european shares rise extending a global rally that added $4.5 trillion to equities. european car sales rise the 25th want, but volkswagen sees its market share drop. emerging challenges. nestle says it will fall short of its growth target for the third straight year. shares trading lower.

you're welcome to "the pulse" live from london. european markets are trading higher this morning. the trading day. let's get straight to ryan chilcote. ryan: european equities on the rise after asian equities rose as well. why? you know. bad economic news is good for stocks. expectations for the fed rate hike getting pushed back. europeannestle so that equities -- the stoxx 600 -- despite we have some bad news with two of europe's biggest companies. hold the noodles. part of the reason is they voluntarily pulled their noodles in india.

that alone they said was responsible for 30 basis points of a loss in terms of sales growth. they are predicting a sales growth of 4.5% this year. they have previously been guiding the market towards 5%. one of the reasons why shares are down. and folks wake and suffering for a second straight day. yesterday, we had the news that they are going to engage in europe's biggest ever recall of 8.5 million cars. this morning, we learned from the european automobile manufacturers association that sales for volkswagen in the months of september trailed the overall car market. rising 8.3%. the overall market rising for the 25th consecutive months to the tune of 9.85%. vw's market share stands at 23.3%. that is the worst it has been since september. further weakness for volkswagen. manus: thanks for the wrap up. here's what else is on our radar

this friday. china expected to announce gdp on monday. expect growth to slip from 6.8% to a year earlier. they also expect china's official growth target to be 7% for the6.5% from next five years. auto sales grew for the 25th straight months, but vw lost market share. the german automaker failed to keep pace with the european competitors in the wake of the diesel emissions scandal. federal reserve bank of new york president william dudley has -- de-escalate his: raising interest rates. he says the central bank should make the move this year, as long as the company -- the economy stays on track. william dudley: i would say we are looking at this year. but it is a forecast. it is not a commitment. perspective,bit of

jonathan bell joins us now. great to have you with us. the story every day is the slow dissertation -- dissipation of what we expect the fed to do. sums it up.we have the probability of a rate hike in december is plunging. are lookingst, we at 70%. we are 50-50. in terms of march. this is what is driving markets? jonathan: it is, i agree. we are in the bizarre position that inflation in the u.s. is just under 2%. unemployment is low, growth is good. everything that should be -- allowing interest rates normalizing is where it should be. the only thing that is not -- you would not be raising rates

if you think we are going into a slowdown. that is the concern we have. are we going into an economic slowdown? whether it is trade data, pmi, surveys coming out shortly having a bit of a slowdown. you really want to be the person on the fomc that votes for the rate hike? lorettoudley and massar are the voices, are keen to get us off zero. but we have this deflationary threat around the world. your that -- how high on agenda is that? jonathan: the only place he do not have deflation is in the u.s. it's core inflation that is real. headline inflation is negative. so, it is a real issue for the rest of the world. and that is why the fed is stuck in this position, can it act if there is going to be a slowdown? if this is good news for the

markets, short-term it is good news. this is not great long term used to say that we are buying equities because we cannot see any growth, we cannot see any earnings growth. manus: take a look at the dollar. we are on the longest losing streak since may. some people say the dollar was so buoyed up, so ramped up for a hike. if the dollar is on the slip, is that not a good piece of news for the fed? they want to see the dollar unwind. i wonder where we are. the reason why the dollar slipping is because everyone was long the dollar. so it does not take much for people to say let's reduce it. you're right. it is one of the things about the strengthening currency is that does the job for you. that titans conditions. -- that tightens conditions. manus: the other thing that caught my eye this morning is

nexturo and ecb and the debate. we asked this question a lot. let's refine it. people are now suggesting you're going to see a rejection -- a re more negativees, interest rates, before you get another slap of q.e. what does that do for the european equity story tied to euro? jonathan: i think you will get an extension of q.e. first. that is an easy thing for him to say -- announce that he is going to extend q.e. that is an easy thing for him to do. going into taking rates into negative rates, that's a harder decision. i think is a decision we may up going down, but it is much harder. manus: we'll see what bang for the buck they get. the corporate very shortly. that is jonathan bell. thank you. now, european leaders have

concluded a summit in brussels where a deal with turkey to stem the flaw of migrants has been drawn up, but remains divided. hans nichols joins us from brussels. where are we? this is europe personified. 24 hours of discussion, no deal. well, now we have more recriminations. we just heard from president erdogan and he is saying that europe is not acting sincerely. he says the cost is eight and dollars. angela merkel it was 7 billion. erdogan says it is $8 billion. angela merkel says it is 7 billion euro. theyhallenge is said that need to convince eastern european countries to let the money get out so they can have an arrangement and start distributing the refugees

europe. listen to how she put it. chancellor merkel: in the sphere between -- the spirit of solidarity, it is only right for europe to think about how they can participate in this. read on what we just heard from the turkish president, they are driving a hard bargain. they want to have easier visa access, travel to europe without restrictions. a want to accelerate and restart their entry into the european union, and they want to have something concrete they could show their people. remember, there are 2 million syrian refugees. in turkey. the refugees that are coming 700,000 of them have left turkey. everyone is agreed that to address the problem you need to have turkey involved in the solution. they are not agreed on what they are prepared to pay for turkeys involving. turkey's involvement. manus: i am wondering where

david cameron -- this is his moment to reignite negotiations with e.u. is that getting lost, or is that taking place quietly on the side juncker? hans: it dominated the first part of discussions yesterday. forced.cameron -- was he said in a letter in november he will lay out their demands. here is what he said he would like to ask for. prime minister cameron: the bill has passed to the commons. it is now an house of lords. the pace will now quicken and i will be again setting out the four areas where we need change, laying down what those changes will be at the start of november. weekly can the pace and quicken those negotiations in the run-up -- to the december counsel.

i'm confident we can get a good deal. we can fix those things that need to be fixed. and i'm confident that this process is well underway. four vital areas from prime minister cameron. i did not hear any specifics. there will be specifics in this november letter. that is what the leaders are demanded. they have a big summit in december. they could has iht it out then. it may have to wait until march to figure out what to do and how to renegotiate the relationship with the u.k. within thae e.u. manus: thank you very much. the devil will be in the details. coming up next, emerging challenges. nestle, why the food giant cut its 2014 forecast and donald trump has been speaking to bloomberg. about everything from the refugee crisis to china. we will hear from him throughout the show. china has done

to the united states is the greatest theft in the history of the world. they have taken hundreds of thousands of jobs. they have taken our money. the beautiful thing is they take owemoney and we ow noe now, we china 1.5 trillion? ♪

manus: welcome back to "the pulse" live on bloomberg tv, radio, bloomberg.com, your

tablet and your phone. nestle, the stock now down 2%. a disappointing set of numbers. disappointing set of results for nestlé, the world's biggest food company. let me start with nine-month sales growth. that came in at a miss. it was 4.2% versus estimates of 4.7%, meaning that nestlé cut its four year forecast. means, this is important, that the company will fall short of its long-term growth target for a third consecutive year. now, what has happened is, we heard that performance was all strongn, europe improvement in north america but the problem has been weakness in china and india, where there was oodlesecall of magi n

which led to the first quarterly loss in that market for the first time in 15 years. so what we have seen in terms of the share price, shares down today, as much as 3%. you can see they are down 2% at the moment. you know what? compared to its peers, the challenge has been the stronger francs. unilever has been benefiting from a weaker euro. if you look at nestlé, it shares have an underperforming the stock 600 food and beverage index. you can see the index up about 12%. whereas, nestlé given today shares price is only up 1%. unilever, on the other hand, has been outperforming. manus: think you very much. now, later this morning, we will talk to the nestlé ceo about these results. . the challenges is facing stay with bloomberg for that. speaking of corporate's, big retail misses on the high and

the low end of the spectrum this week. burberry shares sank the most in three-years on demand from china. walmart's shares fell the most since 1988. this following the slump in sales in the u.s. stanhope capital chief investment officer jonathan bell is still with us. we just heard the nestlé story. give me your perspective. we know the idiosyncrasies. the indian effect. bulcke's always promises 5% organic growth. jonathan: this is still over 4% sales growth on an organic like to like basis. they have got growth. the problem is that they were targeting growth they could not achieve in this environment. asian sales were weak.

you mentioned burberry. in an environment where your are not quite get sales growth, if you're on a demanding p.e., then the shares have to be hit. manus: there is a function where you're able to look at near peers of nestlé in terms of dividend yields runs at 2.99%. the dividend yield is around 2.3$. where does that second? you say it's becoming expensive. jonathan: the high quality growth stocks have outperformed. nestlé has not outperformed. the high quality growth has outperform. the problem is you are in a lower dividend -- for the rest of the market. 2.3 would compare with the european average of 3.5%. 21 times four compares with 15 times the

market. forward. of 21 times once you start getting problems, whether it is magi noodles or slowdown in asian sales and abruptly, then that is a concern. manus: when you look of the spectrum of what is happening in retail, burberry -- their exposure to china. walmart down the most since 1988, saying our growth is on a falter. this doesn't paint a good picture for me at either end of the spectrum. but maybe that is telling something else. jonathan: walmart is -- retail sales in the u.s. are we. -- are weak. manus: that is why am word. jonathan: and you have wage stagnation. my concern for the u.s. is how you carry on growing profits when you have wage prices going through and no headline sales growth. the u.s. earnings growth just has disappeared. and in walmart's case coming

have this issue of wage increases beginning to squeeze margins. manus: janet yellen would be happy to say little bit of wage inflation. jonathan: that means you can start an interest rate rises, but as far as the u.s. market is concern that becomes a concern because the u.s. market is also on a high evaluation. manus: my stunning phrase for the entire six hours is bumper-to-bumper. 9.8%,an car sales rise 25th straight annual gain. we know the recovery is in play in the auto industry. vw slipping slightly. give me your perspective on the status. europe's actually a domestic play. jonathan: i think europe is beginning to pick up. but you're beginning to see it in gdp numbers, which were at t he early stages, on a plumbing is beginning to fall -- unemployment is beginning to fall.

lasts lost market share's months. it is going to lose a little bit more when you look at this months sales. manus: how do you look at europe? if the recovery is in place, a bit more q.e. rather than negative rates, so -- if the trade has been the autos to a certain extent, where else do you look at for strategic position in 2016? jonathan: domestic europe you can look at. you can look at the more cyclical sectors in europe. real estate in europe is interesting. so, there are quite a few different areas that you can benefit from. you have got low expectations and a pick up growth, that should be good for markets. manus: developers will be delighted to hear that,. jonathan, thank you so much. "thecoming up next on cory

pulse," we are going to head to berlin. bumper-to-bumper. 26th straight months of rising auto sales in europe. ♪

manus: european car sales up for the 25th straight months in september. the emissions scandal hitting volkswagen.

