♪ bloomberg'sing from middle east headquarters in dubai. i am manus cranny. this is "bloomberg daybreak: europe." idjane stays at credit suisse. the chief executive continues. the coo is out. we are live in zurich with the latest on the spine scoundrel -- spying scandal that has ripped through. the impeachment inquiry pools in an increasing number of trump's allies. from mao to now. of thearks 70 years

people's republic with a deploy of military and economic might. president xi stretches national unity. protests -- stresses national unity. protests continue in hong kong. ♪ manus: very warm welcome to "bloomberg daybreak: europe." moved -- the rba has moved and it is a dovish move. the aussie has dropped because the rba is ready to do more. therein lies the point. there is more slack in the economy. i love the french from steven major. the central banks are first, at the front, ahead of the game on rates, ahead of the game on language.

have a look at the risk profile this morning, because it is all about the prism of fx and the markets. the dollar is up nearly 3% in the quarter, the best quarter we have seen since the middle of 2018. it would be for hearty and dangerous to bet on rate cuts to take the dollar down. bmo says it is the most unloved rally and impeachment could draw it higher. of course, you know, since the end of june, there is a discussion, the aramco story is front and center. that is in part what helped explain to the market where we are with the back supply. -- i caught up with the ceo of aramco trading. last night, we traveled across the country. exclusiveed for an

conversation work a confirmation of production a wee bit up from where they work for the crisis. credit suisse, the spy scandal. it literally keeps moving at a breakneck pace. let's get to zurich. maria, the first major name to be i supposed taken out of this is the coo, he is gone. there is an important line in regards to the ceo. give us the details. >> we are now dealing with the fallout from the scandal, which credit suisse accepts it has been a public relations disaster. the investigation into the former employee. the bank is saying that this was something led by the coo. he offered to resigned. the bank has accepted that resignation. when it comes to the ceo, tidjane thiam, of course, that was the focus. that was something investors were keeping a very close eye on

. investigationthis does not suggest he knew or approved of this happening. this former employee, iqbal khan , was placed under surveillance. there has been severe reputational damage made for the bank and they will hold a call at 8:00 a.m. cte today to explain more details. manus: maria, of course, this puts in and even shines a bigger spotlight on, i suppose, the ethics within banking. from my history in my 20 years in it, it is no shock that they used investigators to follow any of his staff. that i do not find it shocking. what i find shocking is the pace with which this was condoned at the top. it is about tidjane thiam convincing the markets that he really does have institutional support. do you think this changes that narrative at all?

do you think this shifts that discussion? maria: well, that is a very good point. when i was in zurich yesterday, many told me you have to understand that this is a very tough industry, you have to have thick skin. it is incredibly competitive. ubs and credit suisse compete for the same clients, the same portfolios. they are concerned that there is this level of almost paranoia that you don't want your clients to go to a rival. making money is a lot harder now. what changed here and i guess it is what kept tidjane thiam in. this investigation says there is no link to him or any of his actions. shareholders said, we still back him, he is still doing a good job. manus: maria tadeo on the ground. the headlines from credit suisse , the unfolding story at credit suisse. let's turn back to our stop -- top story of the day, the impeachment inquiry. rudy giuliani has been

subpoenaed for documents relating -- relating to the president's efforts in pressuring the ukrainian leader to investigate joe biden. william barr was drawn deeper into the house inquiry. date.bring us up to a trifecta of names. the tentacles are spreading in terms of who is being included in this investigation. >> yes. the president's men indeed. the house investigation now is spreading, looking at rudy giuliani, attorney general william barr, and looking at secretary of state mike pompeo and what roles they might have played in trying to convince officials to investigate things on the president's by half -- behalf. rudy giuliani has been subpoenaed, asking for documents

that relate to his potential meetings or his meetings with ukrainian officials on the president's behalf. we have seen the secretary of state, mike pompeo, reporting has shown that he was among the people who were listening in to that july 25 phone call between president trump and the ukrainian leader, which is now at the heart of that impeachment inquiry in the u.s. house. now, we are seeing that william barr, the attorney general, has been reported to have sought the help of foreign officials in investigating the origins of the justice department's investigation into the 2016 election and potential russian meddling. they are moving -- they are sweeping up more people, more subpoenas are out, and more questions are being asked. manus: you are going to be with meet through all of this -- me through all of this probably.

are there any deadlines that i need to know about this week? jodi: there is one on friday. that is when mr. barr has to turn in information regarding his contacts with foreign leaders. we will see mr. giuliani have to meet his subpoenaed deadline on october 15. meanwhile, the house intelligence chairman, adam schiff, wants to bring in that whistleblower for his or her testimony behind closed doors. manus: ok. that is certainly going to be the pivotal moment, the quality of that testimony. thank you very much. our senior international editor tracking the possibility of impeachment, what seems to be rising, according to all market commentators. raffaele bertoni is from gulf investment corporation and is the head of debt and capital markets. thank you for making the trip. i look at this widening net of

impeachment. i would say it is 75% probability of impeachment. what does impeachment mean from a risk point of view for markets? raffaele: impeachment is always important, but i believe in this particular case, as we are approaching the election in 2020, i think the effect would be less severe. this is a process that will take time and is going to influence more the decision of the electorate in the u.s. rather than the markets. its residualrms of impact, let's break it down. i can take it to the china trade negotiations. i am referring to eurasia. i love the interview where they said 75% possibility of impeachment. china will perceive this as a weakness in the united states in the arsenal of donald trump and they are less likely to deliver concessions. would you concur?

raffaele: yes. already the wording from the chinese government has changed recently. they do not have a big incentive at the moment to give concessions to these tester this , simply because they know they are approaching a new election, the possibility of dealing with a new president in the next 12 months is high. therefore, for them, they are able to buy time. yesterday, the data on the manufacturing pmi, it is a sign that the economy is holding, despite these tariffs. they will probably wait until next year in order to give some concessions. manus: there is the argument, i started the show with the dollar, so let's have a look at that. king dollar. up 2.7% in the quarter. i am reading lots of various

notes that say impeachment would unleash a new lease of life in the dollar long. do you buy that concept that impeachment equals dollar haven? raffaele: not necessarily. manus: finally, a contrary ianoice! -- a contrar voice! raffaele: i remain bullish on the dollar. the differential between real rates between the u.s. and the rest of the world in major economies. investors are looking for a reserve currency. the u.s. dollar is the only one available at the moment. the main drivers of this trend for the dollar at the moment, in my view. manus: i think you are an outstanding contrarian. i am being facetious.

with that in mind, is it dangerous to bet against this dollar based on the assumption we are on a midcycle cutting period from the fed? raffaele: it could be dangerous, but we need to bear in mind that the fed has already done a lot. manus: are you skeptical about the fed doing a lot more? raffaele: i am skeptical. we are already receiving lots of comments from other fed members that there is no unity in being aggressive and cutting rates. this week -- in cutting rates. this week, we have a several fed officials talking and we should have a better picture. it is clear to everybody that negative rates or very aggressive monetary policy will -- without the support of fiscal policy cannot support the economy for long. i think they want to keep some ammunition for rainy days. does impeachment risk my

fiscal response to the united states of america? raffaele: it would generate some flight for sure. the dollar is part of this. manus: we have got much more to do. central banks are active today. raffaele bertoni, gulf investment corporation, head of debt capital markets. let's get your first word news. ♪ >> thank you. chinese president xi jinping has kicked off a series of celebrations marking 70 years of communist rule. events included a military parade passed tiananmen square, showing off china's most advanced weaponry. xi said he is committed to the one country, two systems framework. >> today, the socialist china is standing in the east of the world. there is no force that can shake the foundation of this great nation. no force can stop the chinese

people and the chinese nation from forging ahead. >> in the u.k., prime minister boris johnson will unveil his new brexit plan to eu leaders today, according to "the daily telegraph." the key will be the reception of the new plant to receive on both sides of the channel. he is still primary -- promising to deliver brexit on october 31 with or without a deal. japan's sales tax increase comes into effect today. 10% inlimbing from 8% to an attempt to rein in the world's largest public debt. it dragged down consumption in prices and shrink the economy by more than 7%. saudi aramco is producing more than 9.9 million barrels of crude oil per day as it fully recovers from the worst ever attack on its energy infrastructure. aramco says it is committed to meeting demands for all of its customers. we spoke to the chief executive

of aramco's energy trading unit. >> we will be back to capacity by september 25, so we reached capacity and we increased a little bit more to replenish our inventory that we used during the interruption. >> global news 24 hours a day, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. -- on air, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. manus: thank you very much. coming up on the show, the spy story's finale or not. coo resigns as he takes responsibility for the scandal rocking swiss banking. we have the very latest from zurich. this is bloomberg. ♪

♪ manus: it is a live shot of sydney harbor in this

afternoon's glorious sunshine. the aussie is lower. we have had a rate cut, which was expected, 25 basis points, although consensus was built in for a hawkish cut. the language, tone, and intonation are different. they are talking about the preparedness for do does to do more. the senate -- they are talking about preparedness to do more. does that mean maybe we are at or near the bottom of the cycle? let's get to one lady who likes a little bit of an aussie dollar story. it is juliette saly in singapore. this aussie dollar is going down. juliette: [laughter] time to go shopping. let's have a look at asian markets. we have china and hong kong out of action today. there has been a little of data around, including a survey in japan which showed further deterioration in sentiment from the larger many factors.

