Rbf and barclays to follow. Today, we hear from the cfo of Software Giant sap. Welcome to bloomberg daybreak europe. Has described Boris Johnsons situation this morning looking at a fruit tree but unable to eat or drink anything. He is going to try and put a meaningful vote to parliament today. Speculation is he may have those votes by just 16 in terms of that amendment. And then we look ahead to this week. If we get a vote, we asked whether it will pass. Optimismms to be some in the market. Sterling is softer today but the drop of. 5 , nothing compared to the gain of 5 this month. Votef them saying a was passed this week. , credit of strategists agricole, we could see 136 in the mediumterm. One week volatility staying elevated near the 2016 highs. Manus. Manus that is the conversation we had yesterday. He said a lot of the risk is in the Options Market, not in the spot market. Hard brexit risk runs for the rest of 20 20. Even if he gets a deal over the line because he has a lot of trade deals to negotiate. I am in zurich. We have ubs on the slate. I will catch up with the ceo, Sergio Ermotti, on his numbers. Inherent in that, there was a story on the bloomberg this morning talking about job cuts at ubs. We have run the story. Ultimately, there will be hundreds of positions to go. 5300 people were in the Investment Bank. The return on equity is half that of the wealth management, so there is a lot of work to do for the team but we will catch up with him in terms of the members and in terms of the outlook. Nejra, it is all about brexit. We have to find out whether this speaker will allow a meaningful vote. Good morning, nejra. Nejra good morning, manus. You have the e. U. Side as well as to whether they will back that extension. To stay with the u. K. For the moment, Boris Johnson ask the house of commons today to back his brexit deal after lawmakers frustrated his plans on saturday by voting for more time for the agreement to be scrutinized and forcing johnson to write to brussels to asked for a delay. The primehave written minister off. He has confounded the doubters. We have the numbers in the house of commons. We do not know that yet. Somewhat people said, a lot of people say get this done, move on. Meanwhile, Boris Johnson was adamant the u. K. Would still leave the e. U. On october 31. P. M. Johnson i will continue to do all i can. Nejra speaker john bracco could block the vote because it amounts to asking the same question twice. We are asking the question on mliv, what impacts will a negotiated brexit have . You can reach out to us and the team on your bloomberg. Joining us now for the hour is just host peter casella. Great to have you with us this morning. Good morning. Is the vote going to pass this week . If you think it will, where do we see sterling by friday . Numbers,dging by the my best case is we get a deal this week passed in parliament and then sterling can continue rallying. A move towards 132 to 135 is absolutely doable and they are after a reflection. It can continue for a while. Nejra i imagine you want to put sterling longs on. When do you start shorting that . Basically vol is inverted at the moment. That is a reflection of the uncertainty. As soon as we get to 132, matt vol will be the last tha tvo vol will the that be the last. Nejra so your trade is long sterling, short vol. One happen to be on this week . Could we get an election . Peter the election is inevitable. My view is we get it by the end of november. It is not early december. If he goes to the people now with the deal he has got, he will walk back in, no question. Nejra you think that is a crucial difference . Peter even if this weeks machinations dont work out, he will go to the people saying, look, i got a deal, a reasonable deal, and the Crucial Point is he is not going to become hanging on nodeal. Nejra they were talking about the fact that sterling could get a lift but when the u. K. Leaves the e. U. , the Economic Situation in the u. K. Means again for sterling is capped. Would you see it move higher in the mediumterm . Peter i can see his argument. Sterling is incredibly undervalued. Certainly can get back to 135, maybe 140 at a stretch. We will see the effect on sterling. We have come down from 155 prereferendum. We will not get back to prereferendum levels anytime soon. Nejra what about eurosterling . Peter we will probably continue to grind lower. May a reflection of sterlings strengths. If you look at the euro, we have sub110. Eone 10 i think that will continue. Nejra how much of a lift does eurodollar get in the short and mediumterm . Peter two cents. 16 by thevels like 1 end of 2020. I wrote so many notes nejra i wrote so many notes. How far has that nodeal risk receded . Is there a chance that the Downside Risk to sterling of being underpriced at the moment . Peter it slipped from massive bid towards sterling and now it is towards sterling gold. The market is no longer discounting a hard brexit and that is clear both in terms of what labor wants, what conservatives are going to what he is saying. We are holding a Nodeal Brexit under both scenarios. Nejra what does all this mean for the bank of england . That was really interesting because previously, we had a lot of dovish comments. Even if we get a smooth brexit, rate cuts could be on the table. He said the opposite. No rate hikes could be on the table. Peter i disagree with him. Globally, if you look at it, we are in a much lower inflationary sort of environment so you dont really have a basis to raise rates. Moreover, if you look at the Employment Data we have had and the unemployment rate, it is higher. The labor market has gone you do not raise rates in that environment. Nejra what does this all mean for gilts and the curve . Peter the curve will not do an awful lot. They are plunging aggressively. They continue to be a secular trade. Even if you get a small rally in rates, 70 or 80, it will not stay there really long. Nejra Peter Kinsella staying with us for the hour. Great to have you here with us at westminster. Bloomberg first word news with Annabelle Droulers in hong kong. Swiss environmental parties have made history in the countrys election. The greens overtook the christian democrats to become the fourth biggest party. Ofy also increased a share the vote meaning the two control a quarter of the house that came at the expense of the antiimmigrant party which saw its lead narrow. President trumps allies are making a list of potential replacements to mick mulvaney. ,t includes Matthew Whitaker former new jersey governor chris christie, and veteran political operative wayne berman. Some white house aides were not happy with his performance at a press conference on thursday. Homes prices for london rebound in october. It climbed 2. 4 amid a scarcity of new properties. We are down 30 on the year, showing how much brexit has made perspective and sellers reluctant to take the plunge. 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. Manus. Manus annabelle, thank you very much. Demonstrators in Hong Kong Set fire to shops and parts of rail stations on sunday. It is the 20th straight weekend of chaos that protests. Stephen is on the streets and joins us now. Policythe appeasement of that they put to the people has not seemed to stop the protests. What was this weekend like . Stephen it was the 20th consecutive weekend of violence. There was an unauthorized march. The police did not authorize that and it led to what we have seen repeatedly many sunday afternoons, and that was an escalation of at least material violence, violence against chinese businesses or businesses that are perceived to have pro establishment or progovernment leanings or that are against the protests. Aomi, a chamois, xi mainland chinese phone maker. One shop was burned. And ransacked. We had a number of other shops snapshot,ed ties to a and several of those shops, i have seen them torched by protesters, and petrol bombs. We have seen other businesses targeted, including banks, a member of atm machines which have been burned. Ehind me is the train station as we all know, for weeks now, actually more than four months, stations have been targeted by protesters. And today, the station, which is at the tip of the kowloon peninsula, a heavy shopping area, it is all closed down. Also behind me is the islamic alsoe of kowloon, which was the epicenter of some controversy yesterday, where the Police Dispersal unit, with their water cannon and their blue dye sprayed at the protesters but also some of that ther blue dye got into islamic compound, the mosque compound. Today, just an hour and a half ago, the embattled deep executive, carrie lam, visited here to offer her apology, along with the police commissioner. The two of them offering their regrets for that situation, here religious leaders decried as an infringement on to their religious grounds. So it is a very sensitive situation right now. Neither side giving in. The protesters feel the government continues to be entrenched towards their demands, and the protesters are obviously and paying up their attacks on chinesebased businesses. Asia our chief north correspondent Stephen Engle in hong kong. Thank you so much. Turning back to earnings, last week, revenue at the six largest u. S. Banks climbed as they sound better than expected gains in trading. We will get a look in at how european banks are faring in the falling rate environment. Manus. Revenuenalysts expect for the Investment Bank to declined. We will be watching updates for the Money Laundering scandal. The earnings from rbs. Friday, barclays is on the slate, extending his hat trick of trading. Is also set to report. Nejra. Nejra coming up on bloomberg, we speak to the s. A. P. Cfo. Do not miss that interview just after seven 30 a. M. London time. This is bloomberg 7 30 london time. This is bloomberg. Nejra this is bloomberg daybreak europe. I am nejra cehic in westminster. Manus i am manus cranny in zurich. I am here for the breaking lines coming across the bloomberg on aramco. Is thee saying there acquisition closing in the first or Second Quarter of next year. They will add one Million Barrels of Refining Capacity. It is all about recovery from those attacks. Boost theirng to Refining Capacity to 6. 8 Million Barrels per year on a Malaysian Joint venture and they see further refining expansion in india and in china. These are all the various lines coming through from the person appointed as the Senior Vice President for downstream. Is over at aramco. This is all about the expansion plans in terms of production. Lets get you a market check. Juliette saly. Morning. Juliette a little bit mixed to kickstart the engine trading week with very low volumes, but you do have an upside coming through in the nikkei which is supporting the overall Msci Asia Pacific index, which is tracking slightly higher and that is despite dismal data come through out of japan, showing exports fell for a 10th month in september, down 5. 2 . Hong kongs Market Holding up reasonably well despite Morgan Stanley today cutting hong kongs 2019 real gdp growth . Recast to. 8 interesting to see the money won, into the korean asias best performing currency, and rising for a Third Session against the greenback, up. 6 , and that is despite dismal data out of south korea. Lets have a look at the chart which shows the fact that we are expecting south korea to see an 11th straight month of export declines when the official numbers come through for october. We have the preliminary numbers, and they showed exports were down 20 . Exports to china also down 20 . And chip exports down by almost 29 , and this coupled with that data from september for japans exports really just adding to this gloomy outlook. Of course, all the reaction of a keyade dispute and focus for finance ministers in washington over the weekend, really highlighting their that morning to be done to spur demand. Nejra. Nejra Juliette Saly in singapore. Thank you so much. Lets turn to china and the base ine stayed unchanged october, defying expectations for a reduction as the economy sees its slowest pace of growth since the early 1990s amid the prolonged trade dispute with the u. S. , manus. This