of a deal, at&t agrees to buy time warner for $85 billion. will that take over gifted the regulators? trade troubles, japanese exports fall, hit by a stronger yen and saw global demand. together again, theresa may howares meetings to discuss they can work to get the best outcome from brexit. ♪ >> a warm welcome to bloomberg

"daybreak europe" in london. show with off he third-quarter numbers. third-quarter revenue at 5.9 billion year rose. this is the amsterdam-based company focusing on health care. they sold off their liking business, phillips lighting. they are planning to sell their components businesses well that supplies the auto industry. a big topic of conversation, to what extent are they in talks with interested parties. it could be one in every three cars in the world.

shares and phillips have advanced 11% this year. int number i mentioned comes -- last the q3 estimate year's number at $570 million. the ceo of philips will join us 6:30 a.m. u.k. time in 28 minutes. is, whene question will they do that deal. meets dallas, not the 1980's sitcom, but time warner and at&t, content and distribution. to ebitahe at&t debt level. they are taking on a mountain of debt. l has $128 billion worth

of debt, more than any other nonfinancial issuer, and three times the level of junk debt. the risk is the credit rating comes under pressure by doing this deal. anna: this number is the one to watch in terms of that credit rating. manus: if it breaks three, that is the critical point. it went up almost it went up a, but three the critical number. i will show you where we are on various assets. low,uro, a seven month of renewed talk about policy diversions. the governing council had not discussed tapering qe, and that euroof weaker manus: continues today.

manus: option relators sellers , and s&p rating on october 28. the s&p review could see another downgrade. they cut the rating by two soels to aa after brexit, that is the risk and sterling. mark carney is in front of abouters tomorrow to talk his decision to stay or go. we will get analysis on that. nymex still above the 50 level, decreasing levels of the shorting of the oil price. that level of shorting is that level of shorting is at the lowest level since may. this is in terms of finalizing

production cuts and to what extent can opec like the russians on board. manus: let's get over to first word news. heang tofshore yuan a record low as policymakers are willing to allow the kleins. some analysts think the pboc reduced support after the currency injured the imf basket. the flow of chinese money into hong kong stocks is drying up. had $8rs and shanghai billion in inflows in september. net buying this month has been just 7% of that. analysts say that is because of the nehring discount -- numeral ring of as the fed go slow

on increasing rates in the dollar remains subdued. mark mobius said gold will gain as much as 50% in 2017. socialist party leadership has opted to stand aside and let the acting prime minister take office for a second term. it signals the end of the nation's 10 month political impasse. the federal committee angry that the lawmakers should let the majority government lead the economy following a confidence vote. u.k. prime minister theresa may will hold her first joint ministerial meeting with scotland, wales, and ireland to get the best outcome from brexit.

it will be the committee's first meeting since 2014. theresa may says we are much more than the sum of our parts, the meeting could be the start of the new grown-up administrational relationship. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. anna: let's get the latest asian market action. today,ng back and played a mixed picture for the asian equities session, although modestly positive, i guess. >> yes, things looking better than they were at the start of the trading session, led by the 1.3% gain on the shanghai composite. ation's a lot of specul annual clinton

couldn't see more spending coming through, state owned companies doing well and hitting that 10% limit. kong back online after the typhoon, upside from energy buters, some up by 5%, there has been weakness in australia, all by .5% on the close. in japan, the nikkei higher despite a shaky start. doubt a comingde through, exports falling for a 12 consecutive month in japan, but imports and exports fell less than what the market was looking for. a fair bit of corporate news, worthbillion play for gen from china oceanwide. it did quite well in sydney today. , disappointingg

last week ahead of first-half numbers. closing 6% down after falling 19% on friday after concern about the health of its books there. manus: thank you very much. great roundoff kicking off the day's news flow in europe. exportslk about japan, else continued to fall with weak demand. anna: imports shrank more than 16%. that left a trade surplus of $4.8 billion. manus: the yen has gained around 14% this year. let's get more from brett miller. why are we seeing weaker export numbers from japan, yet the markets were better than estimated, perhaps we should be more optimistic? little bit of

optimism in the numbers not being quite as bad as expected. strong thisbeen year, up around 15% versus the u.s. dollar, and that has undercut japanese exporters and removed competitive advantage in the first years of abenomics. this year has been quite bad. we have seen continued weakness in global demand, which is that japanese exporters. of 11% and exports to china, japan's biggest trading partner. in the u.s., numbers down around 9%, but a little bit of optimism for europe, numbers relatively flat. anna: they yen a big headache for exporters in japan, but is there anything that indicates improvements in the future? numbers we have been talking about our exports measured by value. if we look at by am's, but --

see an increase giving encouragement to manufacturers. some say we could see a slow rebound in japanese exports here assuming the yen does not get stronger. manus: there you go. that is the question, the yen. thank you very much for running that up for us. let's bring in our guest. there is the line. morning. welcome to the show. there you go, trade data for japan. nothing seems to move the yen from it stronger position. what do you make of yen as we go towards the end of 2016? >> i agree, the yen a difficult call on the back of japanese fundamentals alone. we do not expect the boj to do more anytime soon. longer-term, we expect them to do less and start tapering sometime next year.

i think dollar-yen going into the year-end, the broader dollar move plus sentiment, if anything, what we are seeing is broader dollar strength helping dollar-yen recover more. we would expect an extension of that move as we move closer to the december fed meeting. steepening in the jgb curve on the back of the september boj meeting, where they introduced the so-called curve control policy to accompany the qe policy. the steeper curve went hand-in-hand with a stronger nikkei, and by implication a weaker yen, so those two been plus further steepening. manus: this is the jgb curve. this basically shows you that steepening of the curve.

, kerry andimately rolldown is our story on japan, and that is what it is saying. that is what drives the again strength. >> there is a well pronounced historic correlation between the steepness of the jgb curve and the yen trade weighted index negative correlation that has been around for years and that investors will continue to exploit the correlation down the road, so if we get a combination of a higher u.s. yield plus steeper jgb curve, the result will be higher dollar-yen. that the do you think j, you mentioned the doj will take her why do you think that? oil prices are going higher and the will be better inflation data in japan? that the will we know doj will taper?

will we only know after the event? right.are if anything, they are running out of options to ease further. it might be an option for them to buy stocks and alternative assets more aggressively than the jgb's they are buying at the moment. there seems to be a reluctance on their side to do so. the messages they will be in the market a bit longer, so taper for thee we think the first half next year, first or second quarter next year, but reducing the pace of purchase from the current pace down to 60 trillion our lower as we go along. is difficult that to quantify, but will not be negative for the japanese yen, so were seeing a longer-term production for dollar-yen higher, but further out, the yen

regrading -- regaining ground. manus: thank you very much. anna: some highlights for your week ahead, fed speakers later today, including william dudley and charles evans. marriott -- mario draghi addresses berlin. after lastbate week's eu summit anna:. thursday, pro-and anti-brexit supporters, then we round off the week with the gdp number from the united states. breakupvoiding a brexit as theresa may holds a meeting with the leaders of scotland, wells, and northern ireland. we discussed the country's eu exit plans.

we will analyze the hurdles facing the 80 $5 billion deal between at&t and time warner.

anna: welcome back. you're watching "daybreak". a quick note, samsung says notes e seven customers will get a discount. let's get the bloomberg business flash. the german economy ministry has reopened a review of a , but didoffer by china not specify a reason. they seek tighter control over foreign investment in european countries.

they have called for measures to give government expanded powers. banks and the u.k. will start relocating operations by the end of the year. that is according to the head of the british bankers association. anthony brown said hands are quivering. many smaller banks start to relocating before christmas, with bigger one starting in the first quarter next year. they u.k. transport secretary says the decision for a new runway will be taken tuesday. speaking on the bbc, chris says it is a very tricky choice. >> there are three good choices on the table. we have a very difficult decision. heathrow, new runway to the northwest. heathrow, an extension to the northern runway to double the length, and get wake to build a

runway to the south -- and gatwick to build a runway to the south. all three of these are well-crafted proposals, and anyone can bring benefits to the united kingdom. lloyd blankfein says he personally supports and admires every clinton. the comments came in an interview with cnn. he is previously shied away from public in backing a candidate, saying his support could harm that person's chances. clinton has often been attacked for her links to goldman sachs. that is your bloomberg business flash. manus: thank you very much. firsta may will hold her joint ministerial committee meeting later today. they will discuss how to work together to get the best outcome from brexit. anna: it will be the first meeting since 2014.

theresa may says we are much more than the sum of our parts. i want monday's meeting to be the start of a new grown-up relationship between the administrations and the u.k. government. if you had any mind at all, it was about canada going home with no trade deal. everybody saying this is the set up for brexit. my question is straightforward, is sterling fully price for what we would assume to be a hard or dirty brexit? 85%, 90%rexit is like priced in. indeed, the immediate economic impact on the back of but a lot if not all negative and the price by now. all of our measures and models it is theng show

cheapest g 10 currency out there. when you talk to clients in europe, asia, north america, they agree that a lot of the negatives are in the price by implication and any sustained downside need not be as accentuated as we have seen in recent days. any problem is the fact that there is no trigger for a sustained rebound. cheap, but likely to linger close to the lows. is cheap, butit relative to what? should not look back at the recent history to find the value for sterling anymore. where should sterling traded in a new world? >> longer-term-short-term measures, you compared the correction in the fx markets to other markets like equity markets, a correction to things

like terms of trade. given that these are simultaneous things happening, the pound has dropped will an excess of any correction we have seen anywhere else in any other market. on the long-term side, you're looking at current account deficit, relative productivity, and these are not changing quickly over time, so if the notd drops a lot, i'm expecting the account deficit to close that anytime soon. the move we has seen is already a bit excessive. ,t can always selloff more especially when liquidity is so poor, but we think we have seen most of the correction lower. manus: we were having a look at this this morning, indicators of risk. the spread is the widest it has been in seven months. 50 has before article

date triggered -- the announced, excuse me. risks are rising. andmuch risk is the guilt the sovereign bond market in the u.k., foreign ownership moving away, 27% of the market is owned by foreigners. >> it's tied to the current account deficit. it is an important source of t market.or the gil that could precipitate a potential balance of payment crisis. if brexit were to happen a few years ago, i would be really worried, before lehman brothers. the fundingowever, of the current account deficit of stickierthe back

flows like foreign direct investment, and these are harder to reverse. from that point of view, yes, i have sympathy to that point of view, that is indeed the selloff market gets out of control, that could spook investors. however, i think that risk is exaggerated. i don't worry that much. anna: what link do you draw between the pound and mark carney's decision to stay on? in the potential departure will add a layer of than certainty. one of the aspects you mentioned if those gilt market, yields were keeping it anchored, the further potential easing and attempts by the bank of england provide liquidity or more qe to keep those assets attractive, if that support is taken out of the market, then you can see uncontrolled rise in yields potentially because of the uncertainty would be so great

and potentially because on the ofitical side, the criticism ultra-easy monetary policy is growing. manus: thank you so much. we will talk about phillips and the ceo joins us. ♪

>> you are looking at the imperial palace and this is edition of daybreak is available and let's take a look at some of the main stories that are making it to the top of the agenda this morning. the party in spain is this signalsde and 10 months of having no government could come to an end.

thise currency is touching they are looking at the end and it isr and something that the city of london is not willing to -- we will finalize on this and they seem to be fixated on the investors. >> let's talk about phillips the treatment

business improved. joining us now is the ceo. thank you for joining us. where are we with how we want to be? self-help still the mantra? transformed phillips focused on driving health care solutions and we are helping customers get this at a better cost and we are able to streamline the internal we will getnd

efficiency in the operations. that is a good basis and i can point out the growth is an the united states was also performing well. is talkingthe focus and are you disappointed that you do not have more to say? patients is a virtue you are still planning on the thist and they say

was the best quarter and they were able to get the growth and the profit expansion with everything coming together in the fourth quarter and i would be happy with that. >> still expect this? discussions and we are going to expand on the goods and this is a thatess with discussions we hope will come to a fruitful conclusion. >> across bloomberg, there is a risk of market volatility. and is this a change in the united states for

us? rank the risk. i would put china of and they and itover for us well is not surprising. the population needs our technology solutions and china is lower on this ranking. i have confidence in the united they will be a third quarter number with lower growth in and take and it is reflective of a volatility in the region and there are many elections and

we will stay focused. i spoke with hospital chains about the strategy and combining outcomees with patient this is going to help and that will grow for the future. -- you are smiling because you managed to not talk about this. what does this mean for manufacturing? and there isure

speculation. customersmitted to and we have researched and we are committed. speculateot want to on the process, although i have and a staunch european supporter and i hope we can pull this together. >> we have seen companies talk and what is your pricing? are you putting your prices up? only natural to see this and we are a long-term business with many years of

commitment and i cannot give you the across the board answer. >> a final question on acquisitions and what i said to you with a planned portion of the proceeds for acquisitions. can we be looking at higher dividends? well,

picture is deposit coming through on at woody's. >> the chinese party will meet today -- on equities. >> the chinese party will meet today. >> stephen has details. going on? >> the president is getting towards the end of his first term in office and he has consolidated his power will and

wants to institutionalize the anticorruption platform put in thousands ands of and wants to probe make it a permanent pillar of enhancescipline and party unity and loyalty. that is what he wants and they go behind closed doors in western beijing and i have covered a lot of these in china and you never know what will after mao past, a plenum was used to launch a policy.

they declared the markets would take a bigger part of this. president has set the stage for the next big congress and a reshuffling. bein many ways, this would youmove and, if i set it to , you have covered the background. you say this matter and we don't really know what he is coming with an investors are looking at this. >> keep in mind that this is a planned economy band we look at the moose in china and i

mentioned the party congress should not go under stated and he has a mandate. mix of menro is a and it is a compromised chance toand he has a put new members on the committee and this is important, going willthe second term and it dictate how far the reforms go and, if the economy slows, the reforms can be put on the back burner. this.ors should look at

>> thank you very much. in the run-up to this, we have seen a weakening of the chinese currency and there was a forecast of where this would get pace is a little faster. with tooksome by surprise the currency and it seems like , it issage, just gauging is the weaker and there and they arelosing

fact thatof the chinese corporate continues to pressure theye is will have to introduce more and ility and flexibility guess that is the best way they could do it. think of theyou price action and the overall yet and itot stop may continue. go, youe way, if you can see the media there and the

tolerance level on the upside with the amount left in china and this concerns me. is on allcussion sides and they suggest that they are monitoring the flows and flowsre convinced of the continue to have to compare the demand for the dollars and the debt starts to will potentially see reserves decline to the

corporate and there is application for the broader markets. >> yes. this is a dollar-spent story. >> yes indeed. are trying to prepare and they are driving the dollar higher. bank ande a central demand for dollars, you have to have different currency and assets and japanese bonds. this may be part of the reason the euro-dollar is under i would expect this

. >> thank you for joining us. next, we will talk about pledges to at&t.

>> dialing up at a deal and agreeing to abide time warner. -- they take over there is soft global demand. together again to provide regular meetings. they discuss how they can work to get the best outcome on brexit.

welcome to daybreak, our flagship morning show. >> welcome. what will european equity markets due at the start of the trading day. equities andsian and improved in the session we have lots of m&a to talk about. >> absolutely. trillions added to the value of global equity and you have a government in spain with a little bit of union yang and it is a blockbuster. >> not everything --

subject inhing the china and the german economy minister said we will see this lower with the start of trade in the euron market and is fairly stable right now. the have not talked about we are saying on the risk of the uk's sovereign and the cut the

and there is ag and it is according to the outright -- outlier risk. the previouso they do withill together to join them in? >> this just shows you the tell us about the government bonds. debt is a mountain of

and a total of 50 billion euros in paper. with the happen next bond market? spain had their bonds open opening. year yield let's go to bloomberg news headquarters. heading towards a record low and a slump in exports with some adding a currency basket at the start of the month. the investors --

is this and the concerns of the pending. thereed goes slow and is concern with the u.k. vote the spain's socialist party has taken office for a second term. socialist lawmakers say they

should -- theresa may will hold her committee meeting later and they will discuss how to get this out of brexit. they say they want the monday of the to be the start u.k. government. day:obal news 24 hours a a day, powered by journalists around the globe. this is bloomberg. >> thank you. kicking off the trading week and focus.s back in

are seeing the yen and it and pretty dismal year negative territory and it is hard to watch today and we are seeing a lot of these hit and then expectations composite is trading at highs we have not seen since january and back withis coming

support. today andclosed lower , similar to what we are seeing, we have japan and a number of australian companies. we are talking about a growth these areord low and on the dollar strength. >> thank you. thanks her writing big checks concern thatsome -- be a regulatory >> bank of america providing the at&t didn't immediately

apply with the in there. >> looks talk about the m&a news we have seen with the asset there is more of you have been d watching a few of these stories. different,little bit in terms of context, and people who want to buy or listening to that. there was a deal and there is debt. with

tell us about the deal, which is lathered in debt. and there issk concern. environment could have the weance sheet scrutinized and neutraling at a accommodative phase. look you said, you like to at the earnings season band are there any concerns at the end of last week? >> you have companies that are there areformers and

than whatat are less people have been expecting and there is not a live economic growth will organic growth available. >> you look at the markets and european equity markets. where do you want to be? can the added last? theou have to consider

it is more about they aret this and multiples reasonable and there was lots of this out there. arehe markets are what they and there is concern about politics. >> there are companies that will they will be and sustainable and you can find aree and it is what we

looking at with the edge of the and they can do well in any environment. >> you see the noise in the do the business go against conglomerate? appeal?s is to find a you can realize

band -- you look across europe and it just better over the years. toup next, we look ahead this bloomberg.

>> you are looking at live polices of the french

beginning to dismantle and you talk aboutd these pictures are alter the u.k. press. >> juliet now joins us. ministryrman economy a mood that comes as they try to control foreign they will block

and impose conditions. riseof says seeing profits and the treatment business has improved. they are focused on health care plan on selling the business in the second half of the year. relocatingill start by the end of the year and theon books to sell with banker association. quivering of banks before christmas.

the transport secretary says there is a tricky choice. >> it is a difficult decision on they want and the double blank in the cap of the middle and -- x you genuinely have not made up your mind? >> all of these are well-crafted proposals. anna, manus. >> thank you for that. earningsa big week for in the banking sector and there are negative interest rates.

reported theank numbers and we are joined now to bits of news. expect deutsche bank this week? there is a storm around some there areand scratches on the bank with staffe pulled down and should be selling bonds and have been distracted. this is a main focus for me and i'm looking to see the revenue attrition and whether the gains

we saw with u.s. banks comes from a rising tide or if it hurts deutsche bank. >> it comes down to where they want to hold the collateral, i suppose. they have to appease the market in the higher levels. what do you expect will be the capital? >> we will not have this this week and we'll have some analysts with a major strategic numbersd there will be with job cutsnts

and there could be a real factor with some context comments. the idea of the final judgment is something we are not going to a hearing and they have essentially big mortgage business that comes in towards higher numbers we have seen in the last couple of weeks and it could come in at the lower end. much and thenery is still with us. news we are looking at with the banking sector and

how invested people are. think it is challenging, looking for this and you put space andthe banking it is challenging in the recent years. capitalave thanks and way this and you may and the overall thrust on the value of the assets. would you really want to own these? of this with global old atyers, what are you looking in fixed income?

you think this is defendable and banks are facing political pressures and technology aroundes and it will be these things in the managing are starting to challenge. >> you are seeing the index there. there is a highly specialized thereusiness model and are those types of businesses. they have been exposed to a

they pulledd and out of the traditional market was something as simple as credit card lending. >> what is the brexit brief? seen yields rise. >> this is a slight rise in yields. safetyare looking for and you have a confluence of anderent dynamics going on it seems to be fairly simple and thatds on bonds

will mark that. >> thank you for joining us. >> that is it for daybreak. bloomberg markets european open is up .

♪ >> welcome to "bloomberg markets: european open," will bring the first trade of the day. what we watching this morning? mobilizing capital, at&t agrees for $85.4e warner billion. what is the biggest threat to this deal? is it the regulators are the politicians? germany reconsiders a chinese takeover in a tech firm this is the eu and canada great