This is bloomberg surveillance. Im mark barton in london. Thatme to have a sip of because we have an acceleration to the fastest pace this year, adding to evidence that growth is becoming more resilient. The pmi index, the composition index, rising to 53. 7 in october, from the 52. 6 in september. This is the fastest pace since the beginning of 2016. The recovery continuing at a steady if not spectacular pace in the face of headwinds from brexit, slowing trade, political uncertainty. Ecb supporting the economy with unprecedented stimulus that will come under review in december. Just want to show you whats happening to the markets today. The stoxx 600 trading higher. Last weekend it rose for the second consecutive week. Best run since september. Last weeks rise was the strongest in a month. Byres the euro stoxx 600 up 0. 75 . The euro is a little bit up now. Track force march, on the worst fourth weekly drop. It is all about divergence because the u. S. As many think is set to hike rates in december. In the chinese currency market, the offshore yuan nearing a record low today. Crude oil holding its advance. Iraq threatening to derail opecs plan by saying it should be exempt from cuts. Big day for banks. Monte dei paschi unveils its Business Plan today. Weve got earnings from ubs, deutsche, barclays. Simple chart, but beautiful in its simplicity. This is the pricetobook ratio of monday to ascii monte dei stoxx and the euro banks index. It is essentially worthless. 0. 08 . Deutsche bank is 0. 029 . Many of our guests have been saying these banks are cheap. Lets get the first word news. Heres, the ramanathan. Kumutha thank you so much. Wall street banks are writing checks to fund at ts takeover of time warner, but theres some concern the pledge may get caught up in regulatory impasse. Jpmorgan has pledged 25 billion of the financing with bank of america providing the rest. The banks declined to comment. At t didnt immediately reply to email and cause. Headed to a yuan is record low as chinese policymakers signaled they are willing to allow greater decline. Pbocanalysts think the reduced the currency basket at the start of this month. The flow of chinese money into hong kong stocks is drying up. Investors in shanghai spend more than 8 billion on hong kong shares in september, the biggest monthly inflow since 2014. Net buying this month has just 7 of that. Analysts say that is because of the narrowing valuation on the citys shares and concern about the feds impending rate increase. Isocialist Party Leadership has allowed to let the Prime Minister take office for a second term. It signals the end of the nations tenmonth impasse. The committee agreed that the 85 socialist lawmakers should let rajoy form a minority government to lead the euro regions fourthlargest economy following a confidence vote. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im kumutha ramanathan. Mark thanks very much indeed. Euro area growth accelerating to the fastest pace this year. Pmi data, the numbers coming up on the heels of numbers from france and germany. France slowed despite strong output. Germany seems to have put its soft patch behind it, expanding at the fastest pace in three years. Lets welcome neil mackinnon. Hi. Good to see you. The latest data, strongest of this year. What sort of shape is the eurozone in . Neil you said it was sort of steady, and over the last couple of months, what weve seen in the pmi data, which is a good barometer in terms of manufacturing and Service Sector activity, is that things have been stabilizing. The numbers have been looking more encouraging. Within the eurozone theres less of a divergence. Countries like france nows showing some signs of stabilizing. Germany is the leader in all this, but other countries like spain and italy have seen Industrial Production numbers starting to pick up. There are some encouraging signs. Mark they are weathering brexit it seems. Will that continue . Neil absolutely. The view about brexit was over exaggerated. I think weve moved on from all that. The economics was very unsound. What weve seen not just in the u. K. Mark which we will come to. Neil we are seeing the spillover effect from that, the euro, other countries, being actually limited if not very small indeed. I think the whole thing has been exaggerated. Mark talk about the euro. March levels earlier fell to january levels. Draghi sort of keeping the paint dry. Very much keeping the door open to a further extension. Neil i think that as a general theme, investors are conscious that the major Central Banks are reaching the limits of effective and conventional Monetary Policy. Within the eurozone, the germans are worried that negative Interest Rates hurt german savers and the profitability of german banks. Some concerns about the size of the ecbs balance sheet. Some concerns that it is running out of bonds to buy. All these things are key issues. This takes place against the backdrop of a firmer dollar. The expectation is the fed will move in december. Technical analysts will note 1. 0850, looks like a little bounce off that this morning, and i think that as far as the dollar is concerned, we have to be careful in not making the mistake that we made at the start of this year, assuming divergent Monetary Policy necessarily means a stronger dollar. We may find the fed has a rethink and steps back and janet yellen is much more willing to tolerate and overshoot in u. S. Inflation. We might find we dont get a rate cut. Mark is that about right . Neil i think so. We all follow the bloomberg tracker on the probability. That is about right. It has been fairly constant. The markets havent really changed their view in recent weeks even though the data has been mixed on the u. S. Economy. Mark neil mackinnon, strategist at vtb capital. Stay with surveillance. Up, including a tale of two banks. Deutsche bank heads a busy week as the monte dei paschi board meets. We look at what the week holds for europes lenders. Then the breakup risk. Could a hard brexit result in a constitutional crisis for britain . Prime minister may begins the amidwith a meeting concerns over access to the european Single Market. At ts 85 billion bid for time warner faces a rocky path through washington as both candidates over regulatory scrutiny. Could this be the first test of the next president s competition policy . This is bloomberg. Im mark barton in london. Heres, the ramanathan. Kumutha thank you, mark. Syngenta shares are trading lower after cam china didnt make concessions in the review of its takeover of syngenta. Both companies had until last friday to make concessions that might have avoided an extended probe of the deal. The eu has until the end of this week to approve the buyout or open a longer investigation. German economyhe minister has reopened a review of its takeover offer of chinas grand ship investment. Although they didnt specify a reason, the move comes as germany seeks tighter control over Foreign Investment in european companies. Angela merkels deputy has called for eu measures to give governments extended hours to block or impose conditions on shareholdings of noneu companies. Phillips has seen thirdquarter profit rise as performance at its personal health and diagnosis and treatment businesses improved. Treatment businesses improved. It is sharpening its focus on growing in the health care market. The Dutch Company sold shares of its Lighting Division in an ipo and is planning to sell its components business in the second half of the year. Banks in the u. K. Will start relocating operations out of the country by the end of the year as london looks set to lose access to the eu Single Market. That is according to the head of the british bankers association. Anthony brown said, hands are quivering over the relocate button. He says many Smaller Banks plan to start the location start relocation before christmas. That is the Bloomberg Business flash. Mark thank you very much indeed. Deutsche bank will report on thursday. The executives are likely to face questions on whether plans to cut 9000 jobs and shrink assets go far enough to lower costs and raise capital. Michael moore joins us with details. Neil mackinnon is still here. Michael, what is the expectation . The good news came on friday when deutsche recouped all the losses after the news from the doj seeking this 14 billion settlement. That was some good news for shareholders. Showed theat move most acute fears had kind of subsided. I think what we will see this week is whether all the news around Deutsche Bank and all that and it around Deutsche Bank has had an impact on the business. You saw the u. S. Banks, the fixedincome trading businesses did very well, up 50 on average. Deutsche bank is expected to be slightly down. Will they outperform and get closer to the u. S. , or will they be a laggard . In that case, it looks like some u. S. Firms have taken share. Mark trading in the Second Quarter was pretty good, up by that was barclays. Michael barclays has done well. Deutsche has struggled in recent quarters. If that continues, that may be a more longterm fear, that because bond trading is such a big business for Deutsche Bank, if that starts to deteriorate, it can become a bigger question. Mark Haslinda Amin spoke to him. It goes with this reorganization. In the Second Quarter, fixed income was pretty good for barclays. Is it steadily on the path to reorganizing . Michael joe staley has talked about europe needing one Investment Bank there to be competitive with the americans and to the a dominant force in europe. He seems to think barclays can take that mantle from Deutsche Bank. Reorganizationhe is kind of moving along at its case. Obviously the trading down in africa, selling down in africa, will take a couple more years, but theyve gotten rid of a lot of noncore assets. That has allowed them to focus a little more. Mark monte dei paschi, Business Plan day. What is going to come out of it, michael . Michael we are hoping to get some details. It looks like 2019 is the year they are setting out as the clean year where they can be judged on the performance of the turnaround. A little morem than two years to clean up the bank. Mark last week, shares jumped 58 , which is a record. Stock, socent percentage moves are seemingly greater. Michael moore. Capital. Innon from vtb could brexit break up the union . Prime minister may meets the leaders of scotland, wales, and northern ireland. This is bloomberg. Mark Prime Minister theresa may will hold her first joint Ministerial Committee later with the leaders of scotland, wales, and northern, to discuss how to get the best outcome from brexit. It will be their first meeting since 2014. May said, we are much more than the sum of our parts. I want is to be the start of a grownup relationship. Neil mackinnon, global strategist at vtb capital is still with us. Data should show the Third Quarter wasnt as bad as many had feared, but still a slowdown from the prior quarters. 0. 7 to 0. 3 . Neil very decent, and of course the project fear campaign, in my personal opinion, was completely exaggerated. Everyone recognizes now that it was completely exaggerated. The reality has been the hard data has shown the economy is in reasonable shape. I think the numbers we will get this week will confirm that story. Mark but one swallow doesnt make a summer. It is my job to say that. Neil there is this project fear now. They cant help themselves but try to look on every negative that comes out. So the narrative moves on. We got it wrong about the shortterm effects but we are going to be proved right that somehow the longterm effect is going to be next. Why should we believe that . I actually think the opposite. My personal view is it is good for the economy. If we look at what is happening in europe, a country that has done well outside the eurozone i was very interested in a report that one of your own journalists did on the eucanada trade deal, which seemingly is fallen apart. It is a very good story about how the eurozone has experienced a declining share of world trade. And the only country that has managed to retain its share of world trade within the eurozone is germany. Mark is that a warning, the canadaeurope trade deal which seemingly disintegrated after many years . Is that a warning for us . Is it going to be a lengthy process . Neil i think it is perhaps a little different. I think what it is saying to u. K. , is not just the that the eu seems incapable of arranging a trade deal with its 12 biggest trading partner, canada. Every country has access to the Single Market. We are talking about preferential access. It needs the ratification of eu,y member state in the which tells us why that overall the years, debt crises, banking crises, theyve not been able to move forward. It is a dysfunctional process. I think the message from the trade deal is something different. Why get involved in lengthy, complex, torturous negotiations that may go nowhere because the eu has never cited a trade deal of any substance . Its three main trading partners dont have trade deals. I actually think the message is that what the u. K. Government should go for is a clean brexit option. Mark a hard brexit. Neil i prefer a clean brexit. Mark is that essentially a hard brexit . Neil i think it is going to be good for the u. K. Economy. We should be emphasizing unilateral free trade, a breakaway from the protectionist eu, and that would be to the benefit of consumers. They didnt want canadians to undercut the agricultural interest. Mark quick comment on mark carney. Hes been under caution lately from all sides, whether it is the government, former ministers, do you think those words, those barbs against him, were justified . I think i know what the answer is. Neil im looking forward to the testimony. Mark carney will say he did the right thing both in terms of outlining the potential risks and combing through the Monetary Policy. Others will say he should have been more balanced and perhaps he was hasty in throwing the kitchen sink into the economy. Mark will he stay . Neil im not sure about that. Hes probably there for the time being. Mark great to see you. Stay with us. Mark im mark barton in london. Lets get the bloomberg first word news. Kumutha thank you so much, mark. Wall street banks are writing some of their biggest checks ever to fund at ts takeover of time warner, but theres some concern the 40 billion loan pledge may get caught up in a regulatory impasse. Jpmorgan has pledged 25 billion of financing, with bank of america providing the rest. Both banks declined to comment. At t didnt reply to an email and calls. The offshore the yuan is headed to a record low as chinese policymakers signaled they are going to allow greater declines amid a slum in exports and clients in the dollar. Oc hashink the pb reduced support after the u. N. Entered the imf currency basket this month. The flow of money from the u. S. And hong kong stocks is dried up. Investors in shanghai spent more than 8 billion on hong kong shares in september, the biggest monthly inflow since the stock connect was launched in 2014. But not buying this month has been just 7 of that. Analysts say that is because of the narrowing valuation discount on the dual listed shares, and concern about the feds impending rate increase. U. K. Prime minister theresa may will host her first joint Ministerial Committee later, with the leaders of scotland, wales, and northern ireland, to discuss how they can Work Together to get the best outcome from brexit. It will be the committees first meeting since 2014. We areatement, may said, much more than the sum of our parts. I want the start of a new new grownup relationship between our governments. Spains socialist Party Leadership has opted to stand aside and let acting prime take office for a second term. It signals the end of a 10 month political impasse. The committee agreed yesterday that the 85 socialist lawmakers form alet rajoy government to lead the euro regions fourthlargest economy, following a confidence vote. The longest 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Mark thank you very much indeed. Lets talk about this big m a story. At t agreed to buy time warner. The pairing could face a potentially rocky ride through washington, as the democratic and republican president ial nominees both express suspicion of blockbuster transactions. For more on that make a deal is. Ieberman lieberman they say scale offers the greatest protection of all. How should we see this deal . I think that is probably right. If you look at what at t has been doing it brought up directv for nearly 50 billion. That gave it more penetration in the paytv market. It has gone after time warner which will give it more. You can see the at t standpoint. You have a distribution network, but youll have content to support that. And monetize that content across a number of platforms. Mark you mention the price. Billion, including time warners debt. Two charts to show the wonderful nature of the bloomberg terminal. If you have a bloomberg, this essentially is the debt load, at t versus time warner. At t already has 100 20 billion of debt, including obligations of directv. The second chart i want to show you is the spread between at ts 2026 bond and the Bloomberg Markets nonfinancial corp. Bond index. You see there is a divergence. Is this a time to be taking on more debt . Ian if you look at the current situation, the markets are awash with cash at the moment. Obviously, in terms of returns, if you look at the outlook for Interest Rates, it will be ever so slightly i think it is a good time for companies to take on this debt if they can. And if they can