weekend, beijings top trade negotiator washington are making progress. Both sides are working towards a partial deal. Meanwhile, the incoming ecb president , christine lagarde, says president trumps trade war has indented Global Economic d global dente Economic Growth and he could fix the problem. Peter kinsella is our guest host this morning outside westminster. I look at the yuan this morning and what the governor of the pboc has said over the weekend. The yuan is at an appropriate level, and i suppose i am looking at the yuan, which is at a record low against a basket of currencies. Do you think this is the pboc trying to put some kind of control around the yuan to get this phase i deal over and done with . Reallythat would not surprise me. I think you have seen a little bit of strength in recent sessions. We have gone around 720, and we are back down to the 705 levelish. You normally see yuan strengthening a little bit. At this point, that would not surprise me too much. However, the underlying data in china does suggest a weakening in financial conditions there. Ultimately speaking, that should leave back to you on lead back to you yuan weakness. Nejra the pboc governor responded to data we had last week by hinting or not hinting at much greater stimulus in the pipeline. He sort of emphasized more that chinas focus remains on keeping its heavy debt load under control. Our expectations in the market are expectations in the market too high . Peter on the monetary side, yes, they are. It wanted to maintain debt or keep it within relatively manageable levels. The consequence, they dont want to cut rates to increase leverage in their economy. Really, the focus goes towards more on fiscal policy at this point. Again, they are quite reluctant 20082009 type stimulus. They have a little bit of liquidity. Do not expect a big package from china. Manus i just want to pick up on that. I am looking at his twitter account. Shifting economic priorities towards a renewed focus on growth for the chinese highlights the dilemma between shortterm stimulus and longerterm reforms. The risk is the pboc and china could be making a policy mistake as they go for rob growth. Pushing for rob growth raw growth could make policy mistakes with the chinese. Peter there might be a grain of truth in it but if you look at nominal growth in china, it is probably printing at levels around 7 , which is a very high level of nominal growth for basically the second largest economy in the world so they are doing as much as they can be reasonably expected to do. If you look at the chinese policymakers, they are notoriously longterm in terms of their thinking so i do not envision them sort of overdoing things in the short term merely to make it towards their longterm detriment. I think they will continue with this reasonably slowing growth trajectory for quite some time. Growthwhat would sub 6 in china mean for your review of the Global Economy and how that will translate to the dollar . Peter ok, i think you have slowing growth putting much everywhere. States are slowing, china as well. If we get 5. 8 or thereabouts, it means basically slower export growth and slower trade growth in a broad sense. Bottom markets are priced a lot. For the dollar, what does it mean . It will be hard for the dollar to outperform. We have already kind of restarted qe in a sense. What they are doing in the repo market is the First Step Towards yield curve controlled by the fed p ultimately speaking, that should weaken the dollar a little bit next year. Manus we will talk more about the fed very shortly. In terms of the emergingmarket or near china, the lowest growth since the 1990s, more stimulus to come, we expect long prime rate cuts to come through. How does that play out in the em fx space for you . Peter if you look at the emergingmarket currencies, they are down towards the u. S. 10 year yield, which is an Interesting Development this year. When you think about it, it kind of makes sense. Markets everywhere have placed in ultralow long end rates, and consequently, what you have found is the main exporters in booked exportey into china but they also have the same export destinations as china. Anytime it moves or weakens, they have to weaken their own outlooks in tandem. As long as it has its weakening tendency, em will not do a lot. Nejra and the aussie . Peter the only reason aussie dollar should trade a lot nejra Peter Kinsella, great to have you with us for the hour. You stay with us. Coming up, the great divide. Ecb governing Council Member francois says Monetary Policy must be active. We get into that debate, next. When you are traveling to work, tune into bloomberg radio. This is bloomberg. Nejra bloomberg daybreak europe. You. good morning to i am in zurich. It is a big week for the swiss banks. Say whats preparing to his numbers look like. Potential job cuts on the Investment Bank side in asia. Is that part of a bigger Reduction Program janko program . Citibank coming through this morning. Overall, the banks are more cautious. They are overweight swiss banks generally. We will see how that plays out in the next 24 hours. How is the green . Is it cold . You know what . It is relatively mild today. My teeth have literally been chattering. At the moment, they are feeling ok. Let us get back to brexit, shall we . Boris johnson is hoping for a new boat on his deal today. Parliamentary rules about bringing the same question twice in a session. Bloombergs maria tadeo joins us now from brussels. For more, maria, great to have you with us. Whats the political calculus in brussels as we head for another crucial week . Good morning. The mood here is very much wait and see. One of the things we have been reminded over the past 24 hours is that the Prime Minister has not lost the vote yet, has not been defeated. A lot can happen from now until october 31. The eu taking a step back. Not they do not want to precipitate events they feel still need to play out in london. We did get a few lines out of the sunday times thats adjusted perhaps the eu would be willing to grant another three months, take brexit to february 2020, if that means the deal can get through. Of course, this is very much pending on whether the vote does take place this week or not. Essentially, that comes back to what michael gove was talking about. Good to see you. He said the extension is not guaranteed and the europeans could reject that request for delay. The question is, who wants to be responsible for that . That is always the question. We heard from emmanuel macron, who said he does not seem the need for another extension. To grab moreeed time because there is a new deal in place. If you look at every summit we have covered, every time we moment, a make or break they were more willing to engage then they would initially signal. Nobody wants to be blamed for a no deal brexit. Nobody wants to be seen as pushing the u. K. , especially the Prime Minister so close to getting this deal through. To think a single european country would stop this, frankly, it seems very unlikely. Thank you very much. Maria tadeo with a european perspective on brexit. Lets get the first word news. Protesters have unleashed another wave of destruction in hong kong after using petrol bombs to set off fires in subways and banks. Chinese businesses including huawei were trashed. Attending a ceremony. Swiss environmental parties have made history in the countrys election. They overtook the christian democrats. Ae green party also created share of the vote, meaning the two control a quarter of the house. That came at the expense of the antiimmigrant party. President trumps allies are making a list of potential replacements for mick mulvaney. It includes Matthew Whitaker, a veteranstie, and political operative. There are signs trump is in a hurry to replace mulvaney. Not happy with his performance at a press conference. Party struck a deal to regular housing costs. That paves the way for legislative approval before next year. Its one of the most radical plans to ease the burden after a property boom caused rent to double over the past decade. For london homes rebounded in october. Values climbed 2. 4 amid scarcity of new properties. New listings came down 30 , showing how brexit has made prospective sellers reluctant to take the plunge. 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. Manus thank you very much. To central banking, and a wave of easing. One of the worlds most dovish banks says it will continue with powerful monetary easing. The bank of japan governor kuroda spoke at the g 30 international. Using to reduce includes all three elements. Longterm real Interest Rates fell to a level interest the rate of and powerful easing effects have been observed that have been exerted. Manus mark carney refused to commit to Interest Rate hikes. Lead to a it could pickup in Economic Growth. The banking on governor spoke to bloomberg. In that environment, you would expect all things meaningful for the economy to pick up. That makes Monetary Policy more interesting. That would be including Interest Rate hikes. Im not going to precommit. Waves of easing, the question remains how far policy can go. Olaf scholz says the government has been helping by enacting stimulus. Looking at investments, if we look at taxes. The idea of fiscal policy supporting Monetary Policy is something the ecb governing Council Member also mentioned. He said all available instruments need to be mobilized, including fiscal policy. He was speaking to french daily. The story on the bloomberg today emphasizing not just recently, but also of course we heard from the imf meetings, a longtime supporter of stimulus said he does not want any more rate cuts. Isyou think the market overpricing what we get from the ecb . They terms of pricing in, are not pricing in an awful lot. It is having a very serious impact on the banking system. That is kind of clear. Bankss interesting is the have not passed on those rate cuts to customers. If they do, its not just the economics or the politics that gets interesting. They are seeing deposits whittle away because of ecb policy. Then you see a real backlash against the ecb. Draghi needs the finance ministers to settle and engage in more fiscal stimulus. The money of European Countries have the space to do so, particularly germany. Saying and doing it are different things. The gap is immense. Can you hear me, peter . Can you hear me . Yes. Manus good. I want to put a proposition to you. I have said that to many people, but here you go. We are going to talk about the fed. The fed cuts three times. Then they said to the market, we have done enough. We sent a clear message to the market. The rhetoric coming from austria, the netherlands, and italy, are we in the same moment from the ecb as we were from the fed in 1998 . Enough, we are done. Yes. You are getting to a stage certainly on the positive right policy where it is having more malign impacts then benign impacts. From here, the cuts are not going to do anything at this stage. They are not going to have any kind of stimulative effect whatsoever on the european economy. From my perspective, i agree with them. If you look at the focus, has shifted to restarting the qe program and trying to encourage governments to borrow more. The trick for the ecb is to keep rates at such low levels finance ministers say, look, we can borrow for a long time. Nejra it sounds like you think we have hit or are very very close to that reversal rate. Notif fiscal policy does pick up, what is left for the ecb to do . What should markets be preparing for . You cannot repair for anything. There is nothing they can feasibly do. They can increase qe volumes, but what impact is that going to have . We are already trading at 40 basis points. It is quite clear they dont have much they can do. Manus when you expect the bond market to begin to reprice the alco reprice . Theoriese one of the in policysetting, what are the implications for the periphery versus the koran rates the alco i dont think the bond markets are going to do a lot. You have core inflation well below 1 . Reason for bond markets to rally, for people to Start Talking about changes again. Peripheral rates are going to continue lower. You are in a low rate environment. You are going to find yields not just in core, but increasingly in the periphery. I do not think that is going to change anytime soon. Nejra what is your outlook for the eurozone economy . If we get any kind of positive news on u. S. China trade, on brexit, do we avoid recession . Avoidprobably just about a recession, though germany is probably at the moment. The question is not so much eurozone growth as chinese growth. Euro zone exports are so much to china. China costs, thats where we felt the moment. If we see chinese growth sub 6 to 5. 