the regions banks, credit agricole reports today. ♪ anna: a warm welcome to "bloomberg daybreak: europe." i'm anna edwards. manus: breaking news, credit agricole. anna: numbers from credit agricole, they look to be a little light, third-quarter revenue numbers, 4.58 billion against an estimate of 4.70 4 billion, although the trading revenue is one of the issues here. we have a drop of $.28 in trading revenue, down by 28%. they were hit by slower bond trading, lower volatility on that side of the market. we know that story very well. there are some upsides to the story coming to this morning. we're seeing if there's any strength there on m&a advisory. will look for more details. m&a also a big story, i should say. could credit agricole be interested in doing a deal with commerzbank? we'll see what comments we get from them on that front. abn amro, when and how quickly will the government release more of their holdings? third quarter pretty much matched analyst estimates. a little bit better there. the underlying profit, 673 million. dutch have 17.6%, penciled in an estimate of 18.1%. just a little below. sayingof analysts were this is a company with strong buffers of capital. shaready for perhaps buybacks, the stock is up 22% on the year. have a chat with the cfo a little bit later on in the program. anna: the revenue envelope is a little light for the third order but does seem as if the company has beaten estimates. they say they're on track to reach 2019 targets. this takes us into a conversation about how treasury markets are heading. flashback to 2004. what you have is the curve going up. is open index swaps. time we saw this was back in 2004 when you saw the yield curves dropping and ois spreads rising. 18 months of recession and it really got very ugly. 10 year yields in the tightest range this year. similar put, it's a proposition from the chief economist saying the treasury market either does not believe will get tax cut -- tax cuts and if and if they do they don't believe it will materially change gdp numbers. that's the proposition. let's look at the risk radar for assets overnight in the asian session. a mixed session in the japanese market after we saw the nikkei as high as since 1992. president trump is in the region talking to go public -- geopolitics. addressing the parliament and south korea, talking about what he expects china and russia to do in terms of excluding north korea from their conversations and from their trade. the meeting over in vietnam. all of that very topical. the dollar index was up yesterday but now down this morning. stockpiles that assumed, and we rallied 21% since september. you see the report from yesterday from opec talking higherhale output 56% than just over a year ago. so the oil market is lower. i mentioned there was talk about whether they were interested in commerzbank. credit agricole has no plans to buy commerzbank state. that's the m&a story around the eurozone. juliette saly has the first word news. president trump saying the north korean dictator has turned the country into a held that no one deserves. he called out russia and china by name and set all responsible nations must join forces to deny must denyany -- pyongyang any form of support. northrup will be the best -- next governor of virginia. it seen as a key barometer of whether the party could win in crucial sweepstakes ahead of the 2018 elections. bill de blasio is projected to easily won a second term as new york mayor. u.s. house -- hauser of contacts rises have effectively gutted a proposal to tax american companies payments to related foreign affiliates. according to a preliminary 74 revenue whole has been punched in the tech overhaul plan. kevin brady searching for new ways to offset the bills tax cuts to avoid the threat of a democratic filibuster in the senate that could kill it. u.s.ll talk tax with treasury secretary steven mnuchin at 4:30 p.m. london time. minister theresa may is weighing whether to fire a member of her cabinet just a week after her defense secretary quit and a sexual-harassment scandal. according to reports in the british media, may is likely to dismiss her international development secretary who held unauthorized meetings with israeli officials behind the prime minister's back. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . the topic closing at ties levels is 1991, despite the weakness use on the nikkei, but remember the topics has been trying to play catch-up to the nikkei. he flat in hong kong. post a is market close flat today in the kospi up by .10%. still seeing the asian markets hold onto decade highs and asian currencies getting a boost on the weak dollar today. a good china literature, a , soaring by tencent 100% in hong kong today, up 84%. nissan in focus after it slashed its profit forecast after announcing those recalls in japan. and a big rally after j.p. morgan upgraded a lot of companies expecting hong kong to have a fairly cold winter. saly thank you, juliette there in singapore. new trade data from the world's second-largest economy. china's exports increased 6.9% in october from a year earlier. along with north korea, trade is one of the top priorities. president trump scheduled to touchdown of a king -- in beijing later today. tom mackenzie is on this story. good to see you. you're already in beijing. what is on top of the agenda there? it's risk and reward, trade versus north korea. what do both sides hope to achieve? the trade numbers are really important for president trump. it's a big bugbear of his, the deficit. about $223 billion, that's a surplus china has with the