-- bloomberg markets. vonnie: we are taking you from new york to paris and cover stories out of italy, and washington. the big u.s. banks out with earnings. jpmorgan and city, wall wells fargo takes a hit. , getting the earnings any insight on the scandals. >> we are covering banking out of city today. an investigation over allegations of falsified accounts and markets. >> and getting the week started with a new frisky atf be at the fund looking to capitalize on the 15% growth rate.

we are about 30 minutes into the trading day. marketsman is at the with breaking news. a unexpectedly dropping to one-year low. that 87.9 is lower than even the lowest forecast of the economist who we surveyed. this as we see the current conditions index kicking up and is looks like the expectations are going down sharply. economists say could have something to do with the contentious presidential election campaign. the margin of consumers expecting hillary clinton to win to 46ection widened percentage points from 34 points in september. interesting below the host free

this consumer confidence measure. stocks seem to behold and pretty steady in the wake of those numbers here. averages upe major 7/10 of 1% here. if you look at a two day chart clearly more reaction. they climbed back up throughout the day. a little bit of a takedown of these michigan numbers. of course a big story continues to be bank earnings. both reporting big increases in fixed income revenue. 35%, that is the amount of increases that the bank each saw. fargo, by the way, also out with earnings that estimates. it is benefiting more from its

mortgage business. mortgage banking increasing. as we talked about there is going to be a lot of questions about where it goes from here. though shares are also trading higher. >> china set the tone yesterday. flipside because we have the first factory gains inflation in over five years. exporting deep inflation across the world. at, every single industry group is rising today. looks like we are up for a weekly gain as well. this is a lovely charge, showing the correlation between developed stocks and developed bonds. at .50. you look at how regularly

we see a correlation this high, this tells us it is very rare that developed bonds and stocks and bonds are developing like they are right now. biggest rise since 2009. into aowth pouring money quantity of funds. and then share buyback. it is the big data, losing market sharing euros for the 13th straight month. advantage ofaking a loss of confidence in the german carmaker. worldwide getting the biggest monthly sales gain of the year. upsetting a drop in brazil. chart, showing

the market capitalize asian since the emissions scandal corrupted. we are at 64 billion, roughly halfway. vw is slowly rebounding. >> let's check in on the bloomberg first word news. more from our newsroom. >> the exit negotiations will be controlled by a select group of 12 ministers from theresa may's cabinet. unpublishedrding to documents by bloomberg. it could be another sign they are planning a clean break from the union. all six members are leaving the eu on the june referendum. italy holds a referendum on a key constitutional change on december 4. italians will vote on changes

proposed to limit the power of the senate. italy's upper house of parliament with the economy stagnating and the minted improvements, he has his route -- has his work cut out for him. he says he will quit if the reform aimed at streamlining government is rejected. the british flash crash trader accused of making $40 billion from his bedroom will be extradited to the u.s. to stand trial. his final request was required -- was rejected by judges in london today. fraudl face 22 charges of and market manipulation. remain the most important partner for the philippines. that is according to foreign secretary, who says the u.s. and the philippines have a special relationship. they are linked by formal defense treaties.

mike pence has responded to michelle obama's condemnation of lewd comments the donald trump made about women. in an interview, trump's running mate said he did not understand the basis for the first lady's claim. this is as obama denounced trump without even mentioning his name during an emotional speech in new hampshire. to refute be evidence allegations of trump groping women. power by 2600 journalists and analysts in more than 120 company -- 120 countries. >> citigroup and wells fargo kicked off third-quarter earnings season for the u.s. banks. but the focus was on wells fargo. scandal over fake accounts pay lip to erik schatzker with the latest on the call. tim sloan, the new ceo, is

talking right now about why the former ceo gave up the job. he says because stumpf was a distraction. what we want to know is how much of a distraction. and how much of an impact it will have on wells fargo business going forward. here's what i can tell you right fargo made slides, presentation slides available ahead of the conference call. this scandal, the think -- the fake account scandal broke in the beginning. account openings and account applications were down in the month of september. consumer checking account down 25% year over year.

