>> good morning. from bloomberg's european headquarters in the city of london, i am nejra cehic. manus: and i am manus cranny in dubai. this is "bloomberg daybreak: europe," and these are today's top stories. nejra: a brutal session in europe and an emotional one in the u.s.. asian stocks inch into the green. crude gets crushed as opec goes into full production mode. we are in riyadh. banks.ay for deutsche bank misses on second equity trading. a 2018 profit. watch barclays in about one hour. we speak exclusively to the ceo, jes staley.

manus: a warm-up onto to the show. fors a three-way miss deutsche bank. they missed on 16 commodities and currencies and equities and they missed in terms of the net revenue. the numbers for you. 1.37arket pencil than million. equity sales and trading, 466. stability was a word the bloomberg intelligence team were looking for. the question you must answer is whether this is a bank that will independence, or will it be forced into some kind of a merger? job cuts are well underway. they are targeting below 93,000 by the end of this year. they have managed to cut jobs during this quarter. available forv

you. down 36%. there is a tliv on these markets. low interest rates are still a struggle. for your revenue slightly below 2017. we will put these questions to james, the cfo of during debate, -- torch a bank, at 11:30 this morning. stay tuned for that. one other breaking news line coming through. this is on a system. we will speak with the leader of this company later on. the guidance they are targeting revenue. three points -- 3.43. that is the full-year target for them. they are slightly raising that number in terms of revenue and outlook.per share you're looking at double-digit year to date earnings. ceo joins us for an

exclusive interview just after 6:30 a.m. this morning in london. you've got a little bit of -- nejra: i do. we are jampacked with interviews the show. let's get to the aluminum industry. acyclic, it is saying it will not reach the 2018 improvement program target, and it talks about continued market uncertainty on u.s. tariffs. some of the big context for you. third-quarter revenue coming in at 39.7 7 billion. 39.77 billion. that is a little bit of a mess on the third quarter -- miss on the third-quarter revenue. we are looking at 1.7 billion krona.krona -- norwegian that is the estimate. looking at third quarter underlying ebit, a strong beat.

the estimate was 1.8 7 billion krona. the results for third quarter 2018, up on realized prices. let me talk semiconductors as well. much ina has been very focus for the market selloff. yesterday, we saw an s drop them in af drop the most decade. we need to get on that in a second. we will speak with the ceo of the company at 9:30 a.m. this morning, london time. i was getting ahead of myself there. all the breaking numbers coming through. full-year revenue rising about 16% year-over-year. fourth-quarter net revenue rising 5.7% on the quarter. it sees the fourth-quarter gross of 49.8 percent.

it is looking like it is generally meeting estimates on revenue.-quarter net the income, $369 million beat on the estimate. quarter gross margin, i have already given you. a slight beat pretty much in line. dollars -- $2.25 billion dollars. beat of the day and not even thursday. we will talk about those earnings and the implications. it is now not the worst-performing stock market in the world. the shanghai composite is the second worst-performing stock market in the world. on an average day, we perform 3% on the bandwidth. like that on monday. we have got a little bit of a bid to it this morning. getting a market is

reprieve. the slump in the price of oil yesterday crashing by nearly 4.5% in terms of crude. we are seeing the fx reserves. may fell to five point -- sell five points, the biggest drop. there is pressure coming through for the indians, grappling with record lows. there is the nymex crude market bouncing this morning. in production mode. the saudi's pledge to produce takes.o do whatever it produce as much as you can. you cannot get enough about oil. nejra: that oil story yesterday factored into that risk-off sentiment. the 10 year yield went as low as the 3.11 handle. we are down just one basis point. 3.16% on that 10 year yield.

if we look at what happened to the s&p 500 yesterday, we did recover some of the losses, but we still saw losses that hit the lowest since may. markets, are they looking for an excuse to sell? or are they climbing this wall of worry? see the losses recouped a little bit but u.s. futures still in negative territory, even if just slightly off vibe .1%. you are seeing dollar on the front foot. asia as well. in we see some of the losses recouped. now fromet the detail juliette saly on the markets in asia. juliette saly in singapore. juliette. we actually saw the msci asia-pacific index around 10:00 a.m. hong kong time, three hours ago, slink into that bear market territory, but then we have seen the rebound in china on this optimism that the officials in china will continue to add more liquidity to these markets, so

you have the csi 300 leading the rebound in asia. the msci asia-pacific index back at that level of 150. the csi 300 up 1.5%. the japan market doing very well today as well as the hong kong market. manus mentioned the indian market, too. weakness coming through in some of these equity markets including south korea and australia. when we look at docs, though, they are quite a big lot of movers to the downside today. we had in the u.s. session texas instruments warning about its profit which has hit a lot of these tech players in asia. simcoe in japan off by almost 10%. subaru in the took his session under pressure. it missed its targets and stumbled the most since december 20. i do not know where the americans are getting their wine from, but it's not australia. we have seen that fall by 8%. manus, nejra.

manus: i know it is a shock. are a lot of countries in the world that produce wine. julia solly supporting the wine industry in singapore. saly supporting the wine industry in singapore. to what extent do you think this means that mr. draghi, what would it take for draghi, for the euro to rally? this is the question. there is no plan b. more from the prime minister. let's get back to juliette saly. she has the bloomberg first word news. juliette. juliette: president donald trump says his responsibility is responding to the killing of jamal khashoggi to the u.s. congress. he added to he wants a bipartisan recommendation on penalties.

thelso criticized conflicting accounts from saudi arabia and said those responsible are in deep trouble. was. trump: the cover-up one of the worst in the history of coverups. a bad deal. really messed up. they have the worst cover-up ever. is athould have stopped the deal standpoint of what they thought about it. .t's a bad idea i think it's in big trouble. and they should be in big trouble. juliette: expectations for a meeting between president trump and his chinese counterpart is already being lowered by both sides. larry kudlow said the two leaders would meet "at the g20" but warned they may not even agree on basic principles. they are bracing for a prolonged fight over trade. u.k. prime minister theresa may

is facing another bruising showdown with conservative party colleagues over her brexit plans today. that comes after an angry meeting of her cabinet, which was said to have descended into open conflict over proposals to allow the u.k. to stay inside tariff regime indefinitely. seven senior pre-brexit ministers were said to have spoken out against the plan during yesterday's meeting. china's regulators are said to have ended the issuance of game licenses through a stopgap process. the sorcerers, licenses are no longer being granted through a process known as the green channel, used for testing. the approval mechanism has been in place since at least august, following the government's decision to restructure how it reviews video games for violence, gambling, and sensitive topics. local news, 24 hours a day, --

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. nejra: juliette saly in singapore. thank you so much. president donald trump has described the killing of jamal khashoggi as one of the "worst coverups in history." he said he is leaving to congress to decide which actions to take. let's get to yousef gamal el-din. great to see you again. what is the latest from riyadh? yousef: attends few our -- a tense few hours. the turkish president piling pressure on the saudis. what does that say about the changing world order? milestones coming up. donald trump will be meeting with his intelligence chief. he thinks that they will have enough to go on. they will be coming back from turkey and saudi arabia. what kind of message does he want to send? is he going to mention the

killing? what kind of confidence does he want to instill for foreign investors? how will he -- that takes us to the second point. they are moving ahead with day the investment initiative in the shadow of the killing ahead of one of the biggest banks in japan which says basically, you know what, we are going to be there but we are no longer going to speak at the conference. masayoshi son, the big name on that particular front. we are waiting to see what kind of deal comes through to get a better sense of the success or failure of this event. the organizers insist they have the capacity to find big deals and/or stronger from what growned in istanbul -- and stronger from what happened in you stumbled. manus: let's see what -- in istanbul. manus: let's see what mohammad bin salman has to say. yousef gamal el-din. bloomberg was a media partner

and another of companies have pulled out. bloomberg has pulled out of the future investment initiative of and as media partners. i need to correct myself. i showed my age. mr. khalid al-falih. my apologies for a generational gap. what turn our attention to global investors are grappling with in the worst month in global stocks in more than three years. our guest says her view is to sentimente risk off by hitting markets around the world. to the chief economist and managing director at d+ economics. when you look at the geopolitical risk coming hard and heavy out of -- how do you look at risk at the moment? are yet the beginning of a new illusion of geopolitical risk? -- evolution of geopolitical risk? >> it is now firmly a part of

the dna of market investment. emerging-market phenomenon. what we have seen in the past year is that it has become part and parcel of u.k. markets, the u.s. markets, and the eurozone market. full disclosure. i must tell you that i told my liquidate their positions and move into cash at the end of the summer. down then, the s&p 500 is 5.5 percent. u.s. 10 year yields just north 2.80 in august. even after the latest correction and equity markets, it is still above 3.10. i think we are clearly at the beginning of the evolution of risk in the markets, which is going beyond equities, across asset classes. nejra: it is so notable that people keep comparing it to

february. is this a regime shift for markets or just a short-term sentiment german thing? -- sentiment-driven thing? lena: we are in the middle of a regime change within the regime change. so far, the re-rating and equity markets is happening off the back of the re-rating in bull ofkets, moving from an era dominance and liquidity conditions towards an era of normalization. what we saw at the start of the year, a number of pieces for bloomberg opinions for the financial times. the fundamentals of and are changing. what we have seen is the return of positive u.s. two year real yields. what it did is basically yieldsing two-year u.s. towards 10 year u.s. yields and 10 year euros deal of towards nominal gdp growth. we returned simply to a normal market environment and that is already breaking down

evaluations. it caused -- in risk markets. manus: i want to take some of those plans. serendipitously, i have a chart here. it is in gtv. it is the equivalent of 12% of gdp. rates are up by 100 basis points this year. you have got the dollar up by 7% and stocks are getting smacked 12% of gdp. is any of this to stop the fed in its tracks? lena: manus, this is the big question that will be featuring strongly in the minds of investors and potentially policy officials. the big regime change and the heart of this relationship between volatility to control financial conditions and the markets is bright normalizing policies, the fed is giving control the financial conditions back to the market. so this stabilizing reaction financialetween

volatility and the fed stepping in is something that is happening to have the markets regain composure in the short-term term. the key thing is financial volatility is happening off the , notof liquidity risk because of the rise of economic volatility. it is not happening because of weakness in u.s. earnings or weakness in gdp growth. it will probably show the handle. i think the reality is the markets are becoming more sensitive. the fed is becoming more responsive. in other words, the hopes are overdone in terms of the fed reaction to volatility in the short term. nejra: hopes are overdone. komileva stays with us. great to have you for the hour. let's turn to deutsche bank. it says its fiscal year revenue will be slightly lower than last year's, although they are

confident that they are on track to post a profit by year-end. matt miller is in frankfurt. you as always. some of the takeaways here from the numbers we got about 30 minutes ago. i think the takeaways are that the revenue in the third quarter was the lowest since they have published in 2010, and that full-year revenue is expected to be lower than revenue in 2017. you may expect, as they scale back businesses, that they are revenue post a lower number, but this is lower than the street had estimated as well. a have had ample time to indicate to analysts where their numbers would be, so the missing -- they are missing on revenue and saying they are on track to post a profit in 2018, but not yet promising that. it would not be the first profit they posted in four years if they could do it. line isatt, the bottom this. they wanted stability. these numbers that we have had today, they certainly do not

stability -- they are cutting the revenue outlook. they are in a pretty vicious circle. will they be pushed into some kind of a merger? that has been the question with deutsche bank for quite a long time. urse, both deutsche bank and the government acknowledged that could he a possibility going forward. commerce bank being the preferred partner with the german government, but this is the kind of thing that people into the of far future, so not something that really i think is the story for this quarter or next quarter, but in the years ahead. was bloomberg's matt miller for us in frankfurt. by the way, if you are a bloomberg customer, you can follow all of the action on the tliv blog on the bloomberg terminal on deutsche bank as well. some of the commentary coming through that absence is a bad news. it is an open question for now. do not miss our interview with

the cfo of deutsche bank. 11:30 this that at morning, london time. manus. that, also, just before we will speak exclusively to the ceo of barclays. he joins us at some :00 a.m. this morning, -- 7:00 a.m. this morning, london time. juliette saly standing by in singapore. a bank has reported profits of the third quarter which missed analyst estimates. it was a challenge and quarter. net income fell 18% to 684 million euros in the three months to september at the nordic region's biggest bank. and we will be speaking to the in around bank 10 minutes time. texas instruments slumped in late u.s. trade on a weak outlook for the fourth quarter. shares fell as much as the 7% with a revenue forecast of $3.9 billion, below analyst forecast.

investors use to take this -- texas instruments because it has the broadest product range and the $400 billion chip industry. blackrock's interest in buying a minority stake in an asset management unit has cooled after a failure to resolve an impasse. talks exposed to risk over the valuation of an arm following the recent decline of financial stocks in the broader italian market. that is your bloomberg business flash. manus: thank you very much. let's check in on those markets again. they have turned around since i hit the desk this morning. msci asia-pacific did drop into a bear market, down by 20%, but we managed to turn it around. we have not officially closed in a bear market. you are seeing the market in china.

they are managing to get themselves off of the floor. we are looking at the worst month in three years for global stock markets. the saudi's pledge to produce as much as it takes, as much as you .an the largest since 2017. oil is managing a little bit of a relief rally. khalid al-falih said he will do pretty much whatever it takes. would not say we are seeing relief in equity markets yet even though we are seeing a little bit in oil. the 10 year yield, we are seeing treasuries bid on a 316 handle which bounced off a 311 low. u.s. futures lifted since the lowest since may and close a little bit lower. five days of losses. looks like we could see a six judging by the future. interesting to watch european equities as well. it was a punishing session yesterday. european union leaders and bond investors are dragging the populist government over the polls for its defiance of e.u. spending rules.

the chief economist and managing director at g plus economics is still with us. lena, we are seeing that gtv bund spread above 300 basis points. what is the market's biggest concern here? there is a standoff, but is there going to be a resolution? the italiannger bond market stresses continue, the greater probability we will see the extreme narrative evolving in the markets with some talking about the end of populism,the rise of and the beginning of fragmentation of markets. have continued to strongly overreacts to what has been a line in this -- the sand. it is very much under consideration both in italy and between italy and the european commission. what is clear is that there is no really bad serviceability problem at the moment, but there is going to be a sustainability problem, something you and i have spoken about in the past. the longer the italian yields

remain this high -- and we could grow figures. given that the rating houses and government's forecast for growth look on the optimistic side, this increases the chance of a rating downgrade next year which has a longer period of market volatility. the market seems to be overpricing the risk of a default, but there is this issue that the italian political situation is making investors nervous about the direction of quality. crowding out liquidity from the italian market, that building a italy's balance of payment as part of the eurozone consortium, creating the risk we are seeing an italian bonds. i don't think that is disappearing anytime soon. manus: the chart we have up on the screen is italy's private debt to gdp. this is something that we are not paying attention to. of -- to hold this graph

graphic up there at the moment. this is one of our clients based in the gcc. the fundamental debt profile of 's grandma and grandpa is better than anyone else in europe. anyonet is better than else in europe. the biggest debtor is the government, not the private sector, and that is a big -- makes a big difference, because italy is not greece. there is the domestic cushion of savings, which is ultimately underpinning the public finances, and it does reduce the chance that italy will do a greece and run out of cash, making political risk a real existential problem for the euro. stays with komileva us. up next, we will be speaking with casper, the ceo of a bank. lots of interviews in this show, manus. of a: yup, it is a feast day. if you are traveling to work, tune in to bloomberg radio.

we have live coverage on the dab digital radio in the london area. a little bit of traffic. we are never far. stay with us. all on bloomberg. ♪

london.:30 a.m. in let's have a look at how the markets are shaping up in asia. after a punishing session in europe yesterday, we saw u.s. stocks turn lower. of reliefll touch coming through in these asian markets. we did see the msci asia-pacific index earlier touched a bear market territory about whether it closes the session like that. quite a bit of green coming through now, manus. tliv runningis the on deutsche bank. abouto speaking, talking a new spirit of discipline within the bank. of course, job losses in the

past quarter. that is the human side of trying to transform a business. they haveo to tliv, gone straight to the trifecta. they have done a lovely board comparing it to the u.s. deutsche bank lagging the u.s. peers when it comes to fixed income and equities trading. therein lies the rub for the analysts. nejra: we talked about this with matt miller but it will also have this profit in 2018 so maybe the market could eat out some part -- eke out some positives. we have not yet achieved the turnaround in revenue, manus. manus: ok, let's give it from deutsche bank -- pivot from deutsche bank to another bank. the net income fell short of analyst expectations. nordic region's biggest lender has been challenging and said it was not satisfied with the development in its top line. the earnings come at a testing time for the region's bank. the second major firm to be moneyd of

laundering. let's get to the ceo, casper, who joins us now. good to see you. there is a spirit of discipline at deutsche bank. what is the spirit of change your going to do to push the numbers higher? good morning. casper: good morning. third quarter was softer than we fully expected and i am not happy with the revenue development. it is very stable, which i think is good news. the third quarter for us, traditionally, is seasonally low. this really is driven by commissions. marketlue, given the low volatility. i think we are well-positioned oracle -- a host

historical quarter. we are well-positioned now to move forward. nejra: casper, good morning. after your second-quarter results, it was the first time in five quarters the numbers were met with a positive share price reaction. can you say that this is now basically the bottom in your turnaround and it is up from here? lena: i would like to see it that way because i think we have done a lot in the last three years. we put the bank in a much better position. de-risking is over. we have moved it into the banking unit and we are now extremely focused on delivering to our customers so the platform is in place and i think we're very pleased that we are delivering. s are down and our costs will continue to trend down in

the coming quarters. maybe not on the fourth quarter. overall, our costs are trending down 19, 20, and 21. we are well positioned. casper, can i pick up on the cost story, because it is part of what the market wants to know? you had originally targeted 6000 jobs. how many of those 6000 jobs have been cut, and do you stand by that number in terms of that's what you need to go to to right size the bank? lena: i have no reason to change that. staffing numbers today, we are down 3%. we will continue to transform the bank. i am very comfortable with where we stand. nejra: casper, your efforts to

ton around nordea starting bear fruit. are you concerned that investor worries about money laundering across nordic banks are going to overshadow your performance? lena: we would hope not. i think we are aware of the accusations. they have not been proven but we are aware of those accusations. fighting monday laundering -- money laundering is something we do every day. every day, we do something, if we see something suspicious, we report it. we have a very good corporation and we work very well with the authorities. we see transactions, we report them, and this will be the case here as well. i think the trick here is that of course with that cooperation, we cannott to -- comment on that. i am very comfortable where we stand with what we have done. we have invested heavily over into this.ree years

we have now more than 1500 people solely looking at this and we have trained our front-line staff, so i am comfortable that we are now going ahead. at the same time, i have this humility that when you look back in history, the whole industry underestimated the complexity of i thinksues, but it -- we now have close cooperation between banks come authorities, police, and so on, because this will not go away. we have to take responsibility to make sure we can make the financial system and society safety or. -- safer. manus: can i push you a little bit more? still prouder has five -- b ill crowder has filed criminal complaints. is that a fair number? do you believe that reflects potentially the exposure for nordea? or could it rise? lena: i see nothing in our business -- casper: i see nothing in our business that would indicate that.

i also emphasize these accusations that we are aware of but have not seen, though authorities have not tested them to must i think it is too early to say. when i look at our business, i see nothing that would indicate anything larger. thank you so much. casper von koskull, the ceo of nordea bank. coming up, we speak exclusively to the ceo of barclays, who joins us after 7:00 a.m. london time. and also, the deutsche bank ceo, we have got headlines coming through. some say he's doing everything possible to prevent a fourth-quarter across increase. also saying we need a strong and to the year. -- end to the year. do not miss our interview with james von moltke, the cfo of deutsche bank. you can see that at 11:30 this morning london time, manus. .anus: tliv has the numbers

the word that our analysts at bloomberg intelligence were looking for was stability. the question is, having missed on ficc, having guided lower, will that be enough savings? he says there is a new spirit of discipline. what does that mean in terms of the costs? there are more job cuts to come. investment bankers had a decent third quarter. equity origination revenues surged 61% to 105 million euros, so that is still down 3% from the three months through to last year, but we are certainly listening. the cfo will join us for a more in-depth conversation. that's get into these markets around the world. she is not convinced there is any kind of a bounce. quinn partners is standing by in mumbai. in our london studio, annmarie hordern has it. is stilllike the rupee

under pressure, but we are in the heart of reporting seasoned in india. what stands out this morning? >> good morning to you. the earnings season is going on fine. because of the cool off, i think it started off very well only two peter down a little bit as we speak -- to peter down a little bit as we speak. .25% higher. we slipped a little bit from the highs of the day. the currency generally has had a bit of a rebound primarily because of what is happening to crude prices. a crude spike up has an impact on equity markets and the currency. the market is very positive, and all of those the likes of the aviation stocks are doing rather well for themselves in the session today, so not a bad day. nejra: what are you looking at this morning here in london? casper: who is nervous -- annmarie: who is nervous?

everyone is nervous as volatility is spiking. what you can see here is they are i mean these levels we saw these levels as investors grapple with the fact that we could have one of the worst months and three years even though we are seeing a bit of relief today. we are seeing one of the worst month on record. when you look at the hang seng and the yellow, this is interesting. above day vol has pushed the 90 day rate. he has earnedlead -- earned nosebleed levels. i am looking at wti. it breaks below the two hundred day moving average. this is some of the supply -- this as some of the supply concerns start to fade. opec is in produce as much as you can mode. refinery maintenance. there seems to be less angst in the supply side. we saw a downward trend in oil. but we have this break. we saw an upward trend.

the biggest and is, this latest wti break, what does it signal? looking at prices for wti, 67 around, brent 77. i want to know who is still betting on $100 oil for the new year? manus: who is nervous and these markets?safe to say everyone is nervous, particularly our bloomberg reporter niraj shah and annmarie hordern in london. it is a busy couple of days to the world's central banks. what is happening at the central bank level? this morning, sweden's riksbank is expected to leave rates at -.5%. later in the day, economists forecast canada will hike central rates to 1.75%. nejra: no one wants to be left behind the fed. tomorrow is the return of the ecb with policy likely to confirm asset purchases will end this year, but with record low

rates continuing through to next summer. keep an eye on turkey. rates to stayect on hold. that is also tomorrow. mliv: ok, let's bring our question to our viewers and our guest host. what would it take from mario draghi for the euro to rally? stephen wanted to shorten the euro. she is still with us. he told all the clients to bail out into the -- into cash. to hint in any way about the trajectory of rates 2019? lena: manus, i do not think president draghi wants to be long the euro. ever since the ecb announced the beginning of the end of quantitative easing back in october 2017, it has been a pain to explain to the market that a change in the constitution of the policy tools, the end of

quantitative easing, but four coming to an -- the forthcoming end. not actually want to see financial conditions tighten prematurely. a layer ofitaly adds complexity to financial conditions and given that financial conditions are set to tighten, even with mario draghi's dovish rhetoric, and his very strong intuitive control of the financial which basically meant that he managed to avoid a type of tension with kiwi i bringing forward's guidance with respect to the future for interest rates, it is clear financial conditions are running away from the ecb's control in an environment where global volatility is rising, global growth is that a peak, and eurozone borrowing costs -- that does mean stronger volatility going forward. a weak exchange rate to lead against that. nejra: can the euro even catch a bit while the entity standoff continues -- italy standoff

continues? lena: absolutely not. this is a welcome normalizing lever for euros and markets at a time when, look, global growth concerns are coming to a head. little goal volatility is here to stay in italy but also globally. tois not really specific italy. it's quite clear that wealth, income, inequalities, those are the direction of policy risk for brexit. it is not even a eurozone story, but clearly, the euro will be extentve to that to the that it of course also a mouse european companies to protect margins in the face of global tariffs. na, i watched crude oil yesterday at home on the downberg mobile, tick nearly 4%. doing al-falih is something very significant. he is clarifying the saudi position on oil, but this is more about politics with the

united states of america. or is it more worrisome about global demand? which one of those two is the most pressing tissue in the oil move yesterday for you -- issue in the oil move yesterday for you? lena: the fundamentals of the oil market are very much a matter of global demand and supply imbalances, and what is clear on the one hand is that supply will remain dictated by geopolitical risk premium. these are here to stay. they are not going to get results tomorrow. on the other hand, we are late cycle for the global economy, which means we are at the point of big cycle dynamics, limited supply capacity, and also demand coming off -- that could possibly way down on prices. i do not expect however a big downside here, and that is precisely for the very fact that a think when it comes to global trade tensions, when it comes to the global geopolitical picture, markets tend to overprice

short-term negative growth impact, but they have underpriced the medium-term inflation impact, and that has gone further to stay, which means less risk positive environments for markets in 2019. nejra: lena komileva, great to have you with us, chief economist and managing director aji plus economics. she will be continuing the conversation with us on bloomberg radio at 7:30 a.m. u.k. time. let's get back to earnings. goal in the third quarter and raised its full-year eps forecast. the earnings come out of time for the tech sector with a global selloff amid profit warnings. joining us now for an exclusive interview is the ceo of the systems to discuss the companies earnings. good morning. welcome to our london studios. we have outlined some of the risks that are weighing over global markets and also for your sector, so let me start i asking, with that in mind, how

robust is demand from your customers? a it is quite robust as matter of fact for one reason, diversification from the industry for point standpoint, and also from a geographical standpoint. asia was almost 20%. so fast growing customer use -- growing countries still have high demand. not only forty and the first quarter, but for next year, too. manus: what is the biggest challenge for you? good morning. it is manus in dubai. is it finding the right people for the business? is it supplying your markets? what is the biggest headwind you see? christine lagarde is talking about dark clouds on the horizon. what are the darkest clouds or challenge in the near-term 2019? bernard: for most industrial companies, the digital confirmation is a challenge on providing the right consulting forservice, or to them --

that is the most challenging aspect of what we have to do. if you look at the portfolio for all companies, even car companies, with the new type of mobilities, aerospace companies, producing the volume. the backlog is incredibly high for aviation today. theyhey are basically -- cannot deliver the volume that may have on the backlog. those are the kind of things where our solutions have been improved. ofing the right profile people well-trained is very key. nejra: on the technology you are talking about, digital transformation, recent reports have highlighted sort of potential threats from the u.s. to china to europe, so we are talking about kind of risks of espionage and meddling, something that no doubt, dassault systemes has to think about. how is the company protecting it

got -- itself against these risks? bernard: there is a lot of noise. you have to sort it out. the reality is creating new demand for each of those companies, whether they are in the u.s. or china, to be for the whole product portfolio, so focus for new high each company around the world to think about their portfolios for the market. yes, there is attention, but the reality is there is also a rethinking for each of those companies to look at how they are going to develop the run markets. that is the case of china. china is exporting, yes, but they are also building their solutions for mobility, a logical cars, even airplanes, satellites. that is what we do, basically, provide the platforms for innovation. nejra: yep. manus: can i ask you, bernard.

our industry team said you are add-ons rather than sort of big blockbuster deals. and they would say that you possibly need to shift gear is a little bit in terms of a subscription model. what more do we see from your terms of growth? is it more add-ons for you or do you want to do something transformational that shifts dassault systemes into the next trajectory of growth? bernard: well, i think the highest priority is rapid diversification on getting a multipletprint across industries. for example, we have a lot of new logos in our parent sector. lecture because, consumer goods. 10 dassaultut of systemes designs we have produced. adding the footprint is priority number one because growth will come with that.

related to this approach and model, we have a high visibility, almost 70% of our revenue is substantially based. so we are already there -- subscription-based. so we are already there, everything under the cloud. i think we will not be able to go above 70% for subscription because some customers will want to have our solution on premise and a traditional license model. 70% is a good target and we are already there. nejra: thank you so much, bernard charles. at what you look should be watching today. just after 9:00 a.m. u.k. time, apple's tim cook speaks in brussels at a conference on data protection. we were just talking about that with bernard charles. manus. little bit later on today, south africa finance minister presents the medium-term budget policy statement. economists expect the bank of canada to raise rates to bring borrowing costs up to normal

levels today. what is the new normal in borrowing costs? that is a question for central bankers. that comes at 3:00 p.m. u.k. time. nejra: let's turn to south africa's budget. but stern to our reporter in johannesburg. what can we expect from the policy statement today? >> just two weeks into the job, finance minister -- the finance minister is faced with trying to inspire confidence and of course to reinsurer investors as well as -- reassure investors. of of this in the context trying to find money to boost an economy that fell into a technical recession in the first half of the year. expect that the budget deficit will be at 3.8% of gdp in the current fiscal year and that would be in line with the treasury's forecast of next two..5% in the

another important thing is he will have to outline how the government plans to reallocate its stimulusnd in package in economic reform to boost the economy and how to claw itself out of the recession. these economic reforms will be garnered towards mining telecom. and the transport industry. so it seems as though those will be the main things as well as ratings agencies, but also south africans will be looking to hear when he delivers that budget update this afternoon. manus: it was great to get you on the show. the currency is going to be front and center in terms of reactions. this is the third worst performing currency in the emerging markets space, down 13%. how much currency risk is at stake with this budget? what is the key risk here? what we have seen is that the markets were really happy when he was announced as

the new finance minister. this of course after his predecessor resigned, so it seems as though the markets are not expecting that this budget delimiter budget will have some good news, however, if it does budget willhat this have good news. however, if it does inspire, we may see a positive reaction in the rand. another very important sector of course is south africa has to retain its credit rating. credit rating agencies will be looking to hear how that economic stimulus package will held in economic growth. another important thing is president cyril ramaphosa is on a drive to attract over 100 billion u.s. dollars, so we will have to see how that is outlined when the midterm budget is delivered. nejra: think is a much for joining us, bloomberg's economy inorter amogelang mbatha johannesburg. let's take a look at the stocks

you should be watching this morning. joining us now to talk deutsche bank is bloomberg's finance and investing managing editor and annmarie hordern, looking at nordea bank. let's kick it off with you, alisa. good morning. >> deutsche bank is a bit of a mixed bag. on one hand, you have got the bank finally restoring profitability this year for the first time in full as it pushes ahead with an aggressive cost cut push. on the other hand, you have got revenue outlook that is still pretty dire. thatave the ceo conceding they have not made the turnaround they were expecting by now and conceding that, you know, the shrinking of the business will continue to hit revenue going forward with a low outlook regularly for the investment bank, which we saw posting declines again in the third quarter and missing estimates, so kind of a mixed picture manus: from deutsche bank this morning. yep.

let's say what jes staley has to see whats shortly -- jes staley has to say for us shortly. he is not happy with his topline growth. he has domiciled the bank. what stands out for you? annmarie: he sounded more upbeat in the interview. in his earnings, he did describe this last quarter as challenging . net income fell, manus, and did expectations, falling four point 6%. on top of that, you were able to ask about this cloud that surrounds them in terms of the result, the allegations that his operations were used to launder money. nejra: thank you so much. bloomberg's finance and investing manager and annmarie hordern with our stocks to watch. next, we speak exclusively to of barclays.he ceo he joins us after 7:00 this morning london time.

love to discuss. -- lots to discuss. tune in to bloomberg radio as in the dab digital radio london area. this is bloomberg. ♪

>> good morning from dubai. this is "bloomberg daybreak: europe." nejra: i am nejra cehic, live from the city of london. these are today's top stories. manus: is the selling over or just a cause -- pause? asian stocks inch into positive territory. u.s. features returned to the red. crude gets crushed as opec goes into full production mode. we are in riyadh after strong rhetoric from the saudi oil minister. a big day for big banks. deutsche bank misses on equities trading, but the bank is "on

track" to boast a 2018 profit. the barclayss from earnings, as well as an exclusive conversation with jes staley, the ceo. nejra: 7:01 in london, let's get to the breaking news. third-quarter revenue at 3.60 6 billion danish krone, a slight miss on the estimate of 3.68. the third quarter even it looks to be in-line, 1.0 4 billion danish krone. net --uarter net income, a miss on the estimate of 817.4 million danish krone. basically in line, a slight miss on the net income for novozymes.

manus: let's get straight to the numbers from barclays. the numbers for you, third quarter markets revenue, 1.159 billion. deutsche missed on equities. 1.15 9ket's revenue, billion. i do read go, that was 977. jes staley rolled the dice on a big investment bank. 67%, netncome ratio, operating income 4.40 8 billion. 8 billion. for 2018, a profit of 3.1 2 billion in terms of the numbers. jes staley will break down the numbers and tell us how well his markets revenue business is doing.

we will get to jes staley shortly. you have heineken. nejra: third quarter organic beer volume is up 4.6%. the company compile estimate was a gain of 4.3%. full yearns for the 2018 remain unchanged for heineken. nine-month net income coming in at 1.60 one billion euros. --1.61 billion euros. it went thatmanus: 977he bloomberg, up from million a year ago. a large array of scandals, market turmoil's for europe, constantly underperforming banks the meltdown in the turkish lira , let's put it into context. good to see you this morning. it is a red headline, will then. 1.15 9 billion. what was the standout in the markets business? obviously, we're very

pleased with the results of the third quarter. it is the second clean quarter for the bank. we have no legacy issues, profits were up some 40%. a secondted for quarter in a row, earnings over one billion pounds clean, so that is a demonstration the strategy of the bank is on course. on the markets business, a -- on the dollar basis, in the third quarter, revenue was 19% year-over-year, the best performance of any bank to report thus far in the third quarter. gained market share in our investment banking market revenues four quarters in a row now, which demonstrates the return on the investments we have made in that business. barclays u.k. also had a recorder. positive earnings of -- positive quarter. very good performance. equity was over 18%.

this was also the third quarter in a row barclays as a group generated a double-digit return on tangible equity, which is what our goal is. nejra: good morning. talk to us about equities trading. there were high expectations of this in the market, so tell us how that performed. jes staley -- jes: we have been doing well all year long on the equities trading side from cash equities to trading, what is called flow derivatives. new electronicg trading platforms across the equities business over the course of this year. that has had a strong impact. we have a new management in place for that business. we have done well from credit to equities to rates, currencies. we are very pleased with our markets performance, gaining market share by some margin in the third quarter. this leads the market to a couple of questions.

and share bonds, does ins strengthen your hand pushing back in terms of his call for -- delivering better returns? can you slap that activist investor down with his kind of numbers? look at theously profitability of the overall group. we generated and 11% return on , aital in the first quarter 12% return on capital in the second quarter and now a 10% plus return on capital in the third quarter. it has been across the business is carried our consumer businesses and the u.k. has done well, our consumer business in the west has been very well. our corporate business has done well and the investment business has done well. the market's business and investment trading, has

generated a double-digit return over the last nine months. that is what you want to do. it is higher than the cost of capital, so we like the diversification of the model, the profitability we are in generating -- we are generating. the activist investor is supposed to be updating investors this month. he said the board is recognizing your strategy is unsuccessful. what conversations have you had with him since the last quarter? jes: i think the board is very happy with the results of the third quarter. i don't think anyone would say what we are doing is not successful. it is quite successful. ed inl be meeting with the next couple of weeks, the second time i have met him. i look forward to his ideas. us,as not expressed them to but we are focused on our transatlantic consumer and wholesale bank strategy, delivering double-digit return

for nine months. it is the second most profitable nine-month. period in the history of the bank. we look forward to having our conversation with mr. branson in a couple weeks' time. anus: let's hope it is not topic dirty bull run in the market. withays question you dividends and buybacks. where are we with buybacks? can you commit to the market you will do a buybacks in 2019? what is the guidance? one of the biggest stories of this third quarter is one, we are reiterating that we will pay share dividend. it is roughly 1.1 billion pounds. in addition to that, we got approval from the pra to redeem the last dollar preferred, a

very expensive for sure -- preferred shares issued in 2008. that is effectively returning capital to our shareholders of 700 million pounds. between doubling the dividend and paying back the dollar preferred in 2018, we will return 1.8 billion pounds of investors and we look forward to doing that and even more in 2019. we willretty confident have a good dividend program for 20 and look forward to purchasing stock particularly if it stays below book value. confident in returning money to shareholders, also investing in bankers and traders. what about costs? can you tell the market about your guidance on cost and being confident in reining in those costs? we are confident we will hit our cost target. that is what we are guiding the market to.

our costs were well-controlled in the third quarter. we essentially said costs should be around 13.9 billion pounds this year. we are confident we are on our way to deliver that. now that wet thing, are generating double-digit profitability and clean earnings quarter after quarter, we also want to invest in the bank. we are investing heavily in digitizing our consumer bank, heavily in the electronic trading we have across the investment bank. we want to make sure our customers that is safe and sound, so we invest in the resiliency of our technology platform. we have the benefit as we control costs and generate revenue to invest in the future growth of barclays and that is what we are doing now. manus: let's give it a little to the bigger issues. mark carney made comments in regards to banks' robustness. fromi want to understand you in his synopsis, he modeled a 35% drop in housing market

over the next three years on a hard brexit. do you think that is an overly aggressive call? how perilous a position of the and terms of planning for a hard brexit at barclays? are well onlays, we our way to being prepared for a hard brexit. can have increased the size of our bank subsidiary in ireland. -- filed allwed the necessary applications to relicense our branches across europe from branches of the u.k. to branches of the bank in ireland. we are prepared to be 100% operational in the case of a hard brexit. you are a british bank. the concern is around u.k. economy. -- we are a british bank. the concern is around u.k. economy. we have not grown our credit card receivable book in two years.

our leveraged loan portfolio is down 25% in the last two years. our strategy is to be diversified. that diversification needs over half of our revenues come from outside the u.k., most notably the u.s.. we feel we are diversified in our business strategy, by geography, currency. we are pretty well positioned for a hard brexit, but obviously, like everyone, we would like to see a negotiated brexit which does not harm the economy in the u.k.. we have been talking all morning about markets climbed the wall of worry. a fifth day of declines for u.s. equities, volatility in the bond markets, as well. looking ahead to the rest of the fourth quarter, are we going to see a recovery in equities or is it just more volatility? i think more than likely,

we are going to see more volatility, which actually is one of the reasons why our revenues in the markets business are of. up. markets -- when markets are volatile, we as an intermediary do well. you can't ignore the power and strength of the u.s. economy. the largest economy in the world is growing. it has real strength to it. it pulls a lot of the rest of the global economy along with think there are concerns around valuations as interest rates rise and central banks pull away from accommodative monetary policy, don't take your eye off the strength of the u.s. economy. my bet right now is the markets are actually setting themselves up for somewhat of a bounce in the weeks ahead. manus: nobody hopes that more than myself. jes staley, ceo at barclays. great conversation. join us again on the next round of earnings, sir. a quick update on the other bank

we are talking about, deutsche bank. call,o is on an analyst saying the focus is on the top line. for barclays, but let's see what he is saying. i believe this is the fifth time he has mentioned cost discipline. 2.3% as we go to the open. credit risk ise near historic lows. that is in reference to vol. we didn't quite get to that with forin getting to returns the bank, but the focus is on the top line. the cfo at deutsche bank will be joining matt miller a little later on today. 11:30 u.k. time for that conversation in regards to deutsche bank. nejra? staley told us

markets are repairing for a bounce. it was a punishing session in europe for the stoxx 600 yesterday, down 1.6%, but we could see a rebound. it was a cautious move into the green in the asian session. u.s. stocks closed lower yesterday, but it looks like europe could open firmly in the cacn with ftse 100, dax and futures, up more than 1%. that's get a check on the markets in asia. juliette saly in singapore, give us an update on the wrist on move we are seeing later and the asian session. juliette: it is all thanks to the china market. .4 percent on investor optimism that authorities in china will continue to prop up markets and pump more liquidity into the system. we had a negative started trading day. at one point, the msci asia-pacific hitting the level,

retreating 20% but now above that level of 150 thanks to gains in china and that means the yen has fallen, japanese stocks have risen. by nikkei, closing higher .4%. still weakness in some markets, including korea and australia, closing down by 20 -- .25%. we have seen a lot of commodity currencies rallied on the back of chinese equities. the aussie dollar has been back above 71 u.s. cents, though slightly lowered at the moment. we are seeing a little weakness coming through in the japanese yen and we have seen quite a bit of movement. earlier in the session come along and japanese government bonds rallying quite significantly. in fact, we saw yield on the 30 and 40 year fall by about two basis points, but unchanged on the 40 year now. manus: thank you very much. across europeergy

and the u.k. they have delivered their numbers in terms of the actual statement from the. for the nine months through the close of september. 6.7 billion is significantly up from a year ago, which was 5.40 5.40 4 billion. la,t is from iberdro confirming guidance for 2018. ands get to donald trump the very latest on the jamal khashoggi affair. trump has described the killing as one of the worst coverups in history. says he'sresident leaving it to congress to decide what action the u.s. should take. yousef gamal el-din is on the ground in riyadh. latest in terms of the president's take and it seems as if he is handed could -- to

congress the responsibility for what action america takes? coffin from the united states, you have the turkish government applying pressure on the saudis. moments ago, a turkish aid said the saudi crown prince has blood on his hands. from the saudi side, they don't agree with that version. they are insisting an investigation is on the way and arrests have been made and those who have done the crimes will be held accountable. we heard from the u.s. secretary of state has waiting on the progress made from an american who -- intelligence point of view. we have identified at least some individuals responsible, including those in the intelligent services, the foreign court, the foreign court, the the royal foreign ministry, and others we expect were involved in mr. ashok he's death -- jamal khashoggi's death. we are revoking visas and other measures. we are also working with the

treasury department to look at the applicability of a global sanctions to those individuals. mike pompeo earlier. one, mr. trump is having a meeting with intelligence officials. we understand they have the information they need to make conclusions. #she, the speech from the saudi crown prince. we are expecting to hear from him later this afternoon. mr. salman will focus on the killing or the conference. what message does he want to send to the world from here? nejra: also, strong words from the saudi energy minister crushed oil prices yesterday. what exactly did he say? he basically said they are in pump as much as you can mode, which is a message they have been sending for some time,

but he said the whole group would be doing that as in opec plus. they're in mind, analysts we have been speaking to make clear the drop in crude oil prices isn't just about what the saudi in his -- energy minister said. the reality is it was a risk off . a lot of traditional asset classes like crude tend to suffer on a day like that. and theo early to read commentary and reflect on the oil price movement. if anything, it looks like the political risk rhenium baked in an arice of oil has gotten -- a significantly shave up. el-din onsef gamal the ground in riyadh. we should note several companies including bloomberg have pulled out of the future investment initiative event as media partners. we are there covering the event from our bureau. nejra: it has been a busy day for bank earnings and here is one more.

metro bank has reported revenue for the third quarter of 105 million pounds. the u.k. challenger bank, which could be one of the lenders most at risk from goldman sachs's entry into the u.k. savings market. we will talk about risks and more with metro bank's chairman and cofounder vernon hill to discuss the bank's earnings. thank you for joining us and good morning to you, as well. let's start with the slowdown in the london property market. in london, we are all upset, but is it affecting your mortgage business? vernon: our growth for the first nine months of the year was up 48%, i believe. we are seeing tremendous growth in commercial and residential markets. you.: good morning to we just had a long conversation barclaysstaley over at and he was saying we are prepared for the hardest of brexit's.

you are lending to a whole host of people in the united kingdom. has there been any slowdown at all? at the counter? how is counter confidence for you at metro bank from the individual and the small businesses you talk to? bank -- this is our ninth year, so we have had a long experience operating in london. we serve the consumer business, small business, and middle-market business. no slowdown in growth, but you get the sense we are reaching the end of the curve and you see a little slowing down, but certainly nothing that looks like a crash. nejra: are you slowing the pace of new openings, in that case? vernon: we are not. our business model is about taking market share. we have had tremendous growth quarter after quarter. we are opening new storage. -- store ined our

britain and we are opening when you store a month and our acceptance continues to grow and grow. manus: is literally just look at the proposition available to me from marcus. this is goldman sachs. they are coming after you, vernon. they are snapping at you, or are they? how big a threat is the vehicle created by goldman sachs? offering 1.5% on u.k. deposits. how much of a threat are they? vernon: first of all, there is lots of room in the market for lots of able to compete. marcus is competing only on rate. you can always grow your business if you are the high ratepayer on deposits. marcus has already dialed back in america. our proposition is about service and convenience. we welcome marcus to try whatever they want and we all

compete. nejra: morgan is competitive, as well. what are you seeing in that market given the outlook for the bank of england's rate hike in the context of brexit? vernon: we had an unusual thing in the past two quarters. the boe raise rates twice and the rate has gone down. it is not something you expect. blip in thea little market in that way. manus: tell me this. i get thef expansion, point you are making about what goldman's are doing, but where is the next leg of metro bank's business expansion? vernon: geographically, we are building stores west, bristol, card off, next year, birmingham. array also offer a full of online mobile products, so

you are competing in all segments in every way. it is not commonly known that metro bank is more of a commercial bank than consumer. commercial deposits are more than consumer deposits and we are very actively competing in the commercial area throughout britain. nejra: thank you so much, vernon hill, metro bank chair and cofounder. been talking banks all morning, but also about the markets because after the selloff in the u.s. and europe yesterday, we are starting to see a little green come through. we were earlier on some of the asian benchmarks. overall.pacific flat after a drop on the stoxx 600 yesterday, we could see a rebound in europe. meanwhile, crude is bid. side crush on comments from the saudi energy minister. wti, dropping as much as 5%.

api may have had something to do with that. manus: just staley says the dip in the markets are setting up a recovery. euro-dollar come slightly better off. the 10 year yield, 3.16. $270 billion worth of supply is coming to the market. you are seeing a flow in treasuries, and alleviation. said treasuries are a hedge and people will go back to realizing rate should still be on an upward trajectory. s&p, this is day six of the prop for the s&p 500 if it holds. we are looking at definitely a little bit of trepidation in the market for the s&p futures. nejra: very interesting that european equities look like they could be to stand out in terms of risk on in today's session. in europe, we are asking the question on mliv, what would it take from draghi for the euro to rally?

we get the ecb decision and mario draghi's press conference tomorrow. manus: indeed. there is more conversations to -- to retirehe ceo next year. also, the governor of the

>> welcome to bloomberg markets, the european open. we areleave from your -- live from our european headquarters in london. stocks put an end to the equity rally route that rolled around the world. we now see european futures trading higher, oil bounces as investors by treasuries. the cash trade starts in 30 minutes time. anna: is the selling over or