as we have headed into those lows with euro swiss, it did not seem like there was a lot of push against it. I think this is maybe an absolute zero story. If we are at absolute zero in terms of policy, if we are looking for some transition to fiscal, no matter how we get there, maybe we are at a level where people are sniffing around, but this is an interesting development. It is very early days, but, yes, lets watch this space. You forhn, thank joining us. Appreciate your time. John hardy from saxo bank. It is, as i said, Russia Energy and our reporter is moderating a panel with the new energy minister, and lets listen in. Comfortablequite believee honored to that i could stand here with a straight face and ask any of my colleagues here present or those when you would have a country with a nation that can overcome that challenge which has never been seen anywhere in the world, when you lose more than half of your production 5 ofty, when you lose the World Oil Supply . Matt lets get your top headlines for you off the bloomberg terminal. The u. S. Will slap tariffs on the european goods including aircraft, whiskey, and wine after the wto gave the green light. But the companys most at risk from the u. S. Measures again at the start of u. S. Trading as they avoid a worstcase scenario of 100 tariffs. And uniting brexiteers. Boris johnson presents his proposal today with signs his plans to replace the backstop is gaining traction. Welcome to bloomberg markets. I am matt miller in berlin alongside anna edwards in london. Anna lets have a look at the markets and have the day is shaping up. After another day of losses, we are flat on the stoxx 600. The ftse is under pressure, but elsewhere we see gains. Breaking this down into the movers screen, we got to the upside. 7 . Goes up by just shy of remy cointreau is also higher. This is to do with the wto story we talked about. Give us a summary of how the u. S. Has been more restrained in its tariffs of them anticipated. Some sectors are actually bouncing this morning. Is higher. That sika they increased guidance to the today. Hayes is the biggest faller. The ds smith is down, wpp is down. Also down ando is there are quite a few exdividends on the london market. The indonesian president says he will not take sides in the u. S. China trade war. And our exclusive interview in his hometown, he said he will use his second term to introduce a wide range of reforms, including changes to labor laws. He also said trade tensions hurt all sides and he must make sure indonesia does not suffer from the fallout. We compete against other countries in attracting investment to create jobs. Complaints from investors on labor laws are always expressed to me. They also expressed the need to simplify licensing. We work on these two issues as soon as possible. I will talk to labor unions and discuss laws but without causing losses for workers. This is for new workers so that industries and Foreign Investors can expand, invest come and create jobs so that indonesian children can work in available sectors. Is that your priority . Introducing this law by the end of the year . Yes, our priority is labor laws, we have to talk to labor unions. We also have laws under the on the this law. The list will be reviewed to attract investment and attract jobs. You also have this negative investment list you said you would fully open up. 25 sectors such as telecoms and communications. Do you have a timetable to open up the sectors where you can fully by companies in indonesia . Still in process. You will see the revision by the end of the year. Will provide room for Foreign Universities to set up universities in special economic sons and four hospitals with the latest technology will also be allowed. Also in the technology sector, we will provide room. By year end, we will see many sectors removed from the negative investment list to create more jobs. In thebiggest thing Global Economy which hurts the world is the u. S. China dispute. I suppose that is a dispute where people in Southeast Asia have to decide whose side they are on. Whose side the you feel you are on . Indonesia is in the middle. We want to get opportunities because the trade war is not good for all countries, but indonesia wants to take opportunities but the trade war does not negatively impact our company. We have good relations with the u. S. And china. The most important thing is that our National Interest comes first. Anna that was the indonesian president speaking exclusively to bloomberg editor in chief john nichols with john micklethwait. We are waiting for the ecj to make a ruling on facebook and posts with violent imagery. To expect them here is our reporter. The eu to clarify social Media Companies policing this kind of content. What are we expecting . The ecj will now, rule on whether facebook should remove hate speech from its platforms are whether that should be limited to the eu only. Recommendedsor had they rule in favor of worldwide removal. Judges typically rule in favor of the advisors opinion. The time, facebook has said that such a ruling would potentially cause harm to freedom of expression around the world and said that a countrys role should be limited for this on the other hand, they want