>> good morning from bloomberg's european headquarters in the city of london, this is bloomberg: daybreak europe. supply and demand concerns for crude cause the biggest drop in three years. theresa may strikes a brexit union.th the european parliament may threatened to vote it down. forers gets ready volatility with billions of dollars in market cap already wiped out this year. ♪

good morning. it is 6:00 a.m. in london. today,us is on london with a brexit deal being struck between u.k. and the e.u. will it get through parliament? a big jump yesterday. is the rally premature? can theresa may get the deal through u.k. parliament? crude is down 8/10 of a percent. the biggest drop in three years. oil, supply, demand, and president trump, causing concerns. let's take a look at how u.s. futures are performing. a little bit of a mixed session

in asia. we are flat after losses in the u.s. session yesterday. let's get to the earnings. let me sum up for you what we have had. raising its net sales growth forecasted to 6%. that is the headline that came out of the bloomberg. this is in focus. 3.723 points nine billion -- 3.7 billion euros forecasted. 906d quarter adjusted, million euros. a beat of third quarter. third quarter sales also coming euros.5 billion

merck, cutting its four year forecast, buta raising its sales outlook. let's check in on the markets in sia. with juliette saly -- in asia with juliette saly. we had some data out of china. juliette: a busy day. a little bit of a downturn on the msci-asia-pacific index. a bit of an attempt at the rally today. 1% in japan. third-quarter gdp contracting more than expected. you also have a weaker yen, pushing japanese stocks higher.

this all has to do with oil. that is playing on the overall regional index. this has to do with a number of emerging markets like indonesia. oil prices have been the biggest draggers. santos is off by 5% on the close in sydney. price is affecting indian markets. this petroleum company is one of the best performers in the region, up by 8.5%. trendore is bucking the because it came through with an 81% drop in its profit. that is the biggest decline the airline has posted in seven years. >>. thank you -- thank you. annmarie hordern is standing by.

numbers came in at ¥380 billion. a little bit softer on the dividends. the yen estimate was for ¥52. japan post up some 5% since beginning of the year. >> let's get the bloomberg first word news. : after more than a year of negotiating, theresa may has clinched a brexit deal. the pound rose on the brake for the -- breakthrough, which includes britain remaining in e.u. customs indefinitely to prevent a border work with ireland. many inside parliament are

reported to be unhappy. they will have to decide whether to back the deal or resign. the white house says the u.s. and china have resumed contact and that president trump and president xi will talk in argentina at the end of the month. larry kudlow says it is better to talk than not to, but he warned there is no certainty that china will agree to u.s. demand. >> the president reopened china talks. they slowed down. now that atclear the g20 meeting in argentina there will be talks between the two leaders. >> the u.s. is said to put plans to put new tariffs on car imports on hold. the administration isn't yet on tariffs ofoff

up to 25% on foreign cards. the populist government in rome seems to defy brussels over its spending plan. brussels may now trigger disciplinary action. japan's economy shrank for a second time this year, with third-quarter gdp dropping at 1.2%. natural disasters wait on domestic demand. -- weighed on domestic demand. trump has demanded the removal of john bolton's top deputy. reports swirled about an intimate shakeup of the administered -- imminent shake up of the administration.

no said the top deputy longer has the honor of serving in this white house. he clashed with the first lady staff during a trip to africa last month. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. bloomberg. the pound has arisen on news that the u.k. and the eu have secured a brexit deal. prime minister theresa may now -- herconvince their cabinet, and get into through parliament. we are joined by maria to provide some insight. what are the details of this deal? maria: good morning. it is a technical agreement. it is not political. it is a breakthrough. the reagan auction in the market was immediate.

reaction in the market was immediate. the u.k. has kept a very coy about it. it will agree to stay in a customs union that keeps it close to the european union. there will be special provisions for northern ireland. everything will depend on the cabinet today. what is the likelihood this will get through parliament? >> that is the big? . -- that is the big question mark. cabinet will give us a good stance.

there could be a chance this does not get voted down in the u.k. parliament. >> if we do get that nightmare , how is brussels likely to react? brussels has been very quiet. the u.k. has to sort this out domestically. the u.k. has said, we believe the european union, deal or no deal. that is a big question mark. they think anything could happen. we could head for a new general election.

a big year when it comes to european elections. for the european union, this is just one of the many issues they have to tackle. thank y we willo get back to brexit, lateru. . -- thank you. we will get back to brexit later. let's talk about the oil story. crude is showing little signs of recovery from its unprecedented decline. the biggest one-day job in three years. crude is falling faster than expected. other members are signaling output cuts. have the chief investment officer's in global equities. great to have you with us. seeing an unprecedented front of declines for crude at the moment. marketst shaking equity

much at this point. >> the concern is more on the volatility side. we know that oil has a lot of volatility. it is even more volatile than usual at the moment. we are seeing more geopolitics in the form of president trump. that is a new dynamic than what we are used to. that seems to be the issue at the moment. oil prices are going down. to do with the uncertainty in volatility. >> volatility is its highest since march of 2016. spread, we have with thiswidening out

drop. crude has not reached those level since 2016. if we continue to see a decline in wti, the dispute through to the equity markets after the credit markets? >> yes, because of leverage. moment, the decline is based on fundamentals. there is less demand. that is very logical. it is uncertainty. -- uncertain. that affect you more in terms of how long the selloff can go on for? i do say this quite a lot. monthsver the last six

have really improved once again. at the end of the day, it is based on fundamentals. the market is trying to force decisions. >> you look at individual stocks, rather than the market probably all the time. -- broadly all the time. has this changed anyway -- in any way? are we seeing the crude prices over the past 11 or 12 days? >> we don't tend to invest enormously in that sector. this generally brings down any upward pressure. that is all good. clearly some countries are going to be doing better than others.

the margins are just really about how it helps with costs. growth?about >> we are seeing more downward pressure. it was equally going to be up to 75 the next month. >> we are going to talk about more things, difficult to forecast. coming up, sterling rises. the u.k. and european union agree on a brexit deal. this is bloomberg. ♪ >> let's check in on the

markets. we are seeing some weakness in asia. a mixed bag of data in china. the united nations, steady, on the 694 handle. what is being said on reports of this brexit deal? u.k. parliament remains the challenge. crude continues its record losing streak. wti had its biggest one-day drop in three years yesterday. u.s. futures not showing a lot of direction. let's get your bloomberg business flash. saidchat's parent allegations are being investigated it misled as investors in last year's ipo. ipo,tors say prior to the

snap didn't reveal how much instagram was hurting its growth in the second half of 2016. accelerated plans to parent general electric's stake in is compelling it to share more than 160 million shares in a secondary offering. pivot awayn marks a from the strategy championed by the former ceo to rely on oil. purchases of this metal producer come as many steel and aluminum makers have foundered this year. that is your bloombergt business flash. >> we are asking the question,

what will hedge fund filing show on u.s. stock leadership? you can reach out to us on your bloomberg. we will have back-to-back questions with our guests later this hour. prime minister theresa may has clinched a brexit deal with the european union. the cabinet meets this afternoon to consider the proposal. we have our guest is still with us. -- guests still with us. are the gains in sterling premature? >> there are lots of uncertainties. we think there will be more volatility in the currency between now and march 29. if you thought the prime

minister and the government has done the hard work -- it seems through've got to get the cabinet and then the votes in parliament. i think that spells more volatility. >> what does that mean for sterling? >> our final verdict is a deal will be reached and we'll see a smooth exit on march 29th next year. is sterling cheap or expensive? fundamentally, it looks very cheap. 135 against the u.s. dollar and a bit more than that in the first few months of next year. we could see many fluctuations between now and next week. >> quite a jump from where we are at 129 right now.

saying how difficult it is to predict these things, including brexit. what does that mean for allocation? >> we have to wait for the deal to get through parliament. some of the data is warranted, but it is premature. we will wait and see. cheap.sets are investments are still underweight. we will be watching the barometer. that is until we get some more certainty on this. this is a major, historic agreement. through this, the u.k. is not without its issues going forward.

we still have an economy that is slowing. this, wee get through 'll be better than where we are at the moment. >> what does that mean for the bank of england? we have seen a touch of replacing at the moment. -- repricing at the moment. do you think we could get more rate hikes than what we thought -before? the bank of england is concerned about the state of the labor market, namely its tightness and its prospects for upward pressure on the wage growth.

yesterday's earnings numbers were pretty firm. fromotal evidence individual companies say they are paying more for u.k. labour. provided all goes smoothly we are on we thinkt, a path toward increases for 2019. what about euro-sterling? saying we will get something in the mid to late 80's. we've been surprised by the weakness of the euro. the single european currencies is being weighed down by a relatively disappointing set of

economic numbers. euro bouncing back chancee could be a sterling is a stronger against the euro. will there be any equities that you will buy that are cheap, whatever happens with brexit? >> companies control their destiny, to some extent. they will probably survive. >> our guests stay with us. next, trade. kudlow says washington and beijing are talking at all levels. and we will hear from the ceo of merck at 7:30 a.m. london time.

this is bloomberg. ♪ ♪

>> let's look at the world map and see what's happening in the asian session. chinese shares taking a beating for japan holding up. a bit of a mixed session. u.s. futures dead let. let's check on the markets around the world. joining us from him by is our reporter. let's kick it off with you, were seeing a record losing streak for oil. what does this mean for india's markets today? >> typically positive to marginally positive. decline, ashows the near perfect correlation out there.

the midmarket she well and vice versa. the numbers on the screen will show you 1% higher. e.g. market wasn't doing all that well. but put it in tandem and the markets have done well the last three or four sessions. a little bit of pullback in the that, itd because of , it comesed a little up a little bit and that's putting a little bit of pressure on the markets, but by and large the sentiment is improved and showing the way the markets have done the last few days. sophie: thank you. anne-marie, you're looking at sterling volatility holding its gains from yesterday. >> overnight it's jumping the most since the snap elections we had in june 2017.

volatility on the pound is rising as the currency is climbing as well. tons that the u.k. is closer a potential divorce deal with the european union. traders are looking at the potential year in deal for brexit. we should note short dated pound options well supported, and an agreement may boost the odds of a deal. i'm looking at the commodity world and looking at oil. all agility on oil soaring the highest since march 2016. seeing a collapse in the group market, down 7%, the biggest one-day drop in three years. brett joining the u.s. benchmark entering the bear market on-demand concerns, the fact that opec itself is saying demand for crude is growing faster than expected. and beware of more bearish news today. predicting an increase of more than 3.20 5 million barrels in u.s. stockpiles.

annemarieou so much, and niraj. numbers coming through from of the 3the upper half billion euro range. upe months adjusted ebit 11%, sales down 13% to 24.30 4 billion euros. 2014sically narrowing its profit guidance to the upper end of the range. increasing nine-month earnings and narrowing its forecast. so that is eon. this is also read on the bloomberg. income number net

, ¥198.3 billion. let's get the bloomberg first word news from divide. >> the white house says the u.s. and china have resumed contact at all levels and that willdents trump and xi talk trade in argentina at the end of the month. national economic adviser larry kudlow says it is that of to talk than to not, yet he warned there is no certainty that china will agree to u.s. demands. >> the president reopened china down when had slowed he called president xi. it's clear that at the g20 meeting in argentina, there will be talks between the two leaders. grexit the u.s. has said to put in plans to impose tariffs on car imports on hold. sources, to bloomberg

did administration is not ready to act on the threatened tariffs of 25% on foreign cars. oil shows little sign of recovering from its unprecedented decline as investors flee on market hammered by swelling supplies and darkening demand outlook. seven point 1%ed yesterday, the biggest one-day drop in more than three years after opec that it sees demand for crude falling even faster than expected next year. italy and the e.u. remain on a collision course with the populist government determined to defy brussels over its -- over its spending plans. despite the budget being rejected by the commission for breaking e.u. rules. brussels may now trigger disciplinary action which could lead to fines worth billions of euros. french wine is the latest target of president trump's twitter account. he tweeted that france and the u.s. both make fine wines, but tariffs make it hard for american business to cross the atlantic he with the u.s. sees

of e.u.est markets winemakers taking almost one third of its exports last year. by contrast, the u.s. accounts for only 16% of e.u. wine imported behind other countries. 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. nejra: thank you so much. more numbers coming through on the bloomberg. ebitdad raising its guidance, seeing full-year to 570 million euros. the nine-month revenue number coming in at 144 billion euros. third-quarter revenue beating estimates. eurostes were 530 million and third-quarter ebitda also upbeat. -- also a be. .verall -- also a beat

we have these numbers a few minutes ago, confirming your target sales for sales and the adjusted ebitda margin. first-half sales come in bang in line with estimates. still seeing the siemens deal closing in the first half of 2019 as well. let's get back to one of our other top stories today, the populist are standing firm to the 2.4% budget deficit and growth forecast target, calling the glove on european union enforcers. we were talking about a breakthrough for brexit, how much of a crunch day is today on they, given that even if e.u. decides to impose fines, these things take a long time to come through. it's yet another one, and so

far it has been a relatively contained crisis going on there. new look at spillover into the upper bond market, it doesn't seem to have really happened. that gives a better environment for negotiating. it seems the concern is not really about the scale of the othersdeficit, there are , it's more about the lack of supply-side reform in italy and just going the other way, really , looking to increase income which is fair enough, but nothing on the other side. so there is nothing in there to give a raise to the medium-term growth rate. at the end of the day, our expectation is that they will ,gree and it will rumble on

that's normally what happens and i don't see why it should not happen. nejra: when they get there in the end, who is going to capitulate? of, that'stle bit what we expect to see. discussion,a better plus there's so much else going on as well that there is a desire to just agree there is something else going on. you willes this mean be buying italian equities or other companies? annemarie: there's not that -- lucy: it's more of a question of how it affects europe and the fact that it is not really affecting the rest of europe means it's just something we watch to see if it could get worse. concerned,he euro is and the evaluation of equities within europe. so it is important, but not something we will directly want

to be investing in. nejra: why would you not want to be directly investing in italian banks if you think eventually there will be an agreement? lucy: because there are more issues with italian banks, it's a question of capital ratios or how much you can trust the debts that they have. so it's just inherently not that interesting to investors. nejra: that me take you to this chart. it shows ftse 100 volatility versus the vstoxx index. more trade ing in european stocks than in european shares. does this mean europe is better to invest in now from an equity point of view than the u.k.? a better value than you can find elsewhere in the world. u.k. is cheaper, not just brexit, there are other issues

with the u.k., but on the margin, the u.k. looks a bit cheaper. both areas, having the selloff you're had this year, beginning to see more value of. it's a better environment than we were. nejra: ok, i also want to talk about trade here. it's a little bit of a hard littleut today we saw a bit of optimism in equities. basically the trump administration is going to hold off for now on imposing new tariffs on car imports. top officials weighing revisions to report on the national security implications, according to two people familiar with the matter. the trait story has fallen into the background given what is happening with oil and all the political stories in europe. how do you factor it into your equity investing right now? lucy: it's a major shift in the geopolitical environment that we have been dealing with since the beginning of this year.

i think there is hope that it would be a short-term, but this is a long-term shift. since were going to have to look at all the companies, particularly from a micro as well as macro point of view. that means you are looking to see where costs are being affected by terrorists and we have seen initially on raw materials and now other parts of intermediate goods, so it really means we have to focus on something which was never such a big focus before and think of trade and the uncertainties around the tariffs going forward and factor that into stocks. it has caused more concerns at a it's level as well because a long-term shift and it's not going to go away. the discussions and conflicts between them is likely to

remain. macdonald at allianz global investors case with us for the program. here's a look at what we should be watching today. the u.s. -- u.k. parliament votes on the cap on carbon admission -- emissions from trucks. and the dallas fed president robert kaplan at an event hosted by the dallas fed. questions over what the oil slump means for inflation expectations. cpi data from the u.s. later as well. plus an economic update from the u.s.. consumer inflation probably rebounded in october after easing at september. that data at 1:30 p.m. u.k. time. yearnt is having the worst since it started trading in 2004. loss240 -- $243 billion has broken all kinds of records. why tencent traders are

preparing for the wildest day in three years. we will find out. tune in to bloomberg radio live on your mobile device or on digital radio in the london area. we are with you always, and everywhere. this is bloomberg. ♪

nejra: let's check in on what is bloombergcross the universe. a pink diamond discovered a century ago has been sold for more than $50 million, setting a new apparent world record price. , the e.u. hasom to decide whether to kickstart the process that could result in several billion euros in fines. and our most read stories on the bloomberg terminal, in third place, after theresa may secured a brexit deal with the e.u., she will have to get it passed

parliament. insect place, the trust -- in second place, trump administration will hold off an imposing tariffs on new foreign cars until investigation is completed come and the top story, oil shows little sign of recovery after plunging 7.1% in the biggest one-day drop in more than three years. bloomberg the business flash. >> struggling noble group will cease trading on friday, a long way from restructuring. it will then see new shares being offered from the following day. a third-quarter loss, saying its core coal business has struggled to make money and also made bad bits on lng. general electric search the most in more than nine years on on bakered plans hughes, selling more than 160 million shares through a

dealdary offering in a that could raise $4 billion. the decision marks a pivot away from the champion -- champion to buy ceo. general electric added to investments in the third quarter. bridgewater also win in bid for u.s. steel corporation musk order, more than doubling its holding for purchases that come fears onany americans alumina markets are founded on trade concerns. also staying loyal to gold as other investors sold off. that's your bloomberg business flash. nejra: thank you so much, deadly humphrey in dubai. y humphrey. on your debate bloomberg. let's bring back lucy macdonald

at allianz global investors. some investors look for clues on what's going to happen in the u.s. market from these 13 filings. is there anything you will be looking at? lucy: in particular this year, there have been -- there's been a shift in growth and value with tech names where there was loss of ownership there. becoming more fragmented in performance, the sector as a whole is performing well but there is more to virgins within that. that means more profit taking in some of the names, and looking to put it somewhere else. the leadership has shifted a bit. more about that in just a second. lucy macdonald stays with the program. let's talk about tencent reporting third-quarter earnings later this morning and despite a

240 $3 billion loss of shareholder value since january that has already broken records, the outlook for some of the tech giants most profitable businesses is getting leaker with spending and more stringent regulations. stock, thatfor the was mark the biggest post result reaction to the largest component of the msci emerging market index since august 2015, according to data compiled by bloomberg. joining me is lulu chen, good day to you. it seems to be a cloudy outlook for some of tencent's most profitable sectors. what specifically are investors watching for? analysts are not very upbeat when it comes to revenue growth or cast. analysts are predicting the company will post the slowest growth since 2015, the june quarter. only 23% group -- growth for revenue. only flatocess,

growth, two point 3%. when it comes to highlight that people will be looking for, investors will want more clarity in terms of what the fate will be and when the company will be able to monetize its fortnight gain. a lot of the $200 billion value be been seeing wiped out in public markets has come from regulatory hurdles in china, a crackdown on gaming sectors in china. all of that will be asked during the investor conference during the earnings call this evening. and how high is the bar for tencent to actually beat expectations this time around? lulu: the expectations as i mentioned, right now it's not that upbeat. if you look at the figures, most people are really thinking the question people are asking right now is when is the worst over? the downbeat elements

that could affect the stock are already out there but there is one hanging knife, which is whether the company can continue to operate and whether it will get the license to operate and commercialize those games. chen in hong kong, thanks for joining us. let's bring back lucy mcdonnell -- lucy macdonald. we just heard specifically about tencent. this is perfect for you, who looks at specific stocks. is this a stock you would find interesting? lucy: it's a stock where we have had decent position, much less so now. it's a stock we are looking to see if we want to invest back into. have is the fact that there is more government interference in what has previously been a relatively

protected industry. dere is some the rating -- ating which is justified. it's a judgment of what you want to pay for a company that can be interfered with in that way. if you look at the other areas of the chinese stock market, that is the judgment, really. you want to see the earnings on the gaming side stabilizing as well. if you see that stabilization, then call is about what you want to pay, in a different light to where it has been in the past where it has been growing with no interference whatsoever. so you need to adjust your evaluation metrics. tech, elsewhere in tencent is starting to look more interesting for you now.

that is anything else looking interesting to you or something you would stay away from? lucy: the reason why there is a more fragmented behavior within the tech sector is that you seen or regulation. we talked about china but you are seeing more interest from regulators in europe and you've seen taxation beginning to come in on the agenda with the additional service tax which is just come in the u k budget but is also being discussed in the rest of europe. so there is more concern on that score and they are not going to go away. that has been one issue. at the same time coming through with the cambridge analytic a scandal, or concern that will continue to keep that pressure on. that social media will

continue to be a factor and it will change the way the companies have to behave in the future, possibly constraining their growth. it, you still got some good growth come in that , allis still an area investors we spoke to said they are spending on tech. it's one area that will continually be rising. lucy macdonald, thank you so much for joining us. we will continue the conversation on bloomberg radio at 7:30 a.m. u.k. time. we've just got some headlines coming through, these are headlines on the bloomberg, saying that previous governments did not do well for italy and the government had decided to do the opposite of previous governments. as comments coming through

italy is standing firm on its budget. we will talk more on that, next. this is bloomberg. ♪

>> good morning from bloomberg's european headquarters in london. this is "bloomberg daybreak: demand" supply and concerns cause the biggest drop in three years, the wti, how much will it shape equity and credit markets. theresa may strikes a brexit deal with the eu but with critics in parliament down, isng to focus the pound rally premature? and defying brussels. sticking to its deficit and gross target. how will the commission strike back?

nejra: it has gone 7 a.m. in london. numbers, the red headlines on the bloomberg is that maersk sees full-year even a, it saw 3.5 two 1.1 billion. in terms of the other numbers, third-quarter revenue for maersk is coming in at $10.1 billion, the estimate was $9.88 billion to a little bit of a beat there, lifting its full-year outlook, at three tor ebit $65 million and profit at $251 million, lifting the lower and tda outlook.

basically being narrowed to 3.6 billion to $4 billion for maersk. that is after 7:30 a.m. london time. something to look forward to so let's get some eco-data we have breaking at the top of the hour. we're looking at german gdp. quarter on quarter, the third-quarter wealth -- has a drop of 0.2 percent, worse than what was predicted, a drop of 0.1% and it is a drop after again in the previous reading and year on year, the number coming in at a bit of a mess for german gdp. something to focus on in europe along with brexit and italy. let's turn as the european features and see how the market is opening up. we saw some gains yesterday but we will see a lower open and chinese shares are taking a hammering. asia-pacific index down

and cac 40 futures lower. this also as u.s. futures are flat so it looks like europe the u.s.k lower than at least at this point. let's take a look at what is happening with bond markets. what has been interesting with the selloff in oil and we have seen a record streak of losses, we have not seen the 10 year treasury yield react that much. something like a 314 handle, unchanged. futures are pointing to a similar thing, in terms of what is going on with italy, it looks judging by futures we could see moneyuld spread widening coming out of those italian futures and going into those bund future's. -- futures. in on the markets in asia and juliette saly in singapore has more on that weakness in asian equities. -- itte: what is looking was looking positive but we are

in the red on the msci asia-pacific index for a fourth session, you alluded to the weakness in china. a slew of data out that showed another sign that china is stabilizing but growing concerns about that slowdown adding to the credit aggregate numbers that came for yesterday which shocked the market. we do have a weaker yen pushing the nikkei higher around .2 of 1%. also seeing makers rise in japan as the u.s. held off on tariffs. the oil price a major factor for asian markets. the energy sector in australia hit the asx 200 which closed lower by 1.7%. it has given a boost to a lot of other markets including in india. of same-sex up i've .1 of -- semsex is up by .3 of 1%. coal futures rise as much as 3%.

the government plans to import curbs on coal. that is 72, getting a boost on that weaker oil price also giving a boost to indian oil refiners and also moving higher up .4 of 1%. rates on hold 1.5% in thailand, that was expected by 16 out of 20 economists that bloomberg surveyed. nejra: juliette saly in singapore, thank you. let's get the bloomberg first word news from dubai. desley: after more than a year of negotiations, theresa may has clinched a brexit deal with the eu. the pound rose in the breakthrough which includes plans for the whole of the u.k. to remain and eu customs and trade orbit indefinitely to prevent a border emerging in ireland. now getting the deal past with many on both sides of the debate reported to be unhappy. will have to and

decide whether to back it or resign. the white house says the u.s. and china have resumed contact at all levels and presidents trump and xi will talk trade when they made in argentina. larry kudlow it is better to talk and -- the not too. there is no certainty that china will agree to u.s. demand. >> the press that reopened the china talks which had, i won't say they stopped but they slow down when he called president xi and it is pretty clear now that at the g20 meeting in argentina, there will be talks between the two leaders. >> the u.s. is putting plans to impose new tariffs on car imports on hold as top officials to report on the national security applications of the measures. the administration is not ready to act on threaten to tariffs of up to 25% on foreign cars.

oil shows little sign of recovering from its unprecedented decline as investors flee a market hammered by swelling supplies and a darkening demand outlook. wti crude lunched one point 7%, the biggest one-day drop in more than three years after opec said demand for crude falling even faster than expected next year. italy and the eu remain on a collision course with the populist government in rome determined to defy brussels over it spending plans. the coalition said it will stick to its growth and deficit targets despite the budget being rejected by the commission for breaking eu rules. brussels may trigger disciplinary action which could lead to fines with -- of billions of euros. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. nejra: thank you. the pound has risen after the u.k. and eu secured a brexit

deal following months of deadlock. trimester theresa may has to get agreement from her cabinet and the u.k. parliament. street tofrom downing provide further insight. we have an agreement are good to see you, by the way, between the u.k. and the eu but what are we looking forward to today in terms of what will happen with the u.k. parliament and cabinet? maria: good morning. has taken months and weeks but we are here. we have a technical agreement with the u.k. and the eu, agreeing on a typical -- technical level. part of in the text was the deal, the u.k. will agree to stay in a union for a long time with the eu and there will be special provision set up for northern ireland. for the market, you point out the market was surging after taking a beating on monday but the big question is, what happens here at 2:00 p.m.?

that is when the cabinet will meet and will they back theresa may are not, do they think that this deal is better than a no deal? eu heavingtime, the a close eye on this. they are quiet and coy about this, they don't want to make life difficult for theresa may but they have made it clear they will not call a special brexit summit if it is not clear the cabinet will be ok with it and they say this is a deal that will get to parliament and the u.k. , outside for us at 10 downing street. let's tend to our guests. joining us now. great to see you, thanks so much for joining us. we reached another crunch time here with brexit, the pound of rallying my could ask you first whether the rally is premature given the challenges we are getting to parliament. is uncertain but this

is a step closer to getting some 30 and moving forward, so the market is responding to this in a positive way. you have seen the rakes in sterling about 130, it may be it will trade higher. sterling is something of a percent undervalued. massively undervalued. the market is down 4%. you have currency down 4% year to date and the u.k. has been beaten up quite badly from an investment perspective. this provides clarity and direction. does it provide value for you as an investor in u.k. markets and if so, would you be looking at equities primarily, would you look at sterling, perhaps even at gilts? exposure have had because of the uncertainty. this looks like a good entry point in terms of exposure. valuations are hovering around 12.

in terms of asset classes that we would invest in, u.k. equities, the ftse 100, almost certainly and sterling almost certainly as well. both represent good value for the time being. let me show you this chart, it is a great one. traders are pricing and more volatility in u.k. stocks than in eurozone shares. what does this mean for the u.k. compared to european equities, does it make european equities more attractive at this point or not, given the risk which we will talk about more and a second? guest: europe has additional profit -- problems, the bigger issue is what is going on in italy. valuations also look reasonable relative to the u.s. with pe around 12 to 13. the euro is 15% undervalued on pp basis.n the

from the european perspective, we prefer it, they can weather volatility more so than the u.k. and there are more economies involved and when you buy europe, you are buying global exposure. the look at spain, france, germany. the biggest constituencies of the indices have global exposure. partners istrading often the u.s. and that is more important. nejra: in europe, where are you looking at that you would buy right now if you don't already have significant exposure question mark you have talked about the euro being undervalued, the equity market, and they have value as well. what are you looking at and where would you take opportunities? anywhere where value is present versus growth but we consumer inopean terms of what they are spending. any sectors that in a fit, we tend to focus more on index

trackers so we would either the general market and benefit from any depressed levels at the moment. nejra: you mean europewide or the dax or the cac 40? we euro stocks -- look at the eurostoxx 50. other regions are interesting based on its evaluation with italy. nejra: coming up we speak exclusively with the cfo of maersk and when you are traveling to work, tune in to bloomberg radio live on your mobile device or on dav digital radio in london. stay with us even when you are on the move. this is bloomberg. ♪

6 we have some headlines crossing the bloomberg on brexit from jeffrey donaldson, mp4 the dup, the northern ireland into theis rolling u.k. backstop and northern ireland could be treated differently under a deal and that could be a little bit of a concern. we may see trade barriers.

a lot of sticking points here with that deal, big question if it will get to parliament. toare seeing them holding on gains. the market not getting much direction when it comes to u.s. futures, weaker moving into the downside after being unchanged earlier. europe looks like it could open lower. the dollar is holding highs and cable below that and the 10 year bylds and italy moving up eight basis points, 3.5%, a three handle on the button spread. italy said it will stand firm on its budget and growth targets despite pushback from the eu and wti continues its record slide. yesterday. the biggest one-day drop since 2015 for new york heard. let's get the bloomberg business flash. it remains confident of

pushing through [indiscernible] despite objections from the european commission. the expect the agreement to bring together the biggest european trade makers to close in the first half of 2019 as they reported adjusted earnings before interest and tax up 58% in the first half. general electric surged the most in more than nine years on accelerated plans to parrot stake in the oil services company. selling more than 160 million shares through a secondary offering and a stock we person -- a stock repurchase that could raise $4 billion. the decision ask a pivot away from oil business is championed by the former ceo. hedge fund manager bridgewater associates at a general election -- electorate -- general electric. more than doubling its holdings. come as shares of

steel and aluminum makers have foundered amid trade concerns. also staying loyal to gold as other investors sold off and that is your bloomberg business flash. nejra: thank you. let's turn to our mliv question of the day, we are asking what show hedge funds filings on u.s. stock leadership? you can join the debate, reach out to us on the mliv team, use tv on your bloomberg. with these hedge fund filings, what and there is going to be of interest to you especially if you are buying index trackers in the u.s.? yogesh: i would like to see how hedge funds have reform, what areas they are focused on from a currency allocation perspective and see what strategies they are following whether they are focused on macro hedge fund environment or whether they are

focused on the long short the upper tranche opportunity that exists. hedge funds have struggled to outperform in this environment. they are not hedging markets the way they are supposed to. they seem massively correlated to global equities in a way that makes us feel uncomfortable and they are very expensive. in terms of what they are looking for in terms of investment a are making, that will be absolutely key in this environment. much, thank you so you for joining us on "daybreak europe." no limits turn back to earnings and immerse, the mark's -- and reported profit that beat analyst estimates. the exchange rate continued to weigh on profit. us is the cfo. great to have you with us. thank you for joining us this morning. despite the fact that we have some positive read through on

your numbers and your forecast and particularly for net sales growth in 2018, we are seeing trading down. something is rattling investors here. how exposed are you to forex troubles in the fourth quarter, could this be what is rattling investors today? marcus: good morning. we have seen by and large from reliefond half of 2018 for an exchange situation in a way that important currencies have improved compared to the euro, compared to what we have seen in the first half, we had a strong headwinds. we have seen, we have struggled with the depreciation with the latin american currencies including the argentinian peso and the real which hit our

bottom-line pretty hard. in the third quarter we expect to see it to continue until the end, one of the reasons that led to the fact that despite the fact we have had a topline and an upgrade in sales, we kept da pre-guidance stable for the year. nejra: you expect some of these forex troubles particularly the -- the latin american currencies can -- to continue. should investors be worried that forex concerns will continue into 2019? marcus: i do not have a crystal ball, so forex forecasts for 2019 are quite unsure. it is difficult to comment on that. ok, no problem. you have said that you plan to return to profitable growth in 2019 after a challenging 2018. that is now inching closer area

-- you look ahead, how far into 2019 will that profitable growth come, i we talking about first quarter, second quarter, or beyond? see from theould first quarter of 2019 onwards, the trend that we shall improve all key metrics over 2018, that means higher sales, higher ebi tda and higher ebitda pre-margin. nejra: which will show the biggest improvement? marcus: we will see improvement and -- in life signs. we have labeled 20 at teen as an investment year. that means we have seen investments in r&d and marketing and selling for preparing of the launches of our big products in the u.s.

we expect toce, continue the successful trajectory of the recent past that means growth above the market and further slight margin expansion. from these two big this -- business sections, we expect improvement. from 2019, that means we believe we shall see moderate decline in sales and also ebitda in 2019 and growth from 2020 onwards. nejra: ok, so basically, a growth story and liquid crystals from 2020 onward. you mentioned the u.s. as well. we finished a very contentious midterm election. what is the impact on your business in the u.s. all, the u.s. is very important country for us.

and with the most recent exposition, [indiscernible] there, also production we have r&d structures there. we are very present in the u.s. and we have as many people almost there as in our home country, germany. that means by and large, we do not expect any negative impacts from changes in the u.s. political landscape on our businesses as we are creating jobs there and even the u.s. tax reform has some positive impacts for us because our cash flows that we generate in the u.s. are taxed at lower rates going forward. nejra: thank you so much for joining us exclusively, arcus ert.d hurt -- marcus kuhn "bloombergor daybreak: europe," the european

open is next. traveling, stay with us with bloomberg radio. this is bloomberg. ♪

>> real the from our european headquarters herein london. i am anna edwards alongside matt miller in berlin. matt: equity markets mixed in asia, oil falls for 13th consecutive session. the pound is getting little ground and the euro hovers near a 16 month low. the cash trade starts in 30 minutes' time. ♪ anna: it is a