u.s.. want to see some measures taken by china to address that. geopolitical issues top of the list in north korea. we heard from donald trump to cuthe wants china themselves off from north korea. they may as china to stop exports of oil to pyeongchang, though that seems unlikely at this stage from the chinese perspective. president xi wants more clarity on the investigation of the -- intellectual property going on in washington. forget there's a personal relationship between president xi and donald trump. he said he is looking forward to congratulating him on a great political victory a couple of weeks away. the he get a tour of provision city behind me? he will sit down with president xi and his wife in the forbidden city tonight. what deals are we looking for? there are number of companies following president trump. is there an expectation that we get some deals? >> there is, absolutely. there's about 40 executives who this.e joining trump on we've heard there's likely to be deals in the aviation sector and possibly autos. steps to lower trade bear is around some sectors, potentially financial services. they will want to offer him something he can tweet about back to his constituents in the u.s.. so there's another question whether he will be able to tweak because twitter is banned here in china. expecting any structural changes to the trade relationship between the u.s. and china. strikes me as the type of savvy president that would have a burner phone with him. this is the proposition, so , you're exporting all those bad goods to the united states of america. trade versus north korea. >> i think he has a reasonable point in terms of trade and pricing. it's clear that the command economies of north asia have been exporting at prices that you and i would regard as not economic. interestingly, the most recent trends have been toward korea and china having more focus on growing profitability. this is far more important than the rhetoric behind a trade deal. if we were to she -- to see it tripped up and pricing chin from -- pricing trends, as a result of all the embedded indebtedness. this is it, and there are some great lying opportunities for good, quality companies. more on the specifics around china in just a moment. interesting to pick up on this question of the deficit and whether they're not all created equal. he's talking of about the imbalance that exist between the u.s. and japan. they're not necessarily driven by what trump trump's -- what he thinks they are and not in the way he is the -- not in the way he suggests. it's more about macro economics then the difference in interest-rate policy in the united states and japan, rather than trade protections in japan. it's important to understand where these deficits are driven from. >> we need to go back to the onset of modern globalization when mrs. thatcher in the u.k. and helmut kohl and mr. reagan ,ere very keen on globalization trying to raise economic prot of to the levels and generate strong growth. this involved outsourcing, importing capital from countries with supply. the competitive advantage drove economic growth. it led to dreadful compositional changes and we now have an economy that makes hardly anything and is highly dependent on financial services. so we have a challenge and growing heard activity from here. but that was decades ago, rather than a figment of the imagination of journalist in the last two or three years. samsung is said to double its dividend in 2018. we'll come back to some of your bigger picture a little later. there's a major chinese back stocks. this is what is going on in congress. chinese is targeting banks with sanctions. this is a risk, this is what he's threatening. this is the real stick he's jinpeng.ver xi >> i think the risk is internal to china because the policy is right in china has to dress big bubbles that of all -- always been there. we know that residential property prices have been declining in a number of big cities. ,here has been over investment and china has built factors that are no longer able to produce goods and services that people want to buy. thirdly, there has been excess capital accrued. china has been exporting capital, which is hugely important, trying to rebalance the domestic portfolio. the run rate is $600 billion at the moment. at least the roof -- run rates have fallen down. the pricing of global equities has been significantly driven by the flow of capital from china. a shift in domestic policy saying the capital stays here would be potentially very significant. globally.implications james, thank you very much. those we will break down abn amro numbers. we'll have a conversation with cfo, cliff abrahams. that's next. this is bloomberg. ♪ anna: this is "bloomberg daybreak: europe." by msci asia-pacific just up .8%. 2:20 in the afternoon over there. 7:50 here in amsterdam. abn amro boosted the dutch government's goal of selling out the rest of the state-controlled lender with third-quarter profit that beat estimates as operating expenses and the cost of risk decline. joining us is clifford abrahams who joins us from amsterdam. great to have you on the program. is this about the shift toward digital banking? tell us what is driving this? clifford: last year with announced our intention of taking cost down and serving our customers better. take cost down to this year, we expect to continue that through next year. we will take some more restructuring provisions in order to make those changes. that's part of a continuous process of change we've been doing for the past year or so. manus: we've had a couple of conversations about how this translates in terms of branch closures and staff that would be let go. give us some context around what that actually means in reality. >> that is a small part of a larger change. we announced last year our intention to reduce cost by 900 dollars but also invest in our businesses. this is a small part of that ongoing change initiative. barges in 2010 and we have a little over 200 now. we intend to take that down further. but critically, our customers are using our digital online and mobile services and using our branches less. so we are shifting our focus to serve our clients where they want to be served. anna: analysts have said that abn is one of the most exposed euros on banks to the dutch economic recovery. is not doneonomy too badly. what do you see when you look at the dutch economy at the moment, clifford? clifford: the dutch economy is growing one of the fastest in europe. we've seen it outpaced the eurozone we see that coming through in our long books which are up. we're seeing it in low impairment this quarter, as we've seen over the last year or two. were very pleased with our exposure to one of the best economies in europe and were looking to grow selectively outside the netherlands. manus: there's a great deal of abate in the marketplace when share buyback might calm, when there might be a little more chance for the investor, so to speak. on any update the market of the forward guidance on that? as you say, we are well capitalized under the current regime at 17.6% capital ratio. we have a we think is a strong position that means we are well prepared for changes in the capital regime that could come as early as next year. we are committing to being a well-capitalized, moderate risk profile bank. we have indicated that we would pay up to 50% of our earnings and dividends this year and they will update the market next year in q1 regarding our capital management plan. manus: you used the phrase that the resolution could come this year. is there realistic probability that you will have the resolution before the end of the year? clifford: you have seen the press comments as well as we have. it looks like there is an increasing likelihood of what is called basel 4 happening. we are well prepared for that but we need to factor that in our plans for a capital position. anna: you talked about selectively growing outside the netherlands. your bank is a shadow of what it once was except for its global positioning. you've refocused since the financial crisis on the home market. give me the size and scope of those wider ambitions outside the netherlands. on the healthsed the dutch economy, as we said. we also had some really strong international businesses. we are major player in the energy financing business. we also serve medium-size corporate's in economies that are adjacent to the netherlands. we are looking to selectively grow that possibly over time. manus: thank you so much for joining us, clifford abrahams, cfo at abn amro. needs a little more clarity on basel for some of the banks to talk about returning money. turmoil in westminster, theresa a topnsiders firing minister. could it be the second cabinet casualty in as many week? we will see where the story develops. and talkk about that about investing in the u.k. as brexit looms. this is bloomberg. ♪ retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. manus: a live shot of the emperor's palace. japan has had the trump visit. he moves on to china. the dollar-yen down .10%. dissipating possibilities according to the washington post. were waiting for little bit of utility. what if you got for us? anna: talking about higher dividends. saying were well on the way toward higher dividends. that's the headline coming out this morning. nine month adjusted income 950 million euros. forecast, the net income rising 61% since the nine month adjusted net income. the conversation that santander was about the company resenting its new strategic plan. we heard from -- retail profits under price cap in the united kingdom over at deutsche bank. the publishing business talking about sales of 2.5 billion euros. anna: let's check in on the broader market stories. nejra: the nikkei closing softer asked her -- after a historic it. less than 30 in green and more than 70 in red. about 50% cap members in overboard territory. some saying the party has just begun. aying there has been parabolic rise that might come to an end and short-term. keep an eye on curb flattening. a big question in the markets are lower seeing the flattening and where does from here. flattening for night straight session, the longest streak in almost two years. looking at the japanese bond market, where do we go toward zero on the 10 year? at massmutual life insurance saying it's a bullish technical signal because the yellow line has gone above without reentering. were looking at futures here. if it goes above 100 51, it means a 10 year yield of 0%. some have come out being bullish as well. looking at gold, pretty much unchanged today. virtually unchanged from a year ago since donald trump became president. this is north korea tensions. manus: my favorite run of the day, parabolic. the new edition of daybreak available on your bloomberg. let's look at the top stories. it's all about brexit. are we at the point of no return? amidst government instability, , wilbur ross reportedly told what the final deal will look like, jobs will start to move from london. anna: we have businesses of all varieties and sectors. when you need to know to avoid having to make big change in the short-term? another story is turmoil in theresa may's government. she's reportedly weighing whether to fire a member of for cabinet just seven days after her defense secretary quick he reaches likely to dismiss her international development he had anafter outgrowth meetings with israeli officials, according to reports with the bbc and the sun newspaper. james, i wonder from the risk of theresa may being dumped from the election, is it moving up the curve for you in terms of the u.k.? james: for sure. the prospect of the u.k. economy looks tricky, not least the guys we have inflation in excess of wage growth. confidence numbers in the states a very robust. you look at the u.k. and you look at high levels come you , youat the brexit risk anticipate the u.k. economy set to be relatively weak in the context of the economy. how do you draw a line between what seems to be some level of chaos and government and a new election? it's quite difficult to get there, isn't it? james: it is, and the important thing in investment terms is step back. i think our global quality , it'sies, for investors an excellent long-term buying opportunity on what the future .ooks like i would say the stock market last year is quite cruel to performance relative to its underlying long-term potential. thinking about interest point on multiyear view. anna: is there word for activists in the dream sector? maybe that is one of the reasons. james: i would say the drivers are rather different. the luxury goods manufacturers face pressures on global trade and pricing. balancesitioning of sheets in china met a lot of them are buying handbags as a proxy to -- manus: look at louis vuitton and gucci. james: is very similar. andesonates of what japan chanel were like at the end of the 1980's. japanese people going into chanel stores and ordering up all the available stocks. , others haventrast been underperformers compared with what people have anticipated. describe to my view that we will have relatively slow progress, will have relatively modest inflation gets long-term historic trends, which is why we have the flattening of the yield curve. manus: they will do well. circling back to the global equities in the 5100 relative to conversations we've had with a number of ceos, that is one debate. pound goes through to the end of the year. versus the slightly longer term volatility. you are seeing this rise. i think wet risks, have -- anna: live pictures of air force one, president trump landing in beijing for his state visit with president xi. north korea the focus, and has -- he was calling on china and russia to do more to exclude trade with the north koreans. manus: it will be interesting in terms of two world leaders who both want to be seen as superpowers. when he faces is possibly one of the worst trade deficits since he arrived in china on record. that's returned to james bevan, our guest this morning. we will keep an eye on those pictures but going back to the pound and the volatility. i almost feel as if there is a catharsis, that if there was an election in this country, you might see a different brexit platform put forward and perhaps confidence might change. the telegraph did a poll, for the first time since they brexit, 40% ofg people in the u.k. feel like they will be worse off post-brexit. 26% support the prime minister, down from 34%. james: brexit is a huge unknown. we know what people wanted from brexit is simply not deliverable. cannot get cessation of movement of people and still maintain free movement of goods and services. access to capital opportunities and absence of regulation. it just cannot be done. can have some of them, but not all of them. the softerit might under a labour party but they're still talking about ruling out any second referendum on brexit. so it won't change all that much even if we do get to the polls again. james: people say soft brexit and hard brexit, but there is really only brexit. it's going to take a very long time. article 50 is clear come you have two years from the moment you trigger to the moment it all has to be dealt with. the idea the you have two years and then you have another chance to chat is wrong. manus: james stays with us. you're looking at live shots of the steps going up to air force one. president trump has landed in beijing. i wonder if the steps are provided by the airport in beijing or whether he brought his own. that's something we saw on the saudi visit to russia. we will monitor those pictures and bring them to you as we get them. where about to speak to adam pollock -- alan pollack. manus: coming up, saudi arabia has probe in -- frozen the private accounts of individuals as part of its corruption countdown. anna: will get further discussion on that. this is bloomberg. ♪ manus: you're looking at a live shot of air force one which is just touchdown in beijing. the former ambassador to china, we spoke to him yesterday. president trump should push for xi to openthan ever the economy. he's touching down facing a deficit is pretty much the biggest ever seen. this is what we are waiting for, mr. trump. ahead of this visit, he was speaking in south korea. he called out by name china and russia. clearly that geopolitical conversation is very much part of the mix here, but also trade. he has pledged very strong action and very soon trade relations with china. he said that in the press conference when he was over japan. we will see what he really wants to deliver on trade. what we see in the trade deficits at the moment, the origins of that go back to the 1980's and before. was this sort of last-minute attempt to visit the demilitarized zone in north korea which was scrapped because of fog. it would've been quite significant. to come down,s that's what he said on monday and the expectations are that the trump trip would do anything to fix the problem. they are pretty low at the moment. is not available in china, so we will see if we hear anything from the president right other means. that's get a bloomberg business flash with juliette saly. juliette: snapchat parent company plunge in extended trade. announcing it will redesign its photo and video sharing apps to make it easier to use in an attempt to broaden its audience. sales estimates have been tolining since march thanks increasing competition from facebook and instagram. goldman sachs has shaken up the leadership of its commodities and currencies business after some called it strategy into question. named newly created role says creating officers. one gives up his title while the other relinquishes his role open to run fixed income sales. plan to spin off the british toail unit, threatening dampen profits and what would be the biggest shakeup of the industry and lower -- more than a decade. it could create the uk's second-largest household energy supplier. the new company would have more than 12 billion power and gas customers and cut the number of leading providers from the so-called big six to five. manus: thank you very much, juliette saly there. saudi arabia has said it has frozen some bank accounts. let's take these live pictures. you see president and melania trump arriving in beijing. a lot of pomp and ceremony for the arrival of the president of the united states. trade and security will be the top two items on the agenda as they move in to this, the third nation on the five nation state tour to asia. rally the tried to world to stand up to north korea. that's one of the central goals of his mission to asia. has he been tempering the rhetoric a little bit? attempting to make the visit to the demilitarized zone, but they could not because of fog. he has been talking about north korea coming to the bargaining table, making a deal. flags waving furiously in beijing to welcome the u.s. president. certainly the relationship between doll trump and the other world leaders he's been fascinating. a great deal of friendship express between him and abe. extentand to a certain he has that close relationship with abe. , he congratulated him in terms of its great political successes. on north korea, he said it makes sense for north korea to come to the table, and i do see certain movements. anna: trump has been very vocal on the subject of saudi arabia lately. saying it had only frozen the bank accounts of individuals and not those of the companies they own or manage, as they have had a crackdown that scene princes and billionaires arrested. yousef is back. one of the most read stories is on the internet today. from a market reaction, your assessment, you've been there for a couple of days now. give us your view on the reaction there. still digesting a lot of the moving pieces. part of it is the clarification that they're only looking at the private is not the company bank accounts of those businesses that have been picked up. they're saying it's business as usual when it comes to the broader banks. they could've cast a little wider net. comments from the u.s. administration saying they been given assurances that it will be a fair and transparent process. unknownils are still but it is rattling investor nerves. major losses with a lot of momentum in volume, take a look bady bloomberg, that's the over forward, 250 points credit default swaps in a similar range. the latest view on the markets. is james bevan. we have a couple of big topics to get through. this is the conundrum we started the show with. the yield curve since 2007, this happened back in 2004. is it the same, or were drawing incorrect parallels when the yield curve has been widening? signs that we're in an imminent recession. we will end up with relatively modest but sustainable growth and inflation. -- i anticipate the u.s. federal reserve will the again in december but trajectory of hikes will be relatively flat. this in anyw serious change in strategy from the ecb. we are just monitoring these pictures, watching all the fanfare as trump arrives there. he clearly likes what happened in the stock market since he was elected president. perhaps he is mindful of not doing anything to damage that. worry?see reason to james: it is the case that on most metrics, the u.s. is expensive relative to long-term history. elevated.um looks anticipate that we will have a significant correction. there's a greater risk of a melt value tohere is fair the u.s.? perhaps $150 for the index. that suggests an index target of around 2700 points. gap between 2700 points that would justify 3000 points is where people will allocate their assets. where cash flow deals on company still exceed corporate bond yields. manus: let's talk about the emerging markets. has double down on their view of getting into emerging markets. better, over $3 trillion over fx reserves. james: it's all about company specifics. on the currency front, think the dollar looks set to be relatively weak among most emerging currencies. the mexican peso has a political renegotiationfta and a difficult election coming up. quitek the pound will be strong against the dollar. briefly --ust to go we don't have time through it now, but it's a combination of people feeling more confident about what happened to the sport for the pound from the bank of england, and also the dollar being relatively weaker in a more secular basis. anna: i'm glad you were listening, manus. i clearly was not. ont of the big spenders here daybreak. james bevan, thank you so much for spending your morning with us. manus: u.s. president donald trump touch down in china, the world's second-largest economy. we are live from beijing. this is bloomberg. ♪ manus: trump lands in beijing. the trader wins on deficit, rating and north korea. anna: fresh turmoil in westminster. theresa may considered firing her official. manus: the stocks lumps 20% after hours. slumps 20% after hours. welcome to daybreak europe. our flagship morning show in the heart of london. london,has gone 7:00 in we are getting corporate reporting from various parts of europe. marks & spencer's. manus: the cfo is stepping down. there is a new chairman in marks & spencer's. mr. norman who started two months ago. archie norman is who i am referring to. the cfo stepped down. what is his strategy, that is what we want to know and the numbers which are also important at 219 million pounds in pretax profit. the estimate from the marketplace. in terms of revenue 5.1 3 billion. the estimate was for 5.1 billion. the cfo will continue until a successor is found. , whenms of profitability you break it down, home and clothing comparable sales fell 5.1 of 1%. that looks a bit better from what the market had anticipated. you have -- and i has the's end of the market. i have marks & spencer's. saddlery and the handbags, of course. they are keeping their guidance for the leather business, a growth of 10%. sales coming in at 1.3 billion in the third quarter ahead of the 3.1 billion. beating estimates at leather and other sectors growth, quarter -- sales rising, the company maintains its ambitious goal for medium-term growth. reporting quarterly sales beating estimates. joining leather and boosting growth. more breakdown from marks & spencer's. home and clothing falls .1 of 1%, that is better. the market penciled in a drop of -2%. what mr. norman has to say about changing the landscape. closing stores will be something that comes up on the agenda. 148 owned stores so what are they going to do, what is archie norman going to do? a great deal of criticism against the currency. primark spooked the market with the numbers. anna: a quick line on a couple of u.k. corporate's that look to be giving not a disappointing update. ofget a line out persimmon. is interesting with brexit in mind and the strength of the yuki -- u.k. economy. manus: there is that confirmation from sse and energy. they were going to do this themselves of their u.k. retail energy business because of the cap's proposed by the current government. sse agrees to form a new company. they are giving guidance in terms of full-year dividends, it i, retailqual to the rp price index keeping the dividend between 1.4 times range. anna: they were in advanced talks but no decision had been taken. newand energy forming a energy supply company. this is the and power unit of energy, something of a troublesome business for the german company for some time. the u.k. prime minister taking aim at the sector talking about ripoff charging. trying to see to energy bills. this will perhaps drive m&a. manus: let's talk about global equity markets. seeing momentum in the markets that can take us higher. we are not seeing a roaring market. there's a little bit of a stall in the asian market. paris is flat. but it hasdown transferred into the risk radar. but have a look. you have asian equity markets, the delay, the issue is this. court -- could the corporate tax cuts in the u.s. be delayed? it could be and that is going to be the irksome point for the u.s. equity markets as trump touches down in china. he is talking agreement on north korea. he wants to close the trade deficit. anna: what happens to the tax cuts? pretty flat right now. interesting to see if we get any news on tax cuts, with that change the trajectory for the 10-year treasury. we talked -- we are talking about why the 10-year is believing in the way it is, is the mounted not counting any tax cuts or not assuming they have a material policy impact on growth. we have crude down by .6 of 1%. let's put up the bond markets. countryt trump the making that visit to asia. perhaps that as an extra dimension. manus: let's see what he's got to say about south korea. all of that in context with our cio. let's get you first word -- news. u.s. president donald trump has landed in beijing. earlier he called on the world to abandon support for kim jong un's regime saying that he has turned to north korea into a held that no one deserves. trump called out russia and china by name and said all responsible nations must join forces to deny pyongyang any form of support, supply, or acceptance. in the u.s. the democrats look to have scored a claim -- clean sweep in key elections. n estate -- a state. is new jersey's 56 chief executive. bill de blasio is projected to have won a second term as new york's mayor. executives from some of the world's biggest banks have reportedly warned the u.s. commerce secretary over the impact of the u.k. leaving the eu. told the uk'ss growth may stop them using -- moving thousands of jobs. includedng on friday j.p. morgan chase, goldman sachs, and hsbc. china's overseas shipments held levelt month under robust demand. imports showed the continued strength of the domestic economy. exports increased 6.9% in october from a year earlier. imports rose by 17.2% year on year. that left the trade surplus of $38.3 billion. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. we are seeing the regional index hold onto the decade highs but have a look at japan. the nikkei closed lower by .1 of 1% coming off the highs we saw yesterday. january 1992 levels. -- the us trillion market closed flat. have a look at some of these toyota stocks, cutting its production costs to allow record research and build meant and china literature which is a spinoff of tencent soaring on its debut. it was up as much as 100% in early hong kong trade. ancent having a little bit of switch out. tencent has been trading at these record highs and supporting the overall hang seng index. manus: thank you. president trump has touched down in beijing where he hopes to get the trade deficit. what is at the top of the agenda, why this deficit on record as he touches down, that is the trade side. then there is north korea. >> the trade is clearly in focus, something of an annoyance with president. he has talked about it in quite strong terms saying there is not a fair trade relationship between china and the u.s. we saw the trade numbers out earlier showing that in the first 10 months of this year the surplus for china when it comes to that relationship came in at $223 billion u.s. the u.s. side will want to see china taking measures to address that. as you .2 on the geopolitical front it is north korea front and center. we heard him giving the address in seoul this morning. he wants to see china cut off north korea. we may get the u.s. pressuring oilchinese to restrict exports. from the chinese side they're looking for clarity on this intellectual property violation probe taking place in washington. there is the investigation into steel and aluminum exports from china. there is the restrictions on goodsech it's that -- that are exported. china hopes to ease some of the restrictions. president trump will get a private talk -- tour of the city the next few hours and he will sit down for dinner with president xi and his wife these -- this evening. hile he was in japan he talked about the opportunities to sell u.s. defense equipment into japan. what kind of deals are we expecting in china? the we have heard from likes of goldman sachs, they will be doing a deal with china sovereign wealth fund, $5 billion set up to focus on u.s. manufacturing. we hear from our sources that ge is setting up a fund around energy financing. , autos, agriculture, and energy are set to -- where we may get some deals. some moves tomake lower some of the trade barriers in certain sectors from financial services potentially autos as well. they are not making big concessions but they will want to give trump something to go home with. manus: he has to get some prizes in the bag. thank you, tom mackenzie. joining us, we have olaf van den heuvel. they manage and billion euros. i am drawn to the first line in your notes which is that u.s.-china trade him a total trade is becoming less important to china but perhaps there are specifics that trump still has some leverage to pull. he has a lot of leverage to go with. the important relationship is still there. china is as important for the u.s. as the u.s. to china but it has been changing. we saw the exports and import numbers am a exports are up 7.5% but imports are moral -- more important. china is rebalancing from being export oriented into a more domesticon-based economy. you can see it in the numbers. from that perspective global trade to them is still very important, it is still the cornerstone of the economy. it is going forward and it is much more about financial reform and cleaner environments, exchanging and that will have an impact on this relationship. in the negotiations we will see in the next few days. toa: when you are looking develop a strategy around chinese assets and tapping into the rise of the middle class and the consumer society in china, how do you set about doing that constraints the chinese have put on themselves around the environment on -- and deleveraging the financial services sector, so what is the best way to play this? olaf: we are looking at financials, we are overweight in some of the banking positions. we do have an asset manager in china focusing on the local markets. there is multiple ways we looking at this. it is looking pretty attractive. especially for the banks in china, they are very cheap. manus: they are very cheap indeed. these are some of the bank to ourwe are showing viewers. there are moves afoot in iraness perhaps to slap style sanctions on some of the chinese banks. prove, theoes that last cio suggested the risk potentially is on the domestic economy. the numbers have been quite strong internally in china. china, itou look at is very much and has become more of a leveraging story. there has been a lot of debt pushing through the economy. you saw that in the property sector. it is very much policy instruments to the government to stimulate the economy or cool it down. we have heard the stories about trade sanctions and president trump being more firm on chinese trade policy. if you look at real numbers, they have -- there have not been that many trade sector -- sanctions over the past months. there will be a lot of talk and they will be pressure. it is still a chinese policy instruments i would not expect too much coming out of it from the u.s. government. anna: you do not attach to higher probability to the world's two largest economies entering into a destructive trade war. we spoke to the nab chief economist who applied the one in five probability of that happening but saying that is a big worry for him. do yound of probability attach to a trade war? olaf: i think it is low. it is a big worry. if it happened it would have massive influences across the world. more than one in -- not more than one in 10. what is going on now that there are negotiations, it is looking positive. even from north korea which used to be the hot spot of attention. they are talking about it and in a relatively constructive way. if you ignore list of the aggression in tweets. -- most of the aggression in tweets. manus: this have a burner found? that is what i need to know. staysolaf van den heuvel with us from amsterdam. manus: the u.k. government and turmoil. theresa may could lose another cabinet member seven days after her defense secretary quit. this is bloomberg. ♪ anna: this is bloomberg daybreak europe. let's check on the border markets. the asian equity session rally stalling after we saw the nikkei at its highest since 1992. ese euro stocks futur unchanged. for reflection. president trump is making another leg of his asia journey. he is in china. we have the dubai market pretty flat. given the context of a we have seen for the markets in that region to be flat. manus: that is the state of play in the markets. let's talk about the u.k. it was in our headlines. we have olaf van den heuvel still with us. looking at our mliv blog my imploding u.k. cabinet will not help equities. last week theresa may lost one cabinet member. and possibly to lose a second. one -- minister last week and may have to take action when she returns from africa where she -- where she is on a foreign trip. is imploding. what consequence would it be if we had an election, is alaskan -- election risk rising in the u.k.? olaf: since the last election it has been a higher risk. the is -- if you read recent events there is pressure mounting. the risk is rising. if it is useful or any help in negotiations i do not think so. the pressure is rising. anna: what does that do to u.k. assets, are you looking to reduce, extend your exposure to u.k. assets or looking to increase your to u.k. equities or the pound or the opposite? olaf: we have been more positive toward the pound over the last few months. that might come off a little now. the u.k.ny friends in so we still like our u.k. assets for a much. manus: good to hear that you still have friends here. couple of about a other markets. abnad a few stocks, delivering a nice upbeat message. credit agricole came through his numbers. how do you look at the financials at the moment in europe, good economy, confidence is rising, and we are getting ready for higher rates. it may be a wee bit away but we are getting ready for higher rates. olaf: we need to be cautious, we need to make sure that things are not going to be too stressful especially in this corner of europe, things are going very well. , am standing here in amsterdam house prices have doubled over the last two years. it is your he stretched in that sense -- very stretched in that sense. we have seen financials did really well. that should help them further. all in all we would expect monetary policy to remain supportive but less so and we should slowly start pressuring margins and should start pressuring valuations on european equities. itm a midterm perspective has been mainly driven by oil and gas. technology for the last year. something else needs to do that. if the economy is growing this hard it is hard to see where it comes from. anna: interesting to see where you think the equity market rally has the further like to go. reading comments from the hannover rueck ceo. the company has sold and listed equities. an equityto calling markets are you? it is arope looks like little bit stretched. there i would say. if you look at the u.s. it has been doing ok. quarterly earnings were relatively strong. the trump tax plan could deliver. that looks a little bit more attractive to me currently. the rest we look at japan. further out i would say 2019, 2020, things get too stretched and we would be a seller of equities. manus: let's talk about japan. we have this chart, it reflects the nikkei going back over a number of years and the title of the chart is parabolic. if you look at the -- japan, the this kind of momentum we have seen in japanese stocks, u.s. andity in the japan has been quite substantial. in japan, are we ever done there, would you want to take money off the table in japan? olaf: no, i think we still like it. if you look at on hatched japanese equities in yen, you get the yen exposure and that gives you some portfolio construction benefits. we would still think we are most positive on japan. more so than on europe or the u.s. maybe emerging markets would be more interesting but for now japan looks like a relatively safe place especially with the government in a stable position, abe can progress and what he likes to do. we still like to be there. people have been leveraging up quite a bit, we think, and that creates some tail risk. anna: thank you for your time, --f van den heuvel periods olaf van den heuvel. where watching sky, credit agricole, plenty going on in the markets. equities set for slower -- lower opening. you're looking at that rest of the europe, slightly softer opening. the european market opening is next. this is bloomberg. ♪ ♪ good morning. welcome. you're watching bloomberg markets, this is the european open. the first trade for equities is coming up. we will bring you the first trade. matt is back in berlin. what are we watching? touchdown in china. will president trump gain ground on trade in north korea? he is meeting president xi in the next few minutes. senate republicans may delay corporate cuts by a year.

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