Welcome to daybreak europe. Investments slowed in china and gdp hit 6 . That is below the forecast of 6. 1 . Industrialy Strong Production data was a bright spot, but the chinese economy is likely to lose momentum. In terms of market momentum, we move to the downside on the shanghai composite. It has been a mixed picture overall. We will dig into the trade war. We saw gains on the s p 500 yesterday in the u. S. Euro stoxx 50 futures into the red. The 10 year yield tips to a 174 handle. The bloomberg dollar index near a july low. Prices givingairy the kiwi dollar a lift. The worst performer, the pound. Pulling back from a five month high. Yesterday, risk reversals. Volatility still near that 2016 hi, talking about one week volatility on cable. 12849. Back to the brexit story. After frantic negotiations just days from a deadline, Boris Johnson has reached a brexit deal. This is how he described it. This is a great deal for our country, i also believe it is a very good deal for our friends in the eu. U. K. It means is we in the can come out of the eu as one united kingdom. Throughetting the deal the house of commons is johnsons next challenge. If he cannot, the luxembourg finance minister told bloomberg the eu would be willing to consider an extension. Johnson to to boris ask for a prolongation. I think we have proven that we are extremely open, that we want to avoid a no deal brexit because a deal is in the interest of both sides. I would definitely not excluded from the other side. Nejra anna edwards joins us from brussels. Good morning to you. Ruled out anuncker extension. If this deal does not get through parliament, what are Boris Johnsons next steps the atco nextsteps . Anna we can talk about the math, how difficult its going to be. If it does not get through, there is this question of what would the eu say to an extension . Boris johnson has said he would rather die in a ditch than ask for an extension. They are all using the word prolongation. It means the same thing, doesnt it . I was hearing from a think tank this morning that the eu might be saying all sorts of stuff, but they would grant what they call a technical extension in order to hold an election. Previously we had heard from the eu that if they wanted a further extension, there would have to be a good reason. Im sure if they thought the u. K. Was going to the polls, that would be a good reason. Whether he gets his deal through on saturday, which is a big question, we have to be heading to elections. This is a Prime Minister with no majority. His working majority is sinking as he falls out with the dup. Johnsonow does the deal has negotiated different from theresa mays deal . It is harder. That really reflects the hard or softness of the border between the u. K. And the eu. The Boris Johnson plan is hyder is harder. Both plans talked about Flexible Partnership into the future. Boris johnsons specific this means a freetrade agreement. Hugging to the sidelines of the single market. Something more independent and different. In that lies one of the problems. When he is trying to sell it to labour mps and indeed, to members of his own party or at least those he has thrown out who might be tempted to back this deal, but might worry it pushes the relationship between the ek the eu and the u. K. Out. He is talking about sticking to eu standards, but that is of course the bit we know is not legally binding. Have you witho us. Anna edwards, anchor of the european open joining us from brussels. Anna edwards will lead our special coverage on sunday from 7 00 p. M. U. K. Time. Joining us for the hour is better certain boom Wouter Sturkenboom. You are going to be at the very least watching the developments. What do you expect is going to be happening on monday . This all comes down to saturday. Whats going to happen with the house of commons. We have seen statements coming out of the dup. Its going to make it difficult to get the final votes together. Boris johnson is in for a challenge. If he does not succeed, some of the markets will reverse. At the same time, we also think when push comes to shove, he will ask for the extension and the eu will grant it. We will move onto the next stage of negotiations. It is clearly in for a volatile day on monday. Nejra do you think there will be another stage of negotiations . There is a way this deal can get through parliament postelections . Wouter exactly. We will move onto a new election. If that no happens. Then we will see if this deal gets three introduced. Gets reintroduced. Johnson expands his majority or can get to a majority, which he really doesnt have, this deal would be much more likely to be reintroduced. If not, we will get a new set of negotiations. Nejra if we get a deal that is excepted by parliament or if we get a no deal, which i guess is not completely off the cards, even if the probability has receded, what is the trading range for cable . Some strategists were saying deal would get through, 40, no deal, 111. Wework through a 110 to 120 range. Once you have the deal in place, we think 130 to 140 is going to be the new trading range for cable. We are close to that consensus outlook. Nejra i know you dont trade cable, but how would you approach it right now . Some would say stay away from the spot price and trade the volatility. Is that the approach you would want to take . Wouter we take the same approach. We dont trade the spot. When clients ask, we dont do it ourselves. Look at the volatility. There is value there, but not in trying to predict the binary outcome. Be more focused on the volatility. There is still value there. We have seen that