manus: it's just gone 6:00 a.m. in the city of london, 9:00 a.m.. in divine welcome to the show. these are the top headlines. partial denial. the u.s. treasury plays down a bloomberg report saying it's not contemplating blocking chinese companies from listing their shares in the u.s. without commenting on possible limits. impeachment update. president trump calls for the democrats leading the inquiry to be questioned for treason, this after the committee chairman says the whistleblower will

testify very soon. and boris and settle. u.k. leader plans to lay out his brexit vision at the conservative conference is overshadowed by his past. we're live in manchester. ♪ manus: a very warm welcome to "daybreak europe." we are all over the global stories. from the markets, we had the bloomberg scoop, and the united states was considering invoking legislation that would block china from accessing u.s. equity markets, and that they would stymie the flow of u.s. capitol china, the pathway, the capital, the keys to growth, the very essence of this story could be a

new fork in the road for, let's say, discontent in the trade war's. it would involve 1979 legislation, which jimmy carter used in regard to iran. we will discuss. we've recouped some of those losses. to the local markets now, the rba. and then new zealand. defined by steven major, who is out ahead of the two. is it new zealand or is it australia? the kiwi drops. what you can see is the bid, the kiwi drops, the lowest confidence in new zealand since 2008. westpac says it will take note of this confidence and will add to the case of easing. oil is later on its feet, down 1/10 of a percent. prince abdallah someone will be together in russia. annmarie hordern will be chasing oil ministers.

and we find data today, the official selling prices by the saudi's to the world. those are your markets. let's discuss the u.s. and the story there because this is the latest. there's no current plans to stop chinese companies listing on american companies. it's in a response to a bloomberg report that the ministration is looking -- the administration is looking at ways to limit flows to china. let's bring in our senior international editor jodi schneider. good to see you this morning. can i ask you, because there's a detail here, what specifically is the u.s. denying? jodi: yes, you're right, manus, it's a partial and qualified denial of our report that bloomberg broke last week before the weekend. basically, what the u.s. is saying, a spokeswoman is saying the u.s. has no plans to block chinese companies on listing on

u.s. exchanges at this time. so saying right now, we haven't decided. and also, they are not talking about, the did not in that denial, say that other things were off the table. there have been, what we reported was discussion of other potential limits on u.s. investment in chinese firms, chinese listing in the u.s., and chinese investment in u.s. firms. so they are saying in this one part, at this time, they are not looking at that. that doesn't mean they won't in the future and doesn't mean they are not looking at other things, that they may well be on the table. manus: my last guest said this could be one of those real defining, pivotal moments in this. is it a new weapon of saber rattling, or is it something more meaningful in this? the timing is what i want to get to the essence of. jodi: yeah, it could be

intentionally very important, or it could be more rhetoric. we've seen a lot of rhetoric on both sides in recent months and weeks. what's coming up is very significant, october 10-11, the chinese vice premier is leading a delegation to the u.s. for trade talks. and right after that, some round ofd u.s. another tariff imports is set to take effect. there's a lot at stake and the u.s. could be doing things at the same time in terms of looking at those limits. right now, they also want to set the stage for there to be serious talks with china. and of course, president trump threatened if the stocks don't go well, he's happy to put in effect more tariffs. jodi, thank you very much. my guest host is sonia low, cio and legal general investment manager.

great to have you with us this morning. this is a bloomberg scoop and rebuttal by the white house. if i look at this story, this in essence, is about access to capital, quid pro quo access to growth. that's the risk. sonia: absolutely, and as you highlighted, it is key to be put in context of everything else put on the table, and to be put in context of the overall trade tensions. i think we knew from the beginning that it was not just a focus on mere tariffs and tit-for-tat around trade flows and we would eventually see this broadening out. the timing, i have to say, is very interesting given tomorrow, china is preparing for its 70th anniversary of the people's republic of china. it's quite interesting to see how the u.s. has been reacting and it will be very interesting to see how events will be unfolding afterwards. manus: the chinese immediate

response has been that their doors are open to doing business, again landing on the global side rather than the closed border side we saw from trump last week. another line i read this morning, the rupture in global trade, this could be moving to a rupture in capital markets. and this potentially has a big em,ative feedback loop on geographically close to china. that's my equity risk, isn't it? sonja: absolutely. everything happening here will have a real impact on global supply chains and globalization, and capital is the natural attachment to trade flows. and we will see retracement from globalization and hence, and tingling of global supply chains, and we will have cap an flows impacted, as well, and it will be very interesting one. there will be varying degrees of impact on different countries,

but it's clear it will be very cost intensifying for most producers around the world. manus: the one thing which caught my mind, i'm going to change the gears and drive the bus at the same time. ja.s is live tv, son decided to have a week off. it's not allowable. i want to show the outlook for stocks. this is what caught my eye, the flow of money. we were progressing toward may be a deal. china would do a big deal with the united states of america. our with a fork in the road. but a record flow of money into chinese stocks the past month. have you been a part of this? have you been a believer? continue told still wait and see, but i think you probably have lots of domestic flows on the back of this. and again here, it's more the

domestic story that interesting. the chinese consumer is still a long-term story that's very much intact. for international investors. the story is much more around sentiment and from corporate. here, we have seen clearly weakness, not only in china but around the world. these companies are holding back and wait and see what is going to happen. unless they have a clear outcome and clear deal, i can't see them increasing investment spending anytime soon. varietyook, there are a of ways the chinese could respond. on would be another jolt the horse rains of the one. one could be treasuries. but everybody thinks that would be a self-defeating move. do you think that we could see some kind of pushback on the currency front? think, you will recall

on the day when we've seen the first move in the remember the, there was a bit of surprise why they would have done this at this stage. everything we have seen since has been over well-managed moves in the currency. i wouldn't think they would refer to the currency anytime soon. nevertheless, it is an interesting aspect in terms of timing, as well, because we are entering the end of 2019, and then the presidential election in the u.s. it seems to have been of a cease-fire in the context of first of the anniversary for the chinese people's republic, and then obviously trump kind of wanted to have a break in terms of christmas and thanks giving period. but obviously, everything they are doing to push out or postpone the eventual negotiations that need to happen to get into 2020 and the presidential elections. there is a lot that is going on, and it's very interesting to see

and to watch as an outsider. but as i said, the most important element is the longer it takes, the less we will see any pickup in terms of corporate spending. if we know manufacturing is the weekly, we highlighted a few highlight -- highlighted a few areas. to me, the biggest question is the longer this goes on, eventually we might see an impact on the consumer, which has been favorite so far, and the backbone to global growth. manus: yep, those risks are rising. thank you for being with us. stay in that seat. do not go anywhere. you've got your first word news flow with selina wang in beijing. selina: thank you, manus. johnson.k., boris battling allegations of sexual impropriety. he's denying he groped a journalist four years ago.

the fuhrer is overshadowing the conservative parties conference in manchester. speaking to bbc, johnson also suggested he won't resign if brexit gets delayed. >> i have undertaken to lead the party in my country at a difficult time, and i'm going to continue to do that. i believe it is my responsibility to do that and i think that it's our job to get brexit done on october 31, but to move the country on. kong, smoke and violence again this weekend. police used a water cannon and what -- rubber bullets as people set the train station on fire. the city is bracing for more protests. tomorrow marks the 70th anniversary of the people's republic of china. in israel, prime minister netanyahu is making a last-ditch effort to form a government. that's after elections forced a

parliamentary stalemate. recent talks with the rival party to form a unity government ended without a deal. the party says netanyahu may return his mandate to the president if he can't break the deadlock. onaustria, sebastian kurz is track to return as chancellor. overeople's party one just 37% of the votes. the leading candidate is the green, tripling their share of the votes, but negotiating a deal might be a tough task. neither kurz nor the green wants to compromise. selina wang in beijing. selena, thank you very much. coming up, trump aside, the u.s. president demands to meet that was of lower, the heart of the impeachment -- whistleblower, the heart of the impeachment inquiry, claiming espionage. we get the latest. this is bloomberg. ♪

manus: its bloomberg daybreak: europe. 9:16 in dubai. let's get the asian market action. juliette saly standing by in singapore. getting ready for the holidays, but a little bit of action before we go on golden retreat week. juliette: that is right. we are seeing chinese stocks a little lower, with certainly off the lows of the day. asian stocks starting the trading week on a negative note, weakness coming through in japan's markets. factory numbers were disappointing for the month of august. we've been watching upward momentum in new zealand stocks, but the kiwi is tracking lower. we had business confidence in new zealand at a 2008 low. and hong kong looking pretty good, even though we had more protests yesterday. they are expecting to see a ramp up in protest in october 1, the 70th anniversary of the people's republic of china.

and that is why we are seeing china's markets closed for tomorrow for a week. but worth noting the pickup you're seeing in nitrate. we have seen the csi 300 much further down in that. perhaps more state based buying coming through in the latter part of trade. in terms of the china economy, a bright spot before they go on this golden week holiday. we have seen a pickup in new orders in terms of pmi. also new export orders, which is reflected by the yellow line rising, although they still remain below the level of 50, separating expansion from contraction. when it comes to non-factoring -- nonmanufacturing pmi, it came in at 53.7. manufacturing pmi rose to 49.8, above expectations, but still the fifth month we have seen it in contraction. the pickup you seen is an encouraging sign on the overall chinese economy. manus? manus: ok, thank you very much,

juliette saly in singapore, redding the markets for us. let's get you up to speed with your business flash headlines, selina wang in beijing. selina: the asian unit has enjoyed a strong debut in hong kong. budweiser brewing rose after pressing shares at the bottom of its range. it's a signal for a lackluster ipo market and vindication for the beer maker. it initially boldly offering in july due to market conditions -- pulled the offering in july due to market conditions. the case against goldman sachs to a higher court. they did not give a specific reason, but added the move is usually do to the seriousness of the case. they say criminal charges of misleading investors, arranging bond sales, allegedly knowing funds would be misused. credit suisse is deciding the fate two top executives. that's in the wake of a scandal over surveillance at the bank's

former head of wealth management. the board is leading toward sparing the chief executive, but investigators have been looking into the chief operating officer. they are set to meet today. bp chief bob dudley is preparing to meet the company within a year, according to sky news. he took the helm after the deepwater horizon crisis, leading the energy giant for almost a decade. they had a fit during his tenure. bp declined to comment. that's your bloomberg business flash. manus: thank you for the roundup, selina wang in our beijing studio. donald trump has demanded to meet the anonymous whistleblower, whose complaint kick started the impeachment inquiry. the person is under federal protection, out of fear for his or her safety. that's according to cbs news. in a series of tweets, the u.s. president called for adam schiff, the highest intelligence committee chairman the quite --

be questioned for treason. joining us in london is ever bloomberg u.s. government reporter. it's a pretty spectacular story. what is the latest from the democrats, first of all? let's start there. >> i think what we saw over the weekend was nancy pelosi really trying to consolidate support from her members to take on impeachment. i think that the political stakes are obviously skyhigh here and trump is going all out to make this look like a political witchhunt. and pelosi is trying to counter that and get all of her members singing on the same sheet of music. she's trying to talk about how this is really the need for our -- the democrats have a constitutional responsibility and this is about protecting the constitution and not politics. i think where that message is most targeted towards are her members that trump actually called out himself and one of

his many tweets, who ran and one in 2018 in districts that trump one in 2016. and those folks that one in the midterm elections are going to be the most sensitive to the poll numbers and weathers and up, in the most sensitive to any kind of political backlash year. -- here. manus: even if we begin impeachment proceedings, the likelihood of impeachment is high or low, or what should we look at, in terms of our riskometer for that? kathleen: i think the important thing to remember is as long as it is controlled by republicans and takes a super majority to remove the president, the likelihood of that happening is pretty unlikely. and so i think that what you should watch, though, are the polls that we're getting. we're already seeing movement in the polls. overall support for impeachment

has gone up. but support among independent and republican voters. if the needle starts to move, we're likely to see republican senators, if not stuck with trump, at least unwilling to say he should be impeached, we might start to see movement on that. but so far, there's really no indication of that and trump is still employing his 2016 and 2018 playbook, which is to appeal to his base and keep support very strong. you.: kathleen, thank sonja, we can deal with the possibility, and i emphasize the word possibility for impeachment, from an investment point of view. what is my biggest risk here, that impeachment proceedings take place, but trump loses and he is impeached? or that he stays and goes

through and we shouldn't get lost in the noise? this is the risk the market is a true bidding to impeachment. how do you look at the prism of impeachment? sonja: i think as you say, it is the noise, first and foremost. we should not forget we are in pretty extreme set of in markets. already, we've highlighted in treasuries. where we are, the noise obviously will create more short-term volatility. and interestingly, a reporter read over the weekend was claiming at least now the impeachment procedures have a higher chance of being successful, simply because the underlying wrongdoing of president trump is more transparent and easier to understand for a wider public and as such, easier for politicians to get support, even from their own voters. quite interesting. but i think what we will have to watch out is what is the

reaction function and when they will broaden their focus on china and other areas, which we have seen in the past once he's under attack. there will be affects he tries to kind of move away from the story, domestically, and move his focus and attention on international matters. and certainly a couple of my guests say he might double down on iran. he might double down on elevating trade angst to deflect the domestic story. i just want to pick up a couple of your points. let's take it forward. we have a risk of impeachment. we have a risk of moving away from donald trump. therefore, do i take it my risk is less fiscal stimulus, and my quid pro quo were risk is less bullish story? or is that too much? sonja: i think the equity story is interesting because the s&p 500 is near historic highs. it's not that we are starting

from a low base level of correction. to me, the biggest conundrum is it doesn't square with where treasury yields are. we have seen a drop in treasury yields, while the s&p 500 has been near historic high. my mind, something has to give. we know that the fed has been cutting in september. interestingly, not with unanimous support. there is dissent happening, which tells you the story is not as clear-cut and people think some would like to wait a bit longer to see the data supporting for the cuts. but there's clear pressure, not only from the president, but from other politicians, to see a more aggressive fed reaction function in line with what we've seen from the ecb in europe. manus: ok, we'll pick up on those things very shortly because central bank action tomorrow. we've got confidence in new zealand, plummeting levels we haven't seen since 2008.

the momentum is there on the conversation. sonja. coming up on the show, the u.k. leader fights allegations over his past behavior. the brexit train moves on to manchester. ♪

manus: it is "they break europe -- daybreak europe." a crucial decision on management that could shape years. exposedf tumbled has the top of the second largest swiss bank. the chairman is to decide on the fate of executives implicated in the fate of the former wealth management head. determining who knew about the spying that took place after he decided to move to ubs. with the ceo back in

january. credit suisse investigators have been homing in on the role of the coo. thiam.ime confidant of while it is not clear who well signed off, sources say the board is leaning toward sparing thiam's job. let's go to our partner in mumbai. in london, annmarie hordern. equities are declining today. we are looking at what is largely a positive month. especially for automakers. actually is the substance of what i am going to say. the markets have declined today. if you are looking for a reason bankingoff, some of the stocks have been brought lower. the nifty bank is down. that is the third ticker on your

screen, and that is a heavy weight on the indian market. backed a reason to come after that rally the last couple weeks. we have done that today. you are right. we have had a fairly decent month for equities by and large, and for automakers, very importantly. amongst theas been last 16 on in the months for the automakers. it was 2018 when we had such a big month again. the government has introduced stimulus measures which might help automakers. it might be a flash in the pan downward before we get a force of relief. the wider markets have been a little bit mixed. there is this denial and rebuttal by the white house. in china's final trading week for golden holiday. very mixedeeing a

monday across asia. as you say, we have these discussions ongoing with the u.s. government officials about possible restrictions on access to chinese markets and investment in china. at the same time, china is bowing to keep markets open and encourage foreign investment. you can see here japan getting hit one of the hardest, down zero point 9%. hong kong to the upside. across the border, the asia-pacific index is lower 0.3%. kiwie top there, the dropping against all major fears. business confidence sank to the lowest in decades. japan'sd note, thirty-year up nearly four basis waits on the yield. iron ore is up 2.5%. we are still under $90 a ton. when you look at steel pmi, the has contracted under 50 for the fourth straight month. my chart today, i'm looking at

the yen. this all comes down to a new survey we have a bloomberg. dollar-yen forecast has been pared to levels last seen a year ago, that 105 level. very good for the yen. they are saying has outperformed group of 10 peers by the end of 2019. morgan stanley and bnp expect a three year high by the start of next year. keep an eye on the japanese yen. level looking at that 101 in the near term. have a good time in russia, by the way. she is off to russia. and niraj shah in mumbai. great teamwork. here is the first word news. selina wang is in beijing. no current plans to stop chinese companies from listing on american exchanges. this denial comes after we

reported on friday that the white house was exploring limits on u.s. investments in chinese companies. meanwhile, beijing has vowed to continue opening up its markets. to encourage foreign investment. high-level trade talks are set to restart the week of october 7. european governments need to spend more to counsel -- counter the global economic slowdown. that is what mario draghi told the financial times. he is urging members of the single currency to commit. the ft quotes him as saying we need a common euro zone budget. in hong kong, smoke and violence again this weekend. police used water cannons and rubber bullets as protesters set the entrance of a train station on fire. the city is bracing for more protests. tomorrow marks the 70th anniversary of the people's republic of china. netanyahu isnjamin making a last-ditch effort to

form a government. that is after elections this month produced a parliamentary stalemate. recent talks with his rival party to form a unity government ended without a deal. netanyahu may return his mandate to the president. if he cannot break the deadlock. 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. thank you for the roundup. u.k. politics, boris johnson is fighting a series of allegations about his past behavior as the u.k. leaders conservative party intends to focus on brexit and a host of spending pledges at a conference in manchester. let's get live to that conference. anna edwards is on the ground. good to see you this morning. wantednt to -- they banner headlines about spending. instead what we have is controversy over incidents,

allegations, from 20 years ago. anna: absolutely. there are banners hanging from the ceiling here at the exhibition hall in manchester that say, get brexit done. invest in the nhs. these are the messages the party want us to be talking about, certainly the chancellor committing 25 billion pounds, $30 billion to infrastructure spending. that's what they focus to be on. instead, it is on the extent of the relationship between boris johnson and the american entrepreneur who has received money while boris johnson was mayor of london. he says he has nothing to reveal there. he denies historical allegations he assaulted a female journalist. all of this swirls around the last 24 hours. all of that is overshadowing the other news agenda here. the focus does remain on brexit. in manchester this week, but remember, it is also down in well-- while party --

parliament would not be sitting, it has not gone that way. a big focus on other parties. those mps who would have been here, members of the conservative party, some months ago, who are staying in westminster to talk to other opposition parties. they're going to be meeting this afternoon. they want to do, will they impeach the prime minister? will they try for a vote of no-confidence? westminsterus on while things kick off in manchester. there the leader caretaker corbyn in a government. forest is striding the opposition in calling the vote of no-confidence quicker than they want. you follow this inch by inch, move by move. are we any closer to a brexit deal? you ask all the tough questions.

we have heard both sides of this, haven't we? boris seems to think johnson does want a deal. he says yesterday cautiously optimistic. the brexit secretary rating in the paper for the weekend there will be details from the government about the irish border, the backstop, and that goes back months. he says there will be details on that coming after the conference. what will those details be daca -- ve? they have been saying they don't want any -- they don't want to be staying in the eu other than the agricultural moves we have been seeing over the recent weeks. they want to be moving on the same terms as the rest of britain. there was a lot of talk yesterday about -- if a deal is not going to happen, we still need to leave at the end of october. we certainly heard from michael

gove that he was in charge of no deal preparations, but it is all over this building, banners saying get brexit done. that is clearly the message the tory party is trying to hammer home this week. manus: thank you very much. anna edwards, our resident brexit czar at the conservative party conference. this morning, investment management is her trade. sonia, i put it to you in the words of allianz. the outlook is so grim bond managers see a depression priced in. they have moved from pricing subdued growth to u.k. recession and they are now pricing in an extremely long-term depression and stagnation. our markets pricing in a long-term depression in your opinion? >> i would not go so far as to say they are pricing depression, but it is clear we have seen bond markets citing on the more

negative outlook. it is clear, i have seen further reports this morning that in case of a no deal exit, we would see potentially a 2% decline in the u.k. economic output over a 12 month period. there are is lots of uncertainty about the magnitudes of of the potential recession on the back of a note yield exit. i think until we know the details of any transition your bank, we have insufficient information. as such, you cannot be depending on your outlook. you want to think markets have priced in various scenarios. manus: we talk about the currency and the daily machinations. bloomberghe view from economics that the economy will contract in 2020, ppi will average around 2.8, and the bank of england cuts 70 basis points on a no deal brexit.

can i take you to the currency? i want to show you a structure in volatility. our is available for all bloomberg clients. the cost of sterling's downside is not the most expensive ever. they should not give me these 3d models because i get too excited. this is the peak. cash,ays to me, 123 for given the cost of the options, the market still sees some visceral downside going into december on sterling. >> absolutely. the expectation quite rightly is that on a potential no deal at the end of october, you would seenimilar to what we have close to the referendum outcome. i think that is for the time being, you see in december, i don't know how the longer-term outlook looks, but that expectation is very valid. it is the most liquid way of expressing your view on brexit. --have seen all the effort

the other staff are taking a no deal scenario in their stride. although you would expect , the currencyll is potentially the most volatile. it is interesting we see the bank of england to move -- even if we get a deal, he suggests you are going to see the bank of england move to lower rates. it is an interesting -- i don't know if the word is capitulation or not. would you use that word from that hawk? obviously the u.k. economy has been slowing already. it is grinding lower rather than falling off a cliff. nevertheless, if you compare the bank of england to ecb and the fed, they have been sitting on

the fed quite rightly because they have the deadline on the 31st of october. they probably would be sure to act ahead, but nevertheless, if you think about the economic outlook, you probably -- if it had not been for brexit, you have seen the bank of england react already. stays with theud daybreak team. let's take a look at how your week should -- well, the u.k. conservative party in manchester today. we will bring you the latest. anna edwards is on the ground. chinese markets, the lowest marks for seven-day national holiday. the people's republic of china turns 70. tomorrow, a rate decision from the rba. the fed expected to cut rates for the third time in five months. the reserve bank of india is expected to cut on friday. the decision comes as the country grapples with the

negative outlook of the low target inflation. and it's jobs day. payrolls projected to have risen. on of limit rates steady as she goes unemployment rates steady as she goes. ♪

manus: it is "daybreak europe." 7:48 in london -- in paris and berlin. mohammad bin salman has said war between his country and iran would lead to, quote, a total collapse of the global economy. he told cbs a peaceful solution would be better, but he added that in the case of further escalation, oil prices would jump to what he calls unimaginably high numbers.

>> the region represents 30% of the world energy supplies, about 20% of global trade passages. about 4% of the world gdp. imagine these three things stop. this means the total collapse of the global economy. talkinge have been about this throughout the morning. my cohost has stopped by for a chat. a fascinating interview. it covers many different things. what do you think you took away from it in terms of the rhetoric? it seems almost like a de-escalation moment. >> maybe. it is important to remember it is rare for the saudi crown prince to give an interview. any upper echelons of the royal family very rarely come on tv. that has become a tradition until the saudi crown prince broke that. now he comes on tv once or twice a year. is the is pointing to

fed -- is the need to take action before the issues cheerier rates further. -- the issueion deteriorates further. this is all about maintaining pressure on iran, who deny with whatdo anything happened in saudi arabia, what happened with saudi aramco. they are going to try and persuade the europeans. that's what it's going to come down to. the u.s. is already on their side. the middleground is the crown jewel, no pun intended, of a diplomatic effort. we have had some information, but in terms of taking it to the markets, there's a possibility the saudi's will come back to the bond market. i up he was in the bond market last week. if the saudi's comeback, is that a litmus test for saudi arabia

and political risk? >> absolutely. they heard from the finance minister in the last few weeks. he said there was zero impact on the kingdom's revenue, finances. be the ultimate way to prove to the market there has not been any change in terms of how investors perceive saudi risk. you have the central bank cutting rates. you were looking at what is potentially a dollar-denominated sale as early as next month. government is hiring banks as we understand it. out a planready put to issue 32 billion dollars of bonds in 2019. we will see how big this latest trend could be. i will be interested to see how investors absorb this one. arguably the spreads are going to be quite competitive.

s&p confirmed the rating. thank you very much. if you get up early, join us. a.m. day, 5:00 european stocks have been able to eke out gains. investors are still gearing up for a volatile end of year. with the fourth quarter look ahead, dani burger has the data. >> european equities have outperformed other developed markets and a nearly 2% gain. investors still definitely listening themselves heading into the next three months. when we look at the ecf, investors in europe have poured more than $1 million -- $1 billion in to low volatility etf. a record. now at

this play comes at a crucial time. we have an ecb decision of brexit deadline all coming this quarter. speaking of brexit, falling more than 3% as of friday. this is the worst quarter for sterling. a lot to be cautious of, but the dark shadow that is going to be weighing over europe is economic picture. economic growth falling behind compared to the wider globe. to put this in context, i need to take you into the charts. the surprise index, when it compares to the entirety of the globe, it briefly turned positive. here is the world's leading in the blue, hovering below zero. economic data largely meeting expectations. when we look at euro in -- europe in white, the trend has been sharp decline. weakness still hitting the

manufacturing sector. we get unemployment data from the europeans later today. macroenvironment heading into the fourth quarter. deep: dani burger digging for the fourth quarter. i want to get your opinion first on a billion dollars going into low volatility play. have you become more defensive even the risks? >> absolutely. having a neutral stance is warranted. if you think about what is ahead of us, and most of these political events clearly having more of a fine airy outcome attached to them, -- binary outcome attached to them, we should not forget that although on a year basis, equity markets are flat, year to date, we are seeing double digit, up to 20% positive return from equities. at this juncture, to have a more

neutral stance i believe is the right stance to have. you see as well that most investors have taken this position. very well represented by etf. the bond market on the other hand is telling us again, be more cautious is the right way to look at the overall economy. we have seen a dramatic plunge in global yields. what we should expect as well as an outlook from central banks. have a look at this. this is the bond performance. here today, it is upbeat sent. this is the best year we have had since 2011. would you be more inclined to take defensive, and again, we had the whole duration trade this year. did that remain intact for the fourth quarter for you?

are absolutely right. duration trade has been incredibly successful. what we have to understand, whether this can continue from here, is continued central-bank action. we talked about the fed earlier. you highlighted obviously the central bank of new zealand. there has been a lot of easing with yieldway, now, at these record low levels, obviously the duration sensitivity has gone up. we have seen volatility across the bond complex already rising. a very interesting statistic said since the beginning of the year, we have had more dovish drawdowns in the long end of the u.s. curve than we have had in equities. it tells you that in terms of your overall asset allocation, you have to bear in mind that bonds have taken a lot of the news already into their stride. from here, we might well see more than five point movement, but with higher volatility. you might want to have a tilt

towards longer duration. depending on where we trade from here. sonja, great contribution. ♪

manus: good morning from bloomberg's middle east headquarters. this is "bloomberg daybreak: europe." u.s. treasury plays down a bloomberg report saying it is not contemplating blocking chinese companies from listing shares in the u.s.. without commenting on possible limits on fund flows. impeachment update. president trump calls for democrats leading the inquiry to be questioned for treason. this after the committee chairman says the whistleblower will testify soon. boris' battles. the u.k. leaders plans to lay out his brexit vision at the

conservative conference are overshadowed by allegations from his past. we are live to manchester. a warm welcome to "daybreak europe." 8:00 a.m. in paris. in dubai. european futures, we see the markets vacillating trying to make up the bloomberg scoop late in the afternoon. the rebuttal from the white house that they are not going to try to close off access from chinese companies into u.s. equity markets, but no comment, no comment at all, on whether they would stall or stymie the flow of capital from the united states into china. therein lies the point. this would be evoking legislation from the late 70's last used by jimmy carter.

for the moment this is the state of play, london down by an eighth of 1% as the tory party conference begins. what will happen with sterling? people are paying up in terms of their hedges. let's have a look at the bond markets. fromely line there coming sonja laud. a drawdown in duration positions. inare seeing a slight move the bond market, lower in prices, higher in yield on the back of the u.s. rebuttal of the bloomberg scoop. by six pips. on a number of pieces of data in the u.k.. let's get the market and perspective for you from singapore. let's get to juliette saly. juliette: it is the last trading day of the month and the quarter. we are seeing mixed movement.

the nikkei under pressure. factory production numbers in japan were disappointing. the nikkei's closing at the session weaker by 0.6%. weakness in the kiwi, but a rise in qb stocks. -- newnews england zealand's falling to the lowest since 2008. stocks looking good. expectations for more tomorrow on october 1. october 1 is the 70th anniversary of the people's republic of china. we will see chinese stocks flow into the trading days. 0.2 5% ahead of the holiday. i want to show you what we have seen in terms of or an investment coming into chinese stocks in the month of september. it has been a big one, on track for the biggest inflow we have seen on record. bloomberg data going back as far as we have. we are expecting $9.2 billion into the market. for the largest

purchase on record. the shanghai compass it heading for its first monthly gain since -- shanghai composite heading for its first monthly gain. what youh to offset have seen over the quarter due to what we saw in august with asian stocks on track for a quarterly decline of around 2%. manus: that chart is a thing of beauty. juliette saly in singapore. to the u.s. now. there are no current plans to stop chinese companies listing on american exchanges. incredibly important. that is according to a treasury import -- treasury report. a bloomberg scoop that the administration is looking at ways to limit flows into china. it comes at a time when china is vying to continue opening its markets to foreign investment. jane foley is the head of strategy at rabobank. there's going to be rebuttal in

denial to the bloomberg scoop. to me, this is about the flow of money, access to capital, and dominance for growth. what do you make of the last 48 hours and the ebb and flow on this? >> it's going to be quite confusing. i think we know a couple of things. donald trump will use the u.s. dollar. he will use investment as a way to get the upper hand with trade wars. trade wars are not just about agricultural tariffs. they are about something more complicated. from that point of view, it does drive home of message that these trade wars, or these tensions, really have a long way to go before they can come to any sort of vent. high-level about talks in october. this is about high-level talks in october as part of ongoing trade talks. these talks will carry on into

next year. on some level or other, tensions between the nations are going to continue for quite a long period of time. manus: let's draw a line forward. i started at 5:00 a.m. this morning with kiwi. confidence is the lowest since 2008. the rba meets tomorrow. the rbnz on a tilt. if this continues, do i see furthermore aggressive cuts from steven major? from kiwi and rba? jane: it is quite interesting. the interest rates are down 1%. lower than 1%. there is a debate in both of those countries about moving forward, what are they going to do? does easing,'s part of the agenda? we had a speech by the new zealand reserve bank governor. he was really quite optimistic on growth. they have been preemptive.

again by 50 basis points when the market took us that back. the speech indicated we would preemptively. hopefully that might be enough. the reality is interestingly, in that speech, it is indicated the monetary policy orrnd are -- governor referred to, the inference is he would like the government to do more. his fiscal policy going to have to become, at least in countries such as new zealand, australia, germany, part of a way of fighting global slowdown in growth? we know there are side effects. we know that monetary policy -- but that is another part of the

state going into the new year. have, the question i yuan has had the worst quarter. i'm going to round up by 0.4%. a bit of a crime. 3.6%. that's the worst quarter. why does the pboc not respond say more aggressive let's rate hikes? there have been maneuvers on rrr and other vicarious rates. why not move on prime rates? maybe it will. it's quite interesting with respect to the currency. how much will they allow the currency to weaken? where is that currency going to be against the u.s. dollar at the end of next year? there are many to front ways to go about answering that. part of the question is the u.s. dollar is strong against most currencies. it is a very strongly performing currency this year. it does behave like a safe haven

currency. demandingeople are dollars when risk aversion steps up. the chinese renminbi is like almost everything else in that it slipped against the u.s. dollar. they could allow it to weaken further. that stresses the chinese economy. in any economy when you see weakening of growth, it is natural to see currency slip. the more this goes on the more we will see reaction from the pboc. see more slippage in the renminbi. think thate do you will be on your best guesstimate? lot. we could see quite a percentagewise, quite a substantial movement. that in itself will be quite a

shock. certainly we could see a big shock coming through if we did see a depreciation of renminbi. manus: we will maybe talk about the flip side. we could get a deal. at rabobank stays with the bloomberg team. >> boris johnson battling allegations of past sexual in propriety. he is denying he groped a journalist 20 years ago and says he followed the rules in is linked to a former entrepreneur. the fuhrer is overshadowing the conservative party's conference in manchester. johnson also suggested he will not resign. >> have undertaken to leave the party at a difficult time and

i'm going to continue to do that. it is my response ability to do that. to get brexit done october 31, but to move the country on. >> saudi arabia's crown prince's morning war with iran could bring down the global economy. themmad bin salman saying price of oil would go unimaginably high. he urged the world to take firm action to deter around -- deter iran. represents 30% of the world energy supplies. 20% of global trade passages. about 4% of the world gdp. imagine all these three things stop. this means a total collapse of the global economy. >> in hong kong, smoke and

violence. the police used a water cannon and rubber bullets as protesters said the entrance of a train station on fire. the city is bracing for more protests. tomorrow marks the 70th anniversary of the people's or public of china. 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. manus: donald trump has demanded to meet the anonymous whistleblower whose complaint started the impeachment inquiry. the person is currently under federal protection out of fear for his or her safety. in a series of tweets, the president called adam schiff, the house intelligence committee chairman, the question for treason. let's get to our bloomberg government white house reporter. with the latest from the democrat side? pelosi and from nancy

attempt to consolidate democratic support for the impeachment inquiry she now -- she announced last week. there is a real awareness there is a possibility for democrats they could be vulnerable, particularly those democrats that are in districts that trump won in 2016. particularly for those democrats, they are going to be looking closely at the poles coming out over the next never weeks. to take a look at where the public is on impeachment and whether there has been any movement in favor of the democrats' effort now that we have information on this complaint that came out last week. that looks pretty damming for trump. that's going to be some thing to watch closely. democrats are going to be moving slowly and methodically, or at least trying to give the impression they are moving methodically, while still trying to see if the momentum they built up last week. what is the linchpin for this week? is there a defining moment we

are going to keep an eye on? what we are going to be looking for, now we know this inquiry is going to be housed in the intelligence committee, at least at the outset, so i think there is some indication even though congress is on a two week recess, we know the intelligence committee are going to be subpoenaing folks to get additional information about this whistleblower complaint and what went on between trump and the leader of ukraine. i think it will be interesting to see what comes out of those investigations as they get rolling and also whether or not there is a sense that the -- that congress could formally come back in some capacity. the house could formally come back to deal with this inquiry more formally in the next two weeks. busy, you are going to be busy, busy. our u.s. government reporter. make sure you are up early every day for daybreak europe.

coming up, threats. chairman will decide the fate of top executives involved in spying on its formal -- former world had. -- head. ♪

manus: 7:18 in london. 8:18 in zurich. we are 41 minutes from the start of the european trading week. it is "daybreak europe." live from dubai, i am manus cranny. welcome to the big conversation. it is about credit suisse, deciding the fate of the top executives at a board meeting today. that is in the wake of a scandal over the surveillance of the bank's former head of wealth management. intotigators are looking

who knew about the spying. let's get to our swiss finance reporter. patrick, all roads, some would chairman -- the chairman needs to decide culpability. where are we in the story of the novelette? obviously for one embarrassing, weirdest scandals to hit credit suisse. already, the european bank i think right now the board will decide today on who was responsible. an external law firm has been looking into it. i think what they are going to do is support themselves based on the opinion of this law firm. everything that was heard so far looks like the whole board is thiamng towards absolving

of responsibility. it is going to create an interesting conundrum. in switzerland, a lot of the media have been reporting a lot of the public opinion is negative toward what the bank has done in terms of spying on a previous employee. that is something which a bank just should not do. at the same time, credit suisse has reports from the shareholders. it just shows you how that is important to keeping the management team going. i really don't find the story that shocking in terms of keeping an eye on where your staff are leaving your bank. it is age-old in the industry. that's not what shocks me. what does shock me is perhaps having to shore up your institutional investors to say they support the ceo. this is a critical issue. sure he hasto make institutional support behind him for continuity, doesn't he? >> he certainly does.

what he did do in this last week was, he got the support of previous shareholder harris. that was pretty strong support saying thiam should not be held responsible, no member of the executive team should go. that is what he needs. turmoilly with all this surrounding the bank. people saying this is going to be a threat to him or that he should go, that is the support he needs. paris has a percent of the stock and there are other shareholders pointing to support for thiam at the bank. thank you very much. our bloomberg swiss finance reporter covering all things financial in switzerland. let's move the agenda along and talk about the other issues we are covering here. selina wang is in beijing. ab invev's asia unit has

enjoyed a strong debut in hong kong. budweiser brewing up. it is a signal for a lackluster ipo market and indication for the beer maker. due to market conditions. bp chief bob dudley is preparing to leave the company within a year. he took the helm after the 2010 deepwater horizon crisis, leading the energy giant for almost a decade. shares in the company have climbed by about a fifth during his tenure. bp declined to comment. spacex' elon musk has announced starship,a full call a vehicle that will take humans to mars and beyond. musk says the goal is to fix problems like air travel. it came on the 11th anniversary of the spacex rocket reaching orbit for the first time. that is your bloomberg business flash.

thank you very much. let's talk u.k. politics. boris johnson is fighting a series of allegations about past behavior. he is denying he groped a journalist 20 years ago and he says he follows the rules in his links to a former model. and entrepreneur. the fuhrer is overshadowing the overshadowing the conservative party conference. i want to talk about sterling risk. they have given me a wonderful new 3d model. have a look at this. and structurelity for option pricing, the most expensive ever. to protect myself for three months. i wonder, could you put that in context for me? is that hard brexit risk or is that corbyn administration risk?

there is your three month. it is fairly expensive, the most expensive ever. in a way it is both. we know there is a possibility of volatility in sterling. if we look at were sterling could be if there is a deal, if sterling rallies, if there is not a deal, it is likely sterling has a lot further to fall. there is a lot of quite binary expectations for sterling out there. consequently, trying to price an option is bound to be expensive. this is a hard time for the u.k. corporate's, and of course, we can translate this back into, while investment has been lower than it should have been for the past three years, why this is now coming through in terms of the economy. if we look back to the end of again, uncertainty is coming through and really be getting to hit gdp growth.

we have resilience this week. an opportunity to see how the economy is faring under the weight of brexit risks. that chart in a way helps scribe how difficult -- d scribe -- helps describe how difficult it has been for investors. long periodduringly of time? >> that is the case for an awful lot of countries. it is quite interesting the bank of england has maintained guidance. they could see an interest rate hike. we have seen mark carney callback from that as well. his rhetoric becoming more dovish. the market had anticipated that next move in interest rates could be lower, not higher. there is that flip at the end of .ext week, really important

they could cut interest rates. by the end of next year now. give you agoing to quote from gavin davies. he wrote an op-ed. he talked about entrenched uncertainty, political uncertainty. miredsterling meyer in -- in uncertainty? could we unleash to the upside if we get a deal? >> i think we could. investmentme pent up that would come in if we have a deal. if you are thinking about buying a house, thinking about building a factory, it is the same thing. you want to know what the outcome is, at least that there is a deal, some agreement on the future. there could be and unleashing. sterling will perform a lot better if we do get a deal.

i think sterling could behave well. thank you very much. jane foley is my guest host this morning. daybreak europe is up next. ♪

anna: welcome to bloomberg markets, "the european open." we are live from the conservative party conference. alongside matt miller in berlin. matt: we are watching markets with a sudden selloff in treasuries. we also see futures across europe pointing to a mixed open. we saw mixed trade in asia overnight. the cash trade starts in just 30 minutes time. janeanna: