mark. down thisther leg morning. we saw philip hammond talking about a good brexit deal, allowing more's public -- more public spending. bounce in theng a dax at the start of the european equity trading day. let's get the markets open and look at where we are trading. futures, we are expecting to see some positive moves. u.s. futures have been positive overnight. european futures have been positive, and we have seen positivity in the asian session. a lot of concern if that was generated domestically within china, but those who wants to jump in on those comments from president trump saying a good deal as possible. 24 hours after bloomberg carried a story suggesting further tariffs could be imposed on china by december if talks fail . -- .

ibex. on the set up the imap and show you how the european equity markets shakeup from a equity perspective. energy is in the green, as our industrials. financials look fairly split at this kind of level between the gains and losses. interesting to see energy on the rise because bp was a stock focused on this morning. i've got the mrr function that tells us which of the individual stocks are on the move. interesting to see william hill, 3.4% up. met --icies, new tax measures on the gaming sectors. we have seen william hill trading up 3.4%. 3.3%, bp gaining announcing results net profit looked ahead of estimates. ocado up 2.4% this morning.

to the downside, one company we mentioned in there. reckitt down 3.7%. revenue coming in below estimates, like for like sales below estimates at that household products business. we will wait for opening prices on other companies we were talking about. bnp, lufthansa, bmw newsworthy as well. matt: european markets in general, opening up following broad gains on asian indexes after u.s. president trump said he expects it "great deal with china." despite the positive impact on stocks, washington is said to have threatened total tariffs if talks with xi breakdown and when osiris next month. joining us now, ben jones at state street. how much turns on this global trade war?

it seems to affect so much that investors touch, especially in the equities base. do you have any optimism? >> i do have optimism, but not necessarily from the trade side but more because of the reaction we will get. from china. -- different china. get from china. china has responded with stimulus and we have seen that rhetoric ramping up. from trump side of things, the rhetoric on trade is going to only increase over the course of this week as we go into the midterm elections. report yout with the were running yesterday saying that he was ramping up these tariffs and they are likely to be on all imports from china. i don't think that is going away and will add volatility, but the key think we are focused on is what is the reaction out of china and does that mean china will slow down or stabilize, and

we are in the camp that china will stabilize. anna: good morning to you. let's stick with the china thing. you are watching response from china. in what form are you watching for that response? this shows the one falling -- yuan falling against the u.s., but general currency weakness, does that continue? ben: we will probably see a little stabilization. we are probably getting close to the seven handle, a key level. it has been butting up against that for a little while. we won't see a material breakthrough that. the things we are looking for are a pickup in activity, stabilize a share in corporate profits, which we have seen some indence of overnight response to a combination of fiscal and monetary stimulus over the course of the period. we are at this stage where china

is almost doing the do whatever it takes moment. it is stirred -- throwing every thing the private sector and xi jinping and his vice premier have been clear they are there to support the domestic market at the moment. matt: what do you do to profit off that in the most efficient way? what vehicles do you buy? which investments did you make to profit off chinese stimulus? here, youtime i was asked a similar question and i said it was about the commodity related areas and materials. i stick with that view. i think the stimulus that is coming through at the moment is very much directed at the domestic economy in china. back to that age-old commodities do reasonably well. these are areas that have value at the moment and over recent months, we have been concerned about valuations in other areas when it comes but

to energy, material areas, these are the areas that offer some value and offer you that decent exposure to china. you probably get moves like overnight in the auto areas. we have also had good numbers from vw overnight and comments as well,ated to china, but i am not sure that is the best way to play the china story. i think it is about the older economy and the materials. , senioren jones multi-asset strategist at state street, stays with us this morning. quick word on the movers in the early part of the session. bp is on the move and shares in a year. vw at 4% on the back of their numbers and to the downside, deutsche lufthansa down by 4.7% this morning. let's take a look at the oil price now, very relevant to a couple of companies mentioned.

in the last few days before u.s. sanctions on iranian crude coming to place, the jamal khashoggi affair isn't completed. plenty on the agenda for neg executives at the singapore atmit -- energy executives the singapore summit. haslinda amin is there with a guest. haslinda: oil has been down about 8% because of the looming u.s. sanctions on iran, november 4. we are joined from singapore. good to have you with us. lots of questions, mixed signals. full of supply or is there clarity? >> as of today, the markets are well supplied. there is a significant amount of oil to meet demand. for today.

and the day after tomorrow is very important because there are three important factors. number one, the oil demand, growth is still significant. we see signs of weakness in oil demand growth, but still compared to historical averages, still very strong. number two, you mentioned iran. exports are falling down rapidly, more and more in the weeks to come. plus, oil production is in three, in- number addition to these factors, strong demand growth. there areer, iran, soft spots in the oil-producing countries such as libya, nigeria, putting all of these things together, i believe even

though we saw some -- in the markets the last few days, we are not out of the woods get in terms of the oil markets and the tightness. important to keep your eye on the ball. haslina: keeping an eye on november 4. how much supply will be removed? this is not clear to anybody yet. i cannot make any guess here. i don't know, but even if i -- i know there are ongoing discussions between governments involved but i know one thing. it will be lower than today, the arabian exports. -- iranian exports. producersge the key

to bring more barrels to the go to so that we don't undesired territory in the last months of the year. haslina: how optimistic are you about waivers? fatih: i know the discussion between the u.s. government and governments, we don't know how it goes. the results would be good for the oil market and oil prices. haslina: a colleague was talking about the weakening yuan. the weakening yuan has impact on the other emerging-market currencies and puts a lid on the demand of oil that can make. how do you see that playing out, given the yuan is expected to weaken with a strong dollar? fatih: we see this as a problem, not only with the yuan, but other emerging-market currencies. the rupee is the same. many emerging markets in this region -- we see it and it has

major implications for consumers and governments. 10 days ago, the oil prices were $85. terms, aured in rupees consumer in india was paying the they were paying when the oil prices were $147 a couple of years ago because the rupee lost value with the u.s. dollar. view, i thinkt of it is very important for all of us, business and consumer, to see that higher prices will be detrimental for the global economic rope -- economic growth. the bulk of growth comes from emerging countries now and if fiscal positions are negatively affected with higher prices, this is not good for those

countries or the exporters because their consumers will be the best positioned. is expected to cut production given expectations of a slowdown in global growth? what is happening in emerging markets? opec: it is up to countries to decide what they are going to do but i would say given the demand, still moment to mr.. it is perhaps -- still there. with tradeng down conflicts, the currency crisis, but compared to historical averages, oil demand is still strong. plus, we are going to lose a lot of oil from venezuela, angola, iran. cutting oil production in my view would not be a step in the right direction. it is up to them, but i would think twice. haslina: dr. fatih birol, thank

you for your insights today. not saying yet what opec is likely to do. anna: thanks very much, our chief southeast asia correspondent speaking to fatih birol. interesting to see him call so openly to bring barrels to the market. higher oil prices could be damaging, is his fear. we will be speaking to the cfo subject of the company's earnings, released earlier today. the stock is doing nicely as a result of earnings. in that interview, 11:30 london time. this is bloomberg. ♪

matt: welcome back to "bloomberg markets: the european open." we are 30 minutes into trade. headlines.ur top angela merkel has decided to markingn as the leader, the end of a career that has shaped european politics. can 2005, merkel became the first female german chancellor. she secured her third term in the biggest victory for a german party since 1990. king 2015, she opened the door to refugees from the middle east and africa, inciting domestic opposition and two years later,

a party bloc led by her to the lowest vote since 1949 despite a booming economy. anna: a far right party entered the bundestag for the first time since 1953. her coalition suffered losses in regional ballots and she said she is stepping down as party leader and won't run from another -- for another term. the focus shifts to succession. ben jones, senior multi-asset strategy used at state street is with us. cast ofoked across this contenders, people who could take her place, the path for german politics, how crucial is it for european assets? she has been a bulwark in some eyes against the rise of nationalism, in favor of reform across the eurozone. she is not popular in the south of the eurozone. what role does her departure

play? ben: the important thing to remember is she is not stepping down tomorrow. she willnap elections, be leaving germany until 2021 and there is an awful lot that can happen in three years. politics in the background, brexit politics in the background. immediately, i'm not sure it needs a whole lot for assets. that is why you saw the reaction yesterday. has not explicitly signaled, but he hasn't been a massive surprise she will step down at the end of this term. i am not seeing it as a major event on european assets at the moment. there are bigger things to be focused on. italian politics is the key one and european earnings. that is the bigger story for europe, in my opinion. you are right in that

literally no one expected and let merkel to run for a fifth term. we all knew this would be her last term, but i think the rather thanevent, her not deciding to run for party leader, were the losses the cdu took in hessen over the weekend and her coalition partner, that she might have to rethink the government they are in right now. the likelihood of this government collapsing before elections in 2021 is not very small, right? what would that do to the euro and european assets? of: if you do get some kind collapse and you do get a snap election, that becomes a little but if a risk event, you've got that kind of breakdown, what is the result going to be? cdus likely to be similar, will get some kind of minority. they will need some coalition to form a government.

