♪ from dubai.morning i am manus cranny. this is "bloomberg daybreak: europe." blacklisted. chinese techcuses companies of human rights violations days before trade talks start. trump's turkey threat. the lire holds losses after the u.s. president says he will obliterate the turkish economy if its military does anything he considers off limits. here on bloomberg television, we will bring you our top interviews throughout the day, including exclusive conversations with someone from pimco and the ceo of fidelity

and the new imf managing director. ♪ warm welcome to "bloomberg daybreak: europe." let's get you straight to the markets. 8 companies have been put on a blacklist. everybody is going, who cares? deal,obability of a trade make up whatever superlative you wish to choose. the two-year government bond yield i find fascinating, up by six basis points. it was the biggest move in three weeks. why? if you take esther george's comments and eric rosengren's mmments, it does not

atter what neel kashkari thinks about keeping your foot to the floor. he is not voting. let's roll it over, because betting away risk is personified in dollar-yen. dollar-yen, we've got a lovely note from j.p. morgan. yes, yen is lighter on its feet this morning. . you see the dollar up, yen down. struggling to get through that 106 level. if you think about the currencies that are essentially ground zero for trade, it is -- trade wars, i should say, it is aussie on the trade and new zealand's central bank has been most forward acting. let's talk about the markets. chinese markets have reopened after a week long holiday. the data is less than stellar. vacation services pmi fell from

52.1. on, and still expansi that is the critical point. investors focus on the possibility of trade talks resuming on thursday. in an unexpected move, the trump administration blacklisted 8 chinese companies, accusing them of human rights violations. they were specifically in technology. let's get to our anchor and correspondent for beijing and greater china, tom mackenzie. he joins us now. blacklist. on the . . these are big companies first of all, tell me, why? >> the u.s. is saying they are blacklisting these companies because of their involvement, their implication is the way the commerce department put it, and what they have described as the uighurserring of muslim in an area of china and also the surveillance state put into play

in that region in china. . the u.s. is saying these surveillance and ai companies are complicit in those human rights violations. it asompeo has described a stain of the century in terms of human rights. you have got a camera maker and another surveillance camera maker. they account for about the third of the global production of surveillance cameras, so major companies. you have ai companies, 2 companies backed by alibaba, the e-commerce giant. one of the most valuable ai startups in the world. this is a new front from the u.s. in terms of trying to challenge china, taking aim at surveillance companies in terms of the cameras and the ai equipment. the effect it will have on trade talks is the big question. manus: how likely is this really to play into the trade negotiations? i look at markets this morning.

tech was last week, capital was last week, today is tech. i find it an amazing reaction. it?t's interesting, isn't the timing of this a blacklisting is a surprise but the fact that the u.s. has blacklisted these companies is not a surprise. they have been working on this. certainly, you would assume it will make those negotiations in washington that much more difficult. we heard the vice premier for china heading over there for friday.lks thursday and we already had the report that china wants to narrow the scope of the talks. you talked about the fact that there is a mini deal potentially in the making here. that is what the markets are hoping for. trump saying again that he wants to get a comprehensive deal with china. the gap remains. how much more work can be done in the next couple of days in washington?

whether this blacklist throws another hurdle in the way is something we are going to be watching very closely ind eed. . manus:manus: tom, thank you. let's bring in my guest host, saed abukarsh. are you prepared for a mini deal? a small breakthrough? is that on your radar? saed: it is not at all. i do not think the trump administration right now is in any position to actually do a halfway deal with the chinese. manus: why are we so built up this morning? can i ask you about the dolla r-yuan. the chinese want to play it straight back into this thursday trade, don't let? -- don't they? saed: there is a national outflow out of chinese yuan.

i think the chinese are parking their currency right at the edge of where they can move higher if they feel that the negotiations don't go so well. we have the same view. manus: does that take a collapse? -- have to see a collapse in the trade talks to get to 750? saed: obviously, the u.s. administration is not in a good place right now. the chinese know that. the chinese are looking at the u.s. data. there is some pressure domestically. medicinee you your own that you have been giving us the past year, so to speak. manus: do you think there is money moving into yuan from hong kong? saed: there is definitely money moving from hong kong rayna. the administration -- right now. the administration of hong kong is looking to get worse before it gets better.

situation is going to drive it up for quite a long time. manus: let's have a look at the library.ry -- gtv your jobs was not that rocking. have a look at this. you look at china growth being the weakest. we are going to kiss 6%. the chinese are under pressure just as much as the americans, if not a little bit more. saed: there is no doubt. there is a slight difference. the chinese economy is a state run economy. manus: it is bit more than a slight difference. i get the point. saed: i think the chinese are managing the economy into a growth.f right now, the u.s. is experiencing the first signs of a slowdown. i think that's where the differences. managing a slow down versus the

first signs of a slowdown. manus: a bit of bullishness that we have got this morning. let's take that forward. we have got, how do you protect yourself from potentially a global recession? there is a note from a jp morgan. they say the only recessionary hedge is dollar-yen for them. we had the biggest weekly gain -- biggest gain in a month last week. they say yen is 15% cheaper than its 20 year average. are you becoming more convinced of that yen is your long trade as a backstop to what you have just said to me? saed: there is a problem with the argument. the core problem is that a vocal stance was made. that basically replaces natural demand into dollar-yen. when we see it dipped down to 1. see demandse will

from dollar against yen in japan. that part of the equation is being smooth out. yes, i agree come again can be moved down, but it's not a long-term play or medium-term plate. we will -- play. manus: you are blowing holes all over my theories this morning, but it's fine, you're the guest. it's really your show. let's have a look at gold. hedge funds are hesitating. if yen is not as a stronger protection as you say -- over at morgan stanley, they would say -- but here's gold. i've heard people say, we want to be longer gold. this is the hedge fund position and they are cutting their long positions by the most since may. saed: the gold position is interesting, because when you're talking about gold at the beginning of the year as a natural hedge for qe or baked

cutting we have -- bank , we have spoken about this before. our central banks going to cut are central banks going to cut more? are they going to do more qe? bought ase gold they a hedge against qe, and as we taper down expectations going into next year, i think that's where you will see the tick up in the gold and reduction in gold positions across the board. it flatwe will see before we see gold rise again. it is very crowded. you will see, rises in gold are becoming much more -- w through -- in haiti.

you will see a lot more derivatives. we are not seeing the performance that we should be seeing. we have had the fed come in now with that data. -- bad data. we see pressure on the ecb mounting to change their qe stance further. gold is not performed. i would be nervous -- performing. i would be nervous at this point. manus: that is my guest host this morning, saed abukarsh, chief investment officer at ark capital. selena wingo standing by in beijing with your first word wang is standing by in beijing with your first word news. confucian overhe u.s. -- confusion over u.s. policy in the region. this follows up for from republicans that the president planned to abandon the kurdish allies. he said he would obliterate the turkish economy if some unspecified action occurred. in the u.k., the prime minister

is being urged not to press ahead with big tax cuts amid warning a no deal brexit could blow a 100 alien pound whole in the public -- 100 billion pound hole in the public's finances. if britain crashes out without a deal, that figure could double. hong kong can handle the growing unrest -- can't handled growing unrest without beijing's help, according to carrie lam -- can handle the growing unrest without beijing's help, according to carrie lam. the city's government invoked an emergency law to ban facemasks did not rulem out using more emergency measures. >> at this point in time, i feel arongly that we should find solution. that is also the position of the central government, that hong kong should tackle the problem

on their own. if the situation becomes so bad, then no option can be ruled out. >> global news 24 hours a day, on air, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. manus? manus: thank you very much. coming up on the show, societe generale's chairman says a hard brexit would be a major economic shock to europe. in thathear his views interview. ♪

♪ it has just begun 6:17 see in london, 9:17 and dfi

-- dfic. juliette saly is in our singapore studios. juliette: we see asian stocks jumped the most in about a month as these trade talks near. the yen is lower, the nikkei higher by over 1% today. china trading quite substantially to the upside. the csi 300 up by over 1% even though we had a miss on the services pmi data. hong kong tracking well after its holiday yesterday. hong kong exchanges jumping the most in a month after it dumped that bid for the. london stock exchange the -- the london stock exchange. the kospi getting a boost after samsung's numbers. -- smartphonefor demand in general offsetting this decline you see in memory chip rises. the numbers did come in better

than expected but still down about 50% in terms of operating profit from this time one year ago. analysts looking ahead to the numbers when they come through in a few weeks time. this was the preliminary result and also starting to question we are -- question whether we are seeing a recovery in these chip prices. one quarter is not a recovery. he wants to wait for more detailed numbers that come through. this has impressed of the market. when you look at the anr function on the bloomberg for samsung, 36 buyers, six holes, and zero sells on the stock. manus: let's get your business flash. with that, selina wang is in beijing. >> thank you, manus. is dropping its bid for the london stock exchange. it says the tie up is still compelling but no longer in the best interest of shareholders to pursue the deal. it is a setback.

says it will look to build its role in asia. hedge funds are on a roll this year. they have gained nearly 5% on average in the first three quarters, the best return for the period since 2013, according to a report from hedge fund research. equity strategists are leading gains, followed by event driven funds. that is your bloomberg business flash. manus? manus: thank you very much. in terms of the great brexit debate, in the, parliament will be suspended again today, as boris johnson plans to outline his new legislative agenda. this as brexit negotiations resume in brussels. meanwhile, societe generale's chairman says that he thinks whatever form brexit takes, it is unlikely to produce a different eu-u.k. relationship

now.e one that exists he spoke to guy johnson. he says that instances of rejecting globalization are playing out on both sides of the atlantic, but europe has a key role as a mediator. in there in europe middle. we have a role to play, i think, if we are united. the u.k. people, british people think this may not be the case. we see -- will see what happens. if i'm right, the u.k. will come back and join the european union in 10-15 years time. guy: you think that's going to happen? >> i think the british people are very pragmatic. i think britain has a very good deal inside the european union. they were in the largest markets, very successful. london is the financial center

of the euro area. many investments, a lot of influence. the impression was that you didn't really have the control of the situation, but in today's world, it is easier -- difficult to have the control on everything, because we are in a global world. you have to work with others. you have to cooperate with others. you have to convince others. if you want to decide it all by yourself, you decided for 60 million people. that's my point of view. guy: where does brexit stack up in terms of the risks in front of you and your business? how important is it? there are plenty of challenges that banks face, that europe faces right now. where does europe sit? >> for the financial sector, it is a big risk. if we don't have continuity for

the financial system, it is a disaster. have the brexit would equivalents concept that would at least allow for a very long transition and maybe the continuation of the rule of london being very important -- role of london being very important for the financial system. if we had a hard brexit, than it is a problem, because the continuity of businesses, the continuity of contracts will have to be looked at. the agreement between the bank of england and ecb to have continuity, otherwise it is a major shock. we have seen in the past that when there are doubts, when there are uncertainties, these financial shocks than become a real economy shock. that was the chairman of societe generale speaking with guy johnson at our bloomberg invest in london.

we will have more from that event throughout the day. we have got pimco's ceo at 2:00 this afternoon. all eyes and ears down for that. my guest here in the dubai studio is saed abukarsh, chief investment officer at ark capital. u.k. will possibly go back into europe at some juncture. it is a very european perspective, isn't it? saed: i think the europeans are confident in what they have and they think it is a political game being played out in the u.k. the british want concessions. in the long term, yes, that could happen if we have a change of government, given what we see right now in the british political sphere. that could happen in 15-20 years time. most of the brexiteers have an issue with the being asked to be in the eu in the first place. manus: so it could be a short-term exit?

saed: i hope not. manus: you hope not. world,s intermediated which is where he began his proposition to guy, translate that to me on where i want to be long and where i want to be short as we go forward. the world is becoming more intermediated. if it is trump on syria, trump on turkey, you've got brexit and internal impeachment issues. what is the safest trade 20 21st of all -- 2020 first of all? saed: i hate to quote your previous guest. manus: it's ok. saed: there is no alternative to this -- at this point in time to the dollar. i think the trade for the year next year probably, chinese

fixed income, asian fixed-income. manus: we will talk more about em later on. saed: we know the curve is going to stay flat for quite a long time right now. i think there will be an active search for yields. manus: if we have a hard brexit, because i was supposed to talk about brexit in this block, so the producer is already upset. the assumption is the bank of england will cut pieces -- rates by 70 basis points. you don't seem convinced. saed: i think they will cut before that. manus: if we go for an extension, we get another cut? saed: i think if we see one more extension, they will be moving 25 basis points again. i think the bank of england is beginning to see pressure on the economy. the data in the u.k. is turning. it is not pretty. i think we see the lack of progress in finding a resolution. we will see the bank of england move if we have one more extension.

manus: there you go, you've got your brexit call. coming up on the show, it is a failed deal. hk exchange drops its takeover bid for the london stock exchange. why? what happens next? ♪

manus: this is "bloomberg daybreak: europe," i am manus cranny in dubai. world, ink around the london, dani burger is looking at the chinese equities on the first day of trading after a weeklong holiday. no one seems to care about technology weaponization on the blacklist in america, do they? dani: that is a wild thing, chinese equities getting today. they have a week of trading to catch up to in a lot of people suspected they would fall on the first day just because we had global growth concerns last week. would china start with big --

start with a decline? being ledn asia are by japan currently, which is up over 1%. when we look at foreign exchange were also seeing the yuan higher, it's the first day of you on fixing at basically the same level as of september 30. we are seeing gains. , theussie dollar unconventional policy might be op-ed, butn an generally we are seeing moves we would not expect given the blacklisting of the company. this seems more like a risk off day, a risk on day rather. seeing some of the treasuries, the 30 year yield under pressure marchedn 10 year yield further. in another sign markets don't seem to be taking much risk on, i'm looking at euro-dollar risk, the most liquid trading pair in the fx world, and when we look at risk reversals, across

various tenors, we have one year and 10 year and one month as well, they are basically neutral and around zero. they are not making directional bets on the direction of the euro. this could be two things, triggers are calm, they are not concerned about the currency pair, or it could be that there is so much going on that it is uncertainty, there is confusion, and it is a risk in itself taken directional bet. manus: that was the point my guest host just made. we will talk about that. let's get to selina wang, she is never anxious. she has your first word news. selina: thank you. -- blacklisteday eight u.s. technology needs over human rights violations.

they cannot do business with american companies without a government license. this comes as high-level trade talks between washington and beijing restart on thursday. president trump hasn't endorsed a turkish incursion into syria according to a senior official, but it deepened confusion over u.s. policy in the region. this follows an uproar from republicans that the president planned to abandon american kurdish allies. the global economic outlook is deteriorating amid brexit uncertainty, trade tensions, and a downturn in europe, according to the world bank president. he says forecasts for 2019 grows already even weaker and the imf looks to be on the same page. they are expected to slash its projection when it puts out new numbers next week. kong can handle the growing unrest without beijing's help, according to carrie lam. she did not rule out seeking

china's help in the future. this after a weekend that's all some of the worst violence since the protests began the city government invoked an emergency law to ban facemasks and carrie lam did not rule out using more emergency measures. time, i feelint in strongly that we should find the solution ourselves. that is also the position of the central government, that hong kong should tackle the problem on her own. but if the situation becomes so bad that no options could be ruled out. selina: in the u.s., president trump has won a last-minute reprieve over demands for his tax returns. he has been granted an emergency appeal after a federal court ordered him -- ordered his accounting firm to handle the filing to new york prosecutors. he now has to persuade the higher court to reject the ruling against it, following the

judges claims of immunity as "repugnant to the u.s. ."nstitution or global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you very much, selina wang in beijing. one of the federal reserve's most outspoken policy doves says it's not clear how many more rate cuts are needed to support the economy. minneapolis fed resident said business investment is slowing, the global economy is slowing and inflation is coming in below target. we should be supporting the economy, not tapping breaks. he is a dove to end all doves. as long as the consumer remains , there is no need to add additional accommodation. we have a lot of fractional iced

-- fractional fed. what do you make of the comments in the last 24 hours? saed: i think the very conscience -- conscious. -- there is seems some reservation but we have to see what powell says. that will guide us. the risk is that powell backs off. horrible.s were not always say it is part of the cycle or transitory but we will have to see what powell says. manus: you say he missed a chance yesterday? saed: yes, he missed a chance to clarify because clarification is needed. usually he will give us three or four or five chances with a

policy shift. see riskelief is if we soft -- risks off, we will [indiscernible] manus: we have this week, which is trade angst, and next week i have tariff -- they are linked but one is an actionable moment, next week, the 15th is more tariffs. chance think it's a big for the administration to show some goodwill. to back off on tariffs or increase tariffs. we will see with the future holds and where the u.s. stands and how hardline they want to take with china. they might come up with new tariffs, or increasing tariffs again, and the market will take it [indiscernible] manus: we were chatting and he said there were two pivotal

dates, what are they and why do i care? saed: the past five years, most swiss investors have been taking a negative rates because the big banks have been passing the negative positive rate. remember ubs will [indiscernible] two big institutions i think we'll see some depositors invested in swiss banks. outflow. begin to manus: in terms of volatility, another point you made, if we bondat equity in u.s. volatility, you said this is what the volatility trade you want to focus on -- we back some of that vol at levels we haven't seen for a of months now. are definingnts the market right now, u.s. trade relationships with china, and

brexit. manus: i am going to roll a tape of everybody who came in here the past three years who said to me brexit is not a global event. saed: it is a very global event, it marks a risk aversion event. the market right now is teetering, if you look at s&p, global equities, we haven't made massive strides for the year. right around 2900 for s&p. cswon't take a big event to selloff considerably. if you see a hard brexit, you will have selloff. let's extrapolate that forward, do you break 150? saed: i think the problem with year isight now, the 30 about to-plus.

-- two-plus. manus: thank you very much. chief investment officer from arc capital. let's get to two of our top corporate -- corporate stories for the debuted -- for the day. aey beat estimates after pickup in smartphone demand, and in hong kong, you have the hong kong exchange clearing has dropped its unsolicited takeover bid for the london stock exchange. what does it mean for markets? reporters.o our your take away in the samsung numbers? samsung is slowly recovering from a prophet slump.

the third quarter innings -- earnings results show some benefits. sales helpedte 10 price declines in memory chip businesses. still, there are signs the memory chip business will turnaround. that allesn't mean things are fine in the tech alle -- does it mean that things are fine in the tech space? >> investors have been bullish on samsung earnings and stocks have increased more than 20% this year. demand and shipments for memory chips have picked up, but there are still signs that the memory chip business will turnaround.

there are so many uncertainties surrounding the global economy, and there are concerns of a global recession. those uncertainties over trade issues are still hanging over there arendustry and some downturn concerns still going on. -- manuel, let me bring it to you. it all went wrong, hong kong's bid for the london stock exchange. it didn't do the groundwork. that could be why the deal has fallen over. >> precisely. it was such a challenging deal to begin with. as it turns out, they hadn't done a lot of homework, as you said. they had a lot of work to do to convince shareholders on the merits of the deal and also regulators and key government

officials. keep in mind, the changes are so critical and they are assets of a national interest. we have seen in the past a lot of these gigantic deals falling through the crack's mostly because of the national interest. it is a critical asset they want to keep. if the hong kong stock exchange, as they came out a month ago er,h us unsolicited off they did not do all the work they had to end it was going to be very difficult. as it turns out, the move to walk away was also a bit of a surprise. you went from a surprise to another surprise. the exchanges space today as well. manus: team, great work.

coming up, up h and -- obliteration. that's what the president of the u.s. threatens to do to the turkey economy if it attacks kurdish allies in syria. this is bloomberg. ♪

♪ is just gone 9:47 in dubai, this is "daybreak:

europe." in just under 30 minutes time. the german production figures whether industry and construction output trunk again. also today, u.k. parliament is suspended of its own volition. the queen is set to give her speech to reopen parliament. tomorrow, it's all about the fed and the minutes release later in the evening, and the comments from jerome powell is an opportunity to regressed the easy nettle. onchina, in washington thursday for trade talks. on friday, the winner of the nobel peace prize is announced. let's get your business flash from selina wang in beijing. selina: thank you. samsung results beating estimates on strong demand for

smartphones, operating income coming in at nearly $6.5 billion for the quarter. still, that's a prophet decline of more than 50% from last year. this as a company grapples with a slowdown in memory chip's nest. -- chip business. hedge funds are on a roll, they gave nearly 5% on average in the first three quarters of this year, the best return for this period since 2013. equity strategists are leading the game following by event driven funds. and pepsi has joined the charge to make green bonds more mainstream. the soda giant is offering $1 billion of sustainable debt. yield year bond will above treasuries. insi plans to invest sustainable development, including eco-family plastics and cleaner transportation. that is your bloomberg business flash. manus: thank you very much.

selina wang in beijing. trump appear to to backpedal after he gave turkey a green light to attack u.s. allied kurdish forces in northern syria. the u.s. president warned that he would totally destroy and obliterate turkey's economy if it takes unspecified, off limit actions. the comments came after trump was criticized by congressional which for a statement in he said the u.s. would not stand in the way of turkish incursion in syria. let's bring in our executive editor for the middle east and africa. trump gave a green light to go against the very forces with which he has been allied, and many would say defeated i.s.. what is behind the secret of messaging? chronological and trump have a

phone call and at the end of the phone call, it appears that trump gave erdogan the green light to go into the kurdish areas of northern syria and set up what erdogan says is a safe zone. everyone assumed that basically americans are giving the green light and it turns out it was trump who gave that indicator and now american officials, also you mentioned congressional leaders -- trumps own allies are rejecting to this. say trump didto not mean this is a green light. they did move back some of the u.s. forces along the border and they are saying that was to indicate that when the turks come in, u.s. troops will not be there and they are not supporting with the turks are doing. i think what is behind it is that a trump, from the beginning, and remember he did this last year as well, he said we are pulling out of syria and then they didn't. he is very keen, in his own

words, to end all of these silly wars. he never thought america should be in there, he doesn't like american troops being based in the middle east. whenever he sees an opportunity to pull out, he might jump on that, however, you know, a lot of leaders in the u.s. are coming out and saying this is against our interests. you mentioned islamic state for one. manus: in a barrage of tweets he would say i want to put more pressure on the europeans to take more responsibility for i.s. fighters locked up on the american ticket. can we have a look at the tweet? there was a whole barrage of tweet but this one stands out as perhaps being the one that the markets are perhaps more focused on. my turkey does anything, in grade and unmatched wisdom to be considered to be off limits, i will destroy and obliterate the economy. and europe it before

and others watch over." you drew the comparison earlier, you said this is about trump rhetoric versus perhaps the u.s. position. but he did bring pressure to bear on turkey. he did it last year. several factors went into the rapid decline of the lira last year and one of them was u.s. pressure. pointing tosically that and saying i inflicted damage when we had an agreement with turkey and i can do it again. i think there are key elements in here. one is he is saying if he decides the turks are doing something he considers off limits, then he is willing to apply the pressure. but it is not clear what he means by that, what is off limits exactly? so that leaves a lot of uncertainty, and we have seen andlira react already, there is an expectation that

unless this is cleared up, we are heading into a period of uncertainty where it is unclear exactly what the american position is. manus: you leave us on the currency front, very nicely to introduce our guest, that is our editor for the middle east and africa. the lira has been under pressure. we asked you during the break, do you think we will retest the dime site on the lira as a result of the political shift? saed: let's recount a year ago. the economy was suffering [indiscernible] and as you recall, there was an incident, i think the turks arrested a u.s. individual and there was a selloff within a few hours. i think were in a situation where basically if i was an investor, i would be finding it hard to argue putting my money

here given the story ahead. we have seen the tweets from trump before and comments from erdogan before, and in the context of the turks and kurds, this is not going to go down as a cakewalk down the field in syria. i think there will be scrimmages and i think trump will jump at the opportunity to tweet about it and make threats. that doesn't make me confident as an investor to work -- to enter into the turkish market. manus: where can we retest? april,my mind back to sorry, may of this year, up 618. what is the risk on? turkey was one of the favorite carry trades, a lovely carry trade that we had been using and of the central bank had been making appropriate moves and there was a sense of credibility returning to the

central bank of turkey. i think at this juncture, if we see panic, we could see 640, 6 50 by this year and possibly next year. if we see a panic, we will not see that. about the's talk wider emerging-market. we've done a survey, 50 four global investors, in terms of em. the brightest spots in stocks and bonds in asia, but then the brazilian read and ruble also topics on currency. do you like those? saed: everyone loves those currencies, the consensus trade, everyone loves brazil, but i like it relative to the euro, not the dollar. i really do not like to be short dollars. l true risk isa the dollar below 108, 109. europeanuy them versus

assets and not the dollar. manus: my guest host this morning, chief investment officer of ark capital. we have some more data from germany, coming up. how much lower can ago? ♪ everyone uses their phone differently.

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♪ >> good morning. i am manus cranny. these are your top stories. accuses chinese companies of human rights violations days before trade talks. the risk --ts weugh weigh the risk. trump says he will obliterate the turkish economy if the military does anything it considers off-limits. we will bring you some of the top interviews from out the day, including an exclusive

-- including exclusive conversations. ♪ something better than the market anticipated, industrial production rises, the market survey was for zero. we have had a rough streak of bad data. there you go. there is the euro. one person worries that this currency could retest the downside. industrial production better than anticipated. , one company

agreed to a majority stake in another company. we are seeing a variety of deals getting done. the one company on the german utility side, th. let me take you to -- by the re are three entities involved in that deal, 2.3 billion dollars is the price tag. let's show you futures. the markets seem to be focused on a small deal, partial deal. the u.s. has put a company on the blacklist in germany. the equity markets are higher. goldman sachs has a piece on the bloomberg this morning. it is too early to call to an

end to the equitable run, talking more about the u.s. stock side. we saw a repricing at the short end of the bond market in the u.s. yesterday, and we saw the steepness over the past eight trading sessions given back yesterday morning. away from that. we have more breaking news coming through from the u.k. ae u.k. is publishing temporary tariff regime in the event of a no-deal brexit. operation yellow hammer is about have the u.k. would react in the case of a no-deal brexit, what would be done, what would be exercise. this is the tariffs detail. as i get more, i will bring it to you. ubs did the numbers, nearly 6 billion pounds in tariffs.

5.2 billion pounds of tariffs on u.k. goods going into europe, the eu 27 would be transporting back into the united kingdom, suffering tariffs of 13 billion pounds. are we doing easyjet numbers? let's discuss all things in the market now. asia.ld reynolds is in let's get to the market reaction . it is quite a surprising reaction from a risk-on reaction, when you think about it, weaponizing tech, weaponizing capital, and the potential to weaponize hong kong negotiations, and yet markets are backing it away. what do you make of it? responding to are the effective response from china, which has been to shrug send ahead of the

pboc over to the u.s. for trade .alks if there had been a strong rhetorical response, a tweet from the global times editor, or other editorials, etc., which indicated china was concerned about these issues, then you would have a very different market reaction. instead, it has been a case of welcome back to china, to the markets, after a week off, and rather smooth sailing. it also seems to have helped that the deal between the u.s. , and the was signed indications are that automobile tariffs are excluded, for now. and that got japan off to a good start, so we were set for china to get off to a decent start, it

did come and everybody went, ok, we can have a little bit of risk on. >> weekend, indeed. we saw the pboc key to fixing sharper than the market anticipated. thank you so much for the latest on trade war's in context. on u.k.king news story publishing the tariff rate on the changes to the supply chain. here we go. ,he u.k. says tariff amendments 80% of total imports will be eligible to be tariff-free access. these are the lines coming down on the latest announcement. the u.k. says tariff amendments on three groups will be put through. 88% of the total imports ,ligible for tariff-free access the u.k. tariff regime would

apply for up to 12 months, giving us a time limit on that. those of the three headlines we have. there is the pound, literally shaking its head, no response. operation yellow hammer, the government had been at pains to tell us how prepared they are. here are some of the details on the tariffs. more on that in a moment. i want to pivot to easyjet, breaking news coming through, and no-deal brexit would involve the transportation side of the world. ,asyjet coming in with numbers nice level higher, so full here headlines pretax profit will be in the upper half of the previous guidance. it cites increased demand due to the disruption with the strikes and ryanair. first quarter bookings are in line with last year.

the first quarter 2020 is pretty much in line. those are the headlines, guiding higher, and we will see whether the stock flies higher, and the guidance range for you, by the the profit before tax in upper half of the previous guidance come so a lot to play for into the open. let's revert back to the china story. markets have reopened after a weeklong holiday and there is a lot to digest. services still in expansion, but lower than 52.1 in august. stocks are up as investors focus on the prospect of trade talks at to resume thursday. in an unexpected move come the trump admission patient has blacklisted a chinese tech companies, accusing him of human rights violations comes of that is the driver behind the blacklist. that's get to tom mackenzie in beijing. good to see you this morning.

the blacklist, why exactly? what are the details on these human rights violations? commerce department is saying these companies are implicated in what they say is mass detention and surveillance of minority muslim people in a region of china. the united nations says there are about one million people incarcerated and what it calls reeducation camps in that part of the country. the u.s. says these companies have a role in that system in space, in terms of surveillance, the internal camps. they are taking aims at these companies, surveillance companies that make cameras, for example. of those companies combined account for a third of the global market. then you have the artificial intelligence companies, two red hot startups in china focused on

artificial intelligence technology, facial recognition. those companies are also banned from doing business with u.s. taking aimhe u.s. is at some of china's most prized up-and-coming companies in the ai space and surveillance. it may also be a leverage play in terms of trade negotiations. if it was aion is, leverage play negotiations, market seemed to be patting it away. to think the chinese want to get -- batting it away. do you think the chinese just want to get on with the job at hand? >> there may be a case were policymakers and negotiators are trying to cut through the noise and focus on the issues of trade , forced tech transfer, ip, and get the tariffs removed, and obviously they have shown willingness to buy agricultural products and energy from the u.s. as well, some may be they

are squarely focused on avoiding the noise, sing actions not just run the trade point, not just tariffs, but national security, .aroline huawei it certainly seems to put the two sides at quite some distance with trump saying they want a inmprehensive deal, china wanting a more narrowly-focused deal. again, markets have seem to shrug this off. some companies affected have in stockpiling. there has been some sense this was coming down the line. we just did not know the timing. >> thank you very much. news get you first word from beijing. ♪ >> thank you. the global economic outlook is

deteriorating and that brexit uncertainty, trade tensions and a downturn in your, according to the world bank president. he says forecast for 2019 growth are looking weaker than in june. the imf is expected to/is 3.2% projection when it puts out new numbers next week. slash its 3.2 percent projection when it puts out new numbers next week. the budget deficit is set to pounds,50 billion and a study says if britain crashes out without a deal, that figure could double. to join could come back the eu in 10 to 15 years time, according to society general's chairman. they are also worried and no-deal brexit could spark recession.

is a fatigue about brexit, andnd -- people say do it, whatever the price is, which may be a hard brexit, without fully understanding what the consequences, that is a bit scary, i think. >> in the u.s., president trump a last-minute reprieve over demands for his tax returns . he has been granted appeal after they were ordered to be handover. it follows a judge calling trump's claim of immunity "repugnant" to the u.s. constitution. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you very much. let's get you up to speed.

7:13 a.m. in london. stocks in the sideline. the bid from the hong kong exchange over the london stock exchange falling over. they just didn't do their homework. is it more susceptible to a bid now than ever, or they have batted this one away? keep an eye on fortum and un iper. ,nd easyjet guiding higher giving the market food for thought in terms of taking advantage of other people's woes and angst. reliability is everything in that business. they are cutting in the upper

half of their previous guidance, and they are saying that profits should hit that zone. deal, no, tariffs, deal, what is the market onparing for, but tariffs the risk of the hard brexit, the u.k. is planning and they have delivered the numbers. we will discuss that shortly. if you are driving to work, we are with you every step of the way on bloomberg radio, so tune in to the team. they are on there as we speak. this is bloomberg. ♪ -- on air as we speak. this is bloomberg. ♪

♪ 7:18 a.m. in london. 40 minutes away from the start

of the trading day in europe. let's get into the heart of the markets. i am manus cranny. this is "bloomberg daybreak: europe." let's go to juliette saly in singapore. >> we are on track for the biggest gain in a month on the msci asia-pacific index as we get close to these trade talks. equity futures helping sentiment. 0.9% in latep trade after china resumed trade after that holiday. upside momentum, surprising some in the markets. good, up 0.7%,ng hong kong exchanges rising the most in a month after it dropped to the bid for the llc. the nikkei higher, samsung kospi.g the

let's have a look at currencies. it was steady as she goes when it came to the daily fix. that surprise the market. they were expecting something stronger. the on and offshore tracking higher. the onshore is the best performing currency in asia. gaining, the bank of korea saying they can't say with certainty they will get 2.5% growth next year. in singapore, a lot of volatility in one month for its for the singaporean dollar ahead of the decision on october 14, where it is expected the central bank in singapore could ease. you parsed the markets, not parched.

let's get your business flash now with selina wang in beijing. >> thank you. beating estimates on strong demand for smartphones, operating income that $6.5 billion for the quarter, profit decline of more than 50% from last year. that as the company grapples with the slow down in its memory chip business. year,are on a roll this gaining nearly 5% in the first three quarters, the best return since 2013, according to a report from hedge fund research. equity strategist are leading gains, followed by event-driven funds. that is your bloomberg business flash. officials looking to narrow the scope of a potential trade deal with united states. negotiation set to resume this week. it is unclear whether washington

would support unlimited agreement. was economist spoken new york to explain with this would mean. if the deal produces a cease-fire, no escalation -- lesserest rhetoric etiquette -- lest rhetoric about to for tatts, some move addressing the other says, but nothing concrete, as yet. i think we will end up somewhere between a cease-fire and a mini deal. >> i went back 12 weeks, 12 months ago, all we need is a truce that the g20. if we get that, things will be ok. we had that, then things escalated again. what do you make of trade

discussions going into this round of talks? ini have been looking at it the context of game theory, an uncooperative game. the u.s. side, it is about national security, which means more issues on the table, more demands. on the china side, they made a strategic mistake upfront. they didn't defuse tensions when they could have. waithem, it makes sense to until the elections. the challenge with the central bank argument is the chinese have realized the more they stimulate the old-fashioned way, the more that hampers long-term reform efforts, so they have been hesitant to use that tool. ecb has a limit to strengthen this. you argue we have too much faith in a policy response to

this trade war, and the hope something would come from elsewhere as well. is that your argument? >> especially when it comes to the stock market, absolutely. three data points were reconciled last week, a sharp fall into-year government bond yields, lighter high yield spreads come a contained selloff in equity. the equity market responded to was president trump tweeted that constructive comments about trade. that was the big turnaround last week. i think the equity market has this hope that somehow policies will save us. why? have asthey have us -- the fed has repeatedly stepped in. manus: that potential for a skinny trade deal, i want to bring in this. these markets are pumping.

they are looking for a higher bid. all of the move. equity markets are also higher in asia carrying threw two european trade. of theht you a list temporary tariff regime in the event of a no deal brexit. that is the top line that came through. it was very specific in terms of the information he gave from 88% of total imports would be eligible for tariff-free access. fors bring in our editor all things brexit and trade. what did you make of this? it was very specific in terms of .hat would come into play yes, it is a temporary regime and they would review it after 12 months.

headline from the government will be that 88% of imports will brexit.of tariffs after the thing to remember is this is only on the imports. exports will be subject to the tariffs of the wto structure. the bigger picture is the government is preparing the nation for the prospect of no deal. in this country at the moment, you start to see signs warning that the, companies, tariff structure and the regulatory structure is about to change. the government is trying to seal -- say no deal is manageable. but we have studies that say it would blow a hole in public finances, the customs and

revenue department, the cost to businesses of a no deal brexit, so -- thank you very much for making sense of brexit. this is bloomberg. ♪

anna: good morning and welcome to bloomberg markets the european open. anna edwards live this morning from dublin, with matt miller from berlin. matt: golden week, golden opportunity. stocks rise in asia as stocks reopen after the public holiday. futures suggest optimism will continue in europe. the cash trade is less than 30 minutes away. ♪ matt: blacklisted. washington