Lets have a look at the euro. Euro higher. The dollar continuing to go lower this morning. Over the morning, but course of several days, the dollar has been on a downward trajectory. Meanwhile, gold has been invoked. Is coming off one point percent. We see gold up 4 . 1182. Gold is back on as we see a push back in terms of a likely rate hike. As we see borrowing costs falling. Lets have a look at borrowing costs. We are seeing global bonds. The yields are significantly lower. 1. 99 . That is the lowest we have seen since april. Clearly we are seeing the yields coming down, bonds rising. We see a push back and a likely rate hike. Lets get back to the burberry stock. Unilever says pushing higher more than 3 . Earnings come and will ahead of estimates. Expecting just 4 growth. China is better. Online wrapping up, also record heat means the ice cream falls off the shelf. Unilever is doing well. Lower. China their concern. The woes hitting the luxury. Eller of trenchcoats, perfumes clearly it is to be a concern if china is slowing down. Aey dont have much of presence in countries that are doing well, japan, korea. The lando is set to fall, reducing its margin zalando is set to fall, reducing its margin. Jonathan i will bring you the price of burberry when it comes in. Yvonne, good to see you. Yvonne good to see you. Maybe we can all get some ice cream in asia. Look at this sea of green. We are seeing a rebound after two Straight Days of losses. Quite a day for investors. Recent u. S. Data showing Monetary Policy may not be a threat at the moment. That is pumping sentiment in the region. We are back to the straight of that news is good news. Up 2. 3 . Those chinese stocks in hong kong road rose to an eightweek high. The government says it is restructuring the telecom industry. Clearing out those smes. Big news out of korea. The central bank keeping policy unchanged. They need to flag some of the sagging growth and cut those forecasts for this year and next. End ons, i want to movers. We have been talking about japan not doing too well. That theany seems company failed to test the quality of its rubber products. Surged 24 after it said the Apartment Building was built on falsified data. Asahi cost a says that it falsified. Galaxy, earnings coming up three hours ago. We did see profit there. Improvement from a previous quarter. Up 13 . The bulls are back in the count. Back to you. Jonathan yvonne man. Stillopening thats waiting for the opening price on burberry. That is what is happening in the early session here in europe. Heres what is happening in today show. Commodity shop. We interview from goldman sachs. Chinas slowdown hits burberry. We await the bank of englands banking reforms. Jonathan so it is a commodity shock. A once in a decade event. Maybe even once in a generation. 50 crude is working its way through the global economy. Wealth is transferred from emerging markets to consumers in a developed world. To understand both sides, jeff 80rie and come up shots of trivedi joinsya me now. Jeff, youre been out front on this. , you say it is good to roll over. What underpins the current view at goldman . Jeff i think it is important to look at it in nearterm, longterm. Demand here at how the emerging markets have been weaker than what we have anticipated. You turn to supply from lowcost players like saudi arabia, russia, all surprising to the upset. Not opec production outside of the United States. Brazil,its norway, partially driven by weaker currencies. Youre looking at the u. S. And the government released a report that shows the decline in u. S. Production are much weaker than what we initially thought. You put it all together, markets more oversupplied than what we initially thought. Hya you see itks in the slowdown in burberry this morning. As you look across emerging markets, where is the biggest pain you are seeing . We have been in the eye of the storm. That is where the paint has been the most intense and immediate. That is where the currency move is the most acute. A little bit more to the mediumterm, while the commodity payment will keep the pressure there. It is places like china where the mediumterm growth impact their from the credit buildup that is likely to be even after the commodity draws up, that is where i expect lingering growth slowdown. Jonathan the demand side of the story we will get to that. Supply, i remember you release the report that 20 crude. I raised an eyebrow. Emphasize weto never forecast 200 and we never forecast 20. It is the idea of reaching stores capacity. It overwhelms the ability to store miller store oil. This never happens to metal. All you need is a parking lot, a chainlink fence, you can stack metal to the moon. Oil, you cannot do that. Once you reach stores capacity, have you get that correction . We estimate those numbers from around town from around 20 a barrel. Jonathan on the way down from 100 to the 70s. Went was a 90 we slower as the price would lower. It was about a flaw for crude. Do we have to think about a ceiling if crude start to rebound . Kamakshya we saw that the spring. What happened . Highyield markets opened up. Cash flows increased significantly. Drilling pick back up again. What is unique when we use new oil order is the fast cycle nature of sale. Hale. Ture of sal shale that number is 14 days. Jonathan were talking about supply. In your world, i want to give merging markets, there are going to be a lot of people who take those burberry numbers and say china, ugly ugly place. There are a load of emerging markets that have yet to industrialize. Do we have to have a big imagination to see 100 crude again . Kamakshya demand is something that is going to the desk that is going to drive emerging markets. There is a big transition to take it emerging markets structural story is not there. In the mediumterm, there are adjustments. The adjustments are the flipside of the Global Financial crisis. A lot of these emerging markets stimulate a bear demand to have a good crisis. Now we are seeing a flipside. Bear adjusting. When they adjust, it is going to be tough. Jonathan final question. Jeff, weapons being for five minutes and we have not discussed the Federal Reserve. When i look at the highyield market, that is where a lot of people saw the pressure for u. S. Shale. They find thanks tough with financing. Do you see that . Jeff it is a hindrance to investment. A segment of the producer market is relatively small. We put it all together, it it is around 750,000 barrels per day. When we think about secure , that group is not as important as the investment grade. That is where the core of the production comes from. We have to think about what drives their reduction process. Is also company management. Jonathan next, we talked china. Profit. S burberry the stock is down over 10 this morning. Good morning. Jonathan good morning and welcome back to bloomberg tv. I am Jonathan Ferro live of the city of london. 40 minutes into the trading session here in europe. Lets get a check on the equity markets. The stoxx 600 up by 5 . The dax up by 52 points. 1 . Tse 100 is higher by there is one stock deep in the red that i want to talk about. It is burberry. The slowing growth in china hitting Luxury Companies are with burberry highlighting the trend. Here is caroline hyde. Caroline check out this number. Down 11. 8 . The worst slump in burberry stock in three years. Pounds of their market capitalization. The big mess as a result. A quarter less than the market expected. Up 2 . The market was to see a percent, thank you very much indeed. Disappointment resounding. They are cutting their fouryear profit by half. No look are you getting 20 million pounds, youre getting 10 million pounds. It has to do with the asiapacific, more specifically all to do with china. They talk about a changing environment for Luxury Companies in general. The product mix, the geographic mix that this company has mix it more exposed. , 30 of their sales come from china. You had a slowdown in the economy. Meanwhile, the country has been doing well. Japan, south korea where they have seen significant weakness drawing the travelers over there. They are trying to rectify the situation here it situation. It is a bit late for this year. Genco a look at burberry, look at a very different company. Look at burberry, i look at a very different company. What is the story . Caroline that is what they have been highlighting in their results. It was last year that we saw the real pain for this Consumer Products company. The seller of the odorant, health care products. Indeed, they saw a 20 slump in china sales last year. This time much better. Unilever, well ahead of the 4 growth that was estimated. They are seeing a much closer comparator in china. Less doom include when it came to china. They are ramping up different ways of selling to china. Online. Alibaba, they have been making those sorts of hardship. They have been selling online. Not to mention the record heatwave here in europe. Magnums and ice cream flying off the shelves. Warning, a continuation of soft global markets. Jonathan lets keep the subject on e. M. In china. If a look at the earnings report, it looks like a flipside of five years ago. It is the opposite now. Is the opposite true of your forecast at goldman . Kamakshya i think it is the opposite. I think it is a natural progression. When you think back to the growth in emerging markets, china, youre not good to see those high doubledigit growth digits forever. Even in those forecast, we had growth slowing. There is a ship, it is a natural transition. What makes it more challenging is on top of the slowing potential growth in china, you also have the credit buildup, so you have a bumpy downshift. You are seeing the impact of that in a number of places. Jonathan i see three things, commodity shock, slowdown in china, and then another wave of the financial crisis. They all are interconnected. What is the key drive to you . Thekshya i think china is biggest driver right now. Wave,ome people call the what i think of is the imbalance that is both up and the emerging markets. They are all interrelated. , comparedg in china to a decade ago, china is a much bigger destination of final demand for emerging markets. If you have a slowing in china, he Commodity Prices staying lower for longer, that makes rebalancing that much more harder for emerging markets. Currency needs to move farther. That is what we expect. Then, to bring jeff f lets bring in Jeff Jonathan what is it . , whatthe commodity shock is going on on the demand side is much more compensated. We look in china, we have the rotation away from the investment side toward the consumer side. To capture that in commodity, what we like to do is to buy is to divide commodity. Capx commodities. If we look at demand growth rates, what we see is gasoline. Growth rates in china are 19. 1 yeartoyear. There is a strong bustling consumer there. We look at demand growth rate, steel, cement, theyre running 5 to 6 . Are seeing a slowdown in that investment side of the economy. A consumer side is still doing relatively ok. Jonathan is there a trade there . Jeff if you look at the Downside Risk and copper and iron ore. We would say you look at oil, youre sitting at the top of the cash coffer. , were sitting up in that the two ton range. We are seeing far more downside. Jonathan once again, another discussion we dont mention the fed when we talk about e. M. Our you guys saying we are over emphasizing the role of the Federal Reserve and the role of the emerging markets . Clearlya i think it is the biggest shock youre going to get. I think you can overemphasize. From an emerging market standpoint, u. S. Rate conditions from over two years. From an emerging market standpoint, the volatility has been there. We have been absorbing the shock. What matters are emerging market fundamentals. The growth. Rebalancing is to take place. It is the fundamentals they need to change for a more sustainable sentiment. Jonathan you have 20 seconds to tell me what countries they are. Kamakshya i think india is a top is on top of that pile. There are some others that are moving into the camp, mexico. The oil shock is an important thing for them. Marketsthe emerging still have more progress to do. Jonathan great to get goldman sachs. Thank you for joining us. Next up, we are going to talk about the bank of england and the regulation that could come out later today. Jonathan good morning. Here are bloombergs top stories. The bank of korea has reduced its forecast for inflation and economic growth. Meanwhile, it held its key Interest Rate unchanged. The country is weighing some signs of a pickup in domestic activity against continuing weakness in exports. Profit may fall 12 in the next year. We doubt put sent shares tumbling. Ceo defended his efforts to move back the company. Next year will not be easy. There is some pressure. It is not a complete tethered to what you read in the news and what you see in the stock market in china. We have to percent us and china. We bought the rest of commerce. We set the stage in china as we ave in the u. S. To win seamless experience for customers. Jonathan David Cameron will try to move his renegotiation for the membership to European Union to the next round today. That is followed by a full summit of eu leaders. Lets talk banking. Later, the bank of england will set up plans of the refinancing of european banks. The focus will be on whether lenders will be next line caroline we get the publication of a consultation on the reaction to the report. The ring fencing. The separating of your deposit, your Consumer Lending arm. Your face area from your more risky areas. The slicing off. Iss happens when your bank over 25 billion pounds in deposits. Lloyds, rbs. These are the banks in the spotlight that will be affected. Many are wondering could we see tougher capital requirements. We had it from the Swiss National bank earlier this week, wanting to adopt the tougher measures that the United States imposes. Demand for yet more capital . Is this a costly process. Estimates it could cost 3 billion pounds. Balance 4 billion pounds per year. Hsbc, thee barclays, more banks. Spellys would have to itself into a different units. Hsbc talking about moving 1000 of its london employees to birmingham. It is safer for its Consumer Lending unit. That could cost a significant amount. Remember the taxpayer paid more to bailout lloyds and rbs. Clearly, many feel the cost justified. Jonathan this is a global debate. When i look in the news in the last week, i looking at news out of switzerland. And terms of across europe . Caroline at exactly the same we not only have the Swiss National bank getting tough, butng the leverage ratio making it 5 against the wishes of rbs and credit suisse. Big to failt too rules. He came out just yesterday to say the eu bill which is considering doing what the u. K. Theg in on a loan on two big to fail area will harm the european banks. The United States is not going down this road of separating out the consumer versus the Investment Banking area. Frederick on their speaking out frederick on their is seeking out its speaking out. The world is changed. The problem of the structure is not at the heart of the crisis anymore. In the european parliament, they continue to work out how they tackle this crucial question on whether authorities should split up the trading from the more safer deposit area, so that we never see what happens in a financial crisis ever again. The fact that banks are hit by their riskier exposures and could fall on the shoulders of the taxpayer. Back to you. Jonathan skied lets keep with banking. England legal fees fell. Brian monahan says the company will continue to cut costs. Puts the headcount will come down the headcount will come down. The question is how do you do that . We had to do that very quickly. The cost were coming off as, and we had 58,000 people down to 12,000. Jonathan wells fargo also out with numbers. The banks Third Quarter profits beat estimates. The cfo said it is positioning itself ahead of potential action from the fed. We have told investors that we have added longterm assets to our Balance Sheet with an expectation that we are going to be in a lower than longer environment. If it moves up, that is great. We have not been counting on it. We are not foreshadowing it now, because it may happen, but we are not really handicapping it. Just go on the back of a busy week in the Banking Industry jonathan on the back of a busy week in the Banking Industry, Richard Hunter joins us to discuss the industry. Richard, great to have you with us. A look at the Investment Banking problems at jpmorgan. I look at what is happening domestically, the more retail focus. Be as ani want to investor . Do i want to leverage the Investment Banking story . Questionis a conflict it is a complex question. The dividend is probably 18 months ahead of rbs. You would probably look at lloyds. If you want to further the ,ield, you would go to the hsbc which despite is exposure to asian markets remains a robust bank financially. A big dividend yield. Potentially taking desk where you can see some of the value. You got the interest of the new ceo at barclays which implies a return to the Investment Banking side of which it was a major [indiscernible] prior acquisition to the crisis. Jonathan lloyds 18 months ahead of rbs did some may argue more, some may argue less. Sex hown banking far ahead is the u. S. And wall street away from the rest of europe . Richard it is a fair way ahead. If you bully down to images rate scenario, it is looking like the u. S. Will be the first to hike. Traditionally, that is good news for banks. U. K. Will be second. Europe, who knows . Terms, thatmedium would position the u. S. Banks as being in a positive place. It didn final question, you look at the regulations whether they switch into the higher you may have to raise more capital. The gale force regulatory headwinds in the shortterm is a region i want to avoid because of the relation that might come in. Richard you can extended argument. It is have to say difficult to not have simply with the view from that bank. Than ind is different 2008. Our banks in the u. K. Looking at capital cushions. Jonathan Richard Hunter is going to stay with us. 30 minutes into today show. Up next, luxury warning. Trouble on main street. Worst stockered its decline in almost three decades. Cameron takes on brussels. Prepared to tell europe it is time to talk. Jonathan 35 minutes into the Training Session here in europe. It was red for the first three days of the week. We goes green, black and green of the screen. Ftse 100 up by 1 . The stock 600 up by. 9 . The dax up by 80 points. Switch up the boards some interesting things happening in ethics and bond markets. The eurodollar dropping on dovish comments. We drop back to 114. 61. Cable 1. 54. A much stronger pound of the last 48 hours. A week set of retail numbers out of the u. S. Yesterday. That hit the dollar, pound the other way. Yields. Treasuries, the below 2 . 1. 99 . Lets get you to your top stock stories with caroline hyde. Its burberry, it is the biggest thing in three years for this particular stock. It is on the back of a slowing china. They say the challenge is in china at the moment. The is what is leading to 10 growth and underlying retail sales. Just 2 in the market. Their profit will be in line with the markets expectations. Market expectations have downgraded to 10 million. They exceed expectations for lower profit. Down goes the luxury stock. Casinos. Side, the french retailer. A lot of bearish specs have been out on the stock. The numbers are looking pretty nice. Sales better than anticipated. France is recovering. Brazil, thailand sales not so pretty. Everyone expected that. Thece impressive in monetary. This is the best performing stock on the stoxx 600. Man group is doing pretty well. Despite the volatility they see. Overall an increase in management. Up 3. 8 . Traits here in the u. K. Thats 1. 4 billion. Some of their other strategies did well. During in more money. Loring in more money. Jonathan if you want a big stock mover, look no further than the worlds biggest retailer. One question, is there trouble on main street . Walmart stocks walmart shares plunge the deepest. They came as retail sales rose 0. 1 in september. Bloomberg talked to walmarts ceo. He says the company is doing with pressure. Here is whether Pressure Point is. We go from there. The bottom line is we have got the best we have got to get this Company Position to serve the customers and a longterm. And the longterm. With the investments we are making at the store level, it creates shortterm measures. Jonathan trouble online. Ethics share numbers. Fewer subscribers that netflix shared numbers. Fewer subscribers. It is not consistently the case that people dont have the same account number than some issuers are going to replace that number. Merchant,a recurring where we really want to does the friction of renewable and reduce the friction of having interaction we have to update your Payment Method and present an opportunity not to do that, it means there is more noise introduced into that. We think it is a contributor. Jonathan Richard Hunter, head of equities if i wanted a the it is a little more complex. Argument fors an looking at a bottomup approach. Were usually talking about the ftse 100 which has a disproportionate let alone the pharmaceuticals which have had a rough ride. Recognizingon for that within the ftse 100 there are a number of one class companies. Number of worldclass con worldclass companies. 4 , thereight be down jonathan 50signed dog crude jonathan 50 crude. I was told consumers would have more money to spend. I dont see it in the walmart numbers. You see it in amazon, maybe. Mainstreet, is there trouble coming . Richard it does beg the question that if gasoline prices are lower, does that mean youre going to use more gasoline . Possibly not. It doesnt mean youre going to start stockpiling your own gasoline. Ont affect should be limited both sides. Duckhook as you said here with the burberry thank you come i cannot let you go without asking you about burberry. It used to be a positive for them, now it is becoming a negative. When you look at luxury and you talk about worldclass companies, strip out todays number, you call burberry one of them. Briscoe it was very disappointing. It had a good first richard it was very disappointing. It had a very good first quarter. Side, there is a good digital presence. They are still growing particularly in europe. [indiscernible] it does mean they are going to be more reliant. Maybe i will get another tie on the way back to the office. Jonathan i am looking at the bond market, im seeing yields running down into something that looks like a bund on a 10 year. I look at energy and dividend yields are big, the question of whether the stock is to cheap . Over whether the dividend needs to be cut . Is there an argument that we can start planning the bond proxy . Richard that is something that we have been seeing. Webably the most down sector have been seeing. A fairly reliable one. Everyone is chasing growth. Economies are chasing growth. Companies are chasing growth. Investors are chasing growth. In terms of asset classes, jonathan thank you for joining us this morning. Coming up, spains biggest oil that is next. Jonathan what six minutes past the hour. Willrry indicated profit probably declined for the second year in a row. Luxury good maker dropped by 12 this morning. Unilever shares are trading down by 1. 2 . After a Strong Performance from its ice cream business. Revenue roserter 5. 7 . Authorityegulatory folks on the limitation. Spains Biggest Oil Producer has set its oil breaking prices to 50 a barrel. What does it mean for the Companies Bottom line . Charles a standing by with more. The surprises the surprises, what were they . Charles this is an announcement. It is responding to the big purchase they made. Made before the drop in oil prices. The Strategic Plan is a response to that. As you said, this figure of 50 whichel is a figure in they would be up to finance growth. Pay off debt and maintain dividends. It is a conservative number. It is a low number four oil prices. Jonathan talk to me about divestments. Is it doable without touching the assets . Charles i think we have this as information. We will wait to find out more. Just go out for that press conference this morning. Att up, we give you a look what to watch for the day ahead. David cameron heads to brussels in hopes of renegotiating britains membership. Jonathan good morning in looking back to bloomberg tv. 51 minutes into the trading session. A check into the equity markets. The ftse 100 up by. 8 . The dax up by 92 points. The stoxx 600 up by 9 10 of 1 . Switch up the board. Me the story on your screen right now, not the story of the last 48 hours. That story is a weaker dollar weakerby significant data out of the United States. In the u. S. , we get Consumer Prices out at 1 30 p. M. U. K. Time. Laterill be speaking today. We are back on fed watch all over again. Were looking at to brussels, that is where european leaders are gathering, including David Cameron. Yields to reignite negotiations mentorship. Eu manus cranny uks eu membership. Manus cranny is with us as well. Jeanclaudeard from juncker complaining that mr. Cameron has not been as forthcoming. It takes two to tango. He wants to see more negotiation. Posco Angela Merkel just hans Angela Merkel just spoke in berlin. There are a lot of interesting dynamics. Is moreeljuncker eresting and more jonathan you need the details to campaign on, dont you echo dissipation of what it is that David Cameron is going to try and sell to us in this country. Of what he might achieve from his reformation of europe. There is a desire within europe that this could be there moment. There is a desire to see change. This could be europes opportunity to invoke some change in europe. In berlinhigh priest will acknowledge there needs to be significant reforms. Is this an opportunity to do that . Maybe. Changing the treaty is going to be a difficult one. Jonathan is there trouble brewing on main street . Hans when we saw the sales numbers, there were not robust. When we look at the data that could move market, that is one of them. No if anyone knows what the fed is going to do, they should be trading in making a lot of money. Jonathan manus cranny is one of those people who looks at where the market a 27 chance of a hike. 2015 is slipping away from them. Manus as you go into 2016, that is also dissipating as well. You got global inflation pretty much in skid row. You got bond yields at fivemonth low. The argument is were looking at a high disinflation area environment coming from china. It brings us full circle. Jonathan burberry, tell me what has been going on. Manus this is where able to afford to shop. Those trenchcoats. Those socks. Yourself guys shop for. You dont have people to do that for you . Manus i think this is a seminal bailey,hen the ceo, mr. Who we very rarely hear from, i think this is a moment to say our strategy is correct, 30 in china, 40 in the united kingdom, this is an imbalance story for the current zeitgeist moment. Jonathan gentlemen, thank you very much. Hans nichols, and not in london. Manus cranny coming up after the break with the pulse and francine lacqua. That is it for me. If you want to talk market, you know where i am. Im on twitter. Equity markets snapping a losing streak. 8 . Tse 100 is up it is dominating the discussion luxury. Ld of burberry. Good morning. Francine a luxury loser, burberry shares plunge. The Company Warns of lower earnings for a second straight year. Manus the bank of america swings into profit. The ceo Brian Monahan says jobs will go. Francine fed that fate. Data from around the world sends the rate hike to a record low. Manus operation renegotiation. Cameron heads to brussels to press his case for change