Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Rejected. The eu is expected to approve a brexit delay as a fasttrack deal is blocked by mps. A fresh election could be in the cards. Softbank swoops in. Wework accepts a 9. 5 billion bailout from the Japanese Investment firm. The company is now worth less than 20 of its valuation in january. Semiconductor stocks fall on weak forecasts from Texas Instruments as the trade war bites. Good morning. Matt we are less than a halfhour away from the european open. Taking a look first at the treasury yield, you can see we have come higher and are now going lower. May a riskoff day. Take a look at what the futures trade is showing us across europe. Ax futures down ftse futures so far have been little changed. Dax and cac futures are both down substantially. You can see the parisian equity twox futures down more than thirds of 1 . In terms of u. S. Futures this morning, a sea of red. S p, dow jones, and nasdaq all off. What does the set up look like in terms of brexit after last nights big boat . Vote . Anna the question is whether we are headed toward an election, or when. A withdrawalto get agreement before then or are we just going to go to the election . Either path seems to require some kind of delay. It looks unlikely we leave on the 31st of october. Even with parts of the government talking about no deal, many guests we are talking to are suggesting the possibility of no deal is really reduced now. Certainly at the end of october. Is on whetherus we see a general election. You see the reasons one he might decide to call that, but you can also see why he might decide to go for a new timetable, one that takes some kind of delay from brussels and works with that to try to get a Withdrawal Agreement from parliament. Lets talk with maria tadeo, who is live from parliament with us. We heard from donald tusk he is going to recommend an extension, but then it is a question of how long and how they go about this. What is next . Right. Is to the question of will the eu grant more time, that is pretty much a nobrainer. The eu has made it clear they do not want to know deal brexit. They do not want to force a no deal brexit. The key breakthrough the Prime Minister is close to getting this deal, so they do not want to push him into no deal. Granting more time is pretty much a given. The debate is whether or not this is going to be a short extension, perhaps a matter of weeks. That is what Emmanuel Macron has pushed for. Pilelieves this will pressure on mps to get the deal done. Wayaps it will go all the to january 31, 2020. Perhaps it will include the possibility to allow the u. K. To leave before that if they get a deal done. The question is not about time, but just how much time. Much. The question how thank you very much. Bloombergs maria tadeo joining us out of brussels. Marketus in the conversation, mark cudmore in singapore. . Hat does this look like to you can we discount almost fully the chance of a hard brexit . That is fair at the moment, but im not sure its going to save sterling from weakness. Hard brexit was not priced at a high risk anyway. It was a growing tail risk. What we are heading toward is more uncertainty. Thats not a great backdrop for u. K. Economy that is already showing signs of severe struggle. It is expected to be one of the slowest economies in the world next year. The forecast is 1 , assuming theres not a new deal brexit or tail risk. Overall, the uncertainties of brexit negotiations is bad news for sterling. Anna very good to see you once again. Do markets sense that Central Banks are near the limits of what they can do . This is an ongoing conversation we have been having into the extent to which Central Banks can really be the difference when it comes to the Global Economy right now. Think this is going to be a reoccurring theme. Im particularly interested in the moment that we are in the midst of most Central Banks and acting aggressive easing. We are seeing yields not just refuse to go lower, but start to climb. The u. S. Is a great example. The fed is about to cut rates next week. Hey, centralt banks are easing aggressively, but it is not driving yields down, it is a crawler he. Maybe it will it is a corolla ollary. Orr it has been bouncing around. Wondering where the next breakout is. When people start losing faith in Central Banks, the major proxy driving that risk asset strength, if people start believing centralbank action is weakening, this is bad news for equities and it is bad news for bond markets as well. There any chance it is not we are feeling the depth of a recession right now, but we are getting continued bad news from automakers. Germanys gdp is set to come out early next month. We could have a recession there. Is there any sense you could get a fiscal package maybe out of berlin . Maybe even concerted fiscal action from governments . Imf,e news flow to the that seems less likely now. Germany is getting backing for not being more aggressive on the fiscal side. They are doing some measures already in there is no need for anymore. While we are heading slowly into growth, most people trading in learningoday, they are in the last 15 years or so. The last crisis is 2008. That was a dramatic one. It went sharply. A very bad worldly year later. Recession and financial crisis have been set in. Thats not always the way it is. If you look at the u. S. , there was a Global Growth recession to some extent in the early to thousands around 2002. That was a more slow one. A slowdown of the economy. A much more gradual recession. Germany is at the forefront of that pain. It is exposed to the brexit story. Epicenter. At the the economy is doing terribly. Government going to provide the fiscal stimulus it needs to bail it out . Probably not until too late. Anna you make me almost nostalgic for a good oldfashioned recession. Let me ask you about the earnings season. The story is Texas Instruments weighing on tech stocks. Is that indicative of this season for you . Do you believe it is better than that . Some of the earnings have been quite good. Very good overall. The bigger story is probably the fact we had seen estimates slashed for this quarter. We had 2020 estimates still so high. Those estimates are now coming down. That is the bigger story. We are not going to see Earnings Growth next year. We knew this quarter was going to be bad. It has not been as bad as feared. It does look like we are in this prolonged period of not just lack of Earnings Growth, but recession. Earnings has been taken away. It may be a while before people recognize register the next year is going to be much lower again. Certainly it is no longer a support for having higher prices. Cudmore, things for joining us. Mark is a bloomberg mliv managing editor. We are asking on the blog the question of the day. Do markets sense Central Banks are near the limit of what they can do to spur growth the . Reach out to us. Lets get the bloomberg first word news now. The top u. S. Envoy to ukraine has directly contradicted president trumps assertion there was no quid pro quo behind his phone conversation with the ukrainian president. Claim inaylor made the a 15 page statement to house investigators. The president meanwhile has tweeted that the impeachment inquiry is, quote, a lynching, but added, we will win. Says chinaal times is drafting a plan to replace hong kongs carrie lam with an interim chief executive. The report cites unidentified people briefed on the deliberations. It says lams successor would be installed by march if xi jinping carries out the plan. The interim chief executive may not stay for a full fiveyear term. Assia and turkey have struck deal to create a buffer zone in northern syria. President erdogan talked with Vladimir Putin for more than six hours before announcing the agreement. Includes joint patrols and coordinated action with Syrian Forces to remove kurdish fighters from border areas. The kurdish ypg fought for years beside u. S. Forces, but turkey labels them separatists and terroristic. Haschilean president announced a series of Financial Aid packages in a bid to calm ongoing mass protests. The measures include a workers, a 20 increase in pensions, a scrapping of electricity price hikes, and higher taxes for the rich. Peopleernment says 16 have been killed in five days of rioting and violent clashes. 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 very much. Next, softbank to the rescue. Wework accepts a bail out at a valuation of less than a billion dollars. Whats next for both parties. And for staff. Bloomberg radio is live on your mobile device or dab Digital Radio in the london area. Matt 15 minutes away from cash trading. Futures are down half a percent or more. Ftse futures are little changed. Wework has accepted a 9. 5 billion rescue package from softbank. Deal gives the japanese investor and 80 stake in the company at a valuation of less than a million dollars. 8 billion. It also sees the founder give up his board seat, but get two proxy seeds and walk away with a package including as much as 1. 2 billion dollars in stock. A half 1 billion credit line and a 185 million in consulting fees. What is the first thing that pops out of you from the softbank set up . You just ran through some of the weirdest numbers out of this deal. The fact i think is really quite gets 18 ofsoftbank wework, but they dont control it. Thats according to their own statement. Ause they dont have here shareholder controlling vote and they dont control the board. Instead, they will treated as an associate. The treatment will be different when you consolidate the top line, the bottom line. The Balance Sheet then becomes your Balance Sheet, but when you treat it merely as an associate, you avoid a lot of that. Accounting tricks going on there. Its not illegal, but thats what they are going to do. Amazing things coming out of the deal today. Anna that allows it to be treated differently in the south bank accounts. What about the broader implications for the future of wework or the sector . Wework, this is the start, not the end. Now softbank, which has control of the company, they have replaced their own coo as executive chairman of the board. It is their job to turn it around. It is their job to take that cash and make something of it, including reining in the spending. To look at all the long term leasing deals and see which ones work and which ones dont. Softbank goes from being a vc to being a pe. Now there have to be turnaround. From the broader perspective, this is not the first. Uber and lyft have both ipo and neither are profitable. Unicorns 200 or 300 around the world, none of which are profitable. Investors will be thinking, are they really worth of that . The answer will be no in many cases. Matt thanks very much for joining us. Bloombergs Technology Correspondent out of asia. We are minutes away from the open. Next, we will take a look at your stocks to watch, including swedbank. Lenders hit by rising costs related to Money Laundering allegations. This is bloomberg. Anna welcome back to Bloomberg Markets, the european open. Boris johnson could push for an election after mps blocked a plan to russias brexit deal into law, forcing a delay beyond october 31. Against u voted you had been tempted to back some form of brexit, so why did you decide not to vote in favor of the government in the first vote yesterday . I have taken the view we should respect the referendum result, but it needs to be a deal that protects jobs and livelihoods. I came to the conclusion having looked at the small print of the deal on the table yesterday that it was going to regulations, wos rights, environmental standards, consumer standards. It is difficult to do a freetrade deal with the European Union if the European Union thinks you are just going to be undercutting social and environmental thats why i came to the view we need to amend this deal to have a level Playing Field commitment. Anna some of the 19 of your labor mp colleagues who voted for this deal yesterday have suggested they only voted for it , similar to you, with a view to amending it in the next days. Is that a legitimate reason to vote in favor . It is a balanced judgment. I felt the signal you send by voting for something, which is going to open the door potentially to that sort of bonfire of our protections and standards, was just something i could not support at the second reading stage. I have profound respect for colleagues who took the reality is now it has quite a majority. Anna if it comes back, would you vote for it . If we can have a Prime Minister who stops behaving like a spoiled brat and actually comes to the table and says, lets have a timetable motion that is respectful of parliaments need to scrutinize the deal properly. Thats what was rejected last night. Then i think we can have a Committee Stage where we look at amendments. How we can anchor rights and standards more effectively for a level Playing Field. Colleagues are tabling amendment on the customs union, on how to avoid a cliff edge. Lets debate that and see what we get at the end of the third reading. The more amendments we get, the more likely we will support it. Anna do you think corbyn and johnson are going to be talking about the new timetable rather than pushing into a general election . I really hope so. Anna do you think that is likely . Affect Boris Johnson decided to pause rather than to pull it was a very important signal last night that he may well be open. He got quite a convincing majority for that second reading. You could potentially see that as a majority. When we go into the committee majority, he solid may well feel if we have a new timetable, a new program motion, he would have a decent chance of getting it over the line. I hope there will be constructive dialogue between whip and with chief the government chief whip. Anna coming up, the market open. We are bringing it to you live on bloomberg tv. Politics the perspective, keeping an eye on any conversations between various leaders in westminster about whether the timetable can come forward or we push toward the election. Toward the election. Futures point downward. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Away from the cash open. Dani burger is standing by. It is all about politics today. Look at what the pound is doing. Holding onto yesterdays losses after parliament shut down Boris Johnsons plan to rush his brexit deal. Those proceedings are back in limbo. Hong kong equities underperform the rest of the market. The Chinese Government is planning to replace carrie lam. When it is not politics, it is all about earnings, Something Like 20 of the s p 500 reports earnings this week. Startingee the s p 500 to show some of that weakness. Speaking of weakness, look at these futures. Always a little bit alarming when we see Something Like the dax declining the most. Some signs of macro concern. Just a few seconds and the city until the markets open. The first market we are going to get is the u. K. , which is important because we have the latest brexit development. It is flat. That partly might be because the risk of a no deal brexit largely looks to have been cleared. That might help contain some of the losses we see in the u. K. We cannot ignore the fact that yesterday when the vote was happening, it had an Immediate Impact on the market. Some of which is carrying through today. Buying. A lot of haven the dollar doing better, swiss franc doing better, the yen is trading at a oneweek high after that vote. Throughout the rest of that market, something bigger might be clouding, it might be the macro outlook. France, spain, netherlands all turning downward. It might be the earnings that have markets concerned. Tomorrow, we get more readings on data on europe that need to be strong considering yesterdays s p global cut their outlook for markets when it comes to growth. Lets see how some of the sectors are doing. This is going to be really interesting mostly because today is largely going to be a factor story. It is a scary look. Red across the board. Some of the sectors to point out. Industrials looking very weak today. This is selling of more of the cyclical names, perhaps buying more defensive. It is really hard to see any green on the board. Maybe a bit in energy. Otherwise, it is really the factor story we are seeing. Investors dont want to hold riskier stocks. We can also see Something Like financials doing worse after bank earnings. Then we can see some Technology Weakness as well. We had Texas Instruments downgrading their earnings outlook. That might be really hurting chip stocks today. Matt, what did the individual names look like . Matt we do see for the most part stocks down for the most part. You can see 468 losers. There are only 100 winners. Among them, you have British American tobacco, one of the big gainers, up 1. 2 . It is a very defensive stock. As are a lot of the others that are big gainers. Diageo as a gainer this morning. Nestle as a gainer. Unilever as a gainer. The defensive stocks certainly are the big gains. Now moreee pandora up than 7 . Pandora, not the radio operator, but the jewelry maker, putting up a big surge in not only in price, but in volume already. Pandora trading 122,000 shares this morning already. Take a look at the losers. Sap is the biggest point reduction in the stoxx 600. Well after Texas Instruments disappointed with its fourthquarter outlook. Infineon in also a loser. You will see a lot of these tech in theas big weights index. You also see lloyds, santa fe, i, and rochef weighing down. Boris johnson looks to set try for an election after parliament blocked his plan to rush his brexit deal into law. Joining us now is the head of Global Market strategy let me first ask you about the brexit situation. How much of any fact do you think this is have and effect do you think this is having on the markets or this is something the traders have learned to separate from the price action during the day in stocks . I think in terms of Market Action you see the shortterm move in the pound mostly. Obviously, a bit in the markets. I think you have more Global Situation that will include trade and growth and other areas that are driving equity markets a little bit more. If it does keep moving in the right direction, if we do have a bit less uncertainty Going Forward and that now seems to be delayed a bit, but i think that will be a positive for markets and for european equities. About where you see the pound heading. I noticed that the bloomberg pound index was near its average since we saw the initial vote back in 2016. It has moved around quite a bit in the last couple weeks or so. Where do you see it heading . Very difficult to call without clarity on the politics. Esty it is very difficult. It has moved a lot with all of the headlines. Honestly, we have seen it breakthrough 1. 30. If we had had a deal ready or ready for the end of october, it could have gone a bit higher. 1. 40 may have been a bit high. There are still underlying cracks in the u. K. Economy. There are still underlying cracks in the Global Economy, which wont help the u. K. Much either. I think above 1. 30 if we keep this kind of deal. I dont know if we see a huge rally after that. Matt what do you expect in terms of u. K. Stocks . Andations on ftse stocks certainly midcaps, as well, are lower then we see in the continental european indexes and certainly lower than u. S. Valuations. Esty valuations historically have tended to be a bit cheaper in the u. K. The u. K. Market has usually performed quite in line with the msci global indices. I would say in that case, you want to look at the trade picture, as well. The truth that seems to be finally truths that seems to truce that seems to be finally holding between the u. S. And china, and at least the beginning of an improvement, will be support for Global Markets. So, the u. K. As well, if you have that added support that there is a bit less worry about brexit that we are moving situationd that the might finally come to an end. Finally. Finally. Who knows . Not just yet perhaps. Let me ask you about inflation in the u. K. , your expectations. It seems that looking at two year inflation and bets on low inflation seem to be doing quite well, as we saw the pound rally and quite recently. That seems to have stopped. Where do you see these the pound story going . Is, wet stays where it will have had a nice balance in the currency. That means inflation can remain stable. It does not have to go that much higher. We will have to see what the growth picture looks like. Dealin mind, even if this get sorted in the next couple weeks or months, you are just entering a transition phase, and that means a lot longer status quo, while the bigger negotiations actually take place. I would say a relatively benign environment, as long as we stay in a slightly more optimistic or settled brexit scenario. Matt all right, we are going to keep you with us. Our guest cohost for the hour. Up next, we are going to bring you the stocks on the move so far this morning. A scandal plagued lender is falling after getting hit by rising costs related to monitor Money Laundering allegations. This is bloomberg. Anna welcome back to european open, 10 minutes into your trading day. European equity markets looking under pressure. Bellwether reports later today. A mild earnings recession is anticipated according to morgan stanley. The heavy equipment maker could post its first year over year decline in quarterly profits since 2016. We are also looking had two other major u. S. Companies reporting today, including microsoft and boeing. Numbershad after hours out of Texas Instruments, which is weighing on the tech sector a little bit globally. Lets talk earnings season with esty dwek. She is still with us. Let me ask you about the earnings season. What will we need to see in earnings season to deliver a rally in stocks into the yearend . Esty you are going to need to see some beats. Historically, you see expectations really drop a lot head of the earnings season. That way, Companies Get to deliver their beats, above expectations. This quarter will probably be no different. Now, where we have seen Something Different is expectations are quite negative for this quarter, they are negative in terms of Earnings Growth, year on year both in europe and in the u. S. Hopefully, we can beat that. Or get sometay flat positive growth will be the big question. Q3 2018 was the peak and growth and Earnings Growth was really strong. It is not surprising that if you are looking year on year, it is going to be difficult to have that kind of level of growth. Hopefully, we need decent earnings. Whether that is flat or barely negative, we are going to need that underlying fundamental support for the rally to continue, i think, into the end of the year. Matt so, are you going to be able to get that if the consumer starts to weekend . We are already seeing a real problem with auto sales. If that spreads, is that a problem for earnings . Esty absolutely. The consumer is really key, especially in the u. S. I would argue that the consumer is still relatively in good shape. We have seen one or two numbers a bit weaker, but coming from a pretty strong few months, so that was not a huge surprise either. I think the u. S. Consumer is still doing quite well, so that is one of the main reasons we are not concerned about economic growth. That will help earnings to stay up. Q3 was a little weaker, keeping in mind you did have a lot of the bad trade news in august and that fed into september. We will have to see what kind of impact that has come about looking forward, i think consumers are still going to be very supportive, both for growth and earnings. Europe, youere in are constructive in european stocks. What is your explanation for that . Is there upset from earnings season . What is the story . Esty nk it is a lot up it is a lot about trade tensions. This truce between the u. S. And china hopefully means a change in german sentiments in general. If you have some of the brexit uncertainty, clouds dissipate as well, that is a second positive Geopolitical Development that will be supportive of european markets. The quotes have been onesided on the way out, so any change in sentiment should bring some flows back in and should help the market and valuations are not by any means stressed, which means there is some room for a rerating and of earnings are better than expected, that will be the underlying fundamental boost for markets, as well. A little catch up, but i think it can happen. Especially if Interest Rates if yields drift upward a bit more, that will help some of the bigger sectors in europe, such as financials. Leastbanks are one of the winning groups. What do you think about what do you think about picking up some of those that are discounted compared to others . For example, auto stocks are one of the least winning groups as well. Basic resources are down. Are some of these dogs going to recover . Esty if you look at financials, for example, a lot of it, if you see yields drift upward, that will definitely be a support. Executive Interest Rates have not helped. If it looks like the yield curve steepens a bit, if you are going to get a bit of a pickup, that will be positive for financials. I think we are seeing some optimism in growth and some of these geopolitical trends. It does not mean that all of the growth concerns are going to dissipate. Something like materials might still need a bit of better macro and growth news before they can meaningfully pick up. If we do have a nice big rally into the end of the year, some of those unloved sectors will definitely catch a bit. Matt esty dwek stays with us. Lets get to our top stock stories. For that, we go back to dani burger. Dani certainly one of the things carrying over from the u. S. And asia and now into europe is chip stocks underperforming. Stm micro falling. Ams infineon in. This has to do with Texas Instruments giving and outlook downgraded, saying demand is not there. Shares now down 3 , even after yesterday. Amf had a better than expected earnings report. This bellwether, Texas Instruments, dragging down the entire sector. Swedbank also falling today. They reported earnings, making clear that Third Quarter costs associated with scandals over alleged mishandling of suspicious transactions is following them well into 2020. They said the ecb and u. S. Is probing them. The u. S. Probe might take years to complete and this year, they saw 103 million of costs associated with that. Also missing estimates on quarterly results. Good news on abb, even though results had missed analyst estimates, orders dropping, seeing some weakness, especially in the auto sector, but they are saying margins were strong and that is all despite the really weaker macro backdrop. They liked what they saw in earnings. Shares up nearly 3. 5 . Anna thank you very much. Up next, trade tensions hit chipmakers. A report by Texas Instruments spurred a selloff in Semi Conductor stocks. We will talk about the impact of the trade story in tech. This is bloomberg. Welcome back to Bloomberg Markets european open. We are 21 minutes into the trading day and looking at losses across the equity indexes. Trade tensions are hurting chip stocks. Texas instruments slumped after a gave a weaker than expected forecast. It warned customers are no far more cautious as they wait for an agreement between the u. S. And china. Esty dwek is still with us. What do you think of the possibility of a trade . Esty did looks like we are in a truce at least and i think that week it looks like we are in a truce at least and i think that we can maintain that. Where we want to see the good news is we are probably no longer in a phase of trade escalation and deterioration. With think you saw some data in the u. S. Show some cracks, so some impact finally hitting the u. S. Economy and for president trump, as we are getting into the reelection campaign, he needs to make sure you dont see too sharp of a slowdown in the u. S. , so i think he is also finding reasons not to increase tariffs again. The october ones are on hold, the december ones i assume are going to be on hold as well, whether the chinese managed to roll back the september ones is a possibility. Much more than that, i dont expect yet. I think we are at least sort of in this upswing Going Forward. And where does that leave the dollar . Does any of that reduced trade tension allow the dollar to fall . Esty it might fall a little bit. But if you look at Interest Rate differentials, if you look at growth differentials, we are still late in the cycle, and while we are not seeing any signs of an imminent recession, i think investors are going to remain relatively cautious and i think that will give some underlying support for the dollar. I would not expect that much weakness, but we probably dont see that much strength Going Forward either. So, you dont see in imminent recession in the u. S. What about here in europe . It seems the trade war is affecting the germans the most. We had a contraction in the Second Quarter and it looks like we could get one in q3, as well. Esty absolutely. I would expect to the q3 number in germany to be negative, as well. Unfortunately, i dont think just negative is enough to make the germans loosen the Purse Strings and start with some fiscal easing that i think they need. In a fewhat comes months, we are really hoping for it and i think everyone across europe will benefit, but i think the fact that you see and easing in global trade will probably also be a bit of a boost for germany and therefore for the rest of europe. Q3 probably still not the bottom, whether october still ends up being or the Fourth Quarter ends up being a bit more of a bottom because of these improvements in the trade , thatcs, if they last will definitely be a welcome boost. In general, we are expecting a more of a slowdown to trend. That is about 1 . Maybe just above and europe. 1 or just below may be at the moment, but probably not a recession spread out across the continent, though definitely i think and germany already. Spent a lot of time talking about whether we from, allere it comes of this in the context of expectations of Central Banks continuing to do what they are doing, perhaps. A lot of people asking whether it will be enough. I know in the markets live blog, they have been asking, do markets sense that Central Banks are the limits of what they can do in terms of what how they can spur growth . Esty it depends on the central bank. If you are looking at europe, close. I think mario draghi tried to give one last boost to the markets. Especially to governments. If you look at the latest qe announcement, it seems to me that a lot of what he is trying to do is make sure that servicing costs are remaining low for european countries, so that they have what is now being called this fiscal space, this ability to remain close to budget or within budget, but still have expansionary fiscal policies. I think europe beyond this is really not much more they can do. Japan is in a similar situation. Ae u. S. , of course, is in different situation entirely. They have room to cut, they have room to ease, but i dont think the u. S. Economy needs that much more support. Probably one more cut this year. At the moment, im leaning toward october. I think they will want to show this sort of continued support and we did see some weakness in september and then it should allow them to stay on hold for longer. So, different situations, but still this fundamental commitment to extend the cycle and to keep these economies growing. Matt all right. Thanks very much for joining us. Esty dwek. Lets check in quickly in the markets right now. As far as what is going on with the equity indexes. Drops with theat exception of the ftse. The cac down 0. 5 percent as china dismisses a rumor that carrie lam will be replaced. This is bloomberg. Matt lets get your top headlines. The eu is expected to approve a brexit delay as a fasttrack deal is blocked i parliament. A fresh election could be in the cards. Weworkk swoops in and accepts a 9. 5 billion bailout. The company is now worth less than 20 of its january valuation. And warning signs from Semi Conductor stocks. Texts are down on week forecasts from Texas Instruments is the trade war bites. Welcome to Bloomberg Markets. In berlinmiller alongside anna edwards who is outside on the green in westminster. Anna yeah. Mop up aftermath of the voting and ask what comes next. We saw Boris Johnson lose one vote and win another. He did manage to win a vote in the house of commons. It was to move his Withdrawal Agreement into the second stage. It was kind of seen as a vote on the deal as a whole, managing to win over 19 members to vote on his side. So to takem only did the legislation to the next stage and perhaps change it to force the best protections as we had previously for workers and the environment. Of course, he lost the vote on the timetable, so that raises questions about where we go next. For aoris johnson push general election or try to come up with another timetable for his Withdrawal Agreement and try and get cross Party Support . A lot of mps pushed back because they dont like brexit. Some of them dont like boris brexit and others dont like how theyre being asked to do much in a short time. There is possibly a way forward and trying to craft a new timetable along with the labour party. We will see if we get any new progress on that front. To my things are in limbo in terms of the Withdrawal Agreement. Lets get a first word news update away from the latest on the brexit saga in hong kong. Boris johnson looks set to push for an election after you get parliament blocked his plan. The premise are one the vote on the eu agreement, but mps refused to agree to the timetable. Tusk signaled the eu will likely agree to another delay to brexit. Johnson warned the defeat leaves the u. K. In limbo. Disappointment that the house has again voted delay. Rather than a timetable that guaranteed the u. K. Was in a position to leave with a deal. Uncertaintyfurther and the eu must now make up their minds over how to answer parliaments request for a delay. The top u. S. Envoy to ukraine has directly contradicted president trumps assertions that there was no quid pro quo pro behind his july conversation. Taylor made the claim and a detailed 50 page statement the house investigators. The president has meanwhile tweeted it was a lynching but added he will win. Russia and turkey have struck a deal to create a buffer zone in northern syria. Withdent erdogan spoke Vladimir Putin for more than six hours before announcing the agreement. It includes a joint controls and corrugated action to remove coordinated kurdish fighters from the area. Years besideor u. S. Forces but turkey labels them separatists and terrorists. 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, matt . Anna thank you very much. Boris johnson looks set to try to call an election, certainly one path forward we are talking about. It comes after mps blocked a plan, forcing a delay beyond the october 31 deadline. Joining us with analysis from strassburg is the Vice President of the European Parliament. Great to have you with us. If i could ask you, we heard from donald tusk. Recommend toe will leaders that they back a delay to the brexit process. The you anticipate any countries ignoring tusk or deciding to block an extension . Good morning, it is foggy here in strassburg heard when it to what they will do, donald tusk said he will talk to leaders because im extension is inevitable. Different views, but at this stage, its far too early to predict what leaders suppose we have been patient and persistent and clear all along. Have an to ensure we orderly brexit and not a no deal brexit. However we might feel, wondering when this might ever end, i do think we have to allow the political system in the United Kingdom to have it say. In fact, there is interesting analysis about what the vote meant. Colleagues on the remain side and they believe there will be significant amendments passed to change the direction of the bill, says not quite as straightforward. At one level, and of course, he did not get his timetable through which inevitably means his predictions of do or die by october 31 will have to not die in the estimate of what the consequences of what his parliament has decided. But there is a sense that we have been here before many times and none of us can predict. Do i know what might happen . Not. Utely none of us can predict the Political Developments in the United Kingdom and this morning there is possible about talk about a possible general election. It could require perhaps a long extension and these are early days about the morning after the night before and we have had many of these of brexit. So lets just wait and see. It seems to be crunch time in the conversation. Let me ask you about the possibility of a general election and what that means to european thinking. Easier to justify an extension if it is for a specific purpose such as an election . Anna i think that will always be the case. Want to have some indication as to what the extension is required for how long it might be wired required. But he is obliged under law to ask for the extension and the end of the law is generate 2020. Election, that beat sufficient time to hold an election and let a new government settle in. I am feeling is we might be living with brexit into 2020 without a divorce settlement. However, we do have a listen to leaders and that will be a lot of conversations amongst leaders will be a little bit concerned, as we are, that it decision and 26 is income for the idea of an election, again, im hearing from labor unsure if they would want one or if the conservatives would like to go to the people in a cold and miserable november. So a lot of different issues will tell us what will happen in the next few days in the house of commons and the political system. Its fair to say that from an eu perspective, we have always listens carefully and we respect the outcome of the referendum. We have negotiated fairly and have to do a second deal for the Prime Minister to say he can toldthat you must have leaders was confident this deal would get through the house of commons, so they might be more cautious about what Boris Johnson tells them on this occasion. Much, theks very European Parliament Vice President joining us from strasburg with the latest. Swedbanks folly this morning after the costs of its moneylaundering scandal arose. The ceo admitted in a u. S. Probe could last as long as five years as ecb investigations are ongoing. The institute of International Finance has more needs to be done to counter the threats posed by Money Laundering. It is calling for a commendation of regulatory reform, cultural change, and the deployment of new technology. Us to talks more about this is tim adams, the president of the university. We see these scandals affecting banks left and right. Have you fix them . How do you fix them . The new ceo is a friend of mine and someone with experience. I have enormous confidence. The challenge is the industry spends over 100 billion a year in aml but the rate in getting close to 2 trillion is 100 , 100 compliance. We need to rethink the way we do moneylaundering and the way we go after badly generally. Matt doesnt it raise the risk of increased regulation and scrutiny at a time when it is ,lready incredibly expensive needing a con of manpower to be able to deal with clients . At one hundred percent compliance and still only getting 1 of the flows of their we need a whole new paradigm, that means information sharing with Law Enforcement and intelligence agencies very little that happens we get very little feedback in terms of what actually works and what does not. Employ the latest technology. Machine learning is about pattern regulation and much behavior is about pattern recognition so we need to deploy the latest technologies and the free to do that be free to do that. Matt i am looking at a chart of European Bank stocks. At the same time we see the broader Stock Market Index at a 600, in this case the stoxx , we see European Bank stocks at a low. In this chart goes back to the early 90s. Why are european debt banks in such a bad state. First, the Interest Rate environment is very challenging. The of curve is really hurting them. We dont have banking unions or Capital Market unions. It is a highly fragmented economy trying to be with other institutions at scale with larger domestic Capital Markets. They are all spending tremendous amounts of money to deploy the latest technology and implement other regulatory changes. On. Heres a whole lot going there are Industry Leaders out there doing quite well, but by and large amount we need Capital Market unions, a banking union, and a different Interest Rate environment. Matt what about costs . Mario draghi says it is their own fault because they have not cut costs and Deutsche Bank still has over 90,000 employees. Dont they need to reduce headcount . They need to reduce costs and that is happening. Challenging in certain jurisdictions because of politics is local labor laws. It is hard to lay off or shed workers in hard to shut down are slow toulators the floyd and approve the latest technology. The cost is a part of the and they need to do more rapidly. A different environment would be helpful. Matt thanks for joining us. Tim adams, institute of International Finance president , pushing back against negative rates. More Management Changes and ongoing 737 max 8 concerns looks set to weigh on a boeing. We look at what to expect from earnings. This is bloomberg. Anna welcome back to the european open. Things looking at negative for european equities. Lets talk about brexit. Boris johnson looks set to call an election. That is at least one possible way forward from here. This comes after mps blocked a plan to rush a deal into law, forcing a delay. Smith, us is iain duncan conservative mp and former leader of the conservative party. Good to speak to you. What are the chances of leaving on october 31 . There isstill still a slim chance that if the labor party agrees to a limited extra time, they could run it around the clock. In 25just do it all hours. That is how we have done it in days gone by. We might still get back onto schedule. There is the outside possibility and i think the government recognizes a stage where if they cant make the 31st, their pledge, they have to have an election. The honest truth is youve witnessed what happens when you dont have a majority or a government this place just collapses. An alternative is to craft another timetable and Jeremy Corbyn seems off about that. Is it worth trying that before the election root . If you really examine what he is actually asking for, hes trying to get three more days. To breakery well not the deadline so it is a tautological game he is playing. Anna you could call it a technical extension, thats what some want. Just more time. The extension is not in our gift because it is the eu. A longer extension to three months, then the government is left deciding to get a bill through with a threemonth extension. It means this place would just occupy the three months. You might enjoy this, but i dont, this endless debate. He couldould lean on leaders to get a short extension. He could, ive no idea. But everywhere you turn, theres a bit of a nightmare. If they get out agreement with labor and goes into laws, they will hang this thing with amendments like a christmas tree. Comes back to the commons, the government doesnt have a majority to knock them down there they can put wrecking amendments, the customs union. If you can get rid of those, you got a bill you dont want no longer the thing you negotiated. The eu wont want it because it will break what the treaty agreed. Now you are back to square one you taken more time. Anna when would you hold an election if you are still running the party . You have to have it almost immediately. The problem is now you are in two. Anna a lovely season for an election. Winter is never a great time for the election, but having said that, the british people are sick and tired anyway. But the main point is that the six Term Parliament act has to get over. Is it has the reality locked us into the fact that we cant call an election. Our understanding is the labour party has signaled that they would be ok with it now as long as no deal is off the table. They have gone 180 degrees in Different Directions on every comment they have made. They were given the election twice anna when no deal was a possibility. The moment they were trying to stop brexit as an issue in the next election. They are scared stiff and running way behind the conservatives in the polls. To give themsays an election without telling you truthfully this is the game. So labor is in a game of trying to edge the conservatives into a morass around the brexit arrangement. We let go, we then release control of this place and thats the problem. So the government needs to get an election date set and away with it. Otherwise, we will be doing this for years to come. ,nna Iain Duncan Smith conservative mp and former conservative party leader, thank you very much. Up next, a new impeachment threat. Trumps top ukraine envoy emerges as a risk to the president. We bring you the latest. This is bloomberg. Matt welcome back to the european open. We are 54 minutes into the trading day and looking at a ftse that is just treading water as the pound comes down. Meanwhile, other equity indexes are all off with the cac anf f tse mib down. Kiev has. S. Envoy in emerged as trumps the biggest impeachment threat. A statement, acting Ambassador William Taylor contradicted a repeated by thethat president , i should say, that there was no quit quote throw quid quo pro offered to his ukrainian counterpart. Is taylors testimony really that naming damning . It really runs contrary to what the white house is saying and does so in pretty explicit terms. That must be the big thing. They have said there is no quit quote pro relating to asking ukraine to start trying to give dirt on political rivals, that being joe biden. The problem is that taylors testimony flat out says that the diplomatic channels and tf are not normal, that trump advisors were shortcircuiting the process, running around trying to get anybody who would listen to proceed in these investigations that werent going to dig up anything and were on frivolous grounds. It really runs contrary to everything the white house said. Taylor emerges in this testimony as a really meticulous note keeper. The white house is throwing things against the wall hoping things stick this time. The degree, i encourage people to look at the story on the terminal. The degree to which taylors sort of sits down and takes the talking points completely apart cant be overstated. Its big. Matt thanks so much for joining us. Derek is bloomberg Senior Editor in singapore who has been all across the story for us. Thats it for the european open. Stay with bloomberg. Up next, you get another hour with me on bloomberg asveillance and with anna well in the cold and rain down in westminster. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Call, click, or visit a store today. Matt brexit deadlock. Eu is respected to approve a brexit delay as Boris Johnson fails to push through his plan for timing. Fresh u. K. Election could be in the cards. China is reportedly planning to replace embattled hong kong leader carrie lam, but will it make a difference to the protesters . And softbank to the rescue. Wework