>> china's president unveils a new leadership lineup with no obvious successor raising the chances he will live to stay in power past 2022. --us: the u.s. president over the digital fed chair nominees. republican senators attack trump rattling the party -- [no audio]

news throughout this next hour and a half. some of the big pieces we will deliver. this is the beast of the market, the treasury market, the death of the treasury market. the ticker on this his five-year . the moment of truth has arrived for the bond market. we test above 2.4% for the first time in five months -- we touched above 2.4% for the first time in five months. what is achievable if you break certain points? 6% i-20 20. we are seeing this -- 6% by

2020. we are seeing this. who do you want to run the fed jack of that -- run the fed? how feeble the bond market is to risk. anna: the fed chair conversation and there is also the growth story. the dollar. a quick word on some of the breaking headlines. some corporate around europe but before we get to risk radar, they are cutting their full-year revenue growth to 6%. cutting their full-year eps target. worth keeping an eye on that. we have mentioned the risk radar. what you said about the bond market. let's look at where we have been in the asian equity session. kept it fairly stable. stalling to some extent but we have xi opening the door to keep

himself in power. set for itsould be 17th consecutive session of gains. no massive moves in the chinese market. [no audio] start of u.s. trading day today, despite what has been a pretty decent. 80% of s&p firms have beaten estimates. manus: the s&p 500 could finish this month, the 12th consecutive month, matching records not since the 1930's. the aussie dollar and the kiwi, came in at 16%. --came in at .6%.

the market just reassessing -- [no audio] the market just

u.s. senate has moved to make it easier to make it for customers to sue banks handing financial firms a big win and their battle -- in their battle. majority republicans pushed --ough a reversal limits on mike pence was called in to cast a tie-breaking vote.

it followed a similarit followey the house in july. [no audio] government'se focus on taking control of the administration in barcelona and shoving off options that would allow catalan leadership. --globals ahead of news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . seeing the market close out in australia. .he asx 200 pretty flat the aussie dollar has been under pressure on the cpi but have a look at the nikkei. it is starting to retreat after 17 sessions of gains. we are seeing a little bit of weakness, but it has been on this record run.

china's market coming back online following the announcement from resident she just from president -- from president xi. [no audio] state bank of india up by 18%, as i as i is a 22% gain in the session. $32 billion of capital's -- of capital into those lenders. 50%man lifted its target by for the best performer on the msci china index. also it is forecast for the full-year looking a little week. oh -- a littlek weak. manus: juliette, thank you. to our top story. china's xi jinping has unveiled a new leadership lineup that

includes no clear potential air -- potential heir raising suspicion that he might intend to stay in office the odd 2022. beyond 2022 -- beyond 2022. right. is if theatrical spectacle. -- a theatrical spectacle. 1992onvention was set in when he came to the succession planning for chinese politics in the coming this party. there is no clear successor. it doesn't mean that it can't announce someone, possibly someone from the politburo. this is a significant change. this is a leader that is unassailable now in his power. he has anointed these six men to join him on the -- on the

community. these are people who he have -- he has worked with for decades and they are key loyalists who he can be a short will follow , spoiling policy agenda. anna: before today, there's been a long buildup. we saw that long speech at the start of congress. he has outlined his new philosophy including efforts to tackle pollution. remind us of the water case he has made -- of the broader case he has made to the chinese people. tom: that is right. there has been an important event which is his focus on tackling inequality. it sounds very broad. it is something that is chinese leaders have talked about before. officials will have to work towards this goal of

tackling inequality and make it as important a priority as boosting growth, because president xi and the people around him know that their legitimacy lies with ensuring the chinese people's welfare staying up at a certain level. he wants to get this prosperous society. tackling pollution is going to be important for the leadership. it is going to have implications at the corporate level. we have heard some of china's big titans. they have a listen to what has been said and they will start to reshape their business strategies to be sure they do their part to reduce this huge inequality gap that exists between the cities and china's countryside. manus: tom mackenzie, our correspondent in beijing. alberto gallo joins us.

welcome. the billionaires got the message. there is a new mantra. it is about improving the imbalance but balancing society. what message will markets take from xi about this new era? a very: this is important message, the fact that in the past, governments focused on simple gdp numbers. today, we are looking at growth, in terms of quality growth, not just a gdp number. we need to fix inequality and balance the economy. china gets it. it is amazing how other countries in the west still do not get it. we are going to have a more sustainable growth path. china's -- china doubles its total growth finances. they are tried to get on a more sustainable path, cleaning up npl's from banks, achieving a more sustainable society.

these reflected to a slightly lower growth path is still a strong growth path. there are a lot of china skeptics in their lost money. they look at china as an open economy with a limited amount of resources. an reality is there is amount of losses from nonperforming loans, state owned companies, but there is 23 chilly and of private savings -- 23 trillion of private savings. sustainable, a deleveraging past -- a deleveraging path. does that rely on a favorable global backdrop to keep the export engine of china growing? chartpointing out this that link that is allow china to deleverage without sacrificing

growth too much. alberto: i think we should say "thanks china." in the years following the recession, china was leveraging up. up.na was the engine of china was the engine of growth during those eight years. [no audio] yes, of course, there is some reliance on europe and the u.s. for exports, but i don't see this change -- changing in the next two or three years. the real question is what happens when there is another slow down globally. how many countries will have fixed inequality? there are countries that get it and even the pboc said they are bubbles and we need to reduce stimulus. if some countries get into the

that, thatwn without is going to be a problem. manus: the chinese have come back to the markets with a dollar issuance this week. u.s. s china versus the this is the meat of your day. what extent do you think there's going to be an investor appetite in china flacco -- in china? alberto: the bond market is becoming very tight. there are areas which are stable, the chinese bond market is one of them. not just for the sovereign paper but also for corporate, issuing higher currency. there has been a lot of growth. the authorities want to grow the market and to reach a level similar to europe and the u.s.. they have understood that they need foreign savings to not only grow the economy, but also to

deleverage. crisis, there a was a restructuring of corporate debt. in europe, we took 90% of losses into bank balance sheets and we still have them in the form of nonperforming loans. if you have a bigger bond market , it helps you to restructure your balance sheet and deleverage more quickly and manus: if you had a mandate, would you buy these bonds? we tend to cost rate on high-yield bonds. we try to get investors to yield . this would be a little tight for us. " china is not risky enough for you? -- anna: china is not risky enough for you? stays with us for the rest of this hour. tune into bloomberg radio and get it live on your mobile device. coming.ore analysis

anna: coming up, john taylor is ahead in the rest to become the chair fitment -- become the chairman of the fed. anna: they did not put up their hands. the ceo of blackstone group, stephen schwarzman, joins us live in saudi arabia. we will be live there in a few minutes time. this is bloomberg. ♪

manus: it is 1:19 in singapore. msciessier asian -- the asia index flat and we are seeing a little bit of the aussie dollar. let's get you set up for your training day -- your trading day. anna: the two-day policy meeting

gets underway about what to expect from the latest program. amerco we have the south -- manus: we have the south african finance minister resenting his budget to lawmakers. anna: we get a rate decision from the central banks of brazil and canada. it is a busy week for rate decisions. we have u.k. gdp later on. let's get the bloomberg business flash with juliette saly. juliette: it is state-run banks have surged in trading after the government thomas to inject $32 billion into lenders. credit rating companies which have ordered the move are helping banks and boost credit. state bank of india saw its biggest intraday gain in eight years while punjab national bank rose sharply.

crisis. the financial european commission said there is no agreement on the legislation which would have split the retail units from major lenders such as deutsche bank and bnp paribas. [no audio] [no audio] insurance rates. investors can call their capital and transfer investments to a new vehicle as insurance rates are expected to rise. a spokeswoman declined to comment. that is your bloomberg business flash. manus: thank you very much. donald trump has senate republicans for show over it but it's a nominee of the chairman reserve.deral

anna: the president took a straw poll -- [no audio] question about the ability to get a tax agenda through. when you see the president of the united states asking for a straw poll in april, i don't know how serious he was -- in a room, i don't know how serious he was. it does unnerved me that this kind of soliloquy played out. i am not surprised he

did something opposite to what the senators want. think about being here when you're from now, central bankers would change, we will have a different fed. we will have a potential successor for draghi chosen next year. we have across the board, including the pboc, more worry about financial stability. for -- financial bank qe has been good. and ancreated bubbles artificially lower environment of volatility. it is important that we get out -- this before we down. another slow you are seeing a lowering in

interest rates. [no audio] gone super quiet. just going up and almost a straight line. why? belong end of interest rates remains low because janet yellen has said inflation is a mystery, and that we do not know when it will come back. bond markets remain quiet and not worried as stock markets. this could change at some point if we get a more hawkish fed president. or a fed chair, or some inflation. anna: let's talk about in terms of the bond conversation. janet yellen, there could be to go againstmp expectations and go for janet yellen a second time, given that she could be seen as a continuity candidate. for a dove, she has hawkish plans. alberto: i don't think she will be the next fed chair. she may not want to do it. it is a very hard job.

it is useful to have a change of leadership at this stage. the markets are -- [no audio] change, you need firmer leadership. you need someone closer to the volcker and far away from greenspan and bernanke. manus: is your betting on taylor at the moment? be a combination of taylor and powell could bring the right balance between academic strength and hawkishness, as well as market friendliness. manus: that could create the volcker back up. opinion.en to get your moment of truth has come for fun markets. just for bond markets. -- for bond markets. alberto: this has been a bubble

recovery. audited of easing has helped --ple make returns quantitative easing has helped people make returns. we don't expect the treasury 4% or 5%, but even a today could cause a lot of losses. we estimate -- [no audio] make money, a little bit of money, 1% every month or two if everything stays quiet. they can lose 30% if there is a return of volatility. anna: alberto, very interesting. a bardo gallo -- alberto gallo stays with us. manus: we are live to the future investments form -- forum in

saudi arabia. davos in the desert has been penciled in. ♪

anna: this is "daybreak: europe." 6:30 here in london. yuan.llar against the a lot of the action in the asian equity session has all of been around this has then all around china -- has been all around china. we are getting breaking news coming from corporate. manus: we have usual, let's get -- we have pujols, let's get the number was on that. they confirmed that target. given the september numbers that we just broke a couple weeks ago we saw card -- european car sales slide for the second month and the row.

revenue fair up. the there raising the russian market growth target outlook to 8% from 5% in latin america, that is up as well. anna: this is a business that next month we are expecting to hear about. they spend it with the acquisition in august. we can expect a big focus on cost-cutting coming through from psa. let's get the lufthansa. tightening the grip on the german market because of the demise of their big arrival air berlin phasing out services this month. [no audio] 9.80 in the same ballpark, one billion euros. 81 billion euros.

manus: lifted to saudi arabia. access is standing by. -- erik schatzker is standing by. by with: i am standing stephen schwarzman, the ceo of blackstone group. good to see you. stephen: good to be here. reporter: when you were here five months ago, you left your asset management peers slack-jawed by winning the $20 billion commitment for your in for structure fund from saudi arabia's paf. believe it -- we leave riyadh with another $20 million. stephen: if that is the case, i don't know about it. $20 billion in one year is special. -- reporter: he is counting on what he calls make a partnership, like the one he has

with blackstone to boost returns . is their scope in their relationship for the pif to invest more? stephen: for us, we have $400 solion roughly without pif, as we expand, there's certainly scope, because we grow at least 10% a year. more.ly sometimes a lot we are starting a variety of new businesses. there is a real opportunity for many people to be investing with the firm. i don't think there scale is of interest in terms of inhibition. reporter: the reason i ask about , is there another

firm that has committed $20 billion to blackstone? more thatia has much they need to invest. the crown prince has talked about $2 trillion at some point invest in 15 years in pif. that is why i'm interested in that relationship between pif and blackstone. stephen: these things are going to happen slowly. they are goingthey are going to [no audio] they will have other mandates they have to fund. i don't think the growth of pif would theoretically stretch the ability of blackstone to keep growing.

part of what we do is start new businesses, new investment areas. there is also plenty -- [no audio] and sort of general advice outside of normal investment to the kingdom is interesting to me personally. the crown prince is a very dynamic person.

i met him in new york a year and a half ago. i think it was one of two people -- i think i was one of two people that he met with he laid out this whole vision 2030. three new cities, liberalization , the types of things that people look at saudi and say, why are they -- [no audio] veryesting, but he is a smart, very energetic, very visionary person. being involved with someone like that on a personal basis, as well is institutionally, is really fascinating. stephen: -- reporter: you have mentioned the blackstone is starting a number of businesses. i know about in for structure. what else is blackstone doing?

stephen: more to come. reporter: are you being cagey with me? stephen: not cagey, quite direct. whenever we do things, we find that sometimes there is go boom. .- there is an go boom we like to do research and figure out where we are going to go there and enough time so we have a lead on the people. report: we try and push a little bit. it is clear that the pif and other sovereign wealth funds are targeting even higher returns by investing in high tech and health care, either directly or indirectly. blackstone cannot really help them there, at least not yet. is there an opportunity for blackstone to start investing in an earlier stage? stephen: there is a variety of alternatives for investment.

we don't do them in separate funds, just like we have done 40 billion of infrastructure with extremely high returns. we are marketing a fund. we find a way. reporter: would you consider that wouldfic funds invest in companies at an older stage? -- in an earlier stage? that.n: we already do we basically consider just about everything. we only do things where we think we have -- [no audio] more doubt for us. in many of our businesses, in fact, the ability to have scale

enables you to operate globally, and enables you obtain more intellectual capital, and a moats to some degree for us. report ago a tackle up -- reporter: tactical opportunities. what is the next scale business for blackstone beyond infrastructure? stephen: i admire your tenacity. reporter: it is something you are ready in. stephen: what i will say is the firm started with no money, 400000 and capital. we have almost forget billion dollars in a market capitalization guess we have almost $400 billion in a market capitalization.

we are in innovation factory. we are looking for something that is new, that is breaking where we can deliver really remarkable returns to our investors. we only go there when we can do that. we are not in the asset gathering business. we are in the return-providing business. reporter: based on the opportunities you see to generate returns, let me ask you this. acknowledging that you are not in the asset-gathering business. in 2013, you and i were talking when -- you told me that you could easily see the from growing based on the opportunities the $500 billion. you are almost there. based on what you see today, what is the new number flacco -- the new number? internalwe have

plans aspirations -- plans, aspirations -- [no audio] haven't finished our plans, so we will see if we can accomplish that. substantiale a very increase in terms of what we are doing. mindways have something in where we think we can deliver a product that people who are not getting it, or do it materially better. we have actually have a lot of fun taking the next generation of people at the firm and putting them to work on that problem. we have a really terrific meeting with people presenting ideas. that is how you grow the culture

of the business. it isn't just one person sitting around inventing things. we've got the firm totally grow with how we can great returns. without providing something unique to investors, there is no reason for a business to exist. that is what we think we are doing. we are on a mission to be the best firm in the world. if we are not, we will know it because we see the measure. i know that sounds a little reaching but that is what we do and that is the standard. can we do the best for our investors? that provides the growth. reporter: i don't know that sounds reaching at all. some pretty good.

manus and anna, that is stephen schwarzman p you just heard him it we talked about relationship that blackstone has with saudi arabia but we concluded with the future. blackstone in five years going to $800 billion perhaps. anna: eric, thank you very much. tenacious. live from the future investment forum in react. -- in riyadh. the devil's in the desert -- the davos in the desert. manus: let's get you up to speed now. did on the is biz -- the dollar is biz. nejra: we are seeing a little bit of a pause in asian equities, even in japan because previous to this we saw the nikkei on 16 straight days of gains. a record winning streak but a little bit of faulting is coming through in japan. topics -- a bit of

technicals but it is falling slightly so this is where we see the limit, at least for now on the upside for japanese stocks. talking of what has been pushing higher, the 10-year yields topping 2.4% for the first time since march. this, of course, is the level 2.4% where bill gross said if it sustains above that level, we might see an end of three decade bowl bond markets. so ---year yield, as you as you showed has failed to sustain above the level before. we are seeing that it is failing to sustain up there in today's session. we are at 2.41% on the 10-year yield. perhaps a moment of truth. we will have to see how this continues. partly what has driven this,

fundamentals. fundamentals.w a little straw poll might have had something to do with it. [no audio] data, butgot the cpi that did miss estimates pushing the aussie lower. anna: thank you very much nejra. when you are traveling for work, tune into bloomberg radio live on your mobile device. that is if you have to turn off bloomberg tv. psa is about to run the team to talk about asset allocation. manus: what surprises might be in store at the ecb. it makes his way toward the qe exit. this is bloomberg. ♪

anna: we are expected to be weaker at the start of the u.s. treasury day -- trading day. let's talk about what is happening in india. manus: india's state-run banks surged in mumbai trading after the government pledged to inject $32 billion in capital into the lenders. state bank of india jumped. punjab national bank advanced 40%. let's get to our agent finance reporter, anto antony. good to see you. capital boosts catching everybody by surprise. yes, the position to increase to capital target has caught everybody by surprise. is creditaid that it positive.

the state banks have added more than 10 billion and capital market. this will help banks to clear up indian banks which are saddled with one of the highest bad loans ratio. this will help to clear the balance sheet and add more loans in this economy. anna: anto, thank you very much. the indians bank have been the move heating up the stock market. anto antony in mumbai. about nonperforming loans. manus: this all comes down to mario draghi. the european central bank president is expected to give the details on how the put back theill

parsing of more than 2 trillion euros of debt. anna: the ecb will begin withdrawing even with inflation projected to remain below its target. alberto gallo is still with us. what do you expect from the ecb this week? they cut down the amount of bond buying they are doing on a monthly basis. seems to be the assumption. they tread very carefully because they don't have the confidence to predict the target . alberto: central bankers are worried about withdrawing too early. they are worried about other central banks, because in the past we have seen the fed being fromcautious, switching being very hawkish to having a tantrum. ecb doesn't want to be the one leading the august charge. having said that, there's scarcity of bonds. they have communicated to the market they have reduce

test they have reduced the purchases and the markets have reacted in a quiet way -- they have reduced the purchases and the markets have reacted in a quiet way. it is flexibility to have more debt from spain, portugal and also to buy more credit. the reduction may come more from government debt and core government debt more than credit. manus: the most important thing as i read through the notes is a draghi delivers himself optionality. he wants optionality. that is the reason why you might not commit to this. we are done a couple of surveys with economists. how do you think the market is positioned going into this? alberto: generally the market is bearish on bonds. the market is expecting some

reflationary environment across the world. this is for the market around futures and hedging. if we think about institutional, ,ong-term it investment funds we have 10 years where everyone has a chelated -- has accumulated. everyone is longer duration even as yields have become lower. there is a higher percentage in the same trade. long duration of short volatility. we estimate that to be about $2 trillion group of strategies. even though there are a lot of people that are hedging, including ourselves for the repressing of yields, the largest investors are still very long. anna: how hawkish would ecb have to be to really send bund yields

higher? alberto: i don't think they want to cause a tantrum. wider can cause significant losses. buying bonds a very low yields and they have done that for very many years. that's for many years. -- for many years. investment grade companies that were funding and the huizinga digits, today, if use ago, they are issuing at 2%. manus: forgive me for not -- a dovish take. a dovish reduction. i will get in trouble with ecb and this is the skew of where yields could go to. alberto, how much distance, getting back to .6%, it could

take that long. .e were just looking at this these are the scenarios. what the market .6%? purchases theing less than 30 billion would get us back to 60 basis points. , aroundity is next year summer, draghi will have to successor. he may not be -- [no audio] the fed will have a different chair as well. we are on an upward path. you may have some inflation surprises, not just coming from growth but from politics. anna: on the various central banking chair chair ships.

the me ask you about the u.k. you think we underpriced risk at home. what are the big risks you are looking at for the u.k.? alberto: one is the risk of a hard brexit negotiation, where the government is not prepared for plan b. the government had just the government doesn't have a plan to reception the economy. the hard brexit scenario causes divided country. and then it -- [no audio] but it could be a tail risk for markets. it could be a tail risk for the pound and gilt yields. thes: alberto identifies risks in the market. alberto gallo this morning.

us.: zeno staub joins he has seen in a performance that is fund. we will be in geneva for that conversation. this is bloomberg. ♪

state run banks soar. arabia within saudi therviews of

schroders chairman. welcome toare bloomberg manus: china's president unveils a new leadership lineup. the chances he will stay in power past 2022. anna: the u.s. president asked gop senators for a share -- issue of hands over the nominees. . third quarter underlying profit 2.0 8 billion, the estimate 2.1 billion. broadly in line for the third quarter. lloyd's longer-term guidance maintained so keeping the guidance they had with the markets. all this ahead of a strategy due to be announced in february. the ceo preparing to outline the reading strategy. many analysts [inaudible] the government has sold its last remaining stake in the business back in may. eight years after it was first

bailed out. looking for comments they had around brisket -- brexit. 97% of this banks business is exposure to the you ok, it's a exposure tothe -- the u.k.. lender on the economy. we have the details on the -- the bank of england have been concerned. manus: if you do not want banking we can give you a little bit of year. heineken delivers the third quarter of growth for them. they have an organic beer volume 2.5% lower than the market had penciled in. a couple of headwinds for them. irma and harvey getting north american businesses. have penciled in

2.8%. the full-year remains unchanged or them. the nine-month profit number of 1.4 9 billion. there is a shift in the consumer abandoning mainstream brands. if you are interested in taste you can have that. nigeria having the balance for them. the uganda pressure and likewise with nigeria. third quarter impairments 270 million pounds, the estimate was 211. if you're looking for clues in the strength of the u.k. consumer on the car market, the consider credit lending -- consumer credit lending. let's have a look at futures. weaker, u.s. touch

futures are pointing down at the moment. after touching a new record high on the dow in yesterday's session. a strong earnings season in the u.s. seems to be lifting. suggesting that has led the s&p to be on track to set its 12th consecutive month again. if that happens we will not have seen that since the 1940's. manus: let's have a look at the risk radar. jpmorgan chase in austria saying we are in a long indian summer for global equity markets. our guest sees bubbles everywhere and perhaps you need inredefine what is a level the behavior investing, he talks risk and the s&p on track for the record. how much betting on volatility is there, subprime is 1.4 trillion. the aussie versus the dollar at a three-month low. estimates were looking at .6 of

1%. this is the global conundrum. launch, a failure to hit inflation. a quid pro quo that knocks the currency back. anna: when we talked about bond markets in the u.s. going to we, we have the bunds and are showing you where we expect to open up there. those of the numbers that were given to us by alberto gallo. it's that make money on the bets that makend money on the status quo. manus: a big risk factor for markets. we will see what mario draghi has to say for markets. juliette saly is standing by. juliette: china's president has unveiled a new leadership lineup

-- that includes heirs. break with a secession system and raises the chances he might seek to stay in office beyond 2022. >> we will build on a good momentum to can -- continue modernizing china's system and will make efforts to deepen reform and open china still wider to the world. has askeddonald trump republicans for a show of nominees for the federal reserve. the president took the straw poll during a luncheon yesterday. texas senator john cornyn declined to say whose names were ticked off. about john taylor

and jerome powell. jeff flake has become the second republican senator to publicly attack donald on the day the party wanted to put a proposed tax overhaul at the forefront. flake announced he will not seek reelection and gave a blistering president from the senate floor. the remarks followed a series of television interviews in which center bob corker also denounced trump. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . we might -- we thought we would see the nikkei make 17 wins on -- in a row. sincengest winning streak 1917. heard back of what we

from the party congress. the aussie dollar held to a three-month low after the inflation data missed estimates pushing out the chances of a rate hike. having a look at stocks in detail, we have seen a huge in stateming through banks in india. selling off 23% him a the biggest jump in eight years after a $32 billion injection of capital for the state run banks. boosted after an upgrade from morgan stanley and we had the good caterpillar numbers coming through so you're seeing machinery stocks doing well. closing of the session higher by over 3%. anna: thank you, juliette saly in singapore. -- vontobel rose to a new record. the new ceo joins us.

.eno staub exceeding target for the new money, what is behind what you described as an excellent performance? : first of all it is client focused, the quality of our services and product and now --r the years we have failed filled the reputation of being close to our clients delivering specialized services. clients that recommend us and that makes us very proud. manus: your focused on the clients, it is great to bring money in but the perennial issue is making those clients engage and put their money to work. doing that, are they showing any hesitation, what margin are you delivering on that new money in?

we are predominantly an asset manager which means we have recurring management fees clients.te and to show whereas on the clients who run an advisory relationship with this we still see significant cash holdings which are a quarter to one third [inaudible] anna: in terms of where clients want to put their money and how passively or actively they wanted to be managed, do do think we have reached peak passage? that is a tough question but not a relative -- relevant question. being confident that by selective, we will continue to add value to our clients. economic theory tells us we will

never go 100% passive and never go 100% active so the market will look for equilibrium. we as a focused player will continue to remain committed to our way of the investment game which is [inaudible] manus: you have made it clear that you have cash flow for acquisitions. we understand the dominance he in switzerland. would you explain your presence in geneva? you are poised to act. quite clearly our dollar acquisition strategy, we are very willing and we have executed over the last three years four times, we are in the process of completing our fourth acquisition in less than 24 months. we are open for acquisition on the asset management side and

more open to international acquisitions. we have been able to become the majority shareholder of 24 as it management -- asset management. bearish on the wealth management side as you pointed out. we expect the swiss landscape keeps changing. and m&all be the silent driven consolidation. --are inactive consolidator an active consolidator. so consolidation in geneva is a claim. another theme is technology, artificial intelligence, being many -- employed by many in your industry. to what extent are you relying on ai and will you and which types of jobs do you see at risk as a result? technologyuestion of , first of all, perhaps it is fair to remind ourselves that

only because the [inaudible] which is economic theory out of the 1970's is we [inaudible] this not make the -- does not make the approach any better. we are convinced that the several are fair -- savoir-faire. we are heavily endorsing technology but as a support to make the work of our relationship managers better much a bring them closer to our more bespoke in servicing their clients. technology is a help that we do not think that in our segment of high-end clients it will replace the human being. it will support the human being. when we talk about global advising and influence base, we think that only providers and

companies that have the track record that have the experience of investing and the trust that comes with the track record. we will be successful going forward and there is too much of oversimplified finance and technology. manus: thank you very much. l joining usontobe and talking about sneakers. anna: fighting off the ai guys in seekers -- sneakers. we will get updates on what is happening in china. china's president xi ending a 25 year tradition. naming no clear successor. ofus: we speak to the ceo

vestas. we will talk to the chairman ofshcroders. -- of schroders. that is next. ♪

add: this is bloomberg daybreak: europe. joining us now in saudi arabia chroders chairman. the obvious question is what is the attraction, what specifically takes schroders to riyadh? michael: there are 3500 people here at this conference and laying out their plans for the next three or four years through 2020 and the next 13 years and there are major adjustments happening here.

setting up a major new sovereign wealth fund. it is a fascinating time to be here and it represents a new direction for the kingdom and i think some really opportunities. manus: we caught up with the blackstone chairman earlier and he came home from saudi arabia with $20 billion of new commitments for infrastructure. have you had discussions with the institutions, have you won any new business on this trip, any new commitments for schrod ers? michael: we have an existing set of clients that are important to sowho have done for 20 years we have good relationships with the government and other parties. we are looking forward to deepening. i am not putting a number on anything. anna: we will not take you down that road. ers have been with schrod

since 2001. we spoke to the vontobel reachingt, if we were [inaudible] how profitable can this line of his this be, how profitable can with that as be a backdrop? , for 15 there has been years there is nothing new about this growth in passive that has been going on for 20 years and it continues and probably will continue further because passive for major institutions is an important -- has an important part to play. active managers have done well and they continue to do well and the opportunities for active management are significant where in a market environment now where there are opportunities to outperform, you have seen that across the board in equities and -- and fixed income. managers have delivered excess

returns and that could continue. maybe view would be that the exponential growth in passive will tale of a little bit and they will remain great opportunities for active managers. it is a profitable industry with high risk on return on equity and good profit margins. that is going to come down a bit. that is what flag in the market. these are reducing because of and managersifid 2 are sharing the benefits of scale with their clients. i think these have come down quite a bit. they will go further. that still leaves a great growth opportunity for active as well as passive managers. manus: cai ask you, we have had a lot of active management activity this year, particularly in some of the dutch companies. would you encourage fund managers to be more vocal with

the companies they have invested? michael: it is happening. governance -- governments and involvement with companies is at a high level. it is quite right. are getting actively involved with the company's in which they invest because they think by so doing they will generate higher returns. active producers and that sense. it will continue. it is correct and positive. it is happening in the passive universes much as the active. artificial ask about intelligence? we were having a conversation with another asset manager who is saying that there is going to savoir-faire, knowing how to get things done.

that is not necessarily something you can leave to the guys in sneakers, i think that was his way of describing computers and artificial intelligence. keeping up with the trend? michael: we are investing in data and improving our capabilities. the chief executive, peter harrison, is committed to that and absolutely right, it is a bigger part of what we do. and we will continue in the future. one thing but interpreting it and making an effective and impactful in your investment decisions is another. human interplay is critical. it is a combination. we still think absolutely that grated experience, and investors are going to be as

critical in the future is a have been in the past. the tools they are going to have through ai and data and so on will be much greater and more sensitive. manus: good to know there is still room for the man and woman with a voice in this is this. we know from your ceo peter harrison that there may be an interest in terms of expansion in the u.s. as the chairman, were you encouraging harrison and the team to look my are you encouraging m&a, will there be more consolidation for you and schroders? michael: the industry has been consolidating for a long time. it is going back 10 to 15 years. that will continue. costs are increasing as we said earlier. these are to some extent reducing. extent are to some reducing. that could be achieved through

organic growth which is what we have largely done. it can be achieved through acquisitions. the industry will continue to consolidate. and schroders will be part of that but differently to many others. where we look to growth through ughuisition is thro talent-based opportunities. we are not just seeking to add scale, we are looking for talent in complementary areas that can help us, help our existing organic growth extend more rapidly. the transactions we have done not huge individually, very important, and add to growth opportunities. they are not big industrial sites, transactions as some others have done. that will probably continue. anna: a lot of central banking

decisions made and the bank of england for a much in focus. if we see the bank of england turned tail and start to hike a mistakeld that be given what we see in the underlying u.k. economy or the right move? we have seen some conflicting messages coming out of the bank. and recently a suggestion that they will be looking to put upgrades. the decision in early november will be important and it seems there is a two way pull. i am climate, some uptick in inflation. e fundamentals are not that strong. the brexit negotiations are part of that. it will be interesting to see what the bank decides in early november and there is a two-way pull.

if there is a 25 basis points increase that will be it for a while. manus: thank you very much. michael dawson, the chairman of schroders. thank you for joining us. ♪ is this a phone?

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guy: welcome to bloomberg markets, this is the european open. we are bringing you the first trade of the day. i am guy johnson. matt miller is in berlin. trumps straw poll pushes yields higher. the president has asked gop senators for a show of hands on taylor or powell. it is about who is going to be the next fed chair. will