inbev agrees to buy sab miller for $107 billion. sab sells its stake in its american joint venture. jobs as ituts 2000 seeks to stem a profit decline. shares are surging. china's rebalancing act. industrial output slumps to a 2009 low while alibaba single day sales rise to a record.

a very warm welcome to "the pulse." i'm manus cranny. beer, beer, we want more beer. let's begin with a megadeal. sab miller shares are up this morning. made a formal offer to buy the company for $107 billion. the merger will make the industry's biggest ever deal. sab miller will sell its stake in miller-course. let's get more details on that deal with ryan. this is a relatively complicated agreement and it has taken a number of years to get there. ryan: it has. it has been exactly eight weeks since sab miller came out and said that ab inbev intends to make an offer for it. and of course, executives and shareholders in both companies started disappearing from meetings just before that. you can go all the way back to

last year, when sab miller failed to buy heineken in what was seen as a real defense to prevent its acquisition as kicking the merger talk off. it is easy to understand why. ab inbev is already the world's largest brewer. sab miller is already the world's second largest brewer. together, they will be a brew- hemoth. absolutely massive, part of the world's top 10 companies. also with 30% of the world's market share. one in three pints will come from this combined entity if it goes through. obviously, the combined entity would have a footprint that extends throughout the world. easy to understand why this took a while and why there are still many hurdles to clear, particularly in china and the united states, which is why ab

inbev said they don't expect completion until the second half of next year. manus: sab miller, their stake in miller coors comes into play. what do we reckon it is worth? for $12ey sold it billion. the idea is that if sab miller had not sold its stake in its , thenventure to molson together with ab inbev, they would have 70% of the united states market, which the regulators would not have liked. they decided to clear that hurdle perhaps before it was presented to them. now, they're just hoping they won't run into other ones. manus: ryan, thank you very much. wellore, we are joined by and management head of croci investment.

francesco curto. and matt campbell joins us on set. stocks trading 40 pounds. the offer price is 44 pounds. the difference is based on? matt: this deal in the u.s. to sell miller coors, that gets rid of a little bit of overhang, but this still has to go through china and the european union. it still needs american antitrust approval. if i weren't antitrust lawyer in ghana, i'd be very excited about this. you could hold up the whole deal if you don't get this done. manus: matt, you just live a torch under every one in the world. $4.4 billion worth of synergies. is that a lot? matt: we have to be clear about what that means. when ab inbev buys a company, that is going to mean jobs. it is going to mean employee

perks. the brazilian family who control ab inbev love to cut costs. they would certainly get rid of the free food. manus: and the food is good here. matt: not a lot of perks are going to survive, i expect. manus: we get pancakes on friday. let's bring in our guest, francesco curto from deutsche assets wealth. it took a long time to get this deal. is this good? francesco: clearly is good for the shareholders. a are seeing the share price going up. the question is what's next? the combined group has got 30% of the market share in the beer market globally. at this point, it's very difficult to see how the companies are growing the business going forward. the company is going to become -- pay withindend yield

an income portfolio. we areur perspective, seeing a real trend here in terms of balance sheets being put to work. youroes that play into perspective? company, theythe will cut costs. then the question goes back to what we are seeing happening again and again when companies get very large market share. let's look at some examples. what happened to general motors? what happened to tesla? the company starts to think about how to use that cash. sometimes, they give it back to the shareholder. if i'm an investor, i want the best possible management to look

after my interest. sometimes, you find that management doesn't look after shareholder interest. it looks after building empires. that is a concern. you've written some great pieces on the print side about the cultural clash, about the fundamentally different way of doing business. matt: a lot of people don't realize, ab inbev is controlled by the same family who owns burger king in the u.s., who did t/deal to buy heinz and krafr . this is a few families who have built an enormous empire. they've had great success in building value. but you do wonder. when you are a hammer, everything looks like a nail. what they do is they buy companies. investors start to wonder if

that is the best use of capital. manus: we've seen some phenomenal megamergers fallout. aol and time warner. matt: the biggest m&a transaction in history. manus: matt, thank you very much. francesco, stay with me for a little while longer. -- forcingas lost the airline to cancel nearly 1000 flights today. the cabin crew union has called for three more days of strikes and said it was considering lengthening walkouts. portugal's prime minister has thanforced from power less six weeks after winning the general election. loc socialist left b formed a majority to push through a motion rejecting the plan.

the socialist leader has pledged to rollback austerity measures. china's industrial output slowed in october, matching the weakest gains since the global credit crisis. retail sales defied the trend, rising more than economists forecast. old growth engines falter. what have we got next for you on "the pulse?" it is singles day in china. time to get shopping. it was nearly five times bigger than america's cyber monday. so passe. that was last year. we will look at the records and break down the event helping china rebalance. and we will be watching the bank of england today. governor mark carney is set to speak this hour. that follows mario draghi. 1:15 p.m. the last time that man was in

time, he saved the euro. ♪

manus: welcome back. this is "the pulse." tv andlive on bloomberg radio, and streaming on bloomberg.com. mark carney is speaking. we've just finished a conversation with the ceo of the london stock exchange.

they are at the open forum where they are discussing reinstating -- in markets and financial institutions. let's listen for a second. >> only the markets that serve the real economy can retain the trust of society. aftermath,is and its many of our markets didn't live up to these standards. at times, some of the most important fixed income currency and commodity markets proved fragile, unfair, ineffective, and unaccountable. it is hardly surprising that only one third of people believe markets work in the interest of society. the more people see, the less they like. people tend to trust markets let's with age. at the same time, most people think markets will become ever more important. they are right. as i wrote this week to g-20 leaders, the structure of the

system has changed since the crisis. virtually all of the capital raised since the crisis has been through the capital markets. the size of assets under management has increased in the last five years by more than 60%, to just about $75 trillion. real markets don't just happen. they depend on the quality of infrastructure. that means the heart infrastructure, the plumbing that determines markets, and the soft infrastructure like standards and codes that define how market participants behave. that robust market infrastructure is a public good. like many public goods, it risks being undersupplied. if we take it for granted, that infrastructure won't keep pace with the market as it failed to do in the run-up to the crisis and we have a responsibility to prevent that.

that's why we are so delighted that so many people are here today, joining those who've already participated in manchester and cambridge. we are pleased that we will be hearing from others -- manus: mark carney speaking at the open forum referring to markets being fragile and unaccountable. this is about restoring trust in markets. apparently as we get older, we become more scathing and skeptical of markets. more from those headlines coming from the open forum as we go through the show. let's shift gears a little bit and reflect on china. the fastest rate in a year. industrial production missed estimates. today is singles day. china's biggest online shopping event. consumers already spent $9

billion by the middle of the day. emily chang, anchor of "bloomberg west," joins us. singles day has been the record. the naysayers who said we hit peak alibaba, they have nothing left to say, have they? emily: actually, i've got a new number for you. billionhas seen $11 across their platform so far today. we've still got six hours left. they've already blown away the records from last year. we've got six more hours to see how much more they can come up with. they tell us more than 70% of these transactions are happening on the smartphone. we're seeing a lot of m- commerce, or mobile commerce, today. this is a former goldman sachs guy that has been brought into focus on international expansion. alibaba is touting the global

nature of this holiday. there are aspirations to become a global company. mike evans is the guy supposed to do that. look what he had to say about their u.s. ambitions. >> our strategy is not competing with amazon. it is less about finding the investment opportunities and more focused on starting to learn about the domestic market. emily: that said, the u.s. is still the biggest potential international market for alibaba. it is something the company is very focused on. they are going to the ringing the opening bell of the new york stock exchange on the stage behind me. the head of the new york stock exchange is going to be here with a team of alibaba executives to ring the opening bell and we are going to be watching to see just how many, just how much alibaba has been able to ring up on this latest

singles day. manus: before you tell me about the stock price, what did you get me? come on, tell me. what did you get me? emily: i told you, manus. i pre-ordered you an air purifier. told, onefar as i'm of the most popular items. you can breathe easy. manus: the whole team will like that. i turn the air up on bloomberg tv. talk to me about the stock price. is singles day going to improve things for us? is jack ma going to have a bit of swagger when he hits that stage behind you? emily: alibaba has been on a roller coaster. the stock price has been up and down. a lot of questions about the future of the chinese economy. i put that question to mike evans.

what do you make of this lack of investor confidence? he sort of quibbled with my terminology. see a lack of investor confidence. , see stock market volatility which is not necessarily a lack of investor confidence. if you look at the volatility across the sector and across many sectors in the market, stocks go up and down over time. there's anyk evidence of lack of investor confidence. emily: time will tell if we've hit peak alibaba or not. we're going to be watching the numbers as they roll in life. i'm going to be sitting down with jack ma in just a matter of hours to ask about his vision. manus: look forward to that interview. well done, emily chang, anchor of "bloomberg west." buying me gets for singles day.

doesn't get much better than that. for more, we've still got our deutsche asset and wealth , francescohead curto. , crohe people out there ci? francesco: you can just say croci. sales, 75%billion in on mobile. i thought it was interesting, doesn't create much value in the real economy. take me through your thinking on that whole piece we've just done. we saw some data coming out this morning and it was quite interesting. investments are running very high. when we look at china, there's one piece of data which is very interesting. it explains a lot about what is going on in china.

assets of, the companies in the real economy have more than doubled, but the profits today in real terms on the industrial side are off the level they were in 2007. my example is to say, think of the stores, they doubled the number of stores and made the same amount of money as when they had half the number of stores. sooner or later, you need to stop the investment. you are destroying value. system is in trouble. manus: has that process the gun? they've not really taken the capacity out of the system. where are we in that cycle? if you say to me, the assets have doubled, profits are squeezed -- francesco: i am a value investor

by nature. manus: how do you invest then on the back of china? francesco: when you look at this, investment is what has been driving the super cycle. 50% oflook at this area, global steel, global cement, is produced and consumed in china. the moment you bring down the investments in china, these assets have got significant impairments. plant is 20a cement years. unless we think they will see an , it isble rise in demand going to be very difficult. 7% gdp growth in china going down to 5%, it is not a linear relationship.

this is quite important. sectors see that these have got significant way in the market. people are looking at energy material today with a view to buy them. manus: hold those thoughts. we're going to get into some of the bigger calls when we return. events looming. that is the warning voice coming from this man. we will find out why the credit calme ceo sees a period of for the markets coming to an end. and we will monitor that bank of england open for. mark carney is speaking as we are on air. he said the bank of england will continually review regulation. i believe we heard charge -- george osborne getting ready.

we going to take a short break. ♪

manus: welcome back to "the pulse." the big hitters are in town. mark carney has spoken. george osborne. they want your trust in financial institutions. let's listen in. >> it now turns out the insiders were writing the benchmark.

we had a situation where for a variety of reasons, banking monopolies were throttling outsiders. banks said that they were well-capitalized and turned out not to be. regulators said they knew exactly what was going on and of course they did not. i think it is a sign of how far ,e've come that the country since the crash, that we can have this open conversation about what went wrong and how we want to fix it. i congratulate you. not just top people in finance chairs central bank, the -- manus: the bankers out there,

you've heard it from george and a number of other people. in terms of the history and the past couple years, let's hear from francesco curto. forumg aside the open about regaining our trust, deliver returns and you get trust is what my proposal would be. you don't need a whole four-run. value investing is apparently coming back. you might need a u.s. recession too. the fed is getting ready to shift on rates. this is one of the propositions put together. we've got a bit of a graphic here. we've got the s&p 500 value and growth indices. you can see here, dropping to a level we haven't seen since 2000. is this good news for somebody like you? francesco: it should be. we want value investing to come

back in fashion. we have been strangling for the last few years. in the end, i don't know. maybe other growth investors that have been around for many decades -- warren buffett is the most famous. our view is that there's nothing wrong with buying cheap stocks after you do your due diligence. this is what we do very well. we do due diligence and companies to make sure you are not buying traps. we have been doing relatively well compared to others historically. but yes, value should come back at a certain point. i think we still may see a couple of quarters where value is struggling. manus: where are the biggest opportunities? give yourself a pat on the back. we did better than other investors. where are those opportunities? that you: it is clear

still find some opportunities in technology and surprisingly in health care. it is anre, even if expensive sector, on the real measure, it is still relatively attractive. you aretilities, starting to find some good opportunities. but you don't find many opportunities in materials energy. francesco, great to have you with us. thank you very much, francesco curto from deutsche asset and wealth management. let's get to the breaking data. mark, you are standing by. we have the wages, the unemployment numbers in the united kingdom. am i getting a pay boost? mark: good question, manus. unemployment we will start with. fallen to 5.3% in the three

months since september from 5.4%. since 2008. lowest when it comes to pay, weekly earnings excluding bonuses have actually fallen to 2.5%. in the prior three months, they came in at 2.8%. average pay, on a real-time basis, when you strip out inflation because there isn't any in the u.k., is the highest since the financial crisis, but it has been coming down. 2.5%. economists were expecting 2.6%. the previous three months was 2.8%. what is interesting here is the strength of the labor markets. how much slack is there left in this labor market? the bank of england has a view there's slack in the region of 0.5%. that will determine when the

first rate hike comes. right now, the markets pricing in a rate hike in november. economists, pretty much the first half of the year. that average earnings figure is interesting. not as strong as expected, but the rate down to 5.3%. manus: ok, thank you very much. mark barton running through the headline data. i'm joined onset now by canadian bank of commerce head of fx jeremy stretch. great to have you with us. let's go through those. this is dovetailing the dovish downgrade to inflation last week. what is your interpretation so far? jeremy: it is a flash interpretation. on a headline basis, it seems the earnings have come in a little shy. we need to remember that these numbers are contrast against

headline cpi which is at zero or close to zero. in real terms, we are still seeing fairly sizable income growth. we are seeing the unemployment rate falling. the potential spending capacity of the employed is still relatively robust. i think we need to keep it in some degree of context. we are still seeing consumption being supported by those overall wage numbers. you actually work in an institution. your perspective in terms of whether the market has overreached -- we've had everything, haven't we, in the space of 14 days? we've gone from the first quarter of 2017, super thursday data released, trimmed all the way back to the summer, and the bank of england says we are not

going to have inflation until the second half of 2016. what can change that perspective? jeremy: this data isn't going to change it, but the dynamics in terms of inflation undertones are influenced by commodity prices in general. we take the view that we will expect to see oil prices firm in 2016. some of the benign prospects will start to dissipate. i think that is going to be important. we could find that cpi moves substantially away from zero but not anywhere near 2%. i think that dynamic is still key, the pressure points that creates. that still is a concern that the bank of england is sanguine about how long the process can be maintained without some degree of pressure overall. manus: i'm not an economist, ok?

the position i come is merely from a journalist, commentator, and somebody who interacts with the real world. the world could be changed, structurally, fundamentally, how we work. have they caught up with the paradigm shift? major: jeremy we have seen a structural change. inre's a significant rise self-employment and working from home. there's been a real structural change. , is the analysis or measurement of those changes being reflected in the data? that leaves us with a great deal of uncertainty. toks are still struggling keep up with the structural dynamics and the implications that has for both the growth, but also the degree of policy

tightening or policy accommodation. we are seeing slower trajectories of growth. but i think we're still in a scenario where we need to get away from this zero rate policy. the bank of england will be 3-6 months behind that. manus: let's talk about the fed. socgena comment out of about their perspective, the feds perspective in terms of a inat deal of dollar strength the news. , are wer perspective one and done next year? is the dollar fully priced? is the market fully loaded for a hike? whether you get that in christmas, in march, will that

matter? jeremy: it will matter if it didn't come in december. the market is increasingly preconditioned for that december left off. the fed could change the parameters. i think we need to avoid the headline noise. priced, i think we are for that december move. the key constituent is, what is the statement saying? what does that imply for 2016? i think that may be the case. the trajectory is perhaps a little too extreme. i think the fed will be cautious in 2016. the dollar will benefit ahead of the event but not necessarily post-event. their action in december,

does that give everybody more breathing space? if it is a hike in december, it gives reprieve to the other institutions, a large number of which had to go into easing mode. jeremy: if you go back to september, one of the fed put in a comment about global conditions. there are bankers around the world scratching their head or worse. in essence, you could argue that the ecb was more aggressive last month because they feared the fed was stepping back. i think a number of central banks will be very happy if the fed is moving towards a tightening. banks like the rba don't want to cut or are worried about the impacts of the cut and would like to see monetary conditions ease. manus: always great to get your perspective. jeremy stretch, head of fx strategy at canadian imperial bank of commerce.

let's get you up to speed now with our top headlines on "the pulse." tons a has lost a court bid to end the strike, forcing the airline to cancel 1000 flights today. the heaven crew union has called for three more days of strikes today. 100,000 customers will be affected today. carlsberg is the world's fourth-largest brewer. it will cut about 2000 jobs as it seeks to reduce its annual millionas much as $288 by 2018. about 1300 employees have already been notified. the move will cut staffing by 15%. shares are trading up. china's industrial output slowed in october to match the weakest gains since the global credit crisis. retail sales defied the trend, rising more than economists

forecasted. a greater reliance on consumer spending. let's we take this break, go back to the open forum. that is george osborne. this is the open forum. leaders of the u.k. and the bank of england, they want us to restore our faith in financial institutions and markets. ♪

manus: welcome back. this is "the pulse." ab inbev has made a formal offer for $107b miller billion. the merger will make the industry's biggest ever deal. jonathan, will the deal go through? 40 pounds, the offer is 44 pounds. the market is pricing in a margin. what do you think? >> from a shareholder point of view, i think the deal will go through. they want this to happen. there are two issues.

the first one, abi is not going to sell sab's china. i think that was the big regulatory risk. the other one, we haven't heard anything at all from the various strategic partners. it would be interesting to hear what they think about the deal. jonathan,l me this, what sort of lead time are we looking at in terms of closing up the deal? at theou look back purchase of moto low, -- of meodelo, i don't think anything less than that this time around. [indiscernible] articles thatthe , iwrote here is about

suppose -- ab inbev's main investors, the brazilian , they are the rottweiler of cost management philosophy. miller, $1.4 billion of synergies. does that sound small to you? where will those synergies -- i love the word synergies, jonathan -- where will they extract the cost out of this thing? be a bit got to worried if you are on staff, i suppose. see that the 1.4 is incremental to the cost that sab already announced. it is quite a large number. miller, staffsab person, perhaps not looking

terribly rosy. impact.he global you've got carlsberg cutting jobs. i know that is slightly idiosyncratic in terms of their exposure. if we look at the ramifications of this deal on the rest of the market, what is your take? >> i guess the footprints are so complementary, that i'm not sure -- there's the sab side of it, cost-cutting, but the market as a whole, i'm not sure we're going to see -- are they going to be terribly concerned? i don't think they are. culture is always a difficult one. anything to say in terms of sab, anheuser-busch, according to our stories, it is going to be a

tough culture to unite. >> absolutely. sab is very much about local brands. global brand. how you merge those two will be a challenge. it will be by far the biggest challenge in those two cultures. manus: jonathan, thanks for taking the time out of your day. , let's's largest utility see how the stock is trading at the moment. up everyading 9.52, five cents. eon posted a record net loss. it had a substantial write-down. 3.7%, 9.52. up we are joined by our european utilities analyst. if this is a write-down that comes with it, it wasn't completely unexpected.

we know these utilities in germany have been under pressure. talk me through your understanding. >> the reason why the stock is up is partly because of earnings guidance. things have eroded their. the second important thing is that the dividend remains at ..50 a share that is reassuring for investors. of eon,t only a matter but many utilities across europe are suffering because of low, the prices which are hurting their profit margins. manus: that is the story with these oil producers, the miners. you run the numbers and analyze these companies. how does 2016 look for you?

we don't expect commodity prices to fall much further than they did already. however, you never know. the important thing to bear in are is that utilities reducing their exposure to oil and gas. the second thing is that a lot of utilities are selling their power. eon has presold its power at a fixed price for the next two years. manus: about controlling costs. great to have your analysis. up next, unicredit earnings. it is all about overhaul at the bank. it is a familiar story. around the world, it comes home to roost in italy.

we take a look at what is in store after this short break. ♪

unicredit's earnings are due out in just over an hour. the italian lender is expected to announce job cuts. martinuzzi.o elisa

great to have you with me. talk me through unicredit. you and i cover a lot of these banks. here we are. it is coming home to roost at unicredit. >> that's right. much like the other european banks, one of the measures that unicredit will turn to to improve profitability will be job cuts. we're hearing that the numbers could be in the range of 12,000, up to 9% of the workforce, and investors will probably be looking for other measures on how unicredit is going to the grappling with the interest rate environment which is pushing lenders to think about doing things differently. you know this bank well. where's the emphasis on the review? it is about building capital. which profit areas do you think it is going to build up?

what do you think is going to come through the review? on boosting is these returns and taking one issue off the table, the concern about the capital letter. unicredit, the core measures of capital have been lagging. will be to see whether that question is taking off the table. that is to see new ways of boosting revenue, boosting margins, by gaining more commission-based income from services such as wealth management. manus: there's that famous line, wealth management, all chasing the holy grail. thank you for the preview. we will see what breaks across the bloomberg terminal. elisa martinuzzi in milan. for the markets.

mark: the glass seems to be half-full today. investors choosing to look at the bright side rather than the industrial output. what i wanted to do was look at the impact on industrial metals. yesterday, we look at nickel. today, copper. although markets and equities are focusing on the bright side, the retail sales showing a transition to the consumer economy, the industrial metals space is focused on the industrial output figure. have a look at copper. falling for a fifth consecutive day. output in china was 5.6 percent in october, the worst since 2008. copper, zinc, nickel, all heading for their lowest close since 2008. the london metal exchange index is set for its third annual drop. the worst streak since at least

2001. want to get in with the new zealand dollar. this is the new zealand dollar against 16 major peers. today, thee rising rand and the norwegian krone. every other one is falling today. the reserve bank of new zealand site of the auckland housing market as a big financial system risk. investors think that could persuade the central bank governor to hold off on further rate cuts. the deal of the day, the deal of the year, the deal of all time in the brewing industry, ab inbev tabling a 44 pound a share offer for sab miller. the shares are at 40.82. that highlights concern about the potential completion of this deal. could be a year in the making. inbev on that note, ab

making comment here. if theo do early to say ceo will stay on. we wait to see. more news to come from that. fran is in new york. ♪

francine: this rebalancing act. the economy is slowing the retail sales rise. $9 billion in 12 hours. portugal's opposition as the nation's prime minister waste the fallout. changes are brewing. a major merger for sab miller into ab inbev. good morning, this is "surveillance." week, talkingte a about monetary policy and foreign policy -- did you see th