you have japanese stocks moving higher along with that gain in u.s. futures. once you get that -- to that concern about the boj bond purchases out of the weight, it will flatten again. the asx 200 up. let's have a look at south korea's economy, because data out of there as well today showing that inflation actually fell to some deflation, prices falling by .4%. we expected that after the 20 day number. exports now in decline for a 10th month in a row. the fact that you are seeing some deflation in south korea's economy expected to put further pressure on the bank of korea. bloomberg economics saying that we could see the central bank bringing the policy rate back down to its record low and possibly even lower, even though the bank of korea governor

dismissed these concerns of deflation as being excessive. cpi has fallen .4%, the first time we have seen core inflation prices fall in south korea. manus: that is a big shocker. thank you very much. juliette saly there. we talked about the rba. we had a quick look at the glorious sunshine down under. 0.75%.a cut, 0.25% to it shields to protect the economy from rising global risk. he is prepared to ease monetary policy further. is the head ofi debt capital markets and portfolio manager at gulf investment. we were expecting a hawkish cut. it is far from that. it is far from a hawkish cut. what does it do to your thinking about global rates? raffaele: this is a trend that

we are experiencing all over, all around the world. the australian economic data being weaker recently, especially the -- data, which are very sensitive for any government. i'm not surprised that the central bank has started to cut and also to remain dovish, which is a strong message for the markets. manus: ok, so translate that back to rates. for our viewers, there is a tliv on your bloomberg terminal. it has got all of the top points. we are at a gentle turning point, that is one of the lines coming out. i want to translate this into the rates discussion, because steven major's point when he was with nejra and myself is that are leadingiwi at the front in front of rate cuts momentum.

if i have aussie and kiwi at the front and the fed not doing as much as you said, what happens to the spreads? raffaele: the spreads should widen. these refer to the different nature of the two economies. new zealand and australia are very much depending on the global trade. they are countries very export oriented with strong gdp oil andge of export of their other resources. the difference is going to be more on the spread between the two economies. we need to bear in mind that the room to maneuver, especially for rba, is very limited at the moment. they do not have much ammunition left, which is the main difference with the fed, which is still -- manus: they still have a

reasonably full tank. raffaele: possibly, because they already adjust it race last year. that's a difference. manus: can i circle back to what what we just saw there now from e, which is the deflation story from korea? down 12alling, exports months in a row. the bank of korea warned against being excessive deflation risk, but this has a global potential ramification for us? raffaele: not necessarily. the south korean economy is very export oriented. therefore, they are more sensitive to the global economic environment. example,ntries, for the u.k., are quite different. all of the countries with a their balance of

payments, they generate inflation. south korea is the opposite. manus: ok, so i don't need to globally worry? raffaele: not at the moment. manus: are you still with me? markets andtal portfolio manager with gulf investment corporation stays with me. let's get back to the latest moving lines. coo,t suisse's pierre-olivier bouee, has resigned as he takes responsibility for the spying scandal. let's get back to maria tadeo. she is standing by for us. the coo is out. take me through the other issues in this story, because there are certain corporate issues. there are also some very personal human, quite tragic issues around the story as well. manus, this is a

public relations disaster for credit suisse. the bank will say this has created a lot of reputational damage for them. the coo has been ousted. tidjane thiam, the ceo, they believe he has no -- or they have no indication that he was involved in any of this. we know that the employee put under surveillance was someone that worked closely with them. as it becomes more of an open secret in zurich, the two of them had a very toxic relationship. that is what made iqbal khan, a former employee, want to leave credit suisse for ubs. tidjane thiam also had a very close relationship with the coo. tidjane had nothing to do with it. we have the news that broke last night that someone who acted as a connection between the bank and the broader investigation decided to take his own life last week. there are many questions around credit suisse and what exactly

happens here. manus: maria, thank you very much. maria tadeo in zurich reading the latest lines from credit suisse. coming up, china is celebrating its 70th anniversary of the people's or public. hong kong braces for protests -- people's republic. hong kong braces for protests. ♪

♪ manus: it is "bloomberg daybreak: europe." it has just gone 9:30 a.m. in downtown dubai. it is 6:30 a.m. in london, 7:30 in paris. let's talk about the chinese jinping., xi he is kicking off a massive military parade to mark 70 years of communist rule. he pledged complete unity as protesters begin to gather a little bit more for demonstration across the city. towe must remain committed the strategy of peaceful reunification and one country, two systems. we will maintain long-term prosperity and stability of hong

kong and macau. manus: for more, let's get to selina wang in beijing. we are joined from hong kong. i will come to you first. what is significant about today's parade? it is it -- is that the military might? is that the message from xi? >> beijing has been on high-security all month in preparation for this massive military parade, with more than 100,000 people involved. you have xi in his speech displaying a sense of confidence , strength, and unity, saying that nothing can stop china's rise. this is as he faces a litany of domestic and international challenges, from the hong kong protests, trade war with the united states, sloan chinese economy, and an aging population. what he really wants to highlight is china's enormous economic transformation from a

war-ravaged country to the world's second-largest economy. one way to show that is through the massive military parade with a display of advanced weaponry. the first time in public view, we saw one of the world's longest range missiles that is capable of hitting the continental u.s. that is also on display drones, tanks. just an hour ago, we saw a long column of tanks passing through -- outside the beijing studios in beijing on their way to the center of tiananmen square. manus: ok, let's take it across to you. you are on the ground. we have weekend after weekend of protests. is there a sense of escalation? zenith pointate -- that we should focus on tonight? >> that october 1 demonstration -- this october 1 demonstration

is considered a milestone by protesters. one of their demands includes universal suffrage. independence is not been called for. it is important to make that distinction. thousands of protesters are gathered wearing black t-shirts, calling for the end of dictatorial real, calling for calling, -- rule rule, -- rule, calling for the freedom of hong kong. there was a flag raising ceremony. the chief secretary standing in , he spoke ofie lam hong kong needing to start fresh and talking about how xi jinping's attempts to bring hong kong into the national development plan will be of long-term benefit to the city. it is certainly falling on deaf ears. we will continue to see this

unrest -- it is likely we will continue to see this unrest leading to the election. and it is antes avenue for the public to demonstrate their frustration with carrie lam and the government. manus: thank you very much. she is in the heart of the protests on the ground. selina wang in our beijing studios on the 70th anniversary. more political angst, this time from boris johnson. he is facing a moment of truth as he prepares to present his blueprint for brexit. the reception for his plan received in brussels may determine whether there is any hope for an orderly exit at the end of the month. the u.k. leader also needs to win over 28 so-called spartans. hardest the heart of -- pro brexit conservatives who voted against theresa may's deal three times. arlene foster says it she is

willing to look at the idea of a time limit to the backstop. raffaele bertoni is the gulf head ofnt corporation's capital markets and portfolio manager and he is with me in the studio. there are moments in this story, and they come and go, don't they? where there might be a little bit of light about a deal that can come to pass. one needs to happen for you to shift the brexit story between now and october 31? raffaele: it is very difficult, because there has been a very fluid situation. i think that what we need to see is a real proposal from the u.k. government to the rest of your on how they -- europe on how they want to handle brexit. so far, we have not seen any detail. europe iss still -- still very skeptical.

they are interested in reaching an agreement. obviously, they needed something from the u.k. government. so far, the discussion has been more on what will happen and how the u.k. government will react in the case of a no brexit rather than the proposal itself. manus: let's get into your world, which are rates. i want to show our viewers this and make it come to life. this is the overnight rates in the u.k. it is interesting when you look at this curve. no hike, essentially this curve is showing us that no rate hikes in the u.k. for almost a decade. would say the gloom has deepened. no rate hikes for 10 years. that is a heck of an indication by this curve, isn't it? raffaele: it is. it is quite pessimistic. i tend to avoid to make

forecasts on growth only looking at the curve. manus: right. raffaele: we had the recent experience with the inversion of the u.s. curve. manus: yeah. raffaele: there are many technicalities that can influence the curve, especially on the short end. since the say is that beginning of the brexit story, we have had many very negative assessments on the future of the eu. , there was this study conducted by morgan stanley. they are saying we will have an impact, but it will be more modest level than we thought at the beginning -- it will have an impact, but more of a modest level than we thought at the beginning. manus:manus: this is the deficit in the united kingdom. let's have a look at this. we got a note from a regular with the show. he talks about what needs to

happen. he talks about an investment deficit, or recession in the u.k.. investment down 3% this year. ofoonsecutive years underinvestment. you need deficit spending up to 3% to really compensate and get growth. this would be quite an upending of the 10 year economic model we have just had from the u.k. is this the kind of alpha you need? we need a significant expansion in the balance sheet of the government and the financials, and also investments in order to convince. -- convinced that the economy will lose -- convince that the economy will lose leaving the euro. manus: moving to this kind of

rhetoric, this is a global phenomenon. this is where the dialogue will move to in 2020, one will assume. raffaele: absolutely. this is a global phenomenon. manus: europe's deficit is -- raffaele: exactly. the problem is probably the economy needs years to readjust to the new reality. companies made already lots of changes in their investments over the past three years. they will continue to do so. where there is a lack of investment, the government needs to step in. this is also for europe. it is not very different. i think monetary policy has exhausted all the tools available from now -- available. from now on, it will be more a story of fiscal and budget expansion. manus: a warning shot from you. we should not go dancing with her.

