Johnson forced onto the defensive as the debate turns its attention to the National Health service. Manus a very good morning to you. Definedl about the jgb the gravitational pull to the downside. Waiting on at zero, the option results to come through. Much biggera question about the stock of negative debt. Will that diminish 20. Good morning. Nejra good morning. That is a great question. It seems to be driven about what is going on globally. The prospect on the optimism of some sort of resolution to china trade. Something the move to the upside is going to be limited because where we are now is going to pull the japanese buyers back into the market. Manus absolutely. Lets look at the jgb performance. You have the 234 billion dollars stimulus coming into the market from the japanese government. Level way growth above what the market had anticipated. For the firstero time since march. Blackrock. I like a bit of dr. Copper. You know what i saw . I cant tie that together with a sub 6 growth level. Nejra in that china story, they have the big months where they are going to talk about the growth target. We are digesting the china inflation data as well. Headline might be spiking, but the ppi still in focus. We have the asiapacific Index Trading in the red. Futures not getting a lot of direction. Ecb, though not much is expected from the meetings and the december 15 deadline, cable steady. We did see Boris Johnson hit a bit of a stumbling block in terms of the National Health service. The gap narrowing between label and conservatives. A hung parliaments to let prospect, but alive. Fact i can tell you for a that i am that contrarian. Tos turn our attention inflation that has accelerated to a sevenyear high. Producer prices extending their run. The cultural secretary says the u. S. Is unlike the to go ahead with the extra tariffs on another 160 billion worth of chinese goods on sunday. Lets bring in our guest host this morning, the chief Investment Officer good to see you. If i was a glass halffull man or woman, i would be saying, the u. S. Is making good noises, they are working aroundtheclock, and the chinese have rolled back tariffs. Good news. There is some good news coming out of china. He macro data in tariffs, lets look at it objectively. They were a bit hawkish in trades. I think it is interesting with the numbers this morning. It will probably force china. Just being positive that. Accommodate to offset these higher inflation that they are facing. Nejra good morning. Will they still stay accommodative in terms of policy . Overall, you could say that what they are really battling is deflation. This difficult dichotomy we can observe. Anything in the consumer side is doing well and in the business manufacturing side, it is struggling. The fiscal leeway, the currency. They still have ample room to act. They can look at volatility indices. Manus it is an eerily low volatility environment. It is the lowest since 2018 in shanghai. You have a rye smile on your face. Maybe im misreading the data. Where did we see the pop in a phase i deal . I get that you believe that it is too quiet to be true. I would tend to agree. We probably will not see that same increase in volatility. It is more interesting in the risk side. If we do not get a deal by december 15, i was looking at the macro, where basically they tried to see, where should the renminbi trade in case of the phase one . The december 15 not being achieved, that could create a cap on the markets. Nejra manus how risky could that be nejra how could that be for Global Equity markets . Equity markets already pricing the global upturn in equity pmi. That is true. We saw that over the last few weeks, that there seems to be a trump put in the market. We can see mr. Trump softening his stance on trade and vice versa. If we have some bad news on the , a more dovish fed. This has been the case for the last few months. That is currently the game in the markets. Was equityavorite markets being egregiously high. Do you think that is true . What does the u. S. Stock work at need to deliver plenty for next year. We know that this year is about earnings. To see some earnings growth. The s p 500 has been a tale of two markets. You have a lot of stocks which have been underperforming. It is an interesting chart which is the equal weight relative to the s p 500. Think about cyclicals. Think about value stocks. , theu go be on the s p 500 midcaps have been underperforming. The type of companies that lead the Market Going Forward, maybe that is a best Case Scenario, we breathee better Market Going Forward with more possibilities to the upside. Staying with us for the hour, thank you. Lets get the bloomberg first word news. Thanks. Two days ahead of the u. K. Election, health care has taken center stage with Boris Johnson having an awkward encounter with a reporter. The Prime Minister was confronted with a picture of a sick child forced to sleep on the floor because of shortage of beds at a british hospital. The paul puts his conservatives 10 points ahead of the labour party. Is embarking on three years of spending cuts as the Government Faces up to a widening deficit. It marks a shift away from the stimulus that has powered nonoil Economic Growth. With opec output cuts still he drag, saudi arabia will earmark less for subsidies, social benefits, and the military. Finance minister Mohammed Aljadaan