non-negligible that we get a snap election, but i'm not sure the result will be that different. the positive you can flip on this is and let merkel -- angela merkel has been fiscally conservative during her time. some names being thrown out can --less fiscally retrained restrained and perhaps we get greater spending in europe and that is the positive europe needs at the moment. anna: ben jones, senior multi-asset strategist at state street. we will return to that fiscal stimulus conversation in the future. let's get up-to-date on the stock stories moving markets. dani burger has those for us. >> it is all about the earnings today and to the upside, volkswagen surges more than her percent after strength in its ports business -- porsche business overshadows weakness in china. investors happy about this one.

positive reaction to bp's earnings today. profit beat even the highest estimate of one point -- -- at one point. coming up, interview so stay on that. on the other side, reckitt is really falling today. more than four point 5%, one of the worst-performing stocks on the euro stoxx 600. estimates for its profit for 4%. sales growth, only 2%. a lot of weakness in their health care business, which weighed down after a difficult 2017. a long way to go there. anna, matt? matt: thanks very much for that. this year's stock selloff has left few places for investors to hide, but in the search for safety, has it raked up new risks? we'll discuss that topic next. this is bloomberg. ♪

matt: welcome back to the european open. we are 25 minutes into the trading day. october has been the worst month for global equities since 20 ton with -- 2010 selloffs from hong kong to new york. the mliv question of the day, which hidden market risks may be exposed by the stock selloff?

multi-assetenior strategist at state street is with us in our london studio. what do you think about this question? what is your answer? what are the hidden risks we can see with this selloff? ben: it is a really interesting question and an interesting way of framing it. avoid the question, i will flip it on its head and say what other areas that are not so exposed to this selloff? the first i would flag is u.s. tech. i don't think that is a cockroach. i think we are still seeing reasonably decent earnings growth coming through from those areas, even though you have seen some of the misses coming through. some of the issue we are likely to see in the coming months impact of those areas that are most exposed to higher rates. those would be the cockroaches that i would be avoiding. shows you away from the

defensive areas that have done well over the past few months. andgs like telecoms utilities, which tend to be more bonds like proxies. those are areas that have high levels of everett -- leverage, are more exposed to higher yields. i think we will continue to see those creep through. anna: does that mean you are concerned about u.s. homebuilders and that area in the united dates? -- united states? ben: not massively so. there will be a little pressure on the housing sector with high rates and we see low mortgage approvals and a look -- the like. it won't necessarily be the straw that breaks the camel's back. crisis where the last was. is it going to be where this one is? probably night -- not. anna: thank you for your time, good to have you with us this morning. ben jones from state street.

next, the response from the budget -- on the budget. what does the labor party have to say about the giveaways from chancellor john hammond. a little move meant downward on the pound.

after donaldains trump's bullish rhetoric on trade, even as washington is said to threaten total tariffs if talks fail. vw sticks to its full-year goals as china make clear the road with a tax cut on car sales. shares are up more than 7% over the past two days. the cfo told me that things were looking up for the company. >> we should to better in december and keep our forecast for the full year. every customeror until the last day and that is what we will do. matt: bp smashes estimates.

the oil giant is up most -- the most in a year. we speak to the cfo of the oil company at 11:30 u.k. time. welcome to "bloomberg markets: the european open." and vw's miller headquarters alongside anna edwards at bloomberg's european head orders in london. anna: let's have a look at how things are shaping up across the mrr. to the upside, the biggest gainer up by more than 7%. the part of their business they have had positive feedback on, phase three data coming in positively. cryogenic, up. the retailer in the u.k., buying a u.s. airport -- digital retailer, up 6.2% as the market likes that. also talking about adventures into the united states. volkswagen, matt mentioned those

numbers. that stock 4.5% up. bp, up by 4.4% as numbers came in well above estimates. to the downside, a rollcall of companies that have delivered numbers. down by 8.8%, a water rights business. deutsche lufthansa have decided to capacity -- capacity,. reckitt, also falling on the back of numbers as is b.n.p. paribas, down 3.5%. numbers better than estimates, the commodities, fixed trading, a weaker story. let's get a first word news update with desley. anna: sources in washington say the u.s. is preparing to slap if talksn all exports fail. the meters are x -- leaders are expected to meet at the g20. the announcement would mean $257

billion in new duties around the lunar year. speaking exclusively to bloomberg, the ceo of rio tinto, the world's second largest miner says despite talks about trade wars, current demand in china is strong and the company's audibles in the country are full. >> the mood is still pretty good. lots of talks about trade wars, but if you look on the ground, if you look at aluminum, iron ore, just in copper to name a few, they are full. so the chinese machine is still working very well. data from the crashed indonesian airliner shows it hits the sea at hundreds of miles per hour. it plunged from 4800 feet in a flightsmpiled by tracking system. it was carrying 189 people and all are assumed debt.

shortly after leaving jakarta, a pilot requested permission to return to the airport. that indicated the cruise may have been -- crew may have been dealing with a failure. the u.k. government has announced americans are allowed to use the electronic passport around the country. citizens of other countries are also to be afforded the same right as the u.k. aims to open up beyond the european union. 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. this is bloomberg. humphrey -- desley humphrey, thank you. , icbc,the biggest banks net income came in at 79.2 billion yuan for the third quarter. they got approval -- they tell

us they're netting first -- net for nine months, 2.3%. we will keep across that chinese story as it filters through into trading tomorrow. let's talk about what is going on in the u.k.. philip hammond has declared austerity is coming to an end for taxpayers in the u.k.. the british chancellor tried to thesure voters and short up morale of lawmakers by peppering his speech, budget speech with spending pledges and a surprising contacts cut -- income tax cut. >> their hard work is paying off and the era of austerity is finally coming to an end. we are at a pivotal moment in our the new -- eu negotiations and the stakes could not be higher. get it right and we will not only protect britain's jobs and prosperity, but also harvest a

double deal dividend. we are confident we will secure a deal which delivers that dividend. confident, but not complacent, mr. deputy speaker. we will continue to plan for all eventualities, shows the deficit down from almost 10% under labor to less than 1.4% next year under this conservative government. the government will be -- pf2.sh the use of pfi and or fairt sustainable that digital platform businesses can generate substantial value in the u.k. without paying tax here in respect of that business. we will now introduce a u.k. digital services tax. this will be a narrowly targeted tax on the u.k. generated revenues of specific digital platform business models. important that i emphasize this

is not an online sales tax on goods ordered over the internet. we are determined to increase recycling. we will introduce a new tax on the manufacture and import of plastic packaging which contains less than 30% recycled plastic. austerity is coming to an end, but discipline will remain and that is the clear dividing line in british politics today. anna: that was the chancellor speaking westminster yesterday. labor'sus this morning, shadow chancellor to respond. good to have you with us this morning. talkingd philip hammond about austerity coming to an end. i guess you have a different definition of when austerity comes to an end? what w what we need to see? >> prime minister promised a four weeks ago.

