Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240713

Welcome to daybreak europe. Investments slowed in china and gdp hit 6 . That is below the forecast of 6. 1 . Industrialy Strong Production data was a bright spot, but the chinese economy is likely to lose momentum. In terms of market momentum, we move to the downside on the shanghai composite. It has been a mixed picture overall. We will dig into the trade war. We saw gains on the s p 500 yesterday in the u. S. Euro stoxx 50 futures into the red. The 10 year yield tips to a 174 handle. The bloomberg dollar index near a july low. Prices givingairy the kiwi dollar a lift. The worst performer, the pound. Pulling back from a five month high. Yesterday, risk reversals. Volatility still near that 2016 hi, talking about one week volatility on cable. 12849. Back to the brexit story. After frantic negotiations just days from a deadline, Boris Johnson has reached a brexit deal. This is how he described it. This is a great deal for our country, i also believe it is a very good deal for our friends in the eu. U. K. It means is we in the can come out of the eu as one united kingdom. Throughetting the deal the house of commons is johnsons next challenge. If he cannot, the luxembourg finance minister told bloomberg the eu would be willing to consider an extension. Johnson to to boris ask for a prolongation. I think we have proven that we are extremely open, that we want to avoid a no deal brexit because a deal is in the interest of both sides. I would definitely not excluded from the other side. Nejra anna edwards joins us from brussels. Good morning to you. Ruled out anuncker extension. If this deal does not get through parliament, what are Boris Johnsons next steps the atco nextsteps . Anna we can talk about the math, how difficult its going to be. If it does not get through, there is this question of what would the eu say to an extension . Boris johnson has said he would rather die in a ditch than ask for an extension. They are all using the word prolongation. It means the same thing, doesnt it . I was hearing from a think tank this morning that the eu might be saying all sorts of stuff, but they would grant what they call a technical extension in order to hold an election. Previously we had heard from the eu that if they wanted a further extension, there would have to be a good reason. Im sure if they thought the u. K. Was going to the polls, that would be a good reason. Whether he gets his deal through on saturday, which is a big question, we have to be heading to elections. This is a Prime Minister with no majority. His working majority is sinking as he falls out with the dup. Johnsonow does the deal has negotiated different from theresa mays deal . It is harder. That really reflects the hard or softness of the border between the u. K. And the eu. The Boris Johnson plan is hyder is harder. Both plans talked about Flexible Partnership into the future. Boris johnsons specific this means a freetrade agreement. Hugging to the sidelines of the single market. Something more independent and different. In that lies one of the problems. When he is trying to sell it to labour mps and indeed, to members of his own party or at least those he has thrown out who might be tempted to back this deal, but might worry it pushes the relationship between the ek the eu and the u. K. Out. He is talking about sticking to eu standards, but that is of course the bit we know is not legally binding. Have you witho us. Anna edwards, anchor of the european open joining us from brussels. Anna edwards will lead our special coverage on sunday from 7 00 p. M. U. K. Time. Joining us for the hour is better certain boom Wouter Sturkenboom. You are going to be at the very least watching the developments. What do you expect is going to be happening on monday . This all comes down to saturday. Whats going to happen with the house of commons. We have seen statements coming out of the dup. Its going to make it difficult to get the final votes together. Boris johnson is in for a challenge. If he does not succeed, some of the markets will reverse. At the same time, we also think when push comes to shove, he will ask for the extension and the eu will grant it. We will move onto the next stage of negotiations. It is clearly in for a volatile day on monday. Nejra do you think there will be another stage of negotiations . There is a way this deal can get through parliament postelections . Wouter exactly. We will move onto a new election. If that no happens. Then we will see if this deal gets three introduced. Gets reintroduced. Johnson expands his majority or can get to a majority, which he really doesnt have, this deal would be much more likely to be reintroduced. If not, we will get a new set of negotiations. Nejra if we get a deal that is excepted by parliament or if we get a no deal, which i guess is not completely off the cards, even if the probability has receded, what is the trading range for cable . Some strategists were saying deal would get through, 40, no deal, 111. Wework through a 110 to 120 range. Once you have the deal in place, we think 130 to 140 is going to be the new trading range for cable. We are close to that consensus outlook. Nejra i know you dont trade cable, but how would you approach it right now . Some would say stay away from the spot price and trade the volatility. Is that the approach you would want to take . Wouter we take the same approach. We dont trade the spot. When clients ask, we dont do it ourselves. Look at the volatility. There is value there, but not in trying to predict the binary outcome. Be more focused on the volatility. There is still value there. We have seen that risk reversals have made big moves. Still calling for Downside Risk protection. Investors are not convinced this deal would pass parliament. There is still money to be made in that space. Not so much pricking the price. That is a gamble. Nejra in terms of u. K. Equities, are you looking at buying any at the moment . Again, we are staying away from that trade for now. We are waiting and seeing. The end game will be a deal, but whether its going to happen right now and whether you want to step into this space right here right now, it is such a difficult event to predict. Saturdays vote i am talking