5 , that can be pretty real. Manus ok. Peter kinsella outside westminster, braving the cold. Wirecard is commissioning kpmg to audit allegations raised by ft. It is going to be an independent Commission Set up. Theyre going to use kpmg as an independent look across the books. Its going to be a big week. You know why i am here. Im here for ubs, trying to find some insight. Its a big week for the earnings numbers. Barclays. S, they are all going to be reporting. We are going to be keeping everybody uptodate with events. Canada, Justin Trudeau fighting for his political career in the federal election wednesday. Facebooks chief Mark Zuckerberg heads to the hill, testifying for the House Financial Services committee to address concern over the libra cryptocurrency. Thursday see if the last Monetary Policy decision of the ecb. We will also get a Rate Decision from the Turkish Central Bank amid geopolitical challenges for the country. Sunday, argentina goes to the polls. A key job for the winner will be tackling the countrys debt crisis. Coming up on bloomberg, we speak to the business minister. Do not miss that interview after 7 00 a. M. London time out here at westminster. This is bloomberg. I think the risks of Monetary Policy being too tight driving this into a recession exceed the risks of Monetary Policy being too easy. I personally would be more cautious bringing rates down because you are using up one of the tools you have. What you see is bankers and finance ministers share worries monetary admission being at its own. Thats not to say we dont have a role to play. If you want to improve growth, we are going to need broader policy. A World Economy is going to depend on much more than Monetary Policy. Bank policy had a very Clear Strategy during the last year. Europe is experiencing with negative rates, obviously, not just the Financial Sector, but probably for the economy. Below zero. Ot go never in my life. There is something irrational about it. We think now we have room for lower rates. Its going to depend on how it develops from there. I would price in one more for the rest of the year, then i would sit back and watch and wait. Manus some of the top newsmakers at the imf meeting over the past week. The slowing Global Economy and the key focus for policymakers. It is bloomberg daybreak europe. Lets get the Bloomberg Business flash in hong kong. Ubs is cutting about 40 jobs in asiapacific. Themberg has learned reductions are split between the markets and banking with Vice President level or below as part of the global push to trim costs. A Goldman Sachs banker has been arrested on Insider Trading allegations. The security and Exchange Commission says brian cohen lead to nonprivate information nonpublic information as part of a scheme. Employee third goldman to be charged over Insider Trading in the last six months. Corporate loans in china unexpectedly steady. The oneyear prime rate was kept at four point 2 . Analysts expected a reductionist the chinese economy sees its weakest growth since the early 90s. That is your Bloomberg Business flash. Manus thank you very much. Inicials will meet next week Global Economic uncertainty. They have not taken a Third Straight rate cut off the table. The fed vice chair, should, the last to speak. There is a risk of weakness from abroad. Peter kinsella is still with us. 1998 with the last time the fed did three cuts as the economy was growing. Then they very clearly indicated to the market they were done. Do you see hallmarks of 1998 . Or is the world structurally different . We are structurally different. If you look at Global Growth coming out of the Asian Financial crisis, but broadly speaking, the eurozone and elsewhere, you had a rebound in asia, now you see growth slow everywhere. If you listen to what Richard Clarida was saying, he was saying we have a risk of slowing growth from abroad. Certainly looking at the data, print,k at the u. S. Ism for manufacturing and nonmanufacturing sectors, has clearly been slowing aggressively. The situation is different. Consequently, i will be more inclined to believe the fed will be easing more rather than less. Nejra i heard a commentary that if they dont signal an end after three cuts, we go all the way to zero. Is it binary . Certainly that we can get levels around 1. 5. Risk would be 1. 25. We will see how the data develops. The risk would be certainly on the lower side. You are seeing weakness across the economy. The external environment is still very low. You are doing that in the context of very low inflation. I think the risk if you are the fed, i would much prefer to do more easing rather than less. Manus what does that mean for the dollar . If i look at the dollar over the pound, i did some notes. We turned slightly this morning. Retail sales begin to fall over. There are three rate cuts. Beginning of where i begin to look at rate differentials rather than haven status for the dollar . I would say yes. The dollar only really works in 2810 two thousand nine style scenario where the rest of the world is imploding amid the rest of the u. S. Treasury market. We have seen the dollar fare reasonably well because financials have been coming into u. S. Investments on a nonhedge basis. The yield pickup is much higher than european or japanese equivalents. As that rate differential narrows, as you see growth starting to slow, you dont have huge amounts of reasons to hold the dollar. Particularly if you are a nonu. S. Dollar based. Nejra where would you prefer to express a weaker dollar view . The ecb is at the limits. Best place in q4 is sterling against the dollar. The only good thing you can say , that is huge underlying source of demand. Because the ecb has been fully priced in, it will affect dollar weakness rather than euro strength. Safe havens as well. Swiss francs do ok against the dollar. We will see how things work out over the year. We go into elections in the u. S. 2020. Elizabeth warren is higher in the potential nominations. What would Elizabeth Warren bear with me. What would Elizabeth Warren becoming president do to the dollar . Initially, investors would be frightened. She is quite left wing as it is. The Financial Sector certainly would not like her. Once those effects fade, we will see what her policies are. That normally tends to lead to an appreciation of the Real Exchange rate, but it happens over time. If she gets elected, i mean. Nejra the 10 year yield as well, markets saying if we get to 2 , that is a buying opportunity. Is that the way you look at it as well . Peter 100 . The u. S. Is doing ok. Yields in the tenure will affect the demand for yields. Manus we just heard from jamie dimon lambasting the possibility of a moment he would buy negative yielding bonds. He never would and he hopes you dont get to negative rates in the u. S. What is the biggest concern when you talk to clients . To the zerogoing bound in the u. S. . Necessarily. Recently you saw them a graphic and trend growth in the states. I do not think it is going toward zero bound. It does not mean we will never get there. It is certainly not anytime soon. To 1. 3, one. 5 primary yields . I would say yes nejra . In terms of the u. S. Economy, have a point as it had the labor market . Market . Hit the labor peter so far that has not happened. It is interesting job growth, wage growth has come down, which is interesting. Kind of a weird labor market. We just have to see how it develops. Thank you so much for joining. Cfo. G up, we speak to the dont miss that after 8 00 a. M. London time. Zurich for the next 24 hours. Sergio ermotti joins me just after 6 30. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Manus good morning from zurich. It is daybreak europe. The big push. Sterling takes note as boris theson prepares to bring brexit deal. Speculation suggests he has the votes. Pulling steady. Chinas top trade negotiator says progress is being made on a partial deal with the u. S. Disappoints byc keeping loan rates steady. And setting the town. A big week for european banking measures, set to report. Banks. Ot just the today we hear from the cfo of the Software Giant sap. Nejra has we wake up, we know Boris Johnson is going to try to put a meaningful vote to parliament. The government is going to start putting through that legislation to deliver brexit by october 31. Agricole, rbc, credit looking to the upside. Goldman saying the vote will pass this week and we will get to 135. We have Peter Kinsella as well. He says the vote is likely to pass. If we get 132, that is where volatility starts to come down. That is still elevated at the moment. Manus he wants to belong the currency, short the volatility. Riskuestion is, the tail of hard brexit. Thats what we all need to assess. A whole year of negotiations to go. There are risks aplenty. Breaking news across the bloomberg. Seeking to get controlling stake. Theyre going to offer 7. 35 in cash. In terms of the position, that is the latest crossing the ekoomberg terminal for temas Unit Offering to buy an additional 30. 55 of keppel. We will keep an eye on that. Keppel, their core businesses. Ffshore marine infrastructure stock down 11 on the year. Im going to catch up with Sergio Ermotti tomorrow after 6 30. We will have that interview. There is a bloomberg story coming out of the office, possibly some 40, 50 jobs could go in the asian Investment Banking. Below the rest of the group. That is the challenge. Keeping the cost cuts on track. And of course the sacrosanct, the dividend. Cable might be starting to price out the risk of a no deal brexit. How that translates into the wider markets, we have seen a lift in u. S. Futures after we saw stocks push toward alltime highs on friday. Lets see how europe is set up in terms of the futures market. Ftse futures absolutely flat. Not a lot of movement in the dax futures either. Cac 40 futures at higher. In terms of the global risk out there, perhaps brexit not looking at much of a risk. We are still focusing on Central Banks. The ecb meeting this week. And of course, still talking about the trade war. How is that shaping up in the bond markets . Manus if you travel with me to the higher ground, it is called optimism. Brexit optimism, trade optimism, that could take the bond market in terms of the yield up to 2 . 2 is going to be the highend. At that juncture, they want to buy. They see enough risks out there for the bond bulls. There are a litany of risks in terms of Global Growth. The offer side takes you to 2 . 1998 . Peter kinsella says it is not, where you had three rate cuts and then the fed indicated it was reasonably to be expected to sustain the expansion. Three cuts was enough to sustain the expansion. Kinsella says it is not 1998. It is a different world. Lets check on the rest of the asian markets. Timely enough. Juliette saly. Juliette it is 2019. We are seeing the nikkei close higher than 0. 25 . There has been flat movement in the yen after three sessions of gains. We saw japans exports fall for a 10th straight month in september. A bit of bad data out of south korea with those 20 day exports adjusting south korea is going to see an 11th straight month of declines in exports. All of this a result of the trade dispute. Hong kong giving up early gains. Morgan stanley cutting its gdp real forecast for hong kong to 1 . 