risk reversals have made big moves. Still calling for Downside Risk protection. Investors are not convinced this deal would pass parliament. There is still money to be made in that space. Not so much pricking the price. That is a gamble. Nejra in terms of u. K. Equities, are you looking at buying any at the moment . Again, we are staying away from that trade for now. We are waiting and seeing. The end game will be a deal, but whether its going to happen right now and whether you want to step into this space right here right now, it is such a difficult event to predict. Saturdays vote i am talking about. We are not participating in that trading. We have a neutral position. Nejra if you think the end game is a deal as well, where would you see the 10 year gilt yield ng based as well on your anticipation of the boe . Deal, aftere get a an election or before, we think gilt yields should go up. Beyond those events, we think Interest Rate is going to stay very low and global Interest Rate moves will start to press the 10 year yields down again. Nejra Wouter Sturkenboom staying with us for the hour. Now lets get the bloomberg first word news. Reluctant to cut rates any further. Italyswhat the bank of governor. He did not support all the element of the latest stimulus package, saying negative Interest Rates are an unconventional tool that may backfire, but adding things have been going well. Negative Interest Rates are not a great idea. Asset purchases are not a good idea. Overall, the balance is clearly possible. South africa has a chance to holding onto its Investment GradeCredit Rating according to the Central Bank Governor. He says policymakers have to take action on reform. Moodys is set to deliver its next rating for south africa on november 1. Hands of policy. Policymakersican know what must be implanted implemented to avoid a downgrade. There are signs inflation is moving up a bit. No real signs it is taking off. That is the latest from john williams. He says the feds actions have kept the economy intact, but he was cagey on policy. We spoke about the risks for Monetary Policy. We are reaching a point where momentary ceasing can generate Economic Growth. But might generate the probability of less growth in the future if we fall into a financial spiral into the future. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you so much. Coming up on bloomberg tv, we speak to top newsmakers. We will hear from the Vice President of the European Commission at 11 30 a. M. London time. We also have an interview with the eu commissioner for economic and Financial Affairs at 3 30 p. M. London time. Lastly, we speak to a bank of England Governor Mark carney at 5 30 p. M. London time. Last but certainly not least. Do not miss those conversations from the Imf World Bank meeting in d. C. Nejra this is bloomberg daybreak europe. Pictures of unrest in spain, continuing. Protesters demonstrating in the catalonia region. We will keep an eye on those developments. Inackdrop for the election november. Lets check on the markets. Hong kong is back today. Good to see you. How is it looking . We are seeing asian stocks a little muted, though they are on track for another weekly gain, a rise of 2 . You can see the msci asiapacific flat in late trade as we react to china data area. The economy in china is slowing, but we did see Monthly Industrial production data as a beat. The csi 300 down by 0. 6 , on track for a weekly loss of 0. 3 . Some upside in the aussie. The governors saying the Interest Rate is working to help the economy, but he did rule out the likelihood of negative Interest Rates as a policy tool. A boostan won getting after Steve Mnuchin indicated he will consider south koreas request for an auto tariff exemption. Lets have a look at the inflation peak. We saw prices rise at their slowest pace in two years. That was mainly due to Falling Energy prices reflected by the white line. Economists we have been speaking to on Bloomberg Television and radio today saying that is unlikely to move the needle in terms of a trigger for more stimulus toward the end of this month. Thats because when you look at the line and used her about those volatile aspects, prices are actually up by 0. 5 . The boj could indicate things are working as planned. The boj also today leaving their bond purchase amounts unchanged. Nejra thank you so much. Now turning to china and its Economic Growth slowing in the fourth quarter. Gdp growth between july and september from a year ago, the slowest pace of growth since the 1990s as the market is weak as the trade war drags on exports. Its not that they are going to be the pause of any major shocks, but their reduction of demand for a number of commodities does have an impact. The future of the chinese economy is something the president of the Asian Development bank expressed concern about. He told bloomberg lower growth offsets any gains from shifting supply chains. Ofeven the relocation investment from china to , theyies like vietnam gain from relocation to the united states, but they are also suffering from lower growth in china. There can be a shutdown gain. At this moment, there is to these economies. Financial,ceo of ant controlled by jack ma, was optimistic about chinese consumers when speaking to bloomberg. Very resilient. We are looking at the numbers. Part, masso the consumption in the chinese economy. Nejra Wouter Sturkenboom is still with us. A great range of views. Lets add yours to it. Bloomberg economics thinks momentum is going to continue slowing. What do you think . We think the same thing. We think the underlying economic slowdown is well established. We have not seen any changes. Even though the Industrial Production was a slightly strong, we see manufacturing slowdown, trade slowdown, the export numbers week. We see the underlying dynamic of the uncertainty on the trade side basically impacting growth to the downside. Firming up that slowdown. We dont see any change there. Ancontinue to hold underweight position in emergingmarket assets because of that view. Growth inwe see 6 china, how much of a concern is that for the Global Economy . Wouter just a Downside Risk. 6 in general is fine. We have seen Global Growth down from 4 to 3 . Not great, but not terrible either. Not recession territory. That incremental pause china was delivering is just no longer there. At least not to the same extent. That is something we are going to have to live with. On the monetary or fiscal front, do you not expect that to offset the slowdown . Wouter not in a meaningful way. We think we are at the start of the global easing cycle. We have seen the ecb, the fed, other Central Banks that will come through, including the bank of england. Thats going to be helpful, not going to be a game changer though. On the fiscal side, we are very early to see anything. Numbers, themall german plan on the climate side, the dutch stimulus coming through, but its still too slow to be excited about. Way too small. What are you expecting from the next stage in terms of the apec summit in november . There have been his there could be some agreement there. Looking forre incremental agreement. The timelines of the elections is pushing that direction. We are still very firm we think the situation between the u. S. And china is more strategic than an incremental trade deal. Strife between the two will continue for decades to come. We believe there is irreconcilable differences between the regions and in the end, they will continue to but heads because they have a strategic difference of opinion orderwhat the strategic of the world should be. We do not think trade tensions will go away. Nejra the Strategic Site i get. If we were to come to the end of the year and go into next year and we have no more increase in tariffs, even some of the current tariffs, and this is a positive scenario to be rolled back, how much of a difference would that make to your view on channels economy chinas economy . Wouter it would have an effect. Nejra incremental. Wouter it is a tricky word but it does make for uncertainty. About brexit, this is the other source of uncertainty. If it went away, it would be positive. It would allow manufacturers to breathe a sigh of relief and get going again. There hopeful that political agenda, the upcoming president ial elections, will take some of that tension away. They dont want to economic slowdown. It is going to be incremental. Im sorry. Nejra you dont need to apologize to me, but underweight emerging markets is what you said on china. Not that mean you are prorisk because of this view on china . Or does your view on the fact we are seeing a global easing cycle offset that a little . Wouter it does. We choose to we have three different themes. One of them is we want to be underweight emerging markets and overweight u. S. Equities because we are cautious on the trade side and we do want to be overweight riskaverse trade assets. We take the lower risk part of the risk spectrum. We continue to hold a risk sensitives sorry interestrate sensitive ovoid. We believe Interest Rates will stay low. Nejra Wouter Sturkenboom stays with us. We have breaking numbers from volvo. Third quarter adjusted operating profit comes in at 10. 9 billion swedish krona. The estimate was 10. 1. We do see a clear beat on the Third Quarter adjusted operating profit. The Third Quarter intake is down 45 . If we take a look at guidance here, volvo is saying it is facing a period of tougher Market Conditions. Third quarter net sales come in at 98. 7 billion swedish krona. The estimate is 96. 1. That is a beat on the sales. Third quarter adjusted operating profit 10. 89, that is a red headline earlier. 10. 9 billion swedish krona, a beat on the estimate of 10. 1. Give me your first take on these numbers. If you are looking across earnings season, how is it looking to you . Wouter mixed would be our take. We came into the earnings season cautious. We thought expectations had gotten bearish. We said the earnings season is not going to be great, but relative expectations could deliver a little bit. The industrial sector is showing some of that, but it is very mixed. Lately there is Downside Risk coming through again from china and global trade story. Mixed is how we put it and hopefully expectations can deliver. Nejra saudi aramco delayed ipo. Suddenive behind the postponement. Wouter sturkenboom stays with us. Tune in to Bloomberg Radio live on your mobile device or dab Digital Radio in the london area. Area. We have a deal. This deal represents a very good deal for the eu and the u. K. This is a balanced agreement. I think everybody should be convinced the deal is the best. The irish Prime Minister is content with this. Is the Prime Minister, now a vote to parliament. I fellow mps in westminster do now come together to get brexit done. That was european leaders announcing reacting to the newly announced brexit deal. Boris johnson will need to fight to get the deal through u. K. Parliament. This is bloomberg daybreak europe. We are into earnings season in europe. Umbers coming through today Second Quarter organic sales down 4 . The estimate was a drop of 2. 7 ointreau. C if we take a look through some of the other elements here, the full year outlook is un