On. If we dont get more cuts, presume believe that is negative for oil prices. Eurosterling around the 0. 85 level. Got closer to it a little later on. This is a big line of sand for that pair. We are now up by 0. 2 . The hong kong story absolutely front and center. President trump signing a bill expressing u. S. Support for the protesters in hong kong. It is a move that threatens to complicate trade talks with china. There was a lot of reaction around the world. Not a welcomet is news, but the Market Reaction so far has been pretty calm, so to speak. Basically, its just another thing like having the tariffs. Its a thanksgiving present for everyone. This too shall pass. This was more posturing than substance. This is a real headache for them to try to figure out what is going to be a violation of human rights. How are they going to decide that . It is a foregone conclusion that he would sign, so china is prepared or was prepared for this. The new bipartisan consensus from both the u. S. Administration and congress is to prioritize human rights and democracy and not being override it by trade negotiations. I dont think they have hong kongs freedoms, hong kongs democracy, and hong kongs human rights in mind. It is all about china. Guy for more we are joined by david riley, chief investment strategist at Bluebay Asset Management. Tworade and hong kong inexplicably linked stories now . David no, i think there is still a bit of separation. I was talking with our chief economist who is very much of the view that the response from beijing will still be two separate political issues, including hong kong, from any discussions around trade. Thats been the approach more generally. So i think they will keep it separate, but it is also true to say hong kong is where dollar liquidity meets china. In that sense, it is a kind of stress point potentially for the financial system. Guy i guess one of the issues that china has said it will retaliate. It has said on a number of different occasions that it will tell you eight to interference in hong kong. It hasnt really done so the far. If they were to retaliate, that would further push the hawks in washington to maybe seek a tougher line. David well, the person that matters is President Trump, and i think trump once a deal. Hes been carefully talking up the market in preparation for such a deal. I know that weve been there before earlier this year, and then it sort of fell away, but i think when you look at how china and beijing has responded previously, it has generally. Een measured chineseont think the are going to ratchet it up, and i dont think therefore trump will do so. But what it does underscore is that even if we get a phase one trade deal, this political rivalry between the u. S. And china and ongoing tensions are going to be a feature of the landscape for the for siebel future. For the foreseeable future. Guy lets talk about what happens in the nearterm. Does it matter if we dont get a trade deal by the 15th . That is when the next round of tariffs go on. The assumption now seems to be that the u. S. Will simply bypass that and suspend the tariff increase for the time being. Markets do think that are on hold in terms of that phase one trade deal. I think our own perspective in terms of positive inflection in Global Growth into 2020 is conditional that we do get at least some reduction in trade policy uncertainty. Bed, but if out of theres ongoing trade negotiations, i think it would be pretty negatively. It is setting up for a bit of a rebound from what we saw this year. Guy it strikes me that in order for the Global Economy to do better next year, what you need is not status quo, but rollback. David i dont know whether you necessarily need rollback because some of the impact of the tariffs that have been imposed by the u. S. And in retaliation by china have already had some impact. So if we dont get any new tariffs, even if we get a skinny deal which doesnt involve some rollback, i still think that the headwind from the tariffs, from the trade policy uncertainty into 2020 will diminish. Clearly it is a better outcome if there is at least some partial rollback. Guy what you think is priced in terms of the p1 deal . Do you think rollback is priced at the moment . I am trying to work out, as you say, phase two looks really difficult. All the hard stuff is being left for what comes next. You get a skinny deal that doesnt have much rollback. Already markets ok with that . Are the markets ok with that . Do the risk assets move higher on that, considering the next phase of the trade negotiations looks increasingly difficult . That going think into the new year, theres going that quite a lot of money once the market to go higher. If there is a skinny deal, i think that will allow markets and risk assets to grind higher, even if there is no real risk prospect of phase two or some detailed negotiation occurring before this side of u. S. President ial elections. Lets be clear, there isnt going to be a phase two deal november of next year. Thereafter, i think we could be back into this sort of trade policy uncertainty. What actually i think could replace trade policy uncertainty is a drag on u. S. Capex spending , the u. S. President ial election. Weve got the primaries kicking in in the first quarter. Given given that, guy that, what are you expecting for growth next year . David i think the fundamentals are pretty strong, but in addition, i think we shouldnt underestimate the degree of monetary and financial conditions easing that weve had over the last four quarters. , ands been very meaningful markets react very quickly to that, but the real economy takes time. We are seeing some Interest Rate sensitive sectors start to pick up as well. I actually think we are going to get some positive sequential growth not only in the u. S. , but for the Global Economy. Guy lets think about the impact of that. This year, stocks have gone up because of lower rates. That has generated a 25 return on the s p. If the u. S. Economy is cruising next year, that multiple expansion story is not going to be there. So what drives markets higher . That we had noee profits growth this year. Bottom up earnings estimates suggest something next year which should be coming out of an earnings recession. Think some of the sectors within the s p that have underperformed have been those with a lot of foreign sales. I think some of the Global Growth will moderately pick up in 2020, so that will provide a low bit of boost. But we are in a mediocre kind of growth world. I think emerging markets, both markets,d local debt or the way to play that parcel reflation trade. Guy you wonder whether that ill are whether the dollar is going to move to make that happen. David will be sticking with us. Lets update you on some of the stories you need to know. Heres the first word news. The white house is pushing to wrap up negotiations on a new trade deal with mexico and canada. The agreement has become President Trumps top legislative priority. The democrats want to more enforcement of labor issues. Bus mexco Energy Canada say theres been progress. This may be a new test for President Trump over north korea. Kim jonguns regime has appeared to fire two Short Range Ballistic Missile tests. To end talksened if the u. S. Doesnt ease sanctions by the end of this year. A poll of the British Election campaign is protecting that Boris Johnsons conservative party will win its biggest majority in more than three decades, 68 seats in the november 12 in the december 12 elections. Itspoll closely predicted check with the european markets look like today. Like volume, down by circa 40 . The dax down by 0. 4 . Emanatingnarrative what we seem surrounding hong kong, the main driving story. This is bloomberg. Im guym london, johnson. This is the european close on bloomberg markets. Balanced oil market in 2020. Opec thinks that might be possible. Thats the latest signal the group will probably stick with its output cuts for its meeting in vienna next week. Joining us for a little bit more on this, annmarie hordern. Opec isreak down what saying, they are basically talking about a year of two parts. The first half of the year, you see a lot of supply coming on. You will see a fairly lumpy oil price during the next year. Annmarie exactly. They say they will be able to offset this with a deficit at the end of 2020. You are seeing a lot of supply outside of opec coming on. Shale,ray, brazil. Guyana, maintainpanies want to want opec toies cut deeper. Opec said they would do whatever it takes. I think part of it has to do with the fact that the saudis have always been the ones to corral the group. They are probably getting very frustrated with the level of compliance. Iraq is not complying. Russia is sort is not complying. For november, it will be the eighth months of 2019. They are copartner in this whole opec alliance. Guy in terms of what the expectations are for the oil price next year, a dip followed by the rise. Is that afflicted by a rise. Is that reflect by the curve . Annmarie there are some of the things that opec hasnt been able to get a grip of. Theres going to be this oversupply that every analyst is talking about. We will see prices go lower. Do they have a special emergency meeting in early 2020 . We dont know. If we get a trade agreement, that could help pick up the oil market. The other thing we need to keep in mind, the unrest and the level of all these countries that belong to opec. Iran has had protesters, iraq, algeria, libya. On one hand, the ministers cant go back to their countries and say we are going to lose market share. On the other hand, supplies could be disrupted. Guy lets talk a bit about aramco. Ipo is coming up. Its too late for the saudis to manage the price around all of this, but it is not turning out the way they would have anticipated. It is covered on a retail basis oneforone. That is kind of a risky play, isnt it . Annmarie it does beg some concern, considering all the stock the country has put out together excitement for this ipo. Theres advertisements on the go to the atm, log onto twitter, theres advertisements. As you say, one time over, a bit of a cause for concern. One of the banks that ipo to their was 23 times. We have seen saudi ipos go well and subscribed well, but this is just the retail side. We so have to wait for the institutional side, and crown nce mama been some on Crown Prince Mohammed Bin Salman is in abu dhabi, and looks like he will get 1. 5 billion from them. Guy lets get back to david riley, chief investment strategist at Bluebay Asset Management. Do you see upside or downside in the oil markets for 2020 . David it is certainly the case that u. S. Energy has been taking a bit of a beating. U. S. Highyield energy is running at 8 . Have Oil Producers basically been rerated on the equity side as taken out the equity buffer. Some of the productivity gains people thought would continue havent done so. I just wonder how much more we will get of that source because a hundred market to lynn into. To lend into. Guy at has also been a big employer. How much of a drag is this going to be on u. S. Employment . David it will be a drag on u. S. Employment, but its also been a pretty significant drag in terms of u. S. Capex overall. That is 50 of the negative contribution of capex that has been coming from the energy sector. With defaults running at the level they are in the restructuring of that sector, i still think that is going to play as a drag for capex and employment through 2020. Guy if the Global Economy is going to do what you say, is the european economy going to be one of the busiest beneficiaries of that . One of the biggest beneficiaries of that . It has been suffering from the down trough in Chinese Industrial numbers. Does that change next year . Is europe going to at least see a turn next year in its Economic Data . David i do think that is going to happen. We could actually get a situation where, in terms of sequential growth, actually looks better for europe than the u. S. Year for the euro area is going to be very weak, even if it just goes back to what i think will be some kind of trend level, 1. 25 . That delta is actually going to look quite positive. Therefore a situation with stabilization, china, some of the ems coming back as well, i think growth x u. S. Is going to have a stronger delta than the u. S. You typically expect to see a bit of a weaker dollar, stronger euro. Good for european risk assets. Guy that kind of fits with the argument that says if europe and u. S. If you are a u. S. Fund manager looking for where to generate outperformance, you say it is going to be exus. We are trading circa 1. 10 on the euro. How big an effect does that have if flows are positive into europe . David the extent to which largely depends on the strength we see in global trade and manufacturing in europe. Our forecast quite a positive sequential path, but actually come underlying growth is still going to be pretty modest. Essentially, europe is a one point is a 1 economy. But i could certainly see 5 appreciation of the euro against the dollar. Guy theres another argument that goes a little like this, and i hear it more in the states then in europe, that in order for the euro to go up, the data out of germany in particular has to get worse to prompt fiscal easing, and that is whatll to millie generates a better growth trajectory, which really starts to pull money in against the euro. David but to get a real break out, its clear that we do need a demand boost within europe, are supplyere still and economic form issues that need to be addressed. I am just skeptical that we are going to get that. We are going to get some modest fiscal easing. That is already kind of baked in. It is modest. What is going to be more important for europe in some respects is stabilization in china. Guy at the moment, the Chinese Industrial data does suggest that things are getting better, and its not hard to extrapolate into may be suggesting the idea that pmis, particularly in german manufacturing, are not going to improve from here. You could see those numbers getting worse again. David you could come about some of the forwardlooking segments of pmis have actually been improving, middling from a very low base. , therek at new orders has been, along with this global slowdown, much of it related to china, also a sort of global auto and tech correction as well, but again, i think it is just going to fade. I think the concern that ive china actually slows. I think we still got bad data chinahina, but that slows in a more pronounced fashion. Even with modest stabilization in europe, it is not enough to stop service being contaminated. I think that certainly is a downside risk. We saw a little bit of that was in the pmis, but i dont think that is the base case. Employment is still strong. Youre getting Household Income growth, credit growth. So i still think you are in a reasonable base case for potential growth coming out of europe, and that is going to be good for some of the assets in europe. Guy stick around. David riley, Bluebay Asset Management chief investment strategist, is going to stay with us. Remember, gtv allows you to browse some of the charts and save them for future reference. Gtv on your bloomberg. This is bloomberg. Minutes to go until the end of the european session. Very light volume today, down circuit 40 , because of the down circa 40 , because of the thanksgiving holiday in the u. S. ,he car sector has been off understandably given the trade narrative concerns generated by the president signing that hong kong protest bill in the United States. We will give you the full breakdown. The close is next. This is bloomberg. Guy 30 seconds until the end of regular trading in europe. European equities it is thanksgiving. Volume is unbelievably light. Im not sure you can take much away from todays session. If youre going to take anything, it is the trait risks have ratcheted up a little bit as a result of the president of the United States signing the hong kong protest bill. A very quiet session in europe. You can see that on the chart i have in front of me. This is the stoxx 600. Such a tight range we have trading today. Down. 1 . Let me show you the next chart. This highlights what the volume story looks like. Lets first look at the main market, then we will go to the function. The main markets look like this. 40 down notx, cac by much. The spanish market up a touch but basically absolutely flat. The nordic markets were down more. Very tight ranges. About what the back function shows you. Line, i hope it shows up on television, this is the average of the last 30 days, that is where we are. This panel below, we are down by 40 in terms of volume. We do get a spike coming into the close but not by much. Lets talk about where we have seen big moves and that is in the single stop story. Ets go to vodafone, down 3. 1 a big weight on the ftse 100. Vodafone has gone ex dividend today. Today is thursday. Virgin money is interesting. Branson still owns 13 of this. Up by 19 . The company suspended its dividend and that is to do with ppi. Is market likes what it saying Going Forward and likes its capital ratios and that is provided the upswing in virgin money. Remy cointreau is a cost story. A cost related story. The maker of cognac down 2. 5 today. Celebrations on that front. That is your european close. Largely driven by the lack of the United States involvement. That has generated Light Trading ranges and light volume. However, there interesting stories going on elsewhere. The politics story is certainly one of those ones we are watching carefully right now. Lets get back and talk about the u. K. Elections. According to a poll released last night by yougov, Boris Johnsons conservative party is probably heading for its biggest majority in more than three decades, all the way back to margaret thatcher. Yougov is known for being one of the few polls that came to call the 2017 election correctly. Bloombergs Francine Lacqua talked with yougovs Research Manager and asked if anything could change the outcome of the next two weeks. Chris i know we are saying there will be a big conservative majority, but if you look at the data, there does not seem to be a national a massive shift in terms of policy to change things. There are 30 seats where we have the conservatives ahead less than 5 . If you see the labour party starting to squeeze the National Polls and squeeze the 5 cap, it is easy to see how we could end up in a Hung Parliament territory. It is definitely possible. Francine are voters voting on brexit or policies . Is it spending for the character of the leaders . Chris i think it is all three. Brexit is clearly important. One of the big changes we are seeing is conservatives getting voters and labor not doing well, and that is why we are seeing big swings and the conservative seats in the north and the welands, the labor heartland wouldve previously called them. Labor will try to turn the issues back onto spending, things they poll better on. The nhs being the key example. This not the crucial difficulty that Boris Johnson is significantly more popular than Jeremy Corbyn and they are hoping to close that gap as well. Guy yougov Research Manager chris curtis. Still with us is david riley. Two weeks ago can you believe that poll . It seems that this election is closer than the top line of that suggests. David i agree. As chris curtis highlighted, it does not take that much of a move for there to be a Hung Parliament. It is important to remember that Boris Johnson, when he called this election, he needs a working majority. Guy what is a working majority . Is it 20, is it 30 . Is it 10 . David from a market perspective, i think he needs a working majority of 40 plus because the reason i say that is because what is assumed right now is no deal is off the table because of the withdrawal deal. If he can get a decent sized roomng majority, he has for maneuver as Prime Minister in terms of the subsequent trade potentially,. And , there will he said then be an extension of the transition period. If it is a small working majority he is back into the situation theresa may found herself in after the 2017 election. I think it is pretty much in the end, lots of young people registering to vote. Registrations are moving up. Guy you tend to get that closing of the numbers as you get toward the election. It does seem as if labor consistently has a late surge. David yes. In the squeeze of the middle party or the party in the middle and then going to labor and conservative. Thoughtprised me is i the labor democrats would be doing better, galvanizing the remain vote. At the end of the remain vote, want tos leavers leave more than remainders want to remain. Guy i want to break news we have had coming up that relates to Morgan Stanley. The details are starting to appear on your screen. Morgan stanley has ousted fx traders, multiple fx traders amid a multimillion dollar loss. There are more details to follow. There is a story coming out of the bloomberg right now. We are hoping within the next few minutes to get the author of the story on television and explain all of the details. That is what is happening at the moment. Morgan stanley ousting a number of fx traders as a result of the multimillion dollar loss. I think it involve e. M. Foreignexchange traders in a number of locations around the world. We will get to more details in just a moment. Lets come back to brexit. Done 20 , the ftse 100 has done 10 , does that spread why did next year . David i think it depends guy assume you get a brexit. You think that widens out . If i think if we get the u. K. Gets the brexit deal, the withdrawal agreement. Guy the withdrawal agreement, not the ultimate trade deal. David i think that is important. The ultimate trade deal will have to be made by june of next year. If not, that it is going to be an exit or an end of the trading relationship the u. K. Currently wton moving to the relationship. That will be negative to for the and week economy, which is looking week. The data is not improving and the u. K. It does matter. In the shortterm you get a working majority, the market ra, you get a decent pop in sterling, and then the realities of the situation will start to sink in again as we go through the first part of next year. Guy in terms of what the bank is going to do, the bank of england, u. K. Breakevens have been coming down sharply. Inflation expectations are low. Even if we get a brexit deal, even if there is some degree of movement associated with the exit regardless of where we go, do you think there is still looking at the Global Economy and thinking we do not have any inflict Inflation Expectations are coming by coming down. We have a tight labor market but that is starting to soften. You think a cut is more likely than a hike . A cut is more likely than a hike but i would not be placing a bet on that. I do not have a High Conviction on that. Irrespective of the outcome of the general election, we will get significant increase in guilt supply. Are still very negative in the u. K. If other Central Banks are on hold, i think the bank of england will be on hold as well. The issue of the ultimate trade deal do you think businesses will think i have to wait another year . Ceo, cfo, youre trying to figure out if youre good to make the big investment. If youre an Investment Fund you have to figure out whether to make an investment into the u. K. Is the uncertainty still great enough to prevent you making that decision . David i think it will be, because from a business point of a still relatively close relationship with u. K. Biggest trading partner, if that is one of your key end markets if youre investing in the u. K. , it matters hugely. Whether you have some kind of deal or whether you are leaving the relationship without a deal at all and moving on to this wto test. It iseing said, i think probably still more likely that Prime Minister johnson, if he remains Prime Minister, will not necessarily keep to his redline that he will not ask for a transition, or he will muddy the waters. He will have room for that, the greatlitically British Public will have concluded it is done, and then things like trade deals are secondary. Guy it is interesting you say that. There are schools of thought that go around. Getting the deal done once you take politics out becomes an easier process to generate. There is also another argument that says if he has a sizable majority, he can generate a softer brexit than currently is priced because he does not have the heart brexiteers sitting on his shoulder. David which is what i think is the outcome that is sterling rallying on on december 13 will need. , if it is aight Hung Parliament, even if it is a small working majority for the conservatives, that will come back into play. To 140, do from 130 we need a weak dollar or will sterling do the heavy lifting on its own . I think there is still reasonable brexit premium in sterling. I do not think we need a weak dollar. Guy a broadly weaker dollar . David that is a positive backdrop. Even this year seeing some modest strengthening of sterling and that has been against the backdrop where the tradeweighted dollar has gotten stronger as well during the course of this year. Onid not think you can get cable through 1. 35. Guy if you are looking around the world next year, is the u. K. Going to be in outperform or . Are u. K. Domestic stocks going to be up performers . As Investment Managers try to figure out where my going to get a little bit of extra return if i am looking at a world that digitenerate midsingle return on my equity portfolio . David a lot of investors are looking at u. K. Assets because they are still in that brexit premium, both in high yield, sterling credit, as well as some of the smallcap. If we get a physical boost and a pickup and Global Manufacturing and the u. K. Is still geared, a leverage play on global trade as well, that i think against that backdrop u. K. Assets can look quite attractive. Thatnot fully buy into because i think this election does not necessarily resolve that potential for a cliff edge. I think that is delayed a deal for the u. K. Economy. Guy we will leave it there. Thanks for stopping by. David riley, bloomberg Asset Management keep invested strategist. Lets check where the numbers are. Not much action. The ftse 100 down 13 points. A light volume session all the way across europe as a result of what is happening in the United States, which is actually nothing because this is thanksgiving. Those are your final numbers, the ftse down. 2 , the dax and germany down. 3 and the cac 40 down. 2 . This is bloomberg. Guy from london, im guy johnson. This is the european close on bloomberg markets. President trump has signed a bill backing the hong kong protesters and china is not happy. Beijing some of the u. S. Ambassador and told them to quit meddling in hong kong affairs. The chinese also warned the bill could affect cooperation in important areas. The u. S. And china are in the midst of negotiating a trade deal. Kim jongun may be underscoring the threat he made to break off Nuclear Talks with United States. North korea appears to have fire two Short Range Ballistic Missiles. They landed in waters between it and japan. Kim has threatened to halt negotiations if the u. S. Does not live nuclear sections by the end of the year President Trump has been ignoring Korean Missile test. Fires are still burning in a texas Chemical Plant after multiple explosions. Three workers were injured in the blast 100 miles east of houston. The plant is located near the Gulf Coast Oil refinery. In uruguay, there is finally a winner in the president ial election. A former centerright lawmaker. A one percentage point advantage over his rival, who has conceded. That puts an end to nearly 15 years of leftist rule in uruguay. Breaking news a moment ago. That story. The story surrounding Morgan Stanley that has ousted at least four fx traders into approach of ms. Market of traits ranked to emergingmarket currencies. Lets hear from Bloomberg Opinion columnist who covers finance at bloomberg. We know little bit. It is more about what we do not know. We know they have been ousted for potentially miss market their possessions and we know the loss may be as high as 114 million. What is interesting is to understand how long does this go undetected, who did it involve, how did it become known . A lot of questions this raises about the internal controls and internal procedures and potentially if this is a oneoff, is it a bad apple or is it more systemic of trading processes and controls that are not what they should be. Guy what we know about the assets involved . Anda i believe fx options an area that has had some difficulty this year. This is obviously just breaking, so catching up on the details. It is going to be more interesting how the firm has dealt with it than the actual product. It could be equity derivatives. Guy these positions in the market ripples that come across from that. Elisa potentially, if the market positions itself against it. Guy in terms of what this tells us about how far banks have come, what did we learn . Elisa this will be interesting to learn more about. Of the scale in excess of one billion pounds, but it does raise questions as to how this can come about in this day and age. Guy is this multiple jurisdictions or a single jurisdiction . Elisa from what i have just read, it is across london and new york. Guy a number of regulators are likely to be involved and bringing up quite serious questions about risk controls. Elisa how quickly the institution elected those regulators will be of concern to outsiders. Guy we will watch with interest. Great story. Bloomberg opinion Elisa Martinuzzi on this story that will be filled in as we go. Coming up, technical issues on social media as u. S. Viewers get ready to share pictures of your turkeys. We are apparently having issues with instagram and facebook. More details on that coming up next. This is bloomberg. Whether youre out here on lte. Or here on a wifi hotspot. Xfinity mobile has more coverage to keep you connected to what matters most. Thats because its the only Wireless Network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. And now get 250 off when you buy a new Samsung Phone during Xfinity Mobile beyond black friday. Plus, you can save up to 400 a year. Click, call or visit a store today. Guy from london, im guy johnson. This is the european close on bloomberg markets. Time for the Bloomberg Business flash, a brief on some of the biggest business stories. Issues on social media today. Users in the United States and the u. K. And brazil affect issues affecting facebook and instagram accounts. Hashtagile, the instagram down was the third top trending topic on twitter. The richest person in asia wants to get out of the news business. Bloomberg has used a billionaire wants to sell his assets to indias time group. The Worlds LargestSovereign Wealth Fund will expand its work for norways 1. 1 trillion Fund Reporting to expanding flood analysis for real estate assets. It has already cut a large part of it exposure to coal production. Apollo Global Management has raised tech data by 11 . Aollos move is proxied by competing offer from an unaffiliated distributor of tech products. That is your latest business flash. What if we got coming up . It is thanksgiving. Joining smith will be us on daybreak asia to discuss the latest jobs in Industrial Production data coming out overnight. If you are watching in the United States, have a very happy thanksgiving. Kind tohe weather is you and we look forward to return tomorrow. This is bloomberg. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. Is a paidlowing advertisement from time life. If there was a rule, he broke it. If youre in someone elses house and they leave you in any room alone for a moment, do you look in the drawers . I dont want to steal anything, i just want to know where everything is in case i mask. If a world judge of the word was unspeakable, he spoke it. There are words that