>> good morning. from bloomberg's european headquarters in the city of london, i am nejra cehic. manus: ims cranny. this is "bloomberg daybreak: europe," and these are today's top stories. nejra: asian equities track u.s. gains. to j&j lift goldman the s&p 500. for the futures advance. ftse futures -- advance. the u.s. president takes another jab at powell. pres. trump: the biggest threat is the fed because the fed is issing rates too fast and it independent, so i do not speak to them, but i am not happy with what he is doing because it is going to fast.

nejra: heading into battle, no brexit progress in the cards. we are in brussels. manus: welcome to "bloomberg daybreak: europe." it is the beat for airfare on the margin. they promised you a beat. margin, 48.1%. 3 billion, the market had, just under 2.9 billion. this is a curtain-raiser on tech . we saw the stocks get battered. droppingonductor index 8% in five days. this is a beat on margin, a beat on sales. it beat the street estimate. this is the guidance, by the way, for fourth quarter.

euv orders,arter, this is five systems coming side ofon the big euv the business. 2.8 billion in sales. breaking is coming through on roche, on the pharmaceutical side of the world. astrazenecae had talking about their commitment. nine months. 42 billion. the outlook is confirmed for 2018. prices of drugs in the united states have been a critically important part of what we are looking at. the sales numbers, 13.9 7 billion. that is a beat. it goes red on the head, so that is a beat for roche. it expects further increased dividend. a guidance on the dividend, a comfortable beat on the guidance, and in terms of the afml.ns on a msl --

good morning. [laughter] nejra: good morning. we will be speaking to the roche and akzonobel ceo's later. analysts have been fairly afterstic about akzo even a warning from ppg. third-quarter adjusted operating income continued, 243 million euros. that is a bit of a miss on that number. 30 -- third-quarter revenue, 2.3 3 billion euros. billion euros. estimate was 2.8 billion euros. as i say, analysts have been quite optimistic, expecting price increases to partially costs.higher

the ceo said performance in the third quarter should be in line with expectations. third-quarter adjusted operating operations andd third-quarter revenue continued. we're seeing a miss for akzonobel, manus. manus: it's not going to be a one-way street in regards to these markets. you have been on 2% across the equities space yesterday. we are just managing to get it back in the green. the u.s. stock market gaining the most in six months. they dropped back a little bit. i love the line from fidelity saying if you're looking for a smoking gun, it will come members.n these q3 dollar-yen, i tried to look for something exciting. numeral says you're going -- nomura says he will make 115. to saudi arabia. that shifted the global sentiment and the equity market is on fire with q3 results. the dial has shifted,

nejra. nejra: that is the first time that happened since march 26. it is the same thing we're seeing in the asian session, gains in the msci asia-pacific index overall, significant gains than 1%. infotech has been leading, gaining as much as 1.3%. --s is about netflix impacting those semiconductors as well. we saw the stoxx 600 close higher. we will see if that happens again today. ftse futures higher by .4%. we cannot forget the fed minutes. the 10 year yield on a three point 17 handle. bloomberg first word news. humphrey in dubai. donald trump says it would be bad if saudi arabia's crown prince knew about what happened to missing journalist jamal khashoggi. ,e expressed skepticism

comparing it to your against supreme court justice brett kavanaugh. speaking to fox news, lindsey graham lashed out at mohammad bin salman. >> this guy is a wrecking ball. he had this guy murdered in a conflict in turkey, and to expect me to ignore it, i feel used and abused. i was on the floor every time defending saudi arabia because it is a good ally. is to meet toxic. he can never be a world leader on the world stage. >> christine lagarde has deferred her trip to saudi arabia, where she planned to summerthe davos in the summit summit. pulled companies have out of the future investment initiative event as media partners. theesa may has been told

latest brexit proposal would be thrown out by parliament. bloomberg sources say julian her talk ministers that the current guaranteed to avoid a police order with ireland doesn't have enough votes to pass. she had to a summit in brussels to break the deadlock. -- fell for a third consecutive month in august. they reduced ownership of american debt by $5.9 billion to 1.165 trillion dollars as beijing struggles to prevent the yuan from weakening. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. -- manus and nejra. manus: thank you very much. here fromk it up from her in dubai. ourette saly, she is in london studio. make sense of these markets for us. we have asia playing the

catch-up game. what do you reckon? juliette: we did have a good session in asia yesterday as well, but certainly a much brighter session coming through. you can see the nikkei up by 1.2%. the hang seng out of action today. volumes across the region, a little light. you are seeing a switch out coming through from mainland chinese equities, but elsewhere, it is broad-based buying. the taiex recovering because the semiconductor players are doing very well today. let's have a look at some of the stocks in detail. it is all about tech. this doing incredibly well in japan. it provides a lot of chips to a number of companies in the regions. emphasis is up by about 2.2%, jumping in india on its second-quarter earnings beat. in new zealand, a very strong showing coming through. its first-quarter numbers let's target amid a china outlet