8 despite that disappointing export data out of south korea, you have the korean won higher against the greenback. Speaking of currencies, we have seen a lift in the yuan. Have a look at my chart, or we have actually caught a bloomberg replica of the rmb index. This is showing the yuan is falling against a basket of currency to a record low against its peers after we saw european currencies really rally on this hope of a brexit deal. The fact you have seen a lift in the pound and a number of other european currencies is keeping the yuan lower against this basket according to zero securities. All, of course, thanks to that rally in european currencies and the pound. Thank you so much. Boris johnson will ask the house of commons to back his exit deal after lawmakers frustrated his plans for the agreement to be scrutinized, forcing johnson to write to brussels to ask for a delay. The government is confident about its chances. People have written off the Prime Minister. We seem to have the numbers in the house of commons. We dont know that, but from what people have said, a lot of people say, get this done and move on. Manus dominic raab saying they have got the numbers. Oris johnson is adamant the u. K. Will leave the eu on october 31. I will continue to do all i can to get brexit done on october 31, and i continue to commit this excellent deal to the house. Speaker could still block the vote. Same question twice in the same parliamentary session. A technicality of the Great British parliament. Mliv asking what impact will and negotiated brexit have . Join the debate, reach out to the mliv team. Global head of kokou agbobloua is the global head for Societe Generale. Another day in politics. The risk of heart brexit has dropped. They get to about 35. Have you been a buyer of strategies to the upside . Do you believe in the negotiated deal for brexit . If you look at the data, we went from 120 a few weeks ago to 129. It clearly has rebounded back about 7. 5 . Given the news over the weekend has led to a correction, so the path of least resistance is for a higher cable. If you look at the distribution of outcomes, no deal brexit has come up quite significantly. Today it is more a question of when as opposed to a question of if. If you look at cable over the past five years, it is down. There is more room for a correction. 1 37. It is a shortterm scenario should an agreement be reached in the house. Great to speak to you this morning. If it becomes a question of when and not if and you start to put long sterling trade on now, how do you combine them with trade on volatility as well . Perhaps any protection risks in the Options Market . Kokou if you look at implied volatility, it clearly is high given the risk and the distribution of outcome. It is also something that has not really been extreme given the fact that a lot of investors have decided to step away and not necessarily trade the noise versus the real information. We still think buying call options do make sense. Trying to own volatility and sell at higher as opposed to going short volatility. Then you have other trades in the equity markets where the ftse, for example, could suffer from a stronger currency because a lot of its revenue arm comes from dollar exports. Long small caps versus short could be an interesting trade as well. About on the short dated rate market . There is this pivot at the bank of england. Agreed and an negotiated brexit, the phrase mark carney used was Monetary Policy would become more interesting. He would not commit to the direction of trade. Ratesu do you believe would ultimately rise in a negotiated brexit . Is it that the Global Economy would stymie any nearterm hype yeah, how do you play the short rates . Kokou this is a brilliant point. Ityou look at the backdrop, has been falling gradually over the past few years. Leadingconsistent with Economic Indicators and global pmis that have been following falling. The fiveyear breakeven in sterling has gone up from 2. 9 to 2. 5 . Clearly the u. K. Is facing pressure because of the weaker currency. I do not think the Central Banks to raise ratesd in the backdrop of slowing growth. Its going to be datadependent. Interesting is the right way to put it. At some point if inflation were to go out of hand, they will have to signal with their rate hike. Nejra would you actually be wanting to put on u. K. Related trade . I talked to somebody who made that exact point, that with a stronger sterling, those breakeven rates in the u. K. Are going to start falling. Absolutely. There is an interesting balancing mechanism between the currency and the inflation. Down by 19 over the past five years, which is sort of explaining why inflation has gone up from 2. 9 to 2. 5 . Breakeven inflation in the sterling. Therefore, the currency will probably be doing the job of the central bank in putting an end to the inflationary pressure. Clearly looking at inflation could be a way to trade this sort of scenario or inflation trade as well. On the gilt market, there was significant drift last week. 175 is where we finished on friday. A stoic market on friday. If you look at the longer end of the curve, where does that go on a negotiated deal . Between now and the end of the year. If you look at the long end of the curve, you have to realize an amount of demand from lbi investors who are major receivers given sort of the duration gap they are facing. If you look at the scenario of a strong or a deal, you have stronger growth, but then you get inflation that gets more subdued. I think ultimately the path of resistance would be for a slightly higher long end in terms of yield. 20, 30 basis points would not be shocking in the mediumterm. From kokou agbobloua Societe Generale stays with us. Thank you so much. Lets get the first word news now. Protesters have unleashed another wave of destruction on hong kong using petrol bombs to set fires in subways and banks. Chinese businesses including huawei were trashed as chief executive carrie lam heads to japan today to attend the ceremony of the emperor. A Swiss Environmental party has made history. The overtook the christian democrats to become the fourth biggest party. The green also increased its share of the vote. They control about a quarter of the house. The Swiss Peoples Party saw its lead narrow. President trumps allies are making a list of potential replacements for acting chief of staff mick mulvaney. Sources say it includes matthew and aer, chris christie, veteran political operative. There are few signs trump is in a hurry to replace mulvaney. Some white house aides were unhappy with his performance at a press conference on thursday. Lebanese officials are scrambling to avert a financial meltdown a bit nationwide protests. Talksime minister held with Coalition Partners on sunday two days after he gave them 72 hours. Tens of thousands of people took to the streets for a fourth day of antigovernment demonstrations. 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. Much. Thank you very six of theeek largest u. S. Banks climbed on betterthanexpected gains in trading at a surprise jump in Investment Banking. This week, we get a look at how european banks are faring in this falling rate environment. Tomorrow investors get their first indication from ubs. They expect revenue to decline. Wednesday, we will be watching for updates on the swedbank Money Laundering scandal as target revisions after dividend payouts were cut from 75 to 50 in july. We will also get metro Bank Earnings and thursday we will see earnings from rbs. , and rbsd control new ceo will take the spotlight. Friday we will see if barclays can complete its hat trick. Sabado sabadell is also said to report. Coming up, we speak to the s. A. P. Ceo after 7 30 a. M. London im time. Nejra 7 19 a. M. In london, 40 minutes away from the start of cash equity trading. This is bloomberg europe. The demonstrators in hong kong burned parts of the rail stations on sunday, the 20th straight week of protests ascended into destructions and violence. Joining us now, good to see you. This weekend, carrie lams address did little. Thats right. Protesters came out again in force despite the fact the rally was technically illegal. Had 50,000said they people on the street many of them wearing masks, including those mocking president xi jinping of china. Her ban on masks implement earlier has been doing very little to deter protesters. Or to end the violence. We saw a 19yearold stabbed over the weekend as well. There is escalating violence ever since. It has done nothing to stem the protest either way. Carrie lam is heading to japan today along with a bunch of other dignitaries in asia. On for her. S there is really no answer that would end the violence anytime soon. Thank you very much. We turn our attention to china and the base rates for new corporate lane corporate loans unchanged after the economy see the slowest pace of growth since early 1990. Dispute prolonged trade with the u. S. Nejra beijings top trade negotiator officers offers positive signals trade talks are making progress in both sides are working toward a deal. The incoming ecb president says president trumps trade war has damaged Economic Growth, but he could lift that burden if you wanted to. If he wanted to. The biggest problem trump has is in relation to pricked ability and certainty of the terms of trade. It is the unknown which is hurting. Kokou agbobloua of Societe Generale is still with us. If you take a more positive view of the negotiations and couple it with what we have were talking about about brexit, would you be tempted to move away from defensive stocks at the moment . Kokou yes. Over the medium to longterm, there is value in value stocks. Companies that are more exposed to Economic Growth and inflation. One of the things we are seeing today is the diminishing effect of Monetary Policy. ,f we were to go into recession there is a huge amount of pressure on government to step in and engage in fiscal stimulus. Governments do act under pressure. This is why a 2020 recession could be the catalyst that is needed for the monetary to the fiscal. Anus there is almost like dancing intervention. You are looking for fiscal salvation, which i like the title of. What sort of fiscal salvation could we see . How do you trade fiscal salvation . It simply means doing another qe creates the some of the occasion the zombification of Corporates Companies that are supposed to die do not die. They are kept alive by banks. This expands the output gap. In japan, you get the liquidity trap. To create real inflation and growth, investments or minimum wages etc. Are ways to generate inflation as opposed to assets, which Monetary Policy has done thus far. Exposed to growth as opposed to quality bond proxy stocks that have done very well over the past few years. This is something where you over one to two years time. You clearly need that trigger in 2020. We were talking at the top of the show. Manus is in zurich for the eu Bank Earnings this weekend next. The u. S. Banks set a high bar. Our european banks likely to disappoint . I ask because i notice you have kokou european banks have been suffering from negative Interest Rates, and it is well known and has been damaging for net interest margins. Ultimately it will depend on the outlook. One of the things you see that is the dividend yield sector is enjoying today, which is acting a bit as a floor. Positioning has been pretty extreme. Outlook canhe change, you would potentially seem a decent rotation into the sector. Andill depend on inflation the outlook by the ecb as well. Youve got that position on a basket of eu quality bank dividends. Kokou agbobloua, thank you very much. Head of Growth Strategy and solutions at Societe Generale. We have a slate of interviews this week. We are going to kick it off tomorrow morning. Sergio ermotti joins the Bloomberg Team just after 6 30 a. M. We have that story this morning. More pressure to come. Next up, we speak to the cfo of s. A. P. The european open is up next. We carry on brexit coverage from westminster as well. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Call, click, or visit a store today. Bloombergome to markets. This is the european open peer today the markets say buy the dip. Goldman sachs recommends buying the pound as it goes up to 135 in their forecast. Boris johnson prepares to push brexit deal through parliament. Cash trade is less than 30 minutes away. One last push