about. We are not participating in that trading. We have a neutral position. Nejra if you think the end game is a deal as well, where would you see the 10 year gilt yield ng based as well on your anticipation of the boe . Deal, aftere get a an election or before, we think gilt yields should go up. Beyond those events, we think Interest Rate is going to stay very low and global Interest Rate moves will start to press the 10 year yields down again. Nejra Wouter Sturkenboom staying with us for the hour. Now lets get the bloomberg first word news. Reluctant to cut rates any further. Italyswhat the bank of governor. He did not support all the element of the latest stimulus package, saying negative Interest Rates are an unconventional tool that may backfire, but adding things have been going well. Negative Interest Rates are not a great idea. Asset purchases are not a good idea. Overall, the balance is clearly possible. South africa has a chance to holding onto its Investment Grade Credit Rating according to the Central Bank Governor. He says policymakers have to take action on reform. Moodys is set to deliver its next rating for south africa on november 1. Hands of policy. Policymakersican know what must be implanted implemented to avoid a downgrade. There are signs inflation is moving up a bit. No real signs it is taking off. That is the latest from john williams. He says the feds actions have kept the economy intact, but he was cagey on policy. We spoke about the risks for Monetary Policy. We are reaching a point where momentary ceasing can generate Economic Growth. But might generate the probability of less growth in the future if we fall into a financial spiral into the future. 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. Thank you so much. Coming up on bloomberg tv, we speak to top newsmakers. We will hear from the Vice President of the European Commission at 11 30 a. M. London time. We also have an interview with the eu commissioner for economic and Financial Affairs at 3 30 p. M. London time. Lastly, we speak to a bank of England Governor Mark carney at 5 30 p. M. London time. Last but certainly not least. Do not miss those conversations from the Imf World Bank meeting in d. C. Nejra this is bloomberg daybreak europe. Pictures of unrest in spain, continuing. Protesters demonstrating in the catalonia region. We will keep an eye on those developments. Inackdrop for the election november. Lets check on the markets. Hong kong is back today. Good to see you. How is it looking . We are seeing asian stocks a little muted, though they are on track for another weekly gain, a rise of 2 . You can see the msci asiapacific flat in late trade as we react to china data area. The economy in china is slowing, but we did see Monthly Industrial production data as a beat. The csi 300 down by 0. 6 , on track for a weekly loss of 0. 3 . Some upside in the aussie. The governors saying the Interest Rate is working to help the economy, but he did rule out the likelihood of negative Interest Rates as a policy tool. A boostan won getting after Steve Mnuchin indicated he will consider south koreas request for an auto tariff exemption. Lets have a look at the inflation peak. We saw prices rise at their slowest pace in two years. That was mainly due to Falling Energy prices reflected by the white line. Economists we have been speaking to on Bloomberg Television and radio today saying that is unlikely to move the needle in terms of a trigger for more stimulus toward the end of this month. Thats because when you look at the line and used her about those volatile aspects, prices are actually up by 0. 5 . The boj could indicate things are working as planned. The boj also today leaving their bond purchase amounts unchanged. Nejra thank you so much. Now turning to china and its Economic Growth slowing in the fourth quarter. Gdp growth between july and september from a year ago, the slowest pace of growth since the 1990s as the market is weak as the trade war drags on exports. Its not that they are going to be the pause of any major shocks, but their reduction of demand for a number of commodities does have an impact. The future of the chinese economy is something the president of the Asian Development bank expressed concern about. He told bloomberg lower growth offsets any gains from shifting supply chains. Ofeven the relocation investment from china to , theyies like vietnam gain from relocation to the united states, but they are also suffering from lower growth in china. There can be a shutdown gain. At this moment, there is to these economies. Financial,ceo of ant controlled by jack ma, was optimistic about chinese consumers when speaking to bloomberg. Very resilient. We are looking at the numbers. Part, masso the consumption in the chinese economy. Nejra Wouter Sturkenboom is still with us. A great range of views. Lets add yours to it. Bloomberg economics thinks momentum is going to continue slowing. What do you think . We think the same thing. We think the underlying economic slowdown is well established. We have not seen any changes. Even though the Industrial Production was a slightly strong, we see manufacturing slowdown, trade slowdown, the export numbers week. We see the underlying dynamic of the uncertainty on the trade side basically impacting growth to the downside. Firming up that slowdown. We dont see any change there. Ancontinue to hold underweight position in emergingmarket assets because of that view. Growth inwe see 6 china, how much of a concern is that for the Global Economy . Wouter just a Downside Risk. 6 in general is fine. We have seen Global Growth down from 4 to 3 . Not great, but not terrible either. Not recession territory. That incremental pause china was delivering is just no longer there. At least not to the same extent. That is something we are going to have to live with. On the monetary or fiscal front, do you not expect that to offset the slowdown . Wouter not in a meaningful way. We think we are at the start of the global easing cycle. We have seen the ecb, the fed, other Central Banks that will come through, including the bank of england. Thats going to be helpful, not going to be a game changer though. On the fiscal side, we are very early to see anything. Numbers, themall german plan on the