she is not a reliable girlfriend in terms of markets. raffaele bertoni of gulf investment stays with us. let's get into the markets now. we have our partner in dubai and in london, dani burger crunches the numbers. indian stocks falling for a third day in a row, the longest losing streak in over a month. what is behind your weakness? good morning. >> good morning, manus. it has been volatile at best. it was we could just about 15-20 minutes ago and we started in the green, then went into the red. you are right. there is a high probability that it will again slip back as well. the banking stocks are firmly in focus. they are pulling the index lower almost every single day. it was the case yesterday and early this morning as well. the fresh update that has happened in the last two hours

while we have had this volatile session for the benchmark indices is that the government has announced a divestment process for key names in the energy space. that has got energy stocks excited and probably one reason why the index has gone up. banks pulling the index lower. just in the last 10 minutes, the indices have managed to bounceback into green. manus: thank you so much. dani, let's get to you. the aussie dollar, it is sitting at the top of the charts in terms of weakness. the tilt is definitely a devilish cut -- dovish cut. dani: as you say, it is topping the gmm chart. that 25 basis point cut was baked in. again, as you have been hitting today, the dovish tone took markets by surprise. aussie dollar now the weakest of g10 currencies, down nearly

0.5%. you can see the dollar strengthening from key u.s. data out later today. some of the haven currency is falling. when we look in the commodities space, we see crude gaining about 0.8%. markets right now weighing the upstart, the restart of saudi arabia's oil fields fields along with improvements in trade. with china closed, the most interesting market to look at right now is japan. you can see what sovereign bonds, what the 10 years are doing right now. extreme pain with a year yields up about six basis points. the 10 year sale that we saw today in japan is interesting. this 10 year sale was very anemic. the bid to cover ratio was 3.4, the lowest since 2016. markets may be now adopting this narrative of switching from bonds to stocks, as kuroda has his plan of steepening the yield curve that seems to have alarmed

investors as they buy etf's and less jgb's, manus. manus: everybody has got a different way of trying to manipulate the curve. dani --and we are going to be looking for a few more. dani burger in london crunching the numbers as ever, adding value. coming up, let's add a little bit of value to the saudi aramco story. it recovers from its worst attack ever. we will bring you my exclusive interview with the ceo of aramco trading. this is bloomberg. ♪

♪ manus: it is "bloomberg daybreak: europe." let's get your business flash headlines. selina wang is with the team in beijing. >> thank you. credit suisse's chief has resigned as the bank releases the finding of its probe into the spying scandal. responsibility iqbal

khan for the surveillance of -- responsibility for the surveillance of iqbal khan. credit suisse is adding that the incident has caused a severe reputational damage. wework has formally withdrawn its ipo. it caps off a botched fundraising effort that cost the top executive his job. the office space company could run out of cash as soon as this spring. the new co-ceos are weighing possible staff cuts and asset sales. boeing is in the final stage of preparing it's 737 max for a return to the skies, according to the company's chief executive. --follows debbie crashestqo it follows two debbie crashes. no date at -- deadly crashes. no date has been set. apple won't be exempt from tariffs for five components of

the upcoming mac pro. it originally considered shifting production to china. this follows an announcement last month that the u.s. had granted apple relief on 10 other major components. that is your bloomberg business flash. manus? manus: thank you very much, selina wang in beijing. saudi aramco has approached asian stay oil producers, , and a chinaaysia group about potential investments in its ipo. the state energy provider has gauge interest from kuwait and canadian funds. it comes as aramco recovers from its worst ever attacks on its infrastructure. it is now producing 9.9 million barrels of oil per day. thateo says output reached level on september 25 and a little bit higher now. ulfspoke to me at the g

intelligence energy markets form -- forum. >> we went back to capacity by september 25, so we reached capacity and increased a little bit more to replenish our inventory that we used during the interruption. manus: can you tell me how much? a little bit more? ina little bit that kept us the convertible inventory level. manus: you also -- obviously have to draw down quite a bit of inventory to cope with the situation. are you prepared to see saudi arabia produce up to 10.3 million barrels, which is your opec plus a great quota? -- agreed quota? >> typically, our production is guided by the government through opec. manus: do you think to replenish the stoxx, you're going to have you're going to have to? >> we use the inventory.

our inventory plan is to build our inventory to ensure our smooth operation not only in the kingdom, but also we have storage outside of the kingdom, and to ensure that has been fulfilled with customer requirements. manus: is that the real priority? to replenish the stockpile? >> we want to go back to the normal levels so we are not really building inventories, we're just going to the normal level we have been in. manus: when do you think you will get back to that normal level? >> i think we will cover that in due course, not so long. it will not take us that long. manus: if we are at pre-attack levels in terms of production, can you update us on the supply that you are shipping for exports? what is the percentage of that -- let's call it almost 10 million barrels -- how much of that are you exporting? >> in september, about 7 million barrels per day. manus: is that very comfortably

done? >> we will meet customer requirement with the allocation. that is driven by supply and demand by pricing and other standards. manus: have you had to buy much product from the open market to supply your own refining? that is another story we have covered quite bit of. >> this is where the media picked up on us, seeing aramco trading, and buying product, which we do every day. it has nothing to do with. manus: nothing to do with the attack? >> with the attack. in projects. we export. we don't need to import to supply local demand. it has not really impacted us as a result of the attack. --a matter of fact, we never deferredcanceled or