chris, a very good day to you. what did the numbers say, and more important, what has become of vw? vw numbersink the say to me that volkswagen is not going to get away with this scandal without taking a hit in terms of its sales. they'd had a decent months, but they did not keep pace with the rest of the market. they lost market share. at the same time, there were some discount in from what we understand. it is early days. impact of the scandal will play out in the next, in the weeks and months to come.. manus: take me to the winners and losers. a great headline. 25 straight months. but the trend is in place. who's jockeying for the sales? what's driving them? the bigell, i mean, winner is volkswagen's counterparts -- this 80's and bmw did very well. -- mercedes and bmw did very

well. the mini is growing. so the german carmakers are still healthy. the other winner last months, at least, was fiat chrysler. they did very well, growth of 16%. they picked up market share. that was largely to do with the jeep brand which double sales thanks to the robust demand for the renegade made in italy. manus: thank you very much. giving us the latest on the auto sales of europe. coming up next on "the pulse," it is 5:00 somewhere. yes, it is. and we talk big business of booze. are you a remi person? do you fancy beer? drinks anding chic global business on "the pulse."

you can join me on twitter. francine we'll be back in the house and just under 30 minutes. we will come up with something witty before the end of the show. ♪

manus: welcome back to "the pulse" live from london. i manus cranny. me, that iscall what donald trump has said he'd let the fellow world leaders do if he was elected to the oval office. the controversial businessman is seeking the republican presidential nomination. has given his views on china and international diplomacy to bloomberg's stephanie ruhle. you are in the oval office, your first-day, first week. who are the first four global

leaders you are calling on the phone? anytrump: i may not call global leaders. stephanie: stop. diplomacy. mr. trump: i have great relationships. we are talking about china. china is ripping and yet, they don't even like us. business week magazine had an article where, i'm very critical of china, i have a lot of friends from china. by the way, they cannot believe that they get away with it. the 10 things that the chinese people most want. do you know what the 10 things? anything trump. they know my attitude. people in china, people in mexico, people from all over -- and they buy apartments for me. they pay me a fortune. i like china. i like mexico. but they cannot believe they get away with what -- and friends of mine that are very big people, they come over for dinner. and they say, we cannot believe

your government is so stupidly. i have toruhle: if say something i'm afraid of it is when i say who are the four four latest, i wait for them to call me. hold on. mr. trump: i may. it depends. it is a deep psychological thing. i have a great temperament for business and for making money. and i've got to make the nation rich again before it can be great again. our roads are crumbling. our airports are horrible. when you fly into laguardia, it is an embarrassing. so, we have got to do something. as to who i'm going to call, i will get along far better than this administration. yet we will do better than this administration does. manus: how many times can donald trump say china in one interview with stephanie ruhle? we will get more from donna from throughout the morning. let's look at the markets.

$4.5 trillion has been added to markets. the stoxx 600 rising for a second day. so, what you are seeing is europe managing to unwind the weekly decline. energy producer leading gains this morning. we have had a couple of reports, which have come this morning. we have seen carrefour -- healthy. the french market. let's have a look at other indices in terms of currencies. you have got cable. 1.54.g at almost flat at the moment. nymex is rising $47.00. in terms of the oil market, we're beginning to see a trading pattern. russia is ready to talk about opec. cuts. that's the interesting driving for the first time in five days in terms of that market. so, those are your market checks.

let's hear up to speed with her other main headline. nestlé says it will fall short of its long-term growth targets for a third year. the company says sales will anbably rise 4.5% on organic bases in 2015. that is less than the company's previous target of 5%. it was hurt by a recall of magi nododles in india. carrefour reported further gains in revenue during the third quarter amid growth in europe. boosted by a strong quarter in spain, italy and remain a. sales in china dropped 11%. beat estimates. it confirm 2015 targets. demand remained excellent while china continues to show signs of gradual improvement. the key word is gradual. let's take that statement from

remy and some of the other big booze stores and talk about this industry. ofare joined by the head global beverages, dave shackleton. thanks for joining me. what welly reaffirming are all worried about you put it beautifully. you have got foreign-exchange issues in the booze business and the macker issues. this fills -- and the macro issues. you are reducing your medium-term growth outlook. you arenot convinced that china is going to return to growth for the booze business at the moment. >> i think the message from remy than we more positive are fearing. it is different to what we heard overnight from companies like hugo boss where china has definitely reversed. things are plateauing off a bit in china. that is better than it was. the thought about a growing to

slow growth from cognac to scotheches is a reality now. manus: revisiting fx. everybodyt clear that has a certain amount of foreign exchange exposure, but some of these emerging markets have been dramatic. if we look at some of the moves on the real, the aussie dollar, my question is -- there has been some relief since the start of the fourth quarter. it's whether you think we are at the end of this emergency -- emerging market currency rout in terms of exposure for the booze business. mean, that is a very good question. we are following closely the ab and miller. miller is 75% of emerging markets. part of the reason for abi and b ev going after the company is

t.ey are in a weak spo we have reduced our numbers in the last months over 10%. there is more to go. we are not at the end of that downward spiral in emerging markets. manus: i was looking through the note that was written before the price to sell. 40 pounds was your initial take-up price. happy with that. my question to you is this -- the antitrust issues that are tsing to be reared, what asse do you think are going to be forcibly sold to get it to the chinese regulator and the united states? theseell, this is one of silent transactions was change the game for 20 companies affected by this. so, this is something to write about the next couple of years. you're right, there are two very major issues. one in the u.s., one in china, where there will be device meants -- divestments.

it is quite interesting. j.v.oth areas, sab is the with a local partner. it should be easy to find a buyer for those. other story we have written quite a bit about inbevmberg is when ab and got together in 2008, are intelligent team wrote, the cut the debt load to make the deal more palatable to the marketplace. people are speculating that abin bev, do you think that is under threat to make this big global beast of a deal palatable to big shareholders? ian: well, certainly the combined businesses going to be highlighted. -- high levered.

ways thatere's two can come down. to selling more assets, perhaps the business in africa, some of the businesses in europe. there are two ways of doing this. what we can be sure about given leverrack record, they de pretty fast. they tend to be the target or meet them. they mean business when they are doing these things. manus: we talked about some of the jb's, they may get away or reverse back into their joint ventures. we have got the option on the table about disposals and dividends. aineken, if heineken could be beneficiary from this in terms of africa, in terms of picking up africa and their exposure, is that your base for heineken? manus: i think there are two

arguments. one is positive. one is negative. the positive argument for heineken is to say there are opportunities to buy businesses here. you knowive is to say, what? heineken is only 1/5 the size. that is a big question of how can they compete? i know a lot of people will say beer is a local game. from our point of view, and abi- sab is going to be five times the size of heineken. manus: thank you very much for giving us your time this morning. nod of global beverages at mura. it is 5:00 somewhere in the world. you want to put the part -- pick up our bloomberg magazine. they have photos. cool shots. what is next on "the pulse" this friday. let's rap.

one of the top ceo's saying, are they optimistic or crying in the ofs at the dizzy week cocktails and market chatter? ♪

manus: these are the top headlines. federal reserve bank of new york president william dudley spoke

on thursday in washington. he reiterated his call that the u.s. central bank should raise rates this year as long as the economy stays on track with his forecast. william dudley: i would say -- we are looking at later this year. it is a forecast, not a commitment. deutsche bank is to sell u.s. private- its clients. raymond james is in talks to buy the business. costs, lift capital levels and raise the stock price. the world's biggest toymaker, mattel reported a third quarter profit that lifted estimates. revenue fell to just under $8.4 billion. ie continue to decline. the company's turnaround plan has focused on reviving sales of

barbie, it's largest brand. never forget ken. ken, barbie. nobody ever talks about ken. right, it has been a downbeat almost unanimous bearish sentiment among those in the metal and mining industry. it is linked to the economic slowdown in china. and here is what people in the sector told bloomberg. >> they are a series of players on the marketplace which are using copper as a prophecy for the chinese economy and tkaing position.king some it can be a dangerous game in the medium and long-term. at some stage, we expect the market to move into a deficit. you do not want to have a short position when the market moves into this situation. >> if you do a very simple analysis of the price, it's obvious that copper prices but whole whole friday 00--

prices have become volatile. it is clear they have acquired a life of their own. >> today, if you were to look at -- there something that does not stack up. >> you look at the downside risk in copper and iron ore. see far more downside risk. >> long-term, china is still consuming huge quantities of most of the commodities the world produces. it is not the china stopped. it's growth has slowed. >> the fundamentals for demand for copper are there in the long-term. we believe that we will be in china for a long time. >> industries like copper and iron ore have always been good

businesses for mining to be in. there is usually cyclical industries. by and large, those equities tend to move on commodities. that is the choice of commodity and the choice of assets within the commodity class that really determines the ability of these copies to generate cash for their shareholders. manus: bloomberg's energy commodities editor will kennedy joins me now. i remember when the boys at glencore were happy to be seen dangerous commodity routs. >> they became miners. not as happy with the ups and downs. there is a lot of bearishness about the price of omst m -- of most metals. yeah, it is hard to make money in this business. manus: what are we setting up a 2016? is it m&a? they say they are taking more iron or out of the ground. will: it is the capacity question that is interesting. gelncore made a move in copper

and zinc -- glencore made a m ove. a lot of the talk with who else follows. iron ore, i don't think it likely. manus: now, there is one ceo is a man after my own heart. he has taken to citing movies and songs. manus: this is the freeport chief. will: the turned a speech into -- i would not call it singing. if you arein hell, keep on going. maybe it will work. manus: that has got to be the defining statement of 2015. will, thank you very much. great work on all the news from glencore. will kennedy, bloomberg energy managing editor. the london stock exchange is launching a venture. we are joined by the chairman.

michael, very welcome to "the pulse." . short interest rate market. a crowded zone. what are you going to do that is different from a european peers? michael: we are going to innovate and we are going to see that in conduction -- in conjunction with some equity partners who are putting capital to work with us to make this happen. manus: michael, if we can just ask you, part of the issue is this -- many incumbents have succeeded -- have come to this market and try to challenge it. to do it differently, to get liquidity into your product, partnership it by your do have got banks and an american relationship. partnership is the key, i suppose. is this the model that is going to define you and make a difference? think it isl, i partnership and innovation. maybe i can take a moment to say

what it is we are doing. we are launching today this new trading venture curveglobal. it is going to list interest-rate futures. we have seen those before us, but the key innovation for us, in conjunction with a partner will allowhat it those to clear and the same default funds as otc interest-rate swaps. that will allow users to put structurally correlated risk together to achieve savings in their margins and efficiencies in the way they operate. so, no one has done that before in scale. that is what we are hoping to achieve here. manus: tell me this. data. the perennial issue. are you going to charge for data? that's also what we want to know. michael: i think at the moment we are focused on getting this new trading venture live. it is getting these products listing, getting liquidity and

ing into lchargingi can scale. the market will be watching closely, but we have got to get to scale before we can think about data. manus: well, we wish you well with scaling up and challenging the incumbent. michael david, global chairman. up next on "the pulse," we wrap up the movers in your. nestlé shares under pressure. more to do with magi noodles. that is taking the question of growth, the sustainability of growth. we will talk nestlé after the break. ♪

manus: you are welcome back. this is "the pulse" live on bloomberg television, video, and streaming on your tablet, your phone and boomer -- and bloomberg.com. we are unwinding this week's losses. ryan chilcote has the details. morning fora good european equities. this is the stoxx 600. that's the european benchmark rising for a second straight day, up 1% right now. why? one reason for that is bad economic news if ofte -- is

often good news for shares. we had asian equities rise, no european equities rise on the back of a lot of that economic reports pushing back expectations for the fed rate hike. talking about nestlé today. the stoxx 600 up despite nestlé's performance. nestlé came out and said organic sales growth this year is going to miss its target. what you are seeing right here ever year to date versus nestlé. unilever is the red line. up 12.5%. nestlé up just 3%. and the reason for that is, has in part to do with what nestlé had to say today. hold the noodles. maggi noodles is a big problem for nestlé. they had to pull maggi noodles from the shelves in india. the second most populous nation. they are a huge hit there. but regular seders too much lead in them. -- but regulators saying there is too much lead in them.

what amount that is been for volkswagen. volkswagen also down today after falling yesterday, after it was revealed they would have to recall a .5 million cars. 8.5 million cars. in september we got new data. they said,? guess what, they are losing market shares. the worst showing for volkswagen since september. manus: thanks for writing that up. here, it isers global surveillance. this is an hour of tv you do not want to miss. bulcke it isvin going to join tom and francine. what is going on inside? how are these deals turning out? what is going on in india. that is all too come during

global surveillance. manusme on twitter @ cranny. all the market moving stories of the day. thank you for watching this week. we will do it all again on monday morning. ♪

♪ francine: asian stock following u.s. markets higher as the dollar had stored a third week of losses. britain prime minister cameron puts it in writing. emerging challenges. nestle will fall short of its growth target for a third straight year. we speak to the ceo. this is a bloomberg "surveillance." live from london i am francine lacqua. it has been a roller coaster week. fed i just looked at the

probabilities. it has become a game of gauging numbers and when they will go. i think the tendency is march 16 or 17. francine: you can see the correlations between a fed rate hike and equities. tom: correlations. francine: you like correlations. is with us,inberg as well. friday, my last day in london. it has been a wonderful week. we will continue with smart guests on economics. here is vonnie in new york. onnie: a european summit refugees has ended in a still made on monday. angela merkel said there was an agreement with turkey on curtailing the info of migrants

and refugees. members of the group are dragging their heels over how much aid to give the turks. turkey is harboring 2 million refugees. security has been stepped up ahead of friday prayers in israel. meanwhile, dozens of palestinians through firebombs sacredst bank site held by some jews. 31 palestinians and eight israelis have died in the violence. donald trump lashing out about how presidential campaigns are financed. in an interview he denounces super pac's. a disgusting joke. they're controlling the candidates. when they say the candidate does not speak to the super pac, and cannot do so legally, i would say everyone is speaking to they areer pac, and not allowed to. ar financing for campaigns is

disaster. i pay my own money. you can watch that interview with donald trump on bloomberg "go" starting at 7:00 a.m. hundreds of vehicle stranded on a freeway after a flash flood caused a mudslide on interstate 5, 40 miles north of downtown los angeles. no reports of injuries. it could take 24 hours to clear the road. the canadian diplomat who is a hero to millions of americans died. ken taylor was the ambassador to iran that his 6 americans at his residence during the hostage crisis in 1979. the issue them fake passports. subject of a 2012 film "argo". he was 81.

tom: we look at equity bonds. commodities, futures, and you can see in futures after a sprightly day yesterday, moving onto to the 10-year yield. ago, 2018 24 hours now. 113.67o-dollar, proving on the euro. -- 1.137 on the euro. what are we doing in the market? we have been looking at it all week. one of our themes is the bombshell earlier in the u.k. inflation. that drove the market action. at u.k.: if you look inflation and the periphery countries, there isn't any.

global inflation, there wasn't as much as people were expecting two months ago. talking about the lack of inflation, when will we get inflation? that is the driver. that is the key issue. the problem is not only in european markets and europe, they are following faster than people expected. the bloomberg consensus has been over predicting inflation. haveine: the banks don't the policy tools to spur inflation. this is the new normal. mr. barth: there is the question of if they have the policy tools. this is one of the things that came up in a speech by the boe chief economist three weeks ago. the idea of negative nominal rates. we have seen that at a deep

level in switzerland. in switzerland there is a debate if the ecb should go. diego, jamesin san hamilton is legendary. he has a textbook that no one buys., but everyone it is about the distribution of where we are going. how much of the news of the week did we tilt toward this inflation and deflation in our probabilities out? seeing moreou are information suggesting there are more downside risks. inflation is a more dominant theme. what does that imply for rates? about dispersion, we thought the dispersion was curtailed on one side of the boundary. we are seeing that again. tom: what is mark carney and

janet yellen doing? mr. barth: at this point, there is a different situation in the u.s. whatever is going on with global inflation, we have a tightening market. you should see it inflation pressures and the fed should hike in march of 2016. 2016, tom. it is because you are going to see wage pressures build toward that based on cyclical pressures. francine: you'll notice i cannot say correlation because it is friday, and we can talk about inflation. how is inflation or lack of inflation being imported from china? mr. barth: that is a great question. one that many have focused on. a fantastic paper from the federal reserve a decade ago showing a lot of the decline in

inflation was clearly out of microlevel coming from china. some of that seems to have faded . we have done analysis, not in correlations, tom, but more econ a metrics looking at that. obviously it is coming from china this time. it seems to be more broadly global. tom: eight months ago it was focused on china, now it is not. "surveillance" on friday picked this up. acceleration forces cut down global inflations. how do market participants adapt to the new acceleration with the inflation? mr. barth: the first step is people shifting teams.

consolidation, a cross asset markets, you are seeing people pulling back from the dollar. byy are trying to adapt cutting risks. they need to find out with the next theme will be. tom: what we write about this weekend? mr. barth: for compliance reasons, i can never tell you iat i'm going to write, but will tell you what we have identified -- clearly, it will be up to other central banks to move. we expect the ecb as early as -- tom: unilaterally move. francine: the qb year in europe has not done much. mr. barth: i think that is the problem. for them toto move get a consensus around, remember hurting cats is hard at any central bank when you have 27

numbers. other countries are harder. the easiest staying for them to come to a conclusion on is to extend their time commitment on qb. negative nominal rates are on the table next year. the ideanal thought, that you are saying every central bank is for itself. is that what i'm hearing? mr. barth: isn't that always the case? tom: there was the illusion it was for the world. is it every central banker for itself? mr. barth: it is a race to the bottom. every one will be doing what they can to inflate their own economies, which may have a currency aspect. everybody cannot do that. about focusing on your own domestic inflation drivers. to be partthis needs of a structural conversation

with governments, and a focus on what are these tools, negative nominal rates is the tool -- it helps them get to inflation. i sat down -- tom: it is barclays. francine: marvin, we will come back to you. eu leaders trying to find a solution to the continent's biggest refugee crisis since world war ii. this is a bloomberg "surveillance." ♪

tom: good morning. bloomberg "surveillance." lacqua and tom keene on an interesting friday with a

great lineup of guests. to our business flash in new york. here is vonnie quinn. itsie: the u.s. extended investigation into volkswagen and the faked emission tests. more government agencies have joined the probe. they say that is just the u.s. targeting vw and employees on from pollutiong to misleading government officials. cutting sales forecasts. nestle says they will be revised 4.5%, less than his previous target. they've been heard by weaker demand in china and a recall of noodles in india. alibaba line the rest of the country known as the youtube of china. they are expected to pay for yoku. alibaba already held a stake in the company. for thes is a story fourth quarter.

the idea of alibaba and the chinese slowdown and turmoil in asia. i have a mystery of where alibaba will be next year. francine: and back to chinese e-commerce. china, they have a problem with people spending too much time in changing rooms because they text their friends to get feedback. on: i do that with bowties madison avenue. goodfreire, is this a bowtie? francine: we have been talking about monetary policy all week. and eu.it let's bring in our bloomberg executive editor for international governments and apparently a bowtie expert. we talk about geopolitical risks. anys not really priced in

of the economic models. the main one for europe is ukraine? at theher: looking political scene in europe, the figureportant dominating of european politics has been angela merkel. she has been out front on the refugees. she has been clear that germany and europe needs to have an open door policy. she has taken the biggest .olitical risk of her career that is something investors need to be aware of. you talk about geopolitical shocks, this is something we will pay attention to. francine: turkey is playing a pivotal role. they have become more of an ally to europe? mr. fraher: turkey has been in the cold for a long time, knocking on the door for eu number ship, but have not been met with open arms.

turkey is now arguably the most important country because it holds a lot of the cards for the flow of refugees into europe. there was progress in terms of how turkey can help the eu. i would not get carried away. listen to angela merkel, she is saying there is no done deal. in chancellor merkel, is anyone following her? she is leading, but to lead you have to have people follow. mr. fraher: not as many as she would like to she is getting lip service from countries like france, but looking at the eastern european countries like gary, they areun balking. francine: she sees her self with a moral duty and a strong leader. she has a stronger economy then other countries in europe. that is true.

ultimately, what people need to be aware of is she has been apart for a long time. sometimes what you see, would you sell with tony blair, leaders that spend a long time in power is that the risk is they lose touch with their political base. i think of "the washington post" writing about the war in syria and iraq. where do they go to read about and massive issue? what do you read? which think tank is smart about what is going on at the summit? likeraher: with something syria, which is happening on many different levels, -- bloomberg, first of all, obviously. twitter is also a source of information. francine: how many reporters? 400 following it? tom: for most of us,

particularly across the atlantic , the scale is unimaginable. 160,000 is a joke? refugees?igrants and going from point a to point b? what will you listen for this weekend? mr. fraher: angela merkel is going to turkey. there will be an important summit. we will look for a firm agreement. numbers. what is going to be done to keep refugees in turkey going into western europe. tom: thank you so much. london headquarters with bloomberg news. carl weinbergur, will join us from high frequency economics, and the structural courage necessary for europe and the united states.

this is bloomberg "surveillance." ♪

♪ francine: welcome back. this is bloomberg "surveillance." i am francine lacqua with tom keene. i see a beautiful skyline. tom: that is the backside of hong kong, up the mountain. living up to the mountain is expensive. francine: one day, let's take "surveillance" on the road. for the morning

must-read. that's go to vonnie quinn. vonnie: thank you so much. something from the financial times. monetary policy has its fashion. central banks keeping interest rates low until 2013, 1 rarely hears it mentioned. when you do hear about it mentioned, it is because people are getting frustrated and confused. one of the tools the fed put to put toto the city -- work in 2008 they were going to keep rates low for a long time. it is backfiring. we have the same problem in the u.k.. has not worked. we can forget about it? mr. barth: tom and i remember

this. no offense, tom. in 2003, the fed told us they were going to be on hold for an extended time. that was the original forward guidance. when they hikes rates six months later it lost its effectiveness. -- qb was ane expression of afford guidance. i cannot hike rates because i am buying bonds. the fed told us no more. francine: i spoke to the south african governor, who said there is no way that it works, which is why he said he would never do it. that is sam fisher's point, as well. also coming from the south of maybe there's something in the water. his point was that, and he tried to move the fed away from that

this year. there is a concern that things are being extended, there is demand from the markets for more guidance. they keep telling us we will be dated dependent. -- data dependent. francine: there is no moment in central bank -- francine: a crystal ball, i agree. my forward guidance is at heathrow. francine: that is my forward guidance. the 2015 forecast is cut. of the speak to the ceo nestle, paul bulcke. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. ♪ francine: welcome back. this is bloomberg "surveillance." withfrancine lacqua out tom keene. that's get to bloomberg's first

word news. disagreement over money stalling europe's plan for the refugee crisis. angela merkel and francine hollande met with leaders in brussels, but could not make a deal on funding for turkey. thany has more refugees any other country in the world, more than 2 million. u.s. forces suspected taliban an afghan hospital that was mistakenly attacked. theican analysts knew about hospital, but thought it was used to coordinate militant activities. the hospital was fired on, killing 22 patients and staffers. in central texas, and wildfire has destroyed three dozen homes. the area is southeast of austin. for years ago, a fire in the same area wiped out 1600 homes. jeb bush raised more than $30

million in the third quarter, more then most of his rivals. it is not enough to ease concerns his gaining traction. he raised more money than ted cruz, marco rubio, and ben carson. fantasya, they said sports is gambling and should be licensed. that would go to fan dual and -- draft kings. i wonder if anyone is betting on the mets-cubs series? tom: a spectacular baseball season. dollar/yen, the litmus paper, the touchtone, of the global system. has important ramifications. looking at european ethnic

strategies, but he can do so much on japan. yen over?r that was part of the goal. the big goal is to get japan to move back to inflation. that ultimately drove the yen. expectation of inflation. i think they are more concerned about a weaker yen from here, than they are about -- tom: you are saying that shinzo 119.once a mr. barth: i think they're happy with the yen staying here versus the dollar. they don't want it weaker. that would raise questions. it is at its weakest level in 30 years. born when that was broken down last, a long time ago. they have to be concerned about

that. especially at a time when abe seems to be backing away from fiscal consolidation. k currencies and fiscal consolidation is not great. that is why we are hearing governor kuroda talking about why they do not want the yen weaker. francine: what does that mean for doj? they are meeting at the end of the month. how likely is it they start buying equities instead of continuing youth bond purchases? mr. barth: we think they will do both and extend their duration. making, relative to other central banks, making better progress on inflation than most. it is lower than where it is expected to be by the middle of this coming year. earlier question, tom, i how does governor corrode the

yen in the press conference given those concerns? missingove your phrase inflation, or mis-inflation. there is a mystery. what is the mystery for barclay? mr. barth: you can go through the different explanations about why inflation is low. the hangover from the global financial crisis, the leveraging -- de-leveraging. that doesnother 1/3 not have an explanation that is correlated across countries. tom: what is it? mr. barth: we don't know. that is the concern for central banks. they are facing the same thing. tom: is it an overcapacity issue of supply? mr. barth: we looked at those issues. the problem is that maybe it is

a data problem, we cannot measure it appropriately. francine: is there a risk this is a china hard landing we are not reading correctly? mr. barth: it is possible. jacksons a paper at hole by one of my former colleagues who is now at johns hopkins university, where they look at the myth of normality. they call into question the idea that you never control inflation and a felix curve arrangement. have,nd the claimant we paradigm forew major central banks with the phillips curve? that is what they are struggling with. if they are struggling with it, the rest of us will be struggling to find out where the

reaction function will be. in the currency world, i think the yen looks good. we like the dollar still. --: the level on the yen someone yesterday said 110. mr. barth: i do think it will go there. i like it versus the dollar, aussie, korea, the brazilian real. i like that, i like the dollar. the earlier point about inflation and the change in paradigm, it looks cheap. gamma,rd of the day, there is a lot of volatility that you are not being fully commentated on. sloping bowl proof, that is massively underpriced. you look at the refugee crisis -- tom: you are at increasing agitation in the market?

gamma, just a you know, i have for out for and beta, i do not have one for gamma yet. we have to focus on sterling. sterling looks a bit undervalued versus the euro now. a lot ofen hit hard by the china concerns. and positioning issues. it looks cheap, we like it versus the euro. versus the dollar it will struggle. tom: thank you. marvin barth, barclay capital. organic revenue growth, we are going to one of the world's distinguished experts from william blair.

we will do that at the top at 12 noon london. stay with us. ♪

tom: good morning. bloomberg "surveillance." london andyou from new york. we are looking at damp and global spirits. that affects everyone, including egg food -- including big food companies. francine: nestle, their nine-month sales coming in at gain.a war .7% they have cut their 2017 forecast. joining us is the nestle ceo, paul bulcke. you over the are

weakness in china and that the weakness and emerging markets will continue. that it is more symptomatic than analysts are saying? mr. bulcke: good morning, first. i must say that china is recovering. we saw a slow down and expected recovery. .escafe is growing we have many good e-commerce, almost doubling and 6% of our sales. category, thene milk dimensions, a slower recovery. i'm optimistic for the future. it will not be the double digits we are used to, and we should get rid of the feeling of no double digits is a big crisis. francine: do you need to reduce your long-term sales forecast?

long-term: this is a projection we have. 4.5% compounds. we deliver on the higher end. this year we have adjusted to 4.5% because of exceptional things like maggi noodles. confirmationgotten -- and we have stated that you have to reengage with authorities to see the framing that we have the possibility to move back as soon as possible. widely laudedare for the structuring of nestle 15 years ago. a terrific share performance. in your annual report you frame and optimistic animal spirit, saying we continue to commit to ambitious financial targets and go on to a 5% or 6% organic growth rate.

you just said he will lower that . with that will there be layoffs at nestle? by definition you have to do cost cuts? mr. bulcke: we are doing cost cuts in the sense of our nestle assessments. there going after possibility of more efficiency and productivity. we are not linking a self-assessment of our target this year because of the exceptional items. we are not projecting layoffs, that is not how we are. we go permanently after efficiencies over so many years. don't do stand you layoffs, but will you rationalize your product selection? by selling off products downside nestle given the new world economy? mr. bulcke: no. we look at our portfolio, and we are investing heavily behind

what we think will project profitable growth. we are fixing problems, that is why we have a diversity at a equivalent of 4.6 billion. we are re-engaging with a partner in our ice cream does this with a joint venture. we are investing heavily in nestle skin health. new platforms that are going to be part of the portfolio in a creative way. ourre actively building portfolio. what we have done in the past, as we are doing today. francine: the worry more about currency fluctuations than margins for the next 2 quarters? mr. bulcke: you speak about the swiss bank? francine: yes. mr. bulcke: yes. , wesaw almost 7% impact cannot influence that.

at the end of the day we are decentralized and produce and sell locally. there are some die mention that goes against us. that is why we have our own currency. we have basically hatched -- hedged toward the nature of over structuring. tom: when i look at your chart, there is not a chart in the world like nestle, a b apple computer in a different slope, but it is almost the bond equivalent. what is the pressure you have had after the years of work to keep up the persistency of excellence? do that through dividend growth if you cannot do it to the top line? mr. bulcke: we have to grow, because when you stop growing, that is the beginning of the end. our agenda, strategic direction, valid than ever.

the consumer is health aware. they are asking and evaluating the dimensions we have built into our portfolios. platforms that allows the need of society to be combined with new science we are developing inside and outside. there is growth potential. the world is moving. the developing world is developing. these are dimensions for growth where we can play and our direction. that is why we have to continue growing profitably, because we have so many good arguments to build into our products. that is our ambition. andlieve consistency continuity and continuity in delivering allows us to go for the long term. francine: thank you for joining us. the ceo of nestle. they have done better than unilever in terms of figures, but analysts are holding them

higher, they actually missed estimates. tom: a true transnational company. the only american equivalent is colgate-palmolive. the consistency of excellence for nestle, you wonder where they will be in this new economy. francine: coming up in the next hour, david sarah of algebris investments joins us. this is bloomberg "surveillance." ♪

francine: this is bloomberg "surveillance." am francine lacqua with tom keene in london. let's get to the bloomberg business flash. atnie: walmart is looking cost cuts after a decline in earnings. the retailer may close some stores in the u.s. they make it out of poor performing markets overseas. alibaba has offered to pay the videof a popular streaming site it does not already own. at 4.2 million

dollars. alibaba already owns 18% of the company. win says the uncertainty of complicating decisions of hiring and training employees in macau. city, a smaller casino market might help those that have survived. the city's 8 casino say revenue rose in set timber. they have 4 fewer casinos than a year ago. francine: thank you. let's get to today's morning movers. look at the ecb expectations for qe.e -- four -- jon: we are testing levels we struck in april.

80 eight basis points. we are around 110, a reflection of what they may do at the end of the year. grinds it a good or bad to a more narrow spread? the bigger move is coming from expectations of more qe from more inflation. they want it to push higher to price in. that is not happening. mr. barth: the inflation issue, there is a good. they do not have nominal growth, there is a debt sustainability issue. the qe might help now, but if low inflation continues that will be a problem. jon: what will matter is the

other spread. the u.s. and german 10-year. francine: i have a note from goldman sachs. tom: why don't i have it? basically, he's as market abuse on inflation are too low. he looks at the deferential between the five-year and 10-year, they are three basis points to high. 30 basis points to high. i don't have a strong versus spain on this one. i would not say that they are -- toorily too wide wide. it is the broader nehring versus the bund. tom: what is your structural call?

3% animal spirit, or lower? are one point one real and we are looking at 1.1 inflation. tom: is that politically feasible? francine? francine: it depends on who you are. you have not done that many therms, but more than in last 20 years. if you are angela merkel -- tom: stephanie ruhle interview donald trump, and mr. sanders in the left, the anger in the u.s. says 4% nominal is not acceptable. number forportant the governments is unemployment rates. not the growth figure. the growth in spain, they have gdp growth but elevated unemployment. the lyrically, that is the problem.

-- politically, that is the problem. it is a massive allocation system. you pushthe world can resources other than the u.s.? it shifts from being about the head to being about everyone cutting, as well as where do i find safety? the only place that looks reasonable and i'm not afraid of is the u.s. francine: we should look at any quality. the difference between what the richest and poorest make. that explains a lot of the bernie sanders-trump debate. growth in the u.k. is not bad, -- inequality. when you look to finish this discussion, going parity to a weaker europe, you have been

wrong for x number of months, why? mr. barth: hold on. we called the current levels -- we have been wrong for the last quarter. a slowdown in the second quarter. what i think has been their is peoplehere have been obsessed with the fed. has diminished people's confidence in the top dollar call. francine: marvin barth. coming up next, davide serra from algebris investments joins us. this is bloomberg "surveillance." ♪

tom: there is no inflation. there are diminished animal spirits as global wall street

considers global synergy. that means cost cuts. yellen and carney are boxed in. and jeffrey in melt and nelson peltz -- and jeffrey immelt and nelson peltz -- we will look to them as well. this is "bloomberg surveillance ," live from london. we welcome you on this friday, october 16. i'm tom keene with francine lacqua. everybody at the desk is speaking italian this morning. babbleaking babel -- on the airplane. it is an interesting friday. i will try to get you ready for your weekend on economics, finance, and investment. here is vonnie quinn in new york. vonnie: a european summit on refugees and it on a stalemate over money. angela merkel opposed