climate side, the dutch stimulus coming through, but its still too slow to be excited about. Way too small. What are you expecting from the next stage in terms of the apec summit in november . There have been his there could be some agreement there. Looking forre incremental agreement. The timelines of the elections is pushing that direction. We are still very firm we think the situation between the u. S. And china is more strategic than an incremental trade deal. Strife between the two will continue for decades to come. We believe there is irreconcilable differences between the regions and in the end, they will continue to but heads because they have a strategic difference of opinion orderwhat the strategic of the world should be. We do not think trade tensions will go away. Nejra the Strategic Site i get. If we were to come to the end of the year and go into next year and we have no more increase in tariffs, even some of the current tariffs, and this is a positive scenario to be rolled back, how much of a difference would that make to your view on channels economy chinas economy . Wouter it would have an effect. Nejra incremental. Wouter it is a tricky word but it does make for uncertainty. About brexit, this is the other source of uncertainty. If it went away, it would be positive. It would allow manufacturers to breathe a sigh of relief and get going again. There hopeful that political agenda, the upcoming president ial elections, will take some of that tension away. They dont want to economic slowdown. It is going to be incremental. Im sorry. Nejra you dont need to apologize to me, but underweight emerging markets is what you said on china. Not that mean you are prorisk because of this view on china . Or does your view on the fact we are seeing a global easing cycle offset that a little . Wouter it does. We choose to we have three different themes. One of them is we want to be underweight emerging markets and overweight u. S. Equities because we are cautious on the trade side and we do want to be overweight riskaverse trade assets. We take the lower risk part of the risk spectrum. We continue to hold a risk sensitives sorry interestrate sensitive ovoid. We believe Interest Rates will stay low. Nejra Wouter Sturkenboom stays with us. We have breaking numbers from volvo. Third quarter adjusted operating profit comes in at 10. 9 billion swedish krona. The estimate was 10. 1. We do see a clear beat on the Third Quarter adjusted operating profit. The Third Quarter intake is down 45 . If we take a look at guidance here, volvo is saying it is facing a period of tougher Market Conditions. Third quarter net sales come in at 98. 7 billion swedish krona. The estimate is 96. 1. That is a beat on the sales. Third quarter adjusted operating profit 10. 89, that is a red headline earlier. 10. 9 billion swedish krona, a beat on the estimate of 10. 1. Give me your first take on these numbers. If you are looking across earnings season, how is it looking to you . Wouter mixed would be our take. We came into the earnings season cautious. We thought expectations had gotten bearish. We said the earnings season is not going to be great, but relative expectations could deliver a little bit. The industrial sector is showing some of that, but it is very mixed. Lately there is Downside Risk coming through again from china and global trade story. Mixed is how we put it and hopefully expectations can deliver. Nejra saudi aramco delayed ipo. Suddenive behind the postponement. Wouter sturkenboom stays with us. Tune in to Bloomberg Radio live on your mobile device or dab Digital Radio in the london area. Area. We have a deal. This deal represents a very good deal for the eu and the u. K. This is a balanced agreement. I think everybody should be convinced the deal is the best. The irish Prime Minister is content with this. Is the Prime Minister, now a vote to parliament. I fellow mps in westminster do now come together to get brexit done. That was european leaders announcing reacting to the newly announced brexit deal. Boris johnson will need to fight to get the deal through u. K. Parliament. This is bloomberg daybreak europe. We are into earnings season in europe. Umbers coming through today Second Quarter organic sales down 4 . The estimate was a drop of 2. 7 ointreau. C if we take a look through some of the other elements here, the full year outlook is unchanged. Second quarter revenue comes in at 300. 7 million euros. The estimate was 306. 5 million euros. It is soft on the Second Quarter revenue as well. Say, isook, as i unchanged. A different part of consumer sector, still nonetheless in that space, the one thing im looking at is that danone is cutting its view on sales growth to 2. 5 from 3 . A little bit of lower guidance coming from danone. If you look at other things coming through, it is lowering its forecast on weakness in the u. S. Yogurt and bottled water sectors. Atrd Quarter Sales coming in 6. 4 2 billion euros. Estimate was 6. 4. Thats a little bit better. Some mixed things here for the market. Probably likely to have focused on its lowering the sales forecast. Weakness in yogurt in the u. S. And bottled water in europe led that Third Quarter Revenue Growth to ms. Analyst estimates. Wouter sturkenboom is still with us. Numbers, two these very different companies, but what sense are you getting of the sense of the of the strength of the consumer . Wouter this is a mixed set of data. You would expect the consumers to be holding up relatively well. See some of these numbers come through on the weaker side is slightly disappointing, i think. The revenue story makes sense to me, but you would expect at least because the overall growth slowdown is occurring, but you would expect at least to be on the profit side of things that they should be able to maintain relatively good profit growth. Clearly that is not so much the case. We still think the consumer will carry on doing basically its best to make sure a recession does not happen. Hopefully these companies will profit from that. We do see it has become a tight rope by now. Nejra the gloom that we have about the Global Economy in general, we were talking about china and you are not positive on the outlook here. Do you expect the earnings beyond the Third Quarter into the