boost. a lot of chinese consumers buying up its milk formula. juliette saly, thank you so much, with us in london. hong kong isw from mark cudmore, bloomberg's mliv strategist in singapore actually. good to have you with us on the show. let's start with the mliv question of the day. i will get this right even if your location isn't correct. this is about the s&p 500 and about whether we will hit another record by year-end. we saw a strong rally across all three benchmarks. yesterday, up 2%, although of them, for the first time since march 26. will it have fresh records by year-end? 5% away fromonly making a fresh record. if you put that in the context of a 2% rally yesterday, it is feasible on a time basis. the earnings, it's early in the season, but it started

exceptionally strong in the u.s.. he names reported good results. reported good results, important names in different sectors. yettrade war is not biting on the corporate earnings and i think that is important, especially as manus points out, with fidelity highlighting this is when we were going to expect some kind of signs. it does not mean the detrimental effect of the u.s.-china trade war will be postponed. it may not hit just yet. a fresh record high is back in play i think for the u.s. equity market. manus: i think i'm going to go linecript because i read a from janet yellen. the president of the united states called the fed crazy. he said the fed was raising too fast. my last guest said that was hogwash. f thehave to pace -- hal pace of previous euros.

janet yellen lambasted the president in terms of him having a go at the fed. what you have to say about president trump and heard it on -- erdogan in terms of monetary policy? mark: president trump is not arguing lower rates will lower inflation. in turkey, it is different. very unorthodox economic views, believing inflation will only be controlled by lowering rates, which is unconventional. he has much greater authority for appointing people for overseeing the bank. so i do think there is a slight bit of difference, but that does not ignore the fact that trump is putting some kind of pressure on the fed because no one wants to be blamed and at the center of the spotlight if this turns into a bigger equity rout. nejra: since we have moved on to rates, let me ask you, as we are looking at the fed minutes as well, how much of a risk does

the 10 year yield or other u.s. treasury rates posted this equity market rally -- prose to this equity market rally? mark: it's going to scare people that it's getting out of control, especially with the backdrop of the massive supply we have got, the deficit, and the fact that u.s. debt burden is growing at an exponential rate, so obviously, it will remain -- people are unsure what the new limit on the range is. that said, i do not think yield are ready to break out sustainably and we are in a slightly higher range of roughly 2.9% to 3.3%. we are stuck there. i do not think it will be a big problem if we go higher, but i understand why investors will get concerned and you may see short-term and panic in equities when we see those highs broken. manus: i have got to hand it to you, -- mark cudmore is responsible for the question of the day.

feel free to message him directly. there you go. will earnings drive the s&p 500 to a fresh record high? let's bring in our guest host, john. good morning. you have got to consider with going on with equities. let's throw the question of the day yet you first. good morning. you first. good morning. was last week a bad couple of moments? >> it was certainly bad and it was a significant correction, although as mark just said, it is feasible we could get to fresh highs before the end of the year. it has been sort of a wake-up call and that has reminded people about the interplay between equity and bond markets. it will only be earnings that can take us to those levels. it will not be economic fundamentals for us. we think the u.s. will these little momentum and in will lose a, --

little momentum and it will not be helping the equity market. nejra: what does that mean for yield? if it is not helping the equity market as much, does that mean that 10 year yields are going to come down from here as well? you mentioned that interplay between equity and bond markets, which seemed crucial last week. mark: if you look at the equity market, you could say that selloff was a bit of an overshoot, but we think as treasury yields were rising towards and slightly above 3.25, that was an overshoot. inyear treasuries around 3% the current context with what we expect to happen is about the right level, so we think those yields could drift lower into year-end, especially if the economic data does soften as well. manus: yesterday, we had the u.s. budget deficit announced, $779 billion. do we begin to become more conscious -- moody's warned of a worsening u.s. fiscal path as

the deficit rises. they are concerned about tax cuts, increased expenditure, liabilities, etc. do you think it is a deficit which will supersede anything else and take us upwards in terms of yields and 2019 --into 2019? mark: that is largely priced in -- john: that is largely priced in. we had the fiscal stimulus which was injected at an unusual time in the economic cycle. that is obviously why the fed has had to pick up the pace of hikes a little bit to offset the impact of that fiscal stimulus, and that is translating into more borrowing as we go forward, but you know, there is the bigger fundamental economic picture. it is more dependent on what the fed does, what level it goes too, and what impact that ultimately has next year end into 2020.- and if they managed to calibrate their cycle correctly, growth

