To lift tariffs in phases as the deal makes forward progress, but it may not get signed until december. The bank of england could cut growth and inflation estimates parties the u. K. Major suffer highlevel resignations. Commerzbank cuts its outlook. Good morning, matt. We need to talk about these latest headlines coming through on trade. They certainly move the market narrative. Matt they really are moving the market. Futures were little changed just about 30 minutes ago when these headlines came across. They jumped more than 0. 5 . Take a look at equity index futures. You are going to see big gains wherever you are trading. Futuresfrench, london, are all higher. If you look at u. S. Futures, you are going to see a very positive picture. After these headlines come out, certainly looks like it is going to be a risk on day. That may not be the case for Commerce Bank. Im here in frankfurt to talk to the cfo of commerzbank, stephan engels. It seems as if every time i interview him, he is always cutting his forecast. A lot of people wondering why they dont just cut all their forecasts at once. What gives them the remaining optimism to hold onto these things, whether it is revenue or cost, now profit they say is going to be lower than last year in 2019. Of course, we have had a number of things like the rate cut in september at the ecb, but there is also tearing that is supposed but thereengels is also tiering that is supposed to offset that. Your conversation anna lots to discuss in frankfurt. Lets get back to the latest news coming through about the chineseu. S. Trade talks. That is moving things around on the gmm function. Equities up 0. 1 or so. E are seeing some optimism a bit of change of direction for the chinese currency as a result of these headlines. Also, the yen is being supported by concerns that it was looking difficult to get a trade deal signed soon. We still dont know the date for any signing, but we are getting a few more lines about the conditioning and whether we are going to see rollbacks of tariffs and that is being taken well by markets. Even if they are talking about a staged removal of tariffs. The moves around it being initially received. We want to show you what is going on with commodities. We have seen oil prices pretty stable this morning. That after they fell because of a report that suggested that the opec plus grouping was not going to push for further output cuts. We see brent and wti on the rise. Iron or slipping a little bit despite those lines around trade. Lets get to the markets with mark cudmore. I want to ask you about the latest lines. We have lines coming through about how the chinau. S. Trade talks my progress, but i suppose the fact that we are getting something asat is opposed to yesterday, when we were in a vacuum . Mark absolutely. This is definitely good news. I think the general expectation is that there would be a phase would just bethat signaling that they would continue talks. Expectation that they would remove the tariffs, but that there would be no more tariffs. The talks already in phase one are scheduled for lowering tariffs, it is potentially brilliant news. It is important to mention that we dont have concrete details yet and there may be more ebbing and flowing in the story. And im not news try to say it is not good news, but i dont think it is going to continue higher until we get more details. , butld onto the gains investors will want to see some concrete points and that will be when the deal will be signed and a schedule for when the tariffs will be removed. When they will be removed and how quickly. Matt looking at the dramatic charts here and looking at the dramatic levels, we are at alltime highs in u. S. Equity arexes, but a lot of assets at superlative levels, dont you want to have some kind of insurance here because these two countries have a history of taking one step forward and very quickly two steps back . Mark i think that is completely fair. It will be a story that will ebb and flow until it is signed. Trump has a history of negotiation at the last moment threatening to pull out. I could cs having more scares ahead of that. There is very clear signaling from both sides that they are working to communicate signals to the markets that they want to get a deal that is a real deal that will lower tariffs. Yes, we are probably going to have setbacks in the week ahead, but overall, it is a positive trend in the trade front. Highs almostd every day in u. S. Equities. I think the positive sentiment from trade will dominate that for the moment. I think at some point in the new year, we will start going, hey, we have priced in good news and may be it is time to look at the future, but that is not the story for the moment. Anna i was reading today to talk about the u. K. A little bit i was reading about the rate of recovery, slow as it has been , in wages since the financial crisis and today, i read that the bank of england selected to leave rates on hold, but could cut growth and Inflation Forecasts for the u. K. What do you expect to given all the fog of brexit and the fog of the election that hangs over assets, what do we want for . Mark i think it is the latter point that is going to take a little bit of a marginal difference. That we haveourse gone past the latest deadline for brexit and we still dont know what is happening. I think the bank of england are going to have to cut their forecast. It is bad news for the pound. It is going to emphasize the fact that we are in this seemingly neverending limbo with the u. K. And that is why the u. K. Economy cant find a new base and build on that. One of the things we have seen this week is that the French Economy is kind of doing very well recently. I think the signs that that might be one of the performers to help europe stabilize. There is that relative value argument. That is coming back into light again. Quickly how wonder closely do you Pay Attention to the boe . When i talk to people about the pound and the reasons for their forecast, it is literally always to do with brexit and never to do with rates. Think that is probably fair. Brexit is the much bigger story, but it is probably simplifying the situation or oversimplifying the situation. The rate view is contingent on what people expect around brexit, so you cant have a rate view without incorporating what you expect to happen in brexit, so i dont think it is that they are talking about brexit to the exclusion of rates, but brexit dominates the rate story and therefore the currency story. Matt thank you for joining us. Mliv managing editor out of singapore. Up next, and end to monetary policy. Austrias ecb councilmember tells bloomberg that he thinks the central bank has completely run out of ammunition. We will hear more from that interview. Remember Bloomberg Radio is live on your mobile device or digital in the london area. Definitely tune in. This is bloomberg. The welcome back to european open. 18 minutes to go until the start of cash equity trading. We have these new lines around trade. China and the u. S. Have agreed to lift tariffs in phases. This is one of the early headlines we have coming to us. Coming from sources in china, i understand. This is really of interest and certainly of interest to the markets. We see futures responding to this. Been entirelyve flat. Soybeans also reacting. Little bit of movement in the chinese currency, as well in the reaction to these latest news lines. Senioret to bloombergs International Editor and hong kong. We have been looking at these headlines. How big a deal is this, the markets taking this seriously, but without any details of when and where a signing is going to take place . I suppose there is a nervousness still. Yes, there is nervousness, but there is somewhat relief that it looks like they are moving closer to this deal. What this would allow his china and the u. S. To proportionally rollback these tariffs. Phase one, we still dont know how much of a rollback there would be, but it sounds like they are getting closer to a deal. They are getting closer to the deal. The last few weeks, they have had good talks. The markets are responding favorably because this is a piece of good news we have gotten after a fair bit of uncertainty over previous days. China said they did not want to have it in alaska or iowa, that was the last we heard and now we are hearing that they are working out the terms of the deal. Matt at the core of what is , there really is no real future deal where china says up we will give up as much advantage as we can. Thats right. It is a very limited deal. They are calling it phase one. Basically, it is a limited deal. It would allow china it would require china to purchase more u. S. Goods, more monthly agricultural goods, to purchase them again, because they had stopped purchasing. Tariffs relief for the u. S. They are not talking about big broad issues in technology transfer. They are talking about a limited deal that would allow them to continue talking. Anna so clearly the markets are moving on this. One of the things that has been talked about a lot in the last few days has been the location of any signing. Do we know anymore about where is being talked about or where is likely to be a location for this to be signed . I understand it was politically difficult for the chinese to talk about going to the u. S. When and where has been the question lately. They were going to try to do the chile at anmber in international summit, but that was canceled because of protests. The u. S. Tried to push for iowa and alaska, china said no to bet, saying may be asia, may europe, may be november, maybe december. We still dont know, but the fact that now we do know that the chinese delegates are saying that chinese negotiators are saying they have had good talks over the previous two weeks indicates they have been making progress and the fact that they are willing to announce and that the chinese side is announcing how the tariffs will be removed is a really positive sign that shows they can probably work out where they would meet, but it is politically substantive for the chinese leader. He does not want to be seen as giving up too much for the u. S. And donald trump does not want to be seen as giving up too much to the chinese. It is a bit of a dance right now, but this is very positive news, certainly given that the last few days have been very uncertain in terms of whether they were even going to get a deal. This looks much more likely that they will have this limited deal. When they sign is still up in the air. Matt thanks very much for joining us. Lets talk central banks. The chicago fed president says the economy is in a good place and no further rate changes are actually penciled in. Charles evans spoke to bloomberg in new york, his first Public Comments since the fomc delivered its third consecutive cut. Im not even sure what neutral is anymore. I think it may move down in the short term basis and we need to make an adjustment so that policy would be and i would say moving from leaning toward a restrictive stance to leaning toward an accommodative stance and that is what i think we have engineered with our third rate cut at our last meeting. Now, in my own mind, i was searching for something that was definitely accommodative, not hugely accommodative, but definitely in the accommodative side of neutral. I think the neutral rate probably moved to. In a longterm basis, my assessment of neutral is 2. 75 , and we were still below that when we paused. I think we were definitely accommodative. Im not sure the neutral funds end up closer to numeral 2 . Official heropean called for governments to step monetaryical policy seems to have reached an end. It would likely not have a positive impact on inflation. For this reason, fiscal policy has to take over. Fiscal policy should not simply be an extension of expenditures on social issues if it is to be productive. It would need to be in such a way that it offers a higher future output. So, what exactly do you mean by that and what would that look like . Very simple. In order to deal with the future challenges, every country needs to make sure that a young, Dynamic Enterprises survive and prosper. The old ones are dying. You need expenditures that help the youngsters. Was from the interview with the Austrian National Bank Governor yesterday. Now, take a look at what is going on in futures. After we got headlines across the terminal that china and the u. S. Are going to reduce tariffs ahead of or as part of this shot upe deal, we got in terms of futures. Dax and cac futures were only up 0. 1 . Ftse futures up 0. 2 5 . They have more than doubled those gains and continue to make their way higher. We are minutes away from the open. We will take a look at your stocks to watch this morning. Tons of earnings news out, including a company trimming its steel demand forecast as the crisis in the european economy deepens. This is bloomberg. Matt welcome back to the european open, seven minutes to go until the start of stock trading around europe. Dani burger is looking at commerzbank. Paul jarvis covering rollsroyce. Annmarie, lets start with you. They had a good third quarter. The outlook is not great. They beat, but the market is going to be focused on what they are saying about the fork us focus for global steel demand. They see it growing about 0. 5 to 1 . Earlier, they thought it would be as much is 1. 5 growth. Stock is down about 2 this morning on that news. Anna the chinese Banking Sector said to be considering bank mergers. We will return to that shortly. Paul, the latest on rollsroyce. A pretty devastating opening call on this one. It is going to be toward the lower end of the guided range. On top of that, they are saying they will take a further 1. 4 billion pound charge against the. Ollsroyce trade 1000 engine to restores comments confidence are going to be very important today for a stock that is down 5 this year. It has had a strong rally and it is likely the rally will be cut short as a result of these results. Dani ints get to commerzbank. Our banking reporter has put together a graphic showing each quarter commerzbank has cut its outlook of one kind or another, boosted job cuts, cost cuts. It is all most every single quarter over the last year and a half. What is the story . You know better than anyone, this last cut to their full year outlook came just weeks after one previously. They say their consolidated net income is going to be lower than it was in 2018. They are blaming negative rates, low taxes. They have updated us with a longterm outlook. That is also impacted by trade uncertainty. We are seeing shares called down by as much as 3 . Also, even more cost cuts being announced. Anna thanks very much. First ago is the function to use in your bloomberg. Chemical space, numbers better than anticipated. The day will be dominated by better news flow around trade. A staged rollback of tariffs. This is bloomberg. Anna we are a minute from the start of cash equity trading. We have had very interesting news in the last halfhour that has really changed the direction of markets are reinforced the direction we saw earlier this week, optimism of trade back to the fore. As we got those headlines suggesting there could be a phased rollback that could be part of the trade deal, but we still dont have the signing of that trade deal. S p futures responding to the same headlines. We have seen Oil Prices Falling in some earlier headlines around opec and the fact that they would not be pushing for further cuts in production. With all that in mind, we are expecting to see and the futures are showing up, we were expecting to see to move to the upside at the start of the european trading day, expecting to be quite substantially higher in the germanfrench markets as a result of these latest headlines around trade. Could we also see london doing quite well . We saw copper change direction as a result of these headlines. Halfhour, last trying to keep it around. By 0. 4 . Sh ibex up we will wait for the other majors to get into their stride and have a look at that. Disappointing data out of germany, but that is contrasted with yesterday, a mixed bag in the german data. Waiting for more of these markets to come through. Thes have a look at where markets are from a sector perspective. It is one of those days where that one is story, that one push lift a lot ofan the market. That is what we are seeing today. Financials higher, as well as health care. Staples, as well as utilities. Consumer discretionary, basic materials. Energy is an area of red, which is interesting. Marketseeing the london underperforming. Not underperforming by much. Lets have a look at the individual movers to the upside. Weve got a mixed bag. Unicredit is up by 3. 4 . We have numbers out of unicredit a little bit earlier in today. The turnaround of that business continues better than expected, profits increasing their adjusted profits. That is the upside. That stock still up by more than 3 . Looking for any read across from some of the companies that have reported today. We will go back to that shortly. Lets have a look at the downside. Hiscox is the biggest fall or. Rollsroyce, we heard from them overnight, and exceptional charge coming through, guiding a little lower end of the rate and operating a free cash flow. Certainly taking its toll. Deutsche telekom also reported numbers this morning. We will let the markets just settle, but the overall picture being driven by these headlines around china and the u. S. As expectations for the rollback of tariffs. Matt an absolute ton of earnings out and not a great outlook news. On theocks are rallying onechina headline. Anding us now is the cio founder of latitude investment management, the business celebrating its third anniversary this week. , are we what you think in the third anniversary now of the chinau. S. Trade talks . I dont know if we are that far along, but it seems like it has been three years. We are beyond that for brexit, but it looks like the chinau. S. Trade agreement is something we may see signed in our lifetimes. Do you think it may be this year . I probably dont. I always thought the truth with this trade war is it is hard to get a grand deal for the trade war. It has been to chinas advantage. They just need to yield to americas demand. To get those countries to save face and have something that is plausibly better than what we had to begin with. It is going to take quite a lot of work. I think we will have some sort of resolution and that will be sufficient for the market to get over this trade war being the most dominating factor in the macroeconomic landscape, but i dont think we end up with a grand deal this week. I would not say this year. Grand deal. S the phase i seems to be exciting enough for this morning. You said china needs to take its role more seriously. What were you trying to get across . I think it will continue to grow at an incredible speed. From a political perspective. They need to align themselves with the world. They need Higher Standards than what they have in the past, environmental standards. I think it will get solved and whether phase i steps happen toward it this year, i think it. Ill rally matt you have companies that you have held for a long time. Very little. It matters to some consumer stocks. Even though there was a clear. Nd marked difference most businesses, there is a little bit of slack and that supply chain. Anna we will delve further into your list later into the program. Us in the program. Up next, some of the stocks on the move, including a beat from a company that sees no let up to the drop in global steel demand. We will get the latest on this next. This is bloomberg. Anna nine minutes into the trading day. It is a positive session for europe. It did not look like it was going to be a couple of hours ago. U. S. Futures were flat, european futures were flat, then the ms ci were flat. Then we got the headline of the possibility of rolled back tariffs in a phased way between the u. S. And china and we are higher. We want to delve into some of the picks, some of the companies you hold, and tie that in with some of the reporting we have seen today, and matt miller loves it when we talk about grocery stores. He seems that we are obsessed with that in the u. K. [laughter] anna Consumer Outlook on certain. It made me laugh because the Consumer Outlook and the u. K. Always seems to be uncertain, but i suppose it is especially so. I mention it because you hold tesco. We hold tesco shares. I think the sector is in a very good place. It is not roaring at the moment. The reason why tesco stands out in the sector is because it has been able to reprice the entire market down. And now it has Growth Opportunities and growth and cost opportunities given its scale. The last 18 months, that business has been a little bit distracted and they have not got themselves back on track. It is funny that you mention aldi, because i think back to my time living in london, i love the cheesecake at tesco,e, the curry at sainsbury i saw once in a while on the kings road, i never thought of aldi as being real competitors in the market. , superortant are the new Discount Grocery competitors and why do you like tesco over the british mainstays . They are incredibly important. The reason why we had the whole issue with grocery and the u. K. Is because people did not take them seriously in the early 2000s. 11 marketo nearly share which ate away at the underbelly of the industry, which what caused tesco so much pain. The reason i like tesco and it is partially a reaction to the incredible work they have done in the sector is that tesco has rebates to their private options. It is exclusively at tesco, branded well, position well, and a price matches against aldi, so they have come right down in price and managed to grow the margin the last three years through extraordinary costcutting. You want the choice, you pay the same for the basic goods, but you have a choice that puts them in an incredible position. Anna looking through your list of holdings at the moment and wondering where the trade story leads if you are in individual , you are positioned to not be holding the trade tensions. Are there any tensions . That isest testaments, a sector that has been beaten up a lot. Are there areas looking to get in . At businesseslook that drive more than just the macro outlook, because we believe the macro outlook is harder to predict. Steel companies or minors, we tend to avoid because they are so dependent on the cycle, which is very unpredictable. Something like the industrial sector certainly has good ones. It is a great franchise. It has some great businesses. Longterm term, there will be sensible investments in the industrial space, but the good ones are chewing a bit of cud to get through the situation. Matt you do have amongst your picks, bank of america and Goldman Sachs, the latter has to be the most legendary Investment Bank in the world. Ll due respect to j. P. Morgan i was surprised to see that the stock has underperformed all of its peers at the top of the league table this year and over the last five years. Why do you think Goldman Sachs stock has been so undervalued by investors and what is going to bring it back . The story is quite surprising to me. The business is doing fantastically well. They have a fantastic new leader after 10 years of lloyd blankfein. He is moving in a new direction. More digital, more midmarket focused. Goldman only became a bank about a decade ago. Moving into that space unencumbered is a great advantage. It does have an incredible franchise, incredible Investment Banking. It is a structurally declining market. To be trading in eight or nine time earnings when it is already generating 12 return on equity, paying nearly all that back to believe younely were going to earn 1012 as a minimum as an investor in this business. An incredibly attractive space where the cap has gone up by nearly 2. 5 times since the crisis and liquidity is up nearly three times, so it is a far safer investment and im not sure what the market is modeling up to keep it so cheap. Anna thank you. Matt, go ahead. Going to say, if that is the case, youve got the edge, that is your advantage. Lets get to the top stock stories back in london. Annmarie good morning. Earnings, mn day, and potentially the trade war m a , and potentially the trade war is impacting the biggest movers. Even though it was called lower this morning, this was due to the fact that they were trimming global demand. The entire basic resource sector is jumping on these headlines. This is off of mn day. Bme madrid seems to be one of them. It was a really Strong Quarter for them. Sales were up 30 . Orders were at a record. They are leading the pack. Their rivals did not do as well with them. As them. Anna joining us now on the phone from copenhagen is the ceo. Very good to speak with you. Congratulations on the numbers, sending the shares higher, feeding earnings estimates, because of turbine orders, i read a. How sustainable is this Job Performance . First of all thank you and good morning, i think we are very pleased with the thirdquarter results. Of a fullfirst stage and part ofo here this quarter, we say we have an order intake of 4. 7 and now it comes to a backlog with this ,lmost reaching 3 billion euros halfandhalf from turbine and halfandhalf from service, so we are very pleased with the performance in q3 matt can i ask, im always interested in the windmills and germany. We have 30,000 in this country. I think they are a fantastic site on the horizon, as in booming down the audubon, but germans dont particularly like them. I read that only 35 new windmills were added in the first half, why are they so unpopular with the locals and what can you do to get around that . Depending on is where you do. I like your comment about seeing them from the audubon. It is a very different view when you sit at the top of them at 120 meters and overlook potentially also part of the north sea in northern germany. I think people here, everyone probably appreciates that it is a very important part of the energy source. I think it is always that combination of you might not like to have it in your garden, but on the other hand, you appreciate that it is part of the transformation the world is going through coming from the nuclear fossils to now a Competitive Renewable Energy source like wind and to some extent, solar, as well. I think germany as an example, i think they were some of the first movers in wind, and now they are going through a process to figuring out how they are going to work through that program over the next 10 years, because the next 10 years, they are still going to do some if they want to reach the targets the retirement of some of the other energy sources. I think germany is an example,. Ut lets talk about the others in addition to that, there are plus 25 countries where we have they are coming to more of the wind and renewable energy, so im super pleased with that. Anna that will require some servicing. Tovice margins have proved be pretty resilient in recent years. Can that be sustained . Background, im super excited, im very passionate about the service business. I think what we are doing in the services, we have had 10,000 employees and Service Across the globe. 91 gigawatts of turbines, which also comes with enormous density and opportunity in terms of working also in the digital space. So how do you service then and how do you connect with your turbines from a Service Perspective . We keep building in a service business. So they see the value of the service we provide them with. In this quarter, im very pleased to see that some of the Service Contracts now have more than 25 years of length, and they are actually supporting customers around the world to feel very sure about that source of energy for the next 2025 years. Matt thanks so much for joining us. He ceo of Vestas Wind Systems as we see the stock pop and look at pictures of that massive, massive machinery. The germant clear, finance ministers plans. Will discuss the details next. This is bloomberg. Afford it any longer. It affects the functioning of our internal markets and it affects the trust of eu citizens and our ability to solve problems, even those problems that we have fully acknowledged. Matt that was the german finance minister from the spd talking about his plans for a deeper eu Banking Union. It has become clear since that speech yesterday that he did not run it past his coalition partners. Investmentlatitude management is still with us. I wonder what you think. It is a really fascinating topic and interesting move. He did not run it past the lameduck chancellor, angela merkel. Im not sure how much that matters at this point. Frankly, no one expects the Banking Union to get done in any case. Lets put it like this, before brexit. What do you think about Banking Union . I think it is probably inevitable that some degree of through in the European Union at some stage. Think it is going to get there. I think the backdrop to the european Banking System is that they are still in a very bad place and they are not competing on a global scale. That have been investing in technology, investing in people, training, new markets heavily for the last few years, along with jp morgan and morgan stanley, the europeans are still costcutting, they are still trying to streamline businesses, they are exiting businesses where it is not working. Some sense of scale may benefit them, but it is happening from a position of great weakness, not great strength. Anna youve got interest in the u. S. Banking sector, but we had numbers out from Commerce Bank and a host of other bank stocks this earnings season. Have they sent anything that has convinced you that now is the time to get interested in the stocks because you like them or their value . They are very cheap and they have been for a long time. Until they have a sustainable ,ay to generate decent r. O. E. s i dont think there is any interest in investing in them and if you wanted to speculate, you could say in a year or two, they would get there, but i believe every year there would go on, there is a natural headwind compared to their global peers, unless they are just going to become local, regional, deposit taking and lending institutions again, the larger Investment Banking model in europe is so far behind the americans. Anna thank you very much for your time. Die will be continuing his conversation with us on Bloomberg Radio this morning. Up next, the brexit bet by labour party. Moreare hoping voters are fed up by austerity. We will speak to the shadow business secretary coming up next. This is bloomberg. Matt we are 30 minutes into the trading day, lets get your headlines. China and the u. S. Agreed to lift tariffs in phases. The deal makes forward progress but may not get signed until december. Ill mittal proves its mettle. But it warns the industrys crisis is only going to deepen as demand continues to slump. Cuts its outlook again. The lender dips after downgrading its profit outlook. It is the second time we have had a Forward Guidance cut in weeks. They do it almost every quarter. I will be speaking to the cfo engles here in frankfurt. Welcome to bloomberg markets. This is the european open. I am standing by in the german capital of finance alongside anna edwards in london. Anna all over that banking story in frankfurt today. Let me talk to you about the markets. We are making moves to the upside, up by. 3 . When you look at the balance of movers, it does look as if two thirds of the market is going higher. Proving the old adage that a trade headline lifts many stocks. We spoke to the ceo. Talking about the sustainability of some of that services margin. Arcelor mittal we mentioned. Of earnings plenty news coming through and lifting the individual names. Benefiting also from these positive headlines around trade. The extent to which we will see a rollback of tariffs. That is part of the narrative in phase one. Lets tell you about the downside of things in the markets. Proceedings this german broadcaster is down by 7 , also a negative earnings story. Deutsche telekom down by 2 . In frankfurt to speak to commerzbank, that stock is down by 2 . The bank of england makes its latest policy announcements today and will likely keep rates unchanged, but how will sterling react . The Options Market is saying that the worst is over for the pound. When we look at what onemonth volatility has done, we can see traders have started heading into the boe decision. Onemonth volatility is now at its lowest since july. So the movement for the pound is likely to be upwards from here. But how much further up can sterling go . Down at theen different options and the most soular call is 1. 3, certainly higher than where we are today. But that still is not as high as what was set in march of 1. 34. So expect sterling to move up, but by no means breaching new highs. Matt very interesting stuff. Dani burger, talking to us about the onemonth volatility. This group plans to increase their investments over the next three years according to the russian newspaper. The steelmaker controlled by a billionaire reported stagnating demands for russian steel. Sales have been squeezed by a weak automotive demand here in europe. Some would call it a crisis. Joining us for an extrusive discussion is the cfo of sever severstal, russias largest steelmaker. Would you call it a crisis . At the moment, we do. Anna go ahead. Matt do you see it getting worse . The situation is relatively weak in the european sector. We have seen it the whole of this year. Going forward, we expect a recovery. We see headlines from Arcelor Mittal beating estimates. The stock goes higher. Do you see reason to be optimistic . Sign thenk it is a situation is not that bad. We think the read is not low and we can expect a moderate recovery. Anna what about the u. S. China trade work. War. How does that affect the business and the wider industry . The question is more about wider industry. We are not directly impacted by that. And tradel sentiment would improve as a result of positive outcomes would deftly help. Definitely help. Anna so you think there will be more investment in the Steel Industry if we see a resolution . Couldhink we definitely expect it. Generally in china and the u. S. As well. Nna much of your product where do you see areas of weakness in demand much of. Our product where do you see areas of weakness in demand . Our perspective, it is not that week. That levels of growth are not yet that strong. Growth is quite moderate. Going forward, we believe it has potential. But at the moment, we see the situation is relatively small growth we see across the industry. Anna would consolidation in the sense will sector make sector makeotr sense . I dont see a lot of drivers. Anna you are holding a Capital Market day in london. What is the message to investors . That we stick to our strategy and transformation. Despite the fact that industry , we believeatile the position of the company is ourand our Problem Program will improve performance. Anna you announced a plan to increase capital expenditure. Is that plan still in place . Yes it is. We believe we are in a good position to continue. We can afford it without putting the company under risk due to the strength of our balance sheet. It is a Good Opportunity to develop. Anna thank you very much, the cfo of severstal. Up next, we bring you some of the stock movers, including proceedings this German Tv Network slumping after earnings. This is bloomberg. Matt welcome back, this is the european open. We are looking at significant gains on the dax up. 3 up. 75 on headlines of reduced tariffs. Lets get our stock stories in london. Annmarie the market is digesting more earnings this morning. Unicredit to the upside. The turnaround plan seems to be bearing fruit. This is thanks to trading and higher revenue naturally offsetting lower earnings. Aston martin also up nearly 8 . It was a beat driven by the unexpected sale of six highend cars. Proseibensat to the downside. Prosiebensat to the downside, citing the gloomy market and weaker tv advertising. Anna lets look at the markets more broadly. Matt checked the overall indexes for you. Stoxx 600 up by. 4 . The ftse 100 up. 4 . But lets break things down by the sector perspective with the grr function on bloomberg. We have autos and parts up by. 6 , basic resources up. There is a lot of sensitivity around the trade story in christ did. Being priced in. Travel and leisure and technology are to the upside. Telecom moves lower as do utilities and real estate. That is where we are on the picture for European Equity markets. Byy positive one underpinned the latest trait headlines. The London Stock Exchange is said to be considering the length of the trading day. Thats after nine european exchanges were urged to cut. Work some of the longest hours and some argue it is counterproductive. Exning us is the ceo of your thomas. , let me start with this point around trading hours. They have been suggesting the move to improve Mental Health in the industry and attract working parents into the industry. Do you think there is potential to reduce trading hours . Actually, we have just on the opposite move. We have extended trading hours to cover the asian opening since december and we are seeing a lot of flow plumbing in coming in from asia. I think it rather goes in the opposite, but one has to consider it is fully automated training, so not manual anymore. Anna not necessarily the impacts we are talking about here. Let me ask you about the brexit impact. In an increase in volumes . Thomas we have started a market Led Initiative with 40 banks that have signed up to the Program Start a second liquidity pool. It continues on the back of the proposition to move together futures and repo in one place. We are confident we see continuous demand. Currently, we are at 12 . Anna matt . For we see a real price that has developed in full bloom. See in terms of pricing for trading here much mark are they headed down trading here. Are they headed down . Industry, wey, the see fundamental changes driven by the shift to quantitative passive investment that will impact the derivatives market. Managed. S. , passively investments have exceeded the active ones and there is a strong shift of electronic occasion that will drive markets and further demand. Matt its interesting. Appreciate, ind celebrate the idea of a worklife balance but you make a great point. Most of the trading isnt really done by human beings anymore, its all computers. And much like i can deposit and take money out of my atm, why cant i do that with trading . Thomas it is a fully electronic and digital, but of course it is a market that has a different rules for different providers. Intermediaries and large banks are providing access to the market and clearing. We see an ongoing demand from institutional clients, not so much from retail clients. But it is something that goes absolutely digital. We have seen three ways of electronic occasion. Nification. Electro we see it going into Algorithmic Trading styles. Anna you announced trials of speed bumps, small delays to curb the aggressive highspeed trading. Is that something you are planning to do more of . Thomas we are watching it closely. For us, it is a private program. We want to be the preferred venue for buy side flow. Part of it is to make it attractive for Market Makers show their best prices on screen. Carefully watch the competition around speed to create a level Playing Field among those that are passively and aggressively in the market. Anna so this could roll out to other markets . Gothomas if they positively, we will further expand. It is something focused on the Options Market. Anna thank you for your time. Eurex. Book, ceo of labor is hoping voters are fed up with austerity as they plan to unveil a business package. We speak to the shadow secretary Rebecca Longbailey next. This is bloomberg. Matt welcome back to the european open. We are 50 minutes into the trading day, looking at green arrows across the board. Awayre less than two hours from my commerzbank interview. I am about to head over to the headquarters to speak with the cfo. At the outlook wngrades we have seen from commerzbank over the last couple of years. Get a every quarter, we profit warning, a revenue forecast cut, job cut announcement, so i am going to ask if this is finally it. You might as well just throw the kitchen sink at it and do it one time. Rather than drip feeding it like this. London, 1130 11 30 continental. Isa in the u. K. , labor betting voters are fed up with austerity over brexit. They will attempt to transform education, housing, and health care with 150 billion pounds of funding. But the party suffered a blow overnight when the deputy leader quit frontline politics. Joining us is rebecca sec. Forey, the shadow business and strategy. State forry of business and strategy. He says it is personal and not about the politics, but he is a prominent remain voice in the party. What does this tell a voters about whether there is space for remain in the party. Tom has been campaigning for over 35 years. A force of nature so he leaves a huge hole. But he is not leaving the party altogether, but frontline politics to focus on other projects. He is championing type two diabetics and his book in january are two immediate projects he wants to concentrate on. Partyposition within the is to ensure we get a credible deal that puts our economy first and protects jobs and Living Standards to deliver that to a public vote. Every Single Member and mp has unified around that position and i think it is a sensible place to be in now. Anna so this is the position the party has settled on. , todayu put that to them appreciate the choice or would they rather that you make a choice . Up for certainly come own campaigning experience, there has been a lot of miscommunications about what opposition actually is. When you talk about the need for a credible deal and the fact that it is ultimately up to the people, it seems to go down well whether you voted leave for remain because the final decision is yours to make. Anna we understand that John Mcdonnell will say later that the financial Industry Needs to play its part in addressing the human emerged the. Emergency. Can you speak more about the role you want them to play, or to be more precise how are you planning to extract more money out of the Financial Services industry . Rebecca we have talked about the need for a comprehensive industrial strategy for a number of years. That does not happen by accident. Todays plan will look at irreversible shifts in political decisionmaking and investments away from london to our regions that have been neglected, and that has many components. Firstly, we talk about a National Transformation fund made up of an investment in green. Policy,al revolution but also 150 billion for a social transformation fund. To e invest in our schools, public realm, and hospitals. Reinvest in our schools, public realm, and hospitals. To work with the Business Community and provide support and strategic investment. That is why we are setting up Regional Government offices in every region that will act as a ,river in industrial strategy as well as advising banks and the private sector and looking at the Strategic Investments we need to make. Anna to use the phrase Jeremy Corbyn likes, will you be going after Financial Services . Rebecca Financial Services are going to be a critical part of our plans for example. I have areolicies predicated on the need for collaboration with the finance sector and industry. We want to create the excitement and need for longterm investment and decisionmaking. Certainly, with our plan to the decarbonize, we think that will create excitement for investors in the financial community. Anna briefly, we watched your video overnight. Your campaign video. Do you want to lead the labour party . Is that what you envision . Rebecca [laughter] the video was something we had put together with the intention of sending it out, highlighting where id come from and what may political. In terms of leadership, i will have a very busy job. Rebecca, thank you very much. This is bloomberg. Francine china and the u. S. Agree to rollback tariffs and phases in phases. Downgrades its outlook for the second time in weeks. And mark carney contends with the backdrop of political chaos. Everyone heard good afternoon and good evening. Welcome to bloomberg surveillance. I am in brussels where i have been
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