Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240713

Nejra welcome to daybreak europe. A fourth day of green on the screen for asian equities. Donald trump has talked about being in the final throes of coming to a phase one deal. A mixed picture below the surface. We are seeing a weakness in chinese equities, after the biggest drop on industrial profits on record. The u. S. Benchmark hit record. The fx, the aussie is the underperformer in g10. A two rate cut call for the rba. Some poll showed yesterday that the conservatives are narrowing their lead over labour. Oil slightly off on the back inventories. On donald trump says the u. S. Is in the final throes of a trade agreement with china signaling progress on a deal that has been years. Works for two but in a interview with the fox news host, trump said he is holding up the trade deal to ensure better terms for the u. S. Joining us is Patrick Armstrong. We keep hearing records on all u. S. Benchmarks, does it surprise you . Patrick it is a narrative that that is why we are hitting new feds, but i also think the and what it is doing, not important. E, is the trade deal is important, you dont get significant Global Growth without a rebound and recovery in trade, and to be escalation of the trade war between the u. S. And china is very important. That is what if is one trade deal is. If. Floor under think that basically, there shouldnt be newescalation or no tariffs, or a rollback of existing tariffs. Nejra so the question comes into play, whether President Trump out of a goodwill will put a pause on existing traffic should. Do you think you will on existing tariffs. Do you think he will . That has been enough to push markets to an alltime high every time we get a sound bite that we are close to a deal. It will be a shallow deal, it has artie been headlined what the deal will be. The next stage that people are hopeful for, i am very pessimistic we get any progress on those. I think those are Strategic Issues about technological transfer, Enforcement Mechanisms on things, those are where things fall apart. Trying to dust china committing to manage their currency as they have him, to stop any weakening of the yuan. That is what we will get, i dont think will get much more than that. Nejra safe arguments sake that phase one gets through, does the market start to wake up to those structural issues, or is the conviction there enough to push markets to a new high . Patrick the markets have been waiting for it, and you dont the dayssure the market before you get the deal. Once we get the deal in place, i think it will be a very high bar to get over to get the next deal done. I think it is time to get out of u. S. Equities, they are incredibly expensive. The u. S. Is at the same level it was in the tech level of 2000, so not unprecedented. But that two precedents where it did happen were very good news for equity investors. When we got to 2. 3x price the sales. The only time in history never dropped was in september of 2018, and the tech bubble of the First Quarter of 2000. S ps earnings are down this year where they were last year. Market is up 25 . Think a lot of good news is nejra priced in already interesting that you brought up the tech bubble. Impeachment proceedings, where the economy is, and the argument was that you can see further gains in tech from here. You say you want to shift out from the u. S. Would you stay in certain sectors . Patrick i Like Health Care in the u. S. The last two months have been good for it. But you have Political Risk with health care because you have some very leftleaning political candidates. I think the rhetoric will be much harsher than the politics should one of the leading democrat contenders become president. First if they get nominated and if they get elected, how harsh will the publicist, with republicans in the senate how harsh will be her policies the be with republicans in the senate. I think that is a defensive sector that isnt incredibly expensive. Utilities, staples, sectors where people are hiding out. They are very expensive and very inflated. Nejra if we see an inflection in earnings in the First Quarter of 2020, that could give another leg up to equities. But is that going to continue, but momentum . Patrick i think it is. If you see a rollback of the tariffs, that should be a boost to pmis, manufacturing. It is possible you get that post, but i am not sure you will. There is a bit of a lack in tariffs hitting. Never fish Patrick Armstrong from gourmet wealth, stay with us. Turn to china, profits from their industrial enterprise fell , the biggest drop since 2011, and it comes as domestic demand slows. Early indicators point to a seventh straight month of slowing growth. We speak to tom, our china correspondent, joining us from beijing. Let us kick those numbers come around us through the details. Tom grim data, as he outlined, in terms of industrial profits. Three straight months of decline. A drop of 9. 9 in october, that is a record. It follows a contraction of 5. 3 in september. What is that happening . Factory prices are in deflation. You have lower factory prices come those are dragging on the profitability of these firms. Then there are investment decisions. Will they call back on investments . Indeed, we have seen the curbing its investments as well. Bloomberg economics says. , look, this should be ringing alarm bells for the central bank in china. They say it reinforces the case for more cuts, and Interest Rate well. S there are other economies out there looking at 10 and they say they would agree with that analysis. Nejra is that because there are concerns about the slump in industrial profits, that it will start spilling over into the labor market, which is very important to chinese policymakers, as they have said many times . Tom the labor market is absolutely central, because of stability. The party, the government is focused on stability. That is a number one issue for them. If you start to get to a point where investment is restricted so much by the private sector that they cut back on hiring, certainly, that will be a concern. Currently, implement here is at 5 , if you believe the official statistics. That is where you are hearing from economists that the pboc will have to step up to support the economy if the slowdown continues. You point to the early indicators. We have one bellwether, south korea. They saw there is dropped 10 . The other bellwether our sales managers. They report a record rope in terms of sentiment record sentiment. Ms of one bright spot according to early indicators, was exportoriented economies, up inng to maybe a tick demand. We have pmi data on saturday from china. We will be looking ahead to that to flesh out the picture in germany. Mackenzie, joining us from beijing. Thank you so much. Still with me is Patrick Armstrong. You were just saying that you think now my bedtime to rotate time to rotate out of the u. S. Using there will be significant. Mms from the pboc . Atrick they have shown reticence to do significant stimulus. I think they will lower the reserve ratio, things like that. Be subtle stimulus, and it should keep the economy moving along. We do have some Chinese Companies that we own, alibaba, tencent, big technologytype companies. They are reasonably attractive, japan is where we are really looking to allocate right now. I think that is an area that is cheap right now. Unprecedented multiples almost. China is cheaper, its own history of earnings, yields of 2. 5 , which is very attractive, versus negative rates in japan. If you are looking to move out of the u. S. , japan is where i would put my money right now. Nejra in general as well, how would you be looking for protection . Is yen your preference, gold . Ettrick fish Companies Like japan patrick youre looking at japanese companies. They are not exporting companies, that the japanese consumer has been very resilient. We are looking at a 5 dividend deal. We want to belong yen we want to be long yen right now. Nejra and gold, do you like it in the portfolio right now . Patrick i like it because it is a hedge against the Biggest Issue right now. If we dont get a trade deal, you have an escalation of the trade war. Trade war wars, if they keep forward, they turn into currency wars. Not to make a bad pun on purpose, but that is when gold will really shine. Nejra is that something you are bracing for a the moment . Patrick it is not something we expect, but if you put something in the portrayal of session in the port footer that will do its job, i think that is what we now,. Ight we dont expects it, but there are a lot of scenarios where you could see it happen. Nejra you say you dont really expect any stimulus to come from china in terms of the slow down at the moment . Needed they dont exactly. If you have progress on trade, i think that will create a natural flow. Pmis are still in contractionary phase, but we have started to see the pmis. Tion slow in if you get a resolution on trade, you will see that move back into expansion. Minor stimulus will be enough. Nejra do you like exposure to companies that have exposure to the Chinese Consumer . Patrick it is not something we are actively seeking. We have alibaba and tencent, they are exposed to the consumer. It is an area of strength right now. Hiring is good, which increases are good in china, all of that playing into the Chinese Consumer remaining. Nejra are dollar bounce something you are looking at the moment . Patrick the sixth alien dollar the 6you look at billion issue, i think that is a good pick up right now. They are doing them basically so that chinese corporates have a benchmark to issue their bonds against right now. I think that is a good premium right now. Nejra thank you. Patrick armstrong stays with us for the hour. Lets check on the top stories in the first word news Jeremy Corbyn has. Response,the parties after a rabbi suggested the u. K. Labour party leader is unsuitable for office. The party appears to have made gains on the back of lance to dramatically reshape the british economy. I made it very, very clear, protectin government any committee that is under any sort of any sort. We will support the necessary funding to protect to an gods, temples, and mosques. We will protect the cemeteries also. We will not allow antisemitism of any form in our society. Nejra british carmakers are calling on the next government to deliver a brexit deal. Manufacturers and Traders Association says key requirements include if frictionless border. Carmakers say they has spent more than 500 Million Pounds preparing for the uks exit from the e. U. A white house budget official says he want his superiors that a hold on security aid to ukraine could be illegal, but he waited months without a response. Mark sandy told the impeachment inquiry that President Trump had up. Cted the eight the held meanwhile, congress has invited the u. S. President to an impeachment hearing on december 4. President trump has called the inquiry a witchhunt. That is your bloomberg first word news. Coming up. , a strategy change. One fed governor says the u. S. Economy is solid, but outlines plans for inflation targeting. Plus, we speak to the european Incoming Commission president , ursula von der leyen. Dont to miss that conversation, after 3 00 p. M. London time. We will be live in strasburg throughout the day. Traveling for work, tune into Bloomberg Radio live on your mobile device or on dab general radio in the london area. This is bloomberg. This is bloomberg daybreak europe. Let us check in with juliette singapore. Great to see you. You are focusing on comments from the rba and a bit of pressure on the aussie today . Juliette absolutely. We are seeing asian stocks rising on those comments from President Trump that we are in the final throes of this trade deal. We have seen asian stocks move higher for a fourth session. The nikkei closing of the. 25 . N up a little downward pressure, though in china on that disappointing industrial profits number. And australia, as you mentioned. There was some dying in the equity market. Have a look at my chart there was some buying in the equity market. The indicated that qe could be an option if you see the cash rate get to a quarter of 1 . But the governor is indicating that is unlikely to be the case. Chief economist bill evans, he yen ofwn as the do forecasting Interest Rate cuts, he said you could expect cut four times next year. Forecasting that the rba will use about unconventional monetary pull perhaps to look at qb for the second half of next year. Nejra Juliette Saly in singapore, thank you so much. Now lets get the bloomberg is a flash. A longtime ally of President Trump is facing an investor call to step down. Blackrock capital, which controls about 2 of colonies stock says it has lost confidence in his leadership. It says the Company Needs change to avoid a shareholder exodus. Citigroup has been fined 44 Million Pounds by the bank of england for years of inaccurate reporting about its capital and levels. Y it is the biggest ever find by the u. K. Financial regulation authority. It says between june and hadember of last year, they flaws in the systems they used to give information to financial regulators. Citigroup says it has mediated all issues. Planning to go directly to shareholders to prevent its case for a tie up in the latest push for a deal backed by carl i can. Xerox said it will not apologize for its aggressive tactics in pursuing a merger, despite being fined twice. It will urge shareholders to call on the hp board to pursue what they call a compelling opportunity. Governor Lael Brainard has struck a positive outlook on the us economy, while advocating longerterm changes. Speaking in new york, brainerd recommended pursuing a policy inflation flexible averaging. She said it may be helpful to specify that policy aims achieve time. R she added that given the persistent shortfall of inflation from its target over recent years, it would imply supporting inflation a bit above 2 for some time to compensate for the period of underperformance. She added, well Downside Risk remains, the fed had taken significant action by lowering Interest Rates this year. Patrick armstrong is still with us. This is an ongoing conversation about changing the framework at the feds. Does it make you think perhaps that there is a bias to further cuts that the market has been pricing . Patrick may have been pricing it already. There has been a lot of debate in the fed that the last two cuts should have happened. The statements right now are of bernard would the interpreted as very dovish. The unintended consequence of that is when you have inflation 3 , you have to get punitive and go below. I think she is presenting it as a way that we can let the economy run hard if we need to. I think that is the fed policy anyway. I dont know if formally adopting this makes sense, but i think in for money to have said that we would not be word if inflation went above our target. Nejra in terms of the prospect of inflationary pressures, is the Market Pricing that correctly . Patrick i think the market is pricing lower from longer, and i dont know if that will end up being the case. I have probably been too much of an inflation hawk the last two years, when i have been thinking inflation is around the corner, given the unprecedented monetary stimulus. It has not materialized. If you look at core cpi, significantly above 2 , though, the feds measure in the ecb has been significantly below 2 . The whole world is in an era of disinflation. You have technological change driving that. Eventually, the zero Interest Rate policies will probably create some inflation i dont think i would be extrapolating 1015 years out of zero inflation. I think it is very hard to see how it will have a significant inflation. Nejra earlier this week, we heard from Jerome Powell talking about the glass being more than half full. In terms of what the fed has done with three rate cuts so far, what could be the effect of that, will that just reverse the previous hiking, or will it be able to extend the expansion the way that Jerome Powell talks about it . Patrick i think the three cuts have been important. What he has done now where he has signaled the pause, he has done that not even by conscious decision but by building up the sheet. The organized repo issues they had in september created a nice liquidity flux at a time when they were not cutting. That said, i think, is clearly i dont think they will be hiking by any means next year. There is a potential for a card if we dont get a trade deal, were if the Global Economy continues to slow there is a potential for cut if we dont get the trade deal or if the Global Economy continues to slow. It is not too far off in the future now where we are getting into the election cycle, and you will really want to move markets if you are the fed, in the month before an election. Nejra you talked about the fact that you might be willing to move out of u. S. Equities, apart from health care. How would you want to position around the curve . It is popular in wall street to bet on further steepening in 2020 . Patrick we have an option on steepening. Volatility on steepening is actually cheap right now. Steepening is something that is happening already. We had a flat yield curve, and that has really changed since august. I think we are probably going to get that, and if the fed is on hold, it lets the economy run hot, than you might start to see the long and get higher the long end get higher. We dont have a big position on volatility right now. It is not speculative shorts on volatility, you get a huge kerry took short volatility, but you get punished if you get long. So we dont have a position on volatility. Nejra Patrick Armstrong stays with us. Coming up, pressure is mounting. Colony ceo faces goals to step down faces calls to step down. Driving to work, hop on to Bloomberg Radio on your mobile device or on dab Digital Radio in the london area. This is bloomberg. En this is bloomberg daybreak europe, i am nejra cehic in london. Lets look at markets around the world. In london is bloombergs Annmarie Hordern. Generally seeing a day of trade optimism, but also looking at the reaction on Oil Markets Due to that api data. Annmarie we are seeing a little bit of riskoff when it comes to oil prices. Wti and brent are floor. This comes down to the inventory. Api says inventories in the u. S. Swelled by more than 3 Million Barrels a day. As you can see in my chart, i wanted to show the steady uptick since september in the u. S. Inventories. We are slowly seeing this rise in u. S. Oil inventories. The big question is what happens next week in indiana when opecplus. Question is should they or should they not cut . Commerzbank says if they do not cut, they will see it rice drop in the oil prices ca price drop they will see ua price drop in or prices. Nejra Annmarie Hordern in much. , thank you so President Trump says the u. S. Is in the final throes of a trade agreement with china, milling progress on a deal that has been in the works for two years. But in a interview with former fox news host bill oreilly, trump later said he is holding up the trade deal to ensure better terms for the u. S. Profits for Chinese Industrial Enterprises File a Third Straight month, dropping by the most since 2011. That is as domestic demand slows. Early indicators are just the world second largest economy slowed for seventh straight month. British carmakers are calling on the nest government to deliver a deal. Eating brexit trade the industrys key requirements include a frictionless border, tarifffree trade, and other. Mark sandy told the house impeachment inquiry that officials learned in midjuly that President Trump had directed that aid be held up. Meanwhile, congress has invited the u. S. President to his impeachment hearing on december 4. President trump has denied wrongdoing and has called the inquiry a witchhunt. That is your first word news. From leading europes transition into zero emissions, ursula von der leyens plants as incoming european Commission President are nothing short of ambitious. Let us get to maria today are in strasbourg. Great to have you with us. What can we expect from the new commission . Has heron der leyen team put together, we are expecting the European Parliament to finally give this a go ahead. She had many issues with her nomination, and she also had three members of her would he dashboardbe p ouldbe team rejected. She has talked a new digital tax in the European Union, weighing that if there is no International Agreement by the end of 2020, the e. U. Should go about it alone. She has also said, we need to bring the institutions closer to the people. Her biggest measure is the green deal for the European Union. It resonated strongly for the european voters at the European Election in may. This is something she has said will be her number one priority once the Commission Gets going in december. Nejra we have got reports in frankfurt, someone saying that ursula von der leyen is seeking around 3 trillion euros to spend on climate protection efforts by 2030. It is really hurt star measure, this European Green deal. Can she get it done . Maria that is a big question for to the region, a, who will pay for this . 2, she has set herself a very tough deadline she was. A deal that will see a written us she was the European Union to she hason neutral set herself a very tough deadline. He wants a deal where the European Union will become Carbon Neutral in a few days. The leaders worry about the Economic Impact of this. Then you have the european businesses who wonder, how are we going to become a European Industrial superpower but also be very climate conscious at the same time . It is difficult to see how the two add up. But von der leyen says it can be done, and she wants to get it done in 100 doe days. She is very ambitious. Nejra maria tadeo in strasbourg, thank you so much. Coming up, we will be speaking to european Commission President , ursula von der leyen, as her team faces confirmation votes in strasbourg. It will be at 3 00 p. M. London time. Do not miss our interview at 1 30 p. M. With maste mariusz tjabroki. In an exclusive interview with bloomberg, he said there is a long way to go for the island of ireland united. This unique agreement directs now this unique circumstance under the island of ireland. The british government, the Irish Government, the European Union have played collectively a very imaginative role in looking to come up with an agreement to prevent the development of a hard border on the island of ireland. I believe the agreement has been reached between the au and the that it does deliver insurance policy. I hope it is not needed. I hope we can reach a trade agreement and a future political agreement that means insurance. Lan is not triggered come the idea that the british may cause a problem with the border has just raised, as far as we hear, the odds of a united ireland. Doesnt play that way over there . The idea that the u. K. Breaking halves ofthe two again . Uniting i think we are many, many phases away from Something Like that happening. The good friday agreement is very clear, that there would have to be a possibility of agreement being reached to then figure out a border poll. Then look at the future status of northern ireland. The view of the Irish Government is that the timing is not right that inll like that, fact, it would be very counterproductive. What we now have to do is all work very hard to see, can we come up with a new agreement to close the relationship between the u. K. And the European Union . That is where the majority of our efforts now need to go for the perceivable future. We have a really strong insurance policy that has been negotiated between the e. U. And the u. K. We want to avoid, as i said, that insurance policy to be triggered. We engage with committees of northern ireland. It has not been in place now for three years, and our focus is on getting those institutions in place now. That was the irish Prime Minister, paschal donohoe, speaking exclusively to bloomberg. Jeremy corbyn has denounced antisemitism as file and wrong as vile and wrong. After a chiefame rabbi are tucked his record on dealing with antisemitism cases a few weeks before the election. He stopped short of apologizing to the british community. I am determined that our society will be safe for people on both sides. I dont want anyone feeling insecure in our society. And our government will protect every community. So no apology . Against the abuse they receive on the streets, on the trains. No apology . Any other form of dust. We will try one more time. Hang on a minute, andrew. Can i explain what i am trying to do . You have. I asked you if you wanted to apologize. I dont want anyone to go through what mr. Corbyn, i was asking you about an apology. Nejra the Muslim Council of britain also accused the conservatives of approaching islamic phobia with denial and conceit. It says the party has a blind spot for this kind of. Racism Patrick Armstrong is still with us. Is there complacency in the markets on what the pound and where it will be . Patrick probably. The polls are pointing to a conservative majority, which would likely lead to that going forward. I think there are a lot of risks for the u. K. Economy in 2020. If we get the Withdrawal Agreement approved, you still have a cliff edge at the end of the year. You have got the year to work on a trade deal. By no means is that is certainty. That is a significant headwind for the u. K. Economy next year. I would not want to belong sterling right now. A is still going to be challenging year. You also have the potential for parliament. There will probably be a lot of fiscal stimulus, whether it is conservatives or labour. Both of them have very strong progrowth policies. Nejra you are not actually long on sterling but you are short on pound. Boris johnson faces a much bigger battle in 2020. Also in terms of the actual outcome for the election. Bloomberg has a piece out about four ways it could go. Obviously, you have the conservative majority, a hung parliament, and Prime Minister Jeremy Corbyn or labour in. In three out of those scenarios, no deal risk raises its head again. Patrick the will of parliament is to avoid in nodeal brexit. I dont think europe is exhausted, i think they will grant an exception if parliament votes that they request it again. Nejra you have closed your shorts on sterling. What about in the gilt market . Patrick no positions in the u. K. At all in terms of equities or bonds. We have some corporate debt in the u. K. You are getting some reasonable spreads on bonds. We are tactically playing areas where you get some spread. But the u. K. Economy is going to face headwinds. There have been some members of the boe talking about a hike. I think there will be no need i, donte from the boe think there will be a cut either, because you will get fiscal stimulus a labour government. I think that will offset the risk. Nejra what is it you dont the upside,l be to if, for example, we get a conservative majority or some uncertainty . Patrick you could get some use that the market moves up on that, but by the time you get to december, it is unlikely the ambitious plans of Boris Johnson of getting that trade deal next year and getting it approved. There are a lot of unresolvable issues that we would not get to buy december. That will be the cliff edge have to worry about. Nejra how does the your view of the u. K. Translate into how you might invest on europe . We have seen quite a bit of flows into european equities in the past few weeks and months. Would you want to be buying european equities . Patrick we are neutral on europe. We think it will come in at 1. 1 next year. Which is great. Growth is incredibly good. If you want to be playing value, we prefer japan to europe. Both regions are cheap. We think a trade deal will benefit japan much more than it would the broader european market. Nejra what about fixed income in europe . You talk about corporate debt in the u. K. Do you like corporate debt in europe . Patrick we have highyield debt in europe. It is an area where we dont think there will be a significant increase in a false. We think the ecb might have to extend its quantitative easing debt. More corporate. Anything you can pickup is reasonably attractive not incredibly, but reasonably. Expectbe at the you the curve steepening in europe as well . Because expectations could be qeat it is more about rather than cuts in the deposit rate . Patrick i dont expect steepening in europe, i think you will have a relatively flat curve for most of next year. Nejra dollar, finally, in relation to the euro, does the Dollar Strength continue . Patrick i dont think it will, i think there will be a lot of political uncertainty. In the United States next year you have got impeachment risks, election risks, and the currencies are all very cheap. Versus the dollar the dollar is expensive. Nejra if you were to go longer pound versus the dollar, what would you need to see to go out right long . Patrick i would need to see progress on the trade deal. I would like to really see pmis store to pick up and investments where corporates are really having the confidence to invest in the u. K. Based on the confidence that we will get a trade deal by the end of the year next year. Nejra Patrick Armstrong, thank you so much for joining us. Chief Investment Officer at plurimi wealth. In a recent letter to the companys board, a shareholder said tom barrack should step down immediately as shareholder and ceo of colony capital. Here is dani berger. Dani this year has seen its share of highprofile Asset Management researchers. Tom barrack is under pressure from one of its shareholders, blackwell capital. He said he will depart in 2021, but blackwells has insisted the real estate manager step down immediately this was. In a letter to shareholders yesterday. Blackwells holds only 9 of shares, but still, it criticizes his role as the head of President Trumps inaugural committee, which is currently under multiple investigations. It says he is distracted and already has had an abysmal record. Also under fire, tom barricks socalled frankenstein combination with northstar Asset Management and Northstar Realty in 20. 17 i want to show you how much this threeway merger has weighed on share prices. It took place in january of 2017. It has fallen 66 from more than 60 of its value wiped out. You can see how its peers have performed look. At what happened this year in and colonylackwells capital make an agreement to add three Board Members. An additional 21 gets wiped out. Blackwells now saying that a dramatic change needs to happen soon and if not, it could face a shareholder after this. Nejra bloombergs dani berger, think is so much. Coming up, london decides not to renew the retailing rideshare license. S we speak to the boss of a competitor, next. This is bloomberg daybreak europe, i am nejra cehic in london. Today, the Au Parliament is scheduled to vote on the new commission. If confirmed, ursula von der leyens commissioners team will take office in december. Nejra data to watch out for including corp. Ece for the quarter core pce for the quarter. Plus, watch Electronics Company omi earnings for its third quarter. Hoovers drivers Screening Program is inadequate and is a primary reason for it not getting a license. Competitors are wellpoint to take over ubers misfortune. One of them offers an alternative to uber pool. Isg us is maste mariusz zabrocki. They will continue to operate will be up fields decision while they appealed this decision. Prepare forneed to this challenge. Obviously, scaling up within a very short period will mean we need much more capacity. Nejra how do you plan to actually avoid the issues that are plaguing uber in terms of safety, driver verification, why do we think the challenge is uber is facing our challenges you will not face as well . Drivers we verify all facetoface, we train them facetoface, we check all of the documents facetoface, they wenot upload documents, check them facetoface. We are in touch with tfl, when there are any changes to our app that could materially change the really operate. Nejra what kind of conversations are you having with transport for london . Mariusz that is regarding new features, new classes. Electricy introduced glass, which is the First Electric glass in the u. K. And one of the first in the world as well. You talk about scaling up. Currently, you are free to drivers, 800,000 customers in the u. K. Uber says it has 3. 5 million regular users in london. 45,000 licensed drivers. That is a big gap to close. Manus we launched in may. To 800 in a short time thousand customers, so i think that is a continuation of the trend. Nejra how much are you spending on customer acquisition, and how are you finding it . Bmw is funding our acquisition. Discounts and incentives for drivers to convince them to try the service for the first time. Nejra makes sense. You launched in london in the early summer, with generous discounts of up to 60 . How long will that continue, and how is it going to impact profitability . Mariusz the impacts are mostly for new customers. It is all about retention, and or retention is focused on a Loyalty Program and on providing Better Service than other competitors. Your brand,rms of you actually rebranded. You talked about your owners, the end of the and daimler bmw and daimler. They have come up with a new name. Is there another rebranding coming in the near future . What is the direction on the on how the Group Integration work . Mariusz right now, we are focusing on technical integration, the way we process payments, for example. In terms of branding, there is a different Customer Base for black cabs, that is where we have separate brands. Nejra if i understand correctly, you started with kind of the business consumer, then what you try to do was encouraged the consumers to use your service personally. How well is that working . Mariusz it is working great. We are growing very fast in all three markets we operate under the kapten brand. We started targeting welloff customers, but now, we compete x mostly. Nejra when those discounts stop, because you are talking about them being for new customers, how do you actually retain those customers, given that there is much competition out there . One day after we heard the uber ban, we heard about ola launching in london . Mariusz what we have is a Loyalty Program which is quite unique in the industry. We also are one of the most socially responsible players in the market. Like i said, we have an electric class of cars. We focus on reducing emissions. We. Runs and donate the price at it goes to charity. Nejra how do you plan to actually treat drivers question mark are you concerned they will want to be classified as employees . Will you have a different relationship to drivers than uber has . Mariusz they way we work with them, they can work with any company they want, any hours they want. It is not unemployment anationship it is not employment relationship, it is contractual. Nejra how are you building your relationship in terms of data sharing, information sharing . You feel secure in the relationship you have with transport for london at the moment . Mariusz we both have the same priorities, safety for customers, which makes our dialogue really easy. Whenever we see, ok, this is doing, for safety of customers, we follow the guidelines. Sometimes we also come up with our own ideas and tfl supports as in implementing them. Nejra is your price point different from uber . Mariusz yes, we are slightly less expensive. Nejra thank you for joining us. The final throes, donald trump says phase one of the trade deal is near completion. Next. Ng you the latest, plus, incoming european Commission President ursula von der leyen, as her team faces confirmation votes in parliament. Dont miss that conversation after 3 00 p. M. London time. Remember, if you are a bloomberg subscriber, you can interact on gtv. This is bloomberg. Hey. Hey. You must be stevens phone. Now you can take control of your home wifi and get a notification the instant someone new joins your network. Only with xfinity xfi. Download the xfi app today. Nejra good morning from bloombergs European Headquarters in london. I am nejra cehic. Donald trump says phase one of trade talks with beijing are near completion, but the fallout continues as chinas economy shows a continued slowdown. N the u. S. , solid growth british carmakers say the next u. K. Government needs to deliver a world beating trade deal. Jimmy corbyn defends his party amid allegations of antisemitism. The European Parliament votes to confirm the new commission today emma we are live in strasburg speaking to incoming president. Welcome to bloomberg daybreak europe. President trump says a deal with china is in the final throes. , dow and nasdaq hitting records again. Gains in theted european session, and we could see another day of muted gains. Not a lot of direction, but ftse futures are firmly in the green. We did see yields slide yesterday. Slipping. R bund yield a little weakness in cable with that conservative lead in the polls narrowing slightly. The futures market not getting us a lot of direction. The 10 year yield in the u. S. Steadied. Right now trading at about a 170 handle unchanged. New category Revenue Growth at the lower end of its 30 to 50 view. At the lower end of that range, that is the red headline coming terms ofrom bat in that. Looking through the statement, some of the takeaways, the business continues to perform well. Expect Strong Financial performance on an adjusted basis. They talk about strong results in the u. S. And good Revenue Growth in new categories in the second half. It is that red headline you want to focus on, its fullyear Revenue Growth at the low end of a 30 to 50 view. Lets check on markets in asia, Juliette Saly has more. A fourth day of gains, weakness in china, and focus on the aussie dollar. Juliette absolutely, a lot a focus on australia in general. We heard from the governors saying they will not be looking at an unconventional monetary tool unless the cash trade gets to 2. 5 . If you look at what governor lowe was signaling, they do not think you will get that level by 2020. We heard this call from chief economist bill evans saying they see another two rate cuts by june next year. Have a look at how the aussie , andr reacted, falling yields on the short end. The three year deal down eight basis points, six basis points on the 10 year. Nejra Juliette Saly in singapore, thank you. President trump says the u. S. Is in the final throes on a deal that has been in the works for two years. In an interview, trump said he is holding up the trade deal to ensure better terms for the u. S. Joining us now is simon french, chief economist, Panmure Gordon. Are we getting too optimistic about phase one . Simon if we were to literally interpret the president talking about the final throes, that is what you normally talk about when someone is on their final deathbed. He was having liberty with the english language. Deal will be done, but that makes the risk to the downside that there is disappointment. One thing we talked about, no this to should expect disappear any time soon, this will be a multiyear, multidecade issue. We will was and wan. Will it wan over the next couple of quarters . Cuts offsetthe fed what you described . Ofon i think the level Monetary Policy that is transmitted into the u. S. Economy in terms of the 100 basis point cuts in mortgage, and in aaa and corporate debt, that will pass through with a bit of a lag. We expect 12 months to 18 months of lag before the full impact. At an aggregate level, it seems that is the case in terms of indicators suggesting we will be butnd the 2 growth mark, it will be asymmetrically distributed. The winners and losers from lower rates and tariffs will not be the same group. We will see corporate reporting saying we do not see any benefit. Selection that will be key to determining the winners and losers over the coming nejra quarters of corporate reporting. I want to come back to the final if that does mean we do not get the pause on the december 15 tariffs, and maybe do not get a phase one deal until the end of the First Quarter 2020, should the fed think about cutting again quickly and soon, or stay on hold . Simon it will be a big reversal from what we have heard from Jerome Powell monday, and from the fed minutes last week. Toy conditioned the market expect a couple of quarters of no moves in Interest Rates. Respond to fed would no phase one deal, and a rampup , but we question whether that Monetary Policy response at the macro level might set off trade fictions trade frictions. Therefore you have real distortions in the market which makes it difficult for Monetary Policy alone to deal with. Nejra how optimistic are you about an Inflection Point of Global Growth in 2020, and how long will that last . Simon you have been reading my notes, which is great. That is what i see, q4 this year was always going to be the point easierh the costs become for industrial, and build a cycle. We think growth will pick up not hugely but pickup from here, and more cautious for 2021. Post residential election it becomes harder at this point in the growth cycle to keep growing at that rate. 2021 looks tough. Nejra you mentioned the industrial slowdown. In china where he got data showing profits at Industrial Enterprises fell for a Third Straight month, the biggest drop since 2011. Early indicators also point to a seventh month of slow growth. Are joined from beijing. The question is, what this industrial rough it state tells us about the impact on the labor market and the prospect for big Bank Stimulus from china. Tom the prospects are small, at least if you list the pboc and is economists with their year to the ground. They say the central bank will continue targeted measures. Cuts to the mediumterm lending, financing, and alone prime rate which is the benchmark here. Is what youing should expect, but the data we saw today underscores a continuing easing bias from the central bank. Another black mark in terms of the health check of a chinas economy. Industrial profits falling to a record low. A drop of 9. 9 in october in september. Prices are falling, they are in deflation. That is causing questions for the ability of these companies to invest. A point of hiring, will they cut back on jobs. That would be a concern for policymakers. Gaugee bloombergs own leading up to november, that leads to a seven strain month of seventh straight month of slowing growth. 10 in the first 20 days of november. Painting anies are pessimistic picture. The weakness continues, and the focus shifts to the pboc. Much tomank you so mackenzie joining us from beijing. Lets get back to simon french, chief economist, Panmure Gordon. Is that all that is needed, targeted stimulus . Simon no, a significant amount chinas needed by policymakers. We talk about diminishing returns and embarking on a stimulus program. Publict expansions in sector spending, a weakening of the yuan, that is a policy response similar to what we saw in 2015. We saw initial plaqu plateauing, and that tells you the same policy response has not generated the same inflection more will therefore be required. But you look at the stimulus generated in the downturn in the first place. In 2016, it was not the trade war, now it is. Front and center is if beijing can push through the phase one trade deal. That may see an upswing in economic activity. Nejra if a different stimulus is needed, what is holding beijing back . Do they want to keep the dry powder in case the trade war gets worse . I remember comments were the pboc said they are one of the few Central Banks where they have policy tools to implement, and they want to hold that position. Is that what is behind this . Simon perhaps. Ask yourself how much stimulus can an economy absorb . If you do stimulus, doubledigit spending,in public money supplying increases. Economychinese efficiently absorb that . Limit is more likely to be the reason policymakers are not going faster while trying to secondguess the geopolitics. My guess is that would be the reason we have not seen more and faster at this stage. Ofra on to the question whether this will impact hiring and the labor market, an area and isc wants to protect important in their strategy. Are you concerned numbers like we have seen today and any other forward indicators you are looking at will impact hiring and the consumer in china . Simon the passthrough from industrial profits to the consumer will come with a lag. A lot of this stuff is the degree to which it is persistent and changes decisions that come not daily they do not respond to the headlines the same way the news media does but on a biannual basis will be revised downward. Factory pricest going lower. That has implications for consumer expectations, but around the world. The central bank response, the inflation picture in the u. S. , if there is a spillover, does it give the Federal Reserve more leeway to make an argument on a deflationary basis for why they might need to cut further. Nejra you literally took the question out of my mouth, if we should be worried about china exporting deflation. Should we be worried about that now . I did you read your note, youre talking about reflation. Simon we are talking about reflation on the backend of 2020, the nearterm, q4, the first half of 2020 where all Producer Prices not just in china, in the eurozone, in japan, in the u. S. , Producer Prices are heading lower. My expectation is the backend of 2020. Will central bankers hold their ,erve in the first half of 2020 and say we can see through that the second half of the year, or they blink and we conclude they need to provide more stimulus . I do not think wi do not think they will blink. Nejra british carmakers are calling on the next government to deliver a world beating brexit trade deal. The Industries Key requirements include a frictionless border. Carmakers say they spend more than 500 Million Pounds preparing for the u. K. s exit from the eu. Said hehouse official waited months without any response, he told the house impeachment inquiry that officials learn to mid july that President Trump directed the aid be held up. The congress has invited the Vice President to the impeachment, and President Trump has called inquiry a witchhunt. The owner of Manchester City has agreed to sell 10 , according to the financial times. Business is valued at 4. 8 billion, a record for a sports team. It shows how surging tv revenue is drawing attention from investors, including silver lake which is focused on tech companies. Coming up, denouncing antisemitism, Jeremy Corbyn says it has no place in the labour party. More on the u. K. Election next. If you are traveling to work, tune into Bloomberg Radio in the london area. I will join you there for the market open. This is bloomberg. Nejra this is bloomberg daybreak europe. London. Ra cehic in yesterday we saw the s p 500, nasdaq, and dow hit fresh records again. Calls tott is facing step down from his investment firm. A shareholder said he should step down immediately. Here is dani burger with the details. Dani this year has seen highprofile managers depart, but this is unique. We are not seeing pressure, but is the weighing shareholders who are calling for barrack to step down. Blackwell insists he leave immediately. Hold about 1. 9 of the shares, a small amount but searing words from the investor eadnting out he was thbe h of President Trumps eggnog ural committee. They say he is distracted, and there is an abysmal record behind him. Also a frankenstein combination with northstar Asset Management and realty in 2017. I want to show you how much that merger affected share prices. 2017, and shares have plunged more than 66 . It continues to underperform its peers. An agreementy made to add three Board Members and undergo strategic review. Since that point has lost 21 . Like wells has said if the company does not make a dramatic change, it will face a shareholder exodus. Nejra lets get a roundup of the other top stories with the Bloomberg Business flash. Another swedish bank was used for money laundering, according to the state broadcaster. Cashn trace the flow of back to the death of a Prominent Russian lawyer. 475 million Swedish Krona can be linked to the Company Involved in tax fraud. Anymaintains they have not evidence of systematic laundering. Years of inaccurate reporting on it capital and liquidity levels. Between june 2014 and december last year, three units have significant flaws in the system to give Financial Information to regular is. Pastsays it has moved reporting issues. Hp planning to go to shareholders, the latest push for a deal. Xerox said it will not apologize for its aggressive tactics for pursuing a merger despite being spurned twice. They will call on the hp board to pursue a compelling opportunity. U. S. Aviation regulators have determined to retain control of the grounded 737 max 8 as boeing prepares to finalize fixes for the plane. Relatively routine approval suggests coming off the assembly by agencybe done officials. Boeing says the max will return to the skies before the end of the year. Announcedbyn has antisemitism as vile and wrong. Jeremy corbyn has announced antisemitism as vile and wrong. With the bbc, he stopped short of apologizing. I am determined our society of all for people faiths. I do not want anyone feeling insecure in our society. I will protect every community. That theyst the abuse receive on the streets, on the trains, no apology . I will try one more time. Can i explain what we are trying to do . Have, i am asking you if you want to apologize. I do not want anyone to go through what anyone has gone through. You have said that several times, i am asking you about an apology. It said the party has a blind spot for this kind of racism. Simon french, chief economist, Panmure Gordon is still with us. We saw the pound fall a little bit. Lead forwing erring the conservatives. A narrowing lead for conservatives. Is in theers, it constituencies where they account for more than 10 of the electorate, will this resonate more broadly . Simon sorry appears to be the hardest words for Jeremy Corbyn. In terms of your question if it resonates, i think the degree to of thehey see the leader opposition as Prime Minister in waiting, and those behaviors, perhaps call it a blind spot dealing with issues in his own party tell you more about his ability to govern. It has to be said if you look at some of the leaders elected around the world, their personal conduct has not been first and foremost in terms of why the electorate vote for them. The takeaway is this is unlikely to cut across the broad sweep of things given how electorate is have behaved in recent polls. Nejra another poll this evening , one of the most eagerly poll, howhe mrp much of a game changer could this be . We have seen the conservative lead narrowing. Not really down in the weeds and politics, but why this poll is different, it starts to go into a constituency by constituency basis. 650u. K. Set up constituencies, and many it is not a straight two horse race there are the liberal democrats, the brexit party, and smaller parties who will be material in who wins that constituency. Adding this level of granularity will provide more assurance whether the macro polls reflected in a micro level. Data was very accurate in 2017. Nejra thank you so much for joining us. Simon french, chief economist, Panmure Gordon. Coming up, we will speak to the European Commission incoming president. This is bloomberg. Anna good morning. Welcome to Bloomberg Markets european open. I am anna edwards live from our European Headquarters in london. The cash trade is less than 30 minutes away. Donald trump says phase one of trade talks with china are nearly complete. Swedens state broadcasters says it can trace the flow of cash at scb