u.k. and eu reach a brexit deal that is fair and valid. cable jumps to a five-month high. a move out of bonds into stocks come out of the dollar. honeywell raises its 2019 profit forecast. morgan stanley on deck. are there green shoots or more warnings? welcome to "bloomberg daybreak" on this thursday, october 17. it was really down to the ninth hour here. sb futures popping on that futures, up 0.3% -- s&p popping on that optimism,. up 0.3%. . money flowing into equities. the dollar kissing that 200 day moving average, catapulting all the g10, as well as emerging markets. is this the rotation investors have been looking at? it's time now for the global

exchange. we are going to bring you today's market moving news from all around the world. ndc,brussels to new york -- new york ndc -- new york and d.c. you chief negotiator michel chief negotiator michel barnier says negotiations were often tough. >> negotiations over the past days have at times been delivered but we have , and we have delivered together. alix: anna edwards is in brussels with more. what is actually in the deal? anna: it is taking a little while to get through all the detail, but what was going to change is nothing much in the withdrawal agreement, apart from the deal with ireland.

they've gotten rid of the backstop and put in place something else, which looks very complex, and something the dup does not support. it involves changing the way some voting happens in northern ireland, the amount of concession to give to the process. it seems like they are still holding out. there's also the political declaration about what they want to do next. on that side, some other parties in the u.k. are saying this looks tougher or harder than theresa may's deal, but we are still working through the details of what is contained in this versus the previous deals of theresa may, which were rejected by the u.k. parliament three times. alix: exactly. the rumor seems to be the eu parliament will pass it much easier than the u.k. parliament. there are rumors that the attorney general and the u.k. will put his seal of approval on that. can you talk about the u.k. politics and whether they will

have a deal? anna: in the u.k., on saturday when we get the special sitting of the commons, the question will be whether it is possible to get 320, the magic number he is looking for to get a deal for the house of commons. he doesn't have the support of the dup, so that is 10 votes. how will those he expelled from his own party decide to vote? how will the hard brexiteers vot e? typically, they followed the dup in the past. the labour party has already said they won't back the deal. they want to go for a second referendum. interesting, a new emerging. what will boris johnson speak to the eu leaders about later? will he try to get them to rule out any kind of extension? that changes the dynamic in parliament on saturday. things still moving very quickly on this. alix: indeed.

why the breakthrough now? we've been up against hard deadlines before. there hasn't necessarily been this optimism. the feeling is that this is actually different. why is that? anna: the sense is that it is different because it is being , they a brexiteer, perhaps guy hard brexit side of the conservative party. decide thisill is our guy, we can trust him. changed little else has , and in fact, things have changed for the worse in terms of the math in parliament behind boris johnson, celeste not be low lit into thinking this is going to be easy -- so let's not below old -- so let's not be lulled into thinking this will be easy on saturday. alix: staying on brexit, joining me from london is marcus

ashworth, bloomberg opinion columnist. we had cable at a five-month high. talk to me about what we learned etsut how mark positioned into this. marcus: plenty of time for any shorts to reduce their negative positions on the pound. that's why we've had as much of a rally today on this news. sterling has been remarkably strong the last couple of days. people have expected a deal to come out somehow. believe it is only two or three you are against it. they may split. it looks like the rest of the tory party will probably back boris here. in that sense, people are expecting it to probably go through, but we have too many variables to push further this one point 30's

-- to the 1.30's. gains will be relative to the next few months and years. alix: the dup, the northern irish democratic unionist party, won't vote for johnson's brexit deal, according to party officials. to cable rate paring some of its earlier gains. what kind of action do we need to be paired for today? ofcus: this is a repeat groundhog day. you get what looks like a deal, and both the u.k. government and european union want to move .head two days until the eu summit, and then the whole of saturday to decide in parliament go.these things will there are a lot of moving parts here. you see by the pound has had initial rally.

whether it wants to carry on .ally in, we are in a range now i think we will bounce around in that range. alix: good perspective. thank you so much. in the u.s., all eyes still are in earnings here. had netflix, ibm, honeywell, and at&t. joining us is sarah ponczek. what did we learn from banks to industrials to attack? that -- sarah: things haven't been as bad as expected, but that was also kind of expected. i will dig into some of those numbers, starting with netflix. one investor called it the big kahuna. when you look at netflix numbers, third-quarter earnings did come in ahead of expectations. the focus was really on subscriber numbers, as always. we did see a shortfall in the

united states, but where we really saw a bright spot in the earnings is subscriber growth overseas. that is very important to going forward. there we see it, netflix soaring this morning even though you saw a shortfall in the u.s. as management made it clear that was due to a hike in prices. over to ibm, revenues did come in short. we are seeing shrinking revenue growth for the fifth straight quarter. analysts were hoping we might see a jolt in revenue from the acquisition, and that did not materialize. we are seeing ibm fall this morning. honeywell against the backdrop of a slowdown in industrial economy, we are seeing honeywell raise its fourth-quarter forecast. that is interesting, but this is really because of demand for its aircraft parts. bank to reportr

earnings. should note that third-quarter adjusted etf beat the highest analyst estimates. net interest margins, insomuch focus this quarter because of the yield curve and yields across rates. we did see net interest margins for the third quarter come in a bit higher than expected, but for the fourth quarter, they are tempering expectations. alix: thank you so much. chinese up in d.c., trade officials are now working on a tentative agreement on trade. ministryg, the of commerce spokesman said they are having specific discussions on arrangements for the next phase. on therran joins us conversations today. progress ongn of the trade talks and with the news this morning from brexit

will certainly help the mood for meetings in washington. the backdrop has been the worst forecast for world economic growth in 10 years. they are concerned that central banks are running out of ammunition, and there's a view that governments aren't willing to take the steps necessary by borrowing and spending more. so when we get the news from beijing, it suggests that perhaps these trading rotations remain on track. both sides will push toward some kind of agreement, and coupled with the news from brussels on brexit, those may take some of the pressure off the geopolitical risks out of the story. alix: thank you very much. just to recap all of the headlines for you this morning, it's been a fast and furious new slow when it comes to brexit. there is a deal between the eu and the u.k., but the difficulty now is passing the u.k. parliament. the recent headline we got is that the dup won't vote for johnson's brexit deal, according to party officials. that raises a lot of questions

on what the vote will turn out to be on saturday. we did get a big spike in the cable rate, five-month high. similar when it comes to the ftse. you are now seeing a little bit of selling. yields up about one basis point. european stocks also off the highs of the session. you did learn a lot about the rotation in the market on a positive headline. we will break that down as well. coming up on the program, your morning trade analysis on the markets in today's first take. this is bloomberg. ♪

alix: time now for first take. joining me from our in-house

team of wall street veterans and insiders, vincent cignarella, romaine bostick, damian sassower , and alex harris come up bloomberg -- and alex harris. we have a full house for brexit conversations. the action was crazy. you got one good headline. i was really skeptical. then we get the dup saying we may not be able to sign this deal. what do you do? vincent: i think we are going to do a repeat of may. it looks like he's going to have a really difficult time getting this through on saturday. if it falls back, the outcome is most likely closer to a harder brexit and election, and then potentially a referendum. there's a lot positive if you can push this through. i don't know if he can. i think just be a little leery on trading cable at the moment. have a little fun with it.

