matt: good morning from frankfurt. this is "bloomberg daybreak: europe." nejra: these are today's top stories. standoff. boris johnson wants the general election. jeremy corbyn wants no deal taken off the table. to -- on a brexit extension. china'sce slamming actions against hong kong protesters. he also takes aim at the nba and nike. shares drop in late trading as fast delivery targets profit decline. jeff bezos says it is a long-term decision. in europe, barclays reports.

matt: we have markets sapped in terms of their rally stamina because of amazon's profit. seen int reduction have a couple of years. the reason is one jeff bezos promised he would be delivering since the ipo. they are investing for growth, spending 1.5 billion dollars in order to get customers free one day delivery and market share. nejra: they are certainly delivering on that. that has helped sales, but not delivered as much as investors might want. boris johnson wanting to deliver that election by december 12.

jeremy corbyn has said labor will not back in election unless no deal brexit is taken off the table. if johnson succeeds, he may push brexit through by november 6. the other sticking point is the to know more about an extension at the moment. the eu saying, we need more details about the u.k. election. a little bit of a catch 22. matt: absolutely. it is interesting labor makes both of those demands. no deal off the table and wants to know about the extension is going to get from the eu, but the eu is not going to give an extension until it knows what's going to happen with u.k. politics. you have breaking news. nejra: from signify coming through.

earnings season in full force as well. numbers from intel yesterday giving a bullish signal. third quarter comparable sales are down 5%. the estimate was a drop of 4%. we are coming in worse than estimated on comparable sales. third quarter revenue, 1.5 4 billion euros. also a miss on the estimate. margin as well, 11% versus 11.3 estimated. it is cutting its ebit a margin view. margin atn its ebit a 10 point 6%. it did previously 11% to 13%. we are going to speak to the signify ceo a little bit later this hour. matt: we are also getting breaking earnings headlines from ab inbev.

the bloomberg confirming the full-year forecast and confirming the dividend at $.80 as expected. but giving a third quarter -- giving third-quarter growth that misses. for example, you just sought the bottom of your screen, organic revenue growth up 2.7%. the street was expecting 4.7%. third quarter adjusted debit -- ebitda. the third quarter than expected. ab inbev of confirming its 2019 outlook. looks like it wants to make up for what it missed in q3. kick off with the u.k. story and brexit. boris johnson's bid for an early election has been thrown into doubt after opposition leader jeremy corbyn said his backing depends on the length of a brexit delay granted by the european union. that puts brussels in an awkward

position with officials due to decide on the third extension later today. joining us now is anna edwards in london. in brussels, maria tadeo. anna, great to have you with us. are we heading for an election on december 12? we are expecting mps to vote for it monday. >> indeed. good morning. whether we actually get there is a big question. you talked about the catch-22 situation. boris johnson does not have the power to call this election alone. he needs two thirds of mps to back him, which is why the start of the labour party, the opposition party, matters. they are dependent on the eu. the eu is dependent on the decisions labor makes. a catch 22. british political doom loop. of view. two points boris johnson and jeremy corbyn. you can say boris johnson needs to do something. he wants to bring an end to this nightmare.

unfavorably, you can say isn't he just trying to distract from the fact he's not going to deliver brexit by october 31? he said so many times that would be the thing he would deliver, do or die. from jeremy corbyn's perspective, you can say there is no deal on the table. the eu has not extended. you are looking less favorably, maybe he is frightened of the polling. what about -- the possibility of a no deal brexit, does that come closer if there is no agreement on holding election? then europe won't make an agreement on extending brexit. >> it depends very much on what europe says. on what kind of duration of extension we get, how flexible that is going to be , how responsive that is going to be, to u.k. political development. boris johnson is nervous if he gets an extension until the end of january, we heard this this

week from his conservative party colleagues, the opposition will talk and there will be decision-making. we will get up again against a deadline. these no deal threats or cliff edges just keep coming. that still remains an issue for markets. in the meantime we wait to see what the eu says. the u.k. government could get through an election. strange thing to do perhaps. it looks as if we might be running out of time. the opposition could try and change the date. that requires a majority rather than two thirds. may be easier, but there are headwinds everywhere. maria, does a potential election change the timing of the eu decision on an extension in terms of when they might decide it, but also change the potential length of the extension? what is the thinking?