beginning of 2020 to give markets a lift . Or are we going to see a real impact from the trade war . We think earnings expectations are slightly elevated. Low doubledigit territory. We think they should be more midsingle digit territory, which is not bad in this environment, but now our expectations are. You could get this push and pull where on the one hand, markets need to adjust their expectations. On the other, once the delivery comes through and they compare it to the overall economy, they might be satisfied. The interestrate backdrop will be very important. That will determine to a large extent where the multiple can stay at current levels. Thats where we think the push and pull will come. It should be all right, but there might be volatility along the way. Stays Wouter Sturkenboom with us. Great to have you with us. In the green. Whats driving this today . Does the china data have much to do with it at all . It is industries, a very big weight on the index. That is charging forward. It has scaled past its closest high closing high of midseptember. , anodays session incremental positive we are seeing. The next level on the index you want to be watching out for is 11,694, the intraday high of that big move. A major milestone in terms of the market. Stocks up to. 5 . Banks are doing ok. One stock which is bucking the trend is the entertainment stock on the back of the results, a dip of five to 6 . Some specific india related reasons driving the market there, but the china data of verse a big data point today. How are we seeing that play out throughout Global Markets . The csi 300 took another leg lower. The are trading down zero point 9 as we have gdp numbers at zero at 6 . A sign ofit could be relief. Arehe turkish lira, we seeing it strengthen. The u. S. Dollar down 0. 6 . The u. S. And turkey announced a ceasefire just for 120 hours. A lot of questions remain. Ftse futures pointing lower, down zero point 4 alongside other European Equity futures. Euphoria we saw yesterday has worn off. I want to show you what brexit has done for the pound. Every fx trader has been trading off these headlines. Yesterday we hit 129 on cable. Six days ago we were on a 122 handle. This is the biggest fixed gain rate of change for the pound and the u. S. Dollar since 1989. Where we trade on monday will be up to the political situation. Parliament is able to pass this deal through, fx traders say pound will go as high as 134. Nejra thank you so much. Delayed its has longawaited ipo with only a few days to spare. The saudi oil producer wants more time to incorporate Third Quarter earnings. Joining us now is bloombergs oil reporter. Great to have you with us. Outline for us why the saudis have decided to delay the ipo. It is all about the valuation. Bankers want more time to convince investors to value this at 2 million, which is what muhammad been some and wants. That way they can sell 2 to local investors and raise 40 billion. Analysts see the Company Valued a little bit less than that. We saw one valuation based on aramcos dividends compared to exxons that would value it more like 1. 5 billion. Other estimates have been lower. Bankers are working overtime and meet more time need more time to convince shareholders to buy it at value. Nejra when we talk about a delay, do we have an idea of when this might actually happen . Thisey were trying to get launched before their big investment event later this month. Now it looks unlikely to happen before december, maybe even leaking into next year. The company said this morning that it is ready for the ipo. It has waited for Market Conditions to be right. There is no real guidance from them. It could be a couple more months before we see something. Now lets get the bloomberg first word news. Boris johnson gets a brexit deal in brussels, but the focus turns to westminster. He is facing an uphill struggle to get parliament to back his agreement. The dup says it will not vote for it. Labor is calling for a second referendum, saying johnsons deal should be rejected. That will take place on a rare saturday session for the house of commons. Africa, a chance of holding onto its Investment Grade Credit Rating according to the Central Bank Governor. He says policymakers have to take action on reforms. Moodys is set to deliver its next rating for south africa on november 1. Is in the hands of the policymakers. Moody has the right issuance. Have african policymakers that moodysso will not even venture into a downgrade. Tech companies should not be the arbiters of truth according to facebooks chief mark zuckerberg. He says the social network does not affect check political ads because that is not its role. He made the comments at georgetown university, adding, quote, people should be able to see for themselves what politicians are saying. Is suspending the sale of most ecigarette flavors in the u. S. , bending the pressure from officials and the public. Nations largest ecigarette maker will continue selling menthol and tobacco flavored pods. Some flavors could return to shelves if the fda approves them. 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. Thank you. Central bank leaders are among those gathering in washington. Monetary policy amid a global slowdown is a key focus after the imf cut its Global Growth forecast. Philippines Central Bank Governors speaking exclusively to bloomberg on the direction of their policy. Likely, the rate cutting is done this year. The cutting of the reserve we have maybe several meetings before the end of the year. Italy Central Bank Governor said there has been an overall positive for negative rates. The asset purchases according to others are not a good idea. Overall, i think we should evaluate all these because there are more pros and cons. In my case, the balance is clearly positive. Further easing could come with risks. Whereare reaching a point Monetary Policy ceasing can growth, butnomic might generate the probability of less growth in the future. John williams struck a different tone. He said the feds actions have helped keep the u. S. Economy on track. Wouter sturkenboom is still with us. Lets just end on that in terms of the fed and its action so far. How much more will they need to do . We think they will do three more rate cuts. We think