any of our customer during september -- any of our september.uring aramco, for the last 85 years, never stop producing oil -- stopped producing oil. we are the most reliable suppliers of oil on the planet. manus: if you want more detail on the numbers of saudi aramco trading, the ceo, go to bloomberg.com or my twitter account. by the way, they are exporting 7 million barrels of the 9.9. that is an important number. raffaele bertoni is still with me. , itening to the oil story want to get back to your core face, back to bonds. have a look at this. this is the best run in bonds on the year. if the duration bets, and this is what my guest said yesterday, duration bets have been reduced

automatically in bonds and we see a shifting back and risk -- equity risk, if the duration trades have been lowered and taken off, what does that do to this run-on bond returns for the backorder -- back quarter? raffaele: obviously, this year has been a phenomenal year. i think it is the second best since 2011. cans very difficult that we replicate the same performance going forward. makes sense that lots of investors decided to take some money off the table, reduce some but. we had -- bets. we had this significant compression of the term premium and credit premium. we saw that this shift into other asset classes, again, generic, and alternative are equities, what does it mean for the curve? more normalization.

a more steep realtor. manus: work -- a more steeper yield curve. manus: where do you think the yield curve can steepen to in the near term? raffaele: fundamentally, the 10 year treasury should trade around 1.70-1.75. anytime the market goes above this level, it is a good selling opportunity. it is agoes below, selling opportunity. we needed to look at the economic data for that confirmation. manus: ok. you almost sounded like a central banker. i've got visions of you at the bank of italy before it is all set undone. always great to have -- all said and done. always great to have you with us. raffaele bertoni, from gulf investment corporation, head of capital markets.

they are beginning to rally in hong kong. for the very latest, we are on the streets. we are looking at live pictures of where you are. give me a sense of what -- you know, behind you, i get a sense of calm protest, but you are in the heart of it. tell me what's going on. >> there is suspected -- expected to be an unauthorized rally. this is a starting point for the march that was planned. band --ch was planned s was banned by police. t-shirts are emblazoned with different slogans. vendetta" masks, a symbol of revolution, are being handed out. this is happening despite the

heightened security risk and the risk of arrest. before this activity, 16 were arrested on charges of illegal assembly and illegal possession of weapons. certainly, a lot of energy today. thery stark contrast to muted flag raising ceremony that was presided over by the chief secretary in lieu of the chief executive, carrie lam, who is in beijing attending the military parade hosted by xi jinping. manus: thank you very much. great work in causeway bay on this 70th anniversary on the birth of communism. stay with bloomberg tv, because we have our interview with the chicago fed president, charles evans, at 7:30 a.m. u.k. time on thursday. there is a host of fed speakers this week, culminating in that bellringing on friday. for bloomberg users, the charts are there. we have usedarts

throughout the show. catch up on the key analysis, the calls, reference points, your trading day and week. one destination, one bloomberg. fast and factual. this is bloomberg. ♪

manus: good morning from bloomberg's italy's. this is open bloomberg daybreak: europe. thiam stays at credit suisse. the coo is out. we are live in zurich with the latest on the scandal that has ripped through the world of swiss banking. the president's men. polls in an impeach increasing number of trump's allies. china marks 70 years of the people's republic. xi stresses national

unity. protests continue in hong kong. it is our top story. one of the most read on the bloomberg terminal. coo has resigned. took responsibility for the surveillance of a former credit suisse executive at the center of the story. let's get straight to zurich with maria tadeo. story has many twists and turns. read headlines this morning. the coo is out. what is the perspective on the ceo? good morning. >> good morning. credit suisse concedes this

whole thing is a pr disaster, but the ceo stays. credit suisse has the finding from an investigation which they say exonerates the ceo. there is no indication he knew or approved the surveillance operation of a former employee who decided to leave credit suisse to join ubs. this all comes down to the coo. the entire initiated operation alongside the global head of security. both men have now resigned from credit suisse. the bank was very clear this morning. they believe this whole thing was blown out of proportion as it also has led to severe reputational damage to credit suisse. i have to say, there are many question marks. we are expecting to hear from credit suisse very shortly this morning. that presspurpose of conference is what? to reassure the institution shareholders? or is it in some way to

communicate with the swiss banking community which one relative to audiences in new york or london when they hear about investigating on personnel? >> i think clearly they want to reach out to shareholders. youit suisse will now tell very openly the whole thing has done reputational damage. there are very severe pr implications. when it comes to the operations they do, they want to reach out to the staff. they also want to reach out to the general public. there are many question marks why this whole thing was put in motion. why management would think it would be a good idea to put a former employee under surveillance. one of the things credit suisse wants to do is clear its name. a lot of talks reported to have been done.

that man who took his life in connection to this investigation. we know what is going on behind you. there is a news conference. the board of directors will take part. in chairman is going to be german in english. about say, this is providing an expansion on the hasking of wine the coo stepped down. let's listen. >> the audit committee will speak about the investigation. after that, we will be available for questions. allow me to proceed chronologically. the past few days and weeks, there has been a lot that was said and written during the

dispute between -- which took place at a personal level. i was informed about what was a heated discussion. their accounts differed. i, right from the beginning, was very much aware of this special responsibility i had is the chairman. it was of utmost importance for me. to what extent these personal differences, details in which i cannot elaborate, would impact the ability of the players to work together based on mutual trust. appears two would be able to work together without negative consequences. the result for the first two quarters are positive in the division. evident thatecame a long-term collaboration based on mutual trust was not possible after all. he wanted to leave the credit

suisse group. with thecooperation credit suisse board of directors and the chairman of the brokeree, i have helped the termination agreement. the goal was to achieve a mutually beneficial solution. i would like to note three points. and in the view of the board of directors, to order the observation was inappropriate, even though the instructions were subjectively provided for the protection of our interests. the measure that was taken was disproportionate and did not reflect the criteria standards by which we measure our own work. the board of directors has therefore decided those responsible for the observation

should no longer be employed by credit suisse group and has accepted their resignation. on the question of how the observation played out, i cannot comment over what has been concluded by the external investigation we have committed. separate investigation has been conducted which i do not want to preempt. the external investigation has clearly shown our ceo neither gave the order for the observation, nor that he was informed about it from people reporting to him. we strongly reject any and all assertions made over the last thethat call into question personal and professional integrity of our coo. he continues to have the full trust and backing of the board of directors and myself personally. not changeusions do anything about the reputation of

our bank over the past several days. i am aware these events were damaging for the reputation of credit suisse, but also the entire financial center switzerland. i would like to sincerely apologize. i would like to apologize to our excellent employees who have had to do with a lot of criticism for events which they had no control over. i would like to apologize to our clients and shareholders who have a right to rely on the fact that our top management correctly in all respects that the bank act adequately at all times, including challenging situations, such as when an executive board member decides to join a competitor. i would like to apologize for the consequences of the inappropriate observation. we have taken the necessary measures. has not been easy considering the significant contributions the colleagues

involved have made over the last years. that is something we will not forget, even in this moment. this is the only way we can focus on our strategic objectives. the credit suisse group is in the best position to continue to build upon the significant strategic and operational improvements achieved over the last four years when this leadership team. before i give the floor, i would like to address one important issue. sadness thatreat we learned of the tragic death of a security expert who worked for credit suisse. we express our deepest condolences to family and friends. relatives,ect to the we will not comment further on this matter. now hand the floor to

john, chairman of our on it -- audit committee. >> the chairman of the board of credit suisse speaking at a news conference. a reporter on the ground. quick summation. a public apology for the monitoring. a very clear apology to the shareholders. most importantly, the customers who remain, an apology and admission. >> i would say that is a big highlight from this very short press conference. the apology from credit suisse. they now concede this has been a pr disaster.

this has damaged the reputation of the bank. they apologized to everyone involved. there was also a very brief mention that someone who connected the bank to the private investigators was found dead last week. he would not comment further. the other big highlight is credit suisse still backs the ceo. he also conceded, and this is something we have been reporting for days, that it was obvious the two men have personal issues, and that was obviously part of this whole disaster. clear things. one, a very public apology. a humbling moment for credit he is, but also the fact the right man to continue to turn the bank and continue in his operation and his job. >> this is something we will

deliberate through the day. chairman exonerating, if we m.n use that word, thia he started with mutual trust and confidence, and that the chairman brokered the departure. this changes the narrative for ubs, doesn't it? last week saying we are still doing the checks and balances. this fundamentally changes the narrative. this is the man who negotiated an exit agreement from credit suisse. he was not posed by ubs. i am surmising. he was an available commodity in the market for ubs to hire. >> that's right. this is something we have talked about for days. he was a rising star. someone well known in zurich.

someone who would or had potential to attract clients in talent from credit suisse. that was always the concern. if you look at that press conference, the chairman made a reference to that. the coo put in place this operation with credit suisse will now tell you was wrong and disproportionate. he was looking after the interests of the bank. in terms of ubs, funnily enough, today was the first day at work for the man who said he felt personally threatened by this investigation, but again, the issue here, this is what the chairman alluded to, the fact there is professional and personal interest that colluded. a very toxic relationship at the top of the management here at credit suisse. there is also a number of question marks i would .2. -- i would point to. the obvious question is, how can you lead a bank and not know all this is happening below you?