will start to come after this temporary blip, we think it will pick up next year but then slow into 2020. it will keep bond yields from rising materially even in an environment where there is a lot of supply around. nejra: what will be crucial for today?the fed minutes you can argue they slipped into the background with all the turmoil we have seen the past week. john: maybe they will reflect on that to a degree. it will be interesting. if they perceive any signs in the data -- we think subtle areas like overall manufacturing, there has been some evidence that the tariffs are starting to budge, which we think will be the catalyst for this week at fourth quarter -- do they pick up on that and if they do, will they be perceived as slightly responding to what the president has been saying about monetary policy? it's a difficult balancing act. we think it will be fairly neutral. stays with usaith as our guest host for the hour. coming up, guilty until proven

innocent, donald trump warns against rushing to blame saudi rulers for the disappearance of journalist jamal khashoggi. we are in the region, next. this is bloomberg. ♪

manus: you put on 2% across the u.s. market yesterday. it is not just netflix that is driving the market. the infotech age rallied as much as 1.3%. you have the semiconductor index in there. that is incredibly important. i love this story. the valuation amount uber, $120 billion. that is driving the market, so you have got this tech element, and you have the uber valuation. msci is on the move. nejra: absolutely.

after those results we got from netflix, we did see again in those faangs. the semiconductor supplied to apple, up .6%. with the european futures -- they are not open yet. it is just the ftse 100 futures trading right now, but we are seeing them higher if i take a check on what they are doing, the ftse futures higher, pointing a little bit higher by three points or so. s&p futures flat, so the rally we saw yesterday of more than 2% on all the u.s. equity benchmarks might not hold in today's session, manus. manus: sos. i got it wrong. index. a -- we move on. ,oin mark cudmore, nejra and myself. that might not be a huge problem. let's return to one of our top stories. nejra: let's do that, manus.

donald trump has expressed skepticism over the circumstances surrounding the disappearance of jamal khashoggi. in an into view with the associated press, the president cautioned against rushing to blame the saudi rulers and compared the case to allegations against brett kavanaugh, saying "here we go again with you are guilty until proven innocent." he said the saudi crown prince denied knowing what happened to khashoggi. manus: joining us now to discuss ulf story in dubai is our g economy reporter. i am struck by lindsey graham. he has shifted the political dial. thes talking about conference as a wrecking ball, as toxic. your assessment of lindsey graham's rhetoric? >> that was definitely very notable. we have not seen anybody --

president trump is saying had to the the saudis benefit of doubt until proven guilty, they remain innocent. the narrative we are seeing out of saudi arabia -- out of the u.s., is completely on the opposite side. lindsey graham was basically calling for a replacement, saying this person cannot become a leader of saudi arabia and at the same time, mitch mcconnell said that they would look into sanctions. it is possible to sanction saudi arabia, so you are seeing -- of course, we have the democrats on the other side at going those same sentiments. sentiment in the u.s. is extremely negative based on this story. nejra: you have talked a little bit about the sort of reaction in the u.s. as well. so what does all this likely -- is all this likely to mean for saudis efforts to draw foreign investment? zainab: this is very bad for saudi arabia's efforts to draw

foreign investors. we did not only see many of these international investors at saudi arabia -- they have been diligently courting them. beinge seen actual deals canceled. hyperloop deal with saudi arabia, that was canceled. year, we sawt foreign investment drop, and there were expectations at least from the conference, when he talked to bloomberg, that that would drive this year. it is very a mike lee now has more investors worry about what is happening in saudi arabia politically. the security of the investment after that as well. manus: it's interesting we have seen a financial -- we have seen financial institutions withdrawal from fii. christine lagarde is deferring her trip to the middle east, which includes saudi arabia. is this a more significant distancing when you see, really, the figurehead of global finance

really stepping back? zainab: christine lagarde was put in a very, very difficult position because while all of this is bring to -- brewing, she had the relationship with the saudi government that does not have to do with mohammad bin salman but more with the finance ministry and trying to help saudi arabia, out of big problems like budget deficits, unemployment that is rising, and other issues. nejra: thank you so much. cranny inanus dubai. several companies including bloomberg have pulled out as media partners. bloomberg is among the media partners who have pulled out of the event. ahead of you macro rates strategy and economics at ubs is still with us. john, how does this, among all the other risks we are facing in

the market, feet into the way you outline your rates strategy? john: at the moment, it is a diplomatic, political situation. i mean, it has not really fed through into the market valuation, not the ones we focus on. clearly, that could spill over into more of a commercial situation. it could spill over onto the oil price as well. we are obviously watching to see how it develops, but for now, it is the political firestorm i think. what happenssee with the oil market. the saudi holdings of bonds, that was last threatened back during 9/11. .e have a lot more to dig into you are the head of you came operates and strategy at ubs. if you are a bloomberg customer, tv . the charts are there for you to watch throughout the day. you can message myself. big shout out to the producers of this show. show, up on this

president trump airs his displeasure with the fed. singing a very different tune. we break down the glorious bank earnings. this is bloomberg. ♪

nejra: today, we are asking the question on mliv, will earnings drive the s&p 500 to fresh record by year-end? get in touch with us. you can go to tv to send the show a question. check in on the markets with annmarie hordern. she will be talking about that rally in tech, no doubt. rallyie: we have quite a in asia, getting a boost. japan leading the way, up more than 1%, as well as australia. we did have a leg down on the csi in china. isi asia-pacific index higher, being led by health care

and industrial stocks. hong kong is on holiday. we will not see the hang seng moving. on the macro front, investors will be looking at the minutes today for the federal reserve's last meeting. any clues -- let's look into what happened yesterday deeper out of the u.s.. that gave a boost to the asian markets. we have the dow, nasdaq, and the s&p 500 all closing higher by more than 2% yesterday, the highest we have seen since march 26, being led by those earnings. goldman sachs posting higher earnings. johnson & johnson as well as netflix. let's take a look at what's going on in the oil market. and what oil means for saudi arabia. this is saudi arabia with gdp on a monthly basis, and as you can on thenoil gdp is rise, but not as much as gdp when you include oil, which of course, the country is really

enslaved to. the reason why this is important is because this is the future investment which was crucial to get this higher and diversify the economy. we heard hsbc and credit suisse's ceo's will not be attending. richard branson said he would freeze any ties to the country until more is known about this case with jamal khashoggi. really interesting chart. annmarie.olutely, our guest economist said we are excluding sdi in terms of growth. we should just say there are several companies, including our own, including bloomberg, that have pulled out of the future investment initiative as media partners next week. nejra: let's get the bloomberg first word news with desley humphrey in dubai. donald trump has called

the fed his "biggest threat," criticizing at once again for endangering economic growth by raising interest rates. the central bank has hiked three times this year. speaking to fox business, the u.s. president ratcheted up his rhetoric of chairman jerome powell. not. trump: look, i am happy with what he is doing, i will tell you that, because inflation -- and i fully get the one thing -- the federal reserve. i get it as well as any president who has ever been here. i get it really well. but right now, that inflation is not here. if we start to see it, then you start to go and you do what he is doing. but in the meantime, i would like to pay off debt. desley: senate majority leader the fightnnell says over brett kavanaugh the supreme court appointment has given the vigor to republican voters ahead of midterms. that comes as the battle for control of the senate enters its

last three weeks. he told bloomberg that timing could not have been better. >> and the cliffhanger races we have like arizona, nevada, montana, north dakota, missouri, indiana, tennessee, west virginia, and florida, i think it has been like a shot of adrenaline to republican voters, and hopefully, we can match the democrats in enthusiasm going into this midterm election. desley: global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. nejra: desley humphrey in dubai, thank you so much. isresa may's brexit headache far from over. sources have told bloomberg that the current guaranteed to avoid a hard border with ireland does not have enough of those to be approved by u.k. lawmakers. to arime minister heads key summit in brussels to try to break the deadlock. joining us from brussels is bloomberg's maria. great to have you with us. good morning.

areiven a lot of people saying the biggest challenge is going to be trying to get any deal through parliament. what are the challenges still remaining for the negotiations in brussels? like he pointed out, theresa will meet european leaders today. this is no surprise. the irish border -- many times, we have said this is a make or break moment for theresa may, but it does feel it is crunch time for the u.k. prime minister. on the one hand, she is under immense pressure to hone that story we reported yesterday. it is clear that the current proposal will not make it through parliament. european leaders have told us if we do not get any progress, why should we even meet in november? hashe irish border, there been no technical progress since march, and we also heard from the irish government that they are not expecting much out of the summit. it does feel like she does need

some political oxygen, and at this point, it can only come from european officials. at this point, it seems we have got to proposals for the irish backstop. the brexiteer will not accept that northern ireland remains .ithin the customs union they will not follow that. or will they? square it away for us. maria: they want. this is a very technical issue. manus, remember, from day one, the european union said we need to have this safety net. we need to have a backstop that's got to be legally binding begin in operation. if we do not get this, there is no brexit deal. the u.k. has known this for a very long time. theresa may flat out will reject anything that keeps northern ireland to a separate union from that of the u.k. the u.k. has got to be treated

as one unit. the new proposal says we stand a custom union, the entire u.k., but only for a limited period of time. this is a problem for european leaders. we know the technical details. question is, do you get political will to put this through? nejra: thank you so much. to bloomberg's maria tadeo in brussels. john wraith is still with us. at ubs, you expect a successful deal, but will it be one the u.k. parliament will approve? john: this is the issue, the absolute critical moment to be honest. everything that has been discussed, every agreement they have managed to get to have been shades of gray, common ground. we have been able to find it an inch forward. get thist we would deal. the problem now is these seem categorically of the opinion that there cannot be any time

limits within the backstop partly because of parliamentary dynamics which we have been discussing. they are equally adamant it there has to be some sort of -- those seem like irreconcilable conditions. this genuinely can be an issue that they cannot solve. is this the hard moment where they dig in? i know it is not your best case for an audio, but is this when the hard brexiteers really exceed to their moment of power? john: the risks are clearly rising. to be fair, i do not think it is even hard brexiteers. i think this is a lot of more moderate members of parliament in the u.k. who are concerned about the prospects of having an indefinite aspect to the

backstop and yes, they will dig it's heels in, and probably right that these indications that apparently the whips are giving that the numbers are not there in parliament for any sort of backstop, that potentially leaves any part of the u.k. in an investment customs -- indefinite customs with the e.u. this is the time of maximum danger. we think ultimately the deal will come together. we are much less convinced of it than we have been at any standup to now. nejra: markets do not seem to be pricing the worst outcome. what kind of repricing could we see of that outcome that you say you are sort of starting to think might happen? maria: this sort of volatility -- john: this sort of volatility is getting ever more stressed because it is clear that there is going to be a denouement, not now in october as we were told for so long, possibly not

november, but by the end of the year. time is getting very short. if we do not see some sort of resolution in the intervening period of time, i think the sort of spot fx market, potentially, interest rate markets will be affected by this concern. manus: we were told to rap, but you whetted my appetite. vol is underpriced. quick response? john: i think things are going to get worse before they hopefully get better. i think that is pretty clear now. manus: john wraith, thank you very much, concise as ever. head of strategy and economics at ubs. will continue the conversation on bloomberg radio at 7:30 a.m. u.k. time. this is what we have got planned for you. we are going to talk about the banks. it was a pretty cracking day. dealmaking is not quite dead. most. stanley rallied the indman sachs jumped the most

six weeks after both banks said yesterday that their investment theing business surged in third quarter, a sharp contrast to the stocks we saw in their major rivals. what are the main takeaways of u.s. bank earnings? it's fairly obvious. there are two leaders on the street. keithampbell is here -- campbell is here. what did you take away from the stanley?rom morgan there seems to be the migration to the harder wall street if you want to do a deal. goldman is but one of the names. what do you take from morgan stanley's numbers? >> yes, it was quite interesting runs morganman, who stanley, expressed on his conference call that he does not really understand why his stocks have been beat up as much as it has. been very strong for the two biggest u.s. wall street ipo's, evenially in as m&a has been a little bit

slower. story.eally the ipo the trading not being as bad affected. the one thing that strikes me when i look at my morning news on bloomberg is the 120 billion uber ipo that might happen. who are the two proposed advisers that come up with that number? goldman sachs and morgan stanley. bloomberg has written a great story with about five key takeaways from all the bank earnings. what would you sum up? >> so far it says to me that the u.s. economy is still in a sweet spot. the banks are able to make more with the higher interest rates, lending money to people, but those people are confident about their jobs. not many people are defaulting. most of the big banks are setting aside let's for -- less. if you are an analyst of these things, it's a question of whether they are at peak profitability or whether the headwinds of the global economy have yet to come home to roost. manus: i will give you an option here.

you can either talk about what does it tell us about the health of donald trump economy which he claims of victory lap on that -- the other thing about american output yesterday was all about the remuneration within the banks. and competing for talent with -- those are the two big issues at play. which do you think is the most important one for equity market? -- markets? keith: if you are doing a straight comparison of goldman to morgan stanley, there is a view that morgan stanley makes more money out of every individual banker, but in terms of the long-term equity play, it if you take mr. trump's comments on what he things about interest rates, from what we see from jamie needs who said america higher rates because we are apt that point of the cycle. so take that comment as you will.

nejra: very briefly, is this the the for the bank -- start of the golden age? keith: it may be the end of the goldman-s. nejra: great to have you with us. the cannabis hype is about to become reality as canada legalizes recreational marijuana. juliette saly is covering that. juliette: there are more than 135 publicly traded pot companies in canada alone, but many believe it is only a matter of time before that gets whittled down to a handful of survivors either through consolidation or failure. the person who manages the opportunities fund prefers organic ground, up over 160% year-to-date. he says all of these trade at a more realistic valuation than some of the bigger peers. let's have a look at my chart at

the meteor prices of these companies. the company traded on nasdaq and it has a market value of $13.6 billion, up 800% year-to-date, and 745% from its july 2018 idea. torontoaded on the stock exchange. it has seen its stock rise 65% over the third quarter. that will we continue to see these returns survive? eric paul reckons there could be half a dozen major players left after legalization. he says the rest will either be bankrupt or out of business because their business models won't work. if we also have a look at hedging bets and options volume, that surged. writing the past week, you can see that line coming through. they had the big spike in september. it could be the days that these highly correlated moves are coming to a close. bruce, the ceo of canopy, told a

toronto marijuana congress that if integration will happen -- we heard and analysts say in five years, potentially, the international market will be billion from its -- 50 billion to 100 billion. thank you very much. juliette saly in our london studio. coming up on the show, e.m.'s painful year. what needs to happen to turn the emerging markets around. have we reached the bottom, as our bloomberg survey has suggested? a guest joins us. later in the day, we will speak to the man who coined the term "brits."

joinsmmercial secretary us at 9:00 a.m. u.k. time. ♪

nejra: let's check in on what is trending across the bloomberg universe. on tictoc, the u.s. is the world's most competitive economy according to the world economic forum's annual report. to find out more, head to twitter. manus: bloomberg.com take you straight to the top brexit. theresa may has been told the current guaranteed to avoid a doesed border with ireland not have enough votes to pass in the u.k. parliament that she needs to get to the you summit -- the e.u. summit. onra: our most read stories

the bloomberg terminal over the past few hours, in third place, trump says that is -- fed interest rates hikes are his biggest threat. in first place, netflix sores after blistering subscriber growth restores faith. mets get back to the markets, emerging market specifically. the msci emerging market index down 15%. the dollar with the majority of the blame for those losses. the chief economic advisor at movenz says the e.m. should not be about the greenback. reallocatetation to out of the u.s. is huge. i tend to think that if you are going to do that, do it with the framework of dollars at risk. it is not a dollar to dollar reallocation. the amount of volatility that your underwriting right now by getting out of the u.s. is considerable. is thejoining us now

global macro and foreign-exchange strategist at woodman asset management. do you agree with him that it should not be a dollar-for-dollar replacement? good morning. >> good morning, manus. i think it is going to be a positive environment for much of the markets at the moment. i turned positive on emerging-market currencies in mid-september. i think the confidence crisis we saw in the summer of this year comee central banks have to the rescue, and hiking rates in argentina and turkey. a much more constructive environment for emerging market currencies, specifically in these areas where currencies have rallied with the turkish lira recovering big-time.

nejra: i want to talk to you about the specifics of your calls. you're saying go along the brazilian riel on two-month rising? this one initiated week before the election, when 4.10s trading at 4.14, range. we saw that already on the back of our scenario. and i think that is highly brazile for sentiment in , and we will see this rally in the brazilian riel to continue over the next couple of weeks to year-end in my view. marching ever higher. people are talking about $100 oil. can you put the ruble in context against, let's say, being long lira, being long the south african rand? jpmorgan is perhaps the most noteworthy. they say the ruble will be bolstered by oil and outperform its peers. do you want to be long the ruble

relative to those in the trade? i think the ruble will be one of the positive emerging-market currencies in the weeks to come. it's going to profit from higher oil prices, definitely. the colombianith peso, i am quite positive under the russian ruble, at this point in time, that it will outperform also the turkish lira, but at the same time, i have a constructive you on the turkish lira also entering the trade here at 6.40 four weeks ago. 6.4 weeks ago. at 6.40ency crisis -- four weeks ago. the expectations to come down at the end of the year. nejra: you talked about the riel in the turkish lira as currencies you like. we did a survey of various

things that will be driving e.m. and it was more the global risk that came out on top rather than local issues and also oil actually came lower down the list, so bearing that in mind, if we take into account trade wars, the fed, rising interest rates, you liked the lira. lira,el -- you liked the you liked the riel. bernd: of course you have a big list of concerns and emerging markets at the moment, but i think some of the oil exporters, , ie columbia, like russia mentioned, so these currencies are poised to appreciate, but aso local drivers are strong driving force. the business cycle is positive proposal after the sharp contraction in gdp after the recession in 2015 and 2016. i think brazil is entering a prolonged business cycle upswing, and behind the election

, i think this is very positive for the currency in brazil. nejra: and the riel, you think it could reached four amorite? --, right? bernd: i think it will have a positive outlook, but the global risk, definitely come about the concern at the moment, specifically in china, with the u.s.-china trade war. it's a concern for currencies. manus: unfortunately, time has run against us. that is bernd berg at woodman asset management. trading day, 7:00 a.m. in london. these on the stocks you want to watch, roche and akzonobel, the two key stocks on your agenda. when it comes to roche, it is about your guidance for the rest of the year. akzonobel is also in there. don't forget, you have got your question of the day, which is

will the s&p 500 make fresh highs before the end of the year? we talk about that in the next hour. ♪

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"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. >> good morning. this is bloomberg daybreak europe. >> these are today's top stories. manus: stocks rally. surges after hours on subscriber growth created trump defends saudi arabia as mike pompeo tends to turkey. is thebiggest threat fed. the fed is raising rates too fast. but i'm notndent

happy because it is going to fast. -- too fast. >> going into battle. we are live in brussels. nejra: president trump has around thekepticism circumstances of the disappearance of a saudi journalist. he cautioned against rushing to blame the saudi rulers and compared to case to allegations against brett kavanaugh. what is the latest? >> u.s. lawmakers have had strong words for saudi arabia's rulers. --s comes as been solomon

lindsay graham called him a toxic figure. in turkey, authorities have been going ahead with their thestigation amid news council general of turkey has left for saudi arabia. authorities say they have from the some evidence consulate. meanwhile, everyone is looking for a way, discussions between the governments of all three countries continue with the search for a face-saving way out of this mess. manus: thank you very much. the lindsey graham comments will drive momentum. gulf andr goals -- economy reporter in dubai. i wanted to show you how middle east markets are opening.

burned by 4%. we then turned it around. here's how we look at it. as it stands. very little movement in terms of the obligor he market. 500 and those&p other markets, we are positing -- pausing. seeing european futures higher by a significant amount. tech stocks led that really. across the board regionally, we could see gains in europe. 100 up 0.4%. we will see if tech leads the rally again. performance in equities. the bond market, investors

dipped their toes. on auction, a bit of a tepid reaction to that. -- bond auction. a deficit of $779 billion. the fed, mr. trump saying the fed raising rates too fast. at the fedock chairman mr. powell. bunds, i cannot move them that fast. is the world becoming more familiar with the fiscal plan of italy? are we stepping back? men -- has the yvonne man has the latest. gains from the

philippines. the leader, up more than two percent. a beaten up market, the worst in the world, and a relief rally. 1% gains in korea, singapore, japan as well. china seems to be doing its own thing once again. more risks when it comes to debt. debt piles getting back to a risk of titanic proportions. nged. caps uncha shares have been used as collateral for loans, that is seen as a risk given the fact some of these brokerages are liquidating these stocks. let's show you some movers. we have been watching these india stocks. better than expected seems like some of these investments in high-margin digital services,

paying off. in after they cut their copper out what. more concerns about supply. the hawaii of the east. that island established a free trade zone. jumping close to 7%. wall street journal talking about uber getting ready for their ipo. the biggest shareholder of uber. benefiting from that. nejra: even though we have seen asian stocks rally, it has not all but about netflix. , will asking the question earnings drive the s&p 500 to fresh records by year end? get in touch with your answers.

donald trump says it would be bad if saudi arabia's crown prince knew what happened to jamal khashoggi. but the u.s. president expressed skepticism, comparing it to allegations against brett kavanaugh. lashed out at mohammad bin salman. >> this guy is a wrecking ball. he had this guy murdered in a consulate in turkey, and i feel used and abused. i was on the floor defending saudi arabia because they are a good ally. mbs is toxic and can never be a world leader. hashristine lagarde deferred her trip to saudi arabia, where she had plans to

attend the job loss in the desert summit -- davos in the desert summit. several companies including bloomberg have pulled out as media partners. fightmcconnell says the over the supreme court appointment has given vigor to republican voters. this comes as the battle for the senate comes in the last three weeks. >> the cliffhanger rices we have dakota,, montana, north tennessee, west virginia and florida, it has been like a shot of adrenaline to republican voters. hopefully we can match the republicans in the enthusiasm -- democrats in enthusiasm. >> powered by more than 2700 journalists.

will pick it up. this year,erforming having a splendid day. positive results from netflix, boosted investor sentiment. service surged after crushing analyst expectations. cioa: during us now is the of not make. also, alex webb. good to have you both. let's kick it off with netflix. tell us some of the details. >> they beat on almost every measure. particularly the growth of subscribers. they added 7 million. they aim to add 29 million.

that is remarkable for a company 20 million years old -- 20 years old. in strategy of investing content. no questions being substantiated. growth, i useber the word splendid. that is the word that came to mind this morning. our viewers can hop into the machine and pick it up. what were the big concerns? have they dispelled any of the concerns question mark that is what i want to know. >> absolutely. concerned asere netflix continues to spend more and more cash on content, they are spending upwards of $7 billion on it, that means they are concerned at some point the growth and subscribers will start to taper off. continue to to spend more and more to grow subscribers? it seems as if the growth is

disproportionate to what they have been spending. there are worries about the upper limit to that growth. globally.cade they are only starting to see the expansion in india now. india, which is a huge market. >> you have seen -- where the earnings can drive the s&p 500 to a record by the year and. what questions are you asking about whether the equity rally can sustain and grow? >> is inflation starting to pick up? maybe the terrorists starting to impact as well. expectations for next year are

not that demanding. the is not demanding, given look thatar does not demanding. what is happening with the u.s. economy. our terrace starting to hurt u.s. companies? to you.y good morning fidelity said, when you are trying to look for rummaging around in the dust bins of worry, this is a quarter where you are going to see it. we saw a drawdown in terms of pe recently. we are going to look back and say, that was a great opportunity. the most crowded trade for nine survey,n a row, nerlens -- merrill lynch survey -- united. >> you see a lot of investors are underway with u.s. stocks. -- underweight.

it is not as if everyone has been into this rally. people are coming to the u.s. market somewhat late here. there is a lot of momentum into next year around u.s. stocks. earnings are good. valuations are reasonable. nejra: thank you so much. you stay with us. alex webb, thank you. the lowdown on netflix. bloomberg users can interact using btv go. analysisatch up on key and save charts for future reference. show, coming up in the this is what we got. theresa may brings the brexit battle to brussels, but without support from parliament. what can she really achieve? this is bloomberg. ♪

under 45 minutes away from the european equity markets open. let's take a check at the markets. asia-pacific index, up 0.9%. futures pointing higher, 0.4%. positive momentum for european futures. the rally led by tech. s&p futures, flat, trading water, even though we saw gains on all three u.s. benchmarks of 2%, the first time since march 26. that changes momentum across risk assets. brent up. the longest winning streak since

of timber 12. cable, what will she come back with? she doesn't have the parliamentary math to get her version of brexit through parliament. what would a brexit eel mean for sterling? dollar yen, it defies me. nomura said it will make it to 115. it has come back. defied a few times, but it is not on. are playing the game when it comes to risk today. today, we are asking the itstion, will earnings drive o -- let's go to the

business flash. asm l predicted earnings -- growth margin of about $.48. they also announced five new orders for their newest machines, which have been pushing to clients including intel. old guard of blockbuster medicines helped beat sales estimates. up 7% from a year ago. the bestseller showed little change from a new wave of cheaper copycats. analystw but missed estimates. ibm has ended a streak of sales gains. fell 8.8 point billion

dollars in the third quarter. analysts were expecting $19.1 billion. shares slipped in extended trading. lyft arelift -- solidifying plans to go public next year. goldman sachs will underwrite uber ipo and estimate the right hailing giant could be worth $120 billion. lyft hasrces report chosen jpmorgan to lead its ipo. manus: the very latest on your business flash. theresa may, her headaches don't stop. sources have told bloomberg the arrent guarantee to avoid hard border with the republic of

ireland does not have enough votes to be approved by the u.k. lawmakers. she had some say her d-day moment with brussels to break the deadlock with brussels. what can may do today to salvage this? the european perspective, the idea we get a deal if and when we get it, and then it gets thrown out by the u.k. parliament is terrifying. at that point, all bets will be off. we finally get some clarity on the irish border. theresa may will have to put forward a proposal. it looks unlikely. we heard from a number of officials. we are in this soundbite kind of spiral. we hear it but we do not get any information. a key stakeholder told us they

do not see any progress today. that would take us to november. nejra: speaking of november, how likely is it you are going to be back in brussels? you know this very well. for months we were told, this is how brexit works out. in november, leaders come together & it off. .he parliament that seems to be changing. the november summit has not and confirmed. we might get the opposite. european leaders have made it clear if there is no progress, there is no point in meeting in november. the idea here is you pile on more pressure. she certainly has enough pressure from the back benches that home.

let's see what is delivered today. i/o -- thethe seat cio at not make. an acronym take, don't look at it. down goes the footsie. that is a global market phenomenon. momentum around the politics is this trade all about growth in sterling, or is any of it to do with brexit? >> i think there's a bit of a risk premium. short term.quite sterling, significant bets against the pound. ftse rally would be short-lived career the u.k. as a

defensive equity market. when you get growth accelerating, you expect the u.k. to underperform. nejra: in terms of how you would actually position, are they in the u.k. at all? >> not really. the u.k. is a very high-yield to read what we are looking for, when we do get a deal through parliament, the footsie will look interesting. particularly as we would expect the housing market to recover rate business confidence would recurrent. the bank of england would hike as well. with the wages, one story that caught my eye, advertising, exit risks, have cut u.k. advertising growth to the lowest number since 2015. services might be bolstered, but we need a backdrop. there is a lack of business

confidence, consumer confidence. once we get that confidence done, youet a deal are going to see business confidence return. the u.k. gradually starts to recover. there are other opportunities. but they are relatively cheap market. the u.s. looks like the best equity market at the moment. ian looks very cheap. it lacks a catalyst. the m fx is in recovery which is the important sign. re-cap some of the breaking news. ont we are seeing is a miss some of the numbers. the quarterly margins, 12.3%. pushing ahead with its cost savings as raw materials have

been soaring. one of the things we are watching. we are going to speak with the ceo later. ahead of the numbers, analysts have been positive. i will speak to the ceo shortly. also, roche in focus. 13.9 billion. drugs, bolstering this. this is the team. he has written up the story. of theliver in terms numbers. what is the outlook for the u.s.? the roche ceo will join you a little bit later. that is an exclusive interview.

what kind of earnings are we going to have on the back of a standard performance? i will see you monday.

to bloomberge markets, the european open. live from our european headquarters. boosting the nasdaq to a 3% gain. europe looking positive with a cash trade. >> the rally is on. european futuresnt