Nissan releases Second Quarter detailed earnings in just under half an hour. Joining the streaming wars, expanding breadbox in the u. K. Hong kongs financial district is paralyzed for a second day as protesters block subway lines and clash with police. We will get updates live. Less than half an hour to go until the start of the european trading day. Yesterday we were dominated by talk of hong kong. Violence on the streets there. Things seem to be violent once again. Clash is taking place. At the moment that is not having an impact in hong kong or the European Equity space. European equity markets set to bounce a little at the start of the trading day. Lets have a look at u. S. Futures. Racked up its first drop in four days in yesterday session. We had a slight pullback in the last 24 hours in terms of expectations around trade, in terms of the news flow around hong kong. Now we look set for a rally. U. S. Futures overlook convinced. Up by 0. 1 . Lets get to the gmm. This tells us what we have been in the story overnight in terms of the Asian Session. We dont have the negativity in the markets around hong kong, we continue to watch those pictures. To some extent, the level of violence helping of violence ratcheting up. Markets higher including in hong kong, up by 0. 3 . The new Zealand Dollar a standout here. Inflation expectations on the move in new zealand. That led to expectations of rate cuts coming through. The kiwi is down by 0. 4 or so. I want to reference iron ore. The Iron Ore Price is down more than a third from its oneyear high. We saw prices higher. Part of the reason we have seen moves is the supplyside. Overnight we got an update from brazil about the level of production. Lets get into this market discussion with our markets live managing editor mark cudmore in singapore. Lets start with the hong kong the mood in the markets in asia. The pictures look violent once again. We have not had reports of people being shot. I suppose that is different. Did see big moves down in hong kong stocks yesterday. Today things seem calm her. Why do you think investors are approaching things differently . Partially because of that big retreat we saw yesterday. It is a difficult situation to interpret. Theres a lot of speculation involved. Escalateeally does into a more severe situation, severe violence, and it is looking like thats a risk, obviously there is way more downside for regional stocks. Situation where it is sustained protest for a couple of months, we know the hong kong economy is suffering. It will not be a regional issue. Risk premium in hong kong stocks is already there. Its all about the binary outcomes. To militarylates violence escalation. Anna that is interesting, the extent to which markets are treating this as the new normal for hong kong, the extent to which markets have already digested what we are seeing. Ofay we see reports detentions of several protesters in certain parts of hong kong. Fired. Teargas being we continue to watch that. The market is focused on this story to some extent, but focused on the trade news. I read this morning one analyst describing it as some scrap of trade news we are trading off of, and it feels that way. Waiting. People are looking to hear what trump will say in his speech tonight. Asmight get more guidance whether he views the trade talks is progressing or whether the phase one deal is about to be signed with promises of tariff rollbacks. There is possibly a binary moment there on the horizon. I more suspicious there. Both communication and the overall trade story, is an issue which is going to ebb and flow. We are going to get other side. Trump likes guiding back and forth when tensions are very high. He retains the power to pull the plug. When expectations go low, he promises great things. Were going to keep the story, slightly on edge. That is evolving into a new normal as well. Investors have come to terms with the idea that major progress is far away. Maybe after the next u. S. President ial election. Expectations have been lowered for investors. As long as trade talks dont collapse completely, this will not sustainably hurt stocks even if there is a setback. Butmble in the shortterm, only a couple of days, unless talks break down entirely. I dont think anyone expect major progress in tariffs. Suddenly we got concrete details, concrete details of tariffs on wind, that would be big news. Anna we will see what the u. S. Political calendar, how that mixes with the trade headlines. Let me ask you about whats going on in the u. K. One of your colleagues, nigel farage was not a game changer for sterling. Part of that to do with the fact he is not going to compete with the tories, but he will still compete with them in labor target seats. The markets trying to digest Boris Johnsons brexit strategy, i guess. Look, it definitely was a positive. Conservative, the probability of a conservative majority was trading around 60 when i last saw. Clearly it has made a difference, but it is not a game changer. It might split those pro brexit votes. If the conservatives make further promises in line with the brexit party, there is a change the brexit party might relent further. That is what conservatives need to guarantee a majority in the election. Mark cudmore joining us from singapore. Next, hong kongs financial district is paralyzed for a second day. We have new developments on this story and we will go live to hong kong for an update next. We still hope we can try our very best to do so. It is an important election with the rights of 4 million voters to respect and safeguard. There is an issue of safety and order. We have to work hard to satisfy these requirements. That was the hong kong chief executive speaking about the District Council elections which are due to be held november 24. Her hopes they can still be held. Demonstrations continue to threaten stability in the region. Protesters brought the citys financial district to a standstill. For more, Sophie Kamaruddin joins us now from hong kong. Have the chief executives words once again fallen on deaf ears . Im not sure if there is anything new this time around. Carrie lams emphasis on law order not hitting the mark amid the protracted political crisis that has led to , whiching polarization has seen concern for the situation in the city. Protesters have come out again, setting up blockade in central where right police have deployed teargas. Meters from here, thats where they deployed it. Teargas deployed elsewhere in the city as well. Behind me, riot police and police vans heading toward that direction again. The Central Business district is seeing clashes between police and protesters as the perceived disproportionate use of the , frustrated citizens, especially if the city marks its third this summer. The protesters shot by police is now in serious condition from Critical Condition and has been arrested for unlawful assembly. More than 3000 arrests have been made throughout these five plus months. Carrie lam says all efforts will be made to maintain order. Chinas Foreign Ministry has said crime committed by protesters will be punished. Thanks very much. Sophie kamaruddin with the developing story on the ground in hong kong. Lets get a first word news update. Good morning. Lets start on trade. Donald trump may delay a decision on whether to slap tariffs on european autos. The president gave himself a deadline of mid november to make that call. The white house is now reportedly talking with carmakers about boosting u. S. Investment in workforce. Protesters in hong kong have brought the citys financial district to a standstill. Subway lines were obstructed during the morning commute. Tensions have flared up after a demonstrator was shot yesterday. Carrie lam said this months election should go ahead. We still hope we can hold the election and try our very best to do so. It is an important election with the rights of 4 million voters to protect and safeguard. There is an issue of safety in order that we have to work hard to satisfy. Angela merkel has signaled reports the European Banking Union will not officially talk about suggests a willingness to explore the policy. Years of debate have failed to produce any results. The threat of wildfires in australia now intensified as strong winds fan the flames. Officials have issued warnings for blazes north of sydney and further up the coast, saying in some cases, it may be too late for residents to leave safely. Global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 analysts in more than 120 countries. This is bloomberg. Anna thank you very much. Lets talk about the streaming showdown. Disney plus launches today. Price tag, 6. 99 per month. That undercuts netflix and amazon by a couple of dollars, but it is more expensive than hulu and apple tv plus. The family focused Service Features 25 new tv shows, 10 new films in the first year, along with a huge archive. Disney is still on the back foot when it comes to streaming. Netflix, amazon, apple tv, and hulu have bigger content budgets. Bob iger is not letting that worry him. What the service means for his legacy, he said too late to worry now. A joint venture with the bbc and the broadcast network rolled out breadbox in the u. K. Last week. A media analyst for Bloomberg Intelligence joins us. Good to speak to you. We have content providers going into platforms. Its getting to be crowded, isnt it . Does disney have what it takes to succeed in the streaming business . I think they do. Netflix is spending huge amounts of money on content. Remember,o decadesold content from the disney family, but also 21st century fox. A huge lineup of content. The others are effectively playing catchup. They have espn plus. They have hulu. They have a family of streaming platforms. We have talked about how content is king. I remember that phrase decades ago. Who stands to lose out . People like netflix and amazon who are new to the content game . Faces the most pressure, but not for a year or two. Is shifting its own content investment into different areas. I think they also breathed a sigh of relief when disney announced the price tag. Lower than people thought disney would charge. For a lot of people, they can add this rather than swap it out. Anna thats not the same reaction i would have expected before. Lets take this to the domestic european side of things. We had itv numbers out today. Allr forecasters have gone in with this breadbox offering. Tell us how that fits. I think when you look at it in this context, compared to it looks the content, quite expensive. The bigger question is whether 5. 99 will speak to them, a back catalog of u. K. Content. You are not going to get the new stuff. Thats right. Delay. Big at launch, quite a few of the bigger things, those big hits last year, its going to take a while for this platform to gain momentum. We just used to talk about football. That seems to be the big thing. Then we switched to these big dramas, big costume dramas and other dramatic events. Looking at itv numbers, englands run help them out. That has given them a big boost. November numbers they are guiding to flat. It is a relatively muted outlook. Fullre starting to see the weight of the general election, thats really going on in the business. Thank you. Us tow bloxham joining talk about the streaming wars. We will take a look at the stocks to watch for the open. Welcome back to the european open. Lets find out which stocks the team is watching. Ram osram, as itv, and iliad. Is the saga over . That has gone on for months now. We at least made a big step isward at osram, it says it an appropriate value of the company. Share. S a untilfer will run december 5. Anna we just talked about itv. It seems the revenue story, the advertising story looking better. Itv beat on expectations for the revenue number 5 . Big Success Stories in also thethe drama, rugby world cup. Final. Llion for the that was a big boost. Itv, it is a big target for the company. Have reached their target of adding 30 million subscribers to the online version. They have hit that target two years early. Shows like love island and hells kitchen, 30 in terms of sales. It is a strong quarter. We are seeing assessments at citigroup around 3 . Be another big boost the company. Anna iliad, Share Buyback . Thats right, along with Share Buybacks that beat expectations. By itsuaranteed billionaire backer. That price is going to be bought back at 1 20 euros apiece. Expect shares to pop at least near that amount. Anna thanks very much. First go is the function to use on your bloomberg if you want to get uptodate with stock stories. Vodafone Second Quarter organic Sales Revenue better than expected. A discount retailer, german business starting a Strategic Review. Business, keepes an eye on any movement. We will have the open next. The Asian Session has been moderately positive. Anna a minute until cash equity trading. Lets see what clues we get. This is the hang seng. Yesterday we were focused on the uptick, and some markets moving 3 . Today looks more stable. A lot of protest activity. S p futures point a little higher. Yesterday, butt there was a holiday in the bond market. Perhaps lightly volumes. In terms of what is happening with the pound. Digested adding strength to the pound, the brexit party pledging they will not stand against conservative mps, but will stand against the tories. Of the european trading day, we are looking at what is going on in hong kong. The big losses in the Hong Kong Market yesterday, and if the levels of violence will be repeated. We are also focusing on a trade story. We are getting scraps of information, waiting for details , time, date, location for the signing of a phase one deal. And whether it will contain the rollback in tariffs. Those are Big Questions for the markets as we head towards the end of that 2019. Putting aside the lack of information on tariffs, we have had a lot of earnings news. The French Market up 0. 8 . The spanish market gaining 0. 3 despite the paralysis in the political story in spain. From a sector perspective, in thecare is one area red today, and that is a defensive sector. Agilitys are mixed. The Energy Companies going higher. A broadbased rally. 366 stocks on the stoxx 600 are going higher, 147 to the downside. Lets look at the gainers. This is a credit agent business in the u. K. Who increased their guidance. The phone anticipated. Than numbers out from the tech sector overnight. Silver is up 1. 5 . We will continue to keep an eye on what is going on. A lot of moving parts as the markets digest the recent news flow around earnings. To the downside, despite the fact these numbers are not too bad compared to the estimates. Renault to the downside. Sector a lot in the car has of the headlines overnight that suggests President Trump will delay any decision to impose tariffs on the car sector out of europe. Up 0. 2 on the European Market. Protests in hong kong are firmly on the radar. Joining me is Thushka Jeannequin , executive diretor global strategy team, Jp Morgan Chase , cio and mark ivor phelps concertrated global growth, Alliance Bernstein. Thank you for joining us. Let me ask about your risk appetites. Buying stocks at records, it does not work anymore. Records,ghts on these how comfortable do you feel loading up on equities . Thushka i think we are warming up to a positive risk. I would not say loading up is the terminology i would use, but the characterization of the Global Environment is supportive of a positive view. It is where you allocate that positive view, is it in cyclical markets relative to your defensive markets . Strongly. As rallied i would say having balance. You have your core defensive portion of the u. S. Equity markets but look to add exposure. Anna a little loading up there. Out ofgetting some news nissan, withdrawing its dividend outlook. Payout undecided according to the japanese carmaker, operating profit, we will keep those headlines coming for you. Lets give you a chance to answer this question on how much risk you want to take. I was looking at this chart that looks weak. Than at the end of last year, but relatively low. How much appetite do you have for risk . Mark bull markets do not when you are as cautious as they are. You manage confidence and look at consumer confidence, it is still high. It is still moving ahead. Profitability is modestly moving ahead. Lookink equities reasonable, they are not particularly cheap. Just because they are hitting a new time high, does not mean they are expensive. Anna another interesting metric to look at, we have a lot of money going into cash. Than at any time since 2008, what does that tell us . You have Investor Confidence moderate or weak, plus cautious positioning. We saw that in q3 earnings. That gave us the sense of how the market was positioned. The fact that you had on aggregate in u. S. Equity markets, you saw companies that were rewarded strongly. This is a big change of around previous earnings. This gives us a sense that markets were not fully positioned in equities. That was another data point that investors are cautious. Another factor that markets may may noths, but it be eight well position. Anna i was taken by the chinese ers. Numbers ppi numb the price is really dropping. I have read a lot of research talking about how the deflation is by learning is spiraling and can drive inflation lower. I have been doing this a long time and looking for inflation for 30 years. It does not come, politicalization is one of the drivers keeping it down. Manufacturers,re that tends to be disinflation. , it could have an inflationary impact. See a lot of inflation, as a result Interest Rates are not going up much. Three cuts in the u. S. This year. It is hard to see why the market will change tack on inflation. In certain sectors you see it. It we still struggle to see coming through in wages picking up significantly, and the Inflation Impact is modest. Anna i was quite taken by this chart. In blue is the chinese ppi falling. A measure of europe inflation, tracking it to the downside. This shows the way china can export the deflation story should ppi deflation materialized. Thushka this is the main issue facing banks, we have a global inflation factor in domestic Central Banks fighting against that. Having domestic policy oriented against global drawdown. There is a limitation on how Central Banks can affect that. I am in the same camp, inflation is low when there are aportunities to own assets on longterm basis, but from a cyclical perspective it is hard to argue that will happen. Anna stay with us, Thushka Jeannequin, executive diretor global strategy team, Jp Morgan Chase bank and mark ivor phelps, cio concertrated global growth, Alliance Bernstein. They both stay with us on set. Up next, it gets worse for nissan. The japanese carmaker cut its operating profit outlook. We will get the key takeaways. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 12 minutes into the trading session, mildly positive. The ftse is up 0. 3 . On the French Company that had big news, that stock rising the most since january 2004 after unveiling a buyback of 1. 5 billion. It has been a tough year for nissan, the earnings corporate reporting season beginning with thingsest a year ago, have gotten worse. The carmaker reported a profit plunge in july, and job cuts globally. It had a complete management overhaul. The company has seen its market value drop 30 over the past year. Lets get to dani burger who has been looking at the details. Dani first thing we have to look at is this cut, a couple things in focus. One is the strengthening yen. When it comes to trouble with these carmakers, we also had beat, but when it comes to nissan, one thing to point out, their chinese sales decreasing 12 . That is the impact of the global trade war. It is something investors will have an eye on. North american sales also declining, so it is not just china but the global Auto Industry under pressure. Is speaking currently. If he mentions anything with the renault partnership. Orare at a crucial time carmakers need to build these relationships in order to survive this macro stress. The big thing likely to upset share prices will be this dividend cut. Previously they fell 40 yen a share, and now it is 10 a share and they are looking to reevaluate that. Is a cloudy outlook. It will be china and the strengthening yen which investors are concentrated on. With thiss stick sector. Thushka jeannequin, executive diretor global strategy team, Jp Morgan Chase bank and mark ivor phelps, cio concertrated global growth, Alliance Bernstein are both still with us. This chart shows how cheap the car sector is. Your thoughts on whether the car sector is somewhere you are willing to dip your toes back into. Thushka this is the point of discussion at the moment. I would say there are a lot of is where ittrading is in terms of valuation. We are looking at the secular trend in autos and focusing on those parts of evehicles. Reasons why you would steer clear of others. Challenginga sector, clearly some secular changes. Electric cars becoming more popular. Certain areas doing better. Carchallenge is manufacturers make less money on their electric vehicles. The Combustion Engine was good for the manufacturers for a long in particular. That transition is costing them a lot of money, and margins Going Forward will be less. At the same time people are using less cars. Robust. Ng demand is not you have low margins in certain sectors. Then you have the way the markets are breaking down. In 10 years you could have Huge Companies leasing hundreds of thousands of vehicles, and the commodity manufacturer, and then whoplatforms, uber and lyft rent them to you. If you are the manufacturer, and you are just renting, all you care about is that you go quickly and it is clean. You do not need bells and whistles, that is where the margin is. The response from the car sector is clear, it will be more m a. They have to get together. With renault and nissan, that was there holy grail, but now that is under pressure. It is not the volume game it was. As a result, this is an driven by germany this sector. In terms of european exposure, do you focus on france, domestically driven demand, what is the allocation around europe . Thushka germany is geared toward growth they already experienced over the last 20 years. What we find perplexing is the equity Market Performance in germany relative to the economic performance. A economy in germany, manufacturing weakness and is most likely to happen. Europe, we are most focused on toas that are not as exposed the trade concerns and headline risks. That would be areas like france. Spain has been an issue because of the political front. Markets have looked through that. Towards areas where you have consumer strength them a wage growth and labor markets that are strong. Anna thank you both so much. Thushka jeannequin, executive diretor global strategy team, Jp Morgan Chase bank and mark ivor phelps, cio concertrated global growth, Alliance Bernstein both stay with us on the program. The pound is higher, how sustainable is it and how much does it change the narrative around brexit . More on that next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 21 minutes into the trading day. 0. 3 . 00 up similar gains on the dax and the cac. Says rulesancellor will allow tax cuts and investments in infrastructure. He said despite the ramp up in spending, the Party Remains fiscally responsible. Our economic plans have added to the growth figures. A few months ago i set up my Spending Review which increased spending by 13 p. M. For billion pounds a year 13. 4 billion pounds per year. Spending likeep that under control. The plans for infrastructure and investment in roads and fiberoptic connections. You are given a big boost to the economy. We want to see that spending kept under control. We can do that with our fiscal rules. Guy why what you give details of your fiscal plans . The biggest bond funds are avoiding u. K. Gilts, because they worry there will be more spending. Why cant you clarify that . Should wecal rules win the election is to get the confidence to businesses and International Investors. I do not take for granted international investment. I know you need to show clearly what the economic policies are, to how you will work hard keep investment in the u. K. Anna that was the u. K. Chancellor speaking to bloombergs guy johnson. Thushka jeannequin, executive diretor global strategy team, Jp Morgan Chase bank and mark ivor phelps, cio concertrated global growth, Alliance Bernstein are still with us. The debate right now is around the large amounts of spending whoever ends up in number 10 after the election on december 12. What implications does that have for borrowing . How much can the gilt market absorb . Not ridiculouse due to inflation but the bond market is rightly worried. It seems like every party internationally, you will see expansion fiscally around the world. That is a concern. I do not blame government for trying to do it, if you can borrow cheaply and invest, that is a good thing. You will see Economic Activity pick up. I do not think it is particularly scary, but we want clarity. Cycle, theyon promise everything and you do not know what you will get for some time. On giltur thoughts markets at this point . Spending is a big theme globally. Now we focus elsewhere, the u. K. Is one place. Asymmetric, it does not depend on the election outcome. We will likely see fiscal spending. Is that procyclical . In that sense, it would be negative for bond markets in the u. K. Our view is when you combine the dovish bank of england last week with fiscal spending that will come irrespective of the political outcome, that is a deepening and a global theme, but particularly in the u. K. Anna we were talking about car stocks being cheap. This is a great chart that has the ftse 100 and various indices around the world. It looks cheap against many of them. It is hard for International Investors to come to the u. K. We have an election, i do not think any less have a clue how it will work out. It is likely we end up with a stalemate again. If we get brexit through boriss plans, that is only the start of the negotiation that what we have to do over the next few years to get a trade deal with europe. If you are a company trying to invest, you still do not know the rules of the road, and that makes it hard to see were you need to make investments. U. K. Growthor pushing ahead significantly until that is clear. Much thank you both very for your time. Thushka jeannequin, executive diretor global strategy team, Jp Morgan Chase bank and mark ivor phelps, cio concertrated global growth, Alliance Bernstein. Market will continue his conversation with us on Bloomberg Radio at 9 00 a. M. To wolfgangspeak cfo ofr, the continental, and we will ask him about the report of trump playing cards as well. This is bloomberg. Anna 30 minutes into your trading day. Here are your headlines. President trump may push back a decision on whether to hit european automakers with tariff s. We will speak to the cfo of continental next. Demonstrators paralyze the financial district in hong kong for a second day. Buyback. Remium the most in 15 years after it returns 1. 5 billion to shareholders. The morning and welcome to Bloomberg Markets european open. At bloombergsds headquarters here in london. The stoxx 600, a bit more emphasis to the downside. We are actually fairly flat, not going anywhere in a hurry. Fascinating individual stories. Iliad up by 18 , the Share Buyback is the reason for that. Numbers reporting better than anticipated. That is pushing the sector higher. See others in the Technology Space doing well on the back of that. Earlier,ut numbers also increasing their guidance. Downside and the look at what is weighing on the markets, electrical components down 10. 5 . The revenue is growing. 9 ,unt retailer down a they are carrying out a Strategic Review what is happening in germany. Interesting to see renault is falling. Their partner nissan is having trouble in japan. Spaceere, we see the auto looking on the bright side because of what we heard about President Trump and what he is likely to do on the tariff story. Lets get a first word update. Donald trump may delay a decision on whether to slap tariffs on european autos and parts. He gave himself a deadline of midnovember, but they are reportedly talking with carmakers about reducing their u. S. Investment and workforce. Protesters in hong kong have brought the financial district to a standstill, that follows classes with police earlier. After a have flared up demonstrator was shot by police yesterday. Chief executive carrie lam says they should still go ahead. I hope we can hold the election and do our best because it is an important election with the rights of 4 million voters to respect. There is an issue of safety and order that we have to work hard to satisfy these requirements. Angela merkel has signaled support for european banking an official not endorsement, the german chancellors approval of the finance ministers plans suggest a willingness to explore the policy. Is ansurance scheme strategy to overcome the sovereign debt crisis. Years of debate have failed to produce any result. Foreign ministers voice concern enrichment capacity which has grown 25fold since it began violating the nuclear deal. It says it continues to cooperate with the iaea. Jaguar land rover has made attempts to find partners for the beleaguered brand. Carmakersapproached including bmw, hoping an alliance will help them share the burden of investing in electric vehicles. No talks have been held the. Wildfires in australia are fannsifying as strong winds the flames. Multiple emergency warnings 300 kilometers north of sydney, and further up the coast. In some cases it may be tommy in late the residents to leave safely. Global news, 24 hours a day on air and at tictoc on twitter, powered by 2700 journalists and analysts in more than 120 countries. Bloomberg. Anna thank you very much. Lets focus in on the market moves. Not goingrall anywhere fast, flat on the stoxx 600. The ftse 100 up 0. 8 . Thats break things down from a sector perspective. Telecoms are the biggest gaining sector. The shareart of that, buybacks are pushing up that sector. Numbers out of infineon better than estimated. And othering infineon stocks in the Technology Sector moving higher. Utilities is also a gainer. In terms little growth of utilities. Basic resources goes a little higher. To the downside, retail down 0. 4 . One of the interesting movers in this mornings session, this is a discount retailer moving to germany. Focus is on the weakness in the german sector. They are conducting a Strategic Review. Up next, we bring you stock movers, including more on iliad, the French TelecomCompany Rising after a buyback program. This is bloomberg. Anna welcome back to Bloomberg Markets european open. We are flat on the stoxx 600. U. S. Futures also look flat positive. Alongside secondquarter results, nissan cut its profit guidance. This as it struggles to rediscover its footing in industry seeing falling demand. About what nissans woes mean in context with renault . Clearre are two consequences, one is that underperformance of nissan, 43 of nissan, so anything that impacts one will impact the other. If one gets weaker, the others have to make up for that to make sure the alliance continues performing. Always move across to the others. Anna lets talk about the m a story, this trend toward consolidation. Jlr,e are hearing around how it is looking to do it some partnership. Jlr is an interesting story. The maker of Jaguar Land Rover is owned in india, and they are looking for partners. The Auto Industry is in a huge era to save as much money as they can to survive the shift to electric cars. In order to do that, they need to split costs in a partnership. Jlr especially needs this. Includingartners electrichuge area were mobility is being invested in. Bmw already has a partnership, but the conversations seem to be hinting at a deeper partnership, or a partnership in a new direction. Lets stick with the auto sector. A farreaching overhaul to revise squeezed margins. They are stepping up estimates to adapt to a shifts to electric vehicles. Joining us now is wolfgang schaefer, cfo, continental. You report a loss in the Third Quarter. Lets look ahead to the fourth quarter. Are you going to be profitable once again . We will be profitable again. This loss in the Third Quarter was due to impairments which we had the book because our longterm outlook had been reduced, and we had to book to be profitable again. Anna what time frame are you looking at for any Market Recovery . Or do you see the structural shift not leading to a cyclical recovery . We see the broader auto sector in the doldrums at the moment. We have two years of Passenger Car production behind us, and we are not sure that someyear we will see smaller reduction in the world car production. Then we foresee for the years to come sideways development. We do not see the big impasse in europe, and china might be the market that makes a little bit ina difference for growth car production and stability in the years to come. Anna can i talk to you about your powertrain unit . You decided to go for a spin off rather than an ipo. What are the reasonings . To start with a partial ipo, we do not see the sector or market in a position for a successful partial ipo that can be made in the foreseeable quarters. Forcould say we postpone it a few years and do it later, but we might be a more standalone business, and a business that can more concentrate on this disruptive business, and we decided it is better to put the business in a better position of the more independent situation. Possible, thent a partial ipo is not possible. Anna do you have plans for other structural changes, other Corporate Restructuring question . No, we have no intentions to do that. This combination is the automotive business, and the rubber business. It seems to be a perfect combination as it allows the cash rich business on the rubber side to get us into these high technological investments which we do on the automotive side. This has worked well in the last 10 years, and we see the trends continuing in the years to come. There are a lot of technological changes we expect. You have to have the investments to be the technological Strong Player in that market as we have in the past. We are reporting overnight that President Trump seems likely to delay his decision to on europeanfs automakers. How would you react to that news . S on whateveriff is thwarting the correct allocation of resources, and not helping growth in the world. Discussion is there of not imposing tariffs is the right discussion. And for us in the automotive business specifically, no tariffs would be the right decision in one we would appreciate. Anna thank you very much, wolfgang schaefer, cfo, continental. Would a german recession hurt or help global stocks . Datall get German Growth at the end of this week. Tot might seem a strange way put the question, but some people suggest it is priced in. Any confirmation of a technical recession will be met with a rebound in the months and quarters after that. Give us your thoughts. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Modest gains by European Equity markets this morning. , the companyarkets outlined its new strategy for growth, saying it is looking to develop a project and considering a stake in a rare earth deposit. Joining me now is vitaly natanovich nesis, ceo, polymetal international. Why go beyond gold . Toaly we believe we have have leverage for the electric vehicle revolution in the world right now. Mining provides a platform to get exposure to that global trend, and the commodities we have selected for expansion the on precious metals, rare earth is precisely the commodities we should benefit from. Anna we talk about palladium in thoseontext, do you think Market Conditions will prevail . I am a longterm palladium bull. I think the Current Trends tracking environmental restrictions across the world, and the merging Hydrogen Technology both bode well for the future demand of palladium. The supply of this metal is measured in constraint, a not well situated deposits. Anna you will take a small stake in rare earth metal deposits in russia. What will that investment give you . Vitaly rare earths are the sector that benefit most from the ev revolution. Expect the chinese production will decline over time, mostly on the back of environmental concerns. And the deposit we plan to invest in is the highest grade rare earth deposit in the world, byproduct. A valuable this will provide us significant exposure to the ev revolution, and position us in the top quartile for both of these commodities. Anna do you see yourself getting further exposure to palladium and other metals, or is this where your ambitions will end . Vitaly for palladium, we have one project. As the first step toward that direction is enough. For rare earths we are taking a small investment so far. We are buying and insignificant stake for a small amount of money, less than 22 million. Intois our first foray that space, so any for the progress would be with the same deposit but a larger state. Anna reading about some of the recent debt deals you have done with Interest Rates tied to reduce your water consumption and provide safe working environments, you get fromr Interest Rates certain debt providers. Is this something that will grow for the business or the sector as a whole . It will definitely grow in the sector. We were trail blazers for the emerging markets mining companies. Scope of such facilities will expand with time, and in a green there will be project, and that is the area we are interested in before the tiedyear to have a project to specific projects that should end up reducing our environmental footprint. Anna thank you for coming to speak with us this morning. Vitaly natanovich nesis, ceo, polymetal international. Merkel signals for a deeper European Banking Union. Her remarks suggest the proposal , while not endorsed by the government, reflects a willingness to negotiate on establishing an insurance scheme. , ourng us, Richard Jones strategist in berlin. We talked a lot about this last week. It made a lot of headlines. Do we think Angela Merkel is in a position to push germany in this direction, or is it a parting shot . Richard i think it is something that will be welcomed by a of different factions in europe, the ecb especially. They will look at this as a positive thing. But i think the longer term is that it will be difficult for this to gain any traction right away. It is a step in the right direction, but it will not be a panacea. It will require more work, but at least they are moving forward in talking about it. It has taken a long time to get this far. We areou think having troubles with your sound, we will put you out of your misery there. We are looking for any clues to sentiment around the german industrials story. That will be a focus. Clarida couldy shift the narrative around the markets today. If you want to get involved in is question of the day, itv the function to use on your bloomberg. We are talking about german recession and whether that would hurt or help stocks. Lets talk about what is going on in the markets. Telecoms is the biggest gaining sector, up by 0. 6 . Iliad is a big gainer. Sharere planning a big buyback, and the stock up by more than 50 . 15 . By more than this is pushing up the rest of the Technology Sector. Itshe downside, retail with worst performance, down by 0. 4 . That is it for the European Market open. Surveillance is up next. 0. 1 . Oxx 600 up by the ftse 100 up by 0. 25 . Big news in london, the pound pushed a little higher. Nigel farage saying he will not compete headtohead with tories. In theill be competition labour party seats. That will be part of the conversation through the day. This is bloomberg. Everyone uses their phone differently. 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