that kind of content everywhere. Matt what is the background on this . Was there an incident that led to this . The Court Dispute stems from a specific case in germany related to a politician, but this comes as eu leaders are making a big push on curving hate speech, especially after the christchurch shooting. They are considering eu wide rules to deal with that. The important thing term number is that facebook said that it wants overarching rules on how to deal with hate speech. That would be more black and white for them in terms of knowing whether content should stay up or stay down. Anna thanks very much. We will keep everyone updated as soon as we get that breaking up next on breaking news. Up next, we bring you stocks on the move. Cointreau is up in early trading despite the wto ruling. Apparently, tariffs are not as penalizing as expected by some, so we see a bounce in the stocks. This is bloomberg. Matt welcome back to bloomberg markets. This is a the european open. 40 minutes into the trading day for most of europe. Germany is closed. Lets get first word news in london. Scotch, french wine, cheese, and paint, just some exports facing tariffs. The duties on goods will come into force on october 18. Washington got the goahead from the wto in retaliation for government aid to airbus. It is the largest in wto history. The eu will retaliate when the wto rules on its complaint over u. S. Subsidies to boeing. President trump is heading out against the House Intelligence Committee chairman adam schiff. He is seizing on revelations that shift met with a whistleblower. Is arguing this invalidates the complaint about his controversial behavior. That is alleging California Democrats helped write to the original complaint but did not provide any evidence. He should resign from office in disgrace. They should look at him for treason because he is making up the words. Not only the words, but the meaning. And its a disgrace. It should not be allowed to happen. Tesla has failed to live up to elon musks hype, hitting a record 97,000 deliveries in the third quarter. Shares of some some sunk. They say tesla is relying too much on its cheaper model to grow. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, massive . Matt matt . Plan anna Boris Johnsons has optimistic support after unveiling a compromise with enough concession to keep the eu on side, thats what he hopes. Joining us is the professional era politics and International Fellow ofand senior Political Risk at the university of kent. Good to have you with us on this program. Irish ministers saying this cannot be the final landing place. There is progress but a long way to go. Are you after yesterday that the eu will like what it hears . I am not optimistic at all. The mood music out of brussels has not been good for Boris Johnson. Even if we have seen a few labor mps and eurosceptics saying they might support the deal. But i am forecasting of this deal will not get through. I think the been acted then kicks in and we head into the extension during which will have an election. Anna i saw a newspaper saying that the eu stands ready to extend even if force johnson does not ask them to. I suppose that is another angle on that act. People say he will comply with the act. What is your thinking into how that gets done . Another is a case going through the scottish courts. Have you think the act gets applied . The bigger play for boris letson is that he wants to the nation know he wants sign off on any extension. It could be that another government member does it or the cabinet secretary does it. Even in an extreme case where he were to resign and somebody else were to do it. But in my view, the act is enforceable. And then takes us into the extension and general election where Boris Johnson and his teams whole strategy is to say they. Stopped us from brexit. They are surrendering to the eu. Why do they need to do that . O get the vote down and if they do that, the chances of a big majority are pretty good. Think that your view on the ban act is different than Boris Johnsons . From not only his speeches but from his action that he will go ahead and leave deal might even though he is not legally allowed to . I think it would be a most impossible for Boris Johnson to preside over a note deal. The current composition of parliament and a next deficit of around 40, thats making it almost impossible for johnson to do any. My view, it will come into force in some way or another and that takes us into the endgame of the end game is the you get that extension kicking in and the general election. It will be because consequential general election in britain, certainly since margaret thatcher, if not for the entire postwar time. Economicr get radicalism or a strong conservative majority and really leaving with no deal at the end of january. Anna if we did get a labour coalitionelation with this a very extreme leftleaning government, how popular will that be . Have done analysis on some of the things they are talking about. We have been looking at his to offers, and one thing remember is that we have unprecedented rates of volatility in british politics. Anybody tells you they know what will happen cannot look at those taxes thiss sweeping week, we surveyed on nationalization 50 of voters saying they would support taking an electricity, water, and gas back into public hands. 60 would back renationalization of rail. That shows why Jeremy Corbyn did surprisingly well. This key economic messages, the leftright divide it still matters. Those key messages actually have pretty widespread support. Anna thanks very much, professor Matthew Goodwin from the university of kent. Thank you very much for joining us. On to another subject, one we talked about a little earlier on about facebook. The Eu Court Ruling on facebooks case over hateful posts. To censor someve hateful posts globally. That was the key question coming out of this. We knew there would be stricter rules europe, but to what expect extent with a try to force their will on global citizens . That is what is interesting about this case. We are also covering the oil story this morning. Matt Annmarie Hordern is out at Russia Energy weak. Week. She is moderating a Panel Featuring the Saudi Arabian and Russian Energy oil minister as well as the Nigerian Oil Minister and others. Lets listen in. We have keep with this mechanism and we have to continue. Opportunity for the development of the renewable sources of energy and Climate Change issues. They have embarked very seriously. Anna welcome back to the european open. Trading day. To the the stoxx 600 up by. 2 . Case,und, as often is the is a little bit weaker. So they are moving in the same direction. Lets talk about one of the things supporting european stocks, the Trump Administrations decision to slap tariffs on 7. 5 billion worth of exports. The move is in retaliation for legal government aid to airbus but this mornings shares of the affected companies are trading higher because there has been the expectation that these levees could have been tougher. Lets get analysis from our wto reporter joining us from a geneva. Veryis in relation to a long battle between europe and the United States over support for aviation companies. We expecting europe to retaliate . This action has the blessing of the wto now. Indeed. We are expecting the eu to retaliate eric however, that wont come until early next year. Procedure to follow and there is a bit of lag between the eu and u. S. Case. The eu has already prepared tariffs on 22 billion of u. S. Goods but still has to wait for the wto to give final authorization. What kind of size and scope are we looking for in retaliation . Sayard someone from airbus that it could be even bigger than the u. S. Tariffs on 7. 5 billion in goods. I would be careful. Both companies are going to say they are the winner. The eus case, against the u. S. Was less consequential. Foundst recent ruling that only one of the measures, which was much smaller, violated wto rules. My view, i anticipate a smaller arbitration award from you. From the eu. Anna how are your contacts at the wto feeling about all of this . Have beenel they sidelined from global trade and now find themselves at the heart of the global trade conversation. Indeed i would say they are inundated. The phone lines are off the hook. I hope the donald trump sees this as a positive thing. The wto can provide wins for the u. S. Matt bloombergs wto reporter, very busy in geneva today. Services pmiinal readings from france and italy in this morning. The upsideised to and the french numbers were weaker than the preliminary numbers. Lets get over to dani burger. We just got the germany numbers and they are fitting the narrative from france where they are coming in a weaker than estimated. Sector,the services estimated at 52. 5. And make up crucial 70 of gdp and are trending down. Will it continue to hold up the economy . To be thenues question, or is manufacturing weakness spilling in two services . We get numbers later today, its very important. And a lot of times when we discussed these numbers, when it comes to the context, its bad news good news. Will more and more frequently, it seems bad news is just bad ,ews looking at the correlation they are moving more together. Thats why yesterday we had week data, and at the same time, saw stocks tumble. Central banks dont have perhaps as much firepower or sway as they once did. Weaker Services Numbers roll in and increasingly affect stock markets. Him and nn and anna . Today, we will be speaking to the vicechairman at goldman sachs. Catch that interview live at 1 30. Thats it for the european open. Stay with bloomberg. Up next is surveillance. This is bloomberg. Sometimes your small screen is your big screen. And with the Xfinity Stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. Download your dvrd shows and movies on the fly. Even record from right where you are. Keep what you watch with you. Download the Xfinity Stream app today and get ready for Xfinity Stream tv week. Watch shows like south park and the walking dead october 7th through 13th. Wine and cheese get slapped with new duties after the white house announces tariffs on eu products. Slowdown fears had global equities. Charles evans tells us he is next monthsbout meeting. And Boris Johnson tests his new brexit plan in parliament. Does he have enough support to get a deal over the line . Welcome to bloomberg surveillance. I am Francine Lacqua in london