anchor: euro weakness. the single currency turned to a march low. qe will not come to an abrupt end. divisions deepened. germany warns the u.k. faces a difficult task since merchants split with the e.u. takes place. in the typhoon philippines heads to hong kong, forcing the stock exchange. anchor: a very warm welcome to bloomberg.

europe.: i am annadwards -- edwards. we'll get to that as soon as we have it for you. let us talk about what happened to the euro in the wake of the press conference and the conversation around quantitative easing we saw yesterday from the ecb. anna: dropping during the asian session, back above that now, at 1.0903. there a possible extension to quantitative easing? some of the things mario draghi had to say about tapering not come into an abrupt end. there has got to be some hand of extension. there was no talk of tapering or an extension of qe at the governing council meeting itself. some people heard enough and we are seeing some weakness in the currency. that us get to the risk radar and see what is moving around in the asian session. talks coming under some pressure

-- stocks coming under pressure. we are seeing a three-day winning streak being snapped for some equities. 0.3-pacific down by percent. we have weakness coming through in a chinese currency, now 2/10 of a percent against the u.s. dollar, hitting a six year low. suggestions the pboc has not looking to fight the strength in the dollar we are seeing at the moment. wci down around half a percent, below $51 per barrel. some skepticism about where the big oil producers are going to speak to any commitments around cutting back on output, and some comments from a big russian oil company having that impact on the market. the dollar is stronger this morning, up around 2/10 of a percent on the dollar index. the possibility of a hike in the federal reserve in the month of december. that jump kicking up a little bit. s.a.p. raising the sales and

profit forecast. a positive cloud story helped to lift microsoft yesterday. it seems to be that is the case for sap as well. detailsto some of the here, s.a.p. reported sales at top estimates and have rated their outlook for the years. some customers have signed up for their flagship software. more customers have been signing up for the software. sales in the third quarter percent, -- rose by a compared to the average of 5.3 billion euros that was the estimate, and it came in at 5.4 billion euros. theit just slightly below average. , it ismpany is pivoting a software maker based in waldorf in germany. it is pivoting toward an era in enterprises can run their

software both in their own data centers and in outsourced clouds. it is the cloud story boosting s.a.p.. they get that upgrade to their expectations. we will be speaking to the u.k.f s.a.p. today at 7:40 time. a quick look at what has been happening in breaking news on the european court. here is shery ahn. guest: anna, thank you. china's overheated property market has signs of cooling. prices rose in 63 of the 70 cities the government track, down from 64 in august. prices fell in six cities compared with four a month earlier. a slowing property market may provide some relief the policymakers seeking to avert the housing bubble without killing growth. hong kong stock exchange has canceled trading.

>> schools have also closed and airlines have warned of disrupted flights. the hong kong of the territory says it expects storms to remain in force for most of the day. in theirer facing off last debates, donald trump and hillary clinton in the same room, this time for the memorial dinner. candidates are traditionally made good-natured jokes about each other, but trump apparently misread the audience and was booed during his more critical comments. none of clinton's remarks elicited doing. mr. trump: hillary believes it is vital to deceive the people by having one public policy -- [booing] mr. trump: and a totally different policy and private. for example, here she is tonight , in public, pretending not to hate catholics. [booing]

if at anyn: donald, time you do not like what i am saying, feel free to stand up and shout "wrong" while i am talking. [laughter] ms. clinton: come to think of it, it is amazing i am appear after donald. i did not think he would be ok with a peaceful transition of power. [laughter] the divisions between the u.k. and the rest of the eupean union have begun to take shape and germany has said britain faces "a difficult path." the warning came at theresa may's first -- remaining 27 members will continue to meet without written despite her protests. that is according to an official with knowledge of the discussion. bank of america merrill lynch is optimistic about u.s. growth. ceo brian monahan says the

economy is growing and needs more time. that as he sees consumer spending rising. u.s.e thing about the economy and what it is driven by, it is driven by consumers. it is the most consumer oriented economy in the world, an economy where other countries are trying to get to. our consumers and customer base are spending 5% more. global maize, 24 hours a day, powered by more than 2600 journalists and analysts in a 120 countries. you can find more stories on the bloomberg. i am shery ahn. this is bloomberg. anna? anna: thank you very much for that. it let us check the markets in asia. juliette saly has details for us. no trading where you are? no, anna. a pretty gloomy day in hong kong and hong kong exchange decided to close the afternoon session after closing the morning session as we await -- bearing

it down on hong kong. juliette: the shanghai market started pretty well. it you are seeing good movement coming from industrial and i asked but we did see that read kongoperty prices in hong racing in fewer cities in september than was expected, so a little bit of a switch out of that market. you have got dollar strength and the won weaker. the upside coming through from the nikkei, up 0.1%. we are seeing export stocks drive the gains, similar to what we saw in the japanese session yesterday when stocks hit their highest level since april. health-care stocks coming under a lot of selling pressure in australia, off by 0.3%. southeast asian markets are tracking lower, apart from thailand. recouping a lot of what a loss over the course of last week. just having a look at some of the stock movers we are watching in the region. a fair bit of corporate news

around nintendo, plunging in tokyo after it unveiled its latest console, switch, which appears to have disappointed investors. sky citigroup in sydney heading toward its biggest decline since both socks1996, coming through with disappointing first-quarter revenue numbers. saly and hong kong. the euro is headed for a third weekly loss after the european central bank president mario draghi said it neither tapering nor an extension of bond buying stimulus was discussed at the monetary meeting, leaving traders waiting until at least december for news about policy changes. policyrding nonstandard measures, we confirm that the monthly asset personages of 80 billion euros are intended to 2017ntil the end of march or beyond, if necessary. any case until the governing

council sees a sustained inflation in the consistent with its inflation aim. we did not discuss tapering or the intended horizon. here comes the second question of our asset purchase program. the councilay, reaffirmed that we need to take into account the input of the committees. it remains the ultimate decision-maker here. this our first guest morning, let us get his thoughts on what the ecb is up to up the moment. i am pleased to say we are joined by the chief economist at jefferies international. good morning to you. he did discuss tapering, perhaps, at the meeting. offline, perhaps, he did not even discuss an extension really. >> we all know they are going to extend. that is very clear. earlier this week, i was in spain last week, and in europe

in particular, i thought a lot were spooked by this story of tapering. in london, no one believed it, whereas around europe, it is something impacting market sentiment. i was being asked this question every single meeting. david: i think the confirmation that it is going to be extended out is what we heard yesterday. it would reassure investors to just carry on and remember if they were going to be tapering, they would be tapering at the point where we in the u.k. trigger article 50, which is complete nonsense. that what is it for you made you most convinced that the extension is coming? david: just the data and the fact that it is going to carry 80 billion. they might think about winding it down next year, but they cannot. anna: with their eyes on december the eighth, that is the

date where we get some changes in how the policy works? you think it will go for six -- andonger and an other changes? >> the ecb is always behind the curve. they should in july have changed analysis to allow central banks to ask about where they buy. --limitng the 33 increasing the limit. thetapering scare did allow bank more latitude because it led to higher bond yields in germany so that was slightly helpful for the bundesbank. s to can buy more agentcie make up -- agencies to make up the difference. basically, when they published their forecast, they are going to publish almost 2019.

it is stuck below 1%. anna: they need to do something. i have got a chart here. this is ecb 4411. pleased with what happens to the euro overnight against the dollar perhaps, dropping below 1%. the pound, big trading partner. david: in the u.k., there is the issue of brexit, which overhangs everything. in terms of the euro, draghi will be pleased. the eurozone is as big as the u.s.. it is a really open block. you know, the euro does really matter more for the ecb than a dozen terms of the exchange rate of the u.s. fed or the bank of japan, which are much more closed economies. anna: let us talk about portugal because we have an important

review taking place. agency deciding whether they are going to move the only non-junk rating on portugal. a lot of people saying they do not expect this comment no changes seems to be the expectation. it would be significant as mario draghi pointed out yesterday if we were to see this non-junk rating being removed. david: exactly. i like how he answered the question and made it clear that if there is a downgrade, it would be an issue for portugal, but at the same time, gave portugal his blessing, basically saying they have had a loss with fiscal reforms and so forth. is effectinge he the racing to go, i think he is not expected to change at all. dbrs might downgrade. they cannot have a situation where portugal sells automatically from here. remember as well, we have the italian referendum which is very

important and for drug he will be very important. in terms of italian forms, that is on december the fourth. there is a very good chance the italians vote no to reform, which means frankfurt and brussels take a tougher line on the italian banking sector. anna: look at the ecb be function on the bloomberg. it suggests they might be buying 17 billion euros of portuguese event. do you think that will continue even if they lost the rating? david: i think they would have to change. if you have a situation where what is happening in portugal -- you don't meet investors who are heavily lying portuguese. and nicebe a punt, terms. spanish investors for example, we meet, tend to hold portuguese paper at the moment, there is a systemic problem that is portugal goes, you have an issue potentially later down the line, spain and italy. the referendum is a nose for

reform. bank balance, bondholders -- bank bail ins, bondholders might downgrade. withnow, the spread there spain has been widely out. you have the issue that druggie could be very aware of. when push comes to solve, -- that draghi could be very aware of. when push comes to shove -- anna: he was calling it remarkable. david: it is a very strong message aimed at the racing agencies as well. anna: we will see. thank you very much. david owen, cfo at jefferies international. harry hugo kuroda is speaking haruhiko kuroda is speaking twice.

then we hear from san francisco fed president john williams at 7:30 p.m. u.k. time. up on daybreak, macro moves for microsoft. onres in the giant jump up the growing demand for cloud-based software. that story is ahead. the world's biggest advertising , has been on-- wpt a shopping trip. the e.u. plus one. angela merkel says a difficult path on brexit as theresa may makes her summit debut. this is bloomberg. ♪

anna: welcome back. you are looking at a live shot of hong kong, typhoon

haima approaching of course. 6:20 in london. let us get to learn big business flash. here is shery ahn. >> senior executives at at&t and time warner have met in recent weeks to discuss various business strategies including a possible merger. that is according to people familiar with the matter. shery: the talks are expected to remain informal. shares in time warner closed up fellarly 5% while at&t almost 2% after the news. representatives for both firms declined to comment. nissan has completed its acquisition of a $2.3 billion stake in mitsubishi motors. he is already chairman and ceo of nissan. he told us he sees the alliance helping turnaround scandals at

mitsubishi. >> i will do everything in order to reestablish a v-shaped recovery, normalcy of the operation for fiscal year 2017. if everything is done and we have a clear plan, you can expect that the calm -- that the company is going to reestablish itself very quickly. shery: microsoft shares jumped in extended trading after it earnings beat estimates. first quarter profits excluding certain items with $.76 a share. buoyed by cloud-based software and services. it helped to upset the slumping pc and mobile phone demand. j.p. morgan chase has been accused of inflating the value complex bond that sold to individual investors by 15% in one example. according to a study commissioned by plaintiff's in

litigation, it overstated how by failing to a cap for determinedices that -- that is your bloomberg business flash. anna. anna: shery ahn there. breaking ns. volvo trucks giving details on how they performed in the third quarter on sales basis. sales member third quarter, 60.8 billion swedish krone. that is below the estimate. they will have strong focus on cost control, they say, giving us renewed updates to their forecast. 240,000 units. had previously seen it despite the fact that in the third quarter, north american truck orders fell by 37% and weakness in north america was something well flagged by this company and others. global operating in america under the mac brand of course.

prices falling in more cities in september. bloomberg's china correspondent filed this report. 63 out of the in 70 cities monitored by the government compared to 64 in august. cities.ell in six it suggests official attempts to reign in red hot home prices on our staff. curves have been implement it in 21 cities in the last few weeks. prices in shanghai rose nearly 40% year on year. suggesting there is still a ways to go. a breakdown of this gdp shows growth slowing here, but demand from buyers remaining strong. a surge in new lows to households, -- loans to households underlying concerns of indebtedness as people speculate on the housing market. officials are expected to keep a firm eye on money flows to smaller cities where restrictions have yet to be implement said. it is a delicate balancing

act. bloomberg intelligence expects to see stronger signs of credit being drained from the system in the fourth quarter, but a moderate easing of prices is what officials will be shooting for. tom mackenzie, bloomberg beijing. european economist at jefferies international is still with us in the studio. quick word on china, david, we have seen cooling perhaps in the property markets. the gdp data we got earlier this week certainly suggested equalization? nothing to worry about overly in china? david: always something of a black box. basically a delicate balancing act. they are slowly slowing. the chinese currency is falling. they are trying to rebalance and become more service orientated, based. anna: let's have a quick look at

the chart that caught your eye there. this is ecb 4446. passed thes weekend forecast against the u.s. dollar, 6.7. it has weekend past where economists and analysts expected. it can speak markets. david: if it can speak markets -- spook markets. they have got to get the currency down over time and this is the direction it is going in at least. anna: things seem a little more volatile. david aaron, it chief european economist at jefferies international today with us. up next on the program, u.s. politics with the head of the bpp'st company, the martin sorrell.

more on microsoft and what they had to say last night. the debate was one of the big themes that helps their numbers come in strongly. more on the cloud, when we return. this is bloomberg. ♪

anna: welcome back. this is a live shot of the tokyo imperial palace. is5 is where we are right now. we have got those coming through. net sales, 51.1 billion. it is a touch light with the 52.1 billion estimate. estimateust below the of 29 point 8%. the operating profit comes in exactly in line with estimates at 1.6 billion.

the net loss of 233 million swedish krona, and compare that to the estimated loss of 112 million. erickson's biggest shareholder joining the throng of those calling for a new ceo to be found quickly for the swedish network equipment maker. this company has been run by the the top jobfired by in july, a profit warning wiping 20% off of ericsson's value. let us get other breaking news. news coming through from -- sales, 38ker, q3 point cents billion euros. that looks to be a touch ahead or in line with the 30.4 billion that was forecast estimated. adjusted, 4.0 one oflion, ahead, nicely ahead

36 6 billion that has been estimated. the company is saying they are well on their way to reaching their for your target, well on track to reach for your earnings targets, and that was a question about whether they would stick to their earnings outlook. they had previously talked about earnings this year being slightly higher than 13.8 billion euros. no big change in the earnings outlook right now. people are looking to see how they have been doing in china with the e class sedan, heavy trucks and the united eight. heard from volvo about their business in the united rates, fit -- in the united states 15 minutes ago. we are looking for any details there. a new edition of daybreak now available on your bloomberg and mobile. let us have a look at your top stories making it into this morning's edition. the cover story is on those sap numbers we got at the start of the program. bloomberg intelligence looking at growth from cloud cushioning

earnings, the cloud very much a focus. it was a similar story as microsoft shares, rising and beating estimates for cloud-bad software. the next story is the euro slide, the single currency hit its lowest level against the dollar since march. mario draghi signaled that quantitative easing would not come to an abrupt end. and finally, daybreak focuses on meet -- the summit. the 27 members will meet without the u.k. once brexit passes. 13 days ago and joe the u.s. election. -- days to go until the u.s. election. the race for the white house enters its homestretch. caroline. caroline: anna, thank you very much. margins are all in germany and berlin. good early morning.

>> cannot see what is going on. carolyn: what is different is what is happening in america at the moment. >> i stayed up all might watching the debate because we had that board meeting, having our board meeting in berlin. .7 billion of our revenue it is about one third of our revenue every year. we do and exotic board meeting. -- and exotic board meet -- an exotic board meeting. next year, it will be asia. probably india or mumbai. iwatched the debate and thought donald trump was doing quite well, can he? a thatsort of let fly charity event in new york last night, he could not resist, he seems to be lacking a little bit in humor. he cannot even sort of, i think hillary was a little bit more donaldnd relaxed, but

was a bit too seriously, he got booed. caroline: you think a sure win now? >> nothing is sure. i did say on brexit we would remain. 52.48lling talked about -- 52/48 forecast the result. certainly, internally, if not externally. martin: always difficult to say. having said that, the polls are indicating hillary will win, but of course, there are serious issues because the campaign is so divisive. people worry that even hours , her the election results won't accept it and there will be a right-wing, let's call it, attempt to shake things up. i think there will continue to be probably political problems as a result.

continues to be one of the stronger economies. if you look at the mature economies, they continue to be strong. u.s., the u.k., western europe, and irony about this is -- the philippines, news coming out of china last night about the philippines. the philippines, indonesia, vietnam, markets like that, peru, colombia, mexico, what jim o'neill called the next 11, continue to be strong. the brits are in somewhat of a disarray. inglyhat disinterested here, latin america is on the gds board now running their businesses and the food industry. brazil is sort of flattening out and we are starting to see a little bit of lift in brazil,

brits, brazil the under pressure, rush under pressure, and president putin came on a flying visit. the not think he stayed in hotel. i think they made preparations for it but he stayed in. businessessure, our first half of this year is the flats in china down a little bit. seen a little bit of improvement in q3 and forecasted improvement in q4. car sales, we had our large it -- largest client at dinner last night and ford has had a strong august. if i remember rightly, strong september, too. china, strong. but, or getting stronger, but time. had a very tough india is the shining star of the brits, and we continue to see double-digit topline growth. generally, a brits under pressure.

the fast-growing markets as we used to to call them, and we still do, the developing markets , is that what they call them? not quite as strong as they used to be and the mature markets taking the lead. on the functional side, media and digital continues to be the strongest part. shery: u.k. still strong by u.k. stillcaroline: strong by brexit. martin: yes. we are in a latta moment, but july, august, and september, not as strong as the u.k. used to be. pretty good considering the circumstances. a cheap pound and probably a cheaper pound is good for exports if we can do as good a job as the germans do in terms of exports. the germans do a spectacular job. the reason the economy is so strong is because of the trade surplus. a cheap euro subsidizes german exporting. it is interesting talking to people here.

there are a lot of concerns about what brexit means the eua itself. president putin came here to see the chancellor, angela merkel trying to forge stronger relationships between germany. first madewhen we our due diligence in russia in 1997, when i first looked at buying a company of significant in russia, i was absolutely amazed by the penetration by a german multinationals in the russian economy, and it stems from the relationship with putin. there were very close. --oline: martin: it is difficult time to run a business when we have a sort of diplomatic war going on obviously,ure, and people positioning.

when i landed here on tuesday night, i was amazed to see the fact that we are going to get a vote amongst mps, but the government solicitor in the court case as to whether the government can trigger article 50 below -- before a vote by the , whether we have impact or significance in two years time is another question. i still hope that we'll get another shot at improving brexit, the electorate, sometime -- i19 or maybe going into we will have a brexit checked and. the prime minister says that will not be the case. ironically, we are going to have mp'sently an mts vote -- vote. the irony is that germany, which is our fourth largest market, france, which is our six largest

market and italy in spain which aren't ninth and 10th, four of our top 10 markets are western , andean markets ironically, paradoxically, the become more important. very strong international based in germany, very multinationals based in france. the top companies, and has significant penetration of those , disproportionate representation, french multinationals are very strong. they need help from marketing companies such as ourselves, big opportunity. italy and spain, big multinationals there, too. i do not want our companies to lose influence as a result of britain deciding to go bridge the next level. it is central to our strategy, which is getting people to work together. are the next level. germany, very important.

employment of people, you know, we invest in capital. 50% of our revenue, 21 billion dollars of revenue invested in people. the number of people we will employ in germany, france, italy, spain, will rise faster as a result of brexit than they would have been for that. that is the irony of the situation. u.k. is still very important. we'll still grow in the u.k., but we'll probably add more people, and in brussels, because brussels is important to us, too, and i do not want us to lose influence. it was interesting. jaguarre land rover -- land rover, the representative said he thought they were being discriminated against. if i could double the size of our business in germany, which is about 1.5, $1.6 billion, 8000 people, in a heartbeat, i would do it because i think germany is the strong man of europe, particularly with britain's

potential with brexit, and therefore, there is very strong multinationals based here in germany and middle stand companies, midsized companies, , representedrands strongly in certain countries, but on global enough. there is significant opportunity for companies such as ours to help build. caroline:, and visit --, and visit. thank you very much andy. wpp,ing us, ceo of biggest advertising company in the world. anna: and stuff on a range of targets. caroline, thank you. the euro took a tumble off of yesterday's ecb meeting. let us take a look at everything that has been happening in the markets in the last 24 hours. >> a fourth day of the clients for the euro. we have seen it up to its lowest level since march.

let me take you to my first chart. belowws the euro dropping its brexit low for the first time. this is actually showing the not on aday, so closing basis, but still, weakest point on day of the brexit vote count. draghithis after mario signaled that qe will not come to an abrupt end. this meeting was the meeting of discussing. they did not discuss tapering or extension. some analysts questioning before the meeting how long this weakness could last, so that will be one thing to watch. my next chart, i am happy that i saw david owen from jeffries highlight this earlier because it caught my eye. the u.n. falling to a six-year -- the yuan falling to a six

year low. the green line is showing the year end estimate for the u.s., 6.75. it has fallen past that level, accelerating decline and extending a third straight weekly loss. staying on asia, take a look at asian stocks. caution the come in here, a lot of this driven by earnings, giving some caution. byis all for it was off 0.3%, trimming this week's game but it is heading for a weekly gain by more than 1.1%. just wanted to highlight the dollar strength we are seeing here is the bloomberg dollar index extending gains for a second day. on the flipside, a little bit of pressure in commodities. the beauty i crude trading near $50 a barrel. we are at 50.39. that drop today after russia's largest oil company said the country is

capable of a significant increase to output. also seeing a little bit of downward pressure on gold. anna. anna: thank you very much indeed. coming up on the program, facing the fire. angela merkel cites a difficult task for brexit at theresa may makes her european summit debut. we are in brussels for the latest. staying power. how much of a brexit this is iht enjoying? plus, holding on, can portugal investment grade rating? we look at the potential fallout from the ecb's perspective. this is bloomberg. ♪

anna: welcome back. this is daybreak, i'll live shot of hong kong as the typhoon haima there's down on the city. --e trading taking place

bears downima on the city. no trading taking place. first eve summit as the prime minister. according to an official with knowledge of the closed door meeting, may told leaders that repealing the edu treaty will take one year. joining us from brussels is that the e.u. treaty will take one year. joining us from brussels is -- check fora reality theresa may. it feels like she was given the choice between a hard brexit, a clean break from the e.u. including the single markets all. brexit at she wanted to send a clear message that there was no turning back from brexit, but

ae wanted the u.k. to remain strong and dependable partner. according to the e.u. president, that might not be that easy, even though he said, when he arrived at the console yesterday, that theresa may it den,ot entering the lions but a nest of doves. he said in a closed door meeting, theresa may, that the remaining members may have to meet in the future without the u.k. to discuss some issues if exit was not reversible -- if brexit was not reversible. >> after the decision in the u.k., we have to respect the result of the referendum. this is in the british hands.

i would be happy if it is reversible, but we have to, now we have to start our form the vitiation. start our formal negotiations. anna: what is the latest? some floated in, the possibility of new sanctions inrussia over the situation syria. you sanctions on top of the sanctions over ukraine would require the approval of the 28 du members. .u. members. matteo renzi said it knew sanctions might be premature. sanctions might be premature. >> for a real truth and for

beenical process we have waiting for a while. i think that there is no point in also adding a reference to sanctions. anna: matteo renzi there. caroline, thank you very much. we bring you our weekly show, brexit, what is next? e. the conversations about u.k. vote to leave the e.u.. david allen, chief economist at jefferies international is is still with us here. you have been doing a lot of work, david, on trade. people seem to talk about may be an fta with provisions of includingservices equivalents of financial services would look like some sort of best case right now, may

be paying something to extend the existing relationship and a transition deal. does that sound that where we are heading, or what is your take? at sign five where hammons would like us to head -- that sounds like where hammonds would like us to head. you know, you cannot take what is off the shelf. one has to remember that theresa may going to brussels, the whole aing about the e.u. is it is political project for the brits. for the 25th of march, next year is an important date. it is the 60 year anniversary of -- being signed. anna: just around the time article 50 -- david: you have garbage on the 25th and the 30th to trigger. the tween thet

25th and the 30th to trigger. a the end of the day, and perfect world, you would pay more money that we did originally to have slightly less access, but some control of migration. anna: i have been speaking to a number of trade experts, and one thing that came out of my conversations recently, the mexican trade negotiator was at the first negotiation that needs to happen is internal, in the u k, working out what the priorities are, which sectors are going to get thrown under a bus. is that what is going to happen here? david: absolutely. at the end of the day, we have to prioritize what is important going forward. your agriculture that could suffer really badly. how is that going to work? e.u., theseto the are really complex. financial services and services are generally.

-- more generally. i saw a very interesting argument by deputy governor john conolly, oust trying to think where last week, the house of lords, basically that at the g-20 level, single life or net nets --e platform basically, as a platform moves, it moves altogether. europe tries to take off the rest of the e.u., it may not work. do you think? david: that is a plausible story. also, you know, if theresa may and philip hammond protect the england for example, that would be seen as a bad thing for sterling. anna: thank you very much for

spending time with us this morning. up next, hotels, motels, and holiday inn. we taken in as the companies report their earnings. this is bloomberg. ♪

anna: your weakness. ae single currency falls to low. e.u.n is split with the blasted thethat philippines is in hong kong, forcing the stock exchange two shots. shut. welcome to "bloomberg daybreak: flagship morning

show here in london. it is just gone 7:00 here in london. giving us their numbers. revenue per available room up by 1.3%. of 1.8%. see estimates they remain confident in their outlook for the remainder of the year. fundamentals for the expert remain compelling. that q3 number has come in below estimates, but they do seem to be taking to their overall guidance. to their overall guidance. a little bit of it this -- a little bit of disappointment coming through. they own the holiday inn brand and the crowne plaza brand among others. morehave been spending time and money overseas and that is a big global benefit that they have been getting from their business. looking for more details and how

they are doing in europe because of the terrorist attacks in paris and brussels. to what extent has that dampened internationally? tobacco, we understand that vat has proposed a merger with reynolds. b.a.t.ers values -- offers values at $50 per share. well bring that to you when get more. just breaking at the moment. let us have a look at with the futures suggest we will be doing at the start of the european trading day. it will be fairly mixed at the start of the trading day. after a negative session in asia, we are taking a little time to figure out which direction we will head in. the euro starts look like they could be vaguely positive, but some negativity in france and germany. i think mixed is the best way to

describe that. more clarity on where we will be after the european trading day. let us look at the risk radar. quite a lot of moves in currency markets in particular. the msci pacific down. no trading in hong kong. corporate earnings are disappointed. let us have a look at the yuan. hitting a six year low against the dollar. signs the pboc is not going to fight the strengthen the dollar. the bloomberg suggesting a 68% chance of array a rate hike in the fed in december. pressure, major producers are going to drive the oil price back down below the $51 a barrel mark. euro-dollar in there for you, weakness in the euro. it jobs below 1.09 earlier in the asian session, just at that

-- just about that at 109.04. for some people, the talk that there was some tapering, that was enough to convince them that an extension would be coming. let us have a look at the bond markets. german, unchanged. the u.k. at 1.08%. let us go to bloomberg first word news with shery ahn. shery: anna, thank you. china's overheated property markets show signs of cooling next month as authorities step curves in home buying. prices fell in six cities compared to four a month earlier. policymakers are seeking to avert the housing bubble without killing a main pillar of growth. hong kong stock exchange has canceled trading as typhoon haima drew closer to the financial center. schools have closed and the

y're warned of the storm signals. the highest warning to remain in force. clintonrump and hillary were again in the same room, this time for the al smith memorial dinner. andidates traditionally make good-natured jokes about each other, but trump apparently read the audience and was booed. mr. trump: hillary believes it is vital to deceive the people by having one public policy -- [booing] mr. trump: and a totally different policy in private. for example, here she is tonight, in public, pretending not to hate catholics. [booing] if at anyn: donald,

time you do not like what i am saying, feel free to stand up and shout "wrong" while i am talking. [laughter] ms. clinton: come to think of it, it is amazing i am appear after donald. i did not think he would be ok with a peaceful transition of power. [laughter] shery: the divisions between the u.k. and the rest of the european union have begun to take shape as germany has said britain faces a "difficult task." the warning came at theresa may's first e.u. summit as prime minister. the president of the leaders council, donald tusk, told may that the remaining members will continue to meet without written despite -- without britain despite her protests. that is according to an official with knowledge of the discussions. bank of america merrill lynch is optimistic about growth. the ceo says the economy is growing and just needs more time. he sees consumer spending rising. >> the thing about the u.s.

economy and what it is driven by, it is driven by consumers and it is the most consumer-oriented economy in the world, and economy other countries are trying to get to. our consumers and are customer -- and our customer base have spent more than last year. you can find more stories on the bloomberg. i am shery ahn. this is limerick. anna. -- this is bloomberg. anna. anna: mergers and the tobacco industry seem to be something of interest this evening. b.a.t. made the proposal to buy the remaining shares at $66.5 per share. this is buying the rest of reynolds that they do not already own. the total consideration for that is going to be 47 billion dollars. they expect the deal to be -- in

the first four years. that theylso saying value reynolds at 56.50 per share. no small the. 57.8% of reynolds its $47 billion. let us check in on the markets with juliette saly. anna, we are rounding out this trading week pretty much in the red for the regional index, but it is worth noting that over the course of the week it, it has rallied by about 1%. juliette: we have economic data out this week in china, showing signs of stabilization in the economy. even though the shanghai composite in late trade is flat, it is still on track for a weekly gain of about half of 1%. you are mentioning those trade in hong kong. we are closed today as the typhoon bears down on the city.

you are seeing weakness coming through. australia closed down by 0.25%. market has also fallen. there was news of an earthquake in the last hour or so. the nikkei had been trading higher, but is down by zero point 3% on the close. you did see some bright spot coming through some of those export players. we did see nintendo switched out. analysts disappointed with the release of its new council, the unveiling of its new council, switch, overnight. dollar strength weighing on a lot of the emerging markets this week. the kospi is up. you can see most markets, with the exception of the laser -- with the exception of malaysia, lower today. the other story has been the fixing of the yuan. we have seen six

since august. that said the offshore renminbi to its lowest level. this is the two-year chart, down by around 10% against the dollar. looking at its movement today, the offshore renminbi is down by 0.25%. ana: the euro is headed for third weekly loss after the european central mario draghi said neither tapering nor extension is expected. regarding nonstandard monetary policy measures, we confirm that the monthly asset purchases of 80 billion euros are intended to run until the end of march 2017 or beyond if necessary. any case until the governing council sees a sustained adjustments in the partial inflation consistent with its

inflation aim. we did not disss tapering o the intended horizon. and here comes the second question of our asset purchase program. and by the way, the governing that itreaffirmed would take into account the input of the committees, but it just remains the ultimate decision-maker here. investment atf sunoco investment management. let us get your thoughts on the ecb. what we heard from mario draghi, and is to convince some investors that there were an qeension at qe, and he said will not fall off a cliff. there will be some tapering. as and when they decide, that is a conversation for another day. the extension of qe is the more pressing matter. absolutely. it is always interesting with

central banks whether it is the ecb, the fed or the bank of england, it is about finding the right balance between trying to give the impression that the economy is maybe stronger than people think it is, or the reality rather, but also, about the also talk reality, which is that things shouldot weaker than it be. if you look at unemployment in europe, it is above 10%, and it is going to be an awfully long time before it falls to the sort of levels you have in the u.k. and europe. that is the reality. yesterday, there was a bit of a focus on whether to end qe or taper qe. they are probably going to continue it beyond march. anna: a chart shows expectations

of economists that december is the time we are going to learn more about qe. what you expect they will do when they do make changes. atpoke to david o and jefferies and they said they are going to extend the time horizon and buy things that yield below the deposit rate and also going to allow themselves to buy more of the shares than they are allowed to. are those the creditors you are the kind of? -- shares you are anticipating? peter: you are running out of things to buy. they can continue to buy other things, they could buy bonds of low-quality, they could buy equities. ultimately, it is about buying assets from the market, about persuading people that they are on doing this until people realize that actually they might as well go out and spend. this is about trying to boost confidence and economic growth.

to that end, i think they can continue to find assets. anna: have the chart here. btv 4447. this is what happened to the euro overnight, making the point that as it drops below that 109 level against the dollar, that went to the weakest point on the brexit. how you interpret that. peter: i interpret that as the saying that actually, the reality is that europe is still a lot weaker than the u.s., a lot weaker than the u.k., and it is, you know, the recovery in europe only began in 2012. in the u.k. and the u.s., it began a lot earlier. that is reality. europe is essentially still very weak. anna: peter, thank you very much. peter elson, chief investment manager. is set to review the rating

today. it makes portuguese debt eligible for the ecb's bond purchasing program. dbrs kept the rating. speaking at a news conference after yesterday's ecb rate decision, mario draghi outlined the consequences of a downgrade for portugal. >> if there is a downgrade, it is guaranteed by the republic a portugal, it would become ineligible as collateral. for monetary policy much -- moderations and purchase. having said that, we should the remarkable progress that is being achieved in portugal. there are vulnerabilities that the government knows very well. anna: we are joined by senior european economic correspondent jeff black in frankfurt.

how likely is a downgrade for portugal today? still clinging onto investment grace? >> good morning. you just heard from mario draghi giving the portuguese government pretty strong endorsements on their reform efforts over the last few years and since they have exited their bailout program. on the face of it, it is not terribly likely and dbrs have made encouraging voices about put the portuguese efforts in recent months as well, but i first parted in the of the ecb president's remarks, the consequences if something does happen or down the line if the portuguese government takes its foot off the pedal are pretty serious. anna: the consequences could be serious. we heard one of them from mary a drug he himself. i expected one -- from mario draghi himself. he thinks the ecb would find a

way to still by portuguese paper, but mario draghi set out a seriousness in the short-term yesterday, didn't he? >> i think we do not want to get to that sort of situation where the ecb would have to make some portugal.legation for that is a very political, would be very political circumstance. this is very important for portugal because they are in a very precarious condition. the government of the prime minister costa has been making a very fine balance between keeping his international creditors and imf on the one hand happy, and keeping the more hard left elements in his own government happy, and with a debt level almost 130% of gdp, he cannot afford to let the ecb step away from the table and he cannot afford to give international investors were cause for doubt. a downgrade would not be good news. anna: jeff, thank you very much

for your thoughts. up next, facing the fire, angela difficult path on brexit as theresa may makes her european summit debut. we are in brussels for the latest. this is bloomberg. ♪

anna: a comeback. it is 7:21 here in london. unchanged, which in itself makes a change. let us talk about what has been happening in brussels. germany has warned that they face a difficult path on brexit. despite this, chancellor merkel may's presentation a good base on which to proceed. repealing the e.u. treaty will take one year. joining us is caroline conan.

what was the tone of the meeting then? >> a big reality to check for theresa may. -- reality check for theresa may. , angelacally said merkel, that a win-win situation , and exit that is above good for the u.k. and e.u. might be difficult in practice. the e.u. president seemed to be giving theresa may a simple choice between a hard at all.r no brexit he said he wished the brexit could be reversible. >> after the decision in the u.k., we have to respect the results of our referendum. if it is reversible or not, this is in the british hands. it is be happier if

, nowsible, but we have to we have to step away from our negotiations. >> according to one official we spoke with, the e.u. referendum, donald tusk had a closed door meeting with theresa may where he told her that if brexit was not reversible, that means that the 27 remaining e.u. members may have to do some separate ontings without the u.k. some issues in the next few months. front hollande said that if the u.k. want to have brexit, it will be hard negotiation. anna: thank you, caroline conan, brussels.s in peter, you are watching the latest brexit conversation taking place in brussels. in the meantime, how do you

shape your u.k. investment strategy? you are asking about the equities and gilt, and the pound? let us start with the pound. the pound is on a real effective exchange rate raises as low as it has ever been, at least in the last 30 years or so. yore was a moment or so 15 or so year ago whe it was slightly cheaper. it is actually cheap. i do not know what is going to happen in the short-term, there might be technical reasons why it can go even lower. a fundamental perspective, it is now a very cheap currency. currency hasth the done in many respects is brought forward the end of the business cycle in the u.k. in that the weak currency is incredibly stimulative. it is not only stimulative to british exporters, but think about all of those companies who

are competing with imports. they are now much more competitive than they were in june. anna: you mean the domestic companies? peter: domestic companies that compete with imports. anna: in the short-term, we remain reliant on imports? peter: that means they are going to find cheaper products and imports which plays into the hands of british companies, so this is very stimulative. i think for bonds, because of this stimulus of the u.k. economy, you want to avoid bonds. they are very expensive. you're looking at long-term real yields as opposed to -2%. we are at the part of the cycle where bonds perform poorly, but you have a little to run on the equity markets i.

that is exactly where we are. we are decently invested in u.k. equities and do not hold any gilt. ones withifically the benefit from what we have seen in the currency markets, i assume? peter: not necessarily. we have a focus on mid-caps. it are finding opportunities which are good long-term businesses, many of them of the weeks currencies. it is a one-off. it is not something that is going to really benefit companies on a long-term basis, and for that you need to find good businesses and strong management. anna: peter, thank you very much for joining us this morning. for "bloomberg daybreak: europe." markets: it european open is up next. -- "bloomberg markets: european

open" is up next. i wonder what he made about the talk of tapering at the governing how the meeting? a quick look at futures shows we will be stronger at trade here in europe. ♪

anchor: welcome the bloomberg markets, the european open. we have your first trade of the day. i am guy johnson alongside caroline hyde. quantitative reengineering, how will draghi redesign the ecb stimulus program while keeping germany on board? we will ask that question. hard brexit, hard negotiation. in brussels, the you k's future grows more binary. is it they