nejra: boris johnson's brexit debate is thrown into doubt as jeremy corbyn demands no deal is ruled out first. amazon shares drop as shipping target force a quarterly decline. barclays conference its profit targets but the ceo warns that 2020 could have roadblocks. given at the current interest rate view across europe and the we. and now in the u.s., need to put some caution against a 10% target.

♪ nejra: welcome to "bloomberg surveillance." let's get a check on the markets. moving to the downside for european equities. we did open flat. numbers in terms of october german business confidence coming at at 94.6. the estimate was 94.5. so business confidence is slightly better than expected. the euro trading up ever so slightly after some declines yesterday. nasdaq futures on the front foot , the not going anywhere to strong on futures. -- stocks bit.ly the game did lead the game. we saw the move in after hours.

coming up, we speak to the ceo of electrolux. don't miss that interview about first of the day in around 10 minutes time. here is the first word news in new york. mike pence criticized china's actions against protesters in hong kong. he is calling for greater engagement between the worlds two biggest economies. pence told them traders in hong .ong quote we stand with you >> hong kong is a living example of what can happen when china embraces liberty. for the last two years beijing has increased intervention in hong kong and engage in actions to curtail the rights and liberties of its people. >> the justice department reportedly opened a criminal investigation into illegal

spying on president donald trump. durham is the leading investigator. thep has long affirmed investigation is politically motivated. largestn the world's brewer slumped after ab inbev reported a drop in beer shipments. it caused profit growth to stumble. they are the asia-pacific unit partially spun off and its performance is weighing on the parent company. earnings were flat on an adjusted basis. in missed estimates for 3% growth. -- it missed estimates for 3% growth. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. rough -- nejra? nejra: with six days before the u.k. leaves the eu, we have not reached a breakthrough on brexit.

boris johnson has called for a general election, but does he have the votes to get his way? jeremy corbyn says his backing depends on the length of a brexit delay granted by the european union. that puts brussels in an awkward position. bloomberg understands they are planning to delay the position to avoid getting caught up in westminster politics. maria tadeo joins us now. is that eu going to satisfy jeremy corbyn's demand in terms of taking no deal brexit off the table? >> good morning. at this point, the one thing officials will tell you is they don't want to answer that question. simply because they do not want to be dragged into u.k. politics. they believe any decision that they can make will be delayed and we won't hear from ambassadors today. it could be seen as trying to stop the election or trying to

help the prime minister get the election. they made us very clear many times. they don't want to become up in the internal dynamics of the united kingdom. in terms of the extension, there's a number of ideas that have been floated and those one in particular. the two-tier extension gaining momentum and that is to say two different set of deadlines. , if there's an election or the deal is not ratified, then the second part of the extension would kick in at the end of january. it would satisfy the three months the united kingdom asked in principle. for the time being, this is something europeans want to because just about. they want -- want to be cautious about going forward. nejra: thank you. for joining us is the head of equity strategy at wells fargo. welcome to the show, great to see you. we were just chatting on radio and he said you look for value in the equity market. are you seeing value in equity

stocks? chris: we are seeing value in the u.s. and european market. it is selective value. we are not of the opinion there will be this great rotation but we do think select value opportunities are going to arrive. we are finding that in financials and the banking space. for the most part, what we think is many investors were too far into the global recession. now that we are having earnings coming out what we are seeing is value stocks performing well and numbers better than expected. nejra: with the u.k., are you waiting or already putting money to work in certain parts of the market? you mentioned financials, are you looking at financials or other sectors that might be of value? christopher: we are looking at european financials. it has been our opinion that what might happen if u.s. bank

start to perform that european banks would start to follow suit. to a certain degree, we're seeing that transpire. we are finding value throughout the world and we look to europe for not just banks and financials but other sectors. again, it is selective. nejra: let's talk about tech. amazon's efforts to get packages from warehouses to doorsteps helped push the retail giant to its first profit decline. the cost will total some $1.5 billion during the holiday quarter. shares slumped in extended trading. whofferent story for intel, gave upbeat sales and improved forecasts after improved demand for semi conductors and cloud computing data centers. where are your preferences? christopher: we came in overweight on software.

we downgraded later and upgraded semi-'s. valuation looks attractive. sentiment is rather poor. the numbers have come down and there is opportunity. the stocks have worked or are working, but when we look at software, it's not that we dislike that there are better opportunities elsewhere. nejra: some i conductors you like at the moment. in terms of software, what would make you jump back in? when you look at the potential for cloud, some might say this is an area to get into. if a lot of people think that the valuation is not likely to come down. run a model we do portfolio and we have software names. one of the things we have been recommending is what you have to be careful of is stocks where there is growth at any price. where valuation just is not there.

where it is very much a momentum play. so we see more of a consolidation in the software space and the numbers have been relatively good. do isnow, what we want to add clients to add more cyclicality to the portfolio. nejra: adding more cyclicality. ngs? about the fangs -- faa christopher: other than software -- excuse me, other than semiconductors, we are just ok there. what we are looking for his qualities at the right price and growth at the right price. if you can find that in some of the names, if you have valuations that are exceptionally high but we don't think that is a great reward. nejra: semi conductors are fairly dependent on cyclicality. if we don't get more positive news on trade and the global slowdown gets worse, what do you

do with that position? if that occurs, you would expect software names to underperform. we don't believe that to betrayal. what -- be true. when we have maintained was this was a late 2019 issue. donald trump needs trade and tariff to start to work and has to roll into 2020 with a u.s. economy in the better shape -- in a better shape. both sides are coming together. it may not be a great deal and we may just agree to smaller parts, but what we need is more certainty. what we have seen in earnings season and with clients is the issue of uncertainty. if we get some sort of roadmap, things can work as we go forward. nejra: chris harvey from wells fargo stays with us. coming up, we speak to the ceo of electrolux jonas emmy rossum -- samuelsson. this is bloomberg. ♪

nejra: economics, finance, politics, this is "bloomberg surveillance." electrolux shares are rising after third-quarter profits topped analyst estimates. europe's largest appliance maker said it will continue to raise prices to do with adverse currency effects, rock costs, and trade tariffs. the ceo jonas samuelson joins us on the phone. will get into the numbers in just a moment, but first i want to ask if you are seeing signs that the global slowdown is impacting demand for appliances. jonas: actually come in most of our big markets that we saw favorable demand year-over-year.

on the horizon in terms of the macro developments. but at the same time, interest rates are low. house prices are supportive, unemployment is low. so some of the core drivers of demand remained quite some of course, we take account of consumer confidence and things like that, but so far that has been mitigated by strong trends. nejra: the report does look pretty strong. the main positive being latin america. how sustainable is the improvement in how sustainable our numbers like this? jonas: in latin america, our biggest business is in brazil. , of course it is a relatively volatile environment generally, but we are seeing low inflation and interest rates.

we are seeing negative currency headwinds tensed offset that a bit. but you have to remember, we are coming from a weak market over the last several years. so there is significant pent-up demand. difficulty onnt the macro side, there is pent-up demand, particularly in brazil. we are concerned about developments in chile and peru and so on. that is less the negative. nejra: you have been able to offset rising costs. but in terms of reaching your target of 6% operating margins, when do you expect that to happen? jonas: we are clear that is an achievable target. all parts of our businesses should be able to operate at that level. where we still have work to do is in north america. we are investing heavily in our manufacturing infrastructure and new products. that still has a couple of years

to go until we are fully ramped up. the other big business is the one we have talked about, latin america. other parts of the business are there or above. we need ton america, and expect to see market demand to come back to more historic levels. nejra: if we see the global slowdown accelerating, how are you preparing for that? what changes might you have to make to offset it? jonas: we are right in the middle of a big streamlining initiative. both in terms of planning for a separation of our professional and consumer businesses and working hard to streamline and make those both faster and more agile. that is making good progress. at the same time, we are investing heavily in automation and modernization of manufacturing.

we are in the middle of a significant deficiency -- efficiency transformation. that is well-timed to meet any demand weaknesses that might come. nejra: it sounds like a combination of efficiency, cost cuts, and investing. in terms of passing on costs to consumers if you do have any more rising costs from ramin materials, the to pass one to plan costs at the same time the global economy is slowing? jonas: our experience and track record shows there is a lag between cost changes and prices but we have consistently shown that we are able to pass on additional costs. it impacts all industry players so it is a relatively even playing field in terms of that cost developed. nejra: jonas samuelson, great to catch up.

the ceo of electrolux joining us on the phone. up next, we speak to the president of the ifo institute about the strength of the german economy. that discussion next. this is bloomberg. ♪

>> the risks surrounding the euro area of growth outlook remain on the downside.

in particular, these risks pertain to the prolonged presence of uncertainties related to geopolitical factors, rising protectionism, and vulnerabilities in emerging markets. nejra: that was mario draghi speaking yesterday after his final meeting as ecb president. german business confidence stabilized in october, suggesting europe's largest economy may be over the worst of its slump. the ifo report is the latest encouraging news after employment fell as -- at the fastest point in 12 years. joining us is the president of the institution, clemens fuest. are we seeing a light at the end of the tunnel? clemens: good morning, it looks like we are. we see a stabilization of the index for the second month.

and most importantly about an improvement in manufacturing, a key sector for the german economy. shrinkinging is still but the speed has slowed down so we do see a stabilization. nejra: what is driving that improvement? clemens: well, it is difficult to say. we are in a situation where other sectors of the economy are stable. domestic demand is strong. and then some things have improved slightly. there is less fear of a hard brexit. it is still chaotic, but it seems both sides are ready to get to a deal and that does make a difference. there has been no recent bad news from the trade war front, apart from the tariffs in , bution to other subsidies that is wto compatible. down,ade war is coming

the climbing probability of hard brexit, i would say that plays a role -- declining probability of hard brexit, i would say that plays a role. despite what you've just told us, there were concerns about manufacturing impacting employment in the sector. are you concerned given that you are starting to see a stabilization at the moment? clemens: it is a reaction to the slump we have seen in recent months. it is clear companies needed to react and will reduce a new hiring and cut employment -- red uce new hiring and cut employment. i expect manufacturing will stabilize soon. it is too early to say, but we do have a stabilization. nejra: does german business, and you yourself, expect fiscal stimulus from the german government anytime soon? clemens: no.

we need to understand there is fiscal stimulus even if it is not big enough for some. policy has been expansionary for two years now in germany. the stimulus is not large, but it is better. massive fin -- fiscal stimulus would be there in a downturn but we are expecting the economy to stabilize next year. so these demands for big fiscal stimulus and ecb monetary stimulus is a bit like using a sledgehammer to crack and -- an egg. nejra: you don't think more fiscal stimulus is needed is fairly -- needed necessarily? clemens: as i said. policy is expansionary and we should spare further action for the case that the downturn returns and gets stronger. in that case, things would be different for but currently there is no reason for big stimulus. nejra: could you comment on the

new addition to the ecb governing council. any thoughts about that appointment? schnabel is al very confident expert. she generally supports policy of the ecb but with a certain distance. i think she is critical of the last moves towards more expansionary policies so i think she is a competent candidate and i wish her good luck. nejra: clemens fuest, thank you so much for joining us today and giving us your time, president of the ifo estimate. are clays beat estimates but warns of a challenging 2020. we bring you our interview with the ceo. this is bloomberg. ♪

election, bid for the

and jeremy corbyn demands a no deal brexit out first. and faster shipping targets for a costly profit klein and challenges ahead, please confirms that 20 profit target but ceo jes staley warns of a tough 2020. >> given the current view across the europe and the u.k. and the u.s. as well and if we have economic softness, some caution against him percent target for 2020. let's check in on the biggest stock markers. there's a lot of movers to dig through today, caring to the upside, more than eight and a half percent even though sales slowed, they beat expectations, and crucially the company saying any sales they have lost out on an hong kong they were able to make up.

upside, in ahe surprise rise in sales in the third quarter. they are winning a lot more business in the u.k. than western europe, but not having such a good day, ab invev, they cut their full-year guidance and really, they have seen a decline in shipments and one thing i --ught was interesting, billion inut 20 market value, and keybank so much. let's go to viviano. jeremy corbyn said his backing depends on the length of a brexit delay granted by the european union. bloomberg understands the e.u. is now planning to delay its decision on an extension to avoid getting caught up in westminster politics. here in the u.s., mike pence

criticizing actions against protesters and hong kong and calling for greater engagement between the two biggest economies. he told hong kong demonstrators, we stand with you. scores of problems revealed by an and is asian -- indonesian investigation. one major point of focus, a flight control feature in the 737 max has also been implicated in some crashes in march. in the u.s. reportedly opened a criminal investigation into illegal fine on president trump. the investigator now has the authority to convene a grand jury and compel witnesses to testify. trump has long confirmed the investigation is politically motivated.

a fresh round of job cuts starting in november, hundreds of employees in the middle east and turkey are being targeted we are told the global banking market and commercial banking unit may bear the brunt of the reduction. this is the latest move in the cost reduction program in the region. hsbc employs more than nine and have thousand staff. local news 24 hours a day on air andn tictoc and twitter more than 120 countries. this is bloomberg. barclays has warned that no interest rates in britain will make it tougher to meet targets for the next year, even as the traders have outperform in the third quarter. but jes staley spoke to us earlier. >> are returns in the third quarter was double digits at 10.2 percent. in six of the last seven quarters now we have generated a

return on capital over nine percent. we still feel pretty good about the 9% target for 2019. i think what we are bringing up, as you look into 2020, you've got the macro environments and the u.k. where think growth is somewhat muted, and if we continue with the uncertainty of a brexit, one has to think that you will continue to have soft growth in the u.k. but also we have lower interest rates. in the lower interest rate environment, that puts pressure ,n banks in the interest margin so given the current interest rate view across europe and the u.k. now the u.s. as well, and if we have soft nest -- softness, you need to put some caution against the target, but we will maintain it for now. >> what do you expect in terms of brexit right now? inl you welcome an election

the sense that it could put an and to all of this uncertainty? the laste have said in couple of 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 are that type. but getting that behind us and allowing the banking system to execute with an idea of what the future will look like, i think that's important for the country. i think that one vote in parliament, that voted in favor of a deal that the e.u. had also been supportive of, they know it's a good step forward, but we have uncertainty now that it may lead to a general election. we will have to see how that plays out. was jes staley speaking to bloomberg earlier.

chris is still with us. on the basis of anything other than the strong training performance -- >> i think so. you have sentiment that is low. the underlying balance sheets, the earnings are much lower risk than they have been in the past, partially due to regulation. you're getting this lower risk opportunity, but in a cheap wrapper. you don't need to rely on the interest margin and the trading and credit to all be good at once. what we are seeing with this fundamental is the diversification of banks. and also the ability of the banks to power through in difficult environments. i don't think the market is really price for that. nejra: for so long this year we were talking about the fact that low rates will be a concern, all they can do is cut costs. has that just gone away? >> it hasn't gone away, but i

think if you looked at her and quarter, that was one of the worst environments we have seen in a long time. now we are seeing rates are starting to move higher, the fear of global inflation is coming off the table. the curve is steepening the rate environment is better. if these are the numbers they can put out, they could about what they can do in a positive environment. nejra: if the u.s. consumer buckles at the moment, would that change your view? >> absolutely. what we are seeing from the credit, it's still strong, and the consumer is still strong. a lot of people are calling for the end of the consumer. what we see is in the job picture things have peaked, but they're not getting worse. we are in a pretty good spot. if the u.s. consumer starts to buckle, and what we worry about, it's more about a behavioral issue, if the fears from what was a commente

before about uncertainty, but if it gets greater, we can see the consumer start to retrench and that would be a problem. nejra: even if you look at the big six, there are nuances in the business model. i know you can't talk about individual stocks, but what part of the business models are you most positive about? before,lked about this the diversification, not just relying on interest margins, on credit or chatting --trading. it's a combination. if done a good job. their balance sheets, this late in the cycle, there usually upside down. they are rather attractive at this point. this activity has not been very high, so a lot of the m&a activity happens at the end of the cycle. it's not always economic the other thing, not only have they managed their balance sheet, but they have balanced their stock

price and how they compensate investors. nejra: i get that. when you talk about balance sheets, this is what i hear from credit investors, you are an equity investor. talk to me about why then you would be so positive on european banks because you see value there. >> when we look at them, it's high risk, high reward, a lot of value in that space. they are starting to move more into a value environment. it's not across-the-board the board, but selectively. the other thing, we think that once the u.s. banks start to work, the european ones will follow because it will be more hospitable. we are seeing a slightly more hospitable environment. it's true that they are in a slightly different shape and the consumer is slightly different, so we are starting with the u.s. banks as the first step because the risk reward looks better.

but we would expect for the european banks to follow you. nejra: right. if you look at the ratios, you expect that to create upwards rather than u.s. banks to correct downwards. >> that's right. this is not a multi-month event, this is a multiyear event. we think the u.s. banks will see multiples repriced up as investors see that the underlying fundamentals are a lot more diverse and risk-free --not as risky as many think. nejra: great to have you with us on the show. 20 coming up including we talk precious metals with the world's biggest platinum minor, neil front of him and china hits back after mike pence weighs in on hong kong, but will that affect trade negotiations? we will discuss that later. this is bloomberg. ♪

slumping afteres ab invev reported a drop, it caused growth to stumble. budweiser is the unit partially spot off by ab invev, the earnings were flat on and adjusted basis. it missed estimates for growth. the efforts of amazon to get packages to your door in a single day helped pushed it to

decline. this is early 2017 k. during the holiday quarter the cost of one day delivery push will total about one and a half billion. the shares slumped in extended trading. this is the companies projections or operating income fell short of analysts estimates. southeast louisiana planning has taken a break down of at least $5 billion, to reflect a plunge in some of its biggest holdings according to people close to the move. we are told a parent of the raten fund will make this down on november six per that's when it announces second-quarter earnings. this has been driven by this month's holding in uber. nejra: now let's focus on precious metals. investors get ready for another round of central big action. theext guest is ceo of

largest platinum producer, joining us now for an interview is neal froneman, chief executive of the sibanye-stillwater. it's great to have you on the show. platinum has been a bit of a laggard on the group of metals. d.c. prices improving? --do you see prices improving from here? >> i think we need to look at the fundamentals. platinum is in oversupply. we don't see the prices improving in the short term. in the medium-term, absolutely. we think the market will come back into balance. ptm's,s of the other palladium is in the structural deficit so is --those two metals continuing to perform. gold is dependent on use around interest rates, volatility

internationally from an economic point of view. i think gold is also in a solid position based on those impacts. nejra: so you're looking at solid, palladium you think the deficit will lead to higher prices and gold also looking solid. in terms of your business, are you dependent on these higher prices for a healthy balance sheet? where do you stand with the price action at the moment? pgm perspective, no were not that dependent on the current pricing. we are one of the lower cost producers. obviously we welcome the current commodity prices. the range is probably the most sensitive issue. we estimate the impact of the

rand on our earnings to probably be 40% of the volatility. we do have a view, and it is unlikely to strengthen much, which is good news from an earnings perspective. gold at these levels is also very healthy for our gold business and puts us in a good position. nejra: so i'm hearing a lot of --itive tilde debbie positivity. what about concerns going into 2020? concerned our biggest is international economics. thedownturn will impact sales part of our business being motor vehicles. we have a high exposure to that market. so any major economic downturn will be bad for our business. it will obviously be positive for gold, but that's a small

part of our business now. .t is certainly less than 20% the only thing that is a real concern to me is economic volatility in the wrong direction. how will you offset that? why weink that's exactly are focused on costs are these in just are acquired any --these metals are also used, so being a low cost producer means you'll probably be the last man standing and there will always be a bit of a demand for these products. so controlling costs is critical and making sure we are in the lower end of the cost is really how we manage that risk. understand that where the global economy goes is

really important for your business, but if you look at the domestic economy, we expect the finance minister to present a medium term budget policy statement next week. what would you like to hear? first of allke to see real action from government could one of our biggest risks in this country is currently is come, the electricity utility. we are an energy intensive business. sustainabilitynd is critical to us and we would like to see real and material andges made to the finances to their profitability into the supply of electricity. i think economic growth is important. we need to create a friendly business environment to promote growth, to address poverty and inequality.

those feature highly in the communities where we operate. it creates disruption. those are all necessary impacts that governments need to make to improve the business climate and address the real issues in south africa. pleasure to have you with us this morning. we have a welcoming president for the --you're looking at pictures there. he is on a three date state visit to the chinese capital and he will also meet with the primary. this is bloomberg.

nejra: this is bloomberg surveillance. pence hasdent mike criticized china, and also calling for greater engagement between the two biggest economy in spirit he told demonstrators that we stand with you. >> hong kong is a living example of what can happen when china

for the liberty and yet last few years beijing has increased its interventions in hong kong and engaged in actions to curtail the rights and liberties of its people. nejra: what does this mean for the trade war? christopher harvey is still with us. we have had china hiring back at mike pence sang the u.s. should get its house in order. we are looking ahead to the summit in november. how would you trade u.s. equities with this trade war right now? >> we think there's about 3% upside from here. the price target -- basically what is happening we came into this year low as far as growth, but rates have come down, and the fed has gotten easier. furthermore we are making some progress, and to us that is the

most important thing. the other issue is sentiment. many were saying earlier i cannot have worth quarter happen to me again. if that occurs, i'm out of business. it was a shoot first ask questions later, and then with the trade that they were in, global recession, growth for longer, there's been a lot of negativity in the market. i think people are being squeezed into the market. approach those gains in a defensive way? >> i don't think so. when you look at low volatility, it outperformed by team percent in 2008 --excuse me. if you look back, the trailing 12 months as of the end of september, it outperformed by about 50 -- 15 --50%. iswhat we are trying to do barbell higher-quality with some

cycle ability. we went to see a lower volatility trade. nejra: great to have you with us. christopher harvey, from new york. bloomberg surveillance in the next hour. lisa is in new york and she will be joining and that in london thethey will talk about december 12 election. jeremy corbyn says no we've got to rule out no deal brexit first. this is bloomberg.

♪

that: boris johnson saying

brexit will not happen by this goal, and his election is thrown into doubt. for clarity wait from london. not so fast, amason shares drop after higher spending could increase speedy deliveries lead to its first quarterly decline in more than two years. and a warning from our place, it confirms its profits -- jes staley tells us about the outlook. good morning. this is bloomberg. i am in london. we have lisa today over in new york. we are preoccupied with the domestic policy situation. johnson had to choose between two paths any kind of chose both. they're not sure yet whether we will be heading to an election.

lisa: not a lot of clarity. we are getting clarity when it does come to earnings and we have some of that coming up. viviana: the government concedes it will not be his do or die pledge to leave the european union by october 30 first read the chancellor tells bbc that the government has done everything possible to meet the deadline. the u.k. is still waiting to see if the e.u. grant a request for a delay. johnson is calling for an early --early election, but he needs a two thirds majority for it to take place. the u.s. justice department opening an investigation examining possible illegal spying on trump for his presidential campaign. that escalates the controversy surrounding the probe. it has been largely secret for month. this is widening just as the impeachment inquiry is becoming a threat to the presidency.

shares of amazon down sharply in premarket trading. the retailer posting its first year-over-year quarterly profits declined this is early 2017. the earnings were hurt by spending for delivery. news --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 i am viviana hurtado. this is bloomberg. nna: this friday, this is what the european equity markets look like. we are losing steam a little bit if we go through the session. there is some strength coming out of the luxury sector. showing despite tensions in hong kong, let's give you a quick

check going on in the pound. that is in there for you as well. lisa. lisa: it's quiet today. everything is pretty much flat. we are seeing across the board very little movement, but we are seeing some bigger moves in europe, down six hundred and volatility cutting lower. oflet's talk about the fate brexit, hanging in the balance for aust johnson calling general election to break the impasse. corbyn says he is backing depends on the length of delay granted by the european union. on the other hand the au said to delay its decision to avoid getting caught up in paul talks. thisd up getting caught in catch-22. let's get some insight now with a member of the house of lords

and former transport secretary. good to speak with you. from that labour party perspective, i want to understand about what constitutes taking no deal off the table and went takes us closer to a general election. >> it's serious at the moment. they will have to be an extension. the question is the length. the problem with this no deal is because the are constantly learning what the implications peoplee, it's dawned on and now seeping into consciousness that no deal is not what people thought before, october the end of leaving the union without a treaty paired the problem is that the treaty itself provides for certain periods of -- for certain time just over a year to negotiate a new deal. if at the end of that time, you don't have a trade deal, then all you've done is move no deal.

anna: some of the labour party say you've got to take no deal off the table? you've got to make a declaration that you will never do no deal otherwise you don't get your election? >> that isn't enough. but i'm afraid just to give you a sense of where things are, nobody believes a word the prime minister says. he said that he was leaving at the end of october do our die, and the reason why he suspended parliament for five weeks so he could have a new session when that was untrue. moment. no trust at the what has now become clear to those of us wrestling these issues is that the idea that a johnson government would negotiate a trade deal and a new relationship with the european is farcical.onths anna: why not just say that

might be the case, that this might exist in the future, but why not just say yes to the election? >> because we don't trust him. anna: what could he do in the meantime? >> legislate to rule out no deal has --as a permanent state of affairs. if he were to do that, then i think we would have sufficient trust to have the election. let's be clear about what is going on. most of us in the labour party do not want brexit. the conclusion we have reached is that the right thing is to hold a referendum with the option to remove it entirely. the option we would prefer because we think it is in the national interest, is not to move to an election which will probably lead to a referendum. the odds are it would lead to another -- i'm wondering whether you

think right now markets are looking at the no deal brexit as basically being off the table. d think that's pretty much right even without some sort of commitment from johnson? i think he is having some trouble hearing. talk as if this deal is still on the table? >> she's talking about a different no deal. though that one is off the table. what we are now faced with is a no deal in terms of leaving the e.u. without a trade deal at the end of next year. that is the fundamental issue between how do we take it off the table permanently, and that can only be done by either legislation really out no deal for all time or a referendum with an option to remain in the > .

>> do think there is growing support for no brexit if they were to be some sort of referendum held? >> there always has been substantial support for ending brexit. the question is how you get there? anyway you can get their is through a referendum, and that would be one that would be hold spring, but the problem is getting the majority of parliament fort. the first stage is to make that policy. onre's a great debate going about the terms that we would agree to the election or move straight to a referendum. >> talking about that question, you clearly believe in that remain story, but when i look at the polls, there might be some that put remain slightly ahead, seachangey no means a

. things still looked quite close. is -- polls still show it the really telling indicator is what is happening with the younger voters, and they are overwhelmingly pro-remain. --i'mroject turnout speaking at the university up and down the country, and because this is their future, in another referendum, the younger are coming out and boating in record numbers and they will vote overwhelmingly against it. you gotten inhave your plan? >> i am uncertain at the moment. it's a sign of the crisis that we are in at the moment, that people are doing things that are unexpected.

most people are fighting to get in the house rather than get fighting to get out of it. i hope this is part of the process that hopefully leads us to remain. thank you so much. amazon's profits declining for the first time in more than two years. we will have more on that next. this is bloomberg. ♪

viviana: barclays investment bank outperformed its peers on

wall street, revenue for both next income and equities trading was higher. rising 13 percent. this is twice as much as the u.s. rival, jes staley was cautious. he warned low rates in the u.k. brexit hit economy will make it tougher year. today anheuser-busch plunging after reporting in the third-quarter earnings growth ground to a halt. the largest peer maker pointed to a decline in shipments in the u.s. and china. the maker of budweiser also lowered its forecast. that is the bloomberg business flash. to deliver your packages to a door in a single day has sliced its profit, falling as much as nine percent post market after forecasting lower operating income. overthat binge may not be as the cfo says the cost for one day livery will cost over a

billion dollars in the next quarter. now, our guests, and i went to start with alex paired what was your sense of just how disappointing the earnings were given the fact that amazon has to be spending right now to get delivery in one day as they are promising? >> i think what they're spending is not the problem. i think this has happened in the past. they continue to spend on these options for their have been some concerns about competitions, but i think the issue is really the wrinkled with the web services. that counts for something like two thirds of all operating income, and the growth there seems to be showing some of slowing, and i think that's perhaps the greater concern. >> is the big take away that

microsoft and other big tech companies are being successful in grabbing business away from a ws? >> i think so. i think that's why they may be offering better prices in an attempt to fend off that threat. we've seen microsoft gain some market share. competitors, attacking the market with some ferocity. there is more that amazon has to contend with after a really good head start in this space. >> james, good morning. this, to talk you about what does it tell you about businesses, a more complicated story, but does it give you cause for concern that perhaps companies that choose to make investments for the future are not rewarded? >> you took the words right out

of my mouth. i was sitting here listening to alex, notwithstanding the specific point that he made, i thought equity markets reward companies that buy back shares and punish ones that invest for the long-term. that sounds