alix: his trading cable ever fun? [laughter] there have been good days -- vincent: there have been good days. damian: if i've percent round-trip in the last two days, that is something to be taken into account. if you look at u.k. yields, i think we tried to push higher on equity futures are still up. i think there's still a bit of silver lining. romaine: i'm a little more positive on this. you will end up with more of a soft landing for brexit then what we thought maybe two or three months ago, and you look at the reaction you're getting not only in the ftse 250, but also in the 100, i think it shows on the equity side there's a little more optimism. boardf dup isn't on saturday, somebody is going to manage to get them on board at some point. alex: we have to pull back and think about what the boe is going to do here. can it continue to stay on hold with inflation expectations about 3%?

can they hang their hat on brexit? the new look at the u.s. and the fed and wonder what they are going to do at the end of october, if they are going to cut or not, given that it looks like we have the early makings of a deal with china, and brexit is looking more positive than not. alix: i'm glad you set me up for that. what i found most interesting is what we learned about the market when we got these positive headlines. you had a move into equities out of bonds. it wasn't furious, but it happened. it was really the dollar cratering to that moving average. is that what we are in store for? if you get a deal, is this the rotation we've all been waiting for? damian: you know me, i like to look at options markets. money vols look at across every currency, they are way higher around the end of this month. that could be either the fed or

brexit. all of the markets are pricing in this spike up in risk and volatility going into the end of the month, but once we are through with that, do we have a return to fundamentals? do we look at the fact that we are in a negative yielding environment globally? we don't know what the market is going to focus on after that. vincent: we talked about this a little bit yesterday afternoon. there's a major rotation out of u.s. assets into europe and u.k.. i think that is what the movie is. the move into em is just a go -- a knee-jerk algo reaction at this point. i want to see how the geopolitical risk plays out with hong kong, with what will potentially be a bill in the house and senate. china will not look at that well. while we have positives from the trade deal at the moment, the impact later on is going to be quite negative. i would be looking more to

europe and the u.k. before i look at e.m. the fundamentals, when you compare the u.s. to europe, it is a lot more attractive to be in europe right now if you believe the earnings growth decline in the u.s. is going to continue. you are still looking at a valuation on the s&p, and you compare that to europe, where the thought process -- vincent: europe has been beaten up, and the u.s. has been held high. that's an easy flip to make. it's a safer bet, absolutely. alex: but if europe really that much safer? italy is still an issue. you still have big geopolitical issues there. this is an over. the u.s. and the eu are still dealing with their own trade issues. isn't that much better? the eu guy., ask

you look at those multiples and try to look at the relative value, you have to pay a premium for investing in dollar assets. what goes missing in all of this brexit nonsense -- alix: you said it. i did not say it. [laughter] damian: when i say the data, i mean they did a targeted easing of the medium financing rate. there's another cut coming, probably. their supply data was seasonably strong, but if you look at long-term corporate bondage, corporations can't borrow. so credit extension to china is weak, and that is not going to change anytime soon. alix: if we tie all of this together, things aren't good enough to get the fed to back off necessarily from rate cuts. you are still in monetary easing mode from central banks and

emerging markets, but if you get some slivers of hope, you have strong market reactions, and earnings are not bad as we thought. that could set us up for some kind of bold scenario. stock was down yesterday only 0.1%, but the reader was fine. they see a slower growth environment, etc. romaine: when you talk about what we saw at csx, a lot of people will point to trade, the geopolitical risk, saying what's remove that, it is a springboard up because all of these companies are sitting on potential investment. i am not necessarily a buyer in that belief. vincent: i think it is more of an equity story than a fixed income story. i think central banks have their hands tied. i don't think it matters much. if you look at the potential if the deal goes through, you could see a 10% drop in the dollar. that does not speak well for the

large industrial space in the united states. it does speak well for europe and the u.k.. i think that's the rotation people need to look at, out of the dollar, into europe, not necessarily e.m. less the trade deal goes well. think the fixed income spaces are going to be enter and muddle along. alix: this means higher yields in the u.s.? alex: but only to an extent. people are coming in and buying. alix: just not the chinese. [laughter] said, i thinkce you will get a bit of a range, but i don't see a breakout by the end of the year. i think we are going to muddle along. but also, fixed income tends to track ahead of equities in terms of pricing in the good and the bad, and that's why i think we are just going to sit here until things become a little more clear. imaine: i hate to --damian: hate to look at ims estimates because they rarely come to

look at the if you estimates into 2020, it is really the second half where they get the global gdp rate, and it is going to be brazil, arabia.india, and saudi i found that kind of interesting, in lieu of all the things going on in the world today. alix: and there are some idiosyncratic things in there that you might have to worry about. my the only one who's bullish that you might get central bank cuts around the world and earnings are not as bad as we thought? onlypparently the one. vincent: if brexit goes through on saturday, it would be a major boon for markets. please let it go through so i can stop following all these annoying journalists on twitter over in the u.k.. alix: not here. vincent: absolutely not.

off the this albatross table, and now we just go back to trade. and if trade somehow finds its way, we can go back to a bit of normalization. alix: so you get good news and bad news? vincent: you get 25 basis points, but it doesn't mean you get more after that. romaine: it looks like the trump administration, for however weak people think his deal might be, it looks like they are pushing to get something done by this release a if we could little of the uncertainty. alix: thank you. thank you all very much. following brexit over the next couple of hours as well. this is bloomberg. ♪

alix: this is "bloomberg daybreak." in the u.k., tons of optimism

that we got ideal. the eu and the u.k. finally agree, but the question is if there is a pastor the u.k. parliament. the dup in northern ireland says they are not going to vote for it. cable rate in the ftse off the highs of the session. s&p futures up by 0.3%. you are seeing a move out of the treasury market, into equities on the margin. the dollar index is really what i'm watching, kissing that 200 day moving average. you are seeing that knee-jerk reaction into emerging market currencies and some of the commodities as well. is that sustainable? we will break that down. coming up, morgan stanley earnings on deck. in harnett of absolute strategy research will join us. this is bloomberg.

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headlines here. s&p futures up by 0.4%. food and beverage stocks rolling up a bit -- rolling over a bit in europe. unilever not really holding up with estimates, and nestle had a big buyback, but no one was necessarily impressed. the dollar is a little weaker, pushing into emerging markets. morgan stanley earnings are out right now. taking a look, trying to break it down as we go, looks like on an adjusted earnings basis, coming in at $1.21 a share. looks like a beat versus estimates, about $1.17. give me a second. taking a look at investment 1.6ing revenue, blowout, billion dollars. the estimate was for $1.3 billion. net interest income also super solid, $1.2 billion. that estimate was for under $1 billion. wealth management coming in a

tiny bit light, and equity sales also crushing it. they were able to deliver on all three prongs, investment fic, and equity sales. obviously, that stock popping in premarket. net interest income, we seen as a beat for most of the banks. the question becomes can they actually sustain that is rates continue to go lower with. the fed. joining me for more -- with the fed. joining me for more is alison williams. it all looks good. .iviana: --alison: yep[ fixed income training has been has-- fixed income trading been the positive story. same on the equities side, beating estimates marginally. still looks like that is down year-over-year. i haven't seen the wealth margin yet, but it looks like pretax

was about in line with estimates. so far, so good. alix: did we learn anything about what is driving these banks? the fact that they can deliver on net interest income and still -- income is still consistently surprising. the newerthink maybe thing is the consumer loan growth, something we saw in the industry data. sometimes we don't messerli see that followthrough the earnings -- we don't necessarily see that fall through the earnings. we will be looking to see, are they growing loans in their wealth business, looking at their wealth margin, which i'm still is -- which i'm sure is still sustaining at the high-end of the range. a little better versus some sort of top-down numbers, so i'm not necessarily sure. there's a big story there. morgan stanley coming in better than estimates. last quarter, i believe they

missed, but regardless, they were trending a bit below, so it is good to see them keeping pace. market share and cost are the two things we are looking at this quarter in terms of ways that banks can offset some of the rate pain, and cost has been a differentiator. alix: equity underwriting revenue fell on lower ipo volume, so i can only imagine that is going to get any better for them. different from last quarter. fees from underwriting for bonds and loans last quarter was down by 22%, and advising was down. that's not necessarily crushing it. alison: it's tough when you look at a year ago. the first half was so strong, why we've seen those comparisons easing, but on equity fees, what we saw last quarter was a bright spot in terms of a huge jump across the

board against competitors. part of that was from earlier in the year, things getting delayed due to what was happening in a regulatory environment. we saw a big pop in the second quarter, late in the third disappointing debuts. we saw that come in a little bit. going forward, it's really all about stock prices and volatility. goldman sachs has said the ipo process -- the appeal market is healthy -- the ipo market is healthy. yes, we had some disappointments in terms of banks not coming to market, but perhaps the questioning of the valuation at things and looking not getting overly frothy is a healthy thing for the market,

and a healthier trend longer-term into 2020. alix: thank you very much. i want to recap all these numbers for you. morgan stanley really delivering across all areas here, beating coming backrevenue, in line with wealth management revenue. in.ax margin also coming net interest income also over $1 billion. super solid numbers from morgan stanley. that stock popping over 4%, definitely the outperform or when it comes to the big banks. ,oining me now is ian harnett absolute strategy research chief strategist. i feel like there's two ways to look at bank earnings. one, they are not as bad as we thought they would be. too much bad news is baked in. what do you think? ian: i think you still have to ask the question. they may be ok for now, but where are we going?

that's the big challenge markets need to make. these banks, and morgan stanley started today down 28 percent compared to its peak in 2018, so we are only seeing a recovery rally. those earnings numbers are still going to be challenged if we get an economic downturn. that's what we fear. although you've got net interest margin hopes being fueled by the steepening of the yield curve, if economic activity slows in america, you're still going to see some pressure on these earnings numbers for the banks. i think it is still a very dangerous trade. alix: when we see the curve steepening, we are not hugely , 10 oring, but we have 11 basis points, if you have that modest steepening, how do you not by banks in that environment? veryit's actually been a ambivalent outcome in the past. when you get that steepening in a normal part of the cycle, it

is pretty positive. you get the net interest margin pickup. but if you get the sharper economic slowdown, being driven by the short end. real are being driven down rather than the long and coming up. that starts to ring warning bells for me as a macro strategist. it says that what is happening here is something that is underlying bad news. you will see those provisions go up and earnings coming down. alix: that's a fair point. so how it is steepening being the difference. at what point would you feel better? i know you are forecasting recession in the first half of 2020. what would make you reverse that thesis? ian: i think what we want to see deep interest rate reductions coming in at the short end from the federal reserve over the next six months. we need to see some stabilization in some of the people -- in some of the

geopolitical tensions, not just around the china trade deal, but also the middle east. ind to see some improvement the european situation today. you've got to see a whole range of things improve before we start to feel comfortable about this. slowdown isut this baked in and will be hard to reverse from here in a particularly rapid manner. alix: how do you play it? ian: for us, it is as straightforward as you can get. in an environment where economic growth slows, do you want to be long or short bonds and equities? with treasury yields back up over 1.70%, i think that is an attractive position to start buying again. we think those bond yields can come down to between 1.25% and 1% next year. in the equity space, when you get an economic slowdown, do cyclicals outperform or

underperform? cyclicals underperform the defensive stocks when defensive stocks are expensive. i think they tend to underperform in that world. alix: you will be sticking with me. we want to get an update right now on headlines outside. the business world. viviana hurtado. is here with first word news. viviana: the democratic chairman of the house oversight committee, elijah cummings, has died from complications of longtime health challenges. since 1996, he represented maryland in the u.s. congress. his committee investigated donald trump on a number of occasions. the president responded by "aling cummings' district rodent infested mess." president trump has called on turkish president enter want to work out a good deal on syria, also warning him not to be a tough guy or a fool. all of that was contained in a letter mr. trump sent last week to the turkish leader.

he says that is proof that he didn't give turkey a green light for its offensive. brexit negotiators reaching agreement that could pave the way for the u.k. to leave the european union. european leaders address it at a summit today in brussels. boris johnson will have to win the backing of parliament. his allies in northern ireland say they will not vote for it. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vivianathis is bloomberg. alix: thanks so much. coming up, more on brexit and the market action we have seen. there's a deal, but apparently the northern irish democratic unionist party won't be buying into it. morgan stanley getting a big lift in premarket. they beat on top and bottom line, and some of the details were really good. equities beating all its peers. fixed coming in super strong.

investment banking, superstrong. there will be some questions about leverage for their clients, what hedge funds are doing, will be volatile environment continue, and how they make money in that world. if you have a bloomberg terminal, check out tv . watch us online, click on the charts and graphics, check out any breaking news you might have missed. this is bloomberg. ♪

viviana: later today on

"bloomberg markets," david lipton come alive from the -- lipton, live from the imf meeting. alix: the pound spiking higher deal has been reached, but the democratic units parlay in northern ireland says it will not vote for the deal. maria tadeo is in brussels with more. do we have any more details on what is actually in the deal and where there was a strong agreement? maria: we have more details in terms of the deal, and what is crucial here is that they have been able to solve those issues around the northern irish sea, which the europeans would look at as a concession come about with the u.k. side is saying is that ultimately, they have been able to get rid of the backstop. that was the number one priority for boris johnson, describing this is a great new deal for the u.k. i spoke to emmanuel macron, the

french president, who said this was a deal that would satisfy the european union, so the pressure is on u.k. parliament. the deal struck between the europeans and the u.k. is only for mps to reject, and that is the core of the argument. this is where the debate and pressure is. says that iton really is up to the u.k. parliament, and it is the lack of clarity being resulted in sterling today. it is jumping, but not really surging on the possibility of a deal that would put an end to three years of back-and-forth. the market not knowing how to price and whether the dup will back down and support this. they are not willing to play ball because of those checks that would take place on the irish sea. alix: do you have any sense on how the party is going to be voting?

what happens if they don't actually agree? maria: that's the question i put to emmanuel macron minutes ago. on whatave any guidance the dup is planning on doing? what is prime minister boris johnson telling you? he said he believes the prime minister is optimistic that he will get the dup to be on board, to approve this deal and run with it. at this hour, it is not unclear. the official line from the dup is that they are not willing to vote it through. a lot could happen between now and saturday. if we get to a situation where this is rejected, they will switch to the extension. are they willing to grant another extension? for how long, and what conditions will be attached to it? alix: thank you very much. ian harnett of absolute strategy is still with me. you want to buy u.k. assets here? ian: no.

as you may remember, we've been structurally underweight u.k. equities and assets, but really, ever since the referendum back equities in2016, dollar terms in the u.k. are still down over 20%, even with today's bouts. think of where sterling was just a year ago. sterling against the dollar was at $1.32. we've not even broken against that kind of level again. so i don't think this is a full endorsement, as your analyst was just saying. we still have a significant number of hurdles to clear, and the first of those really comes on saturday. until we are through that, i think markets have really just put u.k. equities and sterling back into that neutral zone. are going backu towards $1.20 or lower in sterling-dollar cross rate, so we would still be very nervous.

alix: what i do think is interesting is what we learn when we get these big headlines. you get an immediate reaction to the upside in the cable rate. the dollar, 200 day moving average, move into em, stocks getting a nice uplift. are we getting anything about the reaction function in the market? how do you ignore it? ian: in truth, we aren't learning anything at all because we get these pops, and they last for a day, two days, two weeks, and we see that wish to see a rotation into value and out of growth, but the truth is until we get the scope to deliver escape velocity and we see the dollar a much weaker currency and the rest of the world picking up aggressively, we are not going to escape this environment that favors growth stocks, defensive assets, and potentially just bonds and u.s. treasuries. alix: walk me through what a versatile and the dollar looks in the what a reversal

dollar looks like. what kind of breakdown do you need to see to feel better about risk? realistically, you need to see that dollar lower, probably towards $90 on the dxy. it's got to be a big move. historically, when these have -- when theseed have really provided support for global growth, you've needed weaker dollar as a real driver. the imf just highlighted the degree of fragility we still have in the global economy here. for us, even if we get some kind of resolution on brexit, there are still no winners from brexit because we still got a whole range of debates around the future arrangements, and that relationship between the u.k. and europe will be fundamentally broken. that is not going to help global trade. world airfreight is already down

year on year. these are the things that have to really turnaround before we get excited again. alix: there are enough. what about some kind of -- fair enough. what about some kind of trade detente, where you get ok numbers? not great, not bad. they are ok. there are some headwinds, but on the margins, everything seems to be ok. if we get a trade agreement, what do you think? ian: i think you are still looking at a u.s. market particularly that is pretty richly priced. if you look at trailing , you actually need dynamic earnings growth to come through, or the expectation of that. you might get a short-term relief rally, and some people might what to play that for the one-month, two-month environment, but historically,

that is not really enough to turn global equities and u.s. equities around, particularly from these valuations, relative to where you are in bonds again. one point seven probably isn't bad. in previous recession environments, you've typically lost about 200 basis points in those bond yields. that would take you significantly lower from today. alix: always a pleasure to catch up with you. thank you, ian harnett of absolute strategy research. coming up on the program, u.s. dollar losing some steam. brexit deal could cnn to its bull run. is it's possible -- could cnn and to its bull run. is it possible? this is bloomberg. ♪

♪ me is vincent cignarella, voice of the bloomberg audio squawk. listen to him all day. you guide traders throughout the day. i want to focus on the dollar.

vincent: i talked to two really smart guys, both named phil. idea.s fx phil's if brexit resolves this weekend, we could see a substantial move out of u.s. assets to u.k. and european assets. to me, that means a big move in the dollar on the downside. most of the capital flows that affect the dollar, that affect fx, the capital flows are dollar related. you can see this bloomberg dollar index looking at the highs of september, over the summer, and the potential lows for the early summer. we are looking at a potential for a 10% move in the dollar if brexit resolves itself this we can. once upon a time, we traded on trade news. now it is all financial news. a shift in equities or investment out of the u.s. and into the u.k. and europe would

bring about a substantial dip in the dollar. alix: we were talking about that earlier, how we are seeing the rand outperform. all emerging markets having a pop. if you get that 10% drop, though, is that sustainable? how do you see the flows in the dollar? do you still want to go in and by the u.s. dollar? vincent: i think it would be sustainable because we would see iny underweighted positions u.k. and european positions. they are nowhere near the u.k.. if you get this kind of a move, as ian would say -- as ian was saying, you will see that bull run in cable. i say this a lot of times, it's always touched 1.60%. $1.20's,wn in the high which is where cable settled after brexit. we will probably see a lot of

consolidation in that area before we see the next move. if we get a were solution, that is when we see a move higher. if this falls apart in parliament saturday, which is is looking like is a reasonable possibility, we go the opposite way and we are back where we started. alix: i have a feeling vincent i are going to be working on saturday. [laughter] alix: vincent cignarella, thanks very much. andng up, mona mahajan david donabedian will be joining us. we've got micro, we've got macro. netflix getting a nice pop. honeywell coming in a little strong. morgan stanley up by over 4%. the general market buoyed by brexit optimism. this is bloomberg. ♪ everyone uses their phone differently.

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switch and save up to $400 a year on your wireless bill. plus, get $250 back when you buy an eligible phone. that's simple. easy. awesome. call, click, or visit a store today. ♪ alix: welcome to "bloomberg this thursday,

october 17. very busy news flow, from earnings to brexit. the u.k. and the european union have reached a deal on brexit that could lead to the u.k. leaving the bloc after 46 years. prime minister boris johnson will have to win the backing of parliament. dup in northern ireland says they will not support the deal. the democratic chairman of the powerful house oversight committee, elijah cummings, has died of long-term health challenges. he was 68. in turkey, president erdogan said to reject the u.s. demand for a cease-fire in syria. he meets today with vice president mike pence. turkey says it is not leaving until turkish militants -- until kurdish militants withdraw from the border. democratic president candidate $300 million more

in the third quarter. s&p futures sitting right on the thousand level. can we hold up -- on the 3000 level. can we hold above it? the cable rate back down. is there question as to whether they can get through a deal with the u.k. parliament? belgian meping in a on the e.u. committee, and he joins us on the phone. it is good to get your perspective today. the latest here is that potentially the northern irish dup will not be backing this deal. what is your reaction to that? guest: what we know is that we are dealing with a pragmatist or who, unlike theresa may, -- dealing with a prime minister who, unlike theresa may, does ajority.y a m

i don't know if you will be able to muster support for this deal. it is the second time that the 's withdrawaln is standing in the ..k. government i remain skeptical as to whether there will be one, but we will see. alix: do you like the deal? guest: well, we can stand behind withdrawal of the united kingdom in a negotiated way is better than without a deal, but in any case, the withdrawal from the european union will be a bad deal in the sense that it would be better for the u.k. to remain in the european union. so it is a lose deal anyway. we are limiting damage, but

damage there will be because united, we are stronger. alix: what contingency plans might europe be making if there is actually no extension and a hard brexit, if boris johnson can't get this deal through the u.k. parliament saturday? well, if things should come to that, we have done whatever we could to prevent that, but you can never be fully prepared. it is going to be disruptive anyway for the euro 27, even more for the united kingdom. i'm not convinced we are going to get there in the short run because i understand there is legislation in the u.k. to prevent that from happening in the short-term. i will expect boris johnson to plato will hear -- boris johnson to play foul here in to play dirty tricks. he's known for that, so i have little trust in the prime minister. alix: why?

he was able to get this through europe and is trying to get it through the u.k. why don't you feel he can get it done, and what happens after that? guest: because that person has a track record, and i'm looking at the track record. his track record is that if there's one thing he can be relied upon for, it is being unreliable. he's managed to lose his .ajority basically insulted parliament for the last few weeks. if you need a parliament, the best way to get it on board is to insulted -- insult it. alix: democratic unionist party is saying that saturday's vote will be the start of a long process. do you back an extension? the britishinly, if

government asks for an extension. i think we would be stupid not to grant it. but then again, at some point in , at the moment, we are negative majority. we have seen majorities against theresa may's deal, against no deal brexit, against all sorts of things. we will say if there is a majority in favor of boris johnson's version of the deal, but i'm not sure there will be. you can't continue like that. if an extension is granted, it should be used to find a positive majority, either for a referendum or for a general election or for a democratic process that leads to a positive majority because indeed, we have been stuck for the last three years. alix: thank you very much for joining me, belgian mep philippe lamberts. with me on set, mona mahajan of allianz global investors and david donabedian of cibc private

wealth and is meant -- private wealth management. has anything changed? mona: we are more positive. when you look through some of the details, they talk about free trade. talk about somewhat open borders, keeping a relationship with the european union. in our mind, brexit has always been an overhang for the marketplace, but primarily for the european marketplace. we don't see it as a systemic risk for the u.s. and the global economy more broadly. clearly the u.k. is a part of the financial system globally, but i don't think this deal in particular would sway our overall view on the economy or markets in the u.s. david: i would agree with that. if you look at europe, the odds of an orderly brexit are higher now than they were 48 hours ago. it doesn't really change our view in terms of investing in the u.k. or europe. when we look abroad, we are generally more interested in the emerging markets where we think there's better secular growth. this doesn't change the fact that you have slow economic

growth and not a great earnings story. alix: to be fair, that dovetails well with germany lowering their growth forecast to 1% from 1.5%. so much for that short-term cyclical slowdown. but i did notice this morning is that when we saw cable jump and you saw a move into the equity market, selloff in bonds and move into emerging markets, i wonder if this is the beginning of what happens. if we get positive news, is this the rotation we see? mona: broadly, markets are pricing out a hard brexit scenario a little bit more now. alix: in general, are we still pricing out bad news or good news? mona: we talked about over the last few weeks the big overhangs on the economy, china trade and brexit. we've gotten incrementally positive news on both, and you could argue that they are not yet resolved, but i think the direction of travel is positive here. i think from that perspective,

you combine that with an earnings story that looks ok, with the yield curve steepening now, and with pmi's that may or may not be bottoming. i think you have a pretty good picture heading into the fourth quarter. david: i would agree. i think what you are seeing is the pricing out of the worst case scenario on the u.s.-china trade war and brexit. the trade war has been an overhang for 18 months, brexit for over three years. now there is perhaps some light at the end of the tunnel. in the short-term, that argues for a risk on approach to the market. alix: have we priced in good news yet? david: i don't think so, actually. obviously there are still enormous questions. brexit news remind me a lot of the aftermath of president trump's announcement on china friday, where there is initial excitement, nothing on paper. we are not exactly sure where this is going. in the case of trade, it was at least a temporary respite from

what had been an escalating negative for the markets. alix: the other side is that we are going to get a recession in the u.s. in 2020. you're going to want to buy u.s. treasuries. that's the only place where you get that safety. why isn't that the conversation now? david: i think there's definitely increased chatter about recession. any time the economy is slowing, you can't rule out the fact that it ascends into a recession. we don't think that is the most likely outcome. when we look at the consumer, we've got very low unemployment, .ecent wage growth we think the consumer is ok. we certainly have to look at the weak spots in the economy, like capex, manufacturing and exports, and make sure the negatives aren't leading into the market. no signs of that yet. mona: another point is 2020 elections are coming up next year, but ahead of that, the president clearly is focused on making sure this economy doesn't

slip into any downturn. can he about what levers pull, what he can do unilaterally. i do think there will be a focus on trying to support the u.s. economy, which means supporting the consumer and supporting business confidence going forward. alix: my thing is that it is expensive. if you come inside to bloomberg, this is a chart that really illustrates both of your points. the white line is consumer discretionary versus industrials in terms of price. the blue line is earnings estimates for the two. it seems like everything is super expensive. that story is well known. do you still want to buy it with this valuation? when do you buy industrials? mona: we think the cyclical story will reemerge. what we have to wait for is a bottoming of pmi's. historically, when the pmi's start to bottom and trend back

upwards, that is the time to rotate into cyclicals. david: we would generally say cyclicals are cheap. it will be interesting to see not just the third earnings, but the guidance, and whether they are a little more upbeat for 2020. alix: i don't know how you price into a model that is not as bad as we thought. one, hodgen of allianz -- mona and david allianz donabedian of cibc will stay with me. this is bloomberg. ♪

alix: morgan stanley shares rising. analyst calls happening right now. sonali basak joins us.

also on that is mona mahajan of allianz and david donabedian of cibc. this looks really good on all margins, but you can be the pessimist. sonali: i am usually the pessimist. their expense ratio is pretty a high, already the highest on wall street. that is maybe the one tough thing to look at. net interest income is also down as well. even with their net interest income being down, wealth management had higher margins than what they've been targeting for the year, so they are beating their own expectations. they beat wall street expectations. we will probably hear mike mayo ask again, as he always asks, shouldn't you be setting the bar higher for yourself? alix: should they be? sonali: james gorman, his feeling about this usually is we are preparing ourselves for a tough environment, so we are not about to change the bar if we believe the environment is going to get tougher. right now, he's talking about the strength of his wealth

management business, his ability to attract more clients, and also the strength in asset management. they've surpassed $500 billion. he really want to be one of those big $1 trillion asset managers like goldman sachs and jp morgan, so let's see if he can get there. alix: this brings us to what we were talking about before, in terms of cyclicals and industrials. have we priced out so much from banks we need to buy them? david: we think financials rain cheap-- financials rain -- financials remain cheap. when you look at the earnings season as a whole, all of these institutions have cleared the bar. a managed net interest margins better-than-expected, trading revenues better-than-expected, good expense control. you would love to see more organic growth in the loan book. you're seeing a return of capital to shareholders through buybacks and dividend increases, so we are bullish on financials. mona: i think the financials have like this year.

clearly -- have lagged this year. clearly there is some room for catch up there. a couple of things we like out of the bank earnings, it seems like the consumer is still solid. the consumer is key for this economy. is, it seems like business still pretty robust here. it seems a good sign, and some of the ipo's that maybe were not as robust earlier on, so we felt positive about that. alix: do we get a readthrough for morgan stanley on that? sonali: everyone is saying it is healthy, which means it is ok. alix: but it is not robust. sonali: exactly. i did beat on advisory and debt underwriting come about their ipo revenue fell short of expectations. obviously, they are the big three in that regard. the ipo world is something everyone was worried about, and i think they will continue to be. alix: is the narrative with the yield curve it is steeper

relative, so that is good for banks? or we are not getting that growth, not getting the right kind of steepener, it is not good for banks? mona: i think the yield curve going from negative to positive is a positive overall for banks. alix: even if it is front end? mona: generally, it indicates the health of the economy overall. that part of it is ok. i do think it should be back in loaded. that is what really -- should be back end loaded. that is what really supports the banks. generally, when you get an economy that looks more healthy, curves steeping ending -- curves steeping in the right direction, that is a good thing. david: i think whether the yield curve is 15 basis points inverted or positively sloped, the curve is flat. that continues to be a challenge for the financials, but it is a little better at the margins. alix: to that point, you

mentioned interest incomes, sonali. the idea is that they either have to take more risk, get more business to offset, or cut a lot of costs to offset that. what levers are left people? sonali: for the most part, they've been cutting costs, but they have to stay competitive. i think the most recent quarter, primedstanley equities down. to watch them compete through the end of the year will be interesting. i think people are watching that. they just said loan growth is still going to be growing at 8%. they are bringing in more lending activity, so despite the yield curve, they are able to bring in money from that business. it was a really tough middle of the year, so i think everyone is rising from a very low bar. alix: fairpoint. any deutsche bank stealing market share? sonali: definitely. just this morning, hsbc saying

they are getting out of the equities business. morgan stanley says they expect to continue the year as number one. the fact that prime balances have been up in a volatile quarter, this volatility could have been stifling, but so far, people are kind of liking it. alix: well, we've been waiting for volatility for a while. are there any other value/ cyclical sectors you feel we should be taking a look at? mona: generally, we are looking at energy, but i think that one is still tbd. we are looking for the pmi story to reverse. what we are still barbelling here -- alix: i need a button when people say barbell. [laughter] mona: i've heard it many time myself. the defensive which has really driven the market over the last quarter, we are getting less positive or incrementally less positive on that story. i think the rotation from defensive's to cyclicals could

still happen. we like the tech story longer-term. david: we generally like that. we like tech. we like health care, which is somewhat contrarian given the political noise. we agree that the so-called bond substitute sectors are overvalued at this point. a little early to make a big case on the industrial cyclicals, but there is certainly a long candidate list there. alix: where do you guys like in tech? you have regulatory over hang, but then a record high for apple. where you see the opportunity? david: i think there's a lot of opportunity on the software side. what we say to investors, a lot of the regulatory and headline overhang relates to the faang stocks. if that concerns an investor, they don't want their companies to be in the headlines every day, you don't need to own those stocks. there are dozens of high-quality

technology names across the market cap spectrum, and we are finding a number of opportunities there. alix: we tend to --mona: we tend to agree with that. we are looking at disruptive technologies. things around global payments, cybersecurity, cloud computing. things that have very long term lakes and can do well in the environment. i think those stories could be interesting for investors for long-term outlook. are going to figure something out. sonali basak, thank you for joining us. mona mahajan of allianz global investors and david donabedian of cibc private wealth management will be staying with me. we are awaiting a press conference from u.k. prime minister boris johnson and european commission president trump of juncker. will the u.k. be able to deliver that deal on saturday?

that is the question markets are struggling with. this is bloomberg. ♪ rg. ♪

alix: we are awaiting u.k. prime eu'ster boris johnson and jean-claude juncker's press conference. bloomberg's anna edwards is in brussels. whatcom expect? -- what can we expect? anna: i can't hear you, but i will give a brief update of what on the ground.ct we heard from the dup recently that they will vote against this deal. they say it damages the northern irish economy. they say that the saturday vote which we are looking ahead to is only part of the process. that raises questions about whether they are plotting something else, whether there is something they have up their sleeve. this is the dup that until recently have been supporting boris johnson's government, and before that the theresa may government.

majority,son lost his but they at least have been adding to his position in parliament. we go into this vote on saturday knowing that the dup won't support boris johnson. will he be able to make up the numbers any other way? 230 is the tally he needs to get to out of 650 mp's in the house of commons to get his deal through. there have been some sounds on either side to give those who are looking for this to go through some hope and those who are looking for this to fail some hope. where are the mps who are going to stand in the way of this or ok it in the house of commons? that is going to be the focus from here. another thing is one of the things herein brussels is whether boris johnson is going to ask the eu leaders to somehow rule out any kind of extension. if they were to rule out any kind of extension, that changes the thinking process on saturday quite considerably. i will leave you with that

thought as we look at the empty stage, waiting for boris johnson and jean-claude juncker. alix: thank you so much. we will bring that to you in the headlines that cross live. coming up, we are minutes away from u.s. september housing starts. we will break down those numbers, what that says about the economy, especially in light of disappointing retail sales yesterday. earnings still delivering. morgan stanley beating estimates, nestle soaring -- netflix soaring after solid international subscriber growth. we will break that down in the next half-hour. this is bloomberg. ♪ from the couldn't be prouders

to the wait did we just win-ners. everyone uses their phone differently. that's why xfinity mobile let's you design your own data. now you can share it between lines. mix with unlimited, and switch it up at anytime so you only pay for what you need. it's a different kind of wireless network

designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you buy an eligible phone. call, click, or visit a store today. alix: this is "bloomberg daybreak." i am alix steel. we are just seconds away from the latest read on housing in the u.s.. you are seeing fading from the rally. s&p futures below 3000.

european stocks off the highs. other asset classes, same story. you have brexit optimism being priced out of the market. cable rate turning negative. the dollar still broadly weaker in the g10 space. you are seeing money moving out of the bond market. the three-month 10 year is what i am watching. here is the latest read on housing. a month by month basis in september is less bad. less bad is the theme we keep looking at. housing starts, a lot worse. down 9.4%. , not as bad, the actual housing starts down 9%. the philadelphia fed business outlook is also out, that was a , half of whater we saw in september.

jobless claims coming in at 214,000. i am surprised considering the g.m. strike we have seen that jobless claims are staying that steady. nonetheless, that is out. my guests are still with me. if you wrap all of this in, what did i just learn? dave: the housing numbers look like a correction from what was some big numbers in august. starts were up 12% in august. we gave a good part of that back. it looks like monthly volatility. when we look at the total of the housing markets, it looks better. it looks like generally the housing market is responding to the lower mortgage rates we have seen over the last three months. it is one of the few sectors of the economy you can say look stronger than six months ago. alix: i like that you brought that up because if you pair that with the philly fed index, the overall number is disappointing, but new orders are up.

for the future index is up. prices paid is down. that is not bad. demand is stronger and the prices are less. is that a good or bad thing? mona: some of the backward looking reeds are negative in the forward-looking ones are more positive. that is probably a good sign. the point on the jobless claims is also a good one. it has been steady and generally in a positive direction. that is a good indicator for the health of the u.s. consumer. we are positive on that overall. alix: if you put that together, stable initial jobless claims, retail sales yesterday, if there was a take away, both of your constructive other consumer, so how did you interpret retail sales? dave: it is one of the most volatile month-to-month, heavily revised, not adjusted for inflation, if you take that into account and look at the trend, what we are seeing is consumer spending was weaker in the third

quarter but still growing at a healthy rate. we look at disposable income growth which is solid, balance sheets are in shape. those then suggest that as long as the job market holds up, consumer spending continues to drive the economy, even at a slower pace. alix: i spoke to paula campbell robert from kkr. she was talking about how things like retail sales encapsulate how healthy the consumer is or is not. here's what she had to say. >> it is a dismantling of the american dream. 35% of u.s. households now rent instead of own. the reason that is important is homeownership has been the engine of growth in the united states. if you think about investing in new businesses, job loss or health care needs, that is what consumers have drawn on. now we no longer have that. it is interesting. retail sales, the september

reading is not the crux of went economic growth takes place. it is usually that q4 and particular december where we are focused. is this holiday season going to be holding up? if we get that, we can say that consumers healthy. then we can start look forward into 2020 and see some of the data come out of that and get a more positive read. q4 will be critical. alix: fed move. what you guys think? i've a chart that shows october cut expectations. will we get the cut? will it be enough? looking at the beige book yesterday and the fed trying to come up with a new word to describe slowing in the economy, modest was replaced with slight, it tells me they are going to cut rates further. i think they have room to do it. policy rates are need of a broad. expectations continue to soften.

they are on a path to cut rates, probably at two of the three next meetings. alix: you agree? --a: our base case is also jay powell has mentioned a bid cycle adjustment. if you look at those examples, it is three rate cuts, 75 basis points each. we think one to two are likely. the on that, it will be very data dependent. if there's a significant deterioration, perhaps more. we are not going to zero or touching the negative bound. i think 122 more are the base. alix: you are looking at a live shot of the conference in brussels with boris johnson and john blow juncker. we will bring you that when it happens. the boston reserve bank said sharks, or to nato, and a robust

-- a tornado, and robust dollar are the reasons behind a robust -- a tourist season in cape cod. the fed cannot do anything about those things. i wonder if you will have the same kind of bullish impact on cuts you would have a year ago? dave: that is a fair point. the bang for the buck for fed action on the economy is less than it was, simply because of a lot of the slack that existed for most of the last decade has been absorbed. still positive for the markets, certainly. still in increase in global liquidity and a lot of that liquidity finds its way into equities. i've been saying this for the last two hours. if you wind up having central banks cut rates, backing up of a hard brexit, backing off of a trade to talk, earnings coming in not as bad as we thought. wise is not setting me up for a bullish u.s. equity scenario?

mona: we could potentially get that. we are at the 3000 level again. will we break up to the upside? if we do, what are the catalysts. the biggest geopolitical overhangs are softening or moving in the right direction of travel. we are also getting to your point of softening economic data or improving economic data. we talked about insurance rate cutting cycles. historically when the fed cuts rates and the economy is not entering a recession, the market outcome is quite positive. upp in mind we are already 70% or 18% on the s&p. perhaps some of that is already priced. the potential for breakout rather than a meltdown is getting more likely. alix: we have an election coming up. how do you factor that into your outlook? is too early to hedge today.vely portfolios

the election is a year ago -- your way. if you look at where we were a year ago, jeb bush was ahead in nobody knew who bernie sanders was. alix: i thought giuliani was in the lead. dave: he was at one point. but it is time to think about all of these factors, but there will be all kinds of things that happen we cannot imagine over the next year. altering a portfolio today does not make sense yet. boriswe are seeing johnson and eu commission leader jean-claude juncker taking the stage. they will talk about hopefully the brexit deal they are going to now sell to the eu parliament as well as the u.k. parliament. they are speaking now in brussels. let's listen. >> we have a deal. means there is no need

for any kind of prolongation. it is a fair and balanced agreement. it is a testament to our commitment to finding solutions. , whereides certainty brexit creates uncertainty. it protects the rights of our citizens and protects peace and stability on the island of ireland. the single market will be protected. the deal is not about us. the deal is about peace. i look forward to continue my conversations with boris. start the negotiations on future relations immediately after the deal has been approved. we will start our debates on the third of november without interruption.

tonight, together with michel barnier, i will explain the deal to the governments. it is for both our parliaments to have the final say. it is not only the minister to approve the deal, it is also up to the european parliament to do the same. , for excellents relations we have had. >> thank you very much. thank you, jean-claude. can i pay particular tribute to you and also michel barnier and all your team, the negotiating team in the commission. representsthis deal a very good deal, both for the eu and the u.k.. outcomereasonable, fair

and reflects the large amount of work that has been undertaken by both sides, which i agree very much, jean-claude, about what you said about protecting the peace process in the island of ireland and northern ireland. for us in the u.k., it means we can deliver a real brexit that achieves our objectives. it means the u.k. leaves entire on october 31 and it means northern ireland and every other part,f the u.k. can take not just in free trade deals, exporting our goods around the world, but it also means we can take together as a single united kingdom, decisions about our future, about our laws, our borders, our money, and how we

want to run the u.k. those decisions will be taken in the u.k. by elected representatives. i hope very much, speaking of elected representatives, that my fellow mps in the west do not come together to get brexit cities and done. to get this excellent deal over the line, and to deliver without any more delay it we could focus on the priorities of the british people, improving our health should service, investing in more police. many other things. jean-claude, i want to conclude by agreeing wholeheartedly with your final point. now is the moment for us to get brexit done, and then together, to work on building our future partnership, which i think will be incredibly positive, both for the u.k. and for the eu.

i remind you what i always say. we are a quintessential european country, solid european friends, weghbors, and supporters look forward to working with you in building that partnership in the weeks and months to come. thank you all very much. hey. jean-claude is the boss here. >> i am happy about a deal but i am sad about brexit. have a good time. [reporter chatter] and epically short press

conference between boris johnson and the eu's jean-claude juncker. they did speak in brussels. they said we have a deal, any deal is a good deal. jean-claude juncker said brexit makes me sad, what i am happy with the deal. johnson said this does mean the u.k. will leave the eu on october 31, and this deal will deliver a real brexit, and they will decide how they will wind up running the u.k. on their own. juncker says the deal means you do not need a prolongation, and he does the irish border stability. the way it was presented does feel like this say perfect deal. the question will be do others wind up seeing it that way. as you some of the market reaction this morning, you saw a big spike, now we are negative on the cable rates. they did not take any questions,

they set their spiel and then they left. that is where we are at in brussels. joining us now is anna edwards in brussels -- no. not quite yet. we will be going to her in a second. just to reiterate, the press conference we just saw, boris johnson saying we will leave the eu on october 31. this is a real brexit. the deal is fair and reflects hard work. jean-claude juncker saying something similar. my favorite line is "brexit makes me sad but the deal makes me happy." anna edwards is with us now in brussels. we learnanything, did at this press conference? they are presenting a very positive picture. jean-claude juncker, who is leaving his post very soon, he wants to go out as the guy who can do a deal. boris johnson has committed to a

deal by the end of october. it would probably be dead in a ditch than to have to ask for an extension. both men out a lot rising on these negotiations. both men had success, and both of them claiming success and what they have done. the dup, the democratic unionist party that has propped up or is johnson, they only have 10 mps out of 650. they can be influential on others, and also every vote counts when you do not have a majority. boris johnson does not have a majority. now we are facing a situation where the deal will have to get back to the house of commons and face all of those 650 mps and then we'll will know whether the masks set up for this deal. other things to talk about at the moment is whether boris johnson will lead on these leaders to get the message another extension is unlikely, if not possible. boris johnson and jean-claude

juncker seem to be getting along famously in the press conference we saw. alix: they did. it felt like everything is great, rosie, sunshine. this is amazing. this is a great deal. what are you hearing about selling it to others? is the behind the scenes rhetoric as optimistic as what they are putting on? anna: boris johnson was saying this is a real brexit. this is the message he is giving to one side of his party, the diehard brexiteers, or the spartans as they recall themselves. they want a real brexit. they do not want a brexit in name only. he is trying to give that message to them. the more he leans in that direction, the more he is in danger of losing others who might be able to support him within his party or outside. on the other site, he might say this is a real brexit and that my please summon his party. there others who will not like that much.

independent mps have concerns about the future relations document. that is not legally binding. it can be changed. that is where we will see the conversation going. we can see boris johnson try to persuade all of these different factions to back his deal. alix: great reporting. a short and sweet press conference. anna edwards joining us in brussels. we want to highlight what is happening in the markets. some earnings delivering. not as bad as we thought. that is the take away. one of the upper formers is netflix, that stop popping 8% after a better-than-expected third-quarter. for more, we welcome mark boyd men, jp solomon head of media and tech services. he has advised companies including netflix. what i found exciting is the

cyber growth -- their outlook was disappointing and the markets did not care. mark: i think the markets realize there was room for more than just one company in terms of streaming. only 10% of tv screen time is nonlinear programming, meeting over-the-top programming. in terms of linear television, you've broadcast, cable tv. there is a lot of white space. as consumers continue to migrate over-the-top programming, you will see more competition. we do not think it will impact these companies. in other words, there is room for everybody and room for healthy competition. alix: you have advised netflix. in this world where you say there is enough room for competition, how do you advise them to go up against somebody like a disney? mark: disney recently banned netflix from advertising on their platforms. home channels, and

out of home media is one of our favorite channels. world,n the physical elevators, airports. it is incredible opportunity to reach a consumer with the cell phone in their hand. they are in purchase mode. it is also an opportunity to reach them in conversation. they see a screen on their way home and a billboard for a new show. they go home, it is something to talk about. it is relevant. alix: the idea is they drive growth? i see an elevator and i talk with my friend and i say i have to sign up for netflix? mark: where there is a particular show i want to see. that is where the conversations happen. there are so much new content. it is hard to aggravate an audience. you have so much media, people are reaching 5000 messages a mind. how do you break through the clutter? out of home is the perfect channel to do that.

the reason is you stand out. digital screens, netflix is one of the largest out of media home advertisers. they overspend compared to the average company. alix: for a moment the conversation was we want to see profit. when they overspend, does it pay off? is that mentality changing? mark: it is very cost-effective. from a cost standpoint, it is effective to reach a mass audience. also with mobile phones, the attribution in the physical world to know who is where, where they are going next, you can create an algorithm where these media companies know where you are and where you're going. they aggravate that, so do not worry about the creepiness factor. it is all anonymous. alix: thank you so much. i appreciate it. netflix update percent in premarket. coming up, boris johnson has himself a deal with the eu. that is next in today's

technically speaking. we want to highlight other earnings. morgan stanley front and center, up over 3%. union pacific down 3% despite the fact that cfx came in less bad than expected. union pacific not benefiting at all. if you're heading out bench up to get your car, tune into bluebird radio heard across the u.s. on sirius xm channel 119. this is bloomberg. ♪

alix: time for technically speaking. bill maloney, chartered market technician and voice of bloomberg's equity squad joints me now. you can listen to bill on the bloomberg. 200 day moving average, what you see? bill: british pound has been crazy today. 12830 eight,nce which is a retracement level of this entire range, which is 61.8%.

second resistance 12877. 12760, thatsupport, is data back to may. second support rings you to 100 2714. alix: are g10 currencies supposed to look like this? bill: this looks like emerging-market chart. you can see the volatility in one day on brexit. the currency has been all over the place. alix: let's get to morgan stanley. that stop not all of the place. earnings crushed it when it comes to investment banking. where is the first resistance level we need to be watching into the open? bill: the stock is up about 4% in the premarket. the first resistance level you want to look at is 45.75. if we can break above that, second resistance 4775, the april highs.

and if they can't? bill: it is like the rest of the bag. alix: that does it for me on bloomberg daybreak: america. krishnap on "the open" memani will be joining jonathan ferro. it has been a pop located morning in the markets. -- it has been a complicated morning in the markets. you have union pacific on the downside. morgan stanley on the upside. netflix on the upside as well. all of that pushing s&p futures over the 3000 level. the dollar continues to head lower. watch the dollar on the 200 day moving average. this is bloomberg. happy thursday. ♪ everyone uses their phone differently.

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jonathan: coming up, the eu reaching a brexit deal with boris johnson. a deal with parliament remains elusive. wrapping up the big bank earnings on wall street. morgan stanley reporting solid results. ignoring china and a bill supporting hong kong protesters. here is your thursday morning price action. equity futures up 10 points on the s&p 500, positive .33%. treasuries higher by a single basis point to 1.75. on one currency to watch the fx market, cable north of 1.28. that is where we begin, with your big issue. we have a deal. >> is short-term good news. it is not quite a no deal brexit. >> the math is still in the balance, but the incentives for mps