times reporting we could be close to a deal on financial services. something like enhanced equivalents with arbitration, a little more reliable, more dependable. this is the downdraft that we expect to see at the start. what is driving these markets lower? we expect to see equity markets in the red at the start of the day. we are picking up on a fairly decent session over in asia, but maybe not standout. yesterday's session was pretty strong, we got some decent data and the last few days, strong statements from the chinese around the amount of support they need to give to private business, all of that being gradually digested. have read plenty of conflicting analysis about what led us into red october and what leads us out, at least over the last couple of days. we are opening in the red around see?of 1%, matt, what you

matt: it looks like the energy industry is bringing us down, take a look at how bright red the energy slice of this pie is. looking at the bloomberg european 500 index, of course, it will look the same regardless of which brought index you look at. energy, industrials, financials, all leading the way down this morning. the gainers that you see are only health care, utilities, and columns. those are the only sectors that are in the green today. everything else is down but energy. look at thisave a function, the individual stock movers. we've got bt group up by over 4%, succession of this business part of the conversation, but bt guiding higher in their earnings

to the upper end of the previous range, ing up by 3.9%, beating estimates they did have to pay out a large amount of money as a charge with the prevention of money laundering, but they said they had made a big progress. have increased sales guidance, but the net profit came in at low estimates. just keeping an eye on what is going on elsewhere, i don't see any of the other stocks on the move. micro focus, down by 2.3%. a number of the stocks we were watching before have been jumping to the upside. european markets, opening lower, even as china started to stage a comeback from october's losses. over?red october really

in terms of the stock moves, we know that the month of october is genuinely done. head ofus now is the the u.k. investment office for ubs wealth management. jeff, i think the question is very simple, are we done with this huge global equity route -- rout? >> it is looking a bit overdone for some time now. sure, there may be some wobbles in the growth expectations, especially how the trade war impact has not been priced in, but taking a step back and looking at fundamentals, we don't see any good reason to outright take equities off the table. we still need to have insurance policies, but right now we can stay the course. so that's equity markets, what does that mean for other asset classes? i got a chart that shows the

dollar, breaking above the summertime. and we were asking if the rally had been done, now we see in breaking a little bit higher. do we get another strong dollar story? i think it just reflects in terms of financial conditions how currency heightens. euro,ry about stronger and the u.s., perhaps the fed can be slightly relaxed about now,r strengthening for we're still confident on the dollar, but next year, i think it is a different story. if you look at the dxy, we're not that far off from previous highs. are we headed back to that level? it seems like the fed is dead set on continuing its rate hike path.

>> the dollar is not taking a chance. reasonsn't a compelling to sell dollars right now, even if you look at the valuation. some of these emerging markets ,ave come back, but next year unless the fed is significantly more aggressive, perhaps you can focus more on the ecb and europe than the dollar will just as well. let's talk about bond markets a little bit then, i want to ask you the question of the day. how prevalent will bond vigilantes be? >> if you look at the correction , last month versus the q1, what is quite comforting, especially

in our business is apart from maybe day one or day one and a half, we are not too worried about correlations. equities rolled off of it, and the 10-year has started to come off as well, in january, there was a fear about correlated selloffs. i think next year, it will be a similar story bond yields hurt up, but overall, the curve is quite flat. matt: it has come to my geoff, thateff -- the kids don't know what bond vigilantes were or where they came from. the was all the way back in early 90's when investors were punishing the u.s. government .or spending too much money is that what is happening now? geoff: there is the sense that

there is no interest in punishing the u.s. government. in the the other side, what is the alternative? for the bulk of the last two or three years, u.s. cash bonds are equivalent to equities, and that could be traded like it is a safe even. case, we is a strong have been worried about the kids not knowing what interest rate hikes are. perhaps they have been introduced to that concept. overall, it just does not seem to be a compelling reason to sell, especially if you look at the trend. will keep our concerns about the debt levels in the u.s. in containment. thank you very much. up next, we bring you the stocks on the move so far, including ing, surging off of third-quarter results. lots of fascinating stocks to bring you. this is bloomberg.

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anna: welcome back to the european open, we are 10 minutes into your trading day. let's get the stock stories on the move. what a volatile morning. out of the gate, shares here were up more than 1% but it has trimmed some of those gains.

they waited forecasts, but what seems to be weighing on shares is their extreme pricing. have helped with those costs, but still some pessimism is not helping shares get as high as they had been earlier. ing,e other hand, we had really taking off, this is its biggest gain since april 2017 after the company trimmed its cost to income ratio for the first time in six quarters, helping them reduce the ratio by 50%, investors are liking this one. on the other side, we have credit suisse down more than 4%. after a surprise loss in their global trading unit. that was, at one time, the best unit in all of wall street, now that is a loss. matt: thanks very much. i want to stick with credit suisse right now.

raw -- francine has been speaking with their ceo, asked him how he sees the markets overall. >> if you look into our results you see we have a net interest .ncome going up nicely clients have been sitting on the sideline. forever.never lasts >> when you see that changing? >> the next 6-12 months, things will change. a lot of uncertainty will disappear. we were at a point of maximum uncertainty. times,always said, many that the exit of qe would not be without issues. it is a sea change of markets to have to adjust to a new normal,

but it means a lot of anticipation has to be changed. fundamentally, the economy is strong and that remains global. -- globally. it is enormous. there is a disconnect between the strength of the economy and the mood of the market. none of us are used to such a long cycle. it is human to think that it will stop, and the fear that it may stop may actually stop it, a sort of self-fulfilling prophecy. environment we have that legacy easily forgotten. we have raiseeal a lot of capital, we have a strong balance sheet this bank has done its cleanup, it's legacy is very strong.

it was 31 billion. is half. so the bank has been massively de-risked. it is growing. when will it be reflected in the share price? >> we are building a track record. eight consecutive quarters of improvement. a consecutive quarters of positive growth. but we need to continue policing that improvement. that was the ceo of credit suisse. francine joins us now from zurich. say us what else he had to about the state of the global market business. clearly drawing a lot of headlines this morning. >> absolutely right. the focus is on global markets. investors have been looking at some analysts note.

the fact that it was an unexpected loss, that is hitting a lot of the revenue for the quarter. this is probably what they will focus on i spent a lot of time talking, he said the targets will probably have to be pushed back, but everything else he says will be on track. revenue is athe little bit disappointing, but not because of us, it was external factors. but if you look at the pillar of his restructuring plan, one of them is global markets. so there will be questions on the targets and on what global markets will take in terms of a place from the strategy of the future. it does not mean he will abandonment -- abandon it or cut further in, but i think investors will stop questioning that strategy implement more. -- a little bit more. ,att: excellent interview francine lacqua joining us from europe where she sat down this morning. ubs wealthf

management is still with us. suisse,t just credit many of the continental european banks are having a real trouble in their markets businesses. is this going to turn around? we've seen so much volatility, it seems like they should be trading. geoff: financials is not a ieferred sector in europe think it has been reflected in the comments just now. things can pick up. at theyou look aggregate, is starting to affect other parts of industry in terms of investment. you start to see some of the pressures on the margin side accordingly. these growth expectations, then you have an issue, and going back to the point about the forecast for the ecb at this point, has the event risk over the last few weeks or so, i'll

are their expectations going to extend? let me ask you about some .f your preferred sectors structural shift away from experiences. you have talked about it quite a lot over recent years. what is it that is going to benefit some much. you site video games, but that has been a beaten up sector. geoff: you have to distinguish between regulation and demand. enough there is interaction between these companies that have been affected, but this falls into the category of many of our clients who want to look at long-term. what thenow millennial's are interested in, what is coming through afterwards. that is where we actually want to spot the trend. in an environment

like this, clients are more interested in investing. if i look at auto parts, it has been one of the worst-performing sectors of the year. only banks have done worse. have a fallen far enough, or is the combustion ended industry just one that is doomed? geoff: one thing in addition to the structure and the demand side is i think the market is still not ready to price out the risk of trade wars and it is starting to affect the sector further. -- discountdistrict which has to be applied. those two things. the demand side and the short-term political side combine hurt the entire inner complex. up ahead, where is international demand going to be? we know europe is exposed cyclically and to the

international side of things. it china's a emerging market does not pick up, the other things are academic. anna: thank you very much. talking of the european market open. let's have a look. 19 minutes in, where do things stand? the stoxx 600 is up, but the ftse 100 is a laggard. tech is a bit of a lag as well. europe,picture here in and futures in the united states are flat this hour. this is bloomberg. ♪

matt: welcome back. we are 22 minutes into the trading day right now. a mixed market in terms of equities. in a general, value investing has claimed another victim. bloomberg, three days capital plans to shutter after years of poor performance. disciples of value investing have been stung as growth stocks one out in an environment of low inflation and low rates. but as central banks reassess policy, is it time again for value to shine? let's get more with dani burger. >> to answer that question, we

have to know where we are starting from, so i want to show you what factors underneath the market have done. the are the gainers, biggest stocks did very well, but this is not surprising. while these metrics are doing well like profit, share buybacks. but the most important thing is what has declined. even though we had a slight come -- has still lost out. but we have seen factors. might say that factor fund shutting causes, but it has also caused analysts to say we are likely to see a rebound in stocks and in these factors. i want to take you into the terminal and if you a closer look at the growth versus value, which has been punishing investors. here, we have the ratio, value charting a record low.

it is the lowest since the.com crash. that is certainly telling you something about where markets are. markets takeoff and list of the cheaper, underserved's parts of the market, but they have a long way to go. anna: thank you very much. talk to us about styles of investing. is it time for value to shine? >> if we look at factor investing, that has been a big pusher of the year. you really have to look at it comprehensively. it is often about, even when we approach style investing, it is about wealth management. you want to be diversified and as flexible as possible. that is where they are headed towards. again, your time to time the cycle as well.

this starts to erode the value of strategies, pardon the pun. i think it is here to stay. matt: when you talk about doing things in a cost-efficient manner, i wonder what vehicles you use to make your investments. our etf's of the way to go? moreou, because you have firepower, able to find more cost-efficient ways to invest? geoff: without dwelling too much on product, firepower will apply in terms of being cost-efficient across asset classes. but in this passive versus --ive debate, but in areas like emerging markets where you are getting a bang for your buck, where you pay for the fund managers, we are happy to look at those as

well. clients are on board with this approach. anna: let me digest what happened during red october. how concerned are you over the role of the scale? where do you put it in a box and safety programs are written by humans, i'm not scared at all. geoff: compared with january, where every second person was worried about the role of disparity and things like that, we have not seen it throughout. demise ofe discretionary strategies, non-robotics strategies has been called a bit too early. there will be a role, of course, and we are looking into strategies to take the emotion out of investing. there is demand for that, but at .his point, we aren't seeing with us. will stick we have a lot more to talk about

, and speaking of the u.k., it is decision day for the bank of england. brexit is stealing mark carney's thunder. we talk bank forecasts next. bloomberg. ♪ ♪

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"get grinch tickets" into your xfinity x1 voice remote. [ laughing ] uh oh. something in my throat. matt: where 30 minutes into the trading day. blues. off the october europe follows asia into the green as jpmorgan talks of rolling squeeze tire. u.s. equities trades mixed. punch.nd packs a hopes of progress in brexit talks around financial services gives sterling a boost. slumps -- credit suisse slumps. theceo tells bloomberg investment bank is outperforming rivals. our investment bank, which is

successful, is doing better than others. that is very comforting. matt: welcome to bloomberg markets, the european open. i matt miller here in berlin alongside anna edwards and bloomberg's european headquarters in london. anna: a lot of companies reporting this morning. asm international of over 13%. 7.5%.up of guiding to the top end of their range. 5.8%.and nephew up 5.2%, the biggest increase since february 2016. spoke a little earlier to the

interim ceo there. it is too early to start talking about the size and scope of the fines they might face. ing group up 4.4%. let's switch to the downside. sticking with financials, credit suisse is well represented here on the downside. the second-biggest faller, down 4.3%. tgs in oslo is down. their numbers were below estimates. let's go to bloomberg's first word news update. desley: president trump says he many asred to deploy as

15,000 troops to the u.s.-mexico border in a bid to stop or detain a caravan of migrants traveling north to the u.s. at a rally in florida, the u.s. president also double down on his vow to deny american citizenship to children born by unauthorized immigrants. the event was the first stop of a six-day tour that was the president trump hold 11 rallies in six days. back before the democratic party went crazy, they also oppose this practice. harry reid said no same country -- sane country would grant automatic citizenship to the children of illegal immigrants. that is what he said before hewitt crazy. japan'sshares in leading wireless carriers have -- dac after daca murder

amer -- the decision puts pressure on rivals. search teams in indonesia have retrieved the flight data recorder of the lien airplane that plunged into the java see this week. the carrier has suspended some executives following the nations worst disaster in two decades. the boeing 737 max eight jet had suffered problems with altitude and airspeed senses. the pilots who flew the plane to jakarta the night before, reported the issue. the plane was checked and deemed ok to fly. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. much.thank you so

sterling is on the rise after a couple of apparent brexit breakthroughs. is times here in london reporting that financial services will have continued access to european markets after brexit. all of this comes ahead of the bank of england's rate decisions do late today. now.beth martins joins us thank you for joining us. in terms of the macro perspective on brexit, we have seen the markets react to these bits of news, of a more positive around the possibility. what are you thinking on how much different this makes for the macro story? what is the range of projections you have based on brexit? we have been on a roller coaster since these negotiations began. services, clearly is key for the pair economy.

the more access they have, the better for the u.k. post-brexit. this is talk. we will wait to see if the deal gets done, and it have to get through parliament as well. how likely is it that we get a deal that allows u.k. financial services to still work with european client bases permanently? instead just in a transition deal? elizabeth: clearly, the u.k. negotiators are looking to get post-brexit. and probably won't be quite as good as well we have now is a member of the single market. it seems clear the path for access comes with single market membership, which is not one of the u.k.'s aims with negotiation. clearly, the financial services sector is important. anna: what are you going to be

looking for from the bank of england later today? expected, ithange seems by markets. the press conference and all of the forecasts, to some extent, these could all be ripped up depending on a brexit outcome. they are judged on their face value just for a very short period of time. elizabeth: absolutely. it has only been three months since we had the last rate rise. i think the bank of england will be feeling quite vindicated with its forecast. they told us wage growth was picking up. the data since the last inflation report have indicated we have wage growth post crisis, high. gdp growth running above what the bank of england calls the speed limit. the bank of england will be feeling quite upbeat.

i think it is quite early for anyone to be voting for a rate rise. matt: don't you expect them to reduce their forecast for growth and boost their forecast for inflation? reduceth: they may growth forecast very slightly this year, but that is largely a function of the weakness we have in the third-quarter gdp. i don't think there will be a big downward revision to their assumptions about the u.k. economy. if anything, the gdp data more recently have been a little better. anna: thank you very much for joining us today. let's take a look at our mid-cap movers today. dani: this is a story of low expectation, shares rising more than 2%. that is after they raise their full-year revenue. expectationssay

were so low given the competition and warm weather. on the downside, we are looking at glanbia, one of the worst performers in the stoxx 600 today. shares down after the dairy producers said they are going to face a lot of fx headwind going forward, especially if the eurodollar rate stays where it is. today, asm gainer international, up 14%. their biggest gain since 2014. we already have seen analysts come out saying they are likely going to upgrade the stock given these earnings. much.thanks very bloomberg terminal users can interact with the charts you see here on bloomberg tv. you will see what we use in our world-famous, internationally

broadcast battle of the charts. that is coming up next. this is bloomberg. ♪

anna: welcome back to the european open. where 42 minutes into your trading day. the ftse 100 going a little bit lower this morning. let's take a look at big oil companies that have reported.

has surgedgiant thanks to rising crude prices in the third-quarter. maker says it is keeping a lid on spending. bp profits smash estimates toing the company profits fund its u.s. shale deal with cash. the price of brent rose in the third-quarter by more than 4%. europe'ss has helped energy sector outperform, growing much more than the stoxx 600 as a whole. shell out this morning, shares you can see down 2.3%. joining us now is bloomberg's energy editor in london. as far asst of all, the sector down so hard today, earnings off, oil price under line down, what is going on? essentially, shell

profits missed analyst expectations, which will have a major impact on shares. the really interesting thing to note is that cash flow reached its highest and 12 years. secondpany announced its share buybacks. that is positive news for investors. it has generated the most cash in a decade. it is comparable to the levels of when brent crude trading around $110 a barrel. if we bear in mind that crude prices are now around $75, that is quite impressive despite the fact that the analyst estimates were missed. anna: what is the contrast with bp? we saw a very different story on tuesday. helen: bp absolutely smashed all analyst estimates. the rise in crude prices that we have seen over the quarter being a key factor.

it is also have various projects come on stream. as we mentioned, it is now announced that it is going to fund a $10.5 billion acquisition through cash. both impressive results. way.i think the key thing for shell right now that is going to be focusing on is that share buyback program regaining investors trust. similar with total as well, where they announced a surge in earnings. their focus is very much quite young capital discipline. anna: thank you very much. time for our battle of the charts. dani goes head-to-head with matt. let's go to dani first. dani: i'm going to currencies were a short squeeze is with the pound. that is after we had the news that theresa may is likely going to help financial services stay

across the eu. look at what is happening with sterling in the orange on my chart. we are now at a 129 handle versus the u.s. dollar. why has a rally been so intense? look how negative sentiment has gotten, this white line here. you can see it reached nearly a two-year low. this morning, showing that investors are feeling a bit of a pain. the short squeeze is coming. not only is there optimism, but this negative sentiment is starting to mean reverse. anna: very nice. let's get to matt miller. matt: i think that is a very fascinating chart. i have something i think can really make you money. we saw oil fall more than 8% in the last month. october was the worst month for crude in over two years. it seemed like it may have been because the u.s. and saudi were getting along, donald trump may khashoggi under the

rug. what i think is u.s. crude production is absolutely soaring. the u.s. and yellow, saudi and blue. russia in the u.s. became the largest crude producer in the world last month. russia is coming back a little bit. savvy has another million barrels of spare capacity, but this shows that the supply side of the supply demand curve for oil is just rising, rising, rising. that is why the price has to come down further. anna: i love that chart. it is fascinating because it shines a light on why it is difficult to work out what impact higher oil prices have on the u.s. economy. dani'sng to go with charges because i do have a slight bias with stories to do with brexit. a short squeeze in the pound

making things more interesting. thank you for your charts. we remind you that you can check out all of the charts at gtv go. maker says it is eliminating rolled by the end of this year. we will stay to the ceo next. this is bloomberg. ♪

anna: welcome back to bloomberg markets. this is the european open. 50 minutes into the trading day with stocks turning higher. nordic says it is cutting about 1300 employees amid pricing pressures in the u.s.. the drugmaker raised its forecast by four percentage points. thank you so much for joining us. let me first ask you about the u.s. situation. we talk about this every time you come on, since donald trump came into office. what is pricing pressure like there. on the one hand, you have the president pushing for lower prices, on the other hand, it looks like they are doing everything they can to roll back obamacare. how is the environment? the environment we compete in is one where there are

multiple product choices, there is competitiveness within the industry. in some sense, that is driving down cost of medication for americans. the administration is trying to impose different price control mechanisms lately in medicare part b. nordiska segment where is not involved. anna: so you're not expose on the part of the medicare question. can i ask you about trump's other comments arround international drug prices? what would it mean for novo nordisk if the usn said we're not going to play anymore -- pay anymore for their products? breakit is important to it down. if you look in the medicare part

d segment and the medicaid segment for the poor and veterans, for retired military people, you actually see in medicare part d, that pricing is going down. it is already quite competitive environment. i think it is different in medicare part b. some of the government officials have been saying that the focus on medicare part b earlier this year, they asked industry to pay a larger part of the coverage gap. come 19, we will see we will be impacted in medicare part b. ishink the u.s. government getting quite attractive price for our products in the u.s. market. how do you look at the competition that you have? just publishedy in mid-stage results last month.

investors are anxious that would affect your new class of diabetes drugs. how is the horse race coming along? lars: i think it is important to note that what drives value is continued innovation. i think it takes two strong companies to drive the value of the market. if you look at the history, there has been a change in products over time. now, we see that right now, novo nordisk is winning based on our latest innovations. do i really has announced they lilly hasthat -- eli announced they have data that could lead to a strong product. things we can launch in a couple of years. in our pipeline, we have next-generation opportunities where we believe we can match or even beat what lilly is bringing

forward. this is a classic pharmaceutical positive which is because there are two companies aiming at expanding the markets and driving up the value of the markets, for the benefit of patients getting better products. therapy thatne novo nordisk once to get involved with, if not, how will your hemophilia portfolio perform? in gene are not yet therapy. what we're focusing on is stem cell-based therapy, not particularly in hemophilia, but working with cells is something we know very well. we are investing significantly in stem cell based therapy. forave opportunities competing on the longer-term, the right now it is not based on

gene therapy. matt: let me ask about the possibility of m&a. do you think you need to pursue acquisitions in order to grow? lars: no. i think we have a strong portfolio, we have a strong pipeline, so we can continue our organic growth. short-term, we are in a situation where we can see the klein compared to products. we announced a's -- decline compared to products. acquisition a small yesterday. at,re continuously looking what are some of the smaller opportunities we can add to our business. thank you very much for your time.

that is it for the european open. coming up on bloomberg --veillance this is bloomberg. ♪

francine: third quarter stalls. credit suisse posts unexpected

loss. gaining momentum. full throttle, china signals more stimulus to come. the nation's governing body says downward pressure is increasing. good morning and good afternoon. this is "bloomberg surveillance." i'm francine lacqua in zurich today. tom keene in new york. we have a busy day looking at u.s. politics, the banks. also brexit. tom: good to see you wearing twitter blue today. america,uld say is in we are finally focused on the elections. there five days away. there are some nuances there we will talk about particularly in our next hour. in america, finally, focused on the elections. i imagine that both

parties are trying to do everything they can to win some of the votes. let's get straight to the bloomberg first word news here in new york, is taylor riggs. financiale u.k. services sector will get continued access to european markets after brexit. that is according to a report in the times newspaper. the paper says negotiators have tentatively agreed on all aspects of a future partnership on services as well as the exchange of data. the pound jumped yesterday after a publication from the uk's brexit secretary and which he predicted a deal by november 21. president trump says he is prepared to deploy as many as 15,000 troops to the u.s.-mexico border in a bid to stop or detain a caravan of migrants traveling north to the u.s. at a rally in florida, the u.s. president -- on his vow to deny american citizenship to children

born of unauthorized immigrants. >> back before the democratic party went crazy, they also opposed this practice. harry reid said, no sane country would grant automatic citizenship to the children of illegal immigrants. that is what he said before he went crazy. search teams in -- the airline carrier has released some executives. jetr to the accident, the had suffered problems. pilots who flew the plane the night before the crash reported the issue, but the plane was checked and clear to fly. denmark's biggest bank says it is working hard to restored trust with customers and

investors after finding himself at the center of one of europe's biggest ever money laundering scandals. johnson bank says it may be facing material finds after it admitted that nearly $230 billion might need to be treated as suspicious. the lender's acting ceo said it is investing massively in compliance. it would be uncertain as to whether we would do that in 2019. that, it iserms of fair to say that we are more preoccupied with being seen as prudent in terms of capital these days than necessarily heading back capital to the shareholders. dividends, wermal still came to pay out between 40% and 60%. taylor: global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm taylor riggs, this is bloomberg. tom: thanks so much. what a lift yesterday. finally a genuine bid to the market. futures up 10, dow futures up 109. curve steepening. all the correlations you want to see with a better euro. we are watching oil. vix, 20.50 back to the 20 year average. the dow, sort of let's you know where we close. up right now. futures, 25,189. i would note mexico is kind of an idiosyncratic backup. a weaker mexican peso that we see. with francine lacqua in zurich with an exceptionally important interview with credit suisse. right now, in london, and on the bank of england, and on brexit,

we speak with david i went of jeffries. he is a prodigious mathematics ability. i want you to use your econometrics to give you the probability that mr. carney will brexit at a press conference today. the analysis on how he is going to avoid a discussion on brexit? david: i would say the probability is zero. it is going to come up in the q&a. idea.l be asked about the we are going to keep this going. he has got a function just like draghi and just like powell, and that is tepid inflation. but it is not.

what is he going to say about inflation? david: i think the chief economist shared a really interesting speech where he talked about wages accelerating in the u.k. the labor market tightening and much more confident there. the labor market was showing real signs of strength coming through in terms of wages. we saw that follow through in the late markets with private sector regular wage rises running at over 3%. public sector wages also picked up. i think the story here will be a lot more confidence eventually. there is always the ecb space. they'reition where it much more confident they can achieve their inflation over the longer term. the interesting thing for me is what they give in terms of rate rises next year. i think the vote is going to be slim. we underestimating

the chances of a rate hike in the next six months? david: absolutely. where the brexit discussions will end up in november or december. there is a meaningful vote theresa may still have to get through parliament. case, i of the central wouldn't be surprised if they go in february. may rate rise with an orderly brexit with a transitional phase that we can can. with -- live with. i think the market can deal with ses.rate ri is theeresting day today communication iran what we are seeing in terms of near-term activity. --

francine: does the market way for brexit to happen are march 2019 to happen before they think of rate rises? avid: i think absolutely, must we get to a situation where it is a smooth transition, which one shouldn't discount. at that point, labor markets are still showing wages are continuing to pick up. the other interesting thing for me is, the bank of england is focusing attention again on trading the balance she. we have had a number of keynote speeches on this issue. they are thinking about how best to strengthen the balance sheet. not in the next few months, they also ask markets to think about what is the new normal? i think the fact that it is trying to follow the fed, slowly but surely. thanks so much.

david stays with us. coming up, u.s. house of commons and parliament. the discussion will not only be on the boes today, also on brexit and the fact that we are hearing reports on banks getting a special deal. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from zurich and new york today. let's get to the reason why i am here in zurich. credit suisse's turnaround is running out of steam as the bank enters its final stretch of its restructuring overhaul. revenue and net income missed estimates in the third-quarter. a lot of the banks are

questioning global markets which posted an unexpected loss. earlier, i spoke with the company's chief executive. >> if you are looking for results, you can see very stable revenue sources. the income has been going up nicely. because of uncertainty constantly sitting on the sideline. francine: when do you see that changing? >> i don't want to put a date on it. a lot of uncertainty will disappear. that means a lot of anticipation has to be changed.

ims would forecast downwards. miss.s in or there is a disconnect between the economy and the move of the markets because none of this is used to such a long cycle. it is human to think that it is going to stop. the fear that it may stop may actually stop it, may stop and fulfilling prophecy. what we have is a legacy. that is a big deal. we have raised a lot of capital. very strong balance sheet.

it was $41 billion when i arrived. now it is half. that is not yet reflected in the share price. francine: when will it be reflected? >> eight consecutive quarters of positive growth. francine: at first, investors were skeptical on what he was doing. now, there is a turning point. they change if their targets they also need to buy less shares in the future? what does that mean for the plans? does he need to cut more cost?

was there a concern in global markets that just outside revenue he was pointing to? tom: i totally agree and i feel that our viewers probably have a good handle on their knowledge of deutsche bank, bp, but the fact is credit suisse is an an enigma. where do you think it fits in? more important, where does he feel credit suisse fits in within european and global banking? if you listen to what the chief executive has had to say over the last three years, he has a clear mind of where he wants to take the bank, which is serving the rich asian we althy clients. there is a swiss bank. what you are asking is what they do in ib. their main rival is ubs.

iny have started the change direction about 45 years before mr. thiam was appointed. tom: this was normalized back at 2007. they are two very different banks, but nevertheless, from 2007, down we go. there was a parity in the spring of 2012. then, they unravel. comes in,hiam credit suisse simply does better. there is the recent rollover here. what is the relationship with him and the board of directors? francine: for the moment, they have gone with the restructuring program and what he has wanted. i guess the main question, which you are spot on is whether they still have to face after this unexpected loss in global markets, i think the investor summit in december, we will see

if they cut costs or have to find money elsewhere to go through with the plan. the key is the shareholder buyback and whether they can stick to that. we will be following that very closely. let's get back to david owen of jeffries. we were talking a little bit about brexit, i'm not sure if there is an angle and how much the banks can stand the you k and whether if we do lose, -- u.k. and whether if we do lose a financial services they will have to relocate to frankfurt or madrid. david: it is impossible to quantify that. number onf putting a people moving to frankfurt, at this point, it is very impossible to say.at the end of the day help, but we will don't know what that means longer-term whether we get

regulatory divergence at some point. whether the bank will need to go a separate way. nothing will be enshrined to become legal uncertainty until the end of the transitional phase itself, which amin we are going towards 2020 without knowing what the deal is going to be. tom: how can these bankers in europe affect the strategy? jeffries walks in the door and tells them what to do. how can they do that with chronic, negative interest rates? good point., really at the end of the day, when you look around at the u.k., i think there is probably more concern about these concerns relating to brexit, around is very complicated supply chains. this embeds an awful lot of services within them. the research and development

that goes into a car, all of those things being done currently in the u.k., that sort of thing is more complicated along with the irish border and not having a hard border in ireland. . these things are key that he is concerned with the bank of england and all this is if there wasn't some kind of deal, we could face some real on march 29.ff will retain a huge importance and financial services. obviously, the whole thing was change over the next five years, assuming the u.k. does leave. francine: thank you. david stays with us. toing up, we will be talking this with chief financial officer. this is bloomberg. ♪

francine: this is "bloomberg surveillance." the company reported earnings today. natural catastrophes has boosted earnings of the world's second-largest reinsurer. let's get straight to the chief financial officer. he joins us now from zurich. thank you for joining us. what is your take on consolidation? is your industry going to merge? >> thank you for having me this morning. these of a consolidation, you

have seen -- that there remains a large space for lots of players to be active. it is one of the leading groups world.and is not fair to me you're going to see an enormous consolidation going forward. we are seeingink a lot of chinese interest joining the insurance company or even your reinsurer. are you presently interested in investments? john: and is not surprisingly our name has come up. we have a major franchise in the chinese market. foreignthe larges ensure their. would say any speculation or

rumors about us being involved rumors, we would not be able to comment on. francine: talk to me about your cash reserves. ? what are they like john: we have a very strong liquidity position we have announced with the nine months results where our capital position, which for reinsurance is a key metric, as of july 1, 2018, the ratio was we target to be at or above 220% on the swiss solvency test, moved from 269 at the beginning of the year two 285 at midyear. that was before the major losses occurred in 2018's third-quarter. we remain comfortable and robustly capitalized as we move forward. francine: with the short amount of time we have left, how high ups it have to be to put

current share buyback? john: the current share buyback we are involved and was announced earlier this year. i think it will be up to the board once we have the full-year results to be able to assess our actions,or capital including dividends and potential share buybacks. francine: thank you so much for your time. next, the u.k. house members of parliament from the labor side. we will talk brexit. this is bloomberg. ♪

francine: this is bloomberg surveillance. tom, british and european

officials with the e.u., we found that out in the last couple days. british and european officials -- leading negotiator dominic rob predicting a deal will be finalized by november 21. mantra.us now is seem a as well as david allen of jeffries. thank you for joining us. what is your scenario of what happens in brexit? seema: i do not believe we are going to see a deal by the 21st of november. in terms of the prediction, that was being backtracked. we are less than 150 days from brexit and there is uncertainty about what we're going to have is a final deal, more importantly about -- which is

the forerunner to our future trading agreement which we will have in the framework within e.u. with more significance as well for members of parliament. what meaningful vote there was going to be and it is evidence of the select committee to go by. this is a meaning less vote than a meaning for vote. what are you telling me? we will have an agreement? i was staying in the common markets for now? what will he deal look like? know. we do not in terms of transition, we will stay within the framework we have but rule takers rather than seated around the table and having a say what -- in what happens. people are concerned about what this could mean if there was no deal for the u.k.

there is no guarantee it gets through parliament. that could mean challenges in terms of difficulties with trade delays at the border, questions about the european health insurance available to citizens. legal certainty around contracts. this uncertainty is not what people voted for. --is concerning we may have facing us. one of the end of march and one at the end of our transition period. the government has a lot to do to have it deal that is going to win the confidence of parliament and have our speed ready for march 20 ninth. there are questions about whether we will be ready in terms of legislation needed. 800 regiments set to go through. francine: we have a lot of work to do yet.

what does that mean for the labour party? do you want a deal? there are increasing calls for a second referendum. minister is in terms of a very difficult position, it is not what people thought as a result of brexit. there is no way in which we are headed to be a prosperous nation. every scenario under the government impact assessment suggested we would be worse off than others. so 2% less growth within the european economic area, so the reason why this calls for a second referendum is people are saying, if what is an offer, surely they can have a chance to express it.

the labour party has said if just by parliament and no general election, which would be our preference, it is putting the economy first and not party interest first. they are -- there are increasing calls as well to say there is no in-state and we are going to leave but it is better to leave. with benefits that go with that, rather than to leave with no deal which would be catastrophic for our country. tom: it is wonderful to speak with you. you provided leadership.

does labor have to find a new way? there was one guarantee and that is the path is never in the future. which is always to be reinventing yourself, which is where modern situation seeks political solutions. if you take the budget this week , what we have seen is less of the same but certainly the same coming from the government, which is sense of failed economic -- the labour party. you are right. the labour party is about having economic policy. can mr. corbyn provide

that? that -- back to the values of another time and place? seema: the fabian society was one of the founders of the labour party just as the unions were. what you have in the labor family is a wide range of views around common values where we believe in fairness and equality and parts for society as a whole. when we look at the budget, an indicator. they saw they had failed in terms of their previous economic plans and strategy. they did not tell you that. they've attended there was going -- going to be some sort of trade. what we have not got is a plan for investment in our country.

if you make this point, we won seats in the general election last year, and when i go around the country now i see people increasingly dissatisfied with the tories. tom: here is the question. that is correct but the key question is -- who did they go to? party,p of the labour does the labour party need a new coach in view and onto something new. i do not see a cogent labor voice in this brexit debate. seema: i do not know if it is about romanticizing the past because it was different at that time we founded the national health service. we invested in early years, we saw a huge growth across our

country and a more increase inequality between our regions. we saw inequality rise hugely. constituency. own people want to know they have access in good jobs they want good prospects for their children. this is the first generation where children are sent to do worse than their parents. those of the things homeownership or secure, decent education. very strongly. are you frustrated voters are 100% know where labor stands on brexit? i could not hear your question. francine: the question is are you frustrated that the voters do not understand where labor is on brexit? i do think we have got to

be clearer about that. we had a big debate last month and in that we moved the position of the party in favor of a second referendum under the circumstances where there is not a deal that is agreed to the parliament and where there is a general election? since the week after the referendum, for my personal point of view thinking about the economy and what is right for our country, we should be seeking to stay in the single market as far as possible. we need to have greater controls over freedom of movement and that is something which the eu can deliver if it chooses to. there was no legal reason why it could not. it is a political reason. need to stay within the customs union so we have that security for northern ireland as well. the reason why ireland is an issue is because the border in northern ireland will not just be the republican northern

ireland, it will be a border between the european union and the third country. that is different. we have to accept a responsibility in that. if we do not want to have a negative impact on the economy and free flow and trade and supplies that we northern ireland and the republic of ireland, we have to find a solution for the u.k. as a whole. that is why i think the customs union has to be a part of that. tom: we must leave it there. much this morning. with us, david allen's. we will continue our discussion. for someone in the trenches of consumerism, not only in europe but in asia, take heart. a 90 day visit we have with mr. hart. this is bloomberg. ♪

tom: good morning. looking at the swiss economy, looking at the view from switzerland them of the bank of england news we will see later today and of course in america, focus five days out and the u.s. the term elections. in new york city, taylor riggs. taylor: that u.s. president doubled down to deny american citizenship for children born of unauthorized incidents -- immigrants. in an effort to save republican control of the senate. >> there is a lot of feeling about the horrors of illegal

immigration. people think they are just going to come into our country and take over our country. we are not going to let that happen but the democrats want to let that happen. it is crazy. we are doing well and the numbers reflect it as you know. i think we will win the senate. home price growth -- growth dropped below 2% according to data. what it said was subdued markets, average values rose compared with the year earlier. after years of booming, prices reported evidence brexit's market is weakening. japan in wireless carriers have plunged after -- cut these by 40%. industry profits will plummet four years, exasperating --

exacerbating the market. on decision puts pressure rival and -- follows government calls for prices to come down. even pressure on chief executive officer ralph hammers, who has promised to invest more in rank's digital transformation. -- plummeted after the bank paid 700,000,005.-- costssee some of these decrease. there were assessments to go on the difficult -- digital front. the ratio is one that will continue and we have indicated that 52% of the ratio will be

more on the backend of the -- of our plan which is 2020. global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. taylor: i am taylor riggs this is bloomberg. tom.francine and it is that halloween candy she brought in -- have a bag of taylor riggs candy. very heavy on snake or's. we go to china with important news. is president even thing. xi. about china'sf slowdown. how scared are they? by all accounts they are taking this head-on.

they recognize economic circumstances are changing in china and they recognize they need to do something about it and they stopped short of detailing the kind of stimulus measures we should expect to see but there is no doubt given the gravity of semblance and that level of government and commentary and measures taken so far that china's series of supporting the economy and they are digging for long-haul in the trade war. tom: they are cutting electricity in hong kong, taking undercurrents from us. ok. , itelectricity in hong kong is that romantic feel of asia. you and i could have a beverage of our choice of the jazz bar at and therein shanghai is nothing wrong with china. what is it like 2000 miles inland? >> i think by all accounts there is a degree of caution growing

inch -- growing in china. we have a big export fair in greatai which will be a gauge of sentiment among leaders and politicians. the president will give a speech. they are nervous. policymakers are nervous. with the u.s. is serious but between what they are planning to do on the stimulus side of things, there will be an important their next week. they are prepared to battle. francine: what else can they do in terms of stimulus? policymakers have done a lot. do they need to keep an eye on debt? if they support the stock market, will that be enough to make the economy collapse? >> they can spend more. debt in china is a problem that continues to grow more than 2.5 times the size of the economy

and it is a critical policy to keep a lid on that. they have been able to spend francine if they need to and they can take measures. the currency is 9% so far this year. if it continues to depreciate, that will help exporters along the ground. they are taking micro measures. they are talking about rebates and making it easy for banks to lend. ifave significant policy they need to. we are not there yet but last night, they are getting serious. tom: thank you so much. i am shocked to see the headline come across the bloomberg yesterday. david allen's is someone -- david opens is someone perfect to speak to. there is a trilemma around macroeconomics and any big in a national player. what is the unique distinction of the chinese impossible trinity?

david: so much of the >> we have signs of a slowdown. trade accelerated into august. ,e don't have a full breakdown but the rate cycle hasn't rolled over. i would taken courage meant from that. it is the first time since 2013.

since 2013. tom: a lot to drive for the conversation on. please stay with us. york,ide in zürich, new this is bloomberg. ♪ his is bloomberg. ♪

tom: good morning. in new york.e some final thoughts with david owens. there is an election in five days. it has been great american growth and everyone else diverting. can we get a lift of global growth? the ecb.h depends on tom: interesting. ,> in particular, next year changes with the new ecb president eating announced

around june. we are going to see major capital flows globally shifting. the interesting thing is whether we are starting to see a move out of the u.s. the eurozone has been a huge supporter of u.s. fixed income. these things will matter for investors next year. growing.will continue we expect interest rates to rise every quarter. tom: do you call for weaker dollar? >> if you have type money, loose fiscal, you don't think the exchange rate were wise. time, it will move away from the dollar towards the euro overtime. tom: very good.

david o income at thank you very much. we will continue the discussion. kevin cirilli on the election. some of the real dynamics. the president wanting to send troops to the mexican border. always. carney interesting. i went as daylight saving time for halloween. it didn't work. of corporatekage profits to the american economy. citigroup. stay with us. this is bloomberg. ♪ ♪

on. this morning, risk a difficult october. we consider a good american

economy. revenue increasing profits. citigroup. there is a shift. the the influential political report. moves to rally the gop base. it is a barbarian at the gate. he darkens the surveillance door. this is "bloomberg surveillance." we are live in new york. i am tom keene in zürich. francine lacqua. francine, can you afford anything in zürich? a cup of coffee costs nine dollars. francine: i am at the top of our roof. i haven't checked out the coffee yet. towoke up early to speak

the leadership of credit squeeze. there are questions going forward about the strategy and cost cuts. tom: what a shift in credit suisse and other banks. we shift to new york city and first word news. preparedent trump is to deploy 15,000 troops to the u.s. mexico border to detain a caravan of migrants traveling north to the u.s. in florida, the president doubled down on his foul to deny american citizenship to children born of unauthorized immigrants. >> back before the democratic party went crazy, they also imposed this practice. no saneid said country would grant automatic citizenship to the children of illegal immigrants. that is what he said before he went crazy.

u.k. home price growth has dropped below 2% for the first time in two years from a building survey. what it called a relatively subdued market, average values rose 1.6% in october. after years of roaming prices, it is evidence market is weakening. nationwide expects prices to rise 1% this year. search teams in indonesia have retrieved the flight recorder of the plane that plunged into the job sees this week. the carrier has suspended some executives following the worst air disaster in two decades. jet had suffered issues. cruise the night before the crash report of the issue, but the plane was checked. turnaround iss

running out of steam as it enters the final stretch. income missed estimates. meanwhile, the global markets business is one of the biggest challenges and posted an unexpected loss. return has promised to half of profits through buybacks or special dividends. bank isnvestment actually doing better. that for us is comforting. >> global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i and taylor riggs. this is bloomberg. tom: what a day yesterday. we follow on as well. guestl let our explain.

curve steepening. euro stronger. from $80. away the vix almost normal. we saw 10, 11, 12. there is the dow above 25,000. level.nder that $80 i want to point out the mexican peso has been weaker over the last three days. i will call that idiosyncratic. one of the idiosyncratic abilities of our guest from citigroup private bank has to keep review on the financial and corporate world. he provides wisdom to city private bank this morning. i will go right to your wheelhouse. ebb in profits into next year? >> we don't get to grow at 20%

forever. tom: the tax cuts are one-off, right? >> it looks like this year could still be 23%. if you end that now and don't have an economic collapse, you have and are sure for profit gains in 2019. profits in the united states and globally will be in the neighborhood of 8% for 2019. last year, if you looked at 2018 outside the united states, 12%. the united states, 23%. this will slow. the magnitude of the slowing will not be as severe as markets would suggest. , folding breaking news into the risk on feel. fund, they have taken a 3.1% stake in deutsche

bank, according to the wall street journal. that talks about the amount of money. is that a bid to the market? monetary policy is tightening. the fed is shrinking its bond portfolio. private savings need to finance the larger u.s. budget deficit. that constraint on markets away from profits and the economy, that is a gradually tightening device. the absolute amount of tightening is asymmetric to 10 years ago. incomes are providing capital and savings flows into financial assets, and that is quite positive. that is the more longer-lasting constraint. the idea the economy will fall where theiff, it is

shorter term outlook is one of rebound. this gradually tightening fed will be with us for a while. some terriblyve they shock, the federal funds rate will be up 100 basis points. tom: you do first-rate economics and first-rate strategy. what do you tell people to do sitting in their kitchen? there are big hitters at citi private bank. you could sleep in the subzero. what are you telling fancy people to do with their money right now? >> don't try to go in and out of the markets. tom: cash has a value, right? >> absolutely. it is increasing value. at the short end of the u.s. yield curve are largest overweight. we are still 1% underweight and

global bond markets because europe is incredibly rich, japan is incredibly rich, so we have the opportunity to double or triple the size of what would be in cash at the front end of the u.s. yield curve with high-quality products to move up with short-term rates. francine: are you expecting a correction in the next six to eight months. >> the correction just happened. we will have volatility. francine: that's it. one and done? very recently where global markets were down a lot more than the amount of global slowing we expect. it voices us for a rebound now. i don't mean just today, that sort of thing. what we just had in the u.s. stock market is we have fallen backly and are shooting up. we are still in a volatile environment over the short-term, but if you think about how far

the economy will slow, it will slow some. monetarywill slow on policy, but can it go to zero? no. if you want to simplify the story, stocks are going down and the economy is going up globally. lower growth alone will not mean ever-falling asset prices and it is not the absolute peak and the american economy, so markets are premature. francine: thank you so much. you stay with us. some breaking news on oil. to agree korea are set on an outline on the iranian oil waiver that would allow limited imports of crude from two refineries. it is just the outline of the deal right now. it would give a little bit to

iran and cool oil prices. tom: it shows the marginal tensions between supply coming on and the demand dynamics. awareo want to make you -- francine: deutsche bank. tom: deutsche bank as well, 3.1 -- 3.1% positionancine. with hudson. that according to the washington journal. kevin cirilli on your american midterm elections, coming up. this is bloomberg. ♪ s is bloomberg. ♪

tom: good morning. "bloomberg surveillance."

kevin cirilli, five days away from the election. let's go first of all, what is the president's plan this morning? kevin: he has been locked in local battles with politicians spanning the geographic map. look no ford than florida. forwar than florida. that they are veering will mobilize the left to get to the , not and have a resurgence just in the house, but key senate states. tom: i want to talk about the general statement and a polarized movement. david wasserman with an important summary at the margin last night. two towards democrats, towards republicans. king, whobout steve

is polarizing out of sioux falls. we can't restore our civilization with somebody else's babies and his travels to meet the far right european figures that made him a pariah in the house and enraged democrats. this is fascinating, kevin. what will happen to the verbal base, like congressman king, over the next five days? kevin: i'm trying to put this in context with a global audience. steve king is the steve bannon in the house of representatives. is the most conservative district in iowa. steve king is locked in a battle and the toughest fight of his political life against the democratic challenger because you had everyone in iowa from the newspapers to the chairman of the local republican party come out against him. what they are saying is white supremacist rhetoric.

congressman king was a kingmaker during the iowa caucuses for the far right, the fact he is having to fight for his political life is stunning. stunning. you for: kevin, thank putting it into global context for our audience. two things have been getting a lot of attention. first right is birthright nationality of people living in the states with illegal immigrants as parents. the second are the troops of the border. how do both play out in the midterms? why isif you are saying president trump saying 15,000 troops could be headed to the is our look, all this efforts to rally the base, but the issue of birthright citizenship is something europeans have talked

about in various factions of their nationalistic political firebrand. tellwill not come and december 9. there could be a government shutdown in the lame-duck session over fighting for funding for the border wall. the policy in central america, what are the chinese doing investing in panama? tom: president trump is outcome painting. out campaigning. who is welcome on the democratic bandwagon now? there.i grew up i'm not sure hillary clinton is able to go to the same working-class towns. haser president obama aggressively campaigned for democrats. what you just mentioned is a foreshadowing of the 2020 cycle.

fight for thehe democratic party and who will have control over all of the infrastructure. tom: there are so many people running in 2020. i think three members of the philadelphia eagles are ready to put their hat in the ring. you go long eagles. kevin cirilli, thank you so much. now, david you right westin in sharp conversation with mick mulvaney. stephen with us from citi private bank with us now. in six months, you and i have not looked at auctions in ages. is the fiscal debate going to mean something? >> it is unusual for bond supply to have a big effect on treasury bond yields. usually when there is economic weakness and we are borrowing and, risk averse activity,

the supply is falling. this is a stronger economy, strengthening. we can debate how long that lasts, but we are adding to auction sizes and pressuring the bond market he comes the economy is holding up, the budget is getting larger, the fed is purchasing less bonds, so where seeing upward pressure on interest rates. that is rare in the treasury markets. it is important. it has made yields percent across all maturities, and it is want high reasons we quality bond portfolios where you can earn a real yield. francine: right. steve, thank you so much. , the carlsberg chief executive. we will talk about emerging

markets and pricing. this is bloomberg. ♪ this is bloomberg. ♪

tom: good morning. i am tom keene in new york. with thevisit carlsberg chief executive officer. i don't care about earnings and that. i want to talk about the strategic success of carlsberg versus the beleaguered outcomes of your competitors, heineken,

and in particular the people who bought inbev ab. what are your best practices that they are not doing? >> good morning. we delivered a strong third quarter. our international premium brands tubergarlsberg and t share good growth. do is what wee have promised, focus on strategic parts of our category and deliver. tom: we have an election coming up in america. washington gives up 46 gallons in a free beer. you can make money on free beer, can you.

do you give away the low price beer market? >> not at all. to your point, we can't give away free beer, what ever the focus on the election is, so we try to really give a good value for money proposition, but it is craft, speciality. beer,ne: away from free what is momentum looking like in the fourth quarter? for third quarter was helped by better weather. ofy drink, enjoy a beverage their choice. can you keep momentum for the fourth quarter and beyond? >> normally the second and third quarter are the strongest and most important quarters. it was a strong quarter three. quarter four is not that important.

obviously we have been helped by a good summer in europe in quarter three. francine: talk to me about cannabis. does it pose a threat to big beer like craft beer used to? >> we are not having an important footprint in the u.s. and canada. obviously we monitor the developments, but are not working yet on an extension in beer based on cannabis. tom: i want to get back to the strategy of beer making. general electric go down in flames over the last days. of how do you deploy strategic capital in the beer business? how do you do that without screwing it up? strategy, set out our

we said that millennials are other kinds and types of drinks, including alcohol-free drinks, and we focused on that. when they drink, they will want to have a good brew and are willing to pay for that. , includingon of that a focus on big cities in china and india leads us to growth. tom: we have to leave it there. , a good some nation quarter for carlsberg. stay with us. libby cantrell on the election later. ♪

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there is quite a lot going on. we will go back to the markets. we spoke to the leader of credit suisse. we will get to the impact it will have on the company. first, first word news from new york city. >> shares and deutsche bank have risen after reports hudson capital has built a stake of 3.1%. manager believes deutsche bank to be misunderstood and undervalued. the ceo says he appreciates the groups confidence. india and south korea have agreed with the u.s. on an outline deal that what a rout them to keep importing iranian oil. .o final decision has been made an announcement is unlikely before u.s. sanctions on iran are reimposed on november 5. the waivers would ensure some iranian oil continues to flow to

global markets, potentially combing down fears of a supply crunch. denmark's biggest bank is working hard to restore trust with customers and investors after finding itself at the center of one of europe's biggest ever money laundering scandals. be ceasing the turtle finds after it admitted $230 billion that move through an estonian unit might be suspicious. it is investing massively in compliance. >> we start the 2018 share beback, and it would answered as to whether we would do that in 2019, but in terms of that, it is fair to say we are more preoccupied with being seen as prudent in terms of capital these days than handing back capital to the shareholders. dividends, wermal

still aim to pay out between 40% and 60%. hashe u.s. president doubled down on his bow to deny citizenship of children born to undocumented immigrants. it is the first stop that will see trump hold 11 rallies to safe republican control of the senate. >> there is a lot of feeling about the horrors of the illegal immigration problem. they're going into our country and take over our country. we will not let that happen. the democrats want to let that happen. it is amazing. we are doing very well. , i think wean do will win the senate and do well in the house. >> global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i and taylor riggs. this is bloomberg.

tom: it is a good and sporting the equityk about market. citigroup private bank with us. only because he wore a red sox had to bloomberg surveillance on radio a few days ago, we tried to get up to the parade yesterday. us fromfan, joining bloomberg opinion as well. i want to talk about the strength of the market and this idea of a correction. what is a correction to you? >> we move back to a level where make fundamental long-term sense. i'm not sure we have got there yet. is a correction to 20% is a bear market is useful. i don't think this is over. gs andt's not just the fan

everybody else, but the dispersion is unique. what does that signal to you? you have an internal rotation in the market, it suggests something deeper is going on. upyou have real estate going recently, that suggests it is there. the most important point about this version is it is being driven by factors that are internal to the market. week are a hit last high beta. those were the ones that seriously tanked. that suggested that his people who are leveraged sellers want to take profit. tom: are we seeing rotation, stephen? a look at would take

it like this. if you think about the drop at the end of january through february, growth stocks did very well in that period. this very recent period, defensives have outperformed. not knowing where the range is on interest rates, the particular stocks that have done well and those have changed a great deal so there is some legitimate growth worried in the market. the degree is how much. folks will say growth will slow, so we have to adjust for that. it is a matter of degree. i think we will end up with a percent eps growth in the u.s. and globally next year. i think that 2020 is a different story. it could be more difficult. it is too early to write about the outlook of 2020.

francine: i don't know if you can since the tension on the new analystk, but one expecting more of a correction. how do you know when it is the end of a correction? >> you never know, do you? that is the joy of trading markets. i tend to be old-fashioned about these things. if you get to a point where valuations have reached a sensible level, then that ultimately has to be the bottom line. i think where we are at this point, however, is the other important point we have not mentioned, the correlation between the bonds and the stock market is shifting in a way we did not see. that is the other critical difference between this correction and the february correction. otherwise, it is plainly similar.

, inink you need to see hindsight, again, we know when things are over afterwards, in hindsight come the critical events that signal the end of march correction was bond yields found a new level. they had been preceded by a sharp increase. had another sharp increase in the last week or so before this latest bout of turbulence. once bond yields again find a sensible level which is what they did for six months, that is when the correction will be over. i think it is possibly more about getting comfortable with the rate situation, being confident with the rate outlook, that drives whether the markets will find a new level. francine: john, what exactly is

the catalyst of this correction? come ms.etary policy pricing future expectation of the fed? market positioning or china? >> in terms of the exact catalyst, that is tricky because none of the catalysts work perfectly. i would say the greatest cause of concern for growth is plainly china. it is always in the background. it has been throughout the 10 years of qe-led expansion. there has always been concerned has been anand that important backdrop to this. i would say the catalyst was the sharp rise in bond yields. i don't think there was any huge change in what the fed did, but if there is any particular

reason why stocks fell off as they were having a perfectly good earnings season, it is because they had this big ramp up and rates and people needed to work out what to do about it. valuation, weout think about valuation very strongly in setting long-term returns. the ups and downs in markets will be driven by earnings and risk premiums. if you look at the last 10 years , the asset class with the best return is small-cap u.s. stocks. we are underweight small-cap u.s. stocks for the first time in decades. we think the next 10 years will be less generous. in china, earnings have risen more than the u.s. since 2007. that is meaningful to the next 10 years. tom: you are long china? to a certain degree. asia is deeply undervalued from the perspective of where indices are.

we will see a shift because growth will persist. the ups and downs of the u.s. market will not be set with long-term valuation. two or could go for three hours. i want to come back and look at eu banking. 3.1%t to look at that ownership of deutsche bank. later, we will look at a small company from cupertino. laptops broken in the past eight hours. it is an outrage. ♪

francine: this is "bloomberg surveillance." must talk about why i am

incirlik, to interview the leadership of credit squeeze. the turnaround seems to be running out of steam as the bank enters the final stretch of its overall. businessl markets posted on unexpected loss in the third quarter. i spoke with the chief executive. >> gtv -- size, theain it upgrade, to the risk with massive, between 40% and 60%. relative losses in these markets. to the cost from $6 billion $4.8 billion here one thing we don't control is revenue. >> i am quite relaxed about that. what would have worried me for the quarter was seeing signs of poor risk management or lack of cost control.

the business has delivered. francine: you not planning for the measures to boost profitability of markets? >> optically, we are down 13%. equities, down 15% in fixed income. seven points of decrease our restructuring in brazil, russia, and emerging markets, and also a restructuring of our u.s. business. the restructuring will ensure we had 4.8. that hit 4.8. -- kit 4.8. what happened in global markets? they have been very good. we have been cutting costs, cutting risk. we are still number one. we are still number two in china. we are number four bank or five in cash equities in the u.s.

a good remained investment. francine: you will hit your target? >> one year later. 10%, return on capital, global markets are it was too ambitious given market conditions. we are confident with this windfall next year will get us into the high single digits. the the rest of the business is really grooming and doing very well. -- booming and doing well. francine: that was the credit suisse chief executive speaking with me early on. going --our the banks are the banks going through an existential crisis? they don't know what they will become more how they fit in. >> yes, this is one of the scary european fixed assets as it stands.

the financial crisis 10 years ago in a much more bloated fashion than even the u.s. banks. it was ultimately because you had this bloated banking system that the eurozone crisis happened, that the banks were too big to fail. they were too big to save. two big swiss the banks, the strategy there, which hinge everything on wealth management to become wealth managers is probably the correct one, particularly given the traditional role and their brand still has strength, but it still , hes, it was interesting said he was relaxed about revenue because he could not control it. zen-likehe can be that about revenue. zen-like isn't

getting it done. cfo of in-like is the j.p. morgan, which has done pretty good. goes out and sets up hudson executive, buys 3.1% of deutsche bank. the critical thing for me, are these things value traps, or is there an outcome down the road? i'm looking at the charts we use. it is real simple. the charts are real simple. they are not good, john. deutsche bank, down. unicredit, down. what does douglas bronstein see here that you and i don't see in a value trap? >> i would love to know the answer to that question. ,he thing that would make sense any value investor needs a catalyst. tom: merger. consolidation. >> who will buy?

francine is incirlik right now. where does credit suisse fit into the mix? >> credit squeeze has the hasntage -- credit suisse the advantage it can have its particular niche and swiss way of fitting into the niche, that wealth management and asset services for the rest of the continent. it has more of a fortified position it can try to benefit from. troubled thanre credit suisse. in the case of deutsche bank, if you are taking a big stake, the logic would be you yourself could be the catalyst.

there is something deutsche bank and do other than wait for the thatmy to achieve ignition can get deutsche bank growing again. i'm not sure what that would be. it is too big to merge with somebody. merger ifdo a shotgun you split it up into its constituent parts. some of those parts aren't worth much at all. the question might be whether they are worth anything. how yout clear to me can become a positive catalyst for change by taking a stake in deutsche bank. francine: john, i want to come back to some of the swiss banks. brand recognition for the swiss banks, isn't strong enough that it validates selling to wealthy managing their money.

is it strong enough to validate that strategy? >> my best guess is that it -- they is, but whether are well established. their main competition is with people in london. there is another set of issues surrounding the big banks in london, which we may or may not get to talk about, surrounding what their business will be after brexit. , ii were a swiss banker would probably try to do what he is doing. work, butying it will it strikes me as the most sensible strategy. you will not make the same trading revenues that you once did. particularly once you move into asia, where there should be a lot of growth there. entire otheran

conversation in our three-hour discussion today. we look at asia and the endless expansion. stay with us. this is bloomberg. ♪ is bloomberg. ♪

tom: we need some air.

francine lacqua in zürich. we say thank you. btig, a single best chart. this is great. this is the investment strategy. it is simple. walter went long apple here. it has done well. i went long ge. we won't talk about it. what a difference between these two iconic names. >> i think the ipad crow is what people are focused on. s have been down, so it needed a refresh. the ipad pro was several years old as well. tom: when the earnings come out, everyone would look at the mix. what is always missing is a ration. what is the iphone worth? what is the ipad worth? what is all that services worth

as well? tothe reason that is coming play is the iphone had good growth this year. a lot of people are looking for services as an opportunity to drive higher value. is effectively a recurring revenue business. tom: really? are upgrading your phone every two years or three years. we have not sold as many phones as we did when the iphone 6 was released. >> let me look at my new iphone. tom: this is the fancy one. i dropped my laptop last night. what should i do? there is a reality every parent in america has. up forsetting ourselves some amazon-like gloom. what is the mix in the conference call? >> a part of it is executing the

quarter. as fart is the guidance as the december quarter. this is when new products hit. investors want to see the units and mix of asp. of time.re out we will continue this discussion on radio. ,ome important questions particularly on use of cash. pound sterling, boe, a rate decision and inflation report, and more importantly, mark carney, maybe he will mentioned the maple leafs. this is bloomberg. ♪ ♪

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my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. alix: mark carney in the hot seat. , but mark carney

have to face brexit uncertainty. dead cat bounce or bottom? the biggest rally since february. earnings on deck. global markets pommel credit dragged down by a weaker activity and challenging conditions. david: welcome to "bloomberg daybreak." you have to feel sorry for mark carney. on thehey have a deal banks having access to the market in europe. alix: we will get a deal, but be in a deal, basically? david: you behave yourself. alix: it makes sense. in the markets, you can look at the clarity when it comes to