told bloomberg keep plans to finance the government shortfall. We will have local markets and international markets. We will look at the market conditions. We will look at alternative government financing. We are making sure we identify the sources of borrowing that we have. It all depends on the market and the timing. In france, president emmanuel twoon is bracing for around of protests over his reforms of the labor Union Pension system. Last weeks demonstrations brought more than 800,000 people in the streets. Day onnews 24 hours per air and twitter. Powered by more than 2700 journalists. Thank you very much and hong kong. The latest round up. We are gearing up for the u. K. General election. We will bring you our special coverage right here. Dont miss it. Atis a program that starts 10 00 p. M. On thursday night. That is the update for you. The events and data points you should be looking for in germany. Deutsche bank hold its investor day. In the u. K. , the Fourth Quarter gdp figures out and the Prime Ministers do to collect the noble peace prize metal, but not without controversy. Radio tune into bloomberg , tune in in the london area. This is bloomberg. Manus im manus cranny in divide. Nejra nejra cehic in london. The french government is mulling a delay in the pension reform implementation the backdrop is Emmanuel Macron bracing himself or a new week of protests with the government and labor unions stick sticking to their guns and the battle over the reform of the pension system. They are now mulling a delay. s challenges mount, dont they . More pain on the pension side. Lets turn a retention to Deutsche Bank. Concerned about a protracted decline in revenue. Lets speak to our bureau chief. Today is a pretty big day. Definitely is. We are not going to expect any major changes to the targets or the strategy. Will have a lot of questions to put to the ceo because five months into the biggest restructuring in decades , there are a lot of doubts about the progress they have made. Movedare price has not since all but one of the named for future growth. Losses in revenues in the third quarter. He has already had to soften his Revenue Target for 2022. Investors are doubtful about the profitability target and the cost targets for the midterms, so saving is going to point out that he has made some progress, particularly in selling down unwanted assets, but investors will still be doubtful and there will be one big question looming he over it which is, will actually be able to stop the bleeding in terms of the revenue losses that Deutsche Bank is feeling . The headwinds from negative Interest Rates, as well as the slowdown in the German Economy has even more increased since he announced the new strategy in july. Nejra it is all going to come down to growth and it might be a day of fine tuning, rather than big changes. Our Germany Bureau chief, thank you so much. Coming up, dont miss our interview with the ceo of Deutsche Bank just after 7 30 am u. K. Time. Deutsche bank holds its investor day and the germans eddie w survey is out german zew survey is out. Still with us is the chief Investment Officer you were talking about equity markets, about there being an sort ofity now for some mean reversion and perhaps rotation out of some of the equity trades that have been popular recently. Is europe an area you would want to allocate to . Even as european equities have done well in 2019 . They did very well this year. Forward could see going is some kind of rotation in terms of sectors. You were just talking about banks. Banks is obviously a very important sector to watch because they have been a massive under performer the last few years and probably the biggest from the ecb policy. So, it is obviously in terms of of theon, one area markets that is that the cheapest compared to the u. S. That is a big question for the year to come. Will we see some rotation from these defensive stories . Some performance that is the big question. More aboutill talk that story, but i want to get a question about the bomb story. Inextricably linked to the banks is the repricing in the curve. Higher in movement bond yields and across europe . It will be be, but seen as three phases. Phase in the u. S. Was also pushing a recession. Then we moved to not a recession, but we are currently in a low growth mode. Are we going to see some acceleration . In the Manufacturing Business sides. Stabilizationome in the numbers. Look at the pmi for instance. The secondary is improving. We need to see this for the yield curve to start to steepen. Ecb bring in terms of creative policy for next year . Manus lets see what creative policy madame lagarde can deliver. Charleshenry stays with us. Lets get you around up of the business flash that we have. In hong kong. Thanks. About stanley is cutting 1500 jobs around the world as part of a yearend efficiency drive. It is weighted toward tech and operations and will affect staff and stales sales, trading, and research. Goldman sachs is being asked to raise new financing to revive wework,. Softbank is pledging 5 billion in funding. We are told that in order to make the deal more palatable to other lenders, softbank will be listed as the borrower and the company will be a coborrower. And that is your Bloomberg Business flash. Nejra thank you so much. Coming up, climbing back. Japans 10 year yield rises to zero, boosting the case that the easing program is sustainable. This is bloomberg. Manus it is bloomberg daybreak europe. Im manus cranny. Nejra im nejra cehic. Lets go to singapore. The chart that matters. Juliette i certainly do have that. The first time we have seen it happen since march. Very exciting in the bond market in japan. Due to waning demand of safe havens amid this likelihood we will see a phase i one u. S. China trade deal, also the slashing. So the boj we saw the yield at 0. 3 and that raised questions as to whether the central bank had to tweet their policy tools. We had another federate cut. Growth. Had annualized nomura saying this climbing yields may not last because we may start to see investors snapping up bonds that no longer have a negative yield. Thes lovely rounding up big move on the day in the market. Health Service Funding has taken center stage with Boris Johnson having an akward encounter with reporter. A picture of a child forced to sleep on the floor of a hospital due to a shortage of beds. Still with us is charleshenry. The imagery of jeremy corbyn, the ongoing daily battles in the polls, i sort of jokingly set at the start of the show that i must be an utterly good contrarian at the top of sterling. If it is a substantial majority as opposed to just for the tories, how much more upside is there in your sterling, sterlingyen . About the cable. Majority, case of which you needed to break the deadlock in brexit, then a move toward 1. 35, 1. 37 is possible. Lets not go too fast. Yes, there is a lead in the poll , but it is still a close call. Up with a hung parliament. Our base Case Scenario is for mr. Johnson to get the majority. There is indeed some potential for more strength for the cable and then maybe the best way to play that is domestic u. K. Equities, think about housing, the upside. There is some upside in this part of the market in case of a majority for mr. Johnson. Nejra are you wanting to participate in that upside now or waiting for the result . Or maybe even 2020. The uncertainty will not necessarily be over even if we get the majority. As that is the time to look at undervalued markets, there are a lot of things in the markets, the u. K. Domestic , it could remain in the Global Equity markets. Manus what about credit . The credit is the tightest that it has been. Global credit, what is currently happening, the higher , think about that where there is indeed some upside some tightening potential, then the worrying part of credit is frequency diverging from the rest. I think the attention needs to be in the week part. Nejra charleshenry stays with else with us. We will bring you special coverage in the election. Good morning from bloombergs european headquarters. These are todays top stories. China inflation hits a sevenyear high as the pboc is inn sticking to its easing japan. Jgb yields climb. Your cuts. Morgan stanley will cut 1500 jobs globally as part of efficiency boosting. Deutsche bank will finetune its goals. We hear from the ceo this morning. Pressure builds with two days until the polls open. Boris johnson forced onto the defensive. The debate turns its focus to the National Health service. Nejra asian equities and u. S. And european futures in a Holding Pattern ahead of a big week. The big news in bond markets, that jgb yield getting to zero. All the action from around the world. Manus we have a full lineup. Joining us, reporter Juliette Saly in singapore, niraj shah in mumbai. Dani burger in london. Juliet, what are you focused on . Stoking that inflation story in china. Absolutely. 110 increase year on year. This is of course due to the african swine. 19 is pushing prices up by on the month. You saw that into the overall inflation picture as well, with a rise of 4. 5 . When you strip out those food prices, it was subdued, but the main factor is what you are seeing with this divergence between consumer and factory inflation. Bloomberg saying this is unlikely to sway the pboc and they expect the current easing policy stance. Nejra thank you. Eye on insurance in india. What accounts for the optimism in that sector . Soft, butkets may be they. 22 points. Point to two points. There are media reports about how they might be extension in the limits for investment into Insurance Companies, up to 75 . Keep in mind, if this move goes through, Insurance Companies might give a leg up. Expensive stock still moving higher. Back to you. Manus thank you very much. Where, if at all, is there stress beneath of the surface . There is certainly stress in the options market. Something strange is happening there. Indexeshe time we see move opposite directions. Over the past two weeks, the banks and the s p 500 have moved higher. While the macro event is on the horizon between the u. K. Election, you can see the stress very clearly in indexes. These are demand for traders hedging against extreme events. That has moved to the highest demand since october 2018. They are preparing for the worst. Perhaps they dont expect it, but they want to be loaded up on protective options just in case. Nejra hope for the best, prepare for the worst. Thank you. Lets get to the first word news now. Thank you. Two days ahead of you caleb, the cap ahead of u. K. S, the Prime Minister was confronted with the picture of a sick child forced to sleep on the floor of the hospital because of a shortage of beds. Johnson is 10 points ahead of the labour party. Saudi arabia is embarking on three years of spending cuts as the Government Faces up to a widening deficit. Helped to power nonoil Economic Growth with opec still a drag on oil experts exports, saudi arabia says it will earmark less money for the military. People may have been killed in a volcanic eruption in new zealand. Dozens more were injured after two explosions on white island. Five deaths are confirmed with eight people unaccounted for. The injured and missing include local people as well as tourists from australia, the u. S. , britain, china, and malaysia. Chinas consumer inflation accelerated to a sevenyear high in november. Cpi rose four point 5 last month from a year earlier, faster than expected. Pricesle, producer extended their declines, dropping 1. 4 from a year earlier. The fifth month in negative territory. Russia and ukraine say they are committed to a ceasefire by the end of the year after talks in paris. The conflict with Eastern Ukraine has claimed thousands of lives with russia annexing crimea and moscow becoming more emboldened in the region. Meeting also secured agreements on a Prisoner Exchange by yearend. Dayal news 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. Bloomberg. Manus that is the latest on the news. Here is what you need to know. Morgan stanley cutting 1500 jobs , 2 of the workforce. Going totions are affect offices in london and new york. For more, dani burger has been looking at this. Another piece of bad news for the industry. It keeps it coming. Workforce, most of these jobs are coming from executives in sales and trading as well as technology and research jobs. This is a push for efficiency. It has been a multiyear slump for banks. Morgan stanley is not the only one has made cuts. Newlso has to do with these trading platforms. Perhaps human jobs are not as in demand as they once were. We are also seeing other banks like barclays. Over the summer they cut 3000 jobs. This is not the worst we have seen, but a bright note out of barclays, promoting 56 of their employees to managing director jobs. They are mostly coming from trading and Investment Banking. It shows the push they are making into Investment Banking. Against 33 of revenue in their last earnings. It is not necessarily a different story. It is just where barclays is concentrated in their efforts. At least for those 56 employees, more cheery news this holiday season. Nejra thank you so much. Power to the people. The fomc is holding a final two day meeting of 2019 where it will issue its latest Interest Rates decision. Policymakers are expected to aep rates on hold even after jobs report sent treasury yields higher. The meeting will include an update economic projections. These will signal whether policymakers are considering rate moves in the runup to the president ial elections. Earlier we were talking about the equity market. You said the pattern seems to be if things are worse on the u. S. China trade front, the market would price again more easing from the fed. How high is the bar for further rate cuts from the fed in 2020 . Hold. Seems to be on i dont want to over simple five. Oversimplify. To see if all of these tailwinds are producing effects in terms of Economic Growth, especially on business and manufacturing. When it comes to cutting rates, i dont think we know much about this fomc. We need to know more about the dots. There may be a dichotomy between the dots and what the market expects. With manufacturing, with the job markets, and the last question will be on repo. Which is also something where creating some stress in the markets. I dont think we know more about the direction and amplitude of those rate cuts for the fed. The market is pricing currently 25 rate cuts by march. Let us see. It is going to be extended anyway. Pushedthe market has cuts into the long grass after this year. Have a look at this. Its one of the this is bloomberg daybreak europe. Less travel south to have a dobby. The u. K. Is actually gearing up to vote on december 12. Tories are currently in the polls. Tough 24nson has had a hours after he refused to look at a picture of a sick child in the hospital in leads. Can i get your perspective, the markets are primed for a tory victory. They are going for a tory victory, but i want to get a sense from you. When you look at currency markets in the u. K. , are repriced to perfection on this assumed tory victory . Listen, it seems like many years ago, when i voted remain, but the issue is very different today. We need a clear majority. Cleand to move toward a and thoughtful brexit. That is what the markets need. The markets need certainty. It is good for the markets. More than that it is good for the private sector in the u. K. The key issue in the election is not just a majority. But Prime Minister johnson, does he get a workable majority so we can work toward early january were at by the latest the end of january agreements on brexit and then keep in mind, we have a full year to implement the new trading arrangements with europe. There is a lot ahead of us. A workable majority in the election on friday gives a jolt of confidence to the financial markets, the currency markets, but most importantly, to the private sector in the u. K. Area the u. K. Fuel to risk assets. The other being centralbank meetings. It has been a good year for bond markets in 2019. Going to 2020 than i anticipated. The private sector in the u. S. Has a lot of confidence and is performing well. Overall the consensus in abu dhabi is more positive than i would have expected when i came. About where you allocate capital. Mark carney to the loss of capital as a result of the referendum. I want to get a sense from you, if there is resolution and as you say a tory majority and a clean brexit at the end of january. Do you see a done deal . If there is a workable election friday in the , we will discount progress on the Brexit Agreement since so much has already been accomplished. I think it will begin. The confidence will really be in the private sector. Many of us look at london. London has weathered brexit fairly well. Real estate prices have stayed reasonably robust for example. The real issue is the private sector in york, newcastle, you get outside of london, how is the private sector doing . How are business is doing . I think we will see a bounceback in confidence even before the final agreement on brexit. Nejra we are digesting yet more data out of china today. The cpi data of course, we are looking ahead to the big meeting this month of policymakers, where they will set their growth targets going forward. I know that you recently launched a highyield distressed credit fund. You have investments that span different parts of the globe. Are you looking to make significant investment in china in the debt . Perhaps the distressed debt space . It is not in our playbook at atlas merchant capital. We would like to find a domestic partner down the road to do something, but i will tell you, being in the middle east, they are very positive on investing in china. It is one of the key themes of some of the sovereign wealth funds here in the wood dobby. Dhabi. In abu 50 or 60 of the external investments in the u. S. They are increasingly focused on china and within china they are focused on the tech sector. That was apparent when we were at the new economy forum. Can i ask you for your take on one of the big flashing signs in the credit markets . We saw cielo have a shakedown. Morgan stanley have a note out. I want to get your sense of how risky the markets are the moment. They say leverage loan defaults are going to double. We see a tough environment into 2020. Do you think we are in the beginning of a repricing of clos we should pay more attention to . Oni am far from an expert clos, but we have Just Launched focused ont fund distressed opportunities. Why are we doing that . We think over the next one to two years, there is a real risk of a crash in credit. We think that is really underpinning that, it has been 10 years, 11 years of real proliferation of credit given the lower Interest Rates, quantitative easing, all the things we have seen since the financial crisis. We have noted as well the weakness at the low end of the distressed market. What will trigger that we have seen some early signs, some Early Warning signs, but we do not know exactly when this will happen or what the trigger is. Could be trade wars . Could it be some event like that . We believe over the next year or two we are going to see a terrific opportunity to invest in distress based on a crack at the low end of the Corporate Credit market. Diamond, thank you for joining us today. Great to have you on the show. There is an extraordinary opportunity. That is what jp morgan is saying. Stick around for our morning call up next. Xt. Manus this is bloomberg daybreak europe. Nejra an extraordinary opportunity to buy under owned, heavily shorted value, and cyclical stocks into 2020, according to jp morgans global head of quantitative. What is he saying this time . The one who rose to fame after making the call in 2015 that equities would fall in the summer. This time around, he is saying you should move into value and cyclical stocks, that if you have not already, it is time to sell the over owned momentum low volatility and defensive stocks. This is not exactly a huge contrarian call. Value is on track to post its best quarterly gain since 2016. He says that rotation is not over yet. He thinks monetary easing this year is going to support value and cyclicals in 20. Cyclicals like energy and credit specifically. Adding to that, he thinks we are going to see more outflow out of bond funds into equity funds. That in itself should be supportive for the overall equity market. This is a call for cyclicality to be the winner in 2020. Nejra thank you. Still with us is the chief Investment Officer at, capital. How important is eight an upswing as far as fiscal and monetary support . Both are important. Just one comment on this. I have sympathy regarding this trade. It is one of the biggest things for the upcoming year. One caveat is if you look at earning expectations for next year, expectations are quite low. Talking about mid single digits. The cyclical part of the markets , expectations are pretty high. Etween 15 and 20 yes, it can work. Valuations are attractive, but they need to deliver. Position. O take some there is some downside risk. Briefly, would you want to bit more cash . 10 seconds. Cash is useful to take advantage of opportunities. You need also to be invested. Manus thank you. That is it from us. Good morning. Welcome to Bloomberg Markets the european open. Im anna edwards alongside a matt miller. Markets say take caution. Stocks see muted trading ahead of potential catalysts from Central Banks to the tariff deadline. European futures hold steady. Cash trade is an hour away. Year end update. Morgan stanley is cutting 1500 jobs globally as part of an efficiency push. Deutsche bank will finetune its goals. We will bring you my interview with the ceo shortly. Sanofi shifts focus. The drugmaker will end its hunt for new diabetes and Heart Disease medicines. We will see how that impacts novo nordisk. We speak to the ceo of that company at 8 30 u. K. Time. And jgb yields climb back to 0 for the First Time Since march. Stocks hold steady ahead of a Central Bank Decision this week. We are just under an hour away from the start of cash trading in europe. Let us take a look at whats going on in terms of the futures , in terms of european futures first off, after what we said was kind of a flat trade in asia overnight, we see ftse futures little changed right now. Dax and cac futures down. In terms of the u. S. Futures, let us pull up the S P Dow Jones and nasdaq emini futures. Still seven and a half hours away, but we see green arrows in terms of u. S. Futures. What do you see on the gmm . Anna just a second. Let me mention some breaking news. M a, we talked about this a lot rejecting the process increased offer. This is just eat rejecting the offer from prosus. We heard yesterday prosus decreased that offer. M a no doubtn to later on. Lets talk about the gmm. Flat, arenttle they . For european equities and indeed for the u. S. Session when we look ahead. On the gmm, negative moves in asia. Big picture for asia is we are down just a fraction of a percent. Not seeing very big moves on the asian session. We are in a Holding Pattern waiting for the ecb, for the fed, no change in rates expect it for either of them. The level of stability we can expect in 2020 or inertia, maybe. 20 19 deadline for trade is looming. I. Of stability while we wait for Movement Toward that deadline, or if there has been none, wait for the aftermath next week. Trade very much in focus. The pound getting a boost, despite narrowing of the torie poll lead. Mark cranfield joins us now from singapore. Mark . Very good to have you with us. Let me start by asking about some thing i have not mentioned yet. That is the chinese data. Moving around . It makes it difficult for the Chinese Government to guide the market when they have a cpi problem to the upside and a ppi problem to the downside. Some of the narrative suggests even if cpi is flying, it is showing signs of stabilization. What are your thoughts . It is a problem they have had for a while. A lot of that is to do with food inflation and specifically to do with pork prices in china because of the problem they had with having to call having to cull thousands of pigs. There are signs that is beginning to stabilize and even come down slightly. For some people, the peak in cpi has probably been seen. Pboc is probably willing to look ahead to next year when things are much more stable. They can probably get on again doing a bit of easing. It is a temporary factor from their point of view. They will probably soon start to make or whether they can go further with cuts or other kinds of interestrate cuts. It is not going to stop them for too long. We are not seeing too much disturbance. Equity markets are relatively quiet in china. Its got a lot more to do with waiting for this december 15 deadline to come along, see whether china does get hit with more tariffs or not. I want to quickly break in with some headlines from ted baker. Terday we told you the stepped down. Today the fashion house has said it will suspend its dividend. November trading was below views. The ceo linzie page is resigning. But when he for ted baker today. The dividend suspended. November trading has been below views. Keep your eye on that stock. Let me get back to Mark Cranfield from our mliv team and ask you, mark, we saw an interesting survey from the u. S. Overnight that citizens, they are happier with the Economic Outlook than they were two years ago, three years ago. General from a european perspective seems to have turned down. What is your view on the Global Economy . Is the u. S. An outlier . Course. Me extent of its very important for everybody else. When you have unemployment down 3. 5 , it is a signal the United States is doing reasonably well. The rate cuts have helped to underpin the economy as well. Such a major economy for everybody. If you have stability and a chance of an upside in the american economy, we will help spread it around the world. Because of china. They are importing less from europe then they were a couple of years ago. Even china is showing signs that it is beginning to turn the corner there as well. Europe is caught between the two. The prospects for next year certainly look brighter. With the euro having been relatively undervalued for a long period now, that will also help european exporters when the time is right for people like china to start buying their products. Reallyan avoid anything unpleasant on the tariff front between the u. S. And china, the Global Economy does not look too bad for 2020. Europe will certainly be a beneficiary of that. Anna what do you make of the move in japanese yields . We heard about the fiscal stimulus package being talked about, introduced in japan. 10 year yields increasing to zero. Such are the times we live in. For the First Time Since march. How significant is that move . Pretty significant. Japanese bonds have a habit of driving where other major markets go in the world. The last couple weeks, the focus has very much been on japan. We are back to zero. Might not seem very much, but its quite a significant move in the context of japan. Its a large market. This physical package which was approved last week should have a pretty good impact on the japanese economy in the first or second quarters of next year. Japanese growth should take off. We are seeing a gdp data this evenway above forecasting though the fiscal stimulus has not started yet. The bank of japan, they want to put more pressure on steepening the yield curve. All those are coming together and that will start to filter in two other markets. German bunds in particular have a close correlation with japanese yields. Where japan goes, people in germany will start to be looking back across treasuries as well. What happens in japan is important for all the major markets. Mark cranfield there, bloomberg mliv strategist. We both thank you. Thanks for joining us. You can check out the work of the mliv team and Mark Cranfield by going mliv on your bloomberg terminal. Coming up, we speak to saudi arabias former investors to the United Kingdom and the United States. We will bring you that interview. Live next. This is bloomberg. Anna 45 minutes or so to the start of equity trading. A fairly flat picture waiting for news around trade, waiting for the ecb and the fed to meet later this week. Saudi arabias oil giant will make its trading debut tomorrow, but how aramcos ipo will affect the biggest arab economy remains one of the biggest questions over its annual budget. The kingdom is embarking on three years and spending cuts as the government aces the widening deficit. Its Fiscal Program marks a shift away from the stimulus that has powered nonoil Economic Growth. Joining us now is saudi arabias former ambassador to the United Kingdom and the United States. He currently serves as the chairman of the center for research and islamic studies. His Royal Highness joins us now from abu dhabi. Good to speak to you. What are your expectations for the saudi aramco ipo . Yet to come to market. That happens tomorrow. How wellreceived do you think its going to be . Good morning. So far it has gone very well in the saudi market. Hopefully when it opens tomorrow, it will be doing even better. I think there is much to vote for for aramco. Not only in terms of its very professional leadership and work ethic, but also because it is an that is company acquiring not only skills and knowhow, but also markets and Job Opportunities for saudis. It is very dynamic and very stable and it deserves to be invested in. Everything has seemed to have gone to plan in terms of the aramco ipo, although it is a fairly, relatively local offering, what is saudi arabia prepared to do in order to bring in more Foreign Investments to the Worlds Biggest Oil company . This is what we are going to see tomorrow when it is open for investments from everywhere. I think this is where saudi arabia has been going the past few years. We are opening up to the world. We are inviting people to come in. Two things not only for aramco, but the saudi government that are very important in my view is transparency and accountability. Ofse are part and parcel mohammad bin salman. As you see from announcements, there is equal transparency and accountability. I ask you about geopolitical tensions in the region . In the spring of this year, there were fears we were going foree the region headed more direct conflict. There had been attacks on tankers, on aramco, of course. Why do you think we have not seen a continuation of that. A seekerngdom is not of troubles. It is a peacemaker. I just remind you the kingdom enter ending the we between and ethiopia try to bring peace rather than conflict. Others will try otherwise, but we will not be responsive to their provocations and we will pursue our policies with our friends, not just in the west, but also our region here, that peace is our primary objective. Matt will you work with qatar to achieve peace in the region . Have said there are positive signs the crisis will be resolved. Will saudi arabia reciprocate and work toward a solution there . Government to be able to give you any indication of where the official engagement between saudi arabia and qatar is. Theinitiative for bringing dispute to an end has been saudi arabias. We are the ones pushing for qatar to come back to the fold, as it were, and be a constructive member of the ecc. Saudi arabia and the United Arab Emirates and bahrain , boycotting qatar, was the sign that these three countries are willing to engage with qatar in bringing her back to our fold. The summit today in riyadh hopefully will have something to do with that. I am not privy to the engagements, but i think the signs are that something hopefully will come out of there. Anna will it be a disappointment if the emir of qatar is not at that gulf meeting and only the Prime Minister . Who needs to be at the table . The invitation went to the prince of qatar. , ihe declines to come personally would be disappointed, but i think business will go on. It is something that is was the case last year when we had the conference as well. E had several conferences the oic, the arab league, and the ecc, the america tar did not attend, but but dismissed the emir of qatar did not attend, but business went on. Anna the qatari Prime Minister is to lead the delegation to riyadh. That just flashed across the bloomberg terminal as you were saying you would be disappointed if the prince does not come. I guess that is your reaction, then . That is my personal reaction. Us. thanks for joining saudi arabias former ambassador to the United Kingdom and the United States and current chairman of the Foundation Center for research and islamic studies. Whyng up, we delve into saudi arabia is not counting on much of an uplift from crude prices in 2020. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. 40 minutes away until the european open. Mixed futures picture with ftse futures up a little bit. Cac futures and dax futures down. I have just come back over from those buildings behind me there, the Deutsche Bank headquarters, where i talked to the ceo. Im going to bring you that interview later in the program. I just want to bring a couple headlines across to our viewers that just crossed the terminal. The ecb is reducing Deutsche Banks capital requirement. They are reducing what is known as which is essentially a capital risk review. Saying they need to hold less in reserves in terms of systemic risk. That is really a vote of confidence. That is a positive headline for Deutsche Bank. It andd to the ceo about will bring you that interview in just about 15 minutes. Deutsche bank no longer required by the ecb or required now to hold slightly less capital than previously. Anna this is interesting. In our story we are seeing the lower bar may ease concerns the company will need to sell new shares to shoulder the cost of its overhaul. There is a big overhaul underway at Deutsche Bank, something you talked to the management about today. That is interesting. If they dont have ecb shares to pay for that overhaul, that could be market moving. Earlierey said to me they do not need to raise more capital and the ceo told me he really is focused on boosting the share price for investors. Today is an investor day for Deutsche Bank. Today is the day they are bringing this message across to their investors, but it seems to me a positive outlook, certainly for the Investment Bank in the Fourth Quarter. There is a positive outlook. Stay tuned for that interview in 15 minutes time with the ceo of Deutsche Bank. About what isalk going on in the world of european data. We are going to get key data points later this morning. U. K. Gdp, the german zoo indicator, we will keep an eye on sentiment there. Lets talk to bloombergs economics jamie rush. Good morning to you. Lets start with the u. K. Story. Is whether we going to show the economy not growing at all. That is overstating the weakness. The picture actually is about 0. 2 per quarter, which is just enough to keep unemployment steady. Uncertainty recedes after the election and so on, this is an environment where the bank of england is going to lift rates fast. It overstate the weakness if we see no growth . Is that looking at stockpiling effects . It is little base effects. We can enjoy it bouncing up and down. On a quarterly basis, that is going to show more. To seehat are we going in terms of the german indicator, the zew number . We have been disappointed with german data and it doesnt look good, even though the economy narrowly avoided an official recession. What we are going to see is more evidence that the that there is a floor being reached in the German Economy. Other surveys which are more reliable surveys of growth, they have all bottomed out. Growth is going to be slow in the German Economy. We now think these industrial sectors probably has shrunk as much as it is going to shrink. You dont expect to see continued contractions in the German Economy over the next year then . No, i think the outlook is for very slow growth. One reason why is uncertainty of global trade. We are seeing a more conciliatory tone between trump and china. This is actually going to be reducing uncertainty. The effect of that is going to start to be felt in 2020. Anna thanks very much. Jamie rush giving us a valuable heads up on the data we will get later from the u. K. And from germany as well. Next, we take a look at the events and data points you should be looking out for today, including Deutsche Banks investor day. German data, u. K. Data, looking at a Nobel Peace Prize ceremony taking place. We will keep you across all those development. Matt was giving us the interesting discussion points of Deutsche Bank investor day. That full interview a little later in programming with the team at Deutsche Bank. That is why matt is in frankfurt. In london, the sun comes up. Half an hour to go until the start of equity trading. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. Bloombergme back to markets. This is the european open. 30 minutes away from the start of cash trading across the continent and in the u. K. Dax futures are down 0. 2 percent. Ftse futures are up a little bit. That could all change. Theres a lot of news at the open this morning. Stay tuned for that. A year after a rare bullish oil, saudi arabia is not counting on much of an uplift from crude prices in 2020. The Worlds Biggest Oil exporter has designed next years budget under the assumption that brent crude will average 65 a
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