and credit card applications down 20%. wells fargo is in drawing a straight line between the scandal and the sack to the. wells fargo has one of the most stable consumer banking franchises in the country, highly unusual. scandal of this nature to see a drop off in customer activity. we want to know about litigation reserves. or the press release or supplemental material. that is why we are so interested in this conference call. >> it is not the only lender of earnings today. or the press release or supplemental material. draw for the can big three today? >> what does a quarter matter in the life of a bank or the life of shareholding if you are not a traitor. between j.p. morgan and wells fargo, both of which have

extremely strong consumer franchises, there is a lot of floating growth. wells fargo reporting several percent. has been able to increase profits in this environment. something we need to be paying very close attention to, consumer credit equality. i will point to these two charts, the credit equality has reached its equality and begin to deteriorate. upwards of our delinquencies and auto loans and the lincoln season credit cards. reporting newer vintages of credit cards are growing delinquent and ending up on collectible. the new customers are not as good as the old customers. that is the trend i am focused on most. thanks, see you later for another wells fargo update.

for more insight and analysis on earnings, i am joined by the cofounder of the investment group. thank you for joining. you just heard a little roundup of wells fargo and the other big banks today. stocks are higher. you may think a big turnaround but they are still not able to grow their product. >> i think the financial sector there are a lot of issues. analysts came in positive on the sector. -- but the sector and the bank are like sardines. there are just way too many overhangs for the sector. you have the overcapacity with the banks, the interest rate environment, which is hurting profitability. and then you have sentiment towards sector which is horrible. feeling people more despised in congress are bankers. brink -- when they

bring a banker to congress it helps their popularity. >> the correlation between the two, nothing is narrow in a long time. i think you want to be comparing a 30 year yield or a 10 year yield. >> you are showing, it is a tough environment for the sector overall. until we see these big overhangs start to ease, is going to be rough. i can't really get into too much detail. analystsssessment is are negative going into the season.

analysts are negative going into this earnings season. the stocks could continue to creep higher. >> if you look at the last eight quarters, it has been negative in lowering estimates more than raising estimates. and during the subsequent earning season the s&p 500 was up seven times. you can draw a parallel going 2008to 2008 and see since there has been an inverse relationship between analysts and the overall markets. while investors were really worried. the pace of negative revisions this quarter or negative warnings is one of the lowest we have seen in the last 18 years. the headlines make good headlines. you always see earnings warnings heading into quarter.

>> i know you love your charts. me to pay excuse for homage to one of the charts i know you like. sentimente investor bullish reading. we have seen about 40% this year in a single week. it is not a fear of investors missing out. it is more of a fear of a baby holding the markets. >> when you are getting to a you tendet environment to hear clients and investors going like on a day like today, i can't believe i'm out on that rally. makinggest fear is not out on the rally, it is holding the bag. in sentiment poll after sentiment poll we see investors are more nervous than they are positive.

>> valuations are pretty rich. we are not going to see a big crash or plunge into stocks, where do you look? thing, is the toughest heading into the year valuations are not attractive. valuations have never started a bear market. we like to call valuations the fuel for a market decline or a rally. at this point we don't have this. we look at a variety of factors. there are either mutual or positive on the market. >> thank you for joining us in studio. >> coming up later fed chair chen at -- fed chair janet

yellen will deliver a speech at 1:30 new york time, do not miss our live coverage of this event. this is bloomberg.

time for a look at the biggest business stories in the news right now. the u.s. presidential election may be an argument for delaying it read increase. be --ral banker who will says he's worried about potential policies that would have distorting effects, depending on both outcomes.

federal reserve chairman janet yellen will be speaking before the federal reserve bank at boston's annual research conference at 1:30 p.m. in boston. goldman sachs is won a bitter lawsuit. the $60 billion libyan invested authority sued the banker saying it was misled. no evidence of consistent profits on any of the deals. that uncontested profits on any of the deals. >> still ahead, the first etf to attempts to it capitalize on the surge in demand for whiskey. on this next. this is bloomberg. ♪

>> you are watching bloomberg markets. >> time for our weekly etf friday segment. let's go to julie hyman. not too early for a drink? not too early for buying a drink stock. the whiskey industry is launching this week, and that is what we are talking about. etf's is ourss senior analyst of bloomberg intelligence. they were traditionally known as -- these are stocks collectively talking about things like news collectively they have been doing fairly spectacularly. >> there is an index called the syntax.

if you go back to 2008 when the financial crisis was over, it is up 325%. casinos have been huge. some of these are big drivers. that of these companies make cigarettes, alcohol and gambling have been doing very well. mostly you hear about yes g clean energy. these are definitely returning more. it launched right before the financial crisis. the index goes on this huge run. there is one mutual fund. >> it is fascinating nobody else has stepped in with multi-industry etf's.

anyway, 1 -- anyway, enter the whiskey etf. somebody on the ground had the idea. thought the numbers back it up. big industry, goes to the etf theyer group area basically made this etf, a robotics etf launched by similar one. sometimes there are these grassroots ideas. if they perform well sometimes they can taken some cash. >> how do you isolate out the whiskey makers? >> that is really why can be called the alcohol etf.

>> we have talked about this .efore, you have told me the question you get more than any other is -- is -- is theon gold really in the vault? at the cannabis index, it is of 100% this year. who wants to pick an individual stock? etf would be perfect. stocks, onlyt 30 37 are good enough. rumor has it somebody tried. but the office companies want a part of it. probably not a pot tv -- pot etf.

>> what about a gambling etf? >> this companies all over the world. having a pretty good year, beats the markets. macau is the engine driving the performance behind this. >> perfect topic for a friday. thank you so much. still ahead we are keeping an eye on wells fargo earnings. the q and a gets underway. this is bloomberg.

vonnie: live from bloomberg's world headquarters in new york and london, i am vonnie quinn. mark: i am mark barton. you are watching bloomberg

markets on bloomberg television. more from our newsroom in new york. >> donald trump reportedly plans millionaireexican for allegations of groping against him. the times published an article this week with two women accusing trunk of inappropriate touching. a spokesman denied the claim. tens of thousands of people gathered on this streets of the capital city of thailand, bangkok to pay respect to the longest reigning mine ark -- monarch who died yesterday at 88. reportedly sent to the hospital this morning. his only son an era parent h -- vladimir putin is

trying to gain ground on the battlefield in syria before a new u.s. president is elected. putin taking control of the city inaleppo will give him more dealing with current -- the new u.s. president. u.k. is planning to use its international aid budget of $14.7 billion to win friends among the world's poorest countries ahead of crucial trade talks according to two senior government figures. go to countries britain needs on its side as it tries to atstablish trading rights the world trade organization after it abandons the eu. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries.

i am a lisa parenti. this is bloomberg. mark: another bank we are watching today is goldman sachs, the lender winning a lawsuit brought by the libyan investment authority over trading losses. tony aarons who covers legal issues in the eu is here with more. tony: it was a convincing win for goldman sachs. the judge ruled in their favor on almost every count if not every count. she said there was no relationship between goldman sachs and the bank and rejected a lot of the more ludicrous or high-profile allegations about prostitutes and wining and dining. mark: how common are these types of cases? tony: there are a lot of lawsuits were municipal governments, government agencies invested money just before the financial crisis and lost a lot

of money after. almost every time in dozens upon dozens of cases the municipal agencies came to london courts and sued, saying the big bad investment banks took advantage of us. als, and theme goldman case is not the only one with allegations of a prostitute . these are just not that uncommon. vonnie: was there much dirty and has that been reported? this was not uncommon but this is the highest profile of these kind of cases as it was such great characters. we had no market off the, goldman sachs -- mo mark udall gaddafi, goldman sachs. vonnie: was there anything that was not proven that would throw mud on the reputation of goldman sachs? tony: i think this is a very

convincing win for goldman sachs . the judge ruled in their favor on every count and i do not think it will tarnish their reputation. mark: let's talk about the flash trash -- flash crash trading. is off toefore sarao america? tony: he has a short 28 days but this has been a long time coming. the events were the 2010 flash crash where the government says he was making short trades and his parents house in the shadow of heathrow airport, and it took them five years to file charges 2015.t him, last year in a lot of people said he would be very quickly to america and it has been 18 months. a court ruled he has to go to the u.s. to face charges. vonnie: what happens next? tony: he has 28 days. u.s.,l go on trial in the

where he faces i believe 380 years in prison. these are very serious white-collar criminal charges. vonnie: is this his first time? tony: the first time what? vonnie: but somebody has been extradited on financial or fraud charges like this. tony: there have been a lot of cases. you will remember enron about 10 years ago. mark: it captured the imagination of the public, this case. tony: it did, because it was a guy who was very low-key who 'basementhis parents and single-handedly wiped off trillions of dollars in u.s. stock market values. mark: tony errands. 10:35 in new york. on bloomberg

television, former french economy minister says brexit could open economic doors for prague. this is bloomberg. ♪

vonnie: you are watching bloomberg, i am vonnie quinn. mark: i am mark barton and this is your global business report. the cost of samsung's fire prone galaxy note phones is adding up. vonnie: hershey's ceo is getting ready to step down. can a new leader we knew the taste for shares? mark: thousands are mourning the passing of thailand's king, the longest reigning monarch in the world. vonnie: former french economy

minister says the u.k. cannot expect to negotiate special privileges on exiting the european union. earlier today in paris he sat down with francine lacqua and said brexit could open economic doors for france. could be an opportunity for france but it depends on two things. our ability to provide a very attractive package and avail -- ability to deliver because we produce a lot of things but plan to thisle commitment. second, we have to monitor the brexit. i'm extremely attached to a strict approach to the brexit. china's sino cam group and combinere, it would

those go companies with more than $100 billion in assets. details of the deals including timing was immediately clear. samsung electronics is expecting a total impact of five $.3 billion through next march after ending production of its fire prone galaxy seven smartphone. the prices are mounting and the company discussed a negative impact of about $3 billion in operating profit this quarter and the first quarter of 2017 on top of the $2 billion cut in the previous period. hershey ceo is preparing to step down by next summer, bringing fresh upheaval to a company that spurred the takeover from on the lee's international earlier this year. international earlier this year. shares have plunged 40% since late august after the bid was

rejected. vonnie: time now for our bloomberg quick take her we provide context and background of issues. the world's longest reigning monarch has been a symbol of unity amid the turmoil. thailand has had so many coups in its modern history that scholars refer to the last eight decades as a coup season. between the violent political strikes, thailand's army seized power in 2014 in a military coup after months of demonstrations against the elections in the government. the latest timeline is calling for polls in late 2017. military leader turned prime minister said the elections are dependent on bridging donations -- bridging the nation's decade

long divide. the economy has proved resilient, bouncing back from the asian currency crisis in 1997, the synonymy in 2004, and crippling floods in 2011. class --the middle future world voters to the polls and they reject the idea they are thwarting democracy, saying they can only have a correct government after sweeping out the corruption. it shakes the constitution to maintain its influence and they say the goal of political unity is unrealistic and what they need is a framework that allows politicians to find out without violence.ng of

you can read more about thailand on the bloomberg. that is your global business report. mark: i want to get more on that exclusive interview with the former economy minister of france. he quit president holland's lacqua askedncine him about the potential for a presidential bid in 2017. >> i do not want to create that is sort of a show, but if we are in a situation we do not expect anything. when i want to do is build a vision to gather people. today i have 88,000 members in my party. with the socialist party and i am brand-new. i am seven months old. decide if you are running or not? ori think probably december

january. >> can firms get back jobs because of brexit or can you get -- become a financial capital? >> i believe that. i believe france has to be more attractive for businesses by streamlining the organization, and brexit could be a positive thing for france. it depends on our ability to provide a very attractive deliver and ability to it as we promise a lot of things. axle compliance to this commitment, i would say. second, we have to monitor the brexit and i'm extremely attached to a very strict approach to brexit. i do respect the british vote. i respect the agenda as defined by the british prime minister but in the same time, the worst thing would be to have a sort of

weak europe and european union. >> when you say strict approach, if they do not give anything on immigration, if the brits want to take control of immigration they will lose access to the single market or passports? >> i think it is not a strict approach. it is impossible to have the best of both worlds. >> they are in or out. >> exactly. do you want to be part of the single market, you have to contribute to the budget and deal with their issues. if you do not want access to the single market as a passport, you can have this new organization. do you want just a new trade relationship? it will be something like canada. do you want something like norway or switzerland? they contribute to the budget so we have to work together, but i do not want a stalemate approach where the brits will have the

better of both co--- of both worlds. it will be an incentive for all to leave or kill the european ids. the european ideas are based on common responsibility and solidarity, and for me, that is a critical point. it is impossible to leave the burden just to some of our members. we have to organize it in an appropriate approach. everybody has to take its own part of the burden. that is part of the eu. mark: former economy minister emmanuel macron speaking to francine earlier. vonnie: still ahead, shareholders will vote this weekend on a merger that would create italy's third-largest lender. this is bloomberg. ♪

vonnie: i am vonnie quinn. you are watching bloomberg markets. mark: live from london, i am mark barton. today,nks in focus several reporting earnings. we will keep a close eye on the banking industry in italy. monte paschi agreeing to pay a fine. up todit trying to raise 18 billion to try to shore up its finances. there is a big banking merger. , is thiss for more merger going to be approved? >> still a bit of a question mark. there are two shareholders meetings tomorrow and the easier one, if you want to interpret it that way in terms of support for

this merger, is the assembly by banko popular ra. these corporate or they have a very peculiar system that has been in place for decades. no matter how large a stake and investor has they only have one vote. it is going to be perhaps very popolan the assembly for re although their chief executive remains confident. mark: the banking news does not end there. we are hearing reports unicredit is set to raise up to $14 billion. is there an appetite for such a big capital raising plan? dan: it is a big number, mark. it is a bit larger than the market has been expecting. unicredit has been doing some

disposals, for example. they sold another 20% of their internet bank this week. perhapse considered doing some other asset sales to reduce the amount of stock that they would have to do in a rights issue. they still have a bit of time and obviously they will be looking at the outcome of italy's referendum in early december, december 4, proposed by mr. renzi before making a final decision perhaps on the total size of the capital raising they have to do. vonnie: we are only about six weeks away from that referendum. what are the polls saying? dan: the most recent poll has the yes vote and no vote just roughly onewith third of those polled saying they have not either decided or are not planning to vote. still about six weeks to go.

the yes side, esther renzi supporters have been trailing a .it, recovering a bit it is still probably going to be very tight, and renzi has an uphill fight on his hands because he is going to be campaigning over the next few weeks, we are going to see more economic data to see whether or not italy's economy will start to rebound in a stronger way than we have seen up until now. vonnie: who is nipping at his heels in terms of better policies and campaigning? dan: i think renzi is recognized as a very good campaigner. a lot of people have compared his media presence with one of his presidents -- predecessors, mr. barris ghani. he is in campaign mode right now traveling up and down the .ountry promoting his case he is maybe going to me making a trip abroad on monday, traveling

to washington to meet obama. hand, the no side of this is also very strong. it has the populous five-star movement backing the no side so it is going to be very close according to the polls that are coming in now. mark: is there a risk that this a plebiscitecomes on the economy rather than the reformers themselves? dan: i do not think so. rightly or wrongly, renzi has and this referendum on him his view of the political future for italy. there are those who say he made the same mistake that cameron did in tying the outcome of this so closely to his own future, but i think it is a very complicated referendum. it is almost inevitable that it

is going to be personalized with renzi being at the forefront of this, and his government ones that have proposed these reforms that are really focused on the italian senate and trying to streamline the way legislation is passed in italy. mark: dan, great to see you, thank you for filling us in. let's stay on banking and get back to erik schatzker who has been listening in on the wells fargo earnings call. erik: the call has been on for about an hour. were a lot ofes boilerplate, a review of the business in third-quarter which does not reflect the fallout from this fake account scandal because it broke at the beginning of september. the fallout to the degree that there is any is limited. since the analysts started asking questions, the stock has

gone into negative territory so ,hat tells you a little bit more than anything else, investors are probably a bit disappointed in the lack of information coming out. the ceos have been asked what kind of an impact this will have on wells fargo's business and its earnings going forward. yes, we are going to have to hire more compliance people and people in risk management. it is going to total tens of millions of dollars in costs every year and the bank expects costs as a percentage of revenue to rise over time but still coming in over the top end of their guidance to investors. once again, all we hear for the most part on this call is it is tough to anticipate how much it is going to affect the earning power of the bank. we do not think it will affect the amount of capital return to shareholders. they are confident in the new woman who is leading, mary not,

who came from walkover via and has a background in wealth management. can she affect a cultural turnaround? vonnie: thank you. you can follow along with the earnings call live with commentary from bloomberg analysts and reporters. mark: coming up on the european close, looks like the uk's exit negotiations with the eu will be controlled by a select group of 12 ministers that includes the most eurosceptic members of theresa may's cabinet. that's top markets, 34 minutes away from the close. ♪

mark: it is 11:00 a.m. in new 30 minutes left in the trading day in europe. i am mark barton. vonnie: i am vonnie quinn.

you are watching european close. we are -- mark: we are going to take you from new york to paris. here is what we are watching today. we are going to get and wells fargo. we are on the wells fargo conference call to listen to any signs of material impact from its account scandal going forward. vonnie: u.k. prime minister theresa may loads up her cabinet for brexit talks with the european union. it is looking heavy on those that are pro-exit. is it a sign they may be planning a clean break with the eu? clues from afor speech by janet yellen. we