it didn't and because austerity is rolling out. inhave seen additional money terms of the health service, but the health foundation has said it is nowhere near enough. noer schools, there was day-to-day money for the running of our schools. no money for additional police officers. we've lost 20,000 police officers off our streets. -- climbinge is red and there is nothing for local police or councils. when local charis collapsing in the community, a gap of 1.5 million pounds, half of what is needed and for children services -- we're having a record number of children coming into care since 1985 because of the cutting children services. a funding gap of 1.5 billion, none of this displays austerity coming to an end. anna: so not enough, it would be your view, i take that.

at any timening since 2010, did you spot anything slightly labor like about this? the size of this giveaway? there were a number of token moves. some of it onto labor's agenda because the conservative party are bankrupted in terms of ideas. unfortunately, it was all political stunts and already what we are seeing is the older budget is being unpacked. are laying off teachers at the moment. i can't get support for my special needs children. teachers are criticizing it. police officers are taking the government to court to get their pay. if you look at health, 4 million are on the waiting list. this will do nothing for them because our hospitals and clinics groups are already 11 billion in deficit. people are pretty angry.

words yesterday, but no delivery and that is disillusioning people pretty quickly. anna: did this have signs of being a pre-election budget with a lot of talk about whether it was designed to be that? do you see this as a pre-election budget? ben: a lot of commentators are saying it because it has all the evidence of what tories usually do. conservatives usually cuts taxes and when they get elected, they take them back again. it might be, but i think it is a reflection that the conservative party are worried they will fall apart over brexit and they may well be forced into a general election. potentially, they are preparing the ground and the is other information about that because departmentalf the budgets will be protected. they will not. even the protection he is offering is temporary. maybe they are planning for an election in 18 months time, but

will happen now -- he's announcing the end of austerity, people will not experience that in their communities in weeks and months. disillusionment will set in. we are ready for it. anna: you are ready for it, you say. voteave also said he will against the government's brexit deal if it doesn't deliver against yorkie test -- your key test. do you still plan to reject any deal theresa may comes back from brussels with? ben: not any deal -- john: not any test. we set out the deal the government promised us. we say this is what you promised us. we will judge against what you promised us. the key test for us is, will the deal protects the economy and protect jobs? if it does, we will support it. , evenancellor yesterday on the day of the budget with the prime minister, seems to be

bobbing and weaving. at one point, he supports the no deal and other times, says we need a deal. we have said to john hammond, for goodness sake, stand up and get this deal negotiated. can'tt is conservatives negotiate the deal, we say they should stand to one side and let the labour party takeover because we can negotiate deals, protect jobs and protect the economy. anna: thank you for joining us, john mcdonnell, the u.k. shadow chancellor. numbers out getting of petrochina, first-quarter net income growth of 348.5%. net profit coming in at 21.0 4 billion yuan. the latest on the chinese oil story. let's take a look at our stock of the hour today. after theswagen incredible gains we saw yesterday and today.

yesterday, driven by reports china is going to cut sales tax on all cars with engines of 1.6 liters or smaller. inay, driven by a beat earnings on the bottom line, a beat on the top line, and a forecast unchanged. why would that drive shares up 4%? because their competitors keep reducing their forecasts in light of the trade wars. doesn't seem to be hitting volkswagen is hard. here come you see the graphic dashboard where you see screens giving a wealth of information on one square. you see the change up in price, but you also see the boosting volume. over the 20 day average, volume is up 145%. interesting also to take a look at the consensus rating, 26 buys , three holds, and one cell. next, we will be speaking to the chief executive patti roberts on the company's earnings. this is bloomberg. ♪

matt: welcome back to "bloomberg markets: the european open." 45 minutes into the trading day. i want to get back to the oil story. third-quarter figures this morning had a wider loss and estimates, sending shares lower. the company says opec ramping up production has brought increased

cargoes and demand has remained resilient in the face of higher oil prices, which are coming down. joining us now, patty rogers, the largesturonav, independent crude oil tanker in the world. about the current quarter. you missed estimates in the last quarter, the street was expecting more. will they get more? the laste big event of quarter was we closed with generate and became the largest oil tank company in the world, three size the market cap of peers. there would have been a lot of elements that were a -- difficult for the streets to get right, but the market has already moved on the back of good figures for demand. the fourth quarter looks to balance for the year average growth in demand and at the same time, iranian sanctions are really biting, meaning oil is being sourced from further away

and therefore, we are seeing u.s. exports increasing and that is very good for driving distances, over which our tankers sail. anna: let's talk a little bit ore 2020 because this is something that is incredibly important to your industry and you suggest to the wider industry markets and oil consumers, new rules on the amount of sulfur allowed to be in you'll's and they are shipped. what impacts is this happening -- having on business? paddy: there is still some uncertainty, but enough is clear. what we burn on board our ships, the whole of the shipping industry, refiners know it as residual oil. it is called residual oil because it is the waste product of the refinery. the refiners have been driving sulfur out of all the grades of their products. dieseln, trucking fuels,

, it has come out of everywhere and it ends up in our residual fuels. at the moment, the speed limit for sulfur in marine diesel oil is 3.5% on ships. on january 1, 2020, it will be reduced 2.5%. the last home for sulfur is being taken out of the refining market. this will affect the way oil is priced. shipping is consuming about 4 million barrels of oil a day, only 4% of demand but we produce about 40% of sulfur emissions. we are a big home for sulfur. ,his means oil gets regraded not just on viscosity or various opponents -- components but the single biggest price for differentials will be sweet versus our. this sends differentials between them higher. it means the oil refiners who are rather easily constructed will have to look for sweet oils. those sweet oils will price up and of course, they will be able

to run them and produce products without sulfur in them, but the ones that are heavy in sulfur will price down and that discount will mean the complex for finders can find cheap to make their products. trading oilsve around the world, increase demand for shipping. this is positive news for tankers. matt: what does it mean for your costs? whenever i hear about big regulations like that and look at a company like yours, i think it is going to cost a lot more to move the metal around the world. on the other hand, postacquisition, you have a lot more bargaining power with suppliers. paddy: the cost issue has been driving a lot of analysts at the moment because one of the rules that was brought in mistakenly was to allow the use of exhaust so old,ning equipment dirty fuels can still be used as long as he cleaned the exhaust.

the problem is once you have cleaned the exhaust, which you do with seawater, you industrialized pollution by pumping it overboard. this looks like something that is vulnerable to future regulation, but has a bigger problem for the shipping industry, which is that it is in hope of future decreased cost. our industry is famously volatile because the bulk of costs is in fixed have very low op ex. as a result, we bought him out when the markets oversupply at all caps and lose our values. this idea is putting the cart before the horse to spend more capital to access cheaper costs. but i think what we are hearing from the industry as a whole, the refining industry says we haven't paid attention to this in the past because they live hand to mouth on the margins and net backs they get from what they sell. now they are focused on it, saying clean fuels will be available.

chinese refiners have suggested the spread between the old and new fuels will be half what the analysts have suggested and we believe a year out, that will come down even further as more oil becomes available and our cost are not materially affected. anna: briefly on iran, give me your thoughts. is it positive that fuel will have to be shipped further? andy: yes, the loss of iran the three big gainers are russia, saudi arabia, and particularly the usa. for us, the usa, because all the oil is going to china, all around the world. anna: paddy rodger, the ceo of eoronav. interact with can the charts we use using the g tv function. you can catch up with the analysis. battle of the charges next. this is bloomberg. ♪

anna: welcome back to the european open. we are 55 minutes into the trading day. dani burger goes head-to-head in battle of the charts. >> we have seen equities rise today, but we are looking at a bear market in the global stock indexes. that is if you look at an equal weight measure to strip out the influence of the mega-caps. from the january high, we have fallen more than 20%. to give an idea of how much the losses have been, if we look at

the relative strength index, we can see for the past week, it has been under 30, leaving it in oversold territory. anna: what have you got? >> we have been in a new reality where we are more worried about u.s. markets and the rest of the world and this chart illustrates this. it is the euro stoxx 50's one year implied volatility minus the s&p 500. usually, it is above zero. people are more worried about european stocks, but that pattern has reversed this year and the question is if this is a temporary anomaly or the new normal. strategists have told me it makes sense when you think about u.s. recession risks and the fed raising rates quickly. anna: i will go with dani burger, sticking with the big picture story at a time we are distracted by the earnings numbers. matt, you have earnings reaction this morning? matt: absolutely. out, we areint

standing in one of the bright spots for the auto industry today. you can see that in the share of price action. volkswagen is up. schaffer is down 9% today. they make ball bearings for cars. ♪

tom: this morning, markets recover. beware the afternoon in new york

after yesterday's 900 point swing. all eyes on renminbi weakening. the president will deploy troops to man the mexican border. he quotes middle eastern people are part of the caravan. ge reports. good morning. this is "bloomberg surveillance." tom keene in new york. nejra cehic in london for francine. nejra: we are seeing a divergence in terms of what happened in the u.s. yesterday and what we saw in asia overnight and what we saw in europe today. a bounce back before we go lower again for equity markets. tom: we will see. right now in new york city, taylor riggs. taylor: president trump plans to

send 5200 troops to the southern border of mexico by the end of this week, escalating his response to a caravan of migrants heading towards the u.s. the move comes as the administration considers additional executive action to block refugees from entering the country. the u.s. president has made illegal immigration a front burner issue in recent weeks. data from the crash indonesian airliner shows the airliner hit the ocean at hundreds of miles per hour. this is all according to data compiled by flight radar 24. it was carrying 189 people. all are feared dead. shortly after leaving jakarta, one of the pilots requested permission to return to the airport. considering abe

tax cut for its flagging automotive industry. carmakers shares surged following the bloomberg scoop. rose 4% to 6%. buddha bank posting -- deutsche bank and b.n.p. paribas posting steep declines. with estimates and similar to what happened at its german rival. we hope there would be parity soon. weekend wait for that. -- we can wait for that. when it comes to brexit, i hear they want to have a transition.

is -- al is that there the u.k. government has announced they are going to allow americans to use electronic passport gates around the country. citizens of canada, australia, and new zealand will be afforded the same rights as the u.k. aims to open up the on the european union. 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. tom: thank you so much. equities, bonds, currencies, commodities. the lift on the screen right now. doubt futures up 69 points. a little curve steepening. on to the next screen with a churn in oil. the vix verily describes

yesterday's tumult. yen, and renminbi out near 6.17. the aussie bid. we are seeing a response in certain parts of the market. higher.ear move we have gdp coming in a little softer than expected. btp yields are moving higher as well. that is not off the gdp data. the cable study. stillot a recession, but challenging. let's look at the bloomberg. we have a series of charts. the vix with a six-day moving

average. tumult of laste february. it was out at 30. we are not anywhere near that, just under 25. we have moved up nicely here. we are not back to the february fear. that said, we keep looking at the reasons behind this most recent selloff. my chart is behind real rates. so many people have said look at what real rates are doing for the direction of what happens next. the cushion has been erased. the real federal funds rate is in positive territory for the first time since 2008. tom: joining us, chris turner of nomura.bob janjuah of what is your cash position right now?

i think if i am a portfolio manager, i think it makes sense. if i was a tactical trader, i would be looking to get long equities for a tactical tomorrow to three months -- two month to three month bounce. we are looking for an uptrend in u.s. equities. tom: in all the interviews we have done over the last four days, it has been looking for that sweat, that pit in the stomach that makes for more healthy markets. we have not seen that. bob: that is part of why there might be a little bit more to go. there is a chunk of people trying to figure out. explain what is going on.

i don't think we are a million miles away. i think if something new is happening we will break the lows of january and february. something different may be happening. until then, looking for a bounce. nejra: to tom's point of whether you are in cash at the moment, it is hard to find across asset anywhere offering positive returns. our junk bonds the place to go? bob: it depends on where you are. if we have the generalized l, junk bonds will not be a safe haven. the safe haven in that outcome is government bonds, particularly in the u.s. turner of ing, dollar strength has held up as we saw the s&p selloff. chris: i think the market is

positioned long dollar at the moment. tom was hinting at a complete deleveraging, maybe the dollar might temporarily selloff, but the reasons we are here is this the synchronized global growth synchronized global growth scenario. dollar-yen look at as the global litmus paper, i am wondering if it is affected by domestic affairs or if it is actually a global indicator. which is it? i think it is mainly the international story at the moment. japanese investors putting money

into u.s. treasuries makes it difficult to hedge the dollar exposure. it is positive for the dollar. the boj has an important meeting tomorrow. there are no expectations that the target for jgb yields are going to be altered. it is a global story. chart, if youthis would. this is the high-yield credit default swap. it is a little obscure. angst. 2011 with some some more price to buy protection as they say. here is the nirvana of the beginning of this year. is high-yield finally unraveling? longer-term on a view deep into next year, i think we will see a meaningful top in equities and a bigger

correction next year as the rate hikes spike properly. i think high-yield is vulnerable. hurt,as the first to get but beyond that, people are looking at u.s. high-yield as a place where a lot of companies have used debt for financial engineering purposes and ultimately nonproductive debt. i think european high-yield idiosyncratic risks abound. i am less concerned today about european high-yield than i am about e.m. or u.s. certainly something pros are watching. lots of good guests coming up in the next hour. this will be superb on risk in the system. the former head of the swiss national bank, vice chairman of blackrock, philipp hildebrand.

stay with us. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." surge inported a profits, giving the company the confidence to fully fund its $10.5 billion u.s. shale oil deal with cash. adjust in demand income was the highest since 2012, beating even the top analyst estimate. says the shale acquisition will transform the company's position in the u.s.. speakingay, we will be

to the bp cfo at 11:30 a.m. in london. volkswagen is sticking to its goals for the year as robust demand for porsche helps to stem the fallout of trade tensions. it came in ahead of average analyst estimates. mission tests in europe triggered costly production bottlenecks this year. november and december we should do better. it is certainly a fight for each and every kind of customer until the very last day. that is what we are prepared for. taylor: that is your bloomberg business flash. nejra: thank you so much. angela merkel has decided to step down as the leader of the cdu, marking the end of a career. in 2005, angela merkel became

germany's first female chancellor. in 2013, she secured her third term. opened the door to refugees from the middle east later,ica, and two years she took the lowest share of the vote since 1999 for her party. this month her coalition suffered losses in regional ballots, and yesterday she said she is stepping down as party leader and will not run for another term as chancellor. possible names for succession include her hand-picked successor and rivals. tony joins us from berlin. great to have you with us. attention turning to succession. directionof different could we see german politics

take based on potential successors? thate accepted wisdom is there are two camps, one of them is the merkel continuity camp. this is accurate crop coward our, the secretary-general of the party hand-picked by merkel not so long ago. it is a powerful post because it puts you in control of the national agenda of the party on a day-to-day basis. right, frederick mertz, an old enemy of merkel who would stir things up certainly. and a younger socially conservative critic of merkel who has been waiting in the

wings. there is a battle for the soul.s the most likely outcome is that it will pull the christian democratic union back to the inht, and that also means german terms closer to the political center because merkel has run some very liberal policies. angela merkel's legacy is economic boom and loan employment. is that at risk? >> i think the market reaction tells you germany is still the economic anchor of the eu and the euro area. the markets see it as very stable. obviously that can change, and there will be voices that say merkel did not do enough to

choose the economy for the decades ahead -- juice the economy for the decades ahead. that is not an entirely unfair criticism. policiesun a lot of that go into social programs and into that direction to keep the social democrats on board in her government. germany is very stable. the economic boom is not about to fall off a cliff for sure. that is one legacy where she goes out with her head held high. tom: thank you for the breathing. german government editor for bloomberg news. this is a great briefing. you have to go see bob janjuah at number. nomura.to -- numbe six-daylook at the vix

moving average and stranger nejra cehic things as well. this is bloomberg. ♪ ♪

nejra: i am nejra change in new york. for more on europe with bob janjuah of nomura and chris turner of ing, we were talking about a possible merkel transition before the break. is the upside potential for the

euro limited? >> probably in the near term. based on conversations earlier, last summer, the euro was doing better when we had this window optimism, business confidence very high at the start of the year. as 2018 has unfolded, we have had trade and uncertainty around germany. until you have a clear indication that u.s. growth is slowing, and we haven't at the moment. recessions don't die of old age. are your clients turning more positive on europe, equities? >> now. i think the u.s. story is known. we know there is a trade issue, a monetary policy issue. people are more concerned about

politics i'm having more discussions in the last month about the sustainability of this whole thing going forwards if it appears off that way or if macron continues to fall in the popularity ratings. i think those pressures, almost all outcomes, europe seems to struggle more than china. china has some flexibility. more than the u.s.. to james not at least call on u.s. unemployment a bazillion years ago. to find the big move. what is the big move of 2019? have the fed hiking three times. that is pretty aggressive. i think with the dollar rate story, that is pushing 10-year yields up to 3.50.

i was talking to bob, perhaps the u.s. late cycle for a while, but i think 2019 will look like late cycle economy. we can talk about in terms shortly, but i think the late cycle for the dollar, it will hold onto its gains early part in the late cycle. it will only be one the fed says we are nearly done that the dollar starts to turn. tom: what is your yen call? what is the ing dollar-yen call? >> for the end of 2019, we are at 100 from 112. tom: extraordinary. 1-0-0. nejra. nejra: we love to get these calls. we just got that $100-yen call from you. .able from you what would you be buying? >> we think it is in the by

zone. deal fears kind of growth. we think ing will be a soft dealer and cable can bounce back to 1.32. nejra: coming up, america's at 11:30vary bp cfo london.e this is bloomberg. ♪ ♪

tom: red and green on the screen. nejra cehic in london. i am tom keene in new york. positive nasdaq, a little red. huge volatility yesterday.

right now, here is taylor riggs. taylor: sources in washington say the u.s. is preparing to slap tariffs on all chinese imports if talks between the presidents fail. they are expected to meet briefly at the g20 next month. that would mean the introduction 250 billion ine new import duties. we have really helped rebuild china. they have been taking out an average of $500 billion a year for many years. not going to happen anymore. taylor: u.k. chancellor philip hammond has promised an and to austerity despite weak growth forecast and uncertainty over brexit. as well as extra cash for the national health service, the

promises money for schools, roads, and defense and a next her 500 million pounds in case the u.k. leaves the eu without a deal. a tax on tech companies like facebook is among the measures and an increase in duties levied on internet gaming operators. a new chief business operator was hired on friday and replaced on sunday. ceo evan spiegel promoted kristen o'hara but then changed his mind, rescinded the offer and picked jeremy gorman instead. snap, had hardly left telling colleagues she was going as part of the changes to team structure. 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. i am taylor riggs. this is bloomberg. thank you.

the u.s. is preparing to announce tariffs on all remaining chinese imports by early december if land talks between president trump and xi ires failedbuenos a to produce a deal. >> we spent a full week in china. we had a meeting with many of our customers come its suppliers, partners. the mood is still good. customers, suppliers, partners. the mood is still good. orders are full. what was clear, and it is not a surprise, the chinese government is putting more money into the system. they are putting more money at the provincial level. that is something we did not expect.

in the end it doesn't really matter. if you look at the statistics, the highestroduce amount of steel ever. demand is strong. chinae no doubt will lead the way in terms of aluminium, copper, and some of the new metals in terms of battery technology. we see significant upside. even if it is not clear-cut what will happen in practical terms, that will generate more demand for product. we are a capital intensive business. tom: those comments from australia.

what is the polls in hong kong kong?se in hong >> it is interesting to hear those bullish comments. the question now is whether these talks next month can yield anything. the markets yesterday were down. there was this turnaround with the comments from mr. trump aired the stakes are very high going into this meeting. progress, that will lift the mood, if there is not, it will be negative heading into 2019. michael shall made it clear he is only looking at the chinese equity markets. audienceto our global

the daily volume flows of those two markets. how do they differ from normal western markets? >> the ownership of china's stock market is very small. it is dominated by state-owned enterprises that are only partially loaded. it is minimal compared to authors around the world. the linkages are not that great. it is much less than you would have in the u.s. and elsewhere. the bigger focus when it comes to china's market remains on themes of stability. it is tougher for the authorities to control the stock market. they are having a better run with the currency right now. it could certainly upend sentiment. a bigger focus on currency rather than the stock market. yuan has depreciated

over the last several months. is that a key level? >> there are differing views. it is an important psychological level. it is really the pace of the decline that counts. we are not far off seven. it would not take much to push through that territory as it is. the declineace of as it continues to accelerate further. that would put pressure on the capital outflow story. then you get into a kind of rinse and repeat negative cycle. if they can manage that dissent gradually and slowly, then they should be fairly tolerable for authorities. manyreally appreciate the weekly briefings we get from hong kong. i want to talk foreign-exchange in our next section. bob janjuah with us from the nomura. i was learned from my guests.

this is the chinese stock market. michael says this is elegant. he is right. since the beginning of 2018, the shanghai index is a textbook short. it is a gorgeous chart. it is what i would use in a technical analyst course. how do you look at chinese equities? i think they are a little different from equity markets around the world for the reasons that were covered. signaling that comes out of the chinese stock market into the global context is weak. i think in terms of the stock market, in china it is very domestic. it is narrowly held. me i don't think they are a brilliant indicator on what is going on on the ground in china or what is going on with policymakers in china.

i think the currency is the place to look at. nejra: would you advise to get exposure directly to china or through developed markets and developed market corporate's that have exposure to china? >> it depends on what business you are in and what relationship before partner has with the domestic partner. meant to structurally have china equity exposure? yes. it is low correlation with the rest of the world. oft i recommend a kind overweight position in china because it is cheap and so much, no. that mean the dollar takes another leg higher across the board, or are there other impacts you are looking to take opportunity in?

>> i think the dollar would have a leg higher. in 2015, there was a strong correlation with dollar across the board. this year it has been more exclusively dollar asia. in general, i think em will be under pressure. going back to your point, i think the chinese authorities would like to break that psychology of cell china when you have the currency selling off, equities selling of your i think it is a psychological level for them. tom: very good. chris turner with us and bob janjuah as well. agoo just published moments thoughts from the president. there is a stunning statement by the president of the united states, by executive order he wants to do away with so-called birthright babies.

we will have much more on this in our next hour. on economics and chicago economics, the chairman of the president's council of economic advisers, austan goolsbee in the 8:00 hour. this is bloomberg. ♪

tom: "bloomberg surveillance." one week to the midterm elections in the u.s., and the president is in full statement mode. this is a bombshell from his interviews with jim brendan ryan over at axios. they published moments ago that the president states by executive order he will do away with so-called birthright baby

citizenship. this is an extraordinary and unique american thing. for our global audience to translate this, if you are an undocumented alien in the u.s. and have a child in the u.s., that child is a u.s. citizen. to select onesays quote, all persons born or naturalized in the u.s. and subject to the jurisdiction citizens to the u.s. with us, bob janjuah of nomura and chris turner of ing. chris, i need to revisit your 100.g yen call to is that coupled with a strong dollar as well? chris: we see the dollar staying

strong into q1. dollar-yen perhaps can go 115htly higher, maybe up to potentially in that window, u.s. rates having another 20 basis points higher from here. and thet to next summer end of the fed cycle, the market u.s.s to fully appreciate stimulus. as the u.s. economy comes down to earth and sustainable levels of growth that decent nice story nchronized story unwinds, we think it is fair value. tom: does this happen with stability? some of these moves, i have one saying 130 yen, chris turner

with strong yen, and the assumption is these are glide cats. -- paths. how glidy are they? bob: i think it is challenging next year for markets and all of us. i think vol is on a sustainable path higher. my view on treasuries reflects yen.'s view on dollar 3.40.ooking to get up to i think that happens in q2. i want to be buying bonds and selling equities. that matches chris's view with dollar peaking middle of next .ear and then coming off i don't think it is going to be easy to trade. aheadnt to be de-risking

of that, not waiting for it to happen. back, just to go generally a risk off scenario, chrises fall 2019, or as was pointing to the synchronized story unwinding, is that where you are? ofto me it was a series one-off china stimulus, trump physical. that is wearing off. we want to talk about midterms. two ina fiscal package the u.s., it is clear the u.s. will converge down with the rest of the world. in that context, this is not the house view, my view, i would not be surprised if we talk about middle of next year. nejra: what does that mean

beyond the dollar for the em world? >> i know you talked about the real fed funds rate going positive. -- have typed fed rights tight fed rates. you have the house view of 2% or 1% world growth. those headwinds are growing. it is a pretty difficult environment for emerging markets in general. it is a shame because currencies are under pressure. they have to run higher rates than they would otherwise. >> the other thing worth mentioning is quantitative tightening. we talk about the price of money, but the actual availability of money in global markets based on with the ecb is doing, dollars are going to get rarer. the people that need dollars the most are e.m.

nejra: with qt and the tightening of global liquidity, that is the reason for the selloff. many reasons we could discuss. we will continue throughout the day and the days to come. janjuahrner and bob stay with us. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. strong performance in its biggest market allowed bbva to offset losses in turkey and argentina. it came in just about analyst estimates. the appreciation of the mexican peso helped to offset impairments in turkey and argentina, whose currencies are among the worst performing this year. >> i think we have a very good bank in turkey.

we hold a little below 50% of guarantee. that is 5 billion euro in investment in the country. we remain confident that things will be brighter as time goes by. that is your bloomberg business flash. tom: thank you so much. we want to continue this important discussion we are having with us for turner of ing. bob janjuah of nomura with royal bank of scotland for years. senior independent client advisor, that is an original title. what do you do for nomura? bob: some people would say not a lot. i am there as an elder statesman. tom: ok. i want a banner made right now, bob janjuah elder statesman.

can you do that, alex? with the other statesman and the young turner. here is 2019. have a difference of opinion. here is dollar-yen as a global proxy for risk. a lot of people are a. with weaker yen call. what is the distinction of how again trades 14 months out? explain yet as global proxy. bob: my view on that might be weakening a little bit. i think we have a pretty decent level of clarity on what things are going to shape the dollar going forward. midterms are a critical thing to discuss, but putting that the one side, we know this is going to keep going.

dollar is going to trend higher. i think when we talk about japan, like many people, i've been in markets 20 or 30 years, and since the beginning, we have been calling the end of japan. it is not going to happen. and talk toto japan policymakers, corporate people, and i see a country that is fully aware of its issues, it's problems and trying to deal with them. i am probably less panicked about japan and the japan debt burden than i used to be. i can easily see an outcome where the fed is forced to price in an easing fed next year. nejra: you said dollar-yen is hard to call. what else is confounding you right now? short-term is this complete

uncertainty over midterms. you can talk to anybody you like, and you get any outcome you want. i think investors in this market this year are probably more focused on that issue than any other issue right now. i think certainty on that gives us some clarity for the quarter at if not the year ahead. justices you understand, chris turner, it needs he gets a table for tea in the afternoon. let's go back to sterling as well. chris turner, ing with the british brexit and politics, what is your call on sterling? we think after brexit we had a 15% fall in sterling. sterling based on medium-term fundamental models seems to be working.

it is cheap. deal,f there was no perhaps you would say the worst case for sterling would be 3% or 4%, not another 15%. that would be our opinion at ing. the position at ing is one for a deal to be done before december that gets voted on in january in the u k parliament. tom: this has been fabulous. chris turner and the elder statesman, thank you so much. up, and important conversation with philipp hildebrand of blackrock on risk. and kevin cirilli on the president and immigration. this is bloomberg. ♪ bloomberg. ♪

tom: this morning, markets recover. where the afternoon in new

york with a 900 point swing. all eyes on the renminbi weakening. deploysas president troops to man the mexican border. risknsider fear and october 2018 style. in this hour, philip held brent and blackrock. this is "bloomberg surveillance." is tom keene paired with me nejra cehic . the president in a conversation with axial's making it clear he will vote after the fourth amendment and the birthright for children born in america of undocumented aliens and a few other definitions. i will tell you, this will be the discussion over the next seven days to the election. nejra: it is extraordinary.

the question for me is whether the president has the power to do what he says he will do, something we will discuss. busy in europe as well. we are talking about the fallout of angela merkel saying she will step down for the -- from the leadership of the party and what it means for the economic boom. european data out this morning, some showing softer than expected. tom: good to have philipp hildebrand on a busy news day. there is taylor riggs. plans toresident trump send 5200 troops to the southern border of mexico by the end of the week, escalating his response to a caravan heading toward the u.s.. the move just days before the midterm alexis -- elections comes as they consider additional legislation to block

them. it has been made in front issue in weeks. u.k. chancellor premises early tax-cuts. that is with uncertainty around brexit. the budget statement promises another 500 million pounds in case the u.k. these the eu with no deal. a new digital tax on tex companies like facebook was among the cash regime -- cash raising measures. promisedime minister four weeks ago and she said austerity will end and yesterday it did not end. we have seen additional money in terms of health service, but the foundation is no are near enough . taylor: the indonesian airliner

crash hit the sea at hundreds of miles an hour. inplunged from 4800 feet just 21 seconds. that is according to data compiled by flight radar. it was caring 189 people, and all are feared dead. ,hortly after leaving jakarta one of the pilots requested permission to return to the airport. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. tom: thank you so much. at least, bonds, currencies, commodities. i don't know what to say about the data check. green on the screen, dow futures of. -- up. the vix, 24.39.

yen weakens. swiss to do it, euro five decimal points, which is 859.we do, 113 i am looking to getting some guidance from philipp hildebrand. it is hard to get a gauge on what is going on. the aussie dollar saying it is risk on. we look to the u.s. open to get some directionality. we have seen eurozone data come through which has shown growth unexpectedly slowing to the weakest in four years. italy stagnating and yields moving higher on the 10 year bond and also in italy. surveillance" is

about economics, finance, and on politics and international relations. across that is risk and uncertainly. philipp hildebrand is with blackrock are he is the former head of the swiss national bank with a lot of good academics in thinking about a broader picture of risk. he joins us now. good morning. what is the risk meter for hildebrand right now? when you look at the markets and new volatility, what is your definition of risks? philipp: good to be here. we still have a reasonably robust economic backdrop. that is the good news. the bad news is the uncertainty of where this will land has increased significantly. a wider range of outcomes that marks 2018 relative to 2017.

we are in a different environment linked to for reasons. china-u.s. relations is the most important risk to the world economy. secondly, what i would consider an early-late cycle phenomenon, or you see dynamics typical of the period when you enter into the later stages of the cycle or the early and of the late part of the cycle. third, we have renewed economic and political risk in europe, a reemergence of political factors that way and -- weigh importantly. inrth, the peak dynamics earnings is something that will preoccupy markets, a decline in growth rate of earnings relative to gdp in the u.s. between the

second and third quarter. earnings are still strong, that there are signs we may be in a peak dynamic. tom: let's map out what we saw yesterday. this is the dow with the opening and everything is wonderful, joyous. 2:00 p.m. and at a bounce of the doubt. nejra: we -- dow. nejra: we saw similar picture with the s&p. with the risk factors you have outlined, is it going to be difficult for equities to catch a bid from here? on the policy side, you cannot change the fact we are heading toward the late stage of the cycle, but you could change policy. we saw in trade negotiations with canada and mexico, there are ways to react on the policy side. poor economic policy creates poor growth numbers, and that is

what we are seeing in italy today. .here are ways to respond the primary risk continues to be around the global trade order, and the g20 summit will be the next milestone people look to to see if president trump can make some sort of arrangement with the chinese president. that is the next big question globally. nejra: is this a poor time for central banks and the fed? philipp: i don't like the term quantitative tightening. you have a normalization of market policy which primarily is happening in interest rates in the case of the u.s. that is a reality of where we are in the cycle. andmarket is discounting less tightening then perhaps a few weeks ago. the market will dynamically anticipate how much tightening we will get. in europe, we are far away from

that. tom: when i look at the work of the bank, i don't you don't want to make statements about the central bank, but i want to ask you about the use of discretion right now. should we be on a roll's-based path -- rule based path internationally? i like the term constraint. rules are never firm. you have to adapt to a changing environment. when the growth outlook changes and the central bank will change course or will moderate what th it is on.n -- pass you will react to several data

points. central bank are focused on being predictable and having a framework under which they conduct monetary policy. they must and will react to evolving data points. very good, filled hildebrand with us of blackrock. coming up, a timely interview. the chief u.s. equity strategist in the 8:00 hour with new volatility. will you be long or short at 2:00 p.m. this afternoon. stay with us worldwide. this is bloomberg. ♪

taylor: this is "bloomberg surveillance.". i'm taylor riggs. let's get the "bloomberg business flash." that help has results stem follow-up from trade tensions. third quarter for special options came in at 3.5 billion euros, ahead of the analysts estimates. costly production bottleneck this year. >> in december we should do better. therefore we keep our forecast for the year. fight every time until the very last time. france's biggest lender has joined deutsche bank for trading in the third quarter. revenues a 15% drop in in the three months ending in september it was in line with estimates and similar to what happened at the german rival.

this comp kates that ceos -- complicates the ceos plan to hit the 2020 target. >> we can wait for that and adapt. when it comes to banking, whenever i hear on the u.k. sign -- side, overall i believe the situation should be manageable. the idea is there is rapid clarification. taylor: that is your "bloomberg business flash." tom: the president is going to remove the president -- a citizenship for babies born on u.s. soil. this broke 30 minutes ago and a on hbo.tion with axios pres. trump: we are the only country in the world where a person comes in and has a baby withhe baby is a citizen

benefits. >> heavy talked about this with counsel? pres. trump: it is in the works. it will happen. joining us right now, kevin chiefi, our bloomberg washington correspondent. dred scottus back to of 1857, the battle over slavery. those who saw the movie saw that battle and yet the president wants to pull us back to 1857. who supports a president in this effort? is making president the cultivation there is a portion of his base that would support that.

this is what we heard on the campaign trail. he tried to drive this issue as a wedge between himself as well as the crowded republicans .ncluding job bush -- jeb bush should he decide to go forward with this, it was set up a court battle, and that is something the new supreme court would likely hear a case on. , is them your reporting president helping his grand old party or not? kevin: it depends on where he is. when you talk to republicans about where he is going to campaign, when he is in rural communities, he is helping ultraconservatives. i would look no further than the kentucky third district in the sense of a rural town that the three-time incumbent head been -- has been able to hold onto.

he now has amy mcgrath giving him a run for is money -- for his money. depends on where he is. when he goes to the suburbs, it is a different race. democrats are faring better now. it depends on what part of the country is in. nejra: we saw markets move in the asian section on two words from president trump. bloomberg porting the u.s. is said to expand chinese tariffs if the meeting between president trump and xi jinping fall short. kevin: they want leverage. that is where this will get interesting. markets are looking positively s will meetesident in buenos aires, but on the other side, this is about

leverage and president trump getting concessions with regard to trade. playing thethat long game with u.s.-china relations ultimately is very likely that similar to the usa nafta 2.0, the senate will have to make some approval. that sets up a check and balance on president trump because the senate is more centrist to president trump on trade. tom: this announcement on birthright is extraordinary. brief us on what the spin will be through the day and the next seven days over this contentious constitutional issue. kevin: this is going to be a very divisive issue on the sense of immigration from a purely political sense. one week from the midterms, president trump is making the

calculation he wants to talk about immigration to rally his base. the flipside is, it could have an adverse effect and there is calculation it could have the opposite effect and motivate democrats, especially when you map in the senate particular. thank you so much kevin cirilli for that update. philip hildebrand of blackrock stays with us. we are watching germany. angela merkel is opening the g20 investment summit of german businesses and african countries. she is speaking as we look ahead to the future of germany after she steps down as the leader of the party. >> we should be protected against political risk, as

obviously this is dependent --

tom: good morning. with us is filled hildebrand, former chairman of the swiss national bank. ou and i will read volker harper. he goes after in a bloomberg precision oflse

central-bank spirit he cries out for practical fact. -- bank. he cries out for practical fact. please help us. he has been a great mentor to me. the courage is the most important dimension of a banker. you need humility when you look at forecasting when you look at .he models that is what we talked about earlier, the notion you can precisely predict what is going to happen is so faulted in no central bank should build policy framework on it. clear,d a combination of transparent framework. you also need to be humble about the lack of ability to precisely

protect the future. tom: if we suggest you were at siu's, doal gnome of , do we needf swiss a little more quiet from our bankers? longpp: as it was said a time ago, central banking should be boring. that has not been the case over the last 10 years. every central banker would quite happily return to those days but my guess is we are not quite there. courage to central bankers need today with the risks you outlined, starting with trade, which you said was the most important risk factor. philipp: the difficulty is it depends on policy. for policy will produce poor results sooner or later. bankerstion as a central is you have trade risk but the ability of politicians to come

to a cooperative outcome. you have to gauge and see how policy evolves. that is why predicting what you are going to do is flawed. nejra: are they on the right path? , which: i think they are is cautiously adapt and move on with normalization and see what happens. flat: philip hildebrand of rock stays with us. you can interact with the charts shown using gtv . can download them and save them. philp hildebrand stays with us. this is bloomberg. ♪

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said to sign an executive order that would remove the right to citizenship for babies of noncitizens and unauthorized immigrants. in aning to comments made interview on hbo, the u.s. president has run the idea of ending birthright citizenship by his counsel and plans to proceed with the order. the executive director of the international energy agency says opec cutting oil production may not be a step in the right direction. in an interview with bloomberg television, he says the world will lose a lot of output from venezuela and iran. market is still strong and we will lose a lot of oil from venezuela and iran, so cutting the production may not be a step in the right direction. i would think twice. lender france's biggest

has joined deutsche bank in posting declines for fixed income trading in the third quarter. there was a 15% drop in revenue from buying and selling bonds, currencies and commodities in september was in line. the drop cockpits chief executive officers'plans to meet 2020 targets. >> we would hope that soon we can wait for that and when it comes to hard brexit on banking, whatever i hear on the u.k. side is they want to have a transition period, so overall i believe the situation is manageable. taylor: americans have been given permission to jump the queue at hundreds heathrow airport previously reserved for europeans. the government announces they will be able to use the

electronic passport gates around the country. australia, canada, and japan will get the same right. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. tom: terrific breaking news for today. this is from the new general director, but me look at the bloomberg. ge reorganized ge power a troubled division involving the years of jeff m else. imhelt. they cut dividends and record $22 billion non-cash goodwill charge. nowe is a dividend right from $.12 down to one cents a share.

finally, on a first look, revenues a little light. we will have much more on general electric. , it missed thely $.20 estimate. let's turn to europe. angela merkel decided to step down as the leader of the cdu, of a career that is shaped politics. she came the first -- became the first female chancellor. she had the biggest victory of unification.ce in 2015, she opened the door to refugees and two years later party bloc led by her was low by a boomingvote economy. it was the first time a far since 1950 entered three. this month, the coalition sever -- suffered losses and she says

she is stepping down as party leader and will not run for another term as chancellor. the focus turns to succession. still with us to discuss who will fill the void in europe is philp hildebrand of blackrock. -- is philipp hildebrand of blackrock. are we in a crisis? philipp: i don't think so. instill have decent growth europe with expansion. we have big problems in italy, where you saw the latest gdp numbers, poor economic policy reduces poor results. concerned,ermany is a year ago we were waiting for the election to form a government. now there is limbo until december when it becomes clear whether she will continue or not. she is a formidable politician and a great leader and should

certainly not be underestimated. i would be careful when i look at all the pundits who are saying she will also step down as chancellor. the sooner we get clarity on that beyond the party congress and collections and leadership, the better for the german economy in europe. nejra: you don't see angela merkel's influence waning in the near term, what about any sort of questions over someone filling the void, not necessarily in germany but the rest of europe. is emmanuel macron that person? philipp: it has always been between the countries and the chancellor. that will be important. it is essential there can be some calm that returns to german politics so germany can focus on its economy and reform. not much has happened in terms

of german reforms and also continued construction site that is europe. that is exactly why chancellor merkel did what she did yesterday in order to try to help this return to some form of stability in german politics. tom: philipp hildebrand with us. we have conflicting stories. a bombshell out of axios and the president doing away with the birthright if you will of children -- newborns of unauthorized immigrants. general electric with more headlines. revenue is light. they will create two units for ge power organization. the dividend cut from $.12 to two cents. that rings $4 billion of cash per year. this is important for those on global wall street including philipp hildebrand. general electric targets net

times.ss than 2.5 that is an important financial variable. that is classic to go into ratios right away. general electric targets sustainable. credit rating narrow. some of those headlines you could have seen on ibm as they rationalized the redhead acquisition yesterday. are we getting enough stories to keep philipp hildebrand entertained on our desk? nejra: he is certainly entertained. we have covered a lot of ground. we went from central banks to markets and europe. let's go back to europe. we were talking about germany a moment ago. italy as well. we had growth numbers through today and we are waiting for the budget standoff between the eu and italy to come to some resolution. are you hopeful when it comes to italy? philipp: difficult to be

optimistic when it comes to italy. i would describe it as a tug of war. the government is lucky and that you have decent fundamentals in italy. you have a primary surplus and a current account surplus. mistakes,oom to make but you will run out of room to conduct that policy. today should be a significant warning signal that for the first time in four years, growth has slowed to zero. we have seen every quarter in the last three quarters running down from .3, .2, and now zero quarter on quarter. that is a sign that this political environment is not conducive to the growth numbers it needed in italy. this is a risk and presumably the risk is being amplified as time goes on. nejra: we archive doesn't of the risks.

of the risks. our analyst been to negative when looking at outflows? philipp: this is true for the is stillonomy that it underpin by an expansion that goes on and growth at or above trend. all of that is essentially why it is premature to call an and to the -- end to the cycle. we are approaching the early stages of the late cycle period. that will always be a period of the cycle. nejra: is the ecb putting itself in a difficult position in that it will only have begun unwinding stimulus when the cycle turns in the u.s.? philipp: that is always been the concern of all central bankers, aat to do if there were to be

next crisis before we get to a normalized policy stance. that is in the nature of things and is a risk, which is why it is important that the cycle can continue and we step away from bad economic policy that could bring this expansion to a premature end. tom: do we know the shadows of the 2018 banking system? we have a great historical understanding of the shadows of 2006 and 2007. what are the shadows in europe right now with financial markets and counting? philipp: the big shadow is the away from anmoved overleveraged private sector to big private -- problems in the private sector with debt levels. germany is the exception that stats -- stands out that you have lower debt then when it started out. most emerging economies today

are in worse shape in terms of the public sector balance sheet than what we saw before the crisis. the shadow of the crisis today is an indebted and public sector in most countries with germany being the exception. tom: philipp hildebrand with us, vice-chairman of blackrock. coming up, a hydrocarbon interview. financial officer and we will dive into the ge news. historic news for general electric, distant from the days of schenectady. this is bloomberg. ♪

tom: good morning, everyone. and historic debt -- an historic day as germany were groups -- regroups. president trump says he will go after undocumented newborns. there is general electric. will blow up the company. karen ubelhart is going to join us. philipp hildebrand is with us as well. i think can talk to you about the idea of aspiration of going global and, boy is there a price to pay when you get it wrong.

going member jeff immelt over to france and he was going to buy industrial europe and it did not work out. what is the endless desire we have to go global and think big for davos men? philipp: we have an equal story or more dramatic story in finance with the european banks since the mid-1990's, expanding aggressively into the u.s. with poor results certainly on a risk adjusted basis. the challenge for any corporation is -- how do you grow? there is always the temptation to go global. in many cases that makes sense. the key when you have a global strategy is to adapt to global circumstances. to say when we operate in germany, we need to be german for our german clients.

the same is true in japan or switzerland or wherever we are. answer to aright global strategy and not assume you can conduct is this everywhere the same way you would in your home market. to seee we going consolidation in european banking? blackrock are removed from there, you're public service to switzerland. i want to be delicate. is philipp hildebrand waiting for mergers and eu banking? need to see consolidation of the european banking sector, absolutely. that is the essential, also with regard to what i mentioned before. ideally, you would see european banks focus much more on the european market as opposed to venturing out to unsuccessful ventures in the u.s. the key here, and this is important, is before a bank can do that, they have to have a

european market that actually exists. this is where the banking union and policy comes into play. it is the responsibility of europe's politician to create a market that will allow a european bank and financial institutions to operate at scale across the market. nejra: what about consolidation in european asset managers question mark has that changed from a year ago -- managers? has that changed? philipp: there is no doubt the technology pressures and others will lead to the pressure. it is critical today for an asset manager to operate at scale. the same is true for banks. think of technology investments required today to be at the forefront of your industry, whether asset management or banking. those require an operating model at scale third otherwise, it is too expensive.

i would expect life gets difficult for small asset managers. questionwant to ask a and it would be great to get your insight. it is in relation to the equity market selloff. we could see relief in the u.s. session. we saw a touch of it in asia. which hidden market risk may be exposed by the stock selloff? philipp: it is sentiment. sentiment is the risk. if market movements selloff in risky assets start to impinge on ,onfidence of corporate leaders of consumers, of investors, that is how you get the bad cycle of affectstock prices confidence in that affects gdp. that accelerates this trend towards the end of the cycle. i do not think we are there yet, but it is clear that market

volatility, which we should expect in the late cycle period, runs the risk. nejra: talking risks and more with philipp hildebrand of blackrock. he stays with us. come up, cohead of u.s. equities at 3:30 p.m. in new york. close shy. expertise of a technical correction. this is bloomberg. ♪

nejra: philipp hildebrand vice president of blackrock with me. tom keene, we planned this to blow you away. what was your big takeaway in terms of methodology? philipp: the way this additional money became available primarily was through a change in the calculation leak to the forecast

-- link to the forecast. or money created because of the way things have been calculated has been amended. this is the money that has been created and is larger going to the nhs, which makes the point that tom referred to earlier, namely that this is uncertain if growth were to change if brexit were to go badly, the budget becomes nolan void. mess is an area of great uncertainty, particularly when you have the kind of brexit risk looming. nejra: thank you so much to philipp hildebrand, lik blackrock vice-chairman. tom: with us now is karen ubelhart of bloomberg intelligence. you have followed the collapse of general electric. what is number one from lawrence called?

karen: he will try to take care and he did that in the announcement of the dividend. he will work on deleveraging. he has to move quickly on power. strategy of power and business plan of failed decisions. karen: he will split it into two businesses. gas is a big problem. he has to shrink it and shrink it fast. tom: i want to go to the powerpoint. what you need to know is forget about the headlines of a dividends. this is what adult look at on global wall street, the idea of cash flows and the cash balance that ge has to do. ibm, hen anything, like has to maintain and a credit rating. if -- is that at risk if he doesn't get it? karen: it is at risk.

they have signals they are concerned. dividend is a big statement. he will save almost $4 billion. tom: what is the revenue persistency that will lead to stability in cash flows that keeps and a rating? karen: they are doing better than expected in euro space. tom: big numbers. karen: that is stabilizing. the other big business is health care, which did very well. organic revenue growth on ge right now? lown: they will do overall single digits to 3% or 4%. tom: the answer is, it is going to be 1% 2% or 3%. is that enough? karen: aerospace has its own cycle and is doing very well.

that much and those are two businesses right now. much.hank you very ge and a -- ge is an company. we thank all of our guests this morning. great conversation with chris turner. thank you kevin cirilli in washington on the president and birthright. bloomberg radio. we continue with jonathan ferro. stay with us worldwide. this is bloomberg. ♪

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