morning, and welcome to bloomberg daybreak on this hursday, october 27. futures up 20 points. switch up the board very quickly. the f.x. market, an upside surprise for u.k. g.d.p. the pound is trading at 122.60. bonds softer globally. 1.83 is the yield on the u.s. 10-year. david: ford motor company is announcing their third quarter earnings. their earnings per share were 24 cents, as opposed to an estimate of 20 cents. revenue of just under $36 billion as opposed to $34 billion estimate. so they beat estimates, but they are well off of a year ago for various reasons. we'll get into it with mark fields when we talk to him later in the program. alix: the real concern is are we at peak cars? you had the cycle that kicked in.

how much more new demand is there? david: exactly. mark fields has said he does think they've peaked. the sque what happens with the mix. how many cars they sell as posed to trucks, things like that. and mobility, he's trying to move forward. jonathan: that's the theme coming up. deutsche bank and barclays numbers crossing this morning. unexpectedly posted profits in the securities unit, reported a jump in revenue, while barclays posted 35% jumps in profit. for more on this, we bring in nick from frankfurt, and steven from london. nick, let's begin with you and run through the deutsche bank numbers quickly. nick: yes, we saw a real surprise on the debt trading figures, especially, a 14 cent rise. it's a much better result than we expected. we were down 8% on the estimates that we gathered. so clearly since they have been benefiting from what we saw in the wider markets, some of the concerns about them losing

their franchise were possibly unjustified, but nonetheless, i mean, in other businesses, in the equities business, wealth management, there was a lot of concern about deutsche bank, and they had outflows. they had poor performances because of this worry around the department of justice settlement and the huge storm that was raging around them in september and october. we heard from market sharing, the c.f.o., that liquidity has stabilized. it's back where it was, but it must be a pretty painful couple of weeks in which they speak to clients and reassure a lot of clients. alix: twitter is out with earnings, estimated both on the top and bottom line. the number that's really standing out is monthly active users coming in at 317 million, higher than last quarter and higher than estimates. the company planning to cut up to 9% of jobs. bloomberg reported earlier that perhaps they were going to cut about 300 jobs. that would be 8% of their workforce, but now we learn it's going to be about 9%.

those are the two big headlines. monthly active users coming in at 317 million, and cutting 9% of jobs. more on this later on in the hour. jonathan: bank to the banking story with steven morris in london. this could have been a bank on wall street. i'm looking at numbers that came out this morning, very, very similar to what we saw from the big investment banks in the united states a couple of weeks ago. steven: barclays is riding the same wave that its wall street peers have been over the last week or so, a 40% increase in fixed income trading, which is around what we were expecting actually. that's not the unexpected part of barclays results, but it certainly has helped offset some of the items on the other side of the line. for example, we're seeing another hundred pounds taken to compensate customers for a scandal that's almost a decade old now, selling payment protection insurance. they took a one billion hit on their pension liabilities, which was rumored to come through this month as well. but the investment bank is picking up its results and

starting to pull its own weight as opposed to the credit card and retail business, which is still reporting much, much better returns. jonathan: there might be a temptation to celebrate the revenue profit over at deutsche, but barclays really the story. we're talking about 40% pops everywhere else. strong underlying profit, higher revenues, lower cost, but this is rearview mirror stuff. we want visibility. a lot of people did not get it from the c.e.o. today, did they? nick: precisely. we heard how they may intensify and accelerate cost measures, how they're the last. but we really didn't get a whole lot of meat on the bone. we did hear there's a hiring freeze, and that's going to help on reducing head count. but still, people are looking for a bit more tangible evidence of the road forward here. and it's something the bank has come off of, really, until they get their legal settlements out

of the way. that's something happening this fiscal year, i.e., by early march, next year. jonathan: our bank reporter who will join us throughout this program,, nick and stephen, joining us. for more on the european lenders, let's bring in an analyst. great to have you with us on the program. for me, i look at the message from joe staley is the investment bank looks good, growth, taking market share. the only word, ambition, that i saw from john today was the ambition to accelerate head count cuts across the board. what does that say about the two positions of those banks right now? >> john has been fortunate in the third quarter that the rising tide that we saw has indeed helped deutsche bank. it is comforting they've not been impacted from a franchise erosion perspective bit news we saw over the quarter, but i think the challenge for deutsche bank and john cryan,

they laid out the business strategy as usual, business as usual. because there is the elephant in the room of the d.o.j. settlement. and until we know what those settlements play out, it is very hard to know how deutsche bank can react, because they have to think about what is the next step. is it that we have a $5 billion settlement that is manageable, and from that perspective, we can continue with the plan, broadly as outlined, with additional cost cutting, or are we facing a number that is multiples of that, in which case we have to seriously consider the possibility of asset management on the line, selling asset management is potentially capital enhancing and may address the capital, but it will be 25% e.p.s. diluted. so the range of outcomes for deutsche bank right now i would say is so broad, it's very, very hard for them to make an absolute call here, to say, yes, we can cut head count by x, but that's a billion dollars of the bottom line potentially.

but by the way, you're impacting a people business. that's very challenging, and that doesn't move the dial if the d.o.j. number is double digit. jonathan: the word i pick up from you is reaction. it's reaction, it's not proactive, and that's a difficult position to be in. >> david: exactly. this feels like a sailboat, where you take your hand off, and you say the d.o.j. is controlling this. the fact is you have to have some sort of strategy. even if it has to change in reaction to the d.o.j., you can still say this is the bank we're going to have. we have to change it depending what happens. but instead of that, just step back and say let the d.o.j. decide it, that's a very dangerous position for a c.e.o. >> i absolutely accept that observation, that concern that the market is having. but i think the reality is here that john cryan is playing a very complex game of chess. if he goes out and raises in the market, remember, he can't raise effectively half his market cap. if he raises not enough, then

we're in a serious position, and then the d.o.j. sees that the war chest is sitting out there, where he's in a very difficult position. i think it's very hard for him to stand up and announce i want to sell my asset management business, and you're not going to get a great price. so i think -- i give credit to john cryan, i think bees the best c.e.o. you could have. he's one of the best in terms of capital management, in terms of balance sheet management, liquidity management, and we saw that, strong numbers in deutsche bank. so knowing they're in a position where they have to just weather the storm. they are meeting their regulatory capital ratios, yes, there are triggers around maximum distributeable allowances available, distributeable, concern the market, for instance, but they have to live within the regulatory frame work for now, until they get that d.o.j. number, i think. alix: what we learned is that john cryan said he doesn't plan to raise capital. he didn't rule out i.p.o.'ing the asset management business, but nonetheless, he dent say what they were doing with it either. that put john cryan stuck in

the middle. he can't say what they're going to do, because the market might not respond. but he's saying he might have to back track, the credibility issue. barrington: i think you've also got to bear in mind where you're raising from. we have this situation across europe that there are a number of financial institutions that are either raising many multiples of the market cap or they're raising 100% of the market cap. and the reality is that deutsche bank can't do 100%. it's not feasibly -- it's not feasible in the short term. but the reality is that you need to try to tell a story that you can cut costs, you can deliver on your earnings, you can try to get the market cap from $10 billion to $14 billion, and from that point, you can then raise at some point in the future. but to try to do it at a distressed point, at the maximum point of paying, i think it's clearly what john cryan is not wanting to do. to his point, he'd rather not raise capital, he'd look asset sales. jonathan: barrington, thank you, sticking with us to talk about lenders. we'll focus on brexit soon. alix: twitter popping by about

-- where are we here? up in the premarket, 5%. here are the big numbers you need to know. yes, it beat on the top and bottom line. but it was monthly active users coming in at 37 million, better quarter on quarter and wound up beating estimates. the other big numbers you need to know is that twitter is not providing specific revenue guidance for the full year and the fourth quarter. it is also cutting up to 9% of jobs. it does say that it will add more syndication partners in the coming months, and it's going to reorganize its sales force, but not going to have any kind of guidance for the fourth quarter or the full year. in other movers as well, take a look at tesla. that came after the bell yesterday. big spike up, almost by 5%. it earned 71 cents a share. it was an enormous beat. the street was looking for a loss t. did also cut its full-year cap ex to $1.8 billion versus the previous over $2 billion. it's trying to control those costs, while delivering on sales. also taking a look here at groupon, wanted to highlight

this. this also came out yesterday, really interesting, now down by 9%. it is buying its rival, living social. he says that the groupon saying the amount of purchase is not material, but at one point living social was valued at about $6 billion. the street not buying the necessarily not material, and also raises questions in groupon's growth strategy. david: another company out with earnings this morning, ford. they came out with earnings that topped estimates, and they're in the green. we'll speak with the c.e.o. to get his take on the quarter, coming up in just a bit. next, britain defies the brexit bite again. the u.k. economy keeps its momentum with g.d.p. growing more than people thought it would. we'll debate what it means for the bank of england's plans for rates. that's next. ♪

alix: this is "bloomberg daybreak." officials weighing in on the impact of brexit on european banks. the u.k. trade minister said passporting, which allows london-based lenders and insurance companies to sell their services anywhere in the single market, is unlikely to continue after the u.k. leaves the 28-nation bloc. meanwhile, barclays c.e.o. laying out his plan for the bank earlier in an interview on bloomberg television. >> there's a lot of capital in the u.k., which is put to work in the european union. we would hope as the brexit negotiations go forth that the politicians and the regulators keep up the free flow of capital and continue to allow participants in europe to have access to participants in the u.k. to have access to europe, to make investments in europe, to help europe grow. alix: that's what jes staley

wants. that's not the reality, though, that's shaping up on the ground. how does management need to pivot now in the next six to nine months? barrington: i think management will have to play a very careful game here between thinking about the future and planning for the possibility of the hard brexit. whilst at the same time recognizing that london is the hub of finance in europe. it has the talent pool. it has not just the financial services industries, but it's the firms, the legal firms, it's the infrastructure that london has. it's going to be very hard for every major financial institution hubbed in london to pivot to dublin, to frankfurt, to paris. that is going to be a big challenge. i think that the banks are going to be looking for middle way, which is to establish enough presence in continental europe somewhere to achieve the european passport, but at the same time, keeping probably a lot of frain structure in london and the u.k. i think it's going to be very hard to see in the short term that there can be a wholesale

shift in the hard of that brexit a lude to. jonathan: it's for the europeans. we unvest, we help you grow, you need london. do the europeans listen to that, or do they not really care when they negotiate in the cong years? barrington: i think the europeans will not care. i think the europeans are going to seek the levi against the u.k. economy. this is a very troubling concept for the u.k. we're sitting here with a sterling that's reflecting the realities that may lie ahead, but a stock market that frankly isn't, or is reflecting the international imported earnings. the reality, to my mind, is we sit with brexit, which is in one single night, the united kingdom has changed the relationship of an active union from the 1700's in scotland. you've got the good friday agreement in question. and you've got essentially the treaty in question. so these are the integral relationships of the u.k. with the entirety of the europe now in question. and i don't think that can be resolved in two years. i don't think you trigger article 50, and two years later