>> it does. the europeans have made it clear they hate to be seen as interfering or being dragged into u.k. politics. they feel anything they decide will be seen as either trying to stop the election or helping boris johnson get the election. it is a tricky situation for european investors who were supposed to come up with a decision on the extension. the two-tier extension that is gaining momentum, essentially what you look at is a short extension that will be due mid november. this is something emmanuel macron has been pushing for to try to ratify the deal quickly. if that is not possible, the second part of the extension would kick in all the way to the end of january 2020. u.k. is a sense today politics will make this difficult. we may not get an answer today.

an emergency summit. thank you so much. joining us for the hour is the head of you can european rate strategy at ubs. john, welcome to the show. you always come on for the brexit drama. we timed it perfectly. sterling is not moving much today. i'm guessing trade is in wait and see mode. you think we are going to get an election by december 12? john: we seem to be inevitably heading toward an election, whether it is december 12, we will have to wait and see. the more you think about new dynamics inducted into the process, you end up thinking this has to lead to an election. there's obviously political imperative for the opposition party not to be seen to be pushed into something they have not necessarily wanted to agree to, but the more you think about an extension and what you do during that extension and how that comes across domestically in terms of presentational aspects, the more you think

election is going to be needed to break a deadlock. matt: how does that calculate into your investment decisions in terms of rates? we are being led by what the opinion polls are telling us. they have been moving around. they are telling us the conservatives are having a sizable lead. it is not of the scale the u.k. system you would say in any way guarantees a majority, especially in the unusual brexit dynamics making productions more complicated than usual. the assumption from those polls taken at face value has to be they would be the largest party. we need clarity. that's the bottom line. an election is needed to break the stalemate in parliament if that ends up with conservatives controlling the next government, we expect the u.k. to leave with a deal at the end of the

forthcoming extension. nejra: if the u.k. dudley with a deal, what does that mean for the bank of england? i understand you don't see rate hikes even in that scenario. why is that? >> if you listen to the way their narrative has developed, if you go back six months, they withsaid if this proceeds an orderly transition, we would expect rising rates. they have dialed down on that. we have a weaker backdrop and evidence growing in the u.k. that the momentum in the labour party is starting to fade. you will get a period of relief. brexit is headed, you see sterling rally, you see rates move up. ,fter short-term relief companies, investors, consumers, will have to focus on the fact we are in a transition period and uncertainty remains in place. against this week global backdrop, we see using, and the bank of england, deal or no

deal, is going to be cutting rates within the coming months. matt: will your colleagues continue to choose london as their number one hub to live from which to trade it to work? does the city remain supreme? >> that is one of the sorts of questions, and that is exactly what is going to give us uncertainty on going beyond this article 50 period when we are going to transition. the obvious answer is nobody knows. the conversation about the future longer-term relationship which will affect things like where companies operate from, what access they have to the european union, what sort of tariffs potentially are in place, what sort of nontariff barriers there are, these are questions that remain open even if we get the current deal. we are just talking as the saying goes about the divorce. we are not talking about that future relationship. the answer is nobody knows, and

that's why investors are going to stay confused even if we get clarity on the current process. nejra: what does that mean for the yield curve? ilt curve? john: we see a parallel move in yields. in periods of concern because of hayes -- because of safe havens. is all pretty relative. the u.k. already has rates so low and there is an understanding that negative rates are not on the table for the u.k.. there's only so much room by which rates can fall. relatively minor decline in historical context. typically, if you're going to any sort of brexit, the curve will tend to steepen up. matt: we are going to keep you with us. our guest cohost for the hour. let's get the blue bird first

word news. for that we go to selina wang. had u.s. president mike pence -- vice president -- criticizing china's actions against protesters, calling for greater engagement between the world's two biggest economies. , pensng in washington told demonstrators in hong kong, we stand with you. an example of what can happen if china embraces liberty, and years,r the last few beijing has increased its interventions in hong kong, engaged in actions to curtail the rights and liberties of its people. >> an indonesian investigation into the fatal air crash that found scores of problems from boeing design flaws to failures of u.s. regulators.

one area of focus is a flight jetrol feature in which the has already been implicated in the crash in march. it was boeing's best-selling plane. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. coming up on bloomberg, barclays reports third-quarter earnings. we speak to the ceo jes staley. next, we speak to the ceo of signify. that is after their third quarter earnings missed estimates. when you're traveling to work, tune into bloomberg radio live on your mobile device or dab digital radio in the london area. area.

matt: this is "bloomberg daybreak: europe." nejra: let's get back to our

carryhost, john wraith to on the conversation earlier. eu as waiting on the boris johnson has called for a u.k. general election. how crucial is the length of the extension for sterling traders? >> absolutely crucial. this really matters. the speculation there has been about an extension of just a few weeks, which the french president wants, that does not seem to work to us given this information about the possible election. the logic,k about where that to be the offered extension, presumably the labour party would turn around and say, that does not take no deal off the table. said ife minister has you do not accept the general election, we are not going to talk about this bill anymore.

labor will not get the criteria they need. by definition, that new short extension will run out of time before the deal goes through. inevitable us almost the end of january will be will regret -- where we get the new extension to and labor will have to say whether that takes no deal off the table. if it does, we are in for the general election. if you have not got a deal by the end of january, of course you are going to get another extension, can you use any kind of bluff? in request for a shorter extension or a request to the brexit deadline is a buying opportunity since you know the eu is not going to push the u.k. out without a deal? that is our assumption. if this goes on indefinitely, the extensions are not going to be granted and no deal becomes a

reality. our assumption is the reason for this proposed short delay is to force the issue and get a deal over the line. now givent can happen what the prime minister said yesterday, which is why we need this longer one. the critical can set -- the quitter quest -- the critical question is if we get an extension, now we are ready for an election, or do they say no deal can still happen, it's just in a few months time, so we are still not ready. that is where the indefinite rolling over comes from. the only way of categorically taking no deal off the table is resending article 50 notification of your intention to leave the european union. that is just not something we are going to see. this debate will roll on. if you get the extension to the end of january, that will meet the criteria the labour party has set for setting an election

and that is what we will be focusing on the next couple of months. matt: you are going to stick with us. john wraith is our guest cohost for the hour. we are going to talk lighting because signify has cut its full-year adjusted bit a margin forecast. said sales in the second half were impacted by continuing deteriorated market conditions. this just after a big acquisition. lat,ing us now is eric rondo ceo of signify. let me ask you about the acquisition. if these market conditions are deteriorating, why spend 1.4 billion dollars in another -- in that looks pretty the u.s.? >> first, highlights on the results. we have confirmed signify will improve its operating margins for the full year.

is slightly less than what we had because of challenging market conditions. when you look at q3, the part that has to grow is growing by 1%. improving byurther 80 basis points. we have a connected 3 million. a percentage of what we sell is now let. 220 million of cash flow. acquisition because of what happens in the quarter were the semester. you do acquisition because it is fundamentally strategy for the company. it is a clear strategic fit and there is -- it is essential to any deal for us. some of the criticism is

that is not necessarily good timing, but also the price may have been too high. what is your response to that? >> first, we looked at the industry in general. when you look at that in the past four years, 22% of corporate assets in the light industry have changed hands. we wanted to do that. let me tell you why. first of all, it is a clear strategic fit for us. they are complement three when it comes to the offers. company,ading lighting it is the biggest and most progressive market in the world. objectives,trategic this is the most progressive when it comes to lighting. it puts us in the biggest and fastest growing market.

it is creating a substantial value. let me give you a few numbers. -- toect it to look deliver synergy in the first three years. mid 20's later. ,hen we look at the transaction in the first year, all these elements are conducive to that deal. you say you see deteriorating market conditions right now. you're talking about the outlook for the quarter or the semester. what do you see for 2020? how does the global economy look to signify? >> it is already complicated sometimes to know what is going to happen two or three quarters ahead. a year ahead, you need a crystal ball. we have been experiencing a

slowdown in china. u.s..not the case in the we have slowdown in europe in the past year. we have liquidity tightening in india. has had an impact for us. to faceless, we have the economy in front of us, but we are continuing to innovate. imagine, dvds, movie content, gaming, all this content you may have in your living room. great to have you with us. thank you for your time. coming up, mike pence criticizes

china over hong kong, offers an olive branch on engagement. what it means for ongoing trade talks, next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." you: we want to bring another exclusive interview right now. a softer economic environment is to blame for a full year revenue growth forecast lower at the end of expectations. the french itn consulting giant sees growth of 5.5%. joining us from paris is the -- we arechief hearing more and more companies cut forecast expecting tighter margins, seeing sales dropped

due to the economic environment. are we headed for a recession? >> good morning. achieved is we have a strong achievement. growth in q3. we started seeing around 5.5% growth for the full year 2019. cutting in the economic environment. there is a less variable economic environment it is true in the banking sector. we also see some sign of certitude round brexit in the u.k.. at the end of the year, which explains the fact that we are theat the bottom end of

revenue growth guidance of early february. you have talked about some challenges in the banking sector and a wait and see attitude on brexit. how are you offsetting those challenges then? you are seeing a softer economic environment as you say. how are you offsetting challenges? what we have seen at the end of the year is specific. it is tightening of the budget at year-end. that would be in the banking sector. u.k. because of the brexit, we seem some wait-and-see attitude. banks need i.t. services for

the production. what we see, it won't last too long. as a matter of fact, there is softness that -- on the banking sector, i.t. services. banking sector the only place you are seeing softness? we are seeing a manufacturing slowdown, a contraction in germany. is that the toughest region for you? >> we are strong in europe this quarter and since the beginning of the year. outside the banking sector, we have -- europe indeed. nejra: let's talk about the deal, that acquisition. that's gotten approval from the eu. talk to us about what that's

going to contribute to the business in terms of what you gain from that deal. does that say about the future of mna as well? our officer was compliant with what opened on october 16. there was a suit launched yesterday evening. the process of closing. we are confident on our capacity to close this project, but of -- but we are very confident to be capable to close this project with a share price share and toer

reach the 51 -- 50.1%. matt: how do you see regions outside the u.s.? what is your take on the global growth slowdown? carole: if you look at the third be very it could balance geographical growth. north american growth stands at 3.5%. europe has been very strong. u.k. and ireland growth is at 6.2%. 5.6%. is growing up the rest of europe is over 6% as well. well at aing very

trend of 16.6%. in asia,ady growth pacific, and latin america. thea: what makes you think wait and see mode around brexit might not last longer? day by day we get more uncertainty. we might be heading to an and the on december 12 extension is up in the air. you must be preparing for the uncertainty to continue. all, we aret of prepared for brexit, meaning our operations are delivered either from the u.k. or offshore from india primarily. that means we will not be affected operationally. -- what i have told you is really at the moment, because of the specific environment around brexit, we see some wait-and-see attitude.

the brexit environment will change and we will see more to normal business. nejra: thank you so much for joining us this morning. great to get your thoughts. now to tensions between the u.s. and china. vice president mike pence criticized china's actions against protesters in hong kong last night. >> hong kong is a living example of what can happen if china embraces liberty. years, for the last few beijing has increased its intervention in hong kong and engaged in actions to curtail of itshts and liberties people. the vice president struck a more positive note on trade, urging engagement.

joining us is john wraith. how much more good news are you bracing for on u.s.-china trade for the end of the year? john: not a great deal. the fact tariffs increased last week -- did not get increase, that is good news. question is what happens next. as we move forward into 2020, tariffs already in place, the ones still scheduled to come in, do continue to bite. the u.s. economy slows markedly next year, primarily because of that. that obviously has global implications as well. --t: do you no longer expect does the market no longer expect any real resolution to this? is the u.s.-china trade were just the new paradigm by which we live? >> it is going to ebb and flow. we don't think this is the beginning of the end.

just a relatively good piece of news. we think things will get worse before they get better in terms of the impact of tariffs. us, we are expecting the fed to act next week. that is in no small part due to the impact of this trade war, this ongoing trade war. >> could the fed to zero? i was reading last week something saying if they don't signal it is three and done, we go all the way to zero. john: certainly the tone you will get from the chairman of the fed, this is a midcycle adjustment. they are just talking about a full easing cycle. i think it will take us to 1% by the middle of next year. once you get those rate cuts from where we are today, we think things stabilize as we head into next year. the trade war goes from bad to worse, that can escalate.

you expect four more rate cuts. what about quantitative easing? what about the bond maturity proceed repurchases? how much bigger is that going to make the balance sheet? >> we think it is ongoing. we will see the fed's balance sheet continue to grow. we think that continues to be presented more as a technical adjustment rather than a deliberate part of monetary easing. it is a process that has further to go, but will be decoupled from what they are trying to do with interest rates and addressing the market imbalances over recent weeks in the past couple months. john wraith stays with us.

right now i want to get the bloomberg first word news. >> an indonesian investigation into the fatal air crash has found scores of problems from boeing's design flaws to failures by u.s. regulators and pilot error. one point of focus is a flight control feature which has also been implicated in the ethiopian airlines in march. the findings come as regulators fate ofe except the what was boeing's best-selling plane. the u.s. justice department has opened a criminal investigation into whether president donald trump was spied upon. the federal prosecutor leading the effort has the authority to convene a grand jury to issue subpoenas to compel witnesses to testify. trump has long contended the investigation into russia's election interference was politically motivated. hsbc is embarking on a fresh

round of job cuts targeting employees of the middle east, north africa, and turkey. it is the latest move in the ongoing cost reduction program. we are told the global banking and markets and commercial banking units may bear the brunt in november. softbank planning -- to reflect the plunge in value of its biggest holdings according to people close to the move. we are told a parent of the $100 billion mission fund will make the right town when it announces its second-quarter earnings on november 6. the move is being driven by the holdings in uber and wework. amazon's efforts to get packages from warehouse to doorstep in a single day helps push the retailer to its first quarterly profit decline since 2017. the cost will total some $1.5 billion during the holiday quarter.

the company's projections for fell shortncome and of analyst estimates. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. you talk a little bit there about amazon. i want to pick up on that story. what are the concerning areas in those numbers? where are the pockets of optimism? >> we saw amazon report that first year-over-year quarterly decline since 2017. we also saw the projections for sales and operating income missed analysts estimate. amazon's bigrn is push to shorten the delivery time to one day for amazon prime members. show increasesto in sales, but at a big cost. it's going to cost $1.5 billion in the holiday quarter. on one hand, you have investors

who say this is a short-term cost for a long-term gain. the cfo also making the argument that it is going to become more efficient over time and more profitable. on the other hand, you have investors who are concerned about amazon's spending binge. they are not accustomed to this narrow profit margin after getting used to the bigger profit margin. spots ine some bright advertising services and the services unit. nejra: delivery is not the only place amazon's spending. it is doing that in web services as well. a big focus was placed on amazon web services. what concerned investors there? isamazon web services amazon's cash cow, the most profitable part of the business. we did see that growth rates low to the slowest pace, amazon's target breaking out the financials of this unit. there is concern among

investors, at what point does amazon's reliance on web services as its cash machine slowdown the entire business? we also saw amazon invest heavily in sales and marketing for amazon web services. amazon did have a big leeway in terms of getting a head start for developing its cloud computing business, but now you are seeing google and microsoft pickup and stiffen the competition. the theme is investors concerned about this quarter not just being a one time miss that increased spending is going to continue for several quarters into the future. great to have you with us. we have a red headline breaking on eni. million net at 776 euros, slightly below the estimate. more details on that as they come through. we are busy with earnings season this week. coming up on daybreak europe,

partly as reports third-quarter earnings. we speak to the bank's ceo jes staley. don't miss that after 7:00 a.m. london time. tune in to bloomberg radio on your mobile device or dab digital radio. ♪.

matt: this is "daybreak europe." nejra: global equities are on track to end the week unchanged. the most loved shares were pummeled. dani burger, what are you looking at? >> we are seeing a slow-motion repeat of what we saw in early september. we see the outperform momentum.

the cheaper sox outperforming the most popular. this has to do with rates. both are correlated with the bond market, especially value. is positivity about global growth as well. we are seeing more risky factors like value, leverage, even volatility, in the green this week. according to bank of america, this is likely to continue because what we are seeing is the end of the late cycle, of the downturn, entering an early cycle. there call for the week is to thisto value overgrowth was the most tricky part of the cycle. morgan stanley also note these factors, the correlation is rising, which means there is more volatility to come. they say there's going to be a correction in the momentum and lowball factor. saying we ever core

have this backdrop of a big cyclical rally. trade is looking better from corporate earnings. they say there was risk on factors, volatility, value, that is where you want to be leaning in this market. thank you very much. dani burger talking about the actors to watch. toio draghi has bid farewell his tenure as president of the european central bank. has beenxperience intense, profound, and fascinating. if there is one general thing i am proud of, it is the way my voting council and myself constantly pursued our mandate. this is something we collectively should be very proud of. i always thought there are things that can be done, nothing you can change. you cannot change the past unless you are a historian.

christine knows better than anybody else what to do and what to say. for much of what i'm going to do next, as i said before, just ask my wife. mario draghi leaves the euro area economy looking sluggish. >> the incoming data since the meeting in early september confirm our previous assessment of weakness in euro area growth dynamics. the persistence of prominent downside risk and muted deflation pressures. matt: after eight years in charge, the italian is departing, a time of slower economic growth and depleted ecb monetary alstom are -- arsenal. germany's manufacturing slump is taking a harsher toll on the job market and investors will be watching for signs of contagion in services when the latest

figures hit at 9:00 a.m. london time. john wraith is still with us. did you get anything useful in terms of your investment strategy from draghi yesterday? he does feel that his monetary policy continues to be the right choice confirmed by the pmi's we are getting. john: yesterday was a seminal event. forecast and the outlook for the euro zone, things have not materially changed. we think the euro zone is set to have a difficult time next year. growth is going to slow down further. inflation is going to stay well below where the ecb would like it to be. and hisrd to deny he governing council have done everything in their power to try to correct things and get

longeron backup with ace -- a stronger domestic demand. you cannot fault president draghi. is what is needed he budget tool which mario draghi mentioned yesterday as well? kind of depends what fiscal stimulus you get. if you have stimulus which is aimed as a sugar rush to drive domestic demand, it might have its primary impact in germany. if it is investment based, the impact could be felt more widely. it depends what they do if they do anything. the contention with monetary policy at full accommodation, if you want growth to pick up, if you believe inflation continues below target, the argument of fiscal stimulus is a very powerful one.

when you look ahead to christine lagarde's tenure, do you expect her to continue the same policies or do you expect every kind of new turn? john: we will have to wait and see. there is not a track record in terms of her being a central banker. we need to see what tone she adopt as she moves in. meeting to the next ecb and press conference in early december. it is the same day as the u.k. general election, could be. we think the rate will be cut further. forecasts only go to the end of next year. path isree, the policy going to continue to of all in a similar direction to mr. draghi's. with the assumption you

have outlined of a 10 basis point cut, in the absence of confirmation of fiscal stimulus, your strategy is to keep buying european bonds? manufacturing slowdown might be affecting jobs outlook? john: it goes alongside our treasury call from the middle of next year. this in terms of the euro zone does not assume hard brexit. it does not assume big u.s. tariffs on european carmakers. even on our central scenario, yields go lower before they start to rise again. thank you so much for joining us today. coming up, barclays reports third-quarter earnings. we will speak to the bank's ceo, jes staley. interesting conversation given how strongly his u.s. peers performed, also questions around cost-cutting as well.

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nejra: good morning. i'm nejra che at. matt: i'm a matt miller in frankfurt. this is bloomberg daybreak: europe and these are today's top stories. we have a standoff. jeremy corbyn wants no deal taken off the table and might not want an election. the eu needs to decide on the length of a brexit extension. power forward. mike pence urges engagement in trade while defending liberty and freedom for hong kong

protesters. he also takes aim at nba and nike for kowtowing to china. deal.ckage amazon shares drop in late trading as faster delivery targets spur a quarterly profit decline. jeff bezos says it is a long-term investment decision. in europe, gearing up to speak with jes staley as we wait for bart staley's -- barclays results to come across the wire. nejra: welcome to "daybreak europe." we have exciting news from barclays, breaking on the bloomberg. third quarter civ revenue comes in at 2.62 pounds. that is a strong beat in the

estimate. what barclays does say importantly is that it has become more challenging to achieve the return on tangible equity targets. this is one of the key focuses last quarter that investors are looking to this quarter, as well. they say they are continuing to see and more than 9% return on tangible equity for 2019 and more than 10% for 2020. interesting to see how jes staley says they are going to achieve that. revised. that begs questions about capital return. the cost guidance remains unchanged. last quarter, we saw them say they would get costs down below the lower end of the guidance. more questions around that in terms of how they will achieve that. more details around the other numbers, the third quarter civ

adjusted pretax comes in at 886 million pounds, a strong beat in the estimate of 714 million pounds. again, i said that the revenue came in at a beat of 2.6 2 billion. the other headline is that it is more challenging to achieve the profitability targets. the ratio was revived after talks -- revised after talks with regulators on risks. there is also a blog that we will run through. we speak to jes staley coming up shortly. even more numbers coming through from some other companies in this earnings season. we are seeing wpp come through right now. third quarter comparable organic sales beating estimates. the full-year view is reiterated. barclays full-year guidance is reiterated. i think this is very important

because we heard from cap gemini earlier and now we are hearing from wpp. when you are watching and economy speeding up, some of the things you want to look at our advertising spend, marketing, i.t. spend, these are the things that companies would typically cut back on if they are worried about the outlook. they are a great indicator of where the economy is headed, but wpp has sales that beat estimates as long as analysts did not bring their estimates down too much going into this. very interesting stuff. now, let's get to the most interesting stuff, which is brexit. boris johnson's bid for an early election has been thrown into doubt after opposition leader backingorbyn said his

depends on taking and no deal brexit off the table and also depends on the length of a brexit delay given by the european union. that puts brussels in an awkward position. they don't necessarily want to be making decisions that affect internal domestic u.k. politics. give theirwant to delay, that is a catch 22 now. it also puts jeremy corbyn in an awkward position. polls are showing the labour party would have a difficult time winning that election. joining us now is the fixed income portfolio manager at marion global investors. let me ask you first off, what market take on the effects of the latest brexit standoff delay news that we got? >> yes, i think it is interesting.

i suppose initially when he lost the election push, downing came off, maybe that reaction would fade, particularly of boris johnson campaigned on a no deal. in terms of whether we have an election, i think there is probably more chance of that than people are thinking. if you think about why labour party is pulling badly, it has because -- been because brexit is falling apart. our has the lib dems on the left taking votes away from them. i think labour would like to look -- put brexit behind them. to be gettingem any better anyway. as they look at 2017, maybe are hoping for this jeremy corbyn bounce. nejra: what does that do to sterling? nick: initially, the market reaction kind of told you that

people will just sell sterling. i think perhaps that is short-lived. when you see the manifestoes , thethe conservative party deals from the eu, i think sterling would resume its bounce. matt: what do you think this means for the economy? how much does it muddy the outlook for businesses? the outlook is pretty muddied already because people don't know what this future relationship will be. i guess this does not resolve that, but it does help us get some clarity. carneylook at what mark says about the u.k. economy and why it has been so weak, it is because capex has been falling off a cliff. businesses don't want to invest. china-u.s. trade talks.

the uncertainty in britain. they are sitting on their hands. if they have some clarity on what the future outlook would look like, perhaps you see this pent up money in doing ok -- in capex doing ok. nejra: let's look at the global growth picture. generally, you are shorting the dollar right now. is that because you expect there to be a better outlook for global growth if you take the view that the dollar has been acting as a safe haven? it is still uncertain. i think everyone is quite pessimistic about global growth. tradesre perhaps some taking the other side of that. clearing ofe some events. given the vice president mike -- there would

like to be a trade truce going in. it could improve. the big thing for us has been that the u.s. has caught up with the rest of the world. the u.s. exceptionalism really crushed global growth. two thirds of the world's liabilities are in dollars. it does kind of lubricate the wheels of global trade. now that central banks are starting to cut rates, a bit more confident. what kind of returns have you been able to achieve in this environment and what kind of upside can you expect going forward? it has been a strong year

for global bonds. that has been been driven by a stronger dollar. think in this kind of market, you just have to stay very flexible. in terms of our absolute return portfolios, we have a reasonable short now. you look at the flows. you have seen massive inflows into global government bonds. i think people are a lot longer bonds than they were a year or two ago. it has a lot of european central banks, doing more qe, there is a widespread acknowledgment that they are suffering from reversal rates. i do feel we have reached a level in the european central bank rates.

that can help yields to the upside. thank you so much. coming up, barclays recorded earnings that beat estimates on ci be revenue and adjusted tax. we will speak about those results on the outlook amid brexit. don't miss that conversation next. tune into bloomberg radio live in your mobile device or on digital radio and the london area. is bloomberg. ♪

is 8:14 here in frankfurt. 7:14 in london. this is bloomberg. i'm matt miller here in frankfurt. nejra: i'm in london. we still have nick wall with us.

matt: yes, nick, i wonder what you take from the bad pmi numbers out of germany. likertainly does not seem it will be a fantastic surprise to the upside. is germany in a recession or headed toward a recession? nick: i think you could argue strongly that they are in recession. unless there is a sea change in terms of government willingness to increase fiscal deficits meaningfully, than they are really relying on growth to come externally. until you have that in the u.s.-china situation, until businesses feel confident enough , it is hard toex see really what drives the until you getmy

that kind of resumption in global growth. thank you so much. barclays has just reported third-quarter revenue and adjusted pretax profits ahead of analyst estimates. the british bank says it faces a challenge to receive -- retrieve the returns. let's speak to the berkeley ceo, jes staley, who joins us right now. good morning and great to have you on the show. thank you for your time, as always. you have said it is going to be more challenging to achieve for 2019 and 2020 profitability targets, but you kept the targets. can you square that circle? jes: our return on tangible equity in the third quarter was in double-digit set 10.2%. in six of the last seven quarters we have generated a return above 9%. i think we still feel pretty

good about the 9% target for 2019. i think what we are bringing up is when you are looking into 2020, you have the macro , where int in the u.k. think economic growth is somewhat muted. if we continue with the uncertainty of brexit, i think one has to think that you will continue to have soft growth in the u.k., but also we have lower interest rates. the lower interest rate environment puts pressure on a bank's net interest margin and on the profitability of its deposit base. so, given the current interest-rate view across europe and the u.k. and the u.s. and if we have economic softness, we need to put some caution against the 10% target for 2020, but we still maintain that target for now. matt: what do you expect in terms of brexit right now? would you welcome and election in the sense that it could put

an end to all of this uncertainty? what we said what, over the last couple days and weeks, what we are hoping for is an end to the uncertainty. i'm not going to make a position from the bank, whether it is this type of deal or that type of deal, but getting uncertainty behind us and allowing the financial system to begin to execute with an idea of what the future is going to look like, i do think that is important for the country. i do think the one vote in parliament that voted in favor of a deal with the european , we have uncertainty now, it may lead to a general election. we will have to see how that plays out. nejra: so, the uncertainty around brexit, you have been saying that u.k. consumers have been moving to cash amid the

uncertainty, but that u.k. credit is benign despite some of the brexit headwinds. what about the global credit cycle? do you get the sense that is starting to turn? jes: not yet. i think the level of overall debt, whether it is sovereign debt or corporate debt, we need to keep an eye on it. you have trillions of dollars of sovereign debt. that is going to take the pressure off the credit markets. we have to recognize that unemployment is quite low. ever reallyr market did deliver inflation and we started to move in interest rates, the lever of -- level of overall debt would be quite difficult to manage. low, withloyment

inflation low end interest rates low, credit markets can appear on the surface to be pretty benign and that is what we are seeing. matt: how do you like your leverage loan business right now? are at leasts increasingly concerned about getting hung out to dry with the loans they cannot get rid of? jes: we very much like the team that manages. they have had a very good year. i would characterize the this way -- if you have a solidly structured deal, the market is receptive. there is liquidity out there, there is a lot of funding available for the leverage finance market. if you have a deal not the market can be pretty punishing at the bottom end. it is a market you have to have your eyes open to.

you can still get strong deals done. we are very comfortable with our performance in the third quarter, but a couple of idiosyncratic deals have moved people's eyes. it is not a free time -- free ride right now. how are you doing versus u.s. peers? jes: you know, we are very pleased with markets' performance. up 13% year-over-year, i think we looked quite good compared to the u.s. peers. we will see how our european peers do. sharetinue to gain market . we had a very good quarter in terms of investment banking fees. up 24% year-over-year. getting capital markets and equity cap markets, the strongest third quarter in the history of the bank, so we are

theng progress and we like diversification it gives us. we like to see it is very heavily weighted to the u.s. it delivered quite a strong quarter for us. matt: the ci be revenue was much better than expected. if you had to look at one unit, when you wake up in the morning, which opportunity and the investment bank do you really get excited about? what do you think is the best opportunity for barclays in this environment? think the characteristic about when iest look at the investment bank is that we are across all asset classes in all markets. i don't think you can pick and choose a vertical in an investment bank.

you need a full range of clients. you need to offer your corporate clients a full range of advice -- services. i think we do that. we have a bold bracket investment banking position in new york and in europe. the two deepest capital markets in the world. i think we are really a strong european alternative to the u.s. banks. i feel quite comfortable we can compete with them. i like how we are positioned and the growth of our business model. nejra: can you give us an update on cost cuts? we understand today that you are still targeting those cost cuts below the lower end of the range. how are you expecting to achieve that? you look at the run rate cost basis, we are well on our way to delivering 13 point 6 billion pounds of cost for the year. that was the low end of our range.

so long as we maintain the profitability of around 9%, we are very interested in taking our efficiency gains and cost reductions and reinvesting them in the business. we got voted the number one mobile banking app in the u.k. and we have a .5 million consumers who go on that each day. we have been rolling out new algorithms. we have the new corporate banking platform. that is all investing in technology to take the bank forward. we like the cost basis here and i think we want to invest in the cost savings so we can grow the top line. what we did in the third quarter, which beat the street estimates is really in the top line revenue. i don't want to surprise profitability, but i would like to surprise profitability by growing the bank.

matt: yes, i wonder what your take is in market share, especially in europe because u.s. competitors continue to report they are taking market share. the bank behind me is in a position where it needs to cut cost more than its competitors. are you in a position to take some of that share that is being left on the table? jes: one of the things we keep an ion is the prime brokerage business, the connection of the bank to financing hedge funds, mutual funds, etc. our prime balances for equities is over 20% year-over-year and our prime balances for credit is up over 70% year-over-year. we are gaining share in the prime brokerage business. that leads to more trading. i think we are doing quite well and quite competitively against u.s. firms. nejra: if trading remains solid

and the rally in the pound holds, of course there is a lot with brexit to do with that, what is the guidance for bonuses? you know, it is very important that we deliver a good level of moffett ability. had a third quarter over 9%. we want to pay competitively. i think everyone in the corporate and investment bank recognizes that we have an obligation to shareholders to deliver a comfortable level of profitability and that is what we will do. matt: thank you so much for your time. jes staley is the ceo of barclays. coming out with revenue that beats expectations and coming out with cost cuts and a forecast for cost cuts below the lower end of its previous forecast. that is it for "bloomberg daybreak: europe it has been a pleasure working with you this hour.

nejra: of course, you carry on with the european open up next. lots more to talk about in terms of earnings. tune into bloomberg radio live on your mobile device and in digital in london area. this is bloomberg. ♪

anna: welcome to "bloomberg markets: european open." i'm anna edwards alongside matt miller, who was once again in frankfurt. over investment. stocks in asia trade mixed as weak amazon earnings keep a lid on positive sentiment. the cash trade is less than 30 minutes away. anna: the