there is much more to come in the next six months. The underlying slowdown which has had Global Economy first is now in the u. S. Economy. We have seen it quite clearly. That is going to force the fed to keep cutting in the next six months. Nejra what is interesting is bank earnings. The strength of the u. S. Consumer, trading held up, and low expectations going in todays. Going into these. Does that give you any sign of hope . The fact the u. S. Banks did well this earnings . Or is it the best behind us . Wouter it does underline our view there will not be a recession if there is enough strength in the consumer and Services Section and the rest of the world as well to prevent a recession from happening. That part we are very happy about, but we do think to maintain that sort of 2 growth rate we have gotten used to, the fed need to deliver more on the rate cut side. Thats why we have three more baked in. We dont believe inflation is coming through. We see those rolling over. That is a big part of our view as well. That probably means you do expect this negative yielding world to stay for quite a while. How are you best allocated in that environment . Pick upe trying to interestrate sensitive assets that have a better yield outcome and risk return spectrum. We like real estate, we like infrastructure. We like highyield. Within fixed income, we are underweight inflation. We are underweight cash. We have a slight overweight Duration Position as well as an overweight credit position. We like spread still in this environment. As we head into the earnings season, what are you going to be looking for in the reports . Guidance is always key. Tot will you be looking to give to your next sense of how to allocate . Profit margins. We are looking for which regions, we look at sectors as well, but we look at regions. Which regions have the most pressure on Profit Margins. So highargins have been and under downward pressure. Because we dont see the inflation come through, we dont see the wage growth, we think Profit Margins should be held up. We look very clearly in the earnings season. Nejra Wouter Sturkenboom staying with us. Lets take a look at what you should be watching. Little financial leaders in washington for the imf and world bank meetings. We will bring you interviews including bank of England Governor Mark carney. Do not miss that after 5 30 p. M. London time. Meanwhile, the eu summit is drawing to a close with brexit still looming large. We are watching for fallout from u. S. Tariffs do to hit the eu today. Earnings season continues. Cocacola and American Express report before the market opens on wall street. Coming up on bloomberg tv, we speak to top newsmakers across the day. First we will hear from the Vice President of the European Commission at 11 30 a. M. London time. We also have an interview with the eu commissioner for economic and Financial Affairs at 3 30 p. M. London time. Lastly we speak to Bank Governor mark carney outside. Do not miss those conversations on the imf meetings in d. C. Next, slipping further. Chinas gdp growth at its slowest pace since the 1990s. Where there enough bright spots . Nejra this is bloomberg daybreak europe. Yesterday during an interview with the ceo of a bangkok based company, bloomberg tv displayed a banner saying the company is set for a record for straight quarterly loss. This actually referred to the conversation on the screen about stock price through the end of september, not the earnings, and case that was unclear. Turning to china and its Economic Growth slumming in the Third Quarter, gdp rose 6 between july and september from a year ago, the slowest pace of growth since the early 1990s. Demand at home is weak and the trade war with the u. S. Drags on exports. Industrial production was a bright spot. Joining us now is the chief bc standardmist at ic bank. Thank you for sticking around. The Market Reaction at we were talking a little bit muted. Investors are fixated on the trade negotiations. What is your view on the impact of trade tensions on chinas economy . What is more important is the domestic drivers and factors. What came out of this set of figures is showing consumption is the area of weakness. Consumption is driving more than 60 of that gdp growth. If the indicators are showing up, momentum is starting to weaken, that is a concern for china. Rather than primarily focusing on the u. S. China situation, which is more about sentiment, confidence, which in fact is relatively weak, sure, however, more important is to see how much stimulus is having an impact on consumption. On the consumption side, there is a lot to be worried about. Bloomberg economics says a further acceleration deceleration underscores the challenges of using Infrastructure Spending to support growth. They see china losing momentum. Would you share that view despite the positive industrial number . Inif we saw a rapid increase investment, particularly Industrial Production, that is a sign that the traditional methods of stimulate the economy is coming back. That for policymakers will be a worry. What they have been trying to is we arehe market is we arey moving away from that, more concentrated on deleveraging and restructuring the economy so it is consumption driven. Also the new drivers are coming through. If we continue to see a limited policy, especially to boost that Industrial Production also in the heavy industries, that is a healthy sign. However, i do see in terms of stimulus, a lot of local government issuance loans for Infrastructure Projects has really offset the impact of a slumming investment picture in china. That is very significant in this quarter in particular, which saw the quote i used up already. Probably we will see more than one treaty once we see bonds being approved for Infrastructure Projects locally. Nejra on stimulus, lets pick up on that more. Whether it will be enough to offset the slowing economy. You have hinted at distinctions between the monetary and the fiscal. On the monetary side, how effective is the policy transmission . That is the right point to make. The transmission mechanism that has broken down. What we have seen his private sector credit the rate the private sector has seen is 200 points higher than state owned enterprises. What we need is further response in terms of market Interest Rates for Monetary Policy. Wouter i was wondering about that. We had been previously worried about private versus public investment. We saw public investments rampup, and clearly that is closely related to the point you just made on the interestrate side. We think the Chinese Government is going to be more aggressive to get that money where it needs to go next. I share those concerns with you. This rate cycle, we have seen two different types. Cut the overall benchmark further, thats not going to have an impact on the real fundamental issue, which is to lower the cost of borrowing from the private sector. Aggressive may be a hard word. I dont think they can be aggressive toward it. It is about taking the time to make sure the policy already in it is about how banks implement the policies. Particular,anks in do they have that Risk Appetite . Some of these private sectors will have further debt issues. Nejra you also say that additional targeted stimulus may be the fiscal side is warranted. What would that look like . I talked about more special bonds, but also in terms of tax cuts, we have seen record tax cuts last year. We are going to see again tax cuts and also hopefully more on consumption. Securitythe social sort of requirement for average earners, workers. They have to put aside their earnings. In fact, lowering the cost of welfare is welcoming, but in terms of fiscal, is to boost infrastructure. Nejra thank you both of you. Wouter sturkenboom for being our guest host. Coming up on bloomberg tv, we talked to top newsmakers. First, the Vice President of the European Commission. This is bloomberg. [no audio] historic saturday vote. Volvo beats the street. Isopean truck market slumping. Nejra breaking news coming through on the bloomberg. Welcome to daybreak europe. London Stock Exchange is to start its Succession Process for the group cfo. Thats a line we have coming through here. David warren is to retire. Update, of a sales thirdquarter revenue comes in at 521 million pounds, beating the estimate of 506 million pounds. Thirdquarter total income coming in at 587 million pounds. Strong beat on the estimate. Intercontinental hotels group. We are looking through here. The main thing im looking at is that its confident in its financial outcome for the rest of the year. Comparableuarter comes in down 0. 8 . A couple of lines, a little bit of an update. While we might be getting into the swing of things in earning season, we have macro data to focus on. Economic growth slows in the Third Quarter. Gdp rose 6 between july and september. That is the slowest pace since the early 1990s. Demand at home it rate is weak. Exports are the bright spot with Industrial Production. Reaction fairly muted. The most downside was in chinese equities. In the u. S. Yesterday, s p 500 oscillating. Heading for a record softness in european you futures. Weakness in european equities yesterday. A bit of money moving at the bond markets. The 10 year yield in the u. S. Tip spate did steeper by a basis point. Futures, not giving us a lot of direction. The cash trade and bond markets is getting underway. Generally, the tone is little bit a weaker pound is something we will talk about the moment. Lets check in on the markets in asia. Juliette saly has more. What are you focusing on in terms of data today . Weve had points from both china and japan. Absolutely. Inflation picture coming throughout of japan which could give a little bit of emphasis for the boj. Prices there rose at the slowest pace in two years. The nikkei closing up the session higher. Asian stocks are on track for a second weekly gain. Its a pretty muted session today on the back of that china gdp data. There were some bright spots in the china data. Retail sales, Industrial Production higher. The cfi down by 1. 4 in late trade. On track for a weekly loss of one third of 1 . Weakness in hong kong today to rate out the round out the trading week. Aussie dollar got a boost after the governor poured water on the likelihood of australia going saying negative rates, the current cycle has been working to gradually help improve the economy. Lets have a look at that gdp data out of china. It was the slowest we have seen since the 1990s. Chinas economy avoiding falling below 6 in the Third Quarter. That picture of 6 was the slowest pace since the early 1990s. The other thing worth highlighting is Bloomberg Economics now saying we could actually see growth fall below 6 in the fourth quarter. See is going to really authorities need to have a focus on Infrastructure Spending and policy implementation. Up,ou have the terminal there an interesting piece saying, china cant shock the sales out of this one. We might see the consumer heard as well and slow down which will slow down overall growth in china. Higher,ee retail sales 70. 8 . 7. 8 . Nejra thank you. Lets get back to the pound. Weve had comments from the bank of england on rates. Basically, he is saying that a smooth brexit puts rate hikes back on the table. This is interesting. Weve heard from some other policymakers, Michael Saunders saying that the boe may need to cut rates even if the u. K. Avoids or no deal exit. In a speech in london on tuesday, a suggestion that in the case of an immediate brexit deal, the argument for Interest Rate hikes had all but disappeared. There is some disagreement in terms of the mpc. What we are hearing from Deputy Governor dave remsen right now is that if Boris Johnson secures parliamentary backing for his brexit deal with a smooth transition, interestrate hikes around the table for the bank of england. He spoke in a bloomberg interview on thursday. Anna edwards is joining us from brussels for the latest on brexit. Really interesting comments from dave there. In terms of the Brexit Process which you have been following closely, as we look ahead to the weekend, what is likely have likely to happen on monday . Interesting comments from him. He also goes on to say the bank of england will be watching what happens on monday in the markets. Interesting that he has that feel about how rate hikes could be back on the table if we get a smooth brexit. Others have been referring maybe to a slowdown in the Global Economy and perhaps it is the interplay that is going to be to the four of the bank of england. On monday, we will have to wait to see what happens on saturday in the house of commons. We know the numbers are tight. The countdown begins. Were tossing out every mp declares an interest in either direction. Members is the number he needs to get to. He doesnt have the dup the labour party. He does seem that this is the Prime Minister with no majority. That working majority is dwindling. A general election cant be that far away. Nejra how does the deal that Boris Johnson has struck with the eu differ from theresa may deal. Mays deal . The main difference is around customs. Boris johnson is going for a harder brexit. He talks about free trade agreements, of course. Theresa may was hoping closer to the single market. Boris johnson wants more of a break. He has committed to adopt some eu standards. That seems to be in the future relationship document. That is up for negotiations. Its really around customs. Interesting to see the coverage we have seen as the details of what has been agreed for northern ireland. Interesting to see how that plays out in the u. K. Political scene. Some people are pointing out, theresa may herself said when she was faced with this dilemma, no u. K. Prime minister could put a line down the irish sea in the way that Boris Johnson is planning. He says this would be short of an attempt to annex northern ireland. That was months ago. That was when he was not Prime Minister and in these rooms of power in brussels, trying to get the deal done. Thats where the big difference lies. Custom checks across the i received. The dup is very angry about what this means for the union. Nejra thank you so much. And edwards joining us from brussels. Overll keep you uptodate the weekend. We are live from 7 00 sunday night for your first print on sterling. Dont get the miss the latest developers. Joining us now is losing the dollar, Lucy Macdonald. Welcome to the show. We brought you comments from the boe Deputy Governor. Apart from the fact that he talked about a smooth brexit putting rate hikes on the table, he said the boe is going to watch fx markets after the brexit vote. As we all will. We are pulling back from a fivemonth high. Volatility on the rise. What is the pound pricing right now . It is pricing more or less the best we can do, a 5050 in the vote tomorrow. 5050 probability. From a markets point of view, that is the best we can do. Is that the biggest underweight investment is the u. K. It is where the lowest valuations are. And where the worst sentiment has been. Tomorrow, it0 looks as if the risks are on the upside. Some visualization is probably sensible. For you can investors, the split between domestics and overseas is similarly prooverseas against domestics. Again, there is a mismatch there against what the probable outcome will be tomorrow. Nejra we have seen sentiment turned more positive on domestic u. K. Stocks. That suggests the market is pricing the risk of a no deal receding somewhat. What is the equity market telling you about the prospects of general election risk and what it might mean for germany corbyn . Jeremy corbyn . The best indication is utilities in the u. K. They have been the bellwether for Political Risk as far as concerns about a labor government. They have been recovering as well. Corbynsests that as popularity goes down and johnsons has been rising, that risk is being priced out. Its all been very efficient and markets. Nejra are you one of the investors that is starting to look more positively and pick certain stocks within the domestic u. K. Space because what we have learned over the past week . Over the past couple months, there either very carefully looking at decent Quality Companies within the u. K. Domestic space. And adding to those. Think there is scope for resolution do get a on tomorrow. Most investors are still, in its the biggest underweight they have globally. Nejra translate this for what it means for european equities as well. On a sentiment level, noble happy of people have said, if we get positive news out of brexit, we would want to jump back into your and european equities. How are you looking at that . I think that is true. At the same time, the u. S. China trade war is more important for europe. The deceleration we have seen in germany is much more driven by those factors rather than brexit. Nejra Lucy Macdonald stays with us. Leslie the bloomberg first word news from hong kong. Aramco is delaying its ipo again. Saying the timing of the Share Offering will depend on Market Conditions. It will be postpone for at least a few weeks. Thats to give Bank Analysts enough time to incorporate thirdquarter results. The numbers are likely to show aramco didnt suffer a material financial hit from the tax last month. A ceasefire in syria. The u. K. And turkey have agreed to 120 hour break in hostilities. Thats to allow kurdish fighters to withdraw from the border. Once a permanent ceasefire takes effect, President Trump will remove cinches. U. S. Senators say the deal doesnt go far enough. They are still pushing for more sanctions. Reluctant to cut rates. Thats the bank of italys governor. He says he didnt support all the elements of the latest stimulus package. Hes cautioning that negative rates are an unconventional tool that may eventually backfire. Adding, banks have so far been coping well. Rates aree interest not a great idea. The asset purchases are not a great idea. Evaluatewe should holdings. The balance is positive. South africa has a chance of hanging onto its last investmentgrade Credit Rating. Thats according to the Central Bank Governor. He says policymakers have to take action on necessary reforms. Moodys will deliver its next rating for south africa on november 1. Africas rating is in the hands of this off the south african policymakers. They know exactly what needs to. E implement it implemented global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra thank you. Coming up, we speak to top newsmakers across the day. First off, Vice President of the European Commission. The eu commissioner for economic and Financial Affairs. We speak to bank of england governor at 5 30 p. M. London time. You do not want to miss that, particularly if we have comments from the boe Deputy Governor. Saying a smooth brexit would put rate hikes back on the table. This is bloomberg. We have a deal. This deal represents a very good deal, both for the eu and for the u. K. This is a fair, balanced agreement. We will deliver it together. Everybody should be convinced the deal is the best. The irish Prime Minister is content with this. Its a very important sign for me. The time has come to decide whether they want a deal. For your premise or to deliver a vote in parliament. Speaking of elected representatives, i hope that my fellow mps in westminster do now come together to get brexit done. That was european leaders reacting to the newly announced brexit deal. The focus turns to tomorrow workforce Boris Johnson will need to fight to get the deal through the u. K. Parliament. The pound was pulling away from a fivemonth high. Dave ramsden said a smooth brexit would put rate hikes on the table. Conflicting a little bit with what policymakers have said recently. It is; 20 a. M. In london. We are 40 minutes away from the equity market open and the start of cash equity trading. The reaction to the china data in equity markets was mixed. On that data, epic not at economic flows in the fourth quarter. Its the slowest pace of growth since the early 1990s. Demand at home is weak in the trade war with the u. S. Drags on. Its not that they are going to be the cause of any major shop. Shock. Their reduction of demand of a number of commodities does have an impact in many countries, latin america, asia, africa. Ceo of ant financial, giant,se Online Finance was optimistic about chinese consumers and originally resilience of smes. They are very resilient. Very resilient. Were looking at the numbers. We are still experiencing strength. Nejra Lucy Macdonald is still with us. We are seeing chinese benchmarks actually down more than 1 following that data. Mixed overall in asian trading. European futures are a bit weaker. What is your first take on what we have heard from that date overnight . Gradual deceleration in growth is expected and the weakest area as expected. Impact fromde as an the trade war. Overall, not too much of a surprise. Does forward, whether it slip, it is possible. It is very close. The measurable thing is the quality of growth. Are you getting a more balance between consumers and investment than we have seen in the past . Consumption is a higher percentage of growth that it was. Overall, i think its not that surprising what we are seeing. Nejra what do you think the response from policymakers will be . Whether they are more concerned about it, we will see. There is no obvious, real area of shock. It doesnt look as if a major response is needed. If it is, it will probably be more fiscal. Nejra Bloomberg Economics is saying that we are actually going to see the economy continue to do lose momentum. You hinted at that as well. How does that translate to corporate earnings . What are you seeing so far in terms of guidance on china . Expectations have come down for companies who are selling it to china already. We have seen some comments about fair volume growth from some consumer staples. Not that much worse than anyone has been expecting. This trade war has been on for the year. People have had time to bring their expectations down. That being said, its a major source of growth for most of these global companies. They cant really get that growth anywhere else at the moment. It does mean you are seeing a deceleration of corporate earnings everywhere. Its not very shocking. Nejra tell me what you are looking for in terms of the impact of the trade conflict. What aspects will you be looking at through this earnings season . We are looking at the p l. What is happening to costs . Are the tariffs having an impact on margins . Can Companies Push them through . Good Quality Companies can actually have pricing through and they are better protected. One other reason for having decent quality. They are looking at corporate spending, supply chain management. If theres any disruptions. Longerterm, whether theres any need to shift production. Really, all the way through the p l, we are looking to see how this will impact. On outlook statements, what is the view on autos Going Forward . Nejra how are you managing exposure to cyclicality in the portfolio . Moment, the bond proxies within Global Markets are still expensive. Versus anything with cyclical exposure. This has been the case throughout the year. The markets have really been driven by bonds like equities. Now, it looks as if it makes more sense to have some defensive exposure because it is still decelerating. Just avoiding the most expensive defectors. Health care is a better place than that for that. Balancing out the portfolio with some more cyclical but well diversified with lower earnings risk. That will give a little bit of a benefit when you get the rotations within the market. Nejra what do you make of two cyclical sectors that are surprised with earnings . U. S. Banks and semiconductors. The semis are the main reason the tech earnings are down. Its an unusual place to be. The tech sector has been the best performing in the market this year. That is because the semis have performed well despite being down. That is because their expectations are relatively slow. And that we will now get 5g beginning to push growth. That does seem to be beginning to happen. They should hold up. Within the banks, despite the very unfavorable operating environment with low Interest Rates, the trading has been better. That has helped out. There are still within the banks very long structural issues to do with regulation and Interest Rates. Nejra great to have you with us. As we head towards the equity market open, futures are on the back foot. We could see a third day of declines for european equities. The pound has been paring its drop after comments from jim rams dave ramsey. The dup has just confirmed it will oppose the brexit deal, according to an oped. This is bloomberg. Anna good morning. Looking to bloomberg markets, the european open. We are live from the European Commission in brussels. I am anna edwards, alongside matt miller in berlin. Matt the markets say, is 6 enough . China reports its worst growth rate since the early 1990s. The cash trade is less than 30 minutes away. Anna