say, well, there's the solution. we just saw that we're able to block the theater, the trade agreement. that was less than 1% of the population of europe is blocking something that 28 countries have agreed to. alix: well, they eventually caved, but nonetheless, point being. david: one of the things we usually talk about is moving people around, executives around, things like that. we don't talk about the regulatory scheme. we had james gorman from morgan stanley on earlier this week, and he was saying one of his concerns is, if you break it up, the banks will have separate capital requirements in dfrpblt locations around europe, which will really impede business, as well as banking. barrington: i totally agree. you made the point that jes staley was, giving a message to europe. he's also one of the people who will face this exact pressure. he has ring fencing in the . k., between the ring fence he now has his u.s. holding

company. now he's going to potentially have a european vehicle. the bond markets are going to have a very challenging time going forward thinking about financial institutions, as will liquidity. we'll have a number of challenges for management to work through. and i certainly think the credit market is going to have to focus hard on this. jonathan: help me understand some of the regulations. you can do a hearing outside of london. you can do it outside of the europian union. already. so if they stop london, are they stopping everyone else from doing the same thing? how does this work? to me, it's a lot of politics right now. i want to understand the legal issues. where are we there? barrington: i think it's a very good question. in fact, the united states could be one of the big beneficiaries of this. if i go to my point of it's very hard to move just out of london to a one continental european country, it will be an awful lot easier potentially to use the passporting relationship, the equivalent releaseship that you have in

the united states. to my mind, that is the one that i think must hold. it will be very hard to see the europeans break that enshrined super equivalent arrangement. to break that would create very substantial trade wars, financial trade wars. alix: not to mention the fact, if you also had u.k. banks moving spew other areas of europe, the e.c.b. thooze oversee that, in terms of rules and accounting. is the e.c.b. even set up to handle that kind of business that they would have to transact? barrington: i think operationally the e.c.b. is set up for it. i think that they can manage the increasing workload. i suspect one of the challenges is that many of the institutions that may be forced to go to work with the e.c.b. may not find it an easier relationship as they maybe have. i think probably the u.s. banks are more comfortable with their own banks. i think dealing with the e.c.b. across multiple jurisdictions

will be challenging. david: thanks very much. barrington pitt miller, thanks for being here. great to have you. coming up -- shares of ford down in the premarket after quarterly earnings fell 55% from one year ago. up next, we'll speak with the man in charge, the ford ford c.e.o. he's going to take us through his numbers. ♪

david: this is bloomberg. ford motor company is out this morning with its third quarter earnings, and they were better than analyst forecast. but they are down over the same quarter last year. ford earned 24 cents, actually 26 cents adjusted per share last quarter, more than the 20 cents people expected. on revenue of just under $36 billion, compared with $31 billion last year. joining us is the president and c.e.o. of ford, mark fields, coming to us live from ford headquarters in deer born, michigan. thanks for being here, mark. good to have you. take us through the numbers. you did beat the estimates.

on the other hand, you're down year over year. what's going on there? mark: when you look at the company, we reported $1.4 billion in pretax income, and it is down from last year. it is a bit better than we expected. and when you look at the profile of that, here in north america, we were impacted by our super duty launch, so we were making the investments as we launched that product. also impacted by a door latch recall that we announced during the quarter. and then we didn't have -- we had some changes in our f-150 stocks, because last year at this time we were lanching the plant and filling the pipeline, so obviously that didn't repeat. but in other parts of the world, in europe, we had very healthy improvement in our profitability. sixth quart near row is our profitability, and we've actually made over a billion dollars in europe this year. and we had record third quarter earnings in asia pacific and record sales in china and another strong quarter from our credit operations. david: as i understand it,

there were some one-offs in the year-over-year comparison that make it apples to oranges. is that complain why some competitors have done a little bit better in their earnings this quarter? mark: again, i can't speak to the competition. i can only speak to ours, and when he look on a year basis, our pretax are about the same as last year, and last year was record earnings. we're reconfirming our guidance or this year, which is about $10.2 billion in pretax. that will be probably the second best year than 2000. we're going to stay really focused on putting out great product, running a responsible business, and growing in emerging mobility areas. david: that's where i want to go. i know that's near and dear to your heart. you made some moves even this last quarter, making investments specifically in crowd sharing in san francisco. where are you in that process, and specifically when do you expect that to start increasing your earnings rather than being

aninvestment for the company? mark: right now, over the next, for the foreseeable future, we're going to be in investment mode, and we actually communicated that in our investor day. as you look at our earnings, our guidance for next year, we did say we were going to be down. our core business would improve, but clearly the investments we're making in the emerging opportunities, whether it's electrification or autonomy or mobility will impact our earnings. but, you know, further out, obviously those businesses will start contributing to the company's bottom line. in the quarter, we made two important announcements, the acquisition of chariot, which is a shuttle service in san francisco. we're going to roll that out globally in a dynamic shuttle approach. and then we also announced that our intent to have a fully autonomous vehicle in a ride sharing or ride hailing service in 2021. so we're making this great progress on becoming an auto and a mobility company. david: mark, finally, you mentioned three things,

electrification and autonomy, and ride sharing. of those three elements, which do you expect to start returning positive earnings first as you look out? mark: i can't put an exact time frame on terms of where each one would cross the finish line, but clearly we're making the appropriate investments, and our intent on each of those is for it to return sitively to the company in terms of profit contribution. when you look at things, let's say in the mobility space, probably they are less capital-intensive, and we get good returns on that. david: mark, thanks so much. that's mark fields, president and c.e.o. of ford. coming up, we'll talk about twitter. ♪

when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. al i can: it is 7:30 a.m. on wall street, 12:30 p.m. in london. here is what you need to know at this hour. revenues jump at europe's top trading firms.

deutsche bank posting a surprise profit in the third quarter, as the c.e.o. moved to lower costs and the bank's trading unit reported a jump in revenue. barclays posting a 35% profit jump in the third quarter after its fixed income unit reported its highest revenue in more than two years. yields jumping to the highest level since the brexit vote after the u.k.a. commess grew more than expected. and it is another big day, ford profit falling due to cost cutting measures, and twitter revenue and user estimates beating estimates, and company announced else cutting 9% -- announced it's cutting 9% of its workforce. jonathan: two hours away from the open in new york. futures are positive, up 29 points on the dow, up five points on the s&p 500. really choppy session in europe. higher, lower, higher, lower, unchanged on the session so far. the bond market is lower, and yields hire, up three basis oints on a 10-year to 183.

an upside surprise on the u.k. g.d.p. putting the pound on a little bit of a stronger footing, the cable rate trading up 122. david: as alix just reported, twitter is pack in the news with earnings just out, and they beat analyst estimates. twitter shares are up on the news. yesterday before the earnings report, former microsoft c.e.o. steve ballmer sat down with bloomberg's emily chang to give us his thoughts on twitter. >> i think twitter is a producible asset. just what goes on, donald trump tweeting out late at night and everybody wants to talk about it. i don't think there's any vehicle that lets you speak broadly to a mass audience any better than twitter. could the product be easier to use? of course the product can be easier use, and i think that's an important area. could the product benefit from additional innovation that takes it in surrounding areas? yes. the cost structure, there are

rumors they're working on it, i have no information that anybody else doesn't have. but i see a lot of potential on twitter. david: that was steve ballmer talking with bloomberg's emily chang. you can catch the full interview this sunday on bloomberg's studio 1.0 at noon. now to talk about the twitter earnings some more and what they might mean for the strategic future of the company, we're joined by bloomberg technology reporter, joining us today from frankfurt. aaron, give us the top line. they beat estimates. do we care most about the earnings per share or their users? what do we care about? aaron: well, let's keep in mind here, things still are not looking that rosy for twitter. as steve ballmer said earlier, they have to watch the cost. the earnings just came out a little while ago. what we did see was a sightly larger job cut than expected. twitter sliced the workforce. that's about 350 people.

they said it's mostly in sales and marketing. it's going to cost them in the short term, though. it's going to cost them $15 million to $30 million in the fourth quarter for some of the restructuring charges. twitter lost more than 100 million u.s. this quarter, and they're on track to lose more than 400 million this year. david: those job cuts, do they fix the place up for a possible sale? there have been talks about possible sales that didn't go anywhere. are they fixing the company up to sell it? >> there's talks off and on for many weeks about a twitter sale. we got this very well publicized, probably for some, too well publicized in september and october. salesforce.com took a look until their c.e.o. publicly said he was not going after twitter. disney had a hard look. alphabet was reportedly looking at it too. that fizzled. bloomberg just moved a story saying twitter was girding to go it alone. we don't know what's going to happen, but certainly the job cuts fit in with that. david: that's aaron, bloomberg

tech reporter, coming to us from frankfurt. alix: with us now is oppenheimer analyst who covers the company. jason, as an underperform rating on the stock, a $17 price target, a little lower than where we're trading right now for twitter. you enter the numbers. what was your biggest takeway? jason: look, the u.s. business is slowing. it didn't slow as much as we thought, but you basically had negative revenue this quarter, negative year over year am it was down 2%. we were looking for it to be a little bit worse. so you've now hit that point, so the question is why did they announce that? well, if your revenues are going to start negative, you ve a spiraling effect on ebitda, but now they're just reacting to, you know, a lack of bidders at this point. alix: on the positive side, the

monthly active user base up by about -- daily active users up 7%. monthly active users hitting 317 million. the company really highlighting that streaming network that they have, the nfl, the debates, using that to sell that narrative. is that the right narrative for them going forward? jason: i think that's right. if you look at u.s. users, it was up 2%. it was the same as second quarter. international did slightly accelerate, but the moanization is a lot lower nationally. so you want to focus on the u.s. business when you're trying to understand, you know, kind of where they're trying to lead the technology and the mountization. from an engagement standpoint, that's where you need to focus. what they need to tell serve what percentage of the usage is what we'll call advertiser-friendly content. you take disney, they can't buy this company until you clean it up. there's been a lot of talk about the trolling activity, etc. what percent of the useable is

trolling -- what percentage of the usage is trolling and content that would not be considered friendly, when advertisers would not want their ad anywhere near certain content? that content, if it makes it great, is not monetizeable. jonathan: what kind of strategy is cleaning up a business to sell it? we were talking about the banks earlier on on this program. barclays has a strategy. jes staley owns the narrative. deutsche bank hasn't really got one right now. the company you're talking about, when we talk about twitter, what is the narrative, and have they lost it? to me, it's a company that was put up for sale, went through a sales process, no one wanted to pie it. and everyone else is looking thinking why should i? jason: look, i think the narrative they're going to try to play is we figured out how to come up with the next generation global broadcasting platform. you can get someone to interrupt with your advertiser live, and it's really hard to get that to happen, given all

the time shifted viewing, on-demand viewing. that's what they want to sell and hopefully convince the media company over time to look at that. you know, they're going to focus on d.a.u., it looks like they're up 7% versus 5% in the second quarter, three in the first quarter, so that's a positive trend, so i think they'll focus on revenue of getting better. historically they have not focused on that. they're going to focus on ad engagements. we're still up close to 100%. but pricing is down. and so there's still enough to talk about. i think they need to address the quality of the content on the platform and how you ultimately make this more of a brand-safe platform long term. david: it may that be streaming video is a good strategy, but it's hardly original. there are a lot of people out there that are streaming video over the spre net. what do they have for an advantage to take, pick a name, facebook? jason: well, you say how did

they get the content? they basically agreed to give the majority of economics up to the content owner in their deals. you would imagine if nfl content is available, everybody raises their hand who has a platform and says we want a shot at this. so, look, right now they're not making much money out of this content, but they're trying to prove that they can get people to engage and then see an ad live. again, it's been well publicized that nfl ratings are down this year. there are a lot of quose why. one of the theories is people are watching a lot more on nontelevision devices, and the current measurement systems are not capturing it. if that's the case, maybe people do want to, you know, watch the beginning of the game, the end of the game, the highlights of the game, on their phone, and if you can get ads to be seen exactly when the advertiser wants, there's value there. alix: jason, thanks so much for joining us, jason helfstein.

coming up, we head to toronto for canada's most important investment conference of the year. our own erik schatzker will join us, alongside a special guest, tom wagner, live from the capitalize for kids investments conference. ♪

>> here in the hewlett-packard enterprise greenroom, coming up in the next hour, citi's global head of f.x. strategy, steven englander. this is bloomberg. jonathan: i.b.m. is teaming up in an effort to expand the company's reach of artificial

intelligence technology. bloomberg's emily chang sat down with the i.m.f. chairman and c.e.o. as the i.b.m. world of watson conference to ask about the company's efforts to bring a.i. to the road. >> this idea, and again, keep it simple, but it's interinteracting. they've got 1.5 billion pieces of information from connection, and you individually permissions what happens here, so you car gets to know you, and everything from, you have a prescription to pick up for your children on the way home, telling you where to get off early, when to go get it, to preordering, paying for your coffee, to another example would just be, look, you're going to run out of gas, getting you to the right place, paying ahead at the pump, for you to get your gas, and it just goes on and on from there. this is just the beginning of it. and in fact, there are a number of partners as part of this first round coming. exxonmobil, you've got mastercard, parkopedia, a whole group of partners. you can see more being added on, but in a very permissioned

way. it just changes that experience, because people on average, in their lifetime, spend 37,000 hours in their car. emily: tech companies from apple to google to uber are vying for control of the car. what makes you think that watson and i.b.m., g.m. plus i.b.m., have something special that other technology companies can't replicate? >> well, in this case, using watson and the artificial intelligence can't replicate it, and therefore, g.m. has got data that can't be replicated either. and by the way, others have different kinds of data of their own that can get used. i can see us being able to play a role across many different parts in auto. we do today, by the way. so whether it's daimler car to go or work we've done with honda on batteries, there's many different places that this type of cognitive intelligence will come into play. and it is not just autonomous driving. we do participate, by the way, on autonomous driving with sub systems in the car.

so this is a whole continuum of opportunities that's out there, and there will be all different forums, whether it's ride sharing, your own car, and there will be a very wide variety of ways you'll participate. jonathan: that was the i.b.m. chairman and c.e.o. on bloomberg television just yesterday. the big story this morning in the world of corporates is the world of banking over in europe. deutsche bank earnings and barclays earnings, and the big question we have coming into this quarter for the european players was, ok, big quarter for the u.s. players on the fixed income trading side of things. did the pie get bigger, or did deutsche bank lose market share in it appears that the pie just got a whole lot bigger. david: and deutsche bank lost market share -- they're not nearly as much bigger as the u.s. counterparts. alix: the bloomberg charts what these guys are talking about. it is fixed trading revenue for u.s. banks. the purple bar is deutsche bank. barclays is the white bar. so on the surface, that purple bar looks quite impressive coming in at, whatter we are

over two billion euros versus barclays. but sequentially, 14% growth versus 49% growth for the five u.s. investment banks, that really puts it into perspective. jonathan: another thing that puts it into perspective, we talked about this d.o.j. issue with deutsche bank. since the middle of september through to the end of october, the big issue is that we only saw two weeks of this in the numbers in the last quarter, with the back end of september, and you wonder what the followthrough is, because what we heard from deutsche bank this morning is, yes, maybe things improve, but the back end of september tries to take a step back. you confirmed thatgain. david: as you suggest, we may not have seen the end of it. it may be just starting. it will be another quarter or two before we really did get a sense of that. alix: he doesn't know how that's affecting the new business, so in essence, that's why you're seeing deutsche flat. jonathan: want to go back to the one line that jumped out at me from the statement from deutsche bank, ambition. when a c.e.o. talks about

ambition, they have goals, strategic aims, investors like to hear them. maybe they want to hear this, but the aim is to be more ambitious in the head count reduction. what does that say about your business right now and your strategy? david: john cryan has a very hard job, a tough job. he's done a better job of saying what the bank isn't than what it is. maybe with the d.o.j. hanging out there, he doesn't have a choice. jonathan: you and i had a conversation yesterday, and the question was, can he really just wait to say i can't tell you anything until i know what the fine is? is he going to be proactive or reactive? the analysts this morning said he's going to have to be react and i have can't do anything until we know the size and shape of the fine that comes from the d.o.j. how long is that going to take? david: can't be fun for him or for his investors. now it's time for other stories making headlines at this hour. here's your bloomberg business flash. >> david, thank you. there's a big acquisition in the semiconductor business. qualcomm has agreed to buy m.x.p., $47 billion in cash.

that represents an 11% premium to yesterday's closing price. it's the biggest supplier of chips to the auto industry. qualcomm is the number one maker of mobile phone chips. volkswagen suffered a setback to rebound from the diesel emissions scandal. v.w.'s biggest profit contributor, audi, has cut its outlook. that's because of costs relating to the emissions scandal and recalling cars with defective air bags. audi says its return on sales will be below its target of 8% to 10%. snap chat will try to raise as much as $4 billion in its planned i.p.o. that's according to people familiar with the matter. a public offering could rally snap chat up to $35 billion. the company makes an application for sharing selfies and videos, watching news videos, and chatting with friends. that's your bloomberg business flash. this is bloomberg. jonathan: let's get a quick check of the market. we are one hour and 43 minutes

away from the open. futures are positive. up four points on the s&p 500. in europe, slightly negative, down .10%. the dax down by 11 points. switch up the board. i'll get to the other asset classes for you. ields up three basis points. an up side surprise on u.k. g.d.p. the cable rate on a firmer footing at 12254. from new york, this is bloomberg. ♪

david: this is bloomberg. i'm david westin. we're heading to toronto, where erik schatzker is with knighthead capital management co-founder, tom wagner, at the capitalize for kids investor conference. erik? y i think: david, thank you so very much. tom, good to see new my hometown. knighthead has about $3.5 billion in assets under management.

we live in a zero interest rate world outside of oil and commodities more broadly, outside of retail. where on earth do you go to find distressed today? tom: i think the key is wait for opportunities. they occur in different sectors. they also occur in different regions. sometimes they occur in different parts of the credit market. we've found in the last few years terrific opportunities, not only in corporate distress, but also sovereign distress. i would characterize that as greece, argentina, puerto rico, you know, different situations where we found very, very compelling investor opportunities in what we view as sovereign distress. erik: how would you describe your state of patience? are your l.p.'s, limited partners, giving you the breathing space that you need to be patient, or do you feel like there's a fire under your behind and you have to invest, cause at what they hired you to do? tom: i think the only time we feel pressure to invest is when you see the broad credit markets trading at very high yields.

the rest -- erik: like january or february? tom: people want to know what you're putting in your portfolio, the nature of the risk. at any other point, our investors want to know we're able to find interesting investments. they're comfortable with us being patient. that's an important part of pursuing a distressed strategy. there are points in time, like the present time, where you have to rely on a level of patience to wait for the next great opportunity. erik: you mentioned a number of sovereign opportunities, quasi sovereign, like puerto rico. is that where a distressed -- you've been in this market since the late 1990's. is that where you have to turn now? tom: it's a place where you'll look over time to find new and interesting opportunities and ideas, so we've been heavily invested, as we talked about in the past, in puerto rico, specifically in the water and power companies there. we've been invested in argentina. we remain very bullish there. i think the sovereign debt remains, on a relative basis, extremely attractive.

erik: what about argentina? tom: it's interesting. the similarities exist in that, in argentina, the catalyst was a new administration led by a person who was very much a reformist and capitalist. in the case of venezuela, you have a leadership that is pursuing a strategy that's not viewed as friendly to outside investors and a more capital stick environment. erik: but the administration in argentina, i guess you could liken it to the maduro administration in venezuela. is venezuela going to become the next argentina, or is now too early? tom: in order to invest in venezuela, you have to have some confidence that they will make the transition. you have -- erik: do you have it? tom: we think over time, yes, and there will be very interesting opportunities there. erik: what about saudi arabia? you've been bearish on saudi arabia, the middle east in general. clearly they're having problems, fiscal issues. they just did a $17.5 billion

bond deal. tom: i think our view on saudi arabia is that it is in the best interest of saudi arabia to allow for a free-floating currency and there will be enormous advantages in the long run, particularly as they tament to attract capital to transform their economy by allowing that to happen. we're not talk a specific view on the relative health of the saudi economy. we're simply looking at the reality of the current global situation with respect to the competitive nature of oil and saying that for them to transform their economy, one of the great levers that they can pull, that would be very beneficial to their economy, would be allowing their occurrence industry flow freely. erik: the gulf region has sold $150 billion in debt so far this year, a record, and there's probably more to come. are those bonds going to turn into distressed opportunities? tom: i don't think it's going to happen in the immediate future, but i think for investors that are buying 10 or 20 or 30-year debt, you have to ask yourself conscious these economies transition over that

period of time to a place where they can compete without relying heavily on oil? erik: the answer is? tom: we'll see. i'm not sure that investors are being compensated for those risks, but i also think it's not an immediate event, so they're not worried about what happens over the course of the next 20 years. they're thinking about the next three to six months. erik: puerto rico, they now have a federal control board overseeing the commonwealth's restructuring efforts. can the people who are on that board -- you know who they are -- resolve these issues? tom: oh, i think with the oper will to find consensual deals with stakeholders, all the various stakeholders, there's enormous opportunities for them to turn puerto rico around. we are bullish their long-term prospects to do that. it will probably be a rocky road, as is often is. but i do think that in the long run things will go quite well. erik: tom, thank you so much. good seeing you here in toronto. that is tom wagner of

knighthead capital. much more coming from the capitalize for kids conference near toronto. for the time being, back to you in new york city. jonathan: looking forward to it, erik. coming up, steven englander will be joining us. the markets, counting you down to the cash open in new york city, futures up 25 on the dow, up five points on the s&p 500. bank earnings out in europe. a surprise to the upside for barclays and deutsche bank. no visibility or limited visibility for deutsche bank, and that's the story that comes out of frankfurt, and we'll debate that coming up, as we bring together the earnings out of europe. here's the f.x. market and the bond market. bonds with yields on a 10-year at 182. from new york, this is bloomberg. ♪

jonathan: from new york, good

morning and welcome to "bloomberg daybreak." i am jonathan ferro with david westin and alix steel. futures up 30 points and the dow , the s&p 500 unchanged. yields upthe board, three basis points on the u.s. 10 year. a surprise to the upside for you at -- u.k. gdp but cable is unchanged. alix: revenues jump at europe's top firms. john cryan move to lower costs and they reported a jump in revenue. the --ields jumping to gilt yields jumping to the highest levels since the brexit

vote, and it is another big day in u.s. earnings. revenue and users beating analyst estimates, announcing they are cutting 9% of their workforce. that is what you need to know. jonathan: the big story out of europe, deutsche bank unexpectedly posting profits and reporting a jump in revenue while barclays posted a 35% increase. let's start with the analyst wrapped out of deutsche bank. profit up, stronger underlying profit, higher revenues, lower cost. the visibility, i want some and i'm not getting it. we do not know about provisions or much more about the doj. what are investors saying? michael: think that is why you have seen the stock jump around a little bit, because there still are so many questions outstanding.

people are happy to see the capital increase and a relatively quiet quarter in down,of revenue up, cost kind of in track with their plan , but certainly the big questions still remain. jonathan: this is night and day, deutsche bank versus barclays. trade revenuee -- up the john cryan says it is going to be a tough year for the rest of 2016. jes staley likes what he sees and is grabbing market share. >> barclays can afford to be a little bullish because they started their restructuring a little earlier. the same asstrength deutsche bank in fixed income trading but with all the noise around torture we have one of the heads of their investment bank coming to say they have lost market share in a lot of areas because of the

destruction, so maybe not only is this coming from the u.s. to barclays but also deutsche. there is still going to be a lot of volatility in investment banker. david: what part of the story of deutsche bank's day is cost savings? what jumped out or litigation costs. if you compare year over year 700 million euros to the good which is slightly more than the amount they beat on the net income. coincidence? michael: no, i think there was a chance that you had some more provisions for this quarter, but certainly it was much cleaner quarter than a year ago. a year ago we had a couple of big write-downs. the legal provision is still a question of whether that will be a fourth quarter issue or whether it will bleed into next year. richard has signaled they --

wouldhe has signaled they like to get a lot of the problems out of the way in 2016, but some of that is not in their hands, especially with negotiations with the doj. jonathan: michael moore and stephen morris, thank you very much. barclays stock up to and a half percent, deutsche bank relatively unchanged. joining me is charles peabody. .reat to have you with us if you want to color and visibility out of deutsche bank, but you get it? charles: i do not think you will get it until the fourth quarter. some analysts talked about their franchises intact. of the doj demands did not come until mid-september and the funding issues did not come until the last couple weeks of september and early october. -- ofmors being withdrawn

prime brokers being with john did not come -- withdrawn did not come until recently. alix: what was good was the cost-cutting. how much more can they bring out of cost-cutting and is that 14% fake growth sustainable -- fic growth sustainable? that pales in comparison so they are definitely losing market share. we have seen cost-cutting in the united states. when bank of america started their project in 2010, they had about $70 billion of expenses. their expenses today will be less than $55 billion, so you can cut costs, but their billion went from $105 to about $80 billion today and their profits deteriorated. it will be a tough grind to generate internal capital. david: what is deutsche bank's

approach to retail banking? we have a saying wholesale bank and a real estate bank that balance each other. i thought they were going to get rid of post hank at deutsche bank and maybe the supervisory board is talking about integrating it. what is their strategy on retail banking? charles: i do not know the answer to that, but i will say you need an environment in which you can sell assets and a price. that does not exist right now. they have tried to sell their chinese steak and there have been problems. out face a multiyear grind with asset sales, internal capital generation, and equity issuance. jonathan: let's talk about full.gy john cryan inherited a very difficult job. can sit here and

i'll agree with the strategy is that has come out of barclays. we cannot sit here and all agree on the strategy out of deutsche bank. some may sit here and say, he has just taken the job, etc. i think there are five months in it between jes staley and john cryan. people say they started things early at barclays. no, they did not. john mack farland was not happy with the job that antony jenkins had done and there were still people talking about the strategy of spinning off the investment bank. that strategy was under doubt a year ago. why are we sitting here saying what is ok for barclays, deutsche bank, let's give them more time? if i was an investor i do not think that would sit well. charles: i think ultimately at the end of the day happens to

the balance sheet is going to determine what they can do strategically. the balance sheet is a critical issue. at best you can grind out an improvement over a multiyear period that worst you have a lehman moment where you lose credibility about your accounting around that business sheet -- balance sheet. right now there are questions about how is deutsche bank accounting for their derivatives portfolio. alix: the last time you were here, you look at something very specific to look at stress for deutsche bank. this is the chart you were looking at, deutsche bank senior unsecured debt issued in may. what does this here in 1998 tell you about the stress? charles: as you can see, that debt issuance was trading pretty tight to par up until the doj announcement and it has come down significantly. they have issued i think about --ee and a half alien senior

billion senior unsecured debt at about three and a half points over. this is the most senior debt. i think the marketplace is still saying, we are uncomfortable with the balance sheet. david: is the marketplace overreacting? deutsche bank will pay their bills. when you get senior debt like that, is that not a safe bet? charles: i think senior debt is much more attractive and the equity is what is unknown. you are trading at a third of book so people are wondering about the dilution effect. peabody: charles sticking with us. let's get an update on what is making headlines outside the business world. emma: a breakthrough in the european unions internal dispute over a trade agreement with canada. all regional parliaments are set to approve a deal tomorrow

night. the french-speaking region had held up the accord, worrying about the attack on consumer standards. the islamic state is using drones in the battle for iraq's second-largest city. they used them to survey u.s. positions and job explosive devices. congress asked for $20 million to fight enemy drowns. parents thomas -- clarence thomas says americans are losing confidence. he made a rare appearance at the heritage foundation in washington. >> the city is broken in some ways. i have been here now most of my and i think that we have become very comfortable with not thinking things through and debating things.

that is one of the things i love about the court, you can actually talk to people about things. thomas says he understands the perception that the supreme court is just another political branch of government. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: u.s. equity futures running a touch higher this .orning, twitter up almost 5% earnings beat on the top and bottom line. daily active users up 7% year on year. monthly active users coming up at 317 million. twitter trying to highlight more people using and staying on their site. sales were also up. the company will not be providing revenue guidance for the fourth quarter and also cutting some jobs, up to 9% of the workforce. tesla reporting after the bell yesterday with a pretty much killer quarter, the first profitable one since the first

quarter 2013. no plans to raise capital in 2016. they estimate they are going to sell about 25,000 cars, helping to lift solar city. qualcomm will be buying nxp which basically makes ships to the auto industry. these rumors started to trickle out a few weeks ago and now definitely ceiling that deal. david: goldman sachs and risk from europe. charles peabody on what goldman is saying about european risk. we will look at what the brexit vote may mean for banks and a good part of the u.s. -- u.k. economy. martin gilbert will be here. this is bloomberg. ♪

jonathan: from new york city, this is bloomberg daybreak. a quick check of the markets. earnings coming through in europe. unchanged is how we stand with ftse, and the dax up by not only two points. yields up three basis points, very much on globally, and the gilt is being hammered. the pound at 1.2256 after an upside to price from third-quarter gdp. alix: the big banks competing for market share. jes staley spoke earlier on bloomberg television. quite a bit ofed market share, particularly in the united states so we felt good about our investment bank performance. it is a key part of the strategy. alix: charles peabody still with

us. that is not the narrative we were supposed to hear after the u.s. banks reported. charles: i think you have to be selective. barclays did do well but relative to the u.s. banks they inc -- up 42% in fic. deutsche bank lost market share. david: jes staley seems to be doing alright. charles: where you can put your balance sheet to work you will be doing all right. we saw this on the rockwell deal and at&t deal and hilton deal, they are putting their balance sheet to work. jonathan: the big story is and goingsus the u.s. forward, can you have a big european player whether it is

deutsche bank or barclays competing with these guys on wall street on their home turf? can you? charles: it has been a struggle over decades. every year you get these european banks coming into the united states whether they are japanese or european, they make an effort, and fall back. the environment i think will get tougher in the capital market. alix: what do we learn from u.s. banks about european banks and the health they have? said the firmdman is is as focused on navigating today's environment as we are on preparing for the future. you have to do the first really well to be in a position to do the latter. what did that mean to you? charles: the way i interpreted that is they see the current environment is full of risk, and you have got to get through that risk before you can execute your future plans. you are preparing your balance sheet to absorb those risks and

one of the things i point out to my client is, oldman has not raised their dividend for seven quarters in a row. they used to raise their dividend every two to four quarters after the financial crisis and the last time they to 2008. long was 2006 dividends are not the principal part of their capital return plan but in indication of what they are trying to do with capital. if i can point out a chart i pulled up on bloomberg that shows the relative performance of the money center banks, they are also telling you something. it is very short-term and you have to be careful about interpreting fundamentals from a short-term chart but you can get a sense of this sentiment. bank of america has clearly outperformed jpmorgan. the thing that differentiates bank of america is they have leverage to rate. jpmorgan had a phenomenal capital market cycle so the read

i'm getting from this chart is that there is clear confidence in the marketplace that we are going to hike rates in december which will help rank of america, but we are not sure what that will do to the capital markets. when we got away 2% 10 year, that will have implications. peabody, good to see you and thank you very much for joining us. gilt yields climb into the highest levels since the britain voted to leave the e.u. but is that round overdone? stephen englander joins us. ♪

jonathan: from new york city, i am jonathan ferro. this is bloomberg daybreak. this quote is brought to you by

kit juckes saying, fed policy tries it all down, cross market correlation up, and the market may be convinced the fed is going to hike rates in december but they are also increasingly convinced that all we have to look forward to is a single .nnual rate hike in the future let's bring in stephen englander who joins us from new york. i want to bring up the cross asset market correlation that kit is speaking to and i can do that looking at the bank of america merrill lynch index and we are seeing the lowest price swings since 2014. the correlations if you can take bonds versus equities, we have stocks, --onds, lawn long stocks, vols low. which asset class is in the driver's seat and is the fx

market just a buffer? steven: that is a lot of questions. i think the market is very worried about the backing up of yields and if they were to back up significantly more we would see some of these correlations getting to break down. we had comments or mario draghi earlier this week in which carefully he was saying that there were disadvantages to having very low long-term rates and low short-term rates, which is different than anything he was saying six months ago. we heard the same thing out of kuroda and the boj a couple of months ago. if the market perceives the fed as joining in, i think we could in quite a sharp backing up asset markets and pull back from risk. the other focus best, and we did a survey of our clients a couple of days ago, at the back of their minds they are worried about china.

does therethere risk are risks to the chinese economic outcomes, financial marco -- market outcomes, and they are afraid if there is an event it could have significant spillover both in emerging markets and developed markets. jonathan: we have got sentiment on the one side which is clearly fragile and volatility is clearly low. low volatilityle with complacency when a lot of people are aware of the risk? are they aware of the risk but unable to price it? steven: i think there is also caution, because it is one thing to be aware of a risk but if you hedge against a risk and it does not play out you lose money. many investors do not have that kind of money to lose. i think there is an artificial low volatility in the market because people are waiting, investors are waiting for the

events to realize themselves and once they see which way they go they pull the trigger in whichever direction. what it means by implication as they give up the first part of the move but are hoping to get the other part on any big move. jonathan: i want to know how the dollar story captures all of that. there is a general assumption in the market that is the dollar index pushes up to 100 the fed drops back and says, we will hold steady. does that still apply in this environment? steven: i think the fed is much less focused on the dollar. 2014 ort september of march of 2015, where the dollar has been on a rampage. tradeality is that the impact of the dollar is probably less than expected at this point . i think the fed is much less concerned about the dollar per se right now then it is theerned about both

domestic financial environment and global financial environment , and trying to retain this low volatility while raising ever so gradually. jonathan: stephen englander, great to have you with us. global head of fx jeter and strategy. the uk's exit from the european union and its potential impact on the financial industry. we catch up with martin gilbert. he will join this program. one hour and four minutes away from the cache open in new york. s&pdow update points on the 500 and a steady session in europe. from new york, this is bloomberg. ♪

are you on medicare? do you have the coverage you need? open enrollment ends december 7th. so now's the time to get on a path that could be right for you... with plans including aarp medicarecomplete insured through unitedhealthcare. call today or go online to enroll.

these medicare advantage plans can combine your hospital and doctor coverage with prescription drug coverage, and extra benefits all in one complete plan for a low monthly premium, or in some areas no plan premium at all. other benefits can include: $0 co-pays for an annual physical and most immunizations, routine vision and hearing coverage, and you'll pay the plan's lowest prescription price, whether it's your co-pay or the pharmacy price. or pay zero dollars for a 90-day supply of tier 1 and tier 2 drugs, with home delivery. don't wait, call unitedhealthcare or go online to enroll in aarp medicarecomplete. jonathan: this is bloomberg daybreak. . am jonathan ferro futures largely positive, up 43 on the dow, up eight on the s&p

500. barclays, a surprise to the upside with fixed income revenue getting a big pop. the ftse up 1/10. the u.s. 10 year up three basis points on the session. the cable rate unchanged despite an upside surprise on the gdp. alix: talk about the downside forrise for durable goods september, down 1/10 of 1%. september coming in slightly lower into negative territory. if you back out non-de-fast it is in line with estimates of non-defense it is in line with estimates of 3/10 of 1%. the job market continuing to improve and less people filing for jobless claims. we are headed into the third

quarter gdp rate tomorrow, and any kind of bad data can throw off the fed now that we are at a 70% chance in december for a hike. about $26we had billion worth of supply come into the market, the most demand since 2008 so clearly the bond market is set up. david: bonds are in play and we have somebody with us who knows about bonds. yesterday, u.k. trade minister mark carney a indicated that they may lose passport rights when they leave the e.u.. when theng is at risk u.k. leaves the 28 nation bloc. gilbert,s martin aberdeen asset management ceo and cofounder.

welcome back to the problem -- program. he said this was pretty important because the u.k. financials are important to the u.k. economy. how concerned are you about passporting? martin: i would be more concerned as a bank than an asset manager. we run our funds out of luxembourg, but for banks i think it is more serious. it is still early days so we do not know what will happen. we all think logic will dictate but i think politics will make it tough for banks. jonathan: can we draw a distinction between politics and some of the legal issues? can they turn around and say you cannot have passporting rights, or does that need to go through the court? do they have to show they have the legal infrastructure to oversee that kind of thing and say to london, you cannot have it anymore? martin: they can just say you cannot have it anymore.

for those very few asset europe, weo sell in would sell u.k. funds into the u.k. and luxembourg funds into europe. for banks, it is selling the services or clearing trades in london that are taking place in europe that they are most worried about. alix: you were one of the property funds that had to freeze redemptions after brexit. you put a steep discount of 20% and now you are at 3%, close to normal. walk us through that. martin: after brexit we saw a flurry of redemption's and then it calmed down, and one of our rivals closed out of the blue. that caused a run on the property funds so about four or five closed but we took the view we are going to provide liquidity to the market, and we did it at a discount. we offered people the chance to take their money out at an asset

discount, and it worked. million in the0 pipeline to come out, 120 million with jew their redemption. jonathan: what a -- withdrew their redemption. jonathan: what a lot of people are saying is you should not withdraw securities when things are so illiquid. discount,d a steep but is that going to be the approach going forward to say maybe we cannot offer that on this kind of fund? martin: i think no one fund manager is going to say we are offering daily liquidity when the rest do. i think it is something they are focused on. david: i want to go back to the bond situation, you said the bond market -- martin: you always regret these things. david: he said the bond market

is near a "dangerously close situation." martin: it is daily liquidity funds offering, even though bonds are liquid in a normal market, when there is a crisis there is no liquidity. i think that is where the regulators are worried so they talk about 76 trillion in daily liquidity funds mainly invested in bonds, and that is where i think the issue could be. people recognize it is an issue. they did not see it coming and property, and it always comes where you did not see it. when you recognize the issue it usually does not happen so we can take some comfort from that. you do not need to withdraw your bond funds yet. martin: this is the vix -- alix: this is the vix for the treasury market over about 13 years. we are incredibly low compared to history. you hit a low you saw a spike in

yields. are we at that place where the story will reverse? martin: i think so, it will only go up. i think the good thing if i look at the bond markets is a lot of people are holding bonds as they have to. where i am worried is the daily liquidity funds, people trying to take money out of an illiquid asset. we sought in property. jonathan: you are talking about the high-yield stuff, the really bad stuff that maybe you cannot even get a price and offer for. stuff,alk about the safe because many people are saying the perceived safety b of safeunds and jgb's is where the risk is now. martin: i think the risk is in credit rather than governments and it is not just the high yields. i think credit will prove to be

illiquid as it did in 2008, but at the end of the day, the central banks may have to be the market maker of last resort as they did in 2008, and provide liquidity in the market. to talkhe risks we tend about our about central-bank motions and what is going on in the marketplace. what about the exogenous risks like political risk? how do you take into account as you invest over $400 billion worth of money? , itin: we really do not suppose the easy answer is we do not take political risk hugely into mind. things like brexit were a total shock to us. certainly a trump victory is probably not priced into the market. but we are not going to do anything about that. we are just going to take the

risk really. we invest in good companies, good bonds and properties around the world and hold them through the cycles. wanted to get some color about what you are discussing at the moment. with brexit i could give you odds but at least if i told you what the outcome would be you can make a trade. with this, if i give you the outcome of the presidential election we sit here and say it involves risk. what is the trade, what is the investment? martin: i think there will be a lip in markets and then it will return to normal. that is what tends to happen with all of these things. you look at how much brexit was over exaggerated by politicians and bankers. even gone over said he was going to move 1200 jobs to france and now he is not. there was a lot of exaggeration.

jonathan: hsbc quite liked things in london. martin: paris is not really what i want to be. jonathan: martin gilbert, thank you for being with us. oils next stop. traders try to figure out what on earth is happening with opec, and will they managed to curtail production? this is bloomberg. ♪

alix: -- emma: this is bloomberg daybreak. coming up in the next hour, the ceo of tia asset management. this is bloomberg. jonathan: from new york city, i

am jonathan ferro. a lot of stocks on the move including twitter, shares spiking up as they report user expected.her than julie: the stock is holding that gain as the call is going on. the company came out with profit that beat estimates. it's monthly active users beating estimates by a little bit and this is the first time the stock has gone up in reaction to earnings going all the way back to reporting in february 2015. i should mention jack dorsey said he would not comment on all of the sales speculation that has been swirling around twitter is said their board committed to maximizing long-term shareholder value. there is a lot of discussion about their new video initiative , streaming initiative,

partnership with nfl. it is streaming bloomberg programs as well. on the call the have also talked about how video for the second straight quarter is the biggest sales and is having the biggest growth. the company says that restructuring of its sales staff could affect revenue to some degree. it is cutting about 9% of its staff so that is something to consider as well. it talked about product changes to notifications to user timelines as one of the things that has been driving growth. alix: julie hyman, thank you. oil has been trading near a three-week low below $50 a barrel. opec will beptical able to cut production. with us is the ing global head of global commodity strategy. its own kind of

roadshow and going to the media, saying this is our production per region, you cannot make us cut. will that hold water? absolutely. they want to get it up to $9 billion -- 9 billion barrels a day and they are not going to stop. they are not realizing there is a huge diversity that has never existed before. alix: if saudi arabia really wants this deal to go through they are going to have to do the lion's share of the cuts and we have a chart showing the best and worst case scenario. in the worst case they are going to have to cut more than one billion barrels of oil a day i. . >> one million barrels is pretty much how much we have lost since the price collapse so the u.s.

will step up, iraq will step up, the north sea will step up as well. any barrels taken out of the market. alix: the market will hinge on what saudi arabia does. they fight for that market share and say they are not going to cut one million barrels and end up losing all credibility. which one will they choose? >> they are likely going to ask their suppliers and neighbors to join him in the cut and say, we would love to do this if you would as well because we want the same level of uncertainty that we have had. alix: bc cut that saudi will place the blame on other people? >> everybody says there should be a cut and everyone says someone else should do it. alix: what is the downside for oil? >> re-think 50 is a cap for

prices -- we think $50 is a cap for prices. in a bullish market the average price is $40 a barrel. david: are they better off getting an opec deal or not? if it breaks down and they cannot force it there is no possibility but right now the oil price goes up on the possibility. >> they have had the opportunity to talk it up and that is what they want to do, but it becomes a situation of the boy who cried wolf. opec says we will announce a cut and everyone has responded. producers have cut their break ablelevels and have been to produce profit at $45 a barrel or above. i think they will face the same headwinds, issues, and difficulties. alix: if we take a look at the bloomberg, this is contango. this is the brent december to june spread.

the difference between those months, as it goes down it means there is more supply in the short-term. this really took a pretty steep nosedive i can do saw in 2014. why? inventory levels are still let record highs or close to it around the world. counts arec increasing. oil producers are saying this is a great time to be investing. sea. barrel in the north when you see that amount of supply coming online it is hard not to see weakness. alix: at some point when you have a price decline that will incentivize a lot more floating storage, isn't that going to curb supply later on? barrelssume we will buy , put them into storage and in

the future store them. what if there is new production online in the future? david: is there a structural things going on in the technology, and alternatives to fossil fuels? >> i think that is a fantastic question. it has brought down the production show the structural shift was from 110 down to 30. the swings are going to be between 30 and 50, and the march of alternative fuels is coming. europe party counts for renewables as the single most energy. portugal -- alix: 30 before 60 or 60 before 30 for oil? >> 30 before 60. alix: good to see you. time now for other stories

making headlines at this hour. here is your bloomberg business flash. emma: there is an acquisition in the semiconductor business. mxpcomm has agreed to buy for $40 billion in cash, representing an 11% premium to yesterday's closing. qualcomm is the number one maker of phone chips. at ford but by half still earnings beat estimates. ford has been spending big on its aluminum body super duty pickup and investing in technology to take on companies such as uber and google. express has raised 4.2 billion dollars in one of the biggest ipos in the u.s. this year. they get most of their business from chinese e-commerce giant alibaba. they begin trading today on the new york stock exchange. that is your bloomberg business

flash. up, what scrap metal and other waste products say about united states growth. that is in the battle of the charts. this is bloomberg. ♪

jonathan: from new york city, this is bloomberg daybreak. key events coming today. at 1:00 eastern the u.s. treasury will auction off 28,000,000,007 year notes and hello againost its event. i am going to bring you a market check. futures up 43 points, s&p up

about eight, the ftse up a quarter of 1%. barclays outperforming on that index, and some echoes of what happened in wall street with fixed income revenue trading. the dax pretty much unchanged. market,ook at the bond yields higher three basis points and the cable rate at 1.2221. let's get some charts. david: chime -- time for battle of the charts. we have dani burger up against julie hyman. dani: some are saying things are too quiet and i'm looking at stocks, that it is just not the vix. i am looking at three specific things. my beloved vix in the middle, at the bottom i have treasury this is a bank of america index of expected price swings based on options.

all of these are based on options expectations. we have described here, one of the highest levels we have had around yuan devaluation, but look what has happened. it has been plummeting. volatilitycommodity are the lowest in two years and that is about the same for these other measurements as well. some might say we are heading into an election, why it are we not experiencing more volatility? maybe people are a little too nervous to make any bets. david: julie hyman, what do you have? there is a little bit of trepidation about the gdp report tomorrow although the forecast's an acceleration to two and a half percent after five quarters of deceleration. i have to give alix credit for this chart and deutsche bank who

originally highlighted this data . we talk about rail cars loads but this is carloads of trash, waste carloads. it is a leading indicator. you have an white rail carloads of trash. he says we are seeing a trending up in that number and gdp should follow, that this is a gdp indicator essentially. and one ofndicator, the reasons he is a little more optimistic about the pace of gdp, we are getting the numbers tomorrow morning. bloombergts at intelligence say consumers will be driving growth in the second half of the year. , itou are looking at trash could be an indicator of what consumers are doing and consuming. david: normally we look at trucks as an indicator and now we are looking at trash. this as ito go with

have not seen trash before on arechart, and gdp numbers really important coming out tomorrow. julie hyman gets the win, back to jonathan. jonathan: coming up in the next hour, $900 billion of advice from the ceo of tiaa global asset management. 34 minutes away from the moke -- market open in new york. we are up eight or nine points on the s&p 500. from new york, this is bloomberg. ♪

hii'm here to tell homeowners that are sixty-two and older about a great way to live a better retirement... it's called a reverse mortgage. call right now to receive your free dvd and booklet with no obligation. it answers questions like... how a reverse mortgage works,

how much you qualify for, the ways to receive your money... and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home and here's the best part... you still own your home. take control of your retirement today! jonathan: a very warm welcome

and good morning. i am jonathan ferro alongside david westin. alix steel has left on assignment. it's get straight to the markets . futures up 53, the dow up nine points on the s&p 500. on the bond market we look like this. bonds globally very much an offer. rate that started to roll over just a little bit. david: here is what you need to know at this hour. revenues jumped at europe's top trading firms, deutsche bank posting a surprise profit after they reported a jump in revenue. reported a 35% jump in the third quarter after it's fixed income unit reported this -- its highest revenue in two years.

ford profit fell less than expected because of cost-cutting measures. twitter revenue and user estimates beat analyst estimates. they are cutting 9% of their workforce. 12 days until the u.s. election. while many polls show donald trump behind, he told bloomberg he is convinced he will win. that is what you need to know. jonathan: let's get to the european lenders because it was a much anticipated earnings report out of deutsche bank. nick comfort joins us. the numbers came out, a surprise to the upside, cost down, underlying profit good. is visibility that we wanted what is going to happen with capital and the doj fine. we did not get those things. what does it mean for investors? divided, youare can see the stock bouncing up

and down and people cannot quite get a grip on it. things were not as bad, the franchise was not eroded as badly as people thought. there were outflows that the ceo was telling us they got liquidity back. it is not in his power to say when they will settle and how much they will settle for with the doj, and that is a main concern of many investors. they want to know ultimately what will be the share count, and what is the strategy going to look like? will they have to cut back or sell their assets? there is so much uncertainty. jonathan: a lot of people highlighting the same thing throughout much of the morning, the fallout from the doj probe captured by this quarter. the back end of september for about two weeks. this is a bank with a massive debt trading wing and arm, huge. revenue was only up 14%.

when the big players in the united states delivering almost 50, barclays was delivering 40. why are they not outperforming and what does this bank become? nick: that is a good point. the bank itself would point to the fact that they do not have as large a credit-rating platform as they do in the u.s. that is going to be a key problem for them. also securitized trading. -- quite well on the quarter in the u.s. and deutsche bank is paying for shrinking and pulling down on some of these capital levers. is, which ision not quite that clear, how much revenue attrition? are they losing more than originally planned? werecryan and the gang saying they were still on track

with their plan and following through, so we have got to see if they do indeed shrink further investment banking side where they do so, in the u.s. or globally. revenues will be lost in the future as well. jonathan: reporting out of germany for bloomberg. the enthusiasm when these numbers came out, i believe we opened up about three percentage points and rolled over again. the people sat around the table and said what is the strategy and the visibility? there is none. david: they got really excited and then they started to digest them and got less excited. concerns over deutsche bank's legal woes may remain but another ceo has a more heat outlook. hisstaley reiterated outlook. >> reset couple of financial targets for ourselves when we laid out the strategy, a double-digit -- we delivered

that again in the third quarter. managing our cost, we are on target for 2016. leary,with us now is rob asset manager. welcome back to bloomberg. let's start with financials. as an investor, what is your outlook on the european banks as a class, equity and debt? rob: generally speaking we are fairly bearish and do not see the most value in the european banking sector. some of what nick had to say about george and barclays, i think there is a lot of questions. many of these banks are undercapitalized. there are some exceptions. for those like deutsche and

barclays who have a heavy reliance on investment banking when they are not getting the same kind of lift they are getting from their u.s. counterparties, that is an issue. with deutsche you have the overhang from the boj -- doj settlement. in the case of barclays, we do not know when that african is the sale -- business sale is going to come. if deutsche will have to sell their asset base. we just do not know how they are going to raise and when they will raise the capital they need to really compete. equity is an area where relative to other sectors in europe we are not as bullish. david: what about debt? their profitw what outlook is that they are probably going to be able to pay their debt. or the market overreacting? but itthink they are

depends on what banks and what countries. it gets back to capitalization, back to the country you are in and what the fundamental business you are in is. on the italian bankside, i do not know that we worry about repayment but what is the right value. then we see banks like ing where we look at a debt and equity side and i think we see good value because of the capitalization. jonathan: let's talk about management. if you are invested you should have some idea of what you want the companies to be. what is the strategic aim of some of these banks? what should they become? through 2007 it was let's do the wall street investment bankers thing. that has not worked. let's say they recapitalize, what do they become? rob: it depends a lot on the operating model of each company. i think for a lot of the companies in teens getting back

companies getting back to their wholesale universal bank, a global supermarket in computing. i do not see that as being the right model for most european thereand i think that should be much more focus on other segments of the market where they have a competitive advantage. david: expanding from financials to europe, you mentioned ing. d.c. opportunities investing in europe? -- do you see opportunities investing in europe? rob: we certainly do. although there has been relatively slow, anemic growth we think the ecb will continue with their asset purchases. we think that while there may be some changes we will be able to continue beyond december. we think european stocks

generally are undervalued and that is a better place than the u.s. overall. jonathan: we will continue that conversation and switch things up to bonds in a moment. rob leary sticking with us. union andeuropean canada can move ahead with one of the world's most ambitious and far-reaching trade agreements. the deadlock belgians french-speaking -- belgium's french-speaking region -- in china the communist party has elevated the status of the theident in advance of power shuffle. he has been designated at the party, allowing him to install is on people before the meeting next year. he is narrowing the field of successors. the democratic party has taken

the republicans to court over voter intimidation. they are arguing to block republicans from placing so-called watchers at voter discourageended to minority voters from voting. the republicans call this meritless. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. julie: i want to get caught up with stocks. board, higher across the snapping back from a few days of declines on some of the big earnings reports we have gotten out. we are seeing rates and the dollar climbed at the same time. we have got gdp out tomorrow. we also had some breaking news on hd supply. this is the direct contractor business spun off from home depot. the shares are 5% after jana partners disclosed it holds an

8% stake in the company. it may urge strategic alternatives. since 2013. up 79% as for some of the big earnings reports, we have ford, shares are down, third-quarter profit falling under $1 billion. dow chemical is higher, eating estimates. -- beating estimates. earnings-per-share better on rising cancer drugs at 5%. celgene as well in the biotech pharma industry, also beating because of higher cancer drug sales. climbed to yields the highest level since britons vote to leave the e.u. but is the bond rout over done? premarket.s up in we will have more on the carmaker's outlook ahead.

♪

jonathan: from new york, this is bloomberg daybreak. a shakeout in the bond market over the past couple of months. 10 year u.s. treasury yields have popped back up and we have a situation where the yield is above the median year-end forecast by the analysts. they year-end forecast is your white line around 175. where we trade at the moment is the blue line, north of 180. i want to bring in robert leary. typically you come into a new year. typically this is how it goes. equities bullish and bonds bearish. you see that on repeat year after year.

that chart shows you a situation where actually the bond market has gone the other way. the bullish bond analysts now look maybe a little bit out of sync. rob: our view is that while we are very happy to see the 10 year at 182, we think it is not going to go up much and that is true even though we think the fed will raise rates in december by 25 basis points on the short end and maybe a couple of times in 2017. we do not get overly excited because we do see a lower for longer scenario. bonds as a -- view good place for many investors, but we do not see the long end of the curve. the 10 and 30 arising much at all. we would tend to favor stocks over bonds and less the situation warrants where you need to look at bonds. there is also municipals.

aboutan: we are talking three-month ranges and six-month ranges. mario draghi was talking in berlin, saying it is not all about central banks. yields have been falling for 30 years. when you say low for longer, re-tasking decades from now as well? decades fromking now as well? rob: i hope not. in all the developed economies you have enormous tension and retirement liabilities coming up for demographic reasons and we think that will put pressure on the long end of the curve because people will be buying longer bonds. we do not think this is a one to two-year problem. we think we are certainly for the next two to three years, relatively low. that: what pressure does

place on asset managers as they try to track is this? you cannot charge as much in a world where you get 2% growth. rob: tiaa global asset management is very unique. we certainly help all the retirement participants that are part of the system, about five percent of americans -- 5 million americans. they are looking for all kinds of returns and they are not just focused on retirement, they are focused on different financial needs so sovereign wealth funds, pension funds, retail investors and the like. 40% of our assets are in equities, 40% in fixed income, and the other 20% are in real alternatives. commercial real estate, private ,quity, energy, infrastructure and those are much less correlated to what is happening in fixed income and equities.

we are seeing huge growth. we have been able to gain market share about 15 billion in that flows this year, 24 billion over the last 24 months. we think we are able to deliver a wide variety of solutions across different asset classes to give them better returns. lift the i am going to lid on the discussion. when we talk about this are we talking about people saying, i am going to go with the fees are lowest? are we talking about passive has been the place to be over the last couple of years? the s&p 500 and index will keep delivering. which is it? rob: i think it is a little bit of both and i have seen the passive versus active debate. i think a relatively benign market environment passive will tend to over perform. that being said, the large

majority of assets are in active. we are mainly an active shop. there is still plenty of demand. our funds are four-star and five star because toir performance relative benchmark over 70% on an asset weighted basis. even though we are one of the top 10 providers of passive index funds, investors still want to see value and if the markets get more volatile, that is where it tends to be passive overall. leary, tiaa global asset management ceo. twitter announcing it will cut 9% of its workforce to meet a profit to dutch profit goal. ♪

jonathan: from new york city, this is bloomberg daybreak. i am jonathan ferro.

features are firmer. twitter very much in focus as they beat estimates. shares are up in the premarket i almost four percentage points. they plan to cut 9% of the workforce to meet a profitability goal. can that save the social network? who holds an analyst a neutral rating on the stock. it is great to have you with us, michael. the question is what this company, are they cleaning it up to sell or are they making a company to run it themselves? michael: i think probably the latter. i think they would entertain an offer over the ipo price but they are not doing anything in terms of a potential acquire. they clearly intend to be profitable on a gap basis and i think they would like to exit

2017 in a profitable state. they are taking steps they probably should have taken three to four quarters ago. david: having a nice business that makes money and goes along works just fine. in this particular field, don't you get left behind if you do not have dramatic growth? if you have modest growth, can you survive? michael: they obviously look more like apple with modest growth or none. the difference is apple is immensely profitable and these guys are not. the biggest problem investors have with twitter is that they of theirebitr so on stock-basedda comp. the company barely made any money, $22 million. that is not enough of a return to justify a multibillion dollar valuation.

facebook pays out something similar but they generate tremendous profitability. mature companies are just cash machines. these guys are not. jonathan: let me tell you the biggest problem with twitter for a user. it is explaining to my friends what it is for. jack dorsey this morning essay he wants to build it to be one of the fastest news networks. when i go to my friends and say sign up for twitter, what is it? rob: that is exactly the dilemma that i've had and when i talk to friends and family, the same thing. it is a news source. if you are interested in anything, entertainment, sports, can followberg, you whomever you are interested in and get real-time information about whatever you care about. you may care what your favorite

movie star is having for breakfast, and most of them will tweet stuff like that, but you can follow anybody. my wife is a big fan of real housewives and she follows about a dozen of them. i am a fan of ryan reynolds because of dead pool and he will be tweeting from the set of dead pool to. i follow political people, all sorts of tech reporters. i follow your former colleague stephanie ruhle because she is really interesting. i follow cory johnson. you can follow anybody you think is going to post something interesting. david: i wonder if there is another problem, they are advertiser supported. yet there is a lot of nasty stuff that goes on twitter. a lot of advertisers are worried to be in that environment. can they get to that level of profitability? michael: i do not know that they

are as diligent as they need to be to control the trolls. the bigger problem might actually be born on twitter. -- porn on twitter. that is what makes it endearing, it is an open forum for commentary. i think advertisers will embrace that overtime, probably not to the extent that they embrace facebook because it is not anonymous and people are more reluctant to be trolls. michael is sticking with us. i think he follows some dubious sources. focus, futures firmer and the dow up eight on the s&p 500. ♪

jonathan: from new york, this is bloomberg daybreak, i'm jonathan ferro. counting down to the opening bell. we're about 22 seconds away. futures now positive up 45 on the dow. positive eight points on the s&p

500. up 22 on the nasdaq with tech earnings "in focus." on the board quickly. this is how we're set in the f.x. market. cable rate at 122.21. bonds very much an offer with yields up four basis points on a 10-year treasury. 183 is how we trade. inching 49 handle back towards 50. the opening bell ring in new york. 10, 15 seconds into the session. let's cross over to julie. julie: i have a feeling the nasdaq -- now the nasdaq has opened. .04%. the dow and s&p gaining a third of one percent. nasdaq has been a laggered in recent drags with the apple drag. today things are turning around as we're getting more if you're weighing the sails of earnings it's more tipped towards the positive reports today. as you can see that is helping

out. let's look at some of the earnings movers. as we head through earnings season and what is one of the busiest weeks if not the busiest week for earnings, people are focused on individual movers. it's la -- tesla is one of them. posting an unexpected profit. first in many quarters. also saying it does not need to raise capital this year. reassuring investors. fobd on the flip side reporting its profits fell by more than a that was a smaller decline than estimated. the shares were down more in early trading. that's something to keep in mind. and semiconductors in qualcomm, although not in the auto sector, it is an auto chipmaker. qualcomm is buying the company for $110 a share. $47 billion. we have been talking about that deal coming for some time. here it is. as for some of the other big movers. we have been talking about

twitter this morning. that company coming out with numbers beat estimates its monthly active users also ahead of estimates. it's largely holding gains although it's up more in the premarket. then a couple of big percentage declines, community health systems, this is a company that is a hospital owner and its numbers missing estimates. these are the preliminary numbers. not the officials earning report. the shares plunging by 40%. g.n.c. also down. comparable sales webbinger than estimated. so g.n.c. shares down 17%. there had been takeover speculation about the company going on and that has also been now sort of going away. especially in the wake of an earnings report like this. also want to talk about numbers we're looking for after the close of trading today. google, it spent years making its waste to wall street its investments in nonadvertising businesses will eventually pay off. last quarter google's parent posted results which suggested that is starting to happen. we checked out alphabet in

today's "numbers don't lie." alabama if a bet's money making units are tied to advertising. they are going strong. the other part of its business where sales jumped 33% in the second quarter, growth in cloud computing and corporate software drove those gains. the cloud is part of alphabet's efforts to diversify. advertising, the whine line, swill dwarfing the others, that remains the company's main revenue driver. it was responsible for more than 1 of the overall $21 billion seams. youtube and google search that's the white line, bringing the most monthly mobile users in the u.s. and nearly 182 million. this helps google keep face with facebook which is the blue line here. together google and facebook account for over half of the mobile advertising market. that audience should help youtube's net in sales which is expected to rise 21% to more than $5 billion in 2016.

and grow even more in future years. part of that growth could come from you tube's live tv streaming service. that will reportedly launch in the first quarter of 2017. we will be following alphabet's results when they cross after today's u.s. closing bell. jonathan: thank you very much. for more on what amazon, google should watch out for, bring in director of north american research joining u. still with us is michael, analyst who has outperform rating on amazon and a price target of $900. paul, begin with you. we were talking about twitter a in a moment ago. if youtube goes into, this how o will the likes of twitter get involved? >> one of the issues about you tube, it's the largest online video player in the marketplace. facebook is there as well. if youtube gets into the streaming business, it brings a significant new player into the market. and what when you talk about screaming video, what it takes is a big checkbook.

we have seen that with netflix. $7 billion next year on programming. it is a big-ticket investment item. google can play with its checkbook. it's not just user generated content on youtube, very successful, talking about getting into cure rated video programming. david: amazon is streaming in a big way. different part of the market. not mobile. they are awfully big. >> they are. there is another company with a big checkbook. they'll spend $3 billion to $4 billion this year. amazon prime is a different business. it's there to drive their prime membership which really serves their core e-commerce business. it has proven to be successful. david: paul, address this streaming issue whether it's amazon or twitter. who is going to own the streaming world? michael? >> right now netflix owns the linear streaming on demand preprogram.

i think live streaming is right now youtube. the item you didn't mention is twitch on youtube which is owned by amazon with you but is the largest live streaming broadcaster on youtube. that's watching -- people watching e-sports and commentary about e-sports. those guys presumably have about 100 million monthly unique visitors. big. that's a hard business to replicate. amazon bought it. i think you're going to see a lot of guys try. i don't see anybody competing with youtube for live streaming. i don't think twitter has the right audience for that. twitter has people who are actually genuinely interested in lots of things. twitch has gamers coming in. and youtube has people interested in video. i frankly think youtube continues to win and amazon continues to dominate the live stream on youtube with twitch. jonathan: think about how each of these companies are geared toward taking advantage of the streaming business. in the u.k., it was the telly

companies, sky sports, they'll say we'll stream this stuff on our platforms when we sign contracts. got it on e user has there. fantastic, done. the likes of youtube aren't in that game. who is better set up in the united states to take advantage and who is geared to got it on there. it? >> you raise a big issue. a big driver going forward for all internet consumption and certainly online video consumption will be on the mobile side of the business. you take look what happened this week with at&t and time-warner. &t with 12 hundred million consume -- 100 million consumer relationships. they think it's worth it buying arguably the best content provider in the marketplace. the marrying, vertical integration which we saw comcast do with nbc universal, a lot of people questioned that at the time. now we're seeing at&t validate that strategy and doing it from a wireless mobile perspective. i think they actually cited some of the success stories that they

have seen in europe. and in the u.k. for one of the reasons that they would pursue this transaction. david: what about this debate, perennial debate about the pipeline versus what goes in the pipeline, what you want to own. google with the phone, the pixel phone. that will take away from android, samsung. who has the advantage? >> you go with content always. i think paul's right. emphasis is on unique proprietary and exclusive. that's what warner brothers has. that's what netflix is trying to build with its original content. i think that's where twitter falls down. they don't offer anything that's live streaming that's unique. they are offering nfl that you can get elsewhere. that's really what you were talking about in the u.k. with sky sports. it's available on television. who cares if you can get it on your phone. that's where at&t is going with directv. they are trying to offer directv programming on your phone, but the emphasis in buying warner brothers is hbo content, which is unique, proprietary,

exclusive. again, the content guys win. that's why at&t is willing to pay this premium for warner brothers. i think -- time-warner. i think that's really the reason we're bidding up netflix because i think investors have a misperception that it's really easy to do and netflix will win. i think they are wrong and i have a sell on netflix. that's the key. content wins. david: that's very much to our team. paul sweeney, bloomberg intelligence director of north american research, michael, web security analyst joining us by way of skype today. now turn to tesla, they had a surprise. the elk trick carmaker reported an unexpected profit for the first time in eight quarts taking in $139 million by zelling zero emission credits to other auto makers. for more joined by senior auto analyst, kevin, from princeton. welcome. take us into the numbers. it was a surprise to me. i think a lot of people were surprised. are they real or just something

cobbled together for one quarter? >> it certainly looks like there's some of that. tipped it elan must have his hand throw pie in the face of the naysayers on wall street. everything's loaded into this quarter. you mentioned the zero emission vehicle credits. those were basically nonexistent in the previous quarter and equivalent to about a year's worth of credit sales in the third quarter. you look at the payables increase a lot. you saw the model s which had been struggling through two quarters on the demand side shoot up from say 9,700 units in the second quarter to 15,000 or thereabouts in the third quarter. at that seems like everything was pushed into this third quarter which would lead me to believe that although he has been coy about a capital raise by the end of the year, it

wouldn't make a whole lot of sense to do all this in the third quarter and then not raise even a little bit of a cash cushion before the next set of results come out in early 2017. jonathan: kevin, that leads me to the question, weighs left top optimistic about? if this isn't sustainable and b a capital raise, what is there to be optimistic about? kevin: well, they did move a lot of units in the quarter. they were cash flow positive. at least briefly. even on -- when you look at the capital expenditures, they were originally two and a quarter billion dollars guidance for the year, that's been brought town to $1.8 billion. so far they spent less than $800 million of that. you are talking about $1 billion until cap in just the fourth quarter alone. nearly impossible for them to be cash flow positive of next quarter which would lead you to believe all this was done in the third quarter to be able to raise money as soon as possible.

david: the cash flow issue and the capital issue, can they make enough cars to sell? as you said they moved more units. are they on track? they have a pretty aggressive ramp up. kevin: yeah, the ramp is aggressive. and we were just discussing it around the water cooler before. i'm a little bit concerned looking at the previous month, especially model s declining sales. that that may not be a supply issue. those might actually be demand issues. if you think about the model s, introduced in 2012, at least cosmetically not upgraded or not redesigned, obviously there's over the air upgrades that make that car different basically all the time, but as you're seeing declining sales there, they mention a 6.5% decrease in pricing from model s i'm not sure for that nameplate that it's a supply issue. it might be a demand issue. then if you're not going to see nother year, you're

going out at the next four quarters with just model s and model x. and i would be worried the demand is still there. jonathan: great to have you with us. joining us.ther year, bloomberg sense seen juror analyst kevin. still ahead trump's confidence. he tells bloomberg he'll win the white house despite the polls. details. stocks up marginally across the o board. from new york good morning. joi ♪

>> this is bloomberg daybreak. i'm andra. later more from the capitalize investor conference. including jess smith, c.e.o. of

starboard value. jonathan: from new york city this is bloomberg daybreak. i'm jonathan ferro. this is how the stage is set. the dow up p a .1%. up a quarter of 1% on thes in a tack with tech earnings coming through. cross over to the nasdaq where abgallon is standing by. abigail: just in case you are thinking about lunch in addition to technology, we do have some restaurant stocks for you this morning. first up the cheese steak factory. this stock on pace for the best in four years after they put up a beat and raised their third quarter. they made 70 cents in earnings per share. that allowed them to raise the full year earnings outlook. on all this mike is saying the cheesecake factory has bucked the weak trend that has hit some of the casual dining restaurants. 14 interest on cheesecake factory.

also hire today, buffalo wild wings, this on a modest third quarter earnings beat. in fact, morgan stanley is saying sales here were less bad than feared. that might be why the stocks are up. considering they guided it the low edge of the range slightly below. we'll see whether this bounce can last. it could be a case of low expectations going into the quarter. yesterday buffalo wild wings, the stock was near a three-month low. david: thanks so much. at the top of the next hour it is bloomberg markets. mark, what's coming up? mark: we have two hours of bulging, bursting at the schemes. deutsche bank, we'll speak to brad hintz. a former veteran of the banking industry. he calls deutsch bank the problem child of universe. then eric interviews gnat zilkha, co-head of credit for the capitalized -- from the capitalized kids conference.

hey the global c.i.o. mark fell -- haefele, they have a new overwait in u.s. tips. finally, it doesn't end there, the u.p.s. c.p.o., richard peretz, matched estimates today. robust growth and international markets. it's two hours, david, that absolutely bulking. jonathan: i'm going to tell david my way so happy. manchester darby last night. mark: finally we won. david: very hope for you. that is a bulking hour you have. coming up, donald trump heads into the final stretch of the election confident despite reason cent polls. more on why he thinks he'll be the next white house resident. next. this is bloomberg. ♪

david: this is bloomberg, i'm david westin. we're now down to 12 days until the election and most polls show widening gap between the two candidates. but donald trump says he remains confident that he will win. his latest hotel opening, this one in washington, d.c., just down the street from the white house, the republican nominee showed little doubt. this is what he said to bloomberg. >> i think we're winning iowa. i think we're winning ohio. so do you. i think we're winning florida. i think we're winning florida by much more than the poll says. you have us two points up. i think we're going to do fantastically in pennsylvania. i think we're winning north carolina. i think we will soon be winningham ham. we're going up there. >> new poll today shows you closer. >> very close. when i go there, people say, look, it's jobs. it's fix our military. take care of our vets. it's don't let the world take advantage of us. i don't know film' a great message, but the message is absolutely the right message.

>> you're going to get 270-something electoral votes? >> i think we'll win. david: for more we go to megan murphy. megan, explain mr. trump to mee. is this bluster? megan: too late for that. david: is this bluster? is he seeing something we're not seeing? is there a chance he might be right? he's been right a lot through the primaries when a lot of us were wrong. megan: he's also been wrong a lot. yes, of course it's part bluster. yes, it's also part of this message that they believe that -- if they say we're winning, if they concentrate on their message that the election is rigged, vote. the numbers are the numbers. and he says when he's talking about pennsylvania, he's talking about ohio, recent polls show him with a big gap to make up in those states. yes our own poll shows florida close, which a must-win for him. he's running out of states he needs to get if he has any credible pathway to 270. jonathan: we keep hearing brexit

again and again. on the one side you have a referendum very different. much more difficult to poll for. on the other side there was this feeling in the united kingdom people weren't being honest about what they were intending to do. is there a parallel here? megan: there is a parallel but there is differences. you just mentioned one a referendum polling is very different than a state and electoral national election. you have people's past voting behavior. on a referendum you didn't have them. there is an important similarity. that's what donald trump's trying to do and his data operation is mobilize voters who actually may not be saying what their true intentions are. there is this groundswell of disenfrance chiesment who want to stick it to washington, the establishingment, who were there and come out in droves on the day as we saw in brexit with a much higher percentage of people who voted to leave as a condemnation of the established system they were in. the desire for the positive message they were getting on the other side. so what he's hoping for is that he can see a similar galvanizing

of voter discontent not just with their elected officials, but with a broader system he's trying to tie the narrative to. david: megan, think point this may come down to who turns out to vote on election day. who stays home and who comes out. do we have any indications of voter turnout either from the early polling or surveys? it's generally assume that a lower turnout will benefit mr. trump. megan: let's flag an important piece of reporting bloomberg has out which also shows that not only is donald trump hoping his voters turn out but he actually has three what he calls -- team calls major voter suppression drives under way. what they are trying to do is target african-american voters who have a poor record of turning out. white liberals and college educated women and trying to actually run narratives that will prevent them from going to the polls. to make them realize that hillary clinton may not be the best choice. that's -- for the campaign to say that's an active part of their strategy that's going to be interesting to see how that

plays out in the next 12 days. that pleas piece of reporting into a real look what is driving the campaign not only about getting their own voters out but turning off hillary clinton supporters. david: a lot of people voted already. megan: that's difficult to capture on polling, including our own polling in florida. we do see very high registration rates among democrats, higher than some people saw. if the polls are right, no, this isn't going to be that close. if donald trump is right and he gets this groundswell of voters who want to go out there and make a point they want change, they want something different, he is ultimate anti-establishment choice. david: thanks so much, she's our washington bureau chief. i don't know what we'll talk about november 9. jonathan: maybe we'll talk about banking story in europe. what i have learned today and haven't? i learned that barkley has a strategy. he likes the investment banking style of the business despite what people had to say about t he said he's getting market shares. david: including here in the

united states. jonathan: what haven't i learned? what deutsch bank are going to do in the future. i still don't have any visibility nor dot analysts what's going to happen with capital raising. and you were the one that came up to me yesterday and said what's the strategy, can we sit there for the d.o.j. find to come out or be reactive? david: the danger for any leader is if they not seize the narrative and have their own strategy, other people will define it for thefment jonathan: you do not want to be there. 26 minutes into this session. stocks marginally higher across the board in the early part of the day. that does it for bloomberg daybreak. up next is bloomberg markets with vonnie quinn and mark burton. ♪

viewpoint it's 10:00 a.m. in new york. 10 p.m. in congress honk congress i'm viewpoint viewpoint. mark: i'm mark burton. welcome to "bloomberg markets."

vonnie: we'll take you from atlanta to autumn and cover stories out of washington, the u.k., and germany in the next hour. more u.s. economic data this week. let's get straight to julie hyman. julie: trending home sales. trending home sales for the month of november up 1 1/2 percent, better than analysts had anticipated. in line with some of the other housing data we have gotten. it has firmed to some extent. this is the second monthly rise over the past three months here. 1 1/2%. there was a 2 1/2% decline in august. this on the heels of the durable goods order data we got earlier today that was a little bit softer than anticipated and ahead of the big g.d.p. data tomorrow. if you look at the three major avenues e