>> good morning, i am nejra and a. manus: this is bloomberg daybreak. stocks rocked. 2018 gains wiped out. this morning, the nikkei heading for the same. all eyes on frankfurt. ill draghii -- w address -- can the swiss banking giant will start reporting earnings in dollars.

well mor warm welcome. majorgo to one of the carmakers in asia. hyundai delivers their numbers. of8.9 billion in terms operating profits. that is significantly below the expectations that was the estimate. below thegnificantly earnings estimate. the third quarter earnings fall on safety cost. weakening emerging mean -- market fx. sales, pretty much in line. 280 eight. the operating profit is where the demolition derby took place.

e.m. fx. this is really the key issue, along with safety costs. from autos, to a tippo. inbev.let's move to ab -- the market, by the way, watching for a possible dividend cut. on the full-year, into dividend eurohare, $.88 versus one year on year. quartere, third adjusted, up 7.5% to read that misses the estimate, 10.6% gain. adjusted eps, $.82. the estimate was $.98. third quarter organic revenu rising.

adjusted eps and the organic revenue. lower year on year as well. for your cap fax -- full year. >> this is a company in paradigmn toward the rolled out by everybody. net reduction of employees globally. the transition far from done. the top line for them, they are accelerating their strategy of execution. they are reaffirming their commitment to the 2020 guidance. one-time costs, 900 million euros. when it comes to the numbers, this is what is fascinating, net sales $5.46 billion.

that is what the market expected, but the transition continues. knocked to theo cash flow. they are reducing the headcount around the world. verizon launching in four countries. inia measures, net reduction jobs. seeating margin, they still the operating margin at 6-9%. take it away. let's look at polymers and plastic. 707 million euros, the estimate was 693 million euros. about to beat the third quarter. beating the estimate of 831.5 million euros. third-quarter sales, also a beart. covestro, the ceo of

joins us. it :00 this morning london time with myself and matt miller -- 8:00 this morning london time. comfortablethan a beat in terms of the profitability at the bank. you are seeing a good set of numbers. net income, 1.2 5 billion. they are romping through the numbers. at the revenue rose 19% corporate and investment bank. equities trading up 15%. top lines coming through. in terms of where the cost savings are going to come from, this is the strategy update. francs comingiss from wealth management. let's get to our guest. great work on breaking down the numbers. think it is the numbers or these new targets?

250 billion -- million. >> good morning. the earnings come of the third quarter, as you said, highlighting the strategy for through 2021. what theytargets than were pointed to in january could cost income, they are forecasting that ratio to come down from 75%. short-term, it seems like they might be missing the target for next year. sunday 7%. a bit of a mixed bag. slightly lower expectations for new money to come through over the next cycle. foroutlook is one geopolitical tensions and trade concerns to continue to weigh on client activity.

it was hinted at in a recent interview. nejra: that cost income ratio, down to 72% is a key thing. something to drill down in terms of synergies from global wealth management. what else will investors be focused on? there be questions around the investment bank? >> absolutely. questions about the investment bank. what people are trying to understand really is what next after having successfully executed a retooling, focusing to wealth management. how is that growth going to pan out from here onwards? nejra: yeah, where is the growth going to come from. thank you so much. coming up, our interview with the ceo of ubs. you can see that 12:30 this

afternoon london time. he is in london for that strategy update. give him my regards. let's see what he says. a growth bank. he is there for the long run. how was that transferring itself into a variety of markets? a haven of bonds, 311. let's hear more. not enough to change the direction of the fed. you might like to have a few bonds in your back pocket. let me tell you about volatility. 22% yesterday. is that spike in volatility and of to move the fed? that is the debate we will have with our guest host. equity markets under pressure. bond markets are your haven. but look at this. she is the oil market, down goes.

this is the collapse over two days in the oil market. a reappraisal of global growth and global risks. $100 oil. with the s&p and dow wiping out gains, and the nasdaq and correction, the question is, when will the setting stop? have been here before. we have seeing futures point higher. the u.s. equity market open higher. big question, as we see $5 trillion wiped out from asian markets. asked,uestion as well whether the stronger dollar is creating more risks for equities. the asia-pacific index, down more than 2%. regionalross benchmarks. let's get the details in asia. market deepening in

asia. the asia-pacific index, down 22% from its peak. have a look at the nikkei and australian markets. these are not standard moves. the nikkei off by 3%. the topics -- the austrian market at a one-year low. kospi hashas -- entered into their market territory. at stocks inlook detail. we have had quite a few numbers of earnings coming through. cathay pacific dropping to a nine-year low, after reporting a data hack. passport id numbers of a number of esther's hacked. jet airways in india also one of the weaker performers. they said they have not sought a minority rim -- moratorium on

loans. a&p in sydney, the worst performer. az wealth protection unit. hyundai, saying they expect earnings to rebound in the fourth quarter. they see a slowdown in trade tensions weighing on overall numbers. story fettered by the fx in emerging markets. great roundup from our singapore studios. market slump has wiped out gains in the west. it is spreading to asia. how big of a stock rout would it take for the fed to posit were slow down its tightening cycle? pause or slow down its tightening cycle?

>> if we had a decline of 30%, it could change what they are doing. it is to them, a garden-variety correction. manus: that was the guggenheim global ceo. let's ask our guest. the senior investment strategist for global fixed income at blackrock. welcome to the show, good to see you. the market is repricing the fed. what would it take at the blackrock house for you to shift? >> i think the bar is very high to change monetary policy. the correction we are seeing in the stock market is something to. are paying attention the turmoil in emerging markets is another example. if you look at the fundamental trajectory of the u.s. economy, the inflation and employment profile, those are on track to be consistent.

priced in over the next year or so, about as much as you would normally see over that time. i think it is possible we see a rally in the treasury market. pauserice the fed for a or delay takes more. that rally and treasuries, we have seen that happening. i want to talk about junk credit. i have a chart here. junk credit barely flinching. off lesss have sold than equities. previously, we have seen moving in tandem a little bit. >> this has been a trade we have noticed. the diversions between emerging markets and high-yield.

high-yield investors take a more longer-term view. the fund flows have been positive. is more about the yield on offer. if they market worth to continue to weaken, all you would see weakening in high-yield. streeti have state saying it is time to take a serious look. are you becoming more entrenched in that short duration trade? would you consider shifting cash? we have talked about this before. one of the things we have found interesting is the yield available for fixed income. five-yearen the retrace a little bit. it gives you 24%, 4.5% -- to 4%,

4.5%. the correction we have seen in treasury yields, it fits with our broader investment theme. terminal theme for monetary policy. real yields converging around 1%. long-terme fed neutral rate. the market looks attractive to us. we have been positioned that way. why are you not seeing the longer and as attractive yet, even with the backup? >> we have seen a lot of flattening in the yield curve. real yields have converged to 1%. long and is a technical situation. management.mpany the intermediate part has sold off more.

also, is more attractive from a carry perspective. we cannot concentrate on the five-year sector. manus: we have a lot more to get through from the fixed income space. it is goingthe day, to take a heck of a lot more to get the fed move. routeep does the stock have to go for the fed to pause or go down? visit garden-variety? -- is it garden-variety? join the debate. we will get you the first word news. juliette saly standing by. the fbi is warning additional devices could eat in the post were suspected mail bombs sent to barack obama and hillary clinton. police detonated a pipe bomb at a new york residents of george soros.

president trump called the axa but the cnnorrent, boss says they failed to understand the seriousness. the media has a civilsibility to set a tone and stop the negative and often times false attacks and stories. have to do it. [applause] president trump: they have got to stop. bring people together. has survived a meeting with conservative lawmakers as they express loyalty to her, rather than frustration at her brexit plan. she told members of parliament they must hold their nose. litparliament is deeply's

-- deeply split. president trump will be briefed process --pel as the crisis over the killing of khashoggi. jamal meanwhile, speaking at the saudi investment conference, prince mohammad bin salman said he would bring the killers to court. that is a heinous crime cannot be justified. saudi arabia is carrying out all legal things to finalize the investigation. to work with, cooperate with the turkish government and present the perpetrators to the court. judgment. pacific shares have

fallen to a nine-year low. from anta access unknown person. the company says there is no evidence of misuse. this comes as rupert hall tries biggest airline to profit. the south african rand has plunged after the finance minister said government debt will peak higher than previously forecast. resenting his midterm budget, the finance minister raised the economic growth forecast. lowered thethe -- economic growth forecast. bloomberg has an interview with the president of south africa. global news, 24 hours a day.

howard by more than 2700 journalists and analysts. nejra: juliette saly in singapore. let's take a check on the market. wiping out their losses for the year. the s&p 500 dropped so far in october, making it the worst since february, 2009. out chilean dollars wiped from asian markets so far this year. the nikkei, down 3.5%, could also end the session in a .orrection manus: brent, a white outcome of the worst month since 2016. where is the hundred dollar oil? where is that 326?

vix up 22%. did it ever really exist? that is the question you have to ask yourself. market?ou treat that let's get more on our top story. byald trump is being briefed gina haspel. after the crisis over of the journalist killed continues to grow. in terms of the briefing from helpia, this is going to progress trump's view and congresses view. >> we expect so. especially after the washington post story. the killings. the question is whether the

president is going to say, we have more evidence. the question is how far this will go. all the questions in saudi arabia, will the turkish president implicate the saudi crown prince or accuse the saudi directing thef murder? the question goes to the cia director. whether she will do that. yesterday the crown prince was by some accounts defiant. basically, it was like a signal. i'm not going anywhere. >nejra: how strong a signal was that?

how did that move us forward from here? what is loud and clear, everybody we spoke to after the address heard it saying. as long as i remain crown prince, which is a strong sign he is going nowhere. there was a call between him and president erdogan one. thingsises speculations will be fine. he said, i'm going to bring those people to justice. him is why we have seen confident. people noticed. me did the key takeaway. thank you so much. nejra: go for it. manus: thank you very much, we

will see a little later. turn our attention to the emerging markets story. turkey has a rate decision. an aggressive hike in september. pressure appears to be easing. in light of claims to possess evidence in terms of the killing of a saudi journalist. investmentnior strategist at lack rock is still with us. there is a lot to talk about in the emerging markets space. all?our view changed at a couple of constructive things that have happened. one is the turkish rate decision which is today. rates more aggressively than the market had anticipated. politicalalso overtures between the government of turkey about easing rates.

a number of the high-profile issues have been in large part addressed. the mexican elections, the situation with russia. of spread to, 350 basis points, looks attractive to us on a long-term basis. it will widen if the market continues, the stock market continues to fall. many of the idiosyncratic issues have come to pass. manus: one of the things we are writing about this morning is the premium. it is coming off a little bit. they say it has dwindled this year. back to that theme, short duration in emerging-market bonds. would you agree?

>> we have generally looked for at most part quasi-sovereigns. a number of oil companies, for example, in latin america. theus, the liquidity and both in governments and semi-governments, relative to corporate's, we favor the sovereign side. the additional spread in some respects to's not compensate you for the drop in liquidity. obviously, there are particular cases where the government has a big stake or ownership of the company and makes it much more liquid. nejra: interesting. our guest stays with us. up next, a conversation with the the company or --

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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. take a look at the world map. asianllion wiped from markets. will the nikkei closed in correction by the end of the session? a sea of red across asia this morning. manus: let's talk about one of those reports. equinor's profits beating expectations for years in a row. the norwegian producer offers a glimpse of what is to come for the so-called earnings of the

world largest oil companies. joining on the phone from oslo, the ceo of equinor. always great to get to speaking to us. well done on the numbers. that is a lovely topline, the best profit jump in more than four years. does this take me closer to a share buyback the first quarter of 2019? when will you deliver that tantalizing the market once? >> -- wants? >> i am glad we can deliver these profits. strong cash flow. we continue to take good care of our cash. two projects.y a very strong jet -- project

portfolio. then we like to see strengthening our balance sheet. included among many other considerations as well. for share scope buybacks is increasing. you reduced your planned investments in 2018. what are you prioritizing? shareholder return? in order to provide shareholder returns, you need to invest. this is a balancing act. we reduced our capital expenditures to around $12 billion. successful project execution. that has given us the basis to reduce this. manus: you did your very first

interview. when is the buyback coming? the market it was very near term. let's tighten of the guidance. -- up the guidance. >> there is precise guidance and there is no individual trigger that could lead to something like that. we need to look at the investment opportunities. the commodity environment. no specific guidance. crocs i am going to push you on investments. -- >> i am going to push you on investments. billion, we haven't

attained the guidance. portfolio projects we are taking through the hype line and executing. what comes up is a stronger portfolio. i would add also, strong discipline across our business. >> that is going to be music. your norwayout focus, and renewables. where is it going to be, as you go into the next 10 year? where are you going to build? are you going to look beyond the

borders of norway for the next leg of growth? norwegian is our mature part. maintainxpectations to production. we will also have to build resources, oil and gas resources outside of norway. i think we have done that successfully. we have the strongest resources outside of norway than ever before. strong cash flow. we will continue to build the international gas and will portfolio. the main focus is brazil. on top of that. there is a renewable portfolio that will continue to grow in fact even more than we have seen. base, ofa lower

course. continue to look for value and have opportunities with and renewables. are we going to see $100 oil? know, i think there's a lot of uncertainty on the oil price. i see a market that is more balanced. stocks are more balanced. we will still see capacity coming into the markets. from projects that were developed. at some point, we might start to see the impacts of the low investment level we have seen the last couple of years. obviously, other sources and also the demand side. we could continue to see a heated market. i would expect continued volatility. the world is dealing with

the equity markets, china u.s., trade wars. geopolitics in the gcc. perhaps is the biggest risk for you as you look into 2019? is it trade and the impact that could have on-demand? you know, trade. free trade is a good thing. it is important for people across the planet. it has to move in various ways across geographies and also supplies that go into the industry depend on a global, free trade. that is good for mankind. it is good for energy and the cost of energy, which some people depend on. we wish you well. well done on the numbers. we will speak to you again. you might have something for me

for christmas, after christmas, a share buyback. damler.om letter -- let me tell you where we are now. targets can be achieved. this is coming through. the mercedes-benz cars unit, sales in previous years. this is there guidance. in 2019.increase inventories are being reduced by the end of this year. when it comes to the actual earnings, 1.5 eight. that is below the estimates. they warned the market earnings would be below. to -- let's get to nara. -- nejra. nejra: the outlook for the year confirmed.

3.9 6 billion euros, bidding the estimate. reaffirming 2018 objective, the third-quarter revenue coming in in line. 10.3 one billion euros. basically in line. the carrier has been benefiting from fiber as well. joins up, the deputy ceo us for an exclusive interview. london time.n, let's check in on the markets around the world are made the equity selloff is continuing in asia. joining us in mumbai. let's start with you. red across the board in asia. the index dropping deeper. india caught up in that. what are you looking for in indian markets? bad ass probably not as

the screen, but it is down a percent or two. the broader markets slightly worse off. informationut technologies doing really bad. banking, non-banking, financial companies. that space has come off quite rapidly. the currency started off a very weak. fairly weak, let me rephrase myself. strength happening in the rupee. a bit of a silver lining. a bit of a pullback happening in the rupee. spaceformation technology is the only one. there are good results that have come from information technology companies. index that is keeping the slightly afloat above the

average, below which it could succumb to selling pressure. indian markets trading with a fair bit of red. i am looking at volatility. bond markets practically phlegmatic. volatility in equities, 22%. put it together for me. >> equities experiencing a bloodbath here. the worst of which so far is the topics. there are signs we might be hitting the bottom. the tokyo exchange, a record price. when we have seen this, we have seen shares rally. let's see what happened. a bit of a short squeeze. the ensuing rally is about 9%. keep an eye on this. keep an eye on the short interest metric to see if there

is a potential turnaround. i want to take us across currencies to the yuan where there has been a fair amount of drama under the surface. we saw volumes spike to the highest on record. even beat out 2015. this is when china evaluated -- devalued the currency. look how much volume has plunged. tot is after news china said have banks to refrain from turnovers. nejra: thank you so much. taking us through the bloodbath in markets. interesting come of this over lining in india has been i.t. stocks when tech has been hit so hard in the u.s..

decision day for the ecb. keeping a close eye on mario draghi. with record low rates continuing through to next summer. the senior investment strategist for fixed income at black rock. i am hoping you can bring a bit of excitement. it has fallen into the background. what will you be looking for in the new once in draghi's link -- nuance in draghi's language? >> i think obviously the reinvestment program is going to be the center of the questions and focus. we will not get new insight into the qe program andy or changes in monetary policy going forward. there is a reasonable amount of policy tightening. which seems consistent with ending the qe and beginning the tightening cycle.

anyre going to look for subtlety around the reinvestment program. the question here is whether when the qe program ends, do they fixed the amount of purchases they have done at that time? at the new p,k which will come out for 2019? use the program based on that on that structure? if they were to use the new p, they would favor peripheral bonds at the margin. we are going to get that information today. today would he one of those meetings, obviously there has been a bigger backdrop of volatility. bunds are unchanged. that would be what he wants. told: you say that could toward the periphery. the italians, they have no plan

b. talk to me about inflation. draghi, as well as reinvigorating the perception of inflation, he said it was vigorous. i looked at the pmi's. they are beginning to roll over. from a bond perspective, did that tied back to the inflation policy? think it is a good observation. one of the things we suggest it we look at some of the updates from companies operating in the u.s. and europe, the numbers look little softer going forward. reboundcipated -- the from the anticipated fall off of european economic growth may be slow to come. what that reinforces, the idea on the terri policy in europe is going to be glacial. in terms of how it moves. it is not thing investors should get too excited about over the median term. i think the end of 2019,

draghi's leadership will have changed and we may move on to stronger economic data. i cannot see a very big push. nejra: glacial monetary policy. how much will that be influenced by where the bund spread is? hashe volatility in italy been unbelievable. you have to take a deep breath. we have 20 basis point moves in bigger onne of the markets in the world. if you look at other peripheral markets, even france for example. the spread between germany and france, it is at the wide of its range, it has not broken materially higher. one of the issues we have not seen is a contagion effect from btp's.

it is beginning to be seen a little bit but not something pervasive. it would have to become pervasive for the ecb to become concerned. the btp market is reacting to the political tension in europe. looking at the economic fundamentals in italy, it does not look as bad as the market pricing currently. it is around the relationship the italian government has with the europeans. it is fascinating to see the amount of leverage on the bbt's. the senior investment strategist for global fixed income at blackrock. if you are driving to work, tune into bloomberg radio. this is bloomberg. ♪

in on what isheck

trending across the bloomberg universe. says kdi crown prince hashoggi's death was a heinous crime that cannot be justified. from the u.s. have $5 trillionia, wiped off of the asian market. . most nejra: in this is down 2%. down 2%. nejra: cia chief gina haspel will brief trump after a trip to turkey. following a washington post report she heard an audiotape of khashoggi's death.

we have had a raft of earnings. ubs, daimler. covering ab inbev. we have our bloomberg opinions. taking a look at has left. -- t ab inbevesla. tesla.as ab inbev. >> they slashed their dividend in half. this is the company attempts to pay down debt. it has also had some cash flow issues. weekend.urrencies have the company did say they expect growth to turn around in the quarter. the dividend is likely to hammer

the share price. tesla stood out in terms of tech stocks. what was behind the blowout quarter for tesla? >> let's clarify one quarter does not mean a trend. we can give elon musk some credit. as they look to sell cars that are lower price come the question is whether it can maintain margin. starting in january come of federal tax credit starts to be phased out. whether the demand will be sustained will be a question. in the third quarter, 2016, tesla had a pretty good quarter. after that, we did not see much. the question is whether they can maintain the demand and actually produce the cars people want to see. in hong kong, thank you

so much with our stocks to much. another big stock we are watching is ubs. on the netg beat number in terms of the details. watching for the cost income ratio, down to 72%. that is key as investors have been looking for more detail of rally synergies in global wealth management. no doubt, there will be questions about that. we have also been looking at i.b. and how the trading has been doing. it looks like it is aligning more with barclays then deutsche bank. time: this is the second he has tried to reset the agenda this year. he said he was a growth stock in the autumn. down 26%. 2-4% per year.

3% by 2021. targets, theme director of the financial unit saint 72% will be tough to achieve some of those cost to income targets. you will have those questions of course. nejra: i will. that interview coming later on. et's go back to scott thiel. manus: you are still with us. we have done ubs, barclays. get a to give you -- sense about credit and fixed income. how much bank fixed income do you want to take on board? at thee look available investments for investors in the bank sector in fixed income, we find value in

bonds, lower in ranking in terms of seniority. particularly lower than tier two and tier one. coupon and non-coupon paying. those spreads are wide. the spread ofd, governments.r the banking sector has benefited from a number of positive developments over the last several years. the recent market volatility and what is happening in italy weigh on the making sector. nejra: thank you so much. senior investment strategist for fixed income at blackrock. whate asking the question, would it take for the father to -- fed to pause or slow down? you can reach out to us. you cannot be without

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manus: good morning from dubai. this is bloomberg daybreak: europe. nejra: live from bloomberg's european headquarters in the city of london. these are today's top stories. manus: the gains of 2018 are wiped out in the u.s.. the nasdaq enters a correction this morning. the nikkei heads for the same. all eyes on frankfurt. the ecb convenes under the clouds of investor concern. will draghi address the vigor of volatility? ubs profits top estimates by as the banking

giant says it will start reporting earnings in dollars. we speak to sergio ermotti later today. nejra: good morning, everyone. let's get to breaking numbers from lloyd's. earnings season continues. total income for lloyd's coming in at 4.6 billion pounds. compiled estimate was 1.7. that third-quarter pretax beating, the company compiled estimate. that is the main thing to look for. also the retirement of the cfo. he is to retire next year. it is one of the world's

largest advertising companies that lost its leader this year. martin sorrell stepped down. sales crumble, down one point 5%. the estimate was for a rise of 0.3%. work,ou lose the creative you begin to snap at the heels of revenue and the rest of your clients begin to wonder. they have been cutting the guidance for 2018. can tar stake is up for review. this is bucking the trend. you had omnicom surging the most a macron five years. exit is causing u.k. advertisers to cut growth. it is an absolute burner on organic sale. the market was looking for a growth. we will break this down as we go . the financial director paul richardson is to retire in 2019.

wpp will provide a strategy update in december. nejra: we got a red headline that bt is naming ceo. philip coming over from worldpay. this is something bloomberg was reporting a week ago, now confirmed by bt. that is coming through. and ceo job that bt being offered to philip jansen. let's look at futures. most of those equity benchmarks down 2%. three pointower by 5%. $5 trillion wiped out for asian equities. the s&p and the dow wipes out this year's gains yesterday. correction.n the worst month for u.s. stocks since 2009. judging by the futures in

europe, we could see a seventh day of losses for european equities. yesterday we saw european equities open. want some upon europe, also the u.s., we start inching into the green. we think we're going to get a reprieve. then it is sell sell sell. manus: the volatility lies in the equity market, less so in the bond market. scott teal from blackrock saying he favors the five-year curve. blackrock has been pushing a lot. where 326dy tell me has gone to in the bond market? that was the yield we saw, the high this year. play, a hugecs and dislocation between money flow into the bond market. .e are also seeing block trades

block trades are traded on the futures exchange. the bottom line is the market disbelieves the fed is really there to get suckered to these markets. existed in these markets are under pressure. btp's off. scott maynard would maintain you're going to need an awfully to even to get the fed remotely stop. fed a futures are repricing the trajectory of the federal reserve 2019 to verily over to hikes next year. asia is where the crux of the meltdown is taking place. juliette saly is an hour singapore studio. how did the numbers back up? extending beare market territory on the msci asia-pacific index down 22% from its peak. things in asia could get worse before they get better. you've got this dollar play in

factor. india down over 1%. the nikkei down by 3.7%. that is its lowest level since march. the topics at its lowest level since last year. -- thetrillion market australian market. china, too. . the kospi now in a bear market. it misseddrop after estimates. let's have a look at the safe havens and play. -- in play. intopeople are going, gold, treasuries, the yen, the yen is up 0.25% against the dollar. a very interesting comment from our mliv strategist saying jgb's seem to have remembered there is a haven play two. look at the drop in the yield on the 10 year japanese note.

we are still seeing weakness coming through in the indian with theaying havoc indian stock market. some analysts saying the bank of india's efforts are good news for its bond market. bonds and safe havens in focus today. today we are asking the question on mliv, how deep a stocks rout when it take for the fed to pause or slow down its tightening cycle? reach out to us at the mliv team on your bloomberg. joining us from hong kong is bloomberg's cross asset reporter. great to have you with us. the bears are out in asia. we have been putting drama around the stocks rout a lot of people are saying it's going to have to go further for the fed to bring in the power put. >> when you're talking about losses in asia, we have been

waiting for the asian markets to officially move into a bear market. we have seen that today. they are spread all across the region. you can see the impact of the the fedical issues, monetary tightening issues that have played on this market all year. i think when it comes to the fed, everyone has been debating the question from mliv today. it seems like there are two sides to it. on the one hand, the fed is talking about -- we have seen the fed has actually backed off when they were originally hinting at four rate increases and only did one. obviously donald trump has put pressure on powell. you may see the fed wanting to assert its independence it -- even if markets are screaming uncle. they are certainly screaming something.

we are in this classic mode. we have europe -- the u.s. equity market wiping out its gains for 2018. you have blackrock, reduce your duration. where is the volatility more pressing and? fx, bonds, or equities? about theu're talking volatility of stocks, for instance, to start off with, earnings are obviously in focus this week. we are seeing it is a no-win situation for stocks. a reason we are seeing so much selling is if you have positive earnings, you are not getting much credit for it. we have had positive earnings for so long. people are looking ahead to next year and questioning whether your forecast for next year are able to meet what you are able to put out right now. when you miss earnings, you get really hammered for it as we are seeing with hyundai today. that is where volatility is

coming from. we have seen movement into the safe havens, into gold and treasuries and japanese bonds as well. a lot of the focus is on equities. that is where the eye-popping numbers are at the moment. >> they really are. you get battered if you miss your numbers. we spoke to the phillips ceo the other day. bloomberg's cross assets reporter in hong kong. a couple indications coming through. on a day like today, jgb's indicated down over 4%. ubs is bucking the trend in terms of calls. ubs is called higher. let's get to juliette solly. she has your first word news. juliette: the fbi is warning that additional devices could be in the post after suspected mail bombs were sent to barack obama

and hillary clinton as well as cnn's offices. on monday, police detonated a pipe bomb at the residence of george soros. president trump called the act's abhorrence, but cnn says the president and his press secretary failed to understand the serious of their attacks on the media. pres. trump: the media has a responsibility to set a civil tone and to stop that the evidence -- the endless hostility and constant negative and oftentimes false attacks and stories. have to do it. they have got to stop. bring people together. juliette: donald trump will be briefed by gina haspel as the crisis over the killing of jamal khashoggi continues to grow. that follows a report that has bull -- gina haspel heard an

audiotape of his interrogation and killing. speaking of the saudi investment conference, mohammad bin salman said he would bring the killers to court and prevent this -- this diplomatic breach. cathay pacific shares have fallen after data on 9 million passengers was accessed by an unauthorized person. the breach involved names, nationalities, passports, and contact details. the company says there is no evidence of misuse. ageseo tries to steer biggest international airline back to profit after two straight international -- after two straight annual losses. the finance minister told lawmakers government debt will peak higher than previously forecast. presenting his midterm budget, he also more than half the economic growth forecast to

0.71% after the economy plunged into a recession. bloomberg has an exclusive interview with the president of south africa. you can see that life tomorrow after a: 30 a.m. london time -- 8:30 a.m. london time. bolsonaro is slipping in the bulls. -- polls. the latest survey gives him 50% and percent -- 57% down from 59%. 'se newspaper says bolsonaro tax reform plan would add to the yearly deficit. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. bloomberg. nejra: now let's get to our guest for the hour.

the european economist at hsbc is with us. good morning. equity markets stealing attention from eye-popping moves. at what point does the selloff in equity markets throw the fed off course, particularly when you couple it with the fact that the dollar is at its strongest? keepviously the fed does the global economy. they need to look at what's going on in the u.s.. in the u.s., there is a huge amount of business coming through. the fed will stop once they start to see the u.s. economy slowing down, which we think that happen toward the second half of next year. until then, it is very unlikely what is going on will move them off course. ultimately they fear that inflation and domestic inflation pressure might get out of control and what they might be behind the curve. manus: one interesting number

that came through on the markets yesterday was on the united states. it really good shape the confidence of the markets. do you concur with that view that you can't keep going stimulus after stimulus? at some juncture, confidence can be knocked by the equity markets in the underlying economic tenor. >> absolutely. there is a limit to how much fiscal stimulus you can put in an economy. already we think the fiscal deficit is heading for around 5% of gdp in 2020. big number. is a certainly we have seen in the past recessions in the u.k. led by the equity markets before the real economy. the risk you might have correction here driven by the equity markets, which affects, in turn, the consumer because of

capital losses they make on their equities. it is certainly a risk that we have in our horizon as well. stay with us, we have a little bit more to get through. a quick line. the have taken a stake on helton. that is the equivalent of about 3.7% stake. this is in helton worldwide. in terms of the percentage of the fund, it's investment represents 13.9% of the net asset value of pershing square. that is where little bit of the stakeholder in that particular business. 3.7% stake. >> is talk ubs. net income beating the highest estimate. sergio ermotti reaching a target

for the second time this year. sergio ermotti will join us on bloomberg tv this afternoon london time. tune in for bloomberg radio live on your mobile device. stay with us throughout the day on all of bloomberg's different platforms. this is bloomberg. ♪

manus: asian stocks are being sold off quite aggressively. we are just on 7:20 a.m. in london. futures are open. let's check on those markets. asian stocks, $5 trillion have been wiped off the value. this is the perception of the market. global stocks are poised for their worst month in more than six years. bid.r-yen, yen is

a walk in the park for the bond markets. markets,s in equity they are gone. daya: it is an interesting when the btp keeled is one of the least interesting things. up just one basis point. we could see a seventh day of losses for european equities. futures point lower by 0.6%. you talked about gains being wiped out. the nasdaq in correction. october so far the worst month for u.s. equities since 2009. futures point to a higher open. a little bit of an open in the green at the start. let's get the bloomberg business flash. a be inverse has cut its dividend and half as it seeks to pay down its $109 billion debt mountain.

the belgian-based company, the world's largest brewer, reported third-quarter profits that missed expectations. dropped.s sales growth tesla's shares have surged on germany's trade gains after posting only a third quarterly profit ever and generating more cash than expected. adjusted net income came in at two dollars 19. -- $2.19. about -- that was was a dramatic turnaround from the billions tesla had been burning as it ramped up her action. -- ramped up production. ford is already seeing consequences from exiting this is been market. automakers apprise wall street with better-than-expected earnings due to selling more high-priced trucks and sport utility vehicles. goalompany jettisoned its

to reach an percent profit margin by 2020 and did not say when it might get there. >> we are backing off achievement of the targets by 2020. we are still working very aggressively to achieve an 8% or better ebit margin. we have pulled that ahead in the first quarter based on business we have seen, external headwinds that have gone against us. juliette: that is your bluebird business flash. -- bloomberg business flash. you're going to get a central bank decision from turkey. .hey are due to decide economists believe they are going to hold rates steady at 24%. nejra: it is the turn of the ecb with policymakers to confirm asset purchases will end this year.

that is at 12:45 u.k. time. manus: watch out for an important update. , what does report the eia have to say? 3:30 u.k. time. for more on today's big event, thes the ecb rate decision, european economist at hsbc is our guest host this morning. when it comes to the ecb, some say it is going to be a snooze fest. in terms of growth, you say whatever problems the fed might are amario draghi multiple version of that. what do you mean? the ecb faces is they are trying to convince the market that everything is on track, that they can start hiking rates after next summer. you might want to define summer. obviously at the same time they are seeing growth is actually

slowing. we had bad numbers yesterday on the tmi's. the market does not believe them. we also don't believe them because we think it's going to be hard for the ecb to start it rate hiking cycle in the moment in which the fed might be down, global growth might be rolling over. and when inflation is not coming through. core inflation is stuck below 1%. draghi faces a mountain of challenges. to some extent, they might have to admit that risks to their growth outlook skews to the downside rather than balanced as they have been telling us. nejra: you expect a 15 basis point deposit rise next september, but you expect one and done. why? >> we think it's going to be hard for the ecb to start hiking rates when the fed is down. if they try to do that, they will be in the same situation

the fed was in 2014 where the euro does the job for them. the last thing the ecb wants is a growing euro. the ecb will struggle. they might get away with one hike before mario draghi leaves. we think they are going to straddle a loss. we might be stuck with negative rates. manus: you say the currency will take the slack there. is it your base case that the dollar's rise continues as a ballast very briefly? wrecks absolutely. -- >> absolutely. that rate differential is so high. we think the dollar rise has got legs. nejra: thank you so much. coming up this afternoon i will speak with sergio ermotti, the ceo of ubs. you can see that interview at

12:30 this afternoon in london. i will be heading over there later. it was a big beat for ubs on the net number. that is it for "daybreak europe." this is bloomberg. ♪

nejra: welcome to bloomberg markets, the european open. stocks slump around the world. let down again by tech stocks. the s&p 500 is now negative for the year with the biggest drop in a month since 2009. the cash trade in europe is 30 minutes away. nejra: