anna: the u.s. president accuses china of unfair trade, but says his predecessors are responsible for the massive deficit. manus: the u.s. treasury secretary says he won't rule out delaying tax cuts for businesses. >> our strong preference is that the corporate tax rate starts next year. the longer we wait, the worse it is for the economy and making company's competitive. we look forward to working with the senate as the details come out. anna: a government and turmoil. theresa may loses the second cabinet member in a week. meanwhile, brexit talks resume

in brussels today. manus: talk strategy with the -- of adidas and xina xina's. ♪ anna: a warm welcome, this is "bloomberg daybreak: europe." from here in the city of london, i'm anna edwards. manus: the promise you a fees from germany in terms of how they are performing. numbers coming through targeting 2018 for 70, excluding charges.

they're proposing to raise their euros to the.10 expectation which had been 380. estimate of 2.40 5 billion that we had penciled in a head of these numbers. that looks to be a little bit the industrial business profits. missing estimates on power and gas slumping. looking for any clues to how the power and gas division is doing. we heard about the wind power division, we've been reporting about how other jobs are going to go in germany or predominantly in germany around other parts of the business but siemens missing estimates on power and asked. we will speak about those matters and the ipo to help business to the ceo who will at 6:30 london time. manus: commerzbank and deutsche

telekom both going red across the terminal. the market at penciled in 479 million euros. he's trying to turn the business around, germany's second-largest banking operator. parts of the business are up for sale and they've artie said out 73 hundred jobs by 2020. perennial takeover discussion on this bank. net income comes in at 472, slightly below the estimates. they see the space below 7.1 billion, expecting a positive full-year net result. the buffer of capital is 12.5%. of course it's a question of

what they will focus on. it's making those profitable, this still is the turnaround stock darling of the banking industry, second-best performing stock in the banking industry this year. we'll talk to stephen engle a little later in the day. we will find out just what is going on there. we have a little bit of deutsche telekom to get through as well. i'll pick up with the german drug sector. a raising of the estimate for door to telecom, he had to walk away from the sprint dealer, the market rackets brains over what that might mean. full-year ebitda gold to $22.5 billion. they have raised the guidance for 2017, predicated on u.s.

growth. sales areelekom says pretty much in line with what the market had penciled in. it's on the t-mobile numbers, and the question is, what happens next for t-mobile in the united states? saying they deserve some credit for not doing the deal, so nice set of lines coming through from door to telecom. we have a lot of german corporate's this morning. sector,into the drug there was talk going into the numbers as to whether they would be heard by the strength of the euro. they seem to have a mixed bag of numbers versus the estimate. ahead of estimates, but the other lines not so impressive.

net sales seem to have missed a little bit in the third order and the adjusted ebitda also missing the lowest of estimates on that particular front. sales, they're sticking to their guidance. it has been losing ground in china in the liquid crystals market and also on the drug front, trying to lift its drug development spending to compete with leaders in the oncology market. eps third-quarter numbers 0.51 coming through and that's in line with estimates. the revenue number looks to be broadly in line as well. the net income number seems to be ahead of estimates in the third quarter. will speak to the deutsche bank ceo who will join us at 7:00 a.m. u.k. time. will talk freight rates, e-commerce and street scooters.

let's talk about what's going on in markets. you've had record after record. the msci asia-pacific touching the highest level since 2007. at 23,000 forded the first time in 10 years. all the technology stocks seem to have added to this overall momentum. volatility in the msci asia-pacific is at a record. going back to 1988, volatility has never been so low. question, will we pricked the bubble? earlier in the day, the stock market hitting in the highest in 25 years. we started to see a reversal in

the talk of north korea. is it the talk around trade from that delegation over in china? correction from our colleagues on the merc story, the ebitda number did not miss those estimates. manus: it's important to get it factually correct. the question is what drives you to the next leg. is it going to run out of steam? some technician saying you could see a top in gold. up, whether you believe the demand side or is it perhaps holding on, little bit of a wobble in u.s. tax reform. that's the potential spoiler for markets. anna: are watching very closely what trump has to say. qs juliette saly.

juliette: republicans on the house ways and means committee aim to release their tax proposal later today, according to a spokeswoman for the senate finance committee, it will be a conceptual mark instead of detailed legislative texts. speaking postal be the bloomberg, treasury secretary steven mnuchin stressed how crucial getting tax reform through to the white house is. >> this is the president's most important domestic agenda item and we are going to get this past. the objective is to get it to the president's desk in december to sign. carette: authorities production in heavily polluting industries to improve air quality. it rose from a year earlier, faster than the 6.6% that was projected. the consumer price index climbed slightly ahead of forecast. and has lost its second cabinet .ember in a week

she failed to tell prime minister theresa may that she held a series of meetings with israeli officials during a holiday in august. on tuesday, it was revealed that she suggested giving british aid money to an israeli project. the bank of england policymaker has said clarity on brexit will be needed early next year to prevent tanks starting to shift jobs out of the country. warning that political and economic instability is bad for business, investment and the economy, he said there will probably be some movement out of london, adding that institutions are already making contingency plans and will have to start acting soon, even before it is clear what the final deal may be. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the .loomberg at top

what an interesting session here in asia. we started with the msci asia-pacific index reaching to its highest level on record. it doesn't look like it will close at that level because of the turnaround you seeing in the nikkei, closing out the session 5.2% lower as we saw movement going back into the safe havens like gold. australia's market closed as high as level since january 2008. toshiba came through with some numbers today, second-quarter operating profit was upbeat, saying it will have more investment into its sixth businesses, one of the chip unit spinoff. we did see initial enthusiasm but to she view -- toshiba closing down by 1.5%. have a look at tencent as we head into the close in hong kong. in just under two hours. it's one of the regional index.

high,closes at a record it will have a lot to do with how tencent fares this afternoon. manus: a quick correct on commerzbank. 13.5% instead of 12.5%. they're aiming for full your court equity tier one ratio of at least 12.5%. so a couple of quick applications on. the market had penciled in 479, so still quite a challenge for the ceo there. with let's talk about happening in china. president trump saying china is taking advantage of america workers and companies with unfair trade practices, but lame his predecessors rather than china. leaders -- tom

mackenzie has been tracking the president and the grand moments of appearances between the leaders in china. tom, good day to you. how significant, how big are these deals? put some context around them for us. tom: i think the number is significant. we need to lift up the hood and give the tires a good kick to find out how significant they are or the long-term. uptnerships have been set and a number of the deals will be funneled into the moment they can be unveiled for president president xi. has been forged

a new over the last few hours. president xi saying there were going to plan to deepen cooperation. blameent trump did not china, he blames previous administrations in the u.s. for that. some data on the deal of 300 boeing aircraft, the deal involving chinese energy company sinopec was about $43 billion avesting in alaska and chipmaker deal with about $12 million with one of the smartphone makers in china. anna: to what extent the u.s. china relationship is being move forward by these deals and by the conversations we've seen around trade and around north

korea. tom: certainly many people take heart from the close personal relationship, good chemistry, wonderful chemistry as president trump described between the two leaders. longer-term, there's frustration from u.s. companies in terms of the structural economic relationship between the two companies, in terms of sectors around financial services also, agriculture, health care, there hasn't been any movement. china has not offered any leveling of the barriers to entry for these companies and they're finding it increasingly difficult to operate here in china. that will be seen as something of a disappointment for many. will continue it to implement you and sanctions, but nothing new on north korea. terms of shifting the relationship forward in a concrete manner, not much of that at this stage. manus: thank you very much, tom

mackenzie on the ground tracking china. every nuanceacking of what he said in each country. this wraps up everything that trump has said. china will welcome the active participation. this is the carrot, the rapprochement tween the two. on the face of it, this is a good rapprochement between the two. elegantlybeen in managed event so far. $250 million worth of deals have been signed at the meeting. it's giving off the right, positive signals. anna: elegantly managed, i like that phrase. one of the key sticking points for u.s. businesses is around market access.

we heard about electric vehicles, but it's relaxation of those rules that some people have been calling for, as we've been heading into this. any sign that china might losing any of that are ramp up the pace that it does so would be taken well by the west. stephen: it significant in that regard because china would welcome some limited investment there. the way that china has set up asian trade, that seems to have gone those two blue will but the u.s. has held themselves back from that. it seems as this is a slightly ambivalent approach to full involvement in the kind of fair trade we have been thinking about. there was a position of angst for trump with the currency, going into the start of his presidency.

calling china a grandmaster level currency manipulator and railing against that. here we are, we have this quite substantial turnaround in terms of the you one. it's no longer the punch back that donald trump can use to with, metaphorically speaking. what were predicting is they will increase liberalization of chinese financial markets increased devil is a ship foreign-exchange markets. theooks as if the level of yuan has not been the issue in the last year that it had been. but the dollar itself has weakened over the last 3-4 months. it's still on the treasury

watch list but some of the rhetoric has been dialed back down. ine say it may pave the way other areas between north korea and china. things, what the chinese have been doing around their currency level angers the united states. ,tephen: it's a fair point something of a neurology issue at the moment. china is a key actor within that area. there links are that much closer with the regime. manus: you've given us some wonderful superlative's this morning, a heraldic issue. let's talk about investing. , we started a

discussion talking about tokyo , buts at a 25 year high , i found a new way to talk about it. this is it, 60 day volatility. the lowest since 1988. do you believe that can continue? sentiment,ata, the the growth and the reflation story. it's extraordinarily low, it's a very astute observation. i'm not sure astute was said with the greatest sincerity. lots of people are trying to discuss why that may be. qe is the most obvious.

people think qe is behind an awful lot of things in the truth is the fed is not currently expanding its balance sheet. so where is volatility going to go? i think the biggest story out there, an era of synchronized level growth for the first time since the financial crisis and the growth is very broadly based. it has very healthy roots. there are starting stats out there. fallingll around 9% and but it's yet to get to the lows we've seen in the u.s. and the u.k.. employment is at a historic high. there are more people working then have before. there are some strong roots and

that's one reason my volatility is low. people want to get behind it. anna: we'll talk more about what it means for strategy in a few minutes time. stay with us on the program. china conversation continues next on bloomberg radio. china.e talking anna: european commission on whatits projections stephen was just saying about participation rates across the eurozone. aboutre back to talking rakes it. resuming talks today. will they be substantial talks, or talks about talks? the latest round of negotiations

comes at a tricky time for theresa may. manus: she has seen a second cabinet member resign this week onlowing further revelations unofficial meeting she had with israeli officials including benjamin netanyahu. stephen now turns his attention to the u.k. for us. what is your base case? i wonder if it changes or if it's stable despite the volatility of the u.k. political story. case when webase think about u.k. financial assets is very straightforward. at the moment financial markets are choosing to price u.k. financial assets through the prism of sterling. markets are reacting fairly aggressively to perceived

developments and equity markets, so much of what revenue is accredited to the u.k. has little to do with the u.k. economy. manus: we had the discussion yesterday with mr. bevan and it was almost like your observation . he said within a year's time, he told see sterling closer 145, predicated on a view that we get some substantial movement in brexit. that ties back to what the catheter been saying at the bank of england, saying it cannot be a last-minute deal in regard to transitioning. he said we would start to see something happen in the news needs to come in the spring. do you agree with that, and will it be a dramatic moment when we shift the brexit discussion? is that what could shift it for you? stephen: i guess what we are

observing is negotiation tactics. we've learned a lot about negotiating tactics from president trump. i think we are still in that negotiating phase. i think back to conversations with colleagues in the greek crisis when a lot of the statements that were made, it was in fact a negotiating move. i think we are in the same place. the greeks did not do well at the end of that negotiation, some people would say. someone argue that some progress has been made on modernizing the greek economy. u.k., come back to the dispassionately speaking, there are two things that struck me of the last month.

growth projections are being revised up and the u.k. is being revised down, so there is a gap between those two things. , butctions can be wrong nevertheless it's quite interesting. the second thing was in the bank of england statement last week where they expressed their view that there revising down to 1.5%. there is a lot of pressure on politicians to clarify the way forward. and to try to re-stimulate growth in some way. anna: stephen, thank you very much. talking tax with steven mnuchin, our exclusive interview with the u.s. secretary, coming up next.

is there a deal to be done, giving a delay in terms of corporate tax cuts, to get a deal across the line? that is next. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." 6:30 here in london, mid afternoon over in tokyo where the dollar against the yen, going back into perceived safe haven assets. asia is up strongly, passing the highs of 2007 to now it is pretty flat and we have a sense of going into safe haven trades in the afternoon session over in asia. we have some breaking news. manus: this time coming from adidas. when we get those numbers, we

will bring those to you. significant market recovery as they report a net quarter -- third-quarter loss. for 2017.atio of 112% a small profit they describe, a bit of a market update coming through this morning. and over their close in all the quoted market positions. the closed out of lot of their equity exposure. adidas has broken across the terminal. third-quarter net income 549 million euros. the bottom line outlook is confirmed and it's a healthy outlet. third-quarter revenue coming in at $5.68 billion, below estimates.

there was talk of them taking the fight to nike in the united states. the estimate was for 49%. the margin side of the story is a little bit better. beat,erating profit is a $795 million. a couple of disruptive things going on, amazon moving into the private label sportswear market, setting the stage for further upheaval in the united states of america. had an unusually successful gear. there's a lot of issues to deal with. how do you deal with amazon? one man has the answers. he joins us at 7:00 u.k. time. u.s. treasury secretary

steven mnuchin says he cannot rule out a delayed tax rate cut for corporations. the senate is said to be considering waiting up to year to lower the rates. manus: mnuchin warned it may hurt the economy. he spoke exclusively to bloomberg. >> the presidents strong preference, he wants to start this right away. having said that, we have to look at the entire senate package. i assume it is really just a money issue as to how they are moving the different pieces around. it's not a philosophical issue. sure they would like to start this as soon as they can. >> they gutted the excess tax revision leaving another hole in the package. how do you feel that? >> were going through a healthy process which we started getting the house and senate and the administration on the same page. so the fundamental goals and parts of the bill we have all agreed to.

now they are going through a detailed process. talking about very technical issues on everything from the international side to pastors and everything else. we are going through healthy process with the committees. >> one thing being talked about is to kill the individual mandate from obamacare. do they want that brought into the tax debate? >> that something you president has encourage them to look at. i was in a press conference yesterday and senator cruz gave a compelling pitch for that. that will be one of the things that is talked about and will be considered. >> when you do the math on who would vote for the package, does it concern you that obamacare could complicate things in the senate? >> it's two different issues, but the appeal of putting that in, he gets rid of a very unfair ,ax on people cannot afford it and it frees up a lot of money that would go to middle income tax cut.

having said that, whether it's included are not, we are determined to make sure we get the tax cuts passed. >> state and local tax deductions in the senate bill, they're talking about getting rid of it entirely. is that acceptable to the administration, or do you end up with a bill that cannot get enough republican support? >> fundamentally, we agree with the idea of getting the federal government out of the business of subsidizing the states. that makes a lot of sense. having said that, several of the states or a big part of the economy. new york, new jersey, connecticut, california, and we're sensitive to the impact on those states. that something we will continue to work with the house and senate and look for the right solution. we want to make sure that middle income people in those states also get tax cuts. >> the president said if anything goes wrong, i'm going

to blame stephen gary and they will hear from me. >> i have spoken to the president several times. gary and i are very comfortable being accountable. this is the presidents most important domestic agenda item and we will get this past. the objective is to get it to the president's desk in december to sign. anna: that was steve mnuchin, treasury secretary, speaking to bloomberg. stephen is still with us. the deliveredd in ability? theax cuts some suggested reason we have such low bond yields at the moment is that maybe markets don't actually believe this is going to happen. i think it's a view of synchronize global growth, i

think the tax cut markets [inaudible] a slight difference between what were seen in bomb -- bond markets and equity markets. talk about 2017 and 18 as being a time of double-digit earnings growth. you seem quite optimistic in terms of steady revenue, share buybacks, if you put that still in a are you melt up scenario? if we look across the globe we see the u.s., the u.k. in the later stages of the cycle. we think the eurozone is midway through the cycle. is marching to the beat of

a slightly different from because of the reforms mr. abe is putting through. what is late cycle, is it another 18 months or another two years? stephen: it just means we are past the midpoint. elastic cycle is very if you look across different anynsions, the catalyst for cycle would be a dramatic overshooting which were not seen yet. it hasn't happened. were not seeing the aggregations of debt that would cause one to be concerned. we were speaking off camera about the increase in the financial sector.

perhaps that is for another time. i don't think were seen the kind of excesses building up that would signal that. ari draghiard from about trying to break that link between the banks in europe and the sovereign's and trying to protect the european taxpayer from any future banking crisis that may happen. i just look at the statistics. if you go back to 2008, average correction was 6% against risk-weighted assets as we came to find out. we now have an enormous amount of visibility with the stress test. one reason why you see some much movement is precisely that we know the scale of the problem.

i think it was 12% of risk-weighted assets. where we have a great deal more visibility. you're less likely to see aggressive deleveraging betty previous terms. it may be relatively benign. technology.val is technology is a conundrum for the federal reserve and the bank of england. from an investment point of view, you say it would be folly to parallel 1999 because companies have massive user basis and impressive growth rates. we are drawing a distinction between what was

happening in 1999 and 2000. were notanies that possible at the time, as we remember [inaudible] it prove that your business plan was really taking hold. ,he situation now is different it subsequent with soundly based business plans. are in a different place. thatoint we are making is were coming into an area where profitability has been extremely low for a variety of reasons. audit --duction of therecial intelligence, is profit to be derived.

manus: thank you for joining us, stephen. michael corbat said his bank is bracing for a hard brexit. >> in terms of brexit, we are all obviously watching it closely. from our perspective, the prudent thing we have to do is assume what has been termed as the hard exit, meaning there is no transition and no sharing arrangements that are put in place because we have to be open for business on that day for our customers to make sure we can facilitate the things they need to do. that is the way we are approaching it. we have some latitude in flexibility because being a global institution, we already 26th e.u. 22 of the

countries. we are already there on the ground we already have connectivity. it's not that we have been operating in the u.k. and going into those territories on an ad hoc basis. we have been on the ground and we had the connectivity. areas where we have chosen and where we think fit us well into the future coming years ago before brexit, we made a significant investment into ireland and we have our european bank already headquartered in ireland. that gives us for passporting capabilities across europe and the continent, so that is done. we are in the final stages of deciding where certain clearing activities will take place. it has been in the press and i'm happy to say we have been in late stage conversations with frankfurt on that. next there was report overnight that some of the banks met with

wilbur ross over in london and really said time is wasting. the u.k. has to sort this thing out or we will have to move a lot of people i've london. is that true for citigroup? are you looking at moving a lot of people out of london? >> we don't have the same construct. we already have a majority of our people in today's e.u. outside of london. we have significant country presence, so the answer is no. we will not be moving as many. we will surly have some things we need to move, and were preparing to do that, but it likely won't be the same types of numbers or percentages that other people have do not have that e.u. presents already. >> where are you on charging for research? there are reports that some will charge almost nothing. one of your colleagues was quoted as saying, we are not going to do that, citigroup is

more proud of their research than that. there's a difference between fixed income and equity research. the conversation stages with each of our clients in terms of their expectations, the things they would expect us to deliver, and we will come to a price and present that. my guess is largely on the fixed income side, there has not been that same type of magic in place. is we will continue as we have to fixed income research for our clients as we have. we hope they see value in it. we recognize that and we hope they are willing to send business our way for them. michael corbat speaking exclusively with david. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." s&p futures suggest will be a little bit weaker at the start of trade. asian equity markets in the morning session, now pretty flat. a little more appetite for some of those risk assets as we go into the afternoon session in asia. juliette: boeing has announced a supply 300 aircraft with a list price of about $37 billion. the agreement includes 260 narrowbody planes, came as donald trump met the chinese president in beijing. the company did not specify how many are new orders. the at&t ceo said he never

propose such a deal, the comments coming as the battle escalated with antitrust officials over the acquisition of the networks owner, time warner. discussions of individual assets including the division that includes cnn have come up in conversations between the companies and justice department officials. u.s. federal investigators have issued subpoenas for information on carl icahn's efforts to change biofuel policy only served as an advisor to president donald trump. it was cooperating with the request and providing information in response to the subpoena. representatives of the white house and carl icahn did not respond to messages seeking comment. a spokesman for the department of justice declined to comment. that is your bloomberg business flash. signals a slump

in demand for energy generating equipment. fourth-quarter profit missed estimates. us fromy the ceo joins siemens. great to see this morning. a disappointing set of numbers, it's been a tough time coming your reorganizing the business. talk about having to tackle structural issues in some individual businesses in the market presumably will focus on the power and gas side. when can we expect an announcement from you on how big a job of reorganization it will be? josef: good morning. back at a fabulous fiscal 2017. we did increase the guidance twice and we did make good on

the guidance for the whole year. it's actually now for the fourth year in a row. job,ve done a decent according to our own estimates as well as overseas business. that's the good news. there's always something that can and should be improved. for years we have been seeing a steady decline in the large turbine environment. it's more and more competitive on the global scale. realignns we need to their resources in the power generation business. we want to execute on our plan and were going to talk about exactly what we're going to do

and what it takes and white is necessary with our people and our representatives about the details and specifics on how are going to solve the structural problems. need to understand they speak to your employees first. and terms of the bigger picture guestswe were talking to in the studio about synchronized global growth. do you see that from your position at siemens? i believe 2018 has much more opportunities on the economic side. the climate is good, we are in the middle of infrastructure growth. see -- were by far the leading company in the

digital factories and enterprises. if you look at the numbers, topline growth and profitability, there's no company out there that is even close. the same is true for health care, significant growth, very good growth not seen in the marketplace. where exley very happy to see what we have. for 2018, the top line is to expect strong growth and to believe that we can capture a lot of opportunities. we do expect revenues to moderately go up again and also like for like, we expect to have meaningful eps growth all the way up to double digits. that, it's at all quite an ambitious goal were setting ourselves for 2018. that, i guess the geopolitical issues are much more cumbersome than the

economic story. we have great, very competent people and were making good on what we set. we've had very reliable guidance and achievements in the markets. manus: obviously your slate is heavy for 2018. one side of the business is health. you,we last caught up with the ambition was perhaps foreign ipo in the first months of 20 18. are you still favoring an ipo and do you think the market environment is conducive for you to go down the ipo road? we just saw a couple of big ipos pulled over the last 10 days. we remain clear, we have not changed.

i always like to be able to stay in control so that we can do what is necessary to get the orets ready for an ipo similar issuing. so basically will be ready in three or four months and then we will look at the markets for opportunities. for,s what we are looking making sure we have a good story and a good place to hit the market in a positive way. then when we are ready -- anna: thank you very much for your time this morning. lots of challenges in the power and gas business, it seems. manus: we have many more conversations coming for you. the top executives are rolling in here to bloomberg. the state of the u.k. retail

market, and an update from kevin open, and then adidas. they will join us to talk about the earnings and their strategies. this is bloomberg. ♪

saying his predecessors are responsible for the national deficit. out doingon't rule the tax cut for business. >> our strong preferences that the corporate tax rate starts next year. the longer we wait, the worse it is for the economy and making company's competitive and we look forward to working with the senate as the details come out. manus: the government in turmoil. theresa may loses a second cabinet minister in a week. brexit talks resume today in brussels.

you're welcome to bloomberg daybreak: europe, our flagship morning show in the city of london. i am manus cranny. anna: i am anna edwards. we are getting some of that breaking news coming through from some u.k. corporate's. let's talk about sainsbury's, 251 million pounds, first half adjusted revenue 16.31 billion. first half comparable sales up by 1.6%. just how far through the brexit increase in food prices are we? is some of the questioning likely to come through. hurry -- how are they preparing for the holiday season? we have marks & spencer's

yesterday scaling back their store openings because of competition. they could not raise food prices to offset the higher costs they are facing. they made a big acquisition, they have quite a good visibility that is going on with the u.k. consumer so we will get details. october trading have been weak. whether the grocery business looks similar, we will get guidance from the cfo shortly. joining us to discuss the performance of the retailer. manus: from food to luxury, the trenchcoats that are ubiquitous around the world, burberry's delivers a marginal upgrade. thenew ceo, you are seeign -- is seeing the former creative director and ceo set to leave the business. a littele bit of good news.

active --t him as 16tive cost savings million pounds. that beats the analyst estimates of 1.2 4 billion. they're revamping their business in the u.s., this is where he needs to convince the investors that he has got his hand on the tiller. a full strategic update is with the market wants to hear. concern is this, the company is cutting back on sales and trimming its exposure to department stores because of the concern that the brand got diluted. fx is always an issue for someone like every. the klein in the pound versus the rest of the world. every expected an impact from foreign exchange in 2018 to hit adjusted profit by 20 million pounds. they expect a strong cash flow. the are talking about cost cuts and a marginal upgrade for next year. anna: we heard about management changes there. esther zeneca a red headline -- astrazeneca a red headline.

coming in a touch ahead of estimates. against an estimate of 110 and focus on the guidance they are giving. it does seem to be favorable. ate cbs -- eps is [indiscernible] and what they expect. this was a core story for esther zeneca. they saw a failure of one of the , one of the cancer therapies that the company had touted as a potential breakthrough. shares regained ground or they lost, they were down 15% as a result of that disappointing news but they have regained some of that. the ceo is outspoken on the brexit subject. we will keep an eye on that. cfo atlet's talk to the sainsbury's. , kevinet to the lsc

o'byrne joins us. mark sent 10 -- marks & spencer's said customers are squeezed by negative wage growth and inflation. where webalance we are thought we would be this time of the year. customers and we are seeing wage increases coming through a little bit of head -- ahead of inflation. we have seen like for like sales grow at 1.6% across the group and more customers coming in to our stores and shopping with us every week. we are where we thought we would be. anna: do you see any weaknesses either geographically or i product segment as you have good visibility being in grocery but also with the chain under your belt. is there, if there are pockets of weakness, where are they?

kevin: where you see consumers thinking twice about spending with some of the bigger ticket items. this is between the food business and our clothing business and general merchandise. the ticket items like furniture, people be taking their time and thinking. the merchants -- merchandise argument -- market [indiscernible] that stands and ranges and the author that is in front of customers and the food business in a time when incomes may be squeezed a bit. what we often find his people eating out and the food business has been resilient. bigs: this was your transformation, where are we on the rollout with the acquisition, lift the lid a little bit for us area and kevin: we are -- a little bit for us. have 200.3,ed, we

you can pick up our ghost products.- argos we are rolling out the first 100. we are seeing in the second year total two-year like for likes on the -- that plus 35%. we predicted synergies by putting the businesses together and we delivered 2 million in synergies on our accelerated plan which was great. anna: can i ask you about brexit, are you contingency planning for moving on to wto trade rules if we go no agreement by march 2019? i heard from a professor yesterday talking about the average basket going up late 2.7%. what kind of modeling are you doing to get your heads around

what the move to the rules would mean? kevin: we buy food that mostly comes from europe and quite a lot of the fruit and vegetables that we eat comes from europe. we expect there would be a pragmatic solution. certain food and vegetables are grown there that we could not grow here. we expect that would be a pragmatic solution, good for farmers in europe and u.k. consumers. we have some time to go before we have contingency plans because we buy one season ahead for food and vegetables. manus: the banks can get up and go, they can take human capital and move to frankfurt and moved to paris. and even to dublin. how important is it for you in the food retailers to have clarity around transition, what would be good for you because if

you do have to look for other supplies that takes time. isin: the practical thing some of these products and you clearly can import from other parts of the world. some of them practically come from europe and southern europe. that is a practical reality which is why we believe there will be a pragmatic solution and we said the practicality of getting fresh product across the border into the u.k. is important for consumers. it is to keep products fresh and on the shelves. we are optimistic it will be a pragmatic solution and we have some thoughts and alternatives. it is early days. anna: we will keep watching that one. in terms of inflation has import driven inflation heat? what is your expectation, what are you putting in your were cast? would the latest numbers indicate food inflation is at 2%. you might surmise with a year or so after brexit the foreign

exchange impact on the inflation has washed through. we may not have picked yet. we must be near the peak. are hoping for that at the bank of england. i am going to go shopping. let's talk about the structure of what you have got. where do you want to be, where will that portfolio mix be given what you just said about the argos rollout and the transformation in terms of our with amazon and whole foods. where does the portfolio go to structurally? have 600 supermarket stores and 800 convenience stores. we opened 18 convenience stores and we opened to supermarkets. we're not opening any big stores arewe are opening some all convenient -- smaller convenience stores. we have 112 argossts stores.

more customers coming to the big stores. the future would be developed the big stores and put a better offer and open convenience stores. mature ismuch -- how the online grow three -- grocery delivery business? that ist grew 7%, measured growth. we are not chasing growth, that is consumers changing habits. our most loyal customers will shop online once a week or once a fortnight and they will come of shopsstores and top between times. it is an integral part of our business. growing 7%. we can see that continuing. it is 7% of the total food market. a relatively small part. most people still buy their food in stores but a growing part. anna: thank you for much, good

joining us insights, kevin from the stock exchange. joining us now is the company cfo. you have taken the fight right to 90 and it is a good story. you are out running nike third-quarter revenue a little bit lighter. talk us through the numbers first. uest: we grew our bottom line by three times the growth rate. we grew in our three largest markets. are happy with the third quarter. we confirmed our outlook for the full year. we will be growing our top line and our bottom line from 26 through 28%. it will be a strong year for adidas. we are happy where we are.

we want to stress we have a long way to go and we are committed to delivering our 2020 targets. anna: when we heard from one of your rivals just recently talking about the u.s. market, under armour cited lower north american demand at the end of october as one factor expanding their revenue mess. what is your experience in the u.s., do you see any of that trend in north america? guest: we have grown 30% and we are not seeing any slow down. we continued to see a strong demand for products whether it is a leisure or performance products and we continue to extract -- expect a strong fourth quarter. it is clear we are gaining market share. there is a disruptor, that name again, it is amazon. moving into the private label sportswear arena. more people to come, how do you

see that as a risk, as a challenge to as you say a good business for you at the moment? is big enoughrket for an amazon moving in and the keys you have to be where the consumer's. that is why we have a very strong spread in our online business, we grew by 60% in the u.s. do we think -- we are seeing the consumers going online, that is why we partnered with amazon but we are strong. we do not think in the short-term it will fundamentally change the market. manus: is it going to put more pressure on you to have to spend more on marketing to hold your market share, if there is room if we are goinganus: is it goio to multi-buy, you will have to keep my attention, you will spend more to keep me on my adidas brand. kasper: is more than just

spending on the brand. we invest heavily but the key is bringing products out that resonates with consumers and having great creative stickup you create products. in the u.s. we have had a strong standing relationship. we announced an exciting sign, entering in a partnership with victoria beckham. we are bringing products to the market. consumer,t is for the you have to bring first-class products to the market. anna: it is all about the celebrities and the product. what is happening at reebok? you have said reebok will get the time it needs to turn around. how much time, how far through the story are we? have a four-year plan and we have done a lot of changes in the last year. we moved downtown in boston, we signed with victoria beckham, we are bringing new products to

market and we are growing outside the u.s. this entire year. we have cleaned up our u.s. business and we expect business to return to growth asked year. going to take a while to get reebok back to where it was. we have committed to this brand because we think it is a highly relevant brand in the u.s. and the rest of the world. manus: one of the big stories we are covering is donald trump being in china and meeting with president xi. trade. about you give us the top line number for your gross numbers. can you take us deeper into the story, how important is that market to you in terms of profitability? along with the u.s. china is our largest market and we grew that 30% annually. it is our most profitable market. we have more than 10,000 stores in china. it is a very important market. we continue to see strong growth.

board and myself and management team spent a week in china through weeks ago. we are optimistic for the long-term growth and politically there is a huge push to address the sporting-goods market and have people exercise more in china. long-terme see a great opportunity in china. we do not think we are close to any and in china at this stage. talkedhe leadership have about being unswervingly committed to opening up the chinese market. you do not operate in the same constraints as what happened in other companies. if you had one big demand for the opening, what would it be? theer: it would be more on currency side, on the finance side. the trading conditions are welcoming. we are not seeing any constraints in the way we

conduct business. probably repatriation of capital. upides that we have been with our chinese business so we have very little else to complain about. anna: you keep your eye on the product and you let the share price do what it does but i read one piece of research talking about how they think you're shares will be at 220 euros within a year. where with the catalyst before the rereading of your stock? you are running very fast ahead of the others. bighere going to be some catalyst or subtly upward? per: we hope it will be steadily upward. revenue between 25 and 27 billion and we are growing our earnings-per-share annually. assuming that we will execute which we were -- we are committed to, i do not think there is going to be any

catalyst. it is consistent and credible performance over the next few years. that is what we will deliver. much areank you very talking about china and room for everybody including amazon. anna: room for many people in that market. let's stick with the german reporting season. releasing third quarter earnings missing estimates. joining us now, frank appel. always. see you as one of the drivers has been e-commerce. tell us on how that can continue to propel the business. frank: the e-commerce area is important. the world economy is in good shape so we see strong growth

over all parts of the business. driven by fundamental improvement of the world economy and that has driven our record quarters this year. divinewe're trying to when people talk about synchronized levels of growth around the world, talk us through the geography of where is the biggest [indiscernible] to kasper from adidas. : we see strong growth. china is doing well. india is doing well. southeast asia is seeing strong growth. i do not want to put my finger somewhere because the impressive thing is that we have consistency around the world and

increase in salaries, increase in employment, increase in trade. situation weque have not seen for a while. anna: the economic growth story is something that you are benefiting from. increased competition, the likes of amazon moving into a different way of operating. how are you preparing for amazon more active in their own local delivery and new competitors emerging, how are you preparing for that? frank: amazon is a strong customer, it has grown with us quite a bit because we provide great service. you have to be the best in the game. assistance.e the we provide the best service quality for anybody to the best pricing value for money than we have and we drive that with many innovations and on the sustainability front.

by delivering [indiscernible] i next day service all over the place. that is the right answer, premium service will be appreciated by consumers and any customer needs that whatever they do themselves. that is the right strategy going forward and we will continue doing that as we have done in the past and that is the reason why we have grown our top line so much. about capitalalk investment. one of the things that we have explored, investment in this country is down by 20%. as a ceo where other capital investments going to come in the coming year? frank: we have continued our capital investments around the world based on long-term strategy. byare not driving investment short-term only. we have a long time -- term strategy.

2020 strategy in 2014 and that is the driver for investment. we continue to do that. we have built a lot of capacity in our express business around the world and expanded that. whenever looking into the next quarter, we are looking in the long-term trends, they are the driver for investments. it is wrong to say -- [indiscernible] we are on the same level as last year. we are still committed to invest significant in further growth. that is necessary for our customers and that would drive the success. anna: you want to deal in the long-term trends, do you have the visibility to enable you to put in place the plans you need for brexit because many ceos say they want more clarity. what do you need to know and by when? challenge. is a it is not good we do not get more clarity on that. amicablee get a

divorce which is a challenge but nobody will benefit, neither the u.k. nor europe from a hard brexit. i hope the government's. it is necessary. -- i hope the governments get along. i am still optimistic that the governments will align themselves because they know that reasonable brexit is much that are for everybody than a hard brexit. i hope that both sides will come to a conclusion very fast. insecurity is increasing which is not good neither for the u.k. and for europe. optimism aboute a deal and likewise with the cfo we have spoken to. does any of that preclude you from taking an investment decision in regards to more allocation resources in the u.k.? we have long-term plans.

e-commerce will be strong in the u.k. and we did and acquisition after brexit. therowth slows down in u.k., we will do less investments because we do not to support the growth if we do not see growth in our self. economic environment will drive for we put our money overall in the long term strategy. we have no intention to change that. we see a slowdown in economic growth in the u.k. and the acceleration in the eu, then we will reshuffle investments. that is too early to say. we have to understand what the brexit means and then this has long-term impact on our strategy. do not changeght our investment proposals. anna: thank you for your time. the ceo of deutsche post. deutscheidas, and

point -- deutsche post. we turned it around at the close one we started at 6 a.m., the msci was dipping and we turned it around. you have rising equity markets and the msci off 2007 highs. good inflation, factory prices rising. that is the global reflation -- is the global reflation story. anna: very strong in the morning then pulled back in the afternoon and now flat. we do see some appetite for some of the safe haven assets, the yen a little bit stronger, the gold price stronger. we had a lot of talk about the one-sided trade relationship, we have been high on the trade front as he continues the visit. that is not shaking markets too much. he did talk about the menace from north korea once again. manus: he did indeed.

commerce bank is up 1.4% on the tray day and adidas, optimistic sorry from the -- a story from them. the european market open is next. guy johnson and matt miller. ♪

♪ guy: good morning, thursday morning. it is going to be a fascinating session. welcome to bloomberg markets, the european open. cash is about to start trading. it is a huge reporting day. so many companies dropping numbers this morning. we will work her way through them and see how they open. . am guy johnson matt miller is in front for. what are we watching? let's start off with the geopolitical story. the blame game. trump