Google and apple outperforming, while netflix and others have lag behind. A chief economics advisor is still with us. Martin, how much are these going to help power the s p 500 to another record . Martin i assume the Semi Conductor market has done better, and 5g, where rollout is important, and the trade negotiations are going to be a key issue, because the growth deceleration we have seen this year is tied significantly to trade friction. If we see a lifting of the trade friction, investment will return quite rapidly, and that will be very, very good news or the technology companies. Manus as far as the earnings season, i had a guest earlier. Earnings, a the slight touch of hunger, is going to hit the market . Do you think we are already priced in with an earnings dip going in . Ontin yes, the surprise is the upside rather than the downside. Trade slow four months. We have seen investment slow for nine months. We now have the labor market deceleration, and this is a key reason why we are getting monetary and fiscal easing. Is key for q4 for markets actually Political Action, so we potentially are going to get a brexit. We have the opec meeting december 6. All of these issues are deal, deal, deal, so the issue is to put in stabilizers, and we will get further monetary fiscal easing to support that effort. So, therefore, we are in potentially a stable phase, and we will have to see how all of that pans out, whether a deal happens, or whether we get some economic stability. Nejra all right, we will pick up on that. Martin is staying with us for the hour. We bring you another earnings interview. Philips, the dutch maker of goods also confirmed the guidance it gave when it talked about profit earlier this month. Frans. Us is the ceo, thank you for your time. You have confirmed that guidance for october 10, talking about toecting adjusted ebitda improve about 10 or 20 basis points, and with the headwinds and the performance trajectory of the businesses you are addressing, can you tell us a little more about that . What are you doing in terms of action to fix the shortfall . Sure, lets position the business. We consider the Third Quarter to be mixed results, because we had this fantastic 6 Revenue Growth across all businesses and all geographies, so clearly, the innovations have tractions across the world. Customers want to deal with us. Diagnosis and treatment and personal health, and we had issues in our connected care business, where, among others, the headwinds of trade tariffs , in a mix thatty was a little less rich. I think it is important to realize that these tariffs are not easy to mitigate. You have to go deep into your supply chain to find out exactly which components, which materials are subjected to the tariffs between the u. S. And china. In our business, it has taken more time to fully get to the bottom of it and to instigate these corrective actions, so it has set us back a bit in the quarter, but we remain confident in the coming quarters, we can resume our upward pass, as we have been doing for the past three years, with a very significant improvement. S, good morning to you. Our top story is that phase one is nearly done. You have guided us down 10, 20 basis points oven in dutch oven increase. Youe one is done, have guided us down 10, 20 basis points with the increase. If phase one is done, what about the margin . Not know exactly what is in phase one. It could be very good news, or it may not affect a portion that is hitting us. That the net impact of duties this year after the mitigation we just talked about euro, to some 70 million what we pay to the u. S. And china in both directions. If the goods and materials that are a part of the phase one deal are the stuff that we use, than that is great news. That means that those duties will come down. It could equally be that it is more agricultural focused, and therefore, it will not benefit us, so i am as anxious as anybody to understand this deal, and we hope very much it is going to be good news. In the meantime, we have no other choice but to continue to take corrective measures. And that brings me back to my first question, frans. I understand it is challenging to get visibility, but with the steps you are taking to mitigate the impacts that we have talked about so far, what steps are you taking . we are focused on selling the products that have the best margins. We are taking the corrective actions with the supply chain so we can avoid the duties. We were, of course, already working on it, and we expect to see further evidence of that. We are also focused on cost management. Altogether, i am confident that the suite of measures we have in the pipeline will be sufficient to improve margins again in the fourth quarter. And then, to resume a good path for next year. Many there are so toficult known, unknowns deal with. China, the data, a huge headline. You still have double digit growth at the end of the second quarter, and that was taken quite well by the market. With the chinese, how does that pan out for your business . Give us some insight on how that is going on on the chinese side. Frans we are repositioning to be a different kind of technology company, and across the world, we see aging populations that require more health care services. People struggle with lifestyle decisions, such as diabetes and cancer and party vascular disease, and capacity in china to deal with that population, the health issues, is just not sufficient, so we have seen a strong expansion of the health care segment, and philips is one in china. We have a very good brand reputation, and we have been growing doubledigit for years now. Frankly speaking, i do not immediately see and Economic Growth difference between, lets say, a six percent or 7 in china makes any difference. We are onnfident that the right path in china. We have got our minimally invasive operating room approved by china, the chinese we are actually expecting good traction from that category, as well. Nejra frans, we have talked about the possibility for a rebound in the business