when it comes to credit suisse, there investigation proves he id not know any of this, but would say shareholders would want to know more. how come the ceo did not know this operation was happening? manus: we are looking at live pictures from the credit suisse headquarters. the head of the committee speaking there. the auditing committee. by the way, for bloomberg terminal users, you can catch everything, scroll back and listen to the chairman. the audit chairs at the coo was aware of the reputational risks. the committee chair says there is no evidence other staff were spied upon. . we are tracking this story from every direction. this is bloomberg. ♪

manus: 10:17 a.m. in london. 10:17 in dubai. my apologies. 42 minutes until the start of your trading day. it is daybreak europe. we are global. straight to hong kong. china celebrity the 70th anniversary of the people's republic. let's get to sophie kamaruddin. you have been there for a couple of hours. give me a sense of the scale, the tension. is it changing? has there been a shift? how is it shaping up? this column of protesters has maintained a peaceful energy as they made their way. shops are closed. whereoward central, down the bloomberg office is located, the major financial hub such as

hsbc and other big names. as we see here, tens of thousands of people have rallied despite this march being deemed illegal by police, who have said so in the name of public safety in order. with that, 6000 police who are said to have been deployed, arrests have been made. 16 people were arrested and charged with illegal assembly and the illegal possession of offensive weapons. elsewhere, we have seen other scenes of protesters gathering, and tensions are rising. riot police have been seen engaging. teargas is being used. manus: certainly a sense of escalation there. i judge fromers the pump, the pageantry xi jinping wants to portray to the world in beijing, there has been a marked difference.

area -- certainly. parade, we saw a float representing hong kong. this morning at the convention center, there was a very subdued flag raising ceremony to mark the national day. it was overseen by the chief of carrie lam,eu who is in beijing with a delegation of businessmen and political elite. talked aboutwe had hong kong needing to start afresh, but that type of rhetoric will fall on deaf years. protesters calling for all five domains to be met, including universal suffrage and the independent inquiry into police conduct. great reporting. stay safe. my next guest is nikolaos

panigirtzoglou, global market strategist at jp morgan. great to have you with us. i want to bring live pictures from the press conference which is ongoing inside credit suisse. this is about exonerating the ceo, explaining a number of events the ceo had zero evidence that spying was happening. a public apology. can i bring this story to you? may i ask you, there has been much said about the reputation risk to credit suisse, to banking, the ceo. can you tell me over the past number of days, do you see major risks from this story from a market perspective on the name of banking? i don't think so. it is significant for credit suisse. i don't think it has

applications for the banking system. if i was a customer of credit suisse, at the end of the day, what they did was to protect the bank. i don't think it will have big implications in terms of reputation. thank you for that response. we are covering the story globally from every angle on your bloomberg, on tliv. let's get back to the business of markets. we are entering a new phase in global equity markets in terms of weather is going to be a capital war and a trade war ongoing. are you worried about the risk of a capital war with china now? if so, would you reposition at the results of the bloomberg scoop on friday? >> of course. we worried it would be

escalation of -- if we moved to capital, so we hope it does not happen. course priority 15, the markets have been hoping for some sort of a truce ordeal that would create a truce. hopefully the presidential elections of 2020. all this noise we hear about the october 15 -- both negative events. what it justify repositioning in the market? i don't think so. , which continue the same is markets have been avoiding and sectors stocks

that are more sensitive to trade war. trade war moves into the capital zone, it will exacerbate previous dynamics. -- some expose the investors have been hoping for. manus: talk a little bit about market positioning. i'm looking at the msci world global equities. on theld index is up 15% year. i want to get a sense of positioning. you would say, how possible is a repeat of the fourth quarter of 2018? has there been an adjustment in equity exposure during the month of september that we should be cognizant of? >> positions are lower than they were a year ago. at low enough to say here repeat of q4 2018.

betweened are somewhere whenows of last december we saw capitulation in equity markets and the highs of 2018. it is not so negative so it to q4 2008. manus: what about the strength of the dollar? the dollar, as you can see on your screen, this has been the strongest since the middle of last year. is it a lack of buyback momentum going into 2019?

strength is more important than buybacks. the higheste got number ever in terms of u.s. held buybacks. it was a down year for equities. important.is more rather contrarian. there are several factors driving the dollar. of course trade wars. depreciation around 6% in the summer months of 2018, or 5% over the past few months, very similar to last year. it is also the fact the dollar is still a high-yield or. -- high-yielder. other central banks have cut. the reserve bank of australia. manus: it is a high-yielder.

nikolaos panigirtzoglou, thank you so much for joining us. global market strategist at jp morgan. is as hong kong prepares for protests on the 70th anniversary of the people's republic. ♪ ♪

manus: welcome to "bloomberg markets the european open." i'm anna edwards alongside matt miller in berlin. say, canay the markets we get an encore? the rba continues the global easing cycle with yields and global equities are on the rise. a higher open.o cash trade is less than 30 minutes away. anna: