>> good morning from westminster. am nejra. -- i u.k. prime minister johnson will try to trigger a snap election if rebels vote to block no deal brexit today. >> i want everybody to know there are no circumstances in which i will ask brussels to delay. we are leaving on october 31, note -- no ifs or buts. nejra: terms of re-engagement. chinese and u.s. officials struggle to agree. the impasse is a concern.

>> we don't see the clear offering -- off-ramp in terms of how either party is going to get to a point of having successful discussions to resolve it. nejra: and following dorian. the deadly hurricane continues to strike the bahamas, but the winds weaken. its movements -- we are tracking its movements. matt: good morning from the german capital of berlin. all eyes are focused on westminster today. you are down there on the green with the cast of important actors in the brexit drama that is set to unfold over the next 58 days. yeah, absolutely. what drama it is. this is a critical week that could see the u.k. had for its third election in 4 -- u.k. head

for its third election in four years. many members of boris johnson's own party are putting a bill forward to try to delay the, deadline to extend the brexit deadline to avoid a no deal brexit. if boris johnson does not manage to agree a deal with the eu, the parliament approves or does not manage to get no deal approved by parliament, then that extension will move to january 31. boris johnson said if these rebel mp's get this bill through, then i'm calling an election for october 14. that's what we are waiting for today. what happens with that bill and boris johnson's response. matt: absolutely going to be following that very closely throughout today's program. stay tuned to bloomberg for all the developments in brexit. i want to give you a quick check of what's going on in markets. it's the first day back after a three-day weekend for u.s. equity indexes. you can see s&p futures

slumping, down about 0.5% right now. you do have again in the bloomberg dollar index, and it is up to a very firm, relatively, 1221 right now. a lot of safe haven flows going into the u.s. dollar, regardless of fed cup expectations. you can see it strengthening -- of fed cut expectations. you can see it strengthening. the indian currency is slumping as gdp growth falls to a six-month low. -- six-year low. yeah, matt, dose safe haven flows are not quite reflected in u.s. treasuries -- those safe haven flows are not quite reflected in u.s. treasuries. we are seeing the 10-year yield tick up a bit. 1.52 handle, up three basis points. following losses of 0.8% yesterday, almost a month

low. a fourth day of gains for the u.k. equities. perhaps fueled partly by the weaker pound we have seen in the past few days. two-month volatility, which captures that october deadline, has been rising for the pound. sticking with brexit, outside westminster, britain could face its third general election in just over four years. prime minister boris johnson's government is expected to table a motion to hold a snap poll on october 14. tory rebels are joining forces with labour to bring a bill designed to stop the u.k. from leaving the eu without an agreement. it would force the prime minister to request a delay to german way 31st, -- to january 31, 2020. >> i want everybody to know there are no circumstances in

which i will ask brussels to delay. we are leaving on october 31, no if's or buds -- ifs or buts. nejra: joining me now is bloomberg's senior executive editor. we also have the chief investment officer from -- let me start with david in terms of what we can expect in the next few days. are we definitely headed for a general election? >> we may know by the end of today. we will have a momentous sequence of events. mp's are back from their long summer recess. they might not be back for long. mp's will attempt to seize control of the government agenda, what they call the order paper. we know that's up to the speaker, john burkle, whether he will allow that or not. we heard from him when the announcement was made. he announced that was a constitutional outrage, so you can expect him to back the

rebels, grabbing the order paper agenda. then there will be about at some point tonight. there will be a vote on whether or not the first hurdle of that rebel bill will be allowed. to what mr. johnson said last night was, if that happens, if he loses that vote tonight, tomorrow he will table a motion to dissolve at parliament when they've just gotten back and call that election for october 14. matt: how important is it to you that u.k. parliament stop a hard brexit? >> i think what's very interesting, if you look over the last two weeks, the pound has been appreciating at zero, which could imply that the hard brexit is going lower. basically, the parliament has two options. i did a back mr. johnson and that gives mr. johnson were barking -- either they back mr. johnson and that gives mr. johnson more bargaining power,

or we go to a general election. the odds are good that he could win the election, which means he could have more bargaining power and ideal as possible. if he loses, the brexit might be postponed forever, which will be positive for the pound. it's true that the different options remain. the hard brexit is still very volatile. on the other hand, it looks like there is some sort of expectations for the pound to strengthen in the short term. nejra: yeah. it sounds from what you're saying that you think overall in every scenario that hard brexit is less likely, but a lot of your argument depends on the fact that the eu would be more willing to negotiate with boris johnson, the way he is saying they would be able to. do you think that's a likely prospect, that the eu would actually agree to the deal he is proposing? weekendve seen over the michel barnier hinting they

would be no negotiation. the u.k. is 14% of the eu exports. it is very important for islands to avoid -- ireland to avoid a hard brexit. as it is very often the case with the eu, a last-minute deal could happen. it's not the core scenario, but the likelihood of some kind of deal last-minute for the eu is still possible and is slightly increasing. this explains the slight appreciation of the you -- the pound against the euro last week. matt: david, what do you think a johnson-eu deal would look like? i'm assuming he insists on dropping the backstop. how does the eu make that happen? >> that's right. mr. johnson calls it the backstop -- he wants to take that out. the union has been clear that's not going to happen. mrs. merkel recently said, give

me 30 days, i would like you to come back with an offer. whilst mr. johnson said, we are getting progress towards a deal, that's not what you hear from the european side. they are saying we haven't had any proper proposals. what alternative do you have to keep the irish border open? i'm afraid, as always in this process, both sides seem to be talking over each other somewhat. we still don't have an idea of what some sort of alternative would be to enable the eu to have reached a deal. to go back to the previous guest, the eu are pretty good at saying no, then at the final hurdle, when it is crunch time, in this case the european council meeting in october, some sort of deal emerging. at the moment, the two sides still look very far apart. nejra: to go back to what wasles was -- charles-henry saying, in the event of a general election, who is likely to win and what happens to brexit then? >> it's an incredibly difficult election to call.

we've had some holes the last couple days saying we are -- some polls the last couple days saying we are headed for a hung parliament. that's not enough to secure a majority in this place. labour party are harboring -- hovering around 2%. there -- all three big parties are within the margin where any of them could in fact become the biggest party. we saw in the 2017 election that mrs. may called how enormous swings in the polls -- labour started out 20 points behind and ended up nearly tipping the government. it's very difficult to tell under the process. mr. johnson has to believe he has the momentum behind him. almost 52% of the public who voted for pub -- for brexit will come back and power him to some sort of majority. let me justs-henry, ask you what your u.k. equities

play looks like. with or without brexit, a lot of people have been saying it is still a very international -- the ftse 100 is still an incredibly a nationally -- internationally focused index. does it make a huge difference to you? indeed, brexit and the direction of the pound. we have seen over the last two years, the trade has been benefiting from weaker pound and to avoid the domestic plays. here if we get some sort of compromise with the eu, and the soft brexit, then the trade might totally reverse. the goal would then be to go with domestic plays, with banks, stocks. short theeight or exporters. that's the play on the u.k. equity side. matt: charles, henry -- charles-henry. he will stay with us. david, our executive -- senior

executive editor for bloomberg, is going to make a lot of appearances on your television screen throughout this important day in the brexit saga from the green. right now, i want to get the first word news. naomi? chief executive carrie lam says she never asked for beijing's permission to quit. >> i have never -- i have never tendered her resignation to the central people's government. i have not even contemplated to discuss a resignation with the central people's government. the choice of not resigning is my own choice. denounced a leak of audio from her meeting with business leaders. earlier, reuters reported on the recording, saying lam discussed quitting, but she said she is committed to hong kong. hurricane dorian is continuing

to bash the bahamas, but its winds are we getting as the storm widens out. forecasters are looking for it -- are weakening as the storm widens out. it has killed five in the bahamas, ripping off roofs, overturning cars, and tearing down power lines. opec's crude production rose last month, the first increase since a new round of output cuts at the start of the year. nigeria and saudi arabia led the way with the bloc collectively increasing output by 200,000 barrels per day. they have struggled against a deteriorating outlook for global growth and demand. australia's central bank has left its key rate unchanged. it is waiting to see how the combination of prior rate cuts and tax relief impact the economy. keeping the cash rate at 1% was widely expected. they are looking to see if they are entering into the plan as predicted last month. global news, 24 hours a day,

powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra? nejra: naomi, thank you so much. coming up on bloomberg, we will speak to howard davis, chairman of rbs, as the prospect of an election in the u.k. surges. we will get his thoughts on that and more. don't miss that interview at 11:00 a.m. london time. matt: definitely one to tune in for. up next, struggling to meet. the u.s. and china can't seem to set up a date as trump's tariffs trample over trust. is a resolution inside -- in sight? plus, if you are on your way into work, tune into bloomberg radio. you're anywhere else in the world, just try bloomberg rate -- bloombergradio.com on your browser. this is bloomberg. ♪

is "bloomberg daybreak: europe." matt: i'm matt miller in berlin. let's check in on the markets now in asia. for that we go to singapore with juliette saly. juieliette: it's a mixed session. cautious trade in asia. news that china and the u.s. are struggling to find a plan date sitet -- planned date to down for the next round of talks. a little upside in japanese stocks in late trade. hong kong under pressure for a second session. pboc setting the yuan rate stronger for a 10th day in a row , but still weakness in the onshore currency. australian stocks are being hurt by a bit of weakness in energy players. let's turn to the rba. they left the official cash rate on hold.

the governor and the board are signaling they are taking this wait and see approach to see whether or not the tax relief spurs through to the economy and these already low interest rates will have an impact. we've seen an uptick in house prices in the key market of sydney. the question is whether or not the lenders will pass on the already low rates. the standard housing rate at 5.2%, well above the rba's cash rate of 1%. the pressure now on the bank of korea, if we can have a look at that. we saw zero inflation in august for the first time ever, and this is putting pressure on the bank of korea to cut their official cash rate, which they left on hold last week. also seeing gdp growth slowing to 2% year on year in the month of august. pretty dismal read. won is asia's worst currency today. nejra: let's get the bloomberg business flash with naomi. naomi: xiaomi shares are

climbing after the chinese smartphone maker announced $1.5 billion buyback. to company is fighting maintain its position in a shrinking market as it attempts to grow higher-margin businesses. the buyback could mark show me's biggest stock -- xiaomi's biggest stock repurchase since its ipo. the high street retailer will be relegated to the mid-cap ftse 250 as part of the quarterly rebalancing. the changes will be confirmed after the market close tomorrow. facebook is considering a test to stop showing the number of in an effortgets, to reduce the social -- the competitive pressure on social media. facebook confirmed the idea after it was reported by a security researcher. that's your bloomberg business flash. matt? matt: thanks very much.

naomi in london with your business flash. chinese and u.s. officials are struggling to agree on when to meet this month to continue trade talks. that's after washington rejected beijing's request to delay the tariffs that took effect on sunday. bloomberg has learned -- while president trump attempts to soothe financial markets by trying to portray that talks are making progress, beijing is planning to file a complaint to the world trade organization against the u.s. tariffs, under the dispute settlement process. the trade impasse seems to be worsening, which is worrying for economies around the world. australian trade minister simon birmingham echoed this sentiment in an exclusive interview with bloomberg. that thereconcern seems to be an impasse that has worsened in terms of the escalation of tariffs and measures applied against one another, and yet we don't see

the clear offramp in terms of how either party is going to get to a point of having successful discussions to resolve it. matt: still with us is charles-henry. he joins us from the dubai studios. what are your expectations for the trade war, i guess i will call it a full-blown trade war? these tit-for-tat tariffs continued to be thrown back and forth, and it doesn't look like a meeting can be set for september. i think a key development over the summer has been the strategy of china. it looks like china is taking the trade war as a given. they are ready to let the economy slow. they are ready to let the currency adjust. at the end of the day, they want to stick to their position. a truce on trade

war with the u.s. seems less likely than before. inevitably bewill affected. the key for investors to balance this with the militant -- the thetary stimulus, but again strong trade deal between the u.s. and china -- strong trade deal between the u.s. and china is getting lower. what the you follow bond markets are telling you and the gloom that is portrayed there, or rather what equity markets are telling you, as we did have again in the final week of august? veryes-henry: we have is interesting dichotomy between watching equity prices and bond yields. the bond market is getting too pessimistic.

we believe that global growth is not but stay decent, definitely we are not in the camp of a recession. we believe that equity markets remain attractive from a relative valuation perspective. bond markets are getting too pessimistic in regards to growth. there isg said, disappointment with the upcoming fomc meetings. that could create a reset in terms of pricing on the bonds and equity sides matt:. matt:so, -- and equity sides. matt: so, buy the dips no longer works for investors, and sell the spikes in bond markets -- you wouldn't want to do that either. it's too dangerous. buying the dips on the equity side, provided we get a correction in the coming weeks, yes, i would do. take advantage of a correction

to add on equity risk, but definitely we are heading toward some kind of -- the medium term outlook remains positive. investors need to take advanta ge. charles-henry, how critical is a september face-to-face meeting between the u.s. and china on trade for you in terms of wanting to increase risk in the portfolio? charles-henry: i think ti -- it's one of the -- trade war is definitely one of the risks. september has a very heavy agenda. i will more look at the fomc meeting as a risk. investors are ready to balance the risk of trade war as long as military -- monetary stimulus is there. if there are any disappointments coming from the fomc, then the focus will shift back to trade and that could create a correction.

matt: we have a great story on the poundal that says is likely to we can more against the yen than it is against the dollar, because it is still the safe haven currency play. do you agree? charles-henry: yes, it is, especially given the fact that the bank of japan is more looking at the yield curve strategy than quantitative easing. that provides a potentially more yields on the government bond side for japanese bonds. this makes the yen stronger. definitely if you look at some of the global asset allocators, yen is among the best options together with gold. charles-henry is staying with us. we will talk more about asset allocation.

following dorian. the deadly hurricane continues to strike the bahamas, but the winds weaken. we will discuss next. this is bloomberg. ♪

matt: this is "bloomberg daybreak: europe." i am matt miller in berlin. nejra: i am nejra change pitch -- nejra cehic. --is johnson's mp's -- defeated by joined by david outside westminster. this election that boris johnson threatened to trigger is based on the fact that if this bill gets through parliament to oppose his no deal brexit, the prospect of a no deal brexit. talk us through the bill and how

likely it is to pass. david: the speaker will have to give the rebel alliance the parliamentary times their first day back after summer recess. he will have to give them time to propose this bill. then there will be a boat -- vote. it will take multiple days to get that deal into law. if there is no deal, the government is mandated to ask for an extension if there is no deal to up to january 31 from october 31. and then to get parliament to approve a no deal. last night, the prime minister said very clearly that he will not tolerate it, he will not have his strategy undermined in that way. clearly that's where we are heading. number 10, briefing everybody last night. motiond bring forward a tomorrow if they lose tonight with a date for an election of october 14. matt: how big is that if? what is boris johnson -- what's

the likelihood that boris johnson loses tonight? david: it's a little bit tough to call. he's only got a working majority of one. he said yesterday in his remarks that he expects to actually win that boat tonight -- that boat tonight. -- that vote tonight. philip hammond was the chancellor of the exchequer just a few weeks ago. talking about throwing him out of the party is pretty extreme. hearing from the rebels last night and this morning, they are not backing down. there's only going to be a few votes in it. we will have to wait and see. the momentum that he has been -- all the announcement in recent days are that he wants to power towards elections, whether it is triggered by that vote tonight or whether it is just the fact that he doesn't have a proper majority in the house of commons . we can expect that election to come sooner or later. matt: david, thanks very much

for joining us, david merritt. bloomberg's senior executive eator for and mia -- for em -- for emea. joining us is -- india is back online after yesterday's holiday and friday's gdp.showing weak how are the markets pricing that in? they are not taking it very well. good morning to you. we are down in the session about 1%, 1.5% for the various indices. 5%, the lowest level in the last six years. the gba, the cross value added -- the constant -- the contraction was even sharper. the current quarter that we are in looks even weaker. the auto sales number thus far

for the month of august also don't show good indicators. the high-frequency indicators are weak. the market is pricing that in. is pricing that in. the macro indicators are not positive. nejra: thank you so much. looking at the broader markets, it really seems to be the prospect or the concern that we might have -- and not have this face-to-face meeting between the u.s. and china that is moving the rest of the markets around. you can see that most clearly in what's happened with the u.s. dollar. the dollar right now is headed higher for yet another day, still trading around a two-year high. the notable move is the pound. we talked about david -- talked with david merritt about the uncertainty there. the euro is down about 0.3%.

a lot of this has to do with the strength in the dollar. in terms of trade uncertainty, you can see that pommel equities. pummel equities. australia also dropping after that rba decision. on the far right hand side of your screen, you will see s&p 500 futures also weaker. today is going to be the first day they are trading -- i want to talk about what the cboe -- matt: dani, it looks like we are losing your mic. you may want to check the batteries. we appreciate you being with us. we will check in with you a lot throughout the morning. bloomberg's dani burger. a check on the markets. let's get to bloomberg's first word news. back to london and naomi. naomi: thank you. in hong kong, chief executive

carrie lam says she never asked for beijing's permission to quit. neverave never -- i have tendered a resignation to the central people's government. i have not even contemplated to discuss a resignation with the central people's government. the choice of not resigning is my own choicen. ao -- choice. naomi: she also denounced a leak of audio from her meeting. she clarified she is committed to hong kong. a bloomberg scoop -- china and the u.s. are struggling to agree on a schedule for the next round of trade talks. this after washington rejected beijing's request to delay tariffs that took effect over the weekend. the date hasn't been set, but that isn't necessarily a sign the talks won't happen. that thereconcern

seems to be an impasse that has worsened in terms of the escalation of tariffs and measures applied against one another, and yet we don't see the clear offramp in terms of how either party is going to get to a point of having successful discussions to resolve it. naomi: opec's crude production rosemont -- last month -- rose last month. nigeria and saudi arabia led the way with the bloc collectively increasing output by 230 -- 200,000 barrels per day. they have struggled to shore up prices against the deteriorating outlook for global growth and demand. australia's central bank has left its key rate unchanged. it is waiting to see how prior rate cuts and tax relief impact the economy. the cash receipt -- this was widely expected. the market is now looking to see if the economy is entering the gentle turn that the governor predicted last month. global news, 24 hours a day on air and @tictoc on twitter,

powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra? nejra: thank you so much. -- off to a up rocky start. jp morgan says now is finally time to buy risk assets. the bank joins others on the sell side. merrill lynch -- bank of america merrill lynch said it is bullish. ubs global wealth management went underweight equities last week for the first time since the euro area crisis. is now the time to buy equities or sit on the sidelines? charles-henry is still with us. if your reason to buy equities is predicated on support from the federal reserve, matching what is being priced in the bond market, isn't that quite a risky proposition? charles-henry: yeah.

your view is that they will really struggle to match what is currently priced in the market, because the market is currently pricing in between four and five rate cuts and we believe it is too much. that could be the trigger for a correction. in six to 12 months, on risk assets -- you shared a chart showing that the ratio is at an extreme level. that's an interesting part of this market. -- rate cycle on top of that, sentiment is seen as good. we are still seeing a lot of bearishness. if you look at the money flow, there's a lot of money going to cash and outflows on the equity side. we view this as a positive. it remains a volatile market. as you have hinted, the foc -- the fomc september is a key event to watch.

matt: is there any concern of stagflation as these trump tariffs come through into the economy? we could see arguably lower growth due to the trade war. we could also see certainly for u.s. consumers higher prices. charles-henry: yeah, i think you are right. the key risks are stagflation and the risk of weakness we have seen on the manufacturing side at some point goes into the consumer weakness. when it comes to the u.s. consumer, it remains strong. wage growth is up 3.5%. unemployment is very low, so we are not seeing any weakness. the last university of michigan consumer sentiment index was weak, but it needs to be confirmed. this is a key to look at. does the customer continue to deliver in the coming months? if that's the case, the global , noth is going to be ok

above trend, but ok-ish. if not, we are poised for issues and troubles, including on the earnings side. just: charles-henry, you said that bond markets are pricing too gloomy a scenario. but nonetheless momentum has been very strong. it was the best month for global bonds since 2008 and august. are you holding any bonds in the portfolio, and if so, which geographies, which maturities do you prefer? charles-henry: yes, you are right on the bond side. it's very interesting to see that investors are buying bonds, government bonds for capital gains, and they are not buying stocks. that's a very interesting thing. when it comes to fixed income, we don't like government bonds, especially long-duration ones. we believe there is over pricing risk. there are interesting

opportunities. high yield been underperforming recently. but also emerging markets, expressions a -- especially currency. that includes the gcc fixed income markets, for instance. matt: we have more to talk about with you, charles-henry. coming up, hurricane dorian continues to bash the bahamas, but its winds are weakening slightly as the storm widens out. still, it remains extremely powerful as forecasters map out its path, the path that could take. for more, we go to london. >> matt, hurricane dorian which you can track on the terminal c ontinues to devastate the bahamas, killing five on one island and inflicting colossal damage to property and infrastructure. even though it has been downgraded to a category four storm with winds slowing to 130

miles per hour from its highest of 185 miles per hour, it still remains hazardous. it will move dangerously close to florida late today for tomorrow evening. and very near georgia and south carolina. you can track it all on the terminal. airlines have canceled more than 1000 flights. fort lauderdale and orlando are the two hardest hit airports and there have been mandatory evacuations ordered in parts of florida, georgia, and south carolina. the latest figure on potential costs put dorian on track to be the most expensive natural disaster since 2017. ubs says it will costs at least $25 billion -- will cause at least $25 billion in losses to insurers. and in general, hurricanes have become much more costly. this could be down to the speed at which hurricanes have been moving. slower moving storms mean hurricanes can linger wherever they had, which causes flood damage. that and high wind makes

hurricanes costly. hurricane harvey, $130 billion. it's a prime example of that, dropping more rain than any other storm system in its history, as the country's's second most costly disaster. you can see since the 80's how much more costly these hurricanes have become. matt: all right. great reporting. thanks very much. following the storm dorian, the hurricane dorian for us. coming up, eye on aramco. role scaled back. are changes in saudi oil policy on the horizon? tune into bloomberg radio live on your mobile device. this is bloomberg. ♪

this is "bloomberg daybreak: europe." here is a look at what you should be watching. there's a lot of data coming out on wednesday. more data out of europe. services and composite readings. u.k. services pmi readings. on thursday, we wait for german factory orders to give us another snapshot of how deep to slow down is in europe's largest economy -- how deep the slowdown is in europe's largest economy. nejra: the rate decision from russia's central bank at the end of the week and the last u.s. nonfarm's jobs data before the fed meeting this month. economic uncertainty is weighing on unemployment. saudi arabia has shaken up its energy sector, removing the chairman of aramco ahead of its much-anticipated ipo. it's the second time in a week

that his role has been scaled back. part of his ministerial job had already been taken away, leaving him to focus solely on the oil markets. for more, are middle east finance reporter joins us -- our middle east finance reporter joins us. what does this move tell us about how serious saudi arabia is about doing the aramco ipo? >> i think after the aramco ipo was delayed last time around a year ago, while aramco focused on the acquisition, there was some skepticism about whether the aramco ipo, because of the size and the complications of doing it, would ever really happen. i think moves like this, putting the head of the fund as chairman areramco, which the saudis saying this is being done to try to improve -- to separate the ministry from the operations of aramco. this shows the sort of commitment that t saudi arabia

has two pushing through this ipo and suggests -- has to pushing through this ipo and suggests we are more likely than not to see that happen within the next 12 to 18 months, i would think. matt: when you take away somebody with as much gravitas as al-falih from this job, it makes me wonder if i should expect changes in saudi oil policy altogether. >> yeah. i think a lot of people are going to be asking that question. clearly, in the lead up to this ipo, the price of oil is going to play a key part in the sort of valuation that aramco can achieve. oil policy will be keenly watched now. al-falih remains energy minister. that is still part of his responsibility. it is difficult to see any sort of significant changes to try and boost the oil price. which i don't think he

is on the cards for the moment -- we would see more cuts, which i don't think is on the cards for the moment. nejra: what does this all mean for the sovereign fund? positions think this the head of the sovereign wealth or fivee pif, four years ago, a little-known saudi banker, now he is at a position atop what -- what has the ambition to be one of the worlds largest sovereign funds -- world's largest sovereign funds. in thecentered at the -- transformation program. it's becoming even more important than it already was. i think we will expect to see a

lot of the investment advisors, bankers coming in to try and see the pif now and try and extract some more deals and some more fundraising, which is going to be hugely important. matt: thank you so much for joining us, matthew martin, our middle east finance reporter in dubai. still with us is charles-henry. on -- just get your take brent crude is still below $60 a barrel. nymex wti under $55. don't the saudi's want to get more bang for their buck if they are going to ipo aramco? charles-henry: one quick comment on the saudi aramco ipo. this is the missing piece. the first piece was reforms. integration of kuwait and

saudi. now we see this ipo happening. this is very good for putting -- when it comes to oil, i think we know there is currently too much focus on demand, which is expected to slow, so the market is not expecting this next year. but maybe the markets will refocus on supply. it should provide some support oil prices in the coming months. at the same time, we hear today that opec increasing out pet -- output for the first time since 2019. how much of a prospect is there of a significant lift in oil prices from here? charles-henry: when you have a cartelder pressure, is always challenged. we heard from russia's energy minister last week, mentioning that oil cuts might be lower

than it was agreed with. if you look at saudi, the compliance so far this year has been much better than expected. -- month should be on a year-to-date basis, saudi has been delivering in terms of cuts. let's see what will happen in the coming months, but our view is that supply remains tight and discipline has been remarkable so far. the supply side might be -- matt: speaking of -- you mentioned reforms. i wonder about the stability of the region, relationships with qatar, the murder of khashoggi. i mean, these things are not going to change overnight. what are the saudis doing in order to bring more stability for investors? charles-henry: geopolitics is part of any region. the way we have been trading on this region has been as in any

market, valuation and earnings. when it comes to valuation, the region was definitely attractive a few months ago. now you have some markets which are more than others. are seeing very attractive markets in the region, like uae. it's not a question of looking at geopolitical risk and saying let's cash invest. look at the bottom up fundamentals, especially earnings and valuations. from that point of view, opportunities continue to abound within the region. nejra: if we could just come back to westminster for a moment, where i'm focusing this morning, because we just seen cable drop below 120 for the first time since january 2017. we are seeing that pressure on the pound. do you see sterling as an opportunity, a buy, or would you

trade it through volatility in any way? aarles-henry: from fundamental perspective, the pound is massively undervalued. we are talking about 20% to 30% undervaluation. the pound is interesting. given what is expected to be discussed over the coming days -- i think the interesting part is that the pound has been slightly appreciating against the euro, which is the interesting development, because there are always other stories. the dollar is basically appreciating against almost all currencies. it's getting stronger and stronger. nejra: got it. keep an eye on eurosterling. it's been a pleasure. thank you for joining us. remember, bloomberg users can interact with the charts shown.

i'm outside westminster for the rest of the show, where we are keeping an ion the prospect -- the u.k. ishether heading for its third election in four years. this is bloomberg. ♪ here, it all starts with a simple...

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matt: good morning from berlin. this is bloomberg daybreak: europe and these are today's top stories. upping the ante. sterling hits in 2017 low as boris johnson will try to trigger a snap elections if rebels vote to block you know deal brexit. knowwant everybody to there are no circumstances in which i, would ask brussels to delay. we are leaving the 31st of october. matt: terms of re-engagement. chinese and u.s. officials struggled to agree on plans for their next meeting.

australia's trade minister tells us the impasse is a concern. >> we do not see an offramp in terms of how either party is going to get successful discussions. following dorian. hurricane continues to strike the bahamas. the storm widens out. we are tracking its movements. ♪ anna: --nejra: welcome to "daybreak europe. a crucial be could see the u.k. had for its third election in four years. a bill to try and stop a new deal brexit. , boris will put

an election forward for october the 14th. we will get into the details in a second. we have seen cable drop below 120 for the first time since january 2017. ftse futures getting a little bit of a lift earlier. right now, they are trading flat, which is interesting given the weakness we are seeing in sterling. slightly in the red. a mixed session in asia. equity markets at least not knowing quite what to make of the trade discussion. a date is still not set for september for talks between the u.s. and china. absolutely going to be following that trade story, the ups and downs that come out of the changes and tweets. in terms of the bond futures this morning, take a look and

see that bund futures are rising. you could see cash purchases pushing down the yield. the same is true for btp's. italian bond futures rising. u.s. ten-year futures falling. the cash trade we see, the 10 year yield at 1.5112 percent. i've got some breaking news. tesco is to sell its mortgage portfolio to lloyd's for 3.8 billion pounds. lots of speculation around this. this seems to be the confirmation tesco has to sell its mortgage portfolio for 3.8 billion pounds. let's get back to brexit as britain could face its third general election in four years. sterling has slumped to a 2017 low.

great to have you with us. outline for us what could happen today in terms of this bill rebel mps are putting on the table. >> people are gathering. protesters starting to yell. 7:00 in the morning. mps comeback after their recess. later today, we are going to get this prospect of a rebel alliance, that's the labour party and tori mp's together promoting the spill that proposes to tell johnson he cannot take britain out with no deal. if the government loses, there is a motion to dissolve this parliament. target street saying the for that is october 14. matt: i have to question the

dedication of the stop brexit guy. getting up at 7:00 in the morning to do this, doing it every day as long as i can remember this coverage -- his dedication is fierce and i wonder, is this because he feels so strongly about brexit himself? is he getting paid in? is this that guy's actual job? do you know the backstory? >> we do not know much about him. if britain does not leave the european union, maybe he can take credit. people on both sides say the you like,arty, if lots of european union people likering as they always do we are going to have today. the country remains deeply divided. opinions on either side.

we can expect a result. this country is split down the middle. matt: the implications for markets are serious. below a dollar 20 for the first time since the beginning of 2017. it reminds me a lot of when homer simpson becomes the town crier. he would be a great town crier. executive editor. i want to check on the markets in asia. >> i'm not going to shout at you, but we see mixed movement in asian markets. the nikkei closing out the session fairly steady. the yen still holding around 106.3 to the dollar. a lot of confusion as to whether or not the u.s. and china are going to meet. they have not set a planned date. chinese stocks come off yesterday's gains.

today say thec yuan is stronger for the 10th session in a row, but still seeing weakness in the onshore currency. energy stocks under pressure. we had the rba rate decision on hold at 1% as expected. the pressure on another central bank is the bank of korea. look at my chart. zero inflation for the first time in august coming through in terms of 0.9 of 1%. second quarter gdp was revised down to 2% from 2.1%. forces saying this could the bank of korea to act. is today's worst performing asian currency, but if you want to look out what to buy amidst turmoil, bank of america merrill lynch is saying

you should go along both the won and the aussie. look at the aussie versus the yen, saying this is the best way to life or a repricing of growth if we are to get a deal anytime soon. chinese and u.s. officials are struggling to agree on when to meet this month to continue trade talks. joining us now from westminster is daniel morris, senior investment strategist at bnp paribas asset management. how important is it for a face-to-face meeting this month? they don't have a date in the books, it would be easy to -- not makingly

the meeting. >> the market has got to be lowering its expectations. started, wehen this did have some type of summit. trump and xi jinping would hug and we would move on to new topics. that has not happened. this is going to be ongoing potentially for years. if there is a meeting this month or not is not going to have a huge impact on the market. even if you did had a meeting -- have a meeting and we have a short-term resolution, trump is going to turn his attention to europe. it is ongoing. becauseatility simply we know it is not going to resolve quickly. nejra: you do feel that equity searchinge surging -- day by day. what will be the catalyst?

that is the challenge. to think of the negative catalyst opposed to the positive one. the risk we have besides brexit, besides election in italy, is that when we think about the central banks, there's a lot of good news. if you look at where treasury yields are, we are counting on the ecb restarting. we are counting on the fed cutting several more times. predicting another hundred basis points. itthat does not materialize, is a risk the markets are disappointed. matt: isn't that a big if? we have this trade war ready to push inflation through in the u.s.. 2%. cpi well over aren't they less likely to cut 100 basis points? honest, nonetheless, we target,inflation below

but i also think they are fundamentally going to ignore it. it is not the type of inflation they are worried about it. it is a tax that would roll over after a year. they are looking at underlining core inflation. fundamentally, they are going to see attacks on the consumer and negative growth. if anything, it would increase the likelihood they would cut rates as opposed to the impact on inflation. u.s.: your neutral duration, is that your way of expressing a view the fed will -- but the ecb will disappoint? >> if you are trying to anticipate how much the market has already assumed the outcome and the potential for disappointment, there are two factors. there is fundamentally more scope for the fed to cut then there is in europe. you already have negative rates for the ecb. also just the politics. powell decides, they more or

less can do so. ecb, there is still legal issues, political issues, and internal resistance. it is not a done deal they are going to go this far. matt: what do you think about -- we are seeing the possibility of an ecb disappointment or move at least in euro pound. we have been focusing a lot on the cable rate today because the a dollar 20opped to for the first time since 2017. we do see the euro pound only at 91, well over 93 a month ago. what do you think the euro pound to -- or down compared not as far down in the same terms as the cable rate? that has been a surprise, to

be honest. in 2016, you have expected this reflected more readily in sterling versus euro given where the trade relationship is. it really has been in cable you have seen the moves. i agree it is surprising you don't see sterling weaker given what is going on. it is the way the market has reacted to it. from that point of view, it makes sense. our last guest's explanation was the scenarios from here, either the mp's signed a law forcing boris johnson to extend the deadline, or they leave johnson with the power to implement no deal brexit. whatever scenario you have, no deal is less likely a few weeks ago. is that your analysis as well? >> no, it is not. moves that political have taken place has been much

more aggressive than people anticipated. if you play out the different scenarios from here, most of them are coming out with hard brexit and no deal. nejra: great to have you with us. daniel morris from bnp paribas asset management. thank you for joining me at westminster. now let's get the first word news. lamhief executive carrie says she never asked for beijing's permission to quit. i have neverer -- attended resignation to the central people's government. i have not even contemplated to discuss a resignation. the choice of not resigning as my own choice. also denounced the leak

of audio from her meeting with business leaders. lam discusseded quitting.- hurricane dorian is continuing to bash the bahamas. --ecasters are looking to looking for signs it will turn north instead of hitting florida. bahamas, five in the tearing down power lines. opec's crude production rose last month. the first increases since the start of the year. nigeria and saudi arabia led the charge. -- a struggle against global demand. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries this is bloomberg. much.thanks very

we speak on bloomberg, to howard davies chairman of rbs with the prospect of election in the u.s.. we will get his thoughts on that and a whole lot more. this is our bread and butter. don't miss that interview at 11:00 a.m. london time. this is. -- this is bloomberg. ♪

nejra:nejra: this is "bloomberg daybreak: europe." matt: let's get the bloomberg business flash. set to lose a place in the ftse 100. the retailer will be replaced, relegated to the mid-caps.

this is part of the quarterly rebalancing. changes will be concerned -- confirmed after the market closes tomorrow. tesco is selling its mortgage portfolio in a deal worth 3.8 billion pounds. the lender will acquire 23,000 customers as part of the agreement. facebook is considering a test of not showing the number of likes opposed gets. only the person who posted something will be able to see the light count. facebook confirmed the idea after was reported, but said it is too certain to say if the network will test it widely. that is your bloomberg business flash. nejra: thank you so much. a u.k. tory is to quit as an mp at the next election. that breaking news coming across now.

green to quit at the next election. britain could face it's their general election in just over four years area that is what we heard -- in just over four years. boris johnson is said to hold a snap call. force a delayto and stop that no deal brexit happening. it is something more people support right now than are opposed to, according to a poll. ben page joins us now. pleasure to have you with us. it sounds from pulling like the people of the -- polling that the people of the u.k. supported general election. what sort of prime minister is likely to win? >> the characteristics of the person who gets to be prime

minister are not the person who is most honest, but who is seen as most capable and good in a crisis. the challenge mr. johnson's opponent jeremy corbyn, as leader of the opposition, is in terms of the issues, boris johnson's ratings are currently double those of mr. corbyn. inre are lots of wildcards any election, particularly where we are. does the much character of the prime minister candidate move british voters to vote for that party in their local elections or for their mp's of that party? >> that is a good question. in general elections, people are voting on three things. they are voting on the leader, so it does matter, but also the policies of the party. their policy on brexit or public

services will matter. british politics is complex and divided. the labour party is always more popular than the conservative party. the challenge is that it's not always seen as the best. those are the things you highlighted that would push a prime minister to win election. if we do get this general election call, how much appetite is there at the moment for brexit to go through? >> more people say they are opposed ultimately to leaving the eu then remaining. it is very divided. the numbers are horribly familiar. what is clear is that people don't want no deal. .7% say they support no deal 46% say they are opposed. however, they are also just getting fed up with the whole issue. when you ask people what the

biggest issue in their lives is, here we are talking about number else, brexit is seven. there are lots of things going on. tiredness.sense of the conservative party is ahead of the labour party on policy. matt: is it possible to divine how disappointed the british people would be if the government failed to carry through the referendum? if more want to remain than to leave right now, what it disappoint the british people if they voted for something, it was passed, and parliament was not able to carry it out? >> yes, and they are frustrated with parliament. one of the things we have been what -- what they think

britain's biggest problem is. we have record numbers of people saying they are fed up with all politicians. in eight says that spontaneously. there is a real sense of frustration. anxiety about the implications of no deal, whatever they do, they're going to make a lot of people unhappy. that is why we are where we are. -- nejra: how do you rate the prospect of no brexit? >> it has decreased. it must be 50-50. like either way, conservative scope would quite like -- conservatives would quite like a general election. this gives them the chance to be in power for five years, whatever happens on brexit. care how much do britain's about the -- britons care about

they notice it when food prices go up. >> what is interesting is that does not seem to move the dial overall. you have to remember, for lots of people who voted to leave, it was not an economic decision about the strength of the pound. it was an emotional decision. thanks for joining us. really appreciate your time. on a day that could determine or could bring a third election in four years in britain. i guess we are going to see a lot more -- nejra: from this week, matt? matt: exactly.

nejra: with the delay as well between us. certainly looking ahead to a critical week. the pound dropping below 120 for the first time since 2017. how much had to do with dollar strength as well? this is bloomberg

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matt: welcome to "bloomberg markets." this is "the european open." the pound hit the 2017 low as investors brace for a third u.k. election since 2016. most asian stocks decline on trade doubt. castrated less than 30 minutes away.