if phase one of the deal between the u. S. And china goes through. A it gets worse, frans, twopronged question. How protective will consumers be in terms of price increases, and how protected will return to shareholders be if the trade war gets worse and further impacts your business . Scenario whereby the trade wars go the wrong direction i think may also happen. We also need to worry about what happens between europe and the United States in that context. End, trade wars almost always end up being paid for by consumers, and that is unfortunate. I do not think there are any winners in a trade war. We try very hard to avoid the impact of duties, into shifting manufacturing location or changing the components of our products. All of that takes time. We tried to avoid that. Our customers and hospitals are affected by price increases, but, of course, if this continues, then there may not be any other way than to pass it on. You say, lets see with the unpackaging of phase one really means for the bottom line for you. There are other phases to go from with trade. Thanks for your time this morning. We wish you well. Lets get your first word news with Annabelle Droulers. Annabelle thanks, manus. Abandoning a key profitability target. Return on tangible equity of more than 11 in 2020. Results missed expectations. And lenders flagging significant restructuring charges as it contends with a worsening global outlook. The eu is proposing a brexit extension until january 31, according to draft documents seen by bloomberg. It will be discussed today. Under the proposal, the u. K. Would be able to leave earlier. This coming as Prime MinisterBoris Johnson was set to lose his bid for a general election on december 12. Hdadiic state leader albag saidad, as President Trump they carried out a raid in syria. He detonated an explosive device. His New York Times reports successors were killed in an airstrike the following day. Toefighters are working contain a blaze in california. The fire has forced the evacuation of nearly 200,000 people. They have declared a state of emergency. Meanwhile, pg e is restoring power to millions after the states largest ever deliberate blackout. Evere states largest elaborate blackout. , limits ofe purchases to just 200 a month. It is much lower than the previous limit. Is victory in argentina considered a victory for the south american nation. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra . Nejra Annabelle Droulers in sydney, thank you. Lets stay with that story with the sweeping of the argentine election on sunday. He replaced the promarket incumbent. Thatomfort, martin, investors can take is that the margin of loss was not as bad as expected, with the position of the government and how they end up working together. You recently put out a note saying to buy brazil. Would you be tempted to step into argentina, given that the results were not as bad as some investors see it . Artan potentially. Martin potentially. Argentina has been diverting its economic performance, very, very poor. It is the reason why we have had this political change, and the imf gave a bailout to argentina of 58 billion last year. The central bank have been very active over the weekend, putting up controls, and they had no choice, because the Foreign Exchanges crashed. So the new government is going to meet today. Policy depend on their going forward, but brazil, like government is new going to be a far left government. And then we have got brazil in moreiddle, which is a market oriented profile, so it is the region, and argentina is currently diverging. It has a chance to reconverge. Going back to fernandez, that is probably not would we are going to see. We will watch it very carefully. The bonds are trading around . 40. Their currency is extremely low. We are not going to be buying local currency. Some things are potentially on the agenda depending on what the new government do. Martin, a very broad question. We have part of the economy team, Global Insight in lebanon, and tomorrow, it could be brazil or argentina. But how are you assessing social instability . Is it a market risk that we are fundamentally underpricing . A network of where the risks lie, is there any kind of hedge trade that i should be looking at in terms of 20 weeks of unrest in hong kong . Lets have a look at the map. So how do you hedge this . Martin unfortunately, you do not hedge it. You have to wait and see if opportunities to invest occur, and the whole key issue here is that we have a political instability phase, and some political leaders are gaining traction, and this is just a generic shift we are seeing across america, across europe, across latin america, across asia, so political leaders have to step up to the plate here, and Political Action has to be seen. What the elections are demanding. If we have action from political leaders, markets are going to support those moves that they are positive. Martin is staying with us as a guest host. And coming up, a first rate cut almost a given, and everyone is wondering. We will discuss, after the break. And tune into bloomberg on your radio in the london area. This is bloomberg. This is bloomberg am this isi bloomberg daybreak. Manus President Trump and the impeachment process. House needs to follow their rules and do what their rules require. Lawr rules are, in essence, as it says here is how you conduct an impeachment inquiry, and what that requires is a public vote. For crying out loud, youre asking people to come and say, here is what happened, but you are not willing to stand up and say i am for impeachment. Well, than that on its face tells you there is a lot of politics being played here. Manus we asked if he thought they were hanging it out to dry, and he said no. We asked about global markets, and he said they are awash with crude thanks to, you guessed it, u. S. Output. Are awash, and the United States happen to be the ones who developed the technology, put the technology in place, and we are reaping the benefits. The world is reaping the benefits of this. Cheap energy is a good thing for the world. Secretary rick perry joining me yesterday. Martin is with us. Just on the oil markets, lets deal with that. We have phase one and phase three on the deal, pretty good news today, but the overarching theme is that opec is probably going to have to do more. That seems to be the consensus. Do you concur with that . Martin yes. I think they actually will. The cuts will remain in place until march, so the december meeting is most likely going to extend those cuts for six or nine months. Is simplyl oil story supply and demand. The supply in the middle east, but we have american supply now, a net energy exporter. They have almost doubled the amount of supply in america over the last three years, and they are now the largest globally, but demand has seen a setback. Theof excess demand over next decade is going to come from china and india. Really, the demand side of the equation will depend on global Economic Growth and getting some of these resources sorted out. Seen asartin, it is impacting quarterly earnings, so exxon, chevron, bp, others, a 42 plunge in thirdquarter earnings when they post results this week, and the executives are going to have explaining to do. What do you say . Martin just on quarterly earnings, that is a shortterm issue. The key is their level of investment, and it is a multiyear investment, so when we have trouble in oil, those ceos make investment, and that is going to be something that is going to impact a one or twoyear timeframe. If we getssue is stability here, and that stability is actually very, very good news for the central banks, because oil is one of the major inputs and the inflation profile. Martin malone staying with us. And the Third StraightInterest Rate cut, the end of the easing, and for more, we are joined by our bloomberg reporter. Reporter good morning. Is this a third time charm before jay powell . Taking out insurance, unemployment low, and Consumer Spending holding up, will this be the final Insurance Premium payment . Economists surveyed by bloomberg think so. Basis point a 25 cut, virtually priced in, and the fed, as you see here, has never withheld easing. Market pricing an actual change in benchmark rates over the years. Now, fridays job numbers, as well, may take on more significance. Is for the u. S. Adding 90,000 jobs, but there are some much more bullish, 23,000. The question for the labor market is whether or not it is running out of steam, and whether this will be enough to sway the fed to sit out the rest of the year. Manus . Manus great center. Lets bring it back to martin. It willin, do you think be plausibility rhetoric for us . They could try to emphasize it, but that would be a mistake. Showed, we know the economy has slowed, but the question is job growth. It was 2. 5 to 3 million per year, and we are now at 1. 5 million, and that is a 40 deceleration in job growth, and that is why i say the fed would make a mistake in pushing this on their policy mechanisms. Mistake atll makes a the press conference on wednesday, or if the fed were to put language like pause, i doubt that, but if it does, we would , and john to friday williams will also have inflation. And we have deceleration in jobs. They should continue with rate cuts. Nejra Martin Malone, great to have you with us on the show today, and coming up, hsbc with thirdquarter profit that missed estimates. We will bring you an interview with ewenthe stevenson. And if you have to step away from the tv, tune in on your mobile device and the london area on the radio also. This is bloomberg. The game doesnt end after that insane buzzer beater. Because with Nba League Pass on xfinity you can watch the out of market games you want all season long. And with the allnew xfinity sports zone, you get everything nba all in one place even notifications about your favorite teams. Watch the dropped dimes, monster blocks, and showstopping dunks. Plus get instant access to your teams with the power of your voice. Thats simple, easy, awesome. Say Nba League Pass into your voice remote to check out a free preview. Dont miss out. Nejra good morning. Ic. M nejra ceh cranny. Am manus these are your top stories. Hsbc shares dropping, missing targets, and flagging significant restructuring charges. This is impacting the banking business, particularly here in europe. Breaking the impasse, impasse, aking the proposed january 31 extension. Back in london, Boris Johnson steps up pressure for an early election. We are live in westminster and brussels. And phase one almost done. Asian stocks rise, and china says there is a preliminary trade deal with the u. S. That is basically completed. They say trade tariffs will knock off profits in 2019 at one company. Manus welcome to nejra welcome to daybreak europe. Ceo, ewen steve nson, and what we want to look at when the market opens, a bit of a mixed picture, u. S. Equities heading towards a record on a friday, the s p 500 holding above 3000. Europe, a little bit of weakness coming through on the ftse futures, but not a lot of direction is what we are getting after a mixed session in asia. We do get some incremental trade, the markets digesting that, but earnings will be very much in focus. Manus . Manus absolutely. And phase one of the trade deal, whatever that might be, and we just do not know what is in phase one. It could be all agriculture. And treasuries, seeing the yields pick up. Is, how highion could yields go on a phase one trade deal . A trillion dollar deficit, so the question is, are they finally going to overwhelm the treasury market . What is the top end of the to percent . T we have got gdp this week and the fed this week, and as Martin Malone just said, any indication of pause would be a policy mistake. Pips. Nds down by 14 and this is carried through phase one of a trade deal. How does it play out . Sophie kamaruddin. It is a big week for asia, earnings in the region, the boj on tap, and a lot of the fed, as you noted, still a lowball volatility session, some markets, india, and earnings climbed as much as 1.