Manus it is all about the oil markets down here. We have had cracking conversations. They reckon it will be tough for the market to get above 64 a barrel. It is great to be back with you. On that trade discussion we are taking a look at the optimism around trade, catching a bid for safe havens as well as the reemergence of geopolitical risk with tensions rising in hong kong and the shooting of a protester. Manus we will get into the be hardoves, going to to get above 64. You have got the daily percentages of trade, aramco discovered more barrels and opecs outlook is not that great. You have got a couple of things we should keep an eye on. Gold, treasuries most important markets indicators. The worst week in three years last week. Slightly better this morning. Are thet positions highest since june this year. A little bit of a shift. People are worried about the rhetoric from donald trump. We have had the weakest shorts piling into the bonds but is it the right moment to do it . Nejra we have had five weeks of gains. We look at refraction reflection with weakness. The biggest losses in hong kong, the hang seng down 2 , the biggest drop since august. We have hit record after record on the s p 500, a new closing high on friday, assessments over where we were going. We hear from President Trump and he poured cold water on the optimism about a rollback, saying nothing has been agreed which might have been obvious but seeing weakness in u. S. Futures. The treasury markets are closed so the focus is on the equity markets in the u. S. Around seeing concerns bring liquidity forward to the highest since 2016. 109. En what get back to the trade conversations. Investors with mixed signals in the trade talks. Said negotiations were along nicely. Last week pointing towards a first phase deal which would but he tariffs rollback, suggests the u. S. Is ready to make concessions it is incorrect. China would like to get a rollback. Not a complete rollback because they know i wont do it but we are getting along very well. They want to make a deal. They want to make a deal more than i do. Nejra joining us is balance against, cio at alice higgins, cio at kong,itical risk in hong five weeks of gains, equity markets pricing in phase one. We are due for a correction. We have had stabilization, no surprise the risk off time, it is relatively limited on the s p 500 futures. But positive overall, ofufacturing showing signs strengthening. Impacting china, that seems to be blossoming. As for a trade deal despite everything, there is a deal to be done here. Great to see you. Speaking with Erik Schatzker said it all. We are trying to rationalize i want to show you negative bond yields. Six days to undo 2 trillion worth of negative debt. It screams something to me about what the bond market is saying about Global Growth. What does it say to you . We arranged to trillion dollars in six days. I agree with that. It is pricing in the same thing as equity markets. There is the negative correlation which essentially is the idea of the Global Economy is recovering. Consumption is held up but it is all about manufacturing and about time. Not sure we will get rid of negative yields completely atause we have the ecb negative. The short end will be negative for years to come. I think that is the wrong policy. The longer maturity bonds are going to become less negative. Nejra how does it fit into the fact we have had data out of china with factory prices, concern rearing its head, not exporting deflation but at the least disinflation . Us for someen with time. It is remarkable how low it is globally. Theurope negative rates and economy is going to get weaker this year but low inflation. Inflation prone economy but hard to generate inflation. I think globalization is alive despite the weakness from china that is keeping prices down. We remain a lowinflation house. That is why we see the rate structure overall. We will get rid of the negative yields but the rate structure will remain low. Manus if the rate structure remains low, what is the biggest trade to protect yourself or to take advantage of a low inflation environment . We have some bonds. We are basically leverage long the twoyear and short the 10 year. The way we look at it, it is a bit of a hedge in the sense that if things go badly like 2008, or like germany and the u. S. , the rate curve will be steep. It will not be a good time for risk asset. You could have bought bonds. In contrast, what we are looking at, you can see the graph increasing, more like a midcycle. Like that midcycle. Rates are going down because inflation is low and the economy is weak but we are seeing the curbs stephen because markets are looking forward to growth and there will make money. We are leverage long the twoyear. All of these treasuries need to be financed on repo. Nejra do you rank into that when you say you have cuts from the fed in 2020 . I have heard mixed views. The fed has cooled a bit but they are data dependent and market dependent. There might be room one or two more cuts because it is a lowinflation environment. The idea Central Banks have a premium over inflation, it is gone. The real rate of 3 , you dont see that anymore. Ofwont take much in terms low inflation. That is the focus to have another cut or two but the steepening is likely to come from the selloff in the 10 year. The last four or five weeks it is classic midcycle playbook. Manus we will go deeper into that later on. Allen higgins. Giving live trading in the market. Hong kong, protesters, they have had a series of incidents in the city. Shot byle have been police. Lets get to our reporter joining us. This is a ratcheting and escalation in terms of the response from the chinese authorities. Can you walk us through what is happening . Basically it started over the weekend. We saw the first protest related death, which really triggered the violence. Protesters then struck to disrupt the morning commute. Outng that time elyse went to disperse, there was a chaotic scene, police scuffling with protesters, it drew his weapon and fired it. Three shots were fired and at first they were saying two teenagers, now they say one. He was just out of surgery, now in intensive care. But we have seen after that is calls for protests across the city. We seen disruptions to the rail lines and tear gas fired in Central Downtown which many viewers are familiar with. Nejra thank you so much to managing editor dan kincaid. Lets get to first word news now. Tom australia is bracing for another week of devastating brushfires. Areas of greater sydney are facing a catastrophic threat that is unprecedented for this time of year. Three people have died and more than 150 homes destroyed as fires went through areas hit by a twoyear drought. Chinas consumer inflation could hit 5 in january according to economists at barclays, citigroup and bank of china. 3. 8 ose to a year high of because of pork prices. Demand from the spring festival in january will push the gauge up further. South americas longestserving president has resigned. The bolivian leader announced his departure after election irregularities triggered weeks of clashes and intervention from the armed forces. He claimed to be the victim of a coup and called to the International Community to intervene. 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. Lets pick up on the big story this morning, the shooting in hong kong. The market is being discreet in terms of liquidity. Msci in hong kong is down 3 . It is the biggest oneday move we have seen since august this year. 240 billion has been wiped off. There is the chart for you. Squeezed higher, you have the hong kong threemonth dollar cost ratcheting higher at this morning, the response mechanism from the chinese, in terms of response. The markets are beginning to Pay Attention to week 21 of the protests. Gamble. Out the election is it backfiring . The spanish Prime Ministers party loses seats, weakening his power. We will take you live to the spanish capital. This is bloomberg. Daybreak is bloomberg europe. I am manus cranny. Nejra i am nejra cehic. Has more. Aly good to see you. Risk off today but the big thing is on hong kong. It is. Index have a decline of more than 3 . The hang seng is off 2. 7 . Both of the indices with the biggest drop. There is one stock on the index in the black. You see the likes of the banks, m. I. T. , the under significant pressure. It has gone through into sentiment across the rest of asia. We have single day, that was off to a good start but you see this is off 1. 5 . The nikkei is tracking lower by a quarter of 1 with money going in on safe haven buying. Also a cloudy outlook in terms of the u. S. And china trade talks reflected in the other currency markets particularly the korean won. We had the first 10 days of exports also falling down 21 . The south korean one of the worst performers in asia. To add to the gloomy outlook we had more signs of factory deflation out of china over the weekend. We have the producers price index falling for a fourth month. The drop coming through in the the worstctober was we have seen. Economists are suggesting we will see weakness in the Fourth Quarter as we start to see import cost and Energy Prices falling since june the most since 2016 going to blow through into price pressures for the likes of europe and the u. S. As everyone looks to china for the downbeat read we have been seeing in Producer Price index. Manus the global threat, whichever word you want. Lets get our attention across the business flash headlines. Tom mackenzie hes with the team. Tom alibaba singles day promotion off to a flying start. The shopping bonanza 16 billion of purchases in less than 90 minutes equivalent to more than half of last years record for the 24 hour event. An estimated half a billion shoppers are expected to swarm the ecommerce giant site for everything from refrigerators to cashew nuts. Oil will peak in 20 years according to the perspectives of saudi aramco. This comes from the consultants ihs market which sees demand peaking around 2035. Officials agreement agree this is overblown. Instagram itching likes for some u. S. Users. They will hide them in attempt to remove social pressure following similar experiments in other countries. Speaking exclusively to bloomberg, the instagram head said it would impact user safety. I dont think it is likely. It is a possibility. It would be really bad for instagram. It would make it difficult for us to keep people safe. It could be difficult to build and innovate. A lot of the work on shopping is built on top of the infrastructure work the Marketplace Team has done the last new years. You have to take these things seriously. So we do. Bloombergis your business flash. Nejra plus get an update from spain. A gamble looks to have backfired with the general election returning fewer seats for the socialist party. The early poll six months after the last one oversaw a virtual wipeout of the potential coalition partner. That leads them again uncertain. Maria. Et more from really good to see you. After a bruising result, how is Pedro Sanchez going to pick up the pieces . That is the big question. This is the election that was supposed to went the deadlock before the election. If you look at the election butlts, the socialists won they lost seats and the Prime Minister doesnt have a path to a majority. He turned to the left, [indiscernible] to the right they have already said they are not interested in joining a coalition. Government inable this country. The question is what does it mean to the economy or for the markets . You look at the economy that had a strong rebound from that crisis in 2012, but you see the indicators point to a loss of momentum. The country hasnt seen 2015 orul reform since had a budget for two years. Political instability beginning to kick in for the spanish grudge spoth was a for the european union. Thank you very much. Scene, with political Boris Johnson is hoping his early election will prove more conclusive than spains. Labor claiming the Opposition Party spent 1. 2 trillion times over the next five years seeing economic stability in the u. K. Eye watering levels of spending, 1. 2 trillion it will be reckless and believe this country with a crisis within months, not years. Sunday politics programs in the u. K. Are the best. So claim a 1. 2 trillion pounds but the tories are proffering their fiscal latitude as well. Is the gilt market bridled and if this comes to pass from either of them, how quickly would we see a repricing in the gilt market . I think it is right to be cautious on this but it is a low global yield environment. When the yield is so low, we think it is right to spend and if you look at the playbook for japan, where the debt to gdp has indeed,very high levels the japanese Government Bond market is wellbehaved now we have qe which could help, but generally with the 10 year yield less than 1 , real yield negative, why shouldnt you gear up the economy, especially for infrastructure . Makes sense. The will be more guilt down the pipeline. We will put pressure on that to go higher but we believe it is a interest rateobal regime. How low will it go . Forget the scenario for europe. There was a gloomy use conference from mark carney. Whether it might see cuts, that is something people are considering. You are our you are long the pound. Is it enough pessimism priced into the markets to make the investment worth it . Trade has turned around. Sterling dollar not doing so well. Yes, but there is so much pessimism, if you look at the flows and the outflows from the u. K. Equities in particular where you can see this, it has this huge run. You look at wellknown bank of america survey, the most hated asset class is the u. K. , whether it is sterling or equities. There is a lot of pessimism. We are broad just like a lot of places. Looks like a high probability now priced in with the bookmakers of a conservative majority. You could see a very big yearend rally in sterling and u. K. Equities. Manus we have done the survey. Library. The gtv on a tory victory, it is up 34. One thing that struck me and i want you to focus on, the orange coalitionh is a labor. Doesability but only the 127 on the labor relation and 123 offer makes sense to you in the labor in the title . I think we will see more downside at least initially for the u. K. Assets, sterling and equities because of the views. Becauseto look at it is because u. K. Assets are cheap, you can understand why markets will come back to the level after initial selloff. Limited downside makes sense. Thank you. We will be speaking to the u. K. Chancellor coming up. Dont miss that interview later today. Aramcos ipo kicks off november 17 but what about their size or pricing . This is bloomberg. Mberg. Nejra this is bloomberg daybreak europe. I am nejra cehic. Cranny in abunus dhabi. Saudi oil producer aramco released the prospectus for its highly anticipated ipo. While the giant has laid out a timeline, investors have been left in the dark when it comes to crucial details. What is the latest perspective on the prospectus . 650 pages. Did you read all 650 pages . I did read most of it last night. I was going through a lot of it. The biggest take away is what was not in the prospectus. We dont have the share price range or the amount they are going to sell. It is a break from normal processes. The next thing to watch out for his november 17 when the Management Committee will be able to pitch the deal and we get an indicative price range. We know what they are doing to retail investors. Half a percentage point we have seen in the kingdom advertisement billboards on the side of the street, atms, twitter, twitter promotions will come up for everyday people to buy into this deal. Nejra what did we learn about Peak Oil Demand . They are 2035 is what looking at. This is the culprits consultants at ihs. Saudi aramco doesnt say it is reliable. Ipoou are buying into an that is all about hydrocarbons and you are saying peak oil is 2035, there will be questions for the institution and the big money backers. Analyst now onl the london said. Great to have you with us. Lets start on the issue about growth for aramco if you wanted to invest. Do the prospects look good . I think if you have already highlighted the demand in 2035, there will be questions about the longterm prospects for growth. There are a lot of details missing but they are promising a certain amount, 75 billion, will be paid out as dividends. As an investor, and they are trying to say right now he goes through the government but after a certain threshold we will guarantee x amount for investors irrespective of the oil price, that is where it can get exciting. If you are looking at a longterm horizon and see or Peak Oil Demand and they are transforming the company, there will be questions. You read through the notes, to say you are skeptical about the long reach of the governance within aramco from the royal family and your skeptical on growth, is that a Fair Assessment you are moderately [indiscernible] we need moreis details, need the share price, need to know effectively how much they are willing to give out but also how much will it be Institutional Investors . We dont know that and we know that aramco has generally gone around and spoken to a lot of investors in the u. S. , over here as well. It hasnt brought up that kind of excitement because of the unknowns. They want so much to be a part of opec because they need a high price level. They put out the budget for next year and they are predicting it to be 11 lower year on year. Suddenly it becomes an issue do you need to value this to get money in right now . Nejra i will go further and say when i read your piece, 10 reasons not to invest in this aramco ipo, it is a savage takedown. Good contrary and views. Give me your back talk about the valuation. People cited a range where do you see it . We dont do Company Valuation but the variation is huge. Nejra compared to other oil companies. If you do comparable numbers, it is less than 1 trillion but banks have put in more than 2 trillion. It is much more of an equivalent to a bond if you are looking at 3. 5 return on a bond. That is where a lot of the range is over 1 trillion. It is hard to come up with any value statement and say this is how much it is worth and ho