Coming up shortly, we bring you an exclusive conversation with the ceo of Goldman Sachs, it David Solomon. He will join us and give us his take on the banks involvement in the aramco ipo. Let us talk about what is going on in the markets. This is the picture we get from the futures. Cac futures pointing higher. U. S. Futures also suggesting they are moving to the upside on the equity story at the moment. Let us think about where we have at anrom the dow alltime high catching up with the other u. S. Benchmarks. Global stocks up 19 year to date. The trade story is once again guiding the narrative. The Asian Session has been dominated for the most part. Broadly, the narrative around trade is news out of the u. S. And china and that there is as urge going on for a venue to sign phase one. And the discussion of the rollback of tariffs. Some of the emergingmarket equity market going higher and we are seeing money coming out from the yen as well which goes hand in hand with the risk on story. Chinese assets moving to the upside. They are tweaking or reducing the level at which the government lens to the Banking Sector over the shortterm horizons. Interesting from the Chinese Market perspective. That is what we have on equities and fx. And mark cudmore joins us now from singapore. It does seem that the trade narrative is once again reminding investors that it could be more playful on equities. What do you put this Risk Appetite down to then . Mark we have a no buyer met where we can continue this risk positive mood to year end unless the talks collapse completely. Some potential negative catalysts are now in the rearview mirror. Suddenly, rate policy is no longer a danger. We are most of the way through the earnings season. A not has been seen as too bad earnings season. Not good but not as bad as feared. I am stillse, slightly worried that the trade issue is ebbing and flowing. Im worried there is a chance for retracement there. What it looks like both sides will continue talks through your end. Anna it is interesting to talk about where the trade narrative meets the central bank narrative. The question of the day is when do the assets expect the global easing to end . Mark that is right. Because there is optimism on the trade front, people do not necessarily desire easing. There is disappointment on the trade front then more easing will come. At the moment, there is whe inwin either way. Anna coming up next from berlin, my colleague matt miller will be speaking exclusively to the ceo of Goldman Sachs, David Solomon. That is coming up next. This is bloomberg. Matt welcome back to bloomberg this is the european open and we are about 22 minutes away from the start of cash trading across europe and the u. K. Yearve an important 150 anniversary to celebrate with Goldman Sachs. Chiefsolomon has been executive for just over an hour. Overhauling management and shaking up the corporate structure, Goldman Sachs is for the Biggest Company potentially in history, saudi aramco. Then berlin possibly uncertainties of the trade war are driving that. Let us get his perspective. David, thank you for joining us. David thank you for having me. Matt let us talk about what you are doing here in berlin. David germany has always been an important market for us. We have an enormous client base here. Timef my jobs is to spend with our clients. We have a Significant Office here in frankfurt. I am here to spend time with our clients and with our people and as you mentioned, this is our 150th anniversary. To ave made our way around number of important cities in our Network Holding events with our clients to commemorate that anniversary. Anniversary does not happen every day and we are happy to celebrate this market with our clients and we will be doing it tonight in frankfurt. Time, you areame trying to change the culture. I know you will announce your vision for Goldman Sachs in january. But you are already making moves , one just hit the wire yesterday giving equal parental leave for men and women. How important is that push for diversity at Goldman Sachs . David we are very focused on diversity and inclusion. To me, a worldclass organization attracting tremendous talent has to be competitive in the way that you treat your employees. We felt this was very important. We wanted to be best in class in this issue. To change broadly, i would temper it a little compared to some of the words that you used. We have very good businesses that we are very proud of and we are evolving the business. Where weding services think we can expand with our clients. Day we arenvestor focused on for january, we will be looking to provide more information to the market on a number of the narratives, on a number of the specific investments that we have already talked to the market about. Just moreeal information. On what we are doing to expand our alternative investment platforms. Transaction backing. Are i know that markets going to be introduced in germany. The apple card is coming here at some point. A huge part of your consumer business. How important is that expansion to Goldman Sachs . David we are building a Digital Consumer platform that at the moment is predominately focused in the u. S. We have started taking deposits in the u. K. We have not made any announcements to take deposits here or anywhere else. We want to build a differentiated platform where we can provide a variety of Digital Services to consumers in a way that helps them with a Financial Education come up with a bunch of the friction that currently exists in traditional banking services. We are making a significant investment. Towill do it methodically make sure we really have a differentiated product before we expanded around the globe. Matt an interesting time to get into Consumer Banking. Around the world, rates are negative. What do you think about negative rates and that business . Getting into this business because we are building it for goldmans ask for the longterm. We have one of the largest and most successful as set management platforms. We have built it over a number of decades. When we think about building a aboutss, we are thinking building a business for decades for Goldman Sachs and we think it will enhance our ability to serve clients. Look at shortterm market characteristic, that is not driving our decision to make investments in build this platform. I was atio draghi his final Ecb Press Conference and he said we are very happy with our negative rates experienced. Francine bogart telling lagarde toeing the same line. David when we look back at negative rates, i dont and it will look like a great experiment. I dont think it is bringing the benefits we had hoped to say. Negative rates have not allowed in acceleration of growth, in my opinion. I do not think they are constructive. We will have to see how it plays out. The worried when we look at experiment of negative rates, we wont like what we see. Matt central bankers say fiscal stimulus is needed to mitigate the unwanted side effects. I know you will be talking to companies around germany. Surely, they will have something to say about negative rates. They will probably also want to talk about infrastructure they think is needed. Do governments need to chip in more . David when you talk to people here in germany, there is significant discussion about fiscal stimulus. I think it is a balance in all of this. Andlance in Monetary Policy stimulus and sometimes in the cycle, there are a variety of other factors that can slow down economic growth. H the trade tensions germany is a significant export economy and they are feeling that. Onwe can get some progress some of the trade talks, i think that could be a positive for growth. From president ar xi and we heard positive comments from wilbur ross yesterday on the possibility of a phase one deal are you optimistic . David i have no information on this but if you are watching what is coming out of the administration in washington and listening to what is coming out of china, i think both sets of eyes believe there is significant progress on phase one. I am relatively optimistic based on the data points. I am watching them as you are. It feels like we will have something constructive happen. Matt how much damaged you think has been done . Can it be reversed . Global economy is still growing and chugging along. The trajectory of growth has slowed in the last 12 months. What the trade tension has done toit has acted as a headwind growth. If you remove the headwind, that should be a positive to the momentum of growth. Matt that is not the only uncertainty. David there are quite a few. Matt in the u. S. , it is more the political situation. Democrats are moving towards an impeachment. There are progressive candidates on the democrat side for 2020. How much of a concern is first of all, impeachment for euro . Impeachment for you . David i think the process of impeachment and how it plays out , to the degree there was an impeachment hearing and the president of the u. S. Was removed from office, that would be a significant event. I dont think it is likely. I do think we are in a political process where there is a lot of discussion. The markets are more focused on what is happening in the election. And i think it is very early to predict a result but we are watching it like everyone else. An interesting process for the next 69 months and how the candidates will be taking shape. Matt what are your clients preparing for . Someoners or warren or with progressive policies were to take power, it would be a headwind for business. David i dont think businesses are preparing for what might be a year and a half from now based on the election results. Whether you have a democrat or Republican Senate or congress there is a lot of that has to happen for legislation to be put into place. At the moment, i think people are watching. It will be interesting to see the candidates. A lot of interesting ideas will be as faust during the espoused during this process. There is a big gap between ideas being shared and actual policy. Leaders are realistic about the things being talked about having populist appeal. The chances of them turning into legislation are not as likely. Matt still a lot of uncertainty. When you came into the job, you were looking at a 15 chance for recession but recently you said it is getting closer to 25 . David you are making a science out of something that i am trying to get a sense on. You are quoting me correctly. When asked recently i said i still think the chance for recession in the u. S. Is small. I said roughly 25 chance. If we had talked about it nine months ago, i would have said it was very small. I do think the uncertainty has increased some of the risk but i still think when you look at the Economic Data and earnings momentum, 4. 5 earnings growth, consumers are still very healthy. No question that the industrial and manufacturing parts of the economy are slower but when you look at the package come i think the chance for recession in the near term is not significant. But there is always a chance that rings could go wrong. Matt the administration thinks the fed should push us lower. Needs think the fed still to be accommodative . David i think it is still focused on the data that it has and it is quite constructive. We will watch and take hold the market at this point. When you look at the Economic Data, i would be surprised if rates push lower than where we are. Matt let us talk about your business specifically. You are one of the leaders in the plant ipo for what could be the Largest Company in history. How important is the aramco business . David we are involved in the aramco ipo but i will not comment on an active transaction like that. We have been in the ipo business for a long time and have had a leading role around the world for the last 30 or 40 years. Therelly speaking, when is a significant transaction, we are fortunate to help our clients. Matt it seems difficult to value ipos in general. There was a time when people as ad about wework 50 million company. David i dont think it is that hard to put a value on companies. The market is efficient in valuing companies. Most can be benchmarked against other companies. When you talk about companies where before they ever get to the point of having an ipo, there is speculation, hype, and misinformation. Those lead to perceptions. Matt the range is so huge. Bank of america says it could be and yous 1. 3 trillion say it could be as high as 2. 1 trillion. David i appreciate you asking but given that it is an active client situation, i will speak about the specifics of that. Different people will have different valuations and parameters. When you run an ipo process and you get one to the point where a and youn rate is set are selling securities to investors, i dont think it is that hard to get to a range for what the market expects and where buyers and sellers can meet. Situationslk about where you have not yet gotten it to market, there is speculation. But the process at looking at comparables and making estimates and trying to arrive at a reasonable range where a company can sell equity, it is something we will continue to do and we do it all the time. About you talked about the process with wework. David this gets to the media saying things and the founder can say things but it is where the rubber meets the road. What are investors willing to pay for a company . When they have the real information that has been vetted and presented in an appropriate way. When you have that, the market will make a decision. Investors were able to have a discussion with real Financial Information and provide feed work feedback, it was pretty clear that the company could go public. Matt this group of companies, the unicorns that have had ipo problems were not performed well are you like uber, concerned that we are seeing reflections of the dot com era . David these are real companies. We can debate the valuations. They are real. Thethat is different than narrow slice of time during the dot com bubble where a lot of companies were in a different state and getting to public markets. Is ai think is happening Monetary Policy ramping around the world has forced people out on the risk curve. Forced people to look for other ways to drive returns. And they have been chasing growth. And to some degree, growth at all cost. If you can hook your wagon to a company that has a lot of growth and is focused on growth that something good will come of that. That has incentive a lot in ncented a lot of companies. Is speakingmarket and telling people you know what . Let us rein that in a little bit. It is important to grow but there has to be a clear and articulated path moving forward. I believe a company can only be worth the discounted future value of its earnings. It is important that you have a that can generate profitability. I think there is more market discipline coming into play and i think it is healthy. Matt are you satisfied that uber is moving in that direction . David we were an early investor in uber. The team is focused on driving profitability and moving the company forward. We are watching as a shareholder like everyone else. Im sure on how they can accelerate the path of profitability for the company. Matt while we are on technology, we talked about and i wonder how you see the growth of fintech in your Consumer Banking plan . Is it possible you make acquisitions in that area . David we have been building our Digital Consumer banking platform organic clay. Acquisition in that business, a platform called clarity money. In addition to the platform, we also got a handful of engineers we felt were very valuable. If we found something we thought could accelerate the plan that we have, we would consider that. For the moment, most of the business most of the growth we have in that business has been organic. We have a platform with 55 billion in deposits. And we have a credit card platform and have launched a product with apple. We are off to a substantial we are off to a substantive start. We feel good about the progress. Problem,has been a especially for european banks is it something that Goldman Sachs is willing to shell out for . David you are talking specifically about our consumer platform but broadly come if you , torunning a Services Firm be in position to compete and bring your clients the products and services and conductivity necessary to excel, you need a Huge Investment to technology. We are committed to that. We have invested in platforms we feel will help us serve our clients better. We have a global portal, Goldman Sachs marquis. We are getting good feedback from our institutional clients and we continue to invest in that. We are making other Platform Investments that should enhance our ability to serve our clients. You have to have scale. We are put we are privileged to be one of a handful of firms in position to do that. Matt you have looked for growth in that way in Wealth Management. High net to individuals have been a great asset here in europe. A wealth made management acquisition in the United States purchasing a business called united capital. Increase theto growth of our ecoplatform. We access Wealth Management opportunities with people through corporations. It is good given our relationship with corporations. We have new leadership in our platform here in europe and were focused on expanding our market share here. If the right acquisition came along, we would look into that but we see a lot of organic growth. Matt more broadly in europe, there is a lot of talk about bank consolidation. There are a number of regulatory hurdles, especially. Do you expect banking consolidation is it coming for european banks and does Goldman Sachs want to play a role in that . David on the question of banking consolidation, there are a lot of compelling reasons why some consolidation here would benefit the strength of the european market. But i think it is hard and it is not clear that it will happen. I do think it would be good for the European Capital markets agion if you had more of consolidated european leader in some way. Whether or not the local politics or the business rationale allows that to happen, im not sure. I watch it as you do. I do think there is an opportunity to strengthen the position of one or two players through m a or consolidation. Matt let me ask you about the share price. It is not unusual to hear the word legendary when you talk about Goldman Sachs. It is one of the most respected investment banks and history. All of the kids want to work there. You are at the top of the table. Under sharing has informed your competitors over the last four or five years. What is needed to turn this around . David if you look over the course of the last five years, our book value for share growth has run ahead those that we have been benchmark against. Somet the same point, for reason, our multiple has come down. We are very focused on finding ways to grow a platform, strengthen our core businesses, and enhance our returns. By operating the firm more effectively and efficiently. If we grow our business and diversify its so there is more durable, reoccurring revenue in the mix, over time we will get benefit from that and our relative performance should be strong. Onare focused on the mini the medium and long term. Matt david, thank you so much. Thank you for being with us here in berlin today. , the ceo ofn there Goldman Sachs. Anna . Anna fascinating conversation. Great to listen in on that and david. The equity markets are up and trading for tuesday morning. We are seeing the upside. Tradeere talking about tensions and if there was positive news coming from there. If there is progress, that could be positive for growth. We see the impact of the Asian Session where the stocks were 0. 8 . The ftse 100 up 0. 1 . Pretty flat and the rest of europe. Let us have a look at how things are performing from a sector perspective. Some of the sector performances this morning resources are doing pretty well. And materials on the floor. Resources are the biggest gain. Theaps responding to positive news flow around the trade talks. Banks are higher, up 0. 6 . Areities and health care down. That is the flavor of the sector picture we have coming through for European Equity markets right now. And auto parts to the top. Health care and utilities to the bottom. We do have a risk on picture. The stoxxrly flat on 600. Individual stocks. Individual movers. Upside, we are pretty evenly split. 300 stocks on the stoxx 600 moving higher. There, associated is in there,f Associated British Foods. Ghing onis not wei the stocks just now. Number of the stocks moving to the upside. Take a look at the downside. Pandora down by just shy of 8 . Another profit warning coming from the jewelry maker. Cutting their guidance once again. That is interesting because we emesta makingcan masteg moves. We have some asset sales coming through from the start of business. Watch thoseto losers. The market as a whole is not moving that far though there are interesting movers within that. Let us talk about trade, the trade optimism being felt. In the u. S. Yesterday, it was evidenced in the u. S. Futures and Asian Session. White house officials are reportedly weighing a decision to remove some tariffs on chinese imports. During a rally in kentucky, President Trump said they are pretty close to a new deal. We are so close. Sona wants to make a deal badly. I think they would like to see a new president. They would like to see another president. Ata speaking in shanghai his first opportunity to address global investors, president xi reaffirmed the company would open itself up to trade even further. In order to boost growth at home and create more room for Global Growth. China will give greater importance to imports. We will continue to lower tariffs and institutional transaction costs. Latest lines on trade. , shwetagy director singh joins us from ts lombard. Music does seem to be improving a little bit. We are doubling down on the multilateral some multilateralism. See the positive or round u. S. Trade u. S. China trade war. We do not exactly know when it will be announced but it has to ofsometime before the 15th december. What is this phase one trade deal . It could eventually involve china giving some symbolic gestures as in concessions to open up the market even more and plans to help reduce the deficit. Suspension of the escalation trying to come in. We are not looking for a wholesale rollback in the tariffs announced so far. Having said that, there are three caveats. The first one is a trade deal seems increasingly like you likely though it is not a certainty. It is not really a certainty. Though the probability has increased. And stepping aside this phase one deal, the underlying fundamental problem around trade wars is still very much there. Were looking at a trade truth resolution to the trade war. If there is positive momentum around the trade truth, we can look into a further rally. We were listening to David Solomon speaking to matt moments ago and he said both sides are incentivized to do this deal. The incentive has been there for a long time. Things get in the way of it. Maybe it is the politics changing or the political calendar in the u. S. Shweta both sides want a trade deal. Growthad accepted lower but even to achieve that come it needs some solution on the trade war french. The Donald Trump Administration needs a Strong Equity market to help its run in the next president ial election. As you get closer to the crunch point, both sides become restless trying to come up with a deal. Anna the big question is where does that leave us on risk assets . Merrill lynch is saying there is a nobrainer that you go after bonds. And not where does this leave us on risk assets . Shweta i think there is still some room for risk assets to run. It is not just about trade war. Notre seeing the end thats the end, but a big portion of chinese liquidity is behind us. Momentum on the production side globally. And we have a modest improvement in global trade. What investors are forgetting a the Central Banks are back into action. The Federal Reserve filed a balance sheet. They feel underappreciated. Aboutwe will talk more central banking in just a moment. Shweta, thank you. You will stay on the program. Up next, the stocks on the move including pandora slumping after a profit warning from that 10. 6 . S dropping down by this is bloomberg. I think when we look back at negative rates, it will not look like a great experiment. I do not think negative rates will bring the benefit we would like to see. There is no question that growth in this part of the world is lagging. Matt that was Goldman Sachs ceo David Solomon speaking exclusively to us earlier here in our berlin bureau. Stock get the top stories. Halfway through the earnings season. Some numbers came out. Is Associated British Foods up more than 4 this morning. Rimark 3 . Boss also up the Third Quarter missed. The market is really focusing on the fourth quarter. The Company Sees Significant increases in those fourthquarter earnings. Pandora slumping more than 12 . You spoke with the company this morning. They had a warning. Are saying they were reach the lower end of their target for profit. You. And rate, thank Annmarie Hordern looking at some of the movers. Ceo of pandorahe and you can check out that interview on bloomberg. Com. Onestine lagarde has working day under her belt as president of the ecb. She has been in office since friday but she had her first speech here in berlin last night calling for strength, resolve, encourage. With a new batch of easing already underway, how much room does she have to maneuver . Lombard ish from ts still with us. What did you think . I was waiting for her to go to work immediately. She is in berlin. What better place to continue Mario Draghis plea for fiscal help but she did not do it. Shweta the speech was a big was a bit disappointing. She has her work cut out. Mario draghi had promised or pushed the ecb into qe infinity. Deliver onid not that, it would have to make substantial changes to the constraints. You cannot really he bond buying assets unless you change the 33 issuance limits. Politicallye really contentious issues. And the most contentious is for spending. The moment we start stimulating there are more assets that the ecb can buy and more qe to extend further. Anna and where do you think we stand given this narrative around what needs to be done in europe to boost the economy . How weak is it right now . With refer we spoke to a turn in the data. That seems to be part of the narrative here in europe. A bottoming out of pmi. Where do you put the strength and weakness of europe right now . Shweta to put things in perspective, the eurozone will likely stand by just below 1 this year. And we expect it to standby just below 1 for next year. Euroe trench growth in the area is around 1. 3 . Subill be a another gear of it will be another year of sub growth numbers. In terms of the tactical turn around, we do expect stabilization. Germany is in a technical recession already. The starting point is looking quite weak and the economies seem to be turning around a little bit. Trade is improving. Impacts from central bank easing are beginning to come through. The ecb has already started to purchase assets which should also boost some credit and money in the economy. We are looking at a bit of a pickup in growth as we head into next year. Theseter edge one, problems will start to become evidenced. Weigh on does the euro that . We seem to be getting pretty 111. 72. P at where do you see the euro going against the dollar . Announceden the ecb qe infinity, our view was despite that policy easing measure, the bar for the euro to drift higher is quite to drift lower is quite high. We do expect the euro to move lower. One point two highlight is a fundamentals. Including undervalued currency which supports a stronger euro but at the same time, you have a huge package that the central bank will for us and that pushes ro lower. Dont forget the dollar. If the Risk Appetite is here to stay and the momentum on easing which will push the Risk Appetite, we will have a weaker dollar which could push the euro a little higher. We are trading and we are getting closer to the high band of that range. Anna thank you for staying with us, shweta singh from ts lombard. Let us look at the markets. For all of the talk of optimism, this is pushing the asia session higher. We are expecting to see some strength but europe is taking a breather. Picture. He sector resources come oil and gas and some of the cyclical movers to the downside. Haveess cyclical we risk on sector review. Have the gains to justify that narrative though. Stocks are flat in europe. That is a look at the sectors. Borisbrexit bar johnson and Jeremy Corbyn clash. We bring you that story next. This is bloomberg. Anna welcome back to the european open. 22 minutes into your trading day. European stocks off to a flat start for the tuesday session. Oil and gas and basic reason versus well this morning. Boris johnson and Jeremy Corbyn have once again traded lows on the brexit question. Jeremy corbyn accused johnson of hijacking brexit to pursue his own political agenda. Shweta singh from ts lombard is still with us. Not sure we will talk to much detail on that but let us talk about what is going on with the economy. We were talking about where the european economy needs support, the eurozone economy. We talk about the level of government spending. It has been coming down in recent years. The issue is getting a lot of attention in the u k media because we see the tories and the labour party pledging to spend more. How much does the narrative around the u. K. Require a step up in fiscal spending at this point . The u. K. Economy has been slowing. Key growthy or driver has been the consumer supported by a relatively tight labor market and decent wage gains and relatively modest inflation pressures. To continuegrowth increasing, you need a boost in Capex Funding though it has been slowing quite rapidly. This is not surprising given all of the uncertainty around the political developments. Bedo not expect consumers to as important a growth driver as they have been in the past. Is the savings rate there not really much room to reduce savings because the savings rate lowlready at historically levels. Where does that leave us . We are still very much in a world which is not really a trade oriented world. And that all brings us again to the fiscal policy. Monetary policy has some support. That brings us to fiscal policy. Loosening infiscal the u. K. And that should offer some tailwind. You confident that the bank of england can do anything about the situation or is bank asengland policy as seen ineffective seen as ineffective as ecb policy . Besides the uncertainty around brexit, the bank of england has much more ammunition than the ecb. It is this juncture, difficult to see how Monetary Policy can do the have the heavy lifting especially because of the big concerns around the pound and the impact it would have on inflation. Fundamentally speaking, the bank of england has more room to maneuver but given the uncertainty around brexit, it is tight. , thank you so much. Shweta will continue the conversation with bloomberg and matt and i on bloomberg radio. If you are in berlin with matt miller. Let us check out the markets. A muted start to trade. 0. 1 . 600 down around patche that uninspiring of great on the European Equity market. A lot of these markets not moving all that far in this mornings session but the positive move in asia could have some reach across the u. S. Markets. Exclusive, goldman we talked with the ceo. This is bloomberg. Matt 30 minutes into the trading day. U. S. Stocks hit alltime highs as hopes for a trade deal buoy the trade markets. President trump says a deal is so close. President xi does his part for risk sentiment thanks china will lower tariffs further, and continue its path to open the economy in a speech in shanghai. Goldman sachs exclusive, ceo David Solomon tells bloomberg he is positive about progress on a u. S. China trade deal. I am relatively optimistic based on the data points. It feels like we will have something instructive. Matt good morning and welcome to Bloomberg Markets european open. I am matt miller in berlin alongside anna edwards in our European Headquarters in london. Anna lets have a look at how things are shaping up. 600stocks on the stoxx going downward. We are witnessing a change in the mood from the u. S. Session into the european session, not dominating to such an extent of optimism from trade talks. Andee things muted, flat negative on the stoxx 600. Hese are the biggest gainers abs, up by 3. 8 despite what they had to say, which was not taken positively. That stock is doing well this morning. Hugo boss on the fashion side up by 2. 7 . To the downside, what is dominating there, pandora down by 11. 5 , the jewelry maker putting out another profit warning. Pause to talk on stocks to talk about oil markets. Worldublished its annual outlook looking at the expectations for the industry. Annmarie hordern is standing by with the key take away from that report. Annmarie things are looking grim for the cartel. They are expecting to not need to produce as much oil, and that will project that their market share will strengthen. Will shrink. Years, ane next four thing they arene talking about is they remain under pressure from outside of opec. The main driver of opec supply growth remains tight. Also there is brazil, norway, contribute. Ikely to they are under pressure from these outside supplies, and that is shrinking opecs hold on the market. Matt what does this mean for the production deal and the groups upcoming meeting . Annmarie there is a lot of talk about cutting deeper than their current quote up. The group will do whatever it toes to remain that balance market. When you look at this report, it looks like potentially the strategy is backfiring by making room for u. S. Shale. This is something investors and analysts have said could happen. The former Saudi Oil Minister has warned that you keep cutting , you will have a vicious cycle and make more room for u. S. Shale and other supplies around the world. Anna thank you so much with the latest on the oil markets. Lets get an update on first word news. Morning, lets start in the u. K. Were the Election Campaign is heating up with Prime Minister Boris Johnson and Opposition Leader Jeremy Corbyn trading barbs. The house of commons has elected its new speaker, he will be parliaments referee for the next phase of brexit. He was a member of the labour party, but by convention he will sit without any party affiliation. In australia, the central bank is giving policy unchanged, a rebound in property prices is what it is betting on. After three cuts in june, the reserve bank sees economic bywth picking up, rising 3 2021. Uber is disappointing investors with quarterly results. Lackluster booking and users are the closely watched metrics on wall street. It was not all bad news because revenues, and is pledging to turn profits by 2021. In the u. S. President trump has formally withdrawn from the paris climate accord. The move was announced in 2017 and will take another year to complete. This sets the stage for the u. S. Departure next year, the day after the president ial election. Global news, 24 hours a day on air and at tictoc on twitter, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thank you very much. Talked to David Solomon earlier in the program, and he spoke to us about a number of topics from Global Growth to aramco, as well as negative rates. Listen in. When we look back on negative rates and the book is written, it will not look like a great experiment. I do not think negative rates brings the benefit we would like to see. There is no question growth in this part of the world has been lagging and negative rates have not allowed an acceleration. I do not think negative rates are constructive, but we have to wait and see how this plays out over years. I worry when we look back to my we will not like what we see. The central bankers say the fiscal stimulus is needed to the unwanted side effects. I know you will talk to , surelys around germany they will have something to say about negative rates. They will want to talk about Infrastructure Spending they think is needed. You think fiscal spending is needed . If you talk to people in abouty, there is concern the fiscal stimulus being spent. If you look at sustainability and the capital being spent to move germany toward a better economy, that is a significant fiscal stimulus. I think there is a balance between Monetary Policy and stimulus, and sometimes in the cycle the variety of other factors can slow down economic growth. With the trade tensions around the world, germany is a significant economy that is feeling some of that. If we did get progress on some of the trade talks, that could be a positive for growth. Matt are you optimistic . We heard from xi jinping and positive comments from wilbur ross on the possibility of a phase one trade deal. Are you optimistic . To what isisten coming out of the administration in washington and what is coming out of china, it deals like some sort of phase one deal looks progress and move forward. The issues are complicated and there will be more to talk about, but i am optimistic based on the data points. It feels like we will have something instructive. Matt how much damage do you think has been done, and can it be reversed . The Global Economy is still chugging along, the trajectory of growth has slowed over the last 12 months. But what the trade tension has headwindhas acted as a to growth. If you remove that headwind, it should be positive for Global Growth in the short term. Matt this group of companies, idealicorns that have had problems or have not performed well post ipo like uber, are you concerned we are seeing reflections of the dotcom era . I would not compare it. These are real companies. We can debate the valuations, but they are real companies. That is very different from that narrow time during the dotcom bubble when there are companies were in a different state getting into public markets. I think what is happening is the Monetary Policy around the world has forced people on a risk curve to look for other ways to for growth at all costs. There is sentiment if you hook your wagon to a company with a a lot of growth and is focused on growth, something good will come to that. Companiesncentivized to take capital from investors and spend it aggressively to drive topline Growth Without understanding the consequence as to how that can translate to profitability. The market is speaking in telling people, lets rein that in a little bit. There has to be a clear and articulated path to earnings in some way. I am a big believer that over a company can only be worth the discounted future value of its earnings. It is important you have a Business Model that can generate rough and ability, and there is market discipline to come into play. Matt as the ceo of Goldman Sachs, David Solomon speaking exclusively here in our berlin bureau. On the one hand, he thought negative rates in the end will when we take a measurement of how this worked out historically. Also, he thought these Companies Need to make a profit and have a big stake in uber, 10 million shares still, and you will see likely the value of that stake shrink today after uber published a 5 billion loss in one quarter. Anna you talk a lot about the said it is and he not hard to value them. There are comparisons. Cryptic hek by how was on the Interest Rates story. Thated how he framed it when the book is written it will not be a positive experiment. Absolutely, i would love to be a fly on the wall the Christine Lagarde meets with her ecb peers and they talk about their views on it. Mario draghi, in his last press conference as ecb president said, we have been very happy rateshe negative experience, which i thought was the most shocking thing he said in the entire press conference. It is hard to prove a counterfactual, but i do not know if they have been that happy pushing european rates into negative territory. Anna the ecb distanced themselves from talking to the Banking Sector. Up next, we will bring you stocks on the move. Renewable Energy Equipment 12. 6 thising by morning. This is bloomberg. Anna anna welcome back to the european open, 46 minutes into the trading day. Things look flatter. It trade optimism sweeping across markets in asia. Asian markets joined wall street , climbing to records. That is a positive signal talks between the u. S. And china. It is hard to imagine the indexes are going further. That there is one key group of investors that has yet to participate, that is hedge funds. See thiset in, we can market rally go further. A good way to measure the participation is through beta, the relationship between the s p 500 returns and hedge fund returns. Their exposure has been extremely depressed. This level is about half of the average when we go back to the Historical Data from 2002. Hedge funds are more hesitant, not going onto the cyclical rally, positioned defensively as value starts to rally. Instead of buying the valley instead of buying value, momentum is a popular strategy for hedge funds. Names, lowuality volatility names, bond proxies etc. This is what it would look like if you had a portfolio of momentum, you can see this index sincellen to its lowest 2017. Hedge funds love this strategy, but because returns have heard have hurt, they are more likely to move to value stocks. If they do that, look out for the s p 500, the stoxx 600 europe. Those indexes will chart even bigger highs. Burger. Ank you, dani ubers to technology, thirdquarter revenue came in better than expected, but investors were disappointed as shares were down. Joining us now is alex webb. We talked about those numbers that they reported, but we are talking about business in the midst of an evolution. For a broader offering, where are we in that story . Alex that is part of the story investorsing, now looking to make money. Setting targets for 2021, profitable one adjusted operating bases by then. If it is not profitable yet, and the growth story is slowing, there are questions investors are reasonably asking, why should they be investing given there is no guarantee it will be profitable. Anna how is it changing and why . Alex we have seen what happened invested in a ,imilar basis, rapidly going they were like amazon, lost a money for a lot of time but then had the ability to become profitable. The difference is amazon was investing in infrastructure and warehouses, whereas uber is getting you and me money, giving us a discount to make it affordable to use their food delivery and other services. Those numbers artificially pump up growth. Businesses are looking for it to be more sustainable. Anna thank you, alex webb. Seeing thise question are markets live blog, when do we expect global easing to end . Matt welcome back to Bloomberg Markets european open. A one hour into the trading day, looking at a mixed picture in terms of the equity indexes. Not a lot of movement in any direction. Little wonder as we bump up against record highs on some of indexes in equity the world. The s p 500, the nasdaq, and the dow at record levels. The 25 gains here on the continental, on the continent. Joining us now, our rates strategist. Let me start with the global trade picture. T seems we get more optimism is it all priced in now . Richard i think the equities markets got that narrative and are optimistic about phase one being done, and have run with it. On the rates side, there has been a slight recalibration of the price. We still have not had all the easing expected for next year priced at of the u. K. , u. S. The bond markets are taking a more sanguine detached view from what is going on in trade. The equity markets are running with it, running to new highs. Anna except for europe, they are looking different. Any particular reason . Hurt because it did not europe so much in the first place. Think if we look at the Economic Data in europe, it has suffered early and disproportionately from all the global trade tensions. Look at the economy in germany. Probably already in recession. Then you fracturing is in the doldrums if you look at the pmi numbers. That is why we see lagging in the german economy. Are reachingk we new highs. If we do not have the problems with trade, you would see europe even better than it has been. Matt we have not gotten back, but we are almost there. Backe the dax index going to the prehistoric times of 2000. We are very close to hitting a new high on the german index as well. Without currencies . Mail,t got any mail an e they are forecasting the euro up to 118. I thought that was punchy. In the next move is thought to be down. The euro hasought suffered disproportionately to other currencies because of the trade tensions we have had, and trading down earlier this year was a result of a lot of bad news priced into europe. If we are heading into a detente in global trade, europe does get an uplift because it has suffered so much as a result of the tensions. Matt thank you so much, Richard Jones is our fx and rates strategist. On the mliv team you can joined her question of the day, when do assets expect global easing to end . Your bloomberg to take live in that conversation. Surveillance is up next. The game doesnt end after that insane buzzer beater. Because with Nba League Pass on xfinity you can watch the out of market games you want all season long. And with the allnew xfinity sports zone, you get everything nba all in one place even notifications about your favorite teams. Watch the dropped dimes, monster blocks, and showstopping dunks. Plus get instant access to your teams with the power of your voice. Thats simple, easy, awesome. Say Nba League Pass into your voice remote to upgrade for a great low price or go online today. Francine stocks. Wall street hits fresh records. Investors bet on a trade deal. Solomon exclusive. The Goldman Sachs chief executive tells us he is optimistic and the chance of a recession in the near term is unlikely. Uber stalls. They report lackluster user growth and lower food deliveries, sending shares lower and extended trade in extended trade. To bloombergome surveillance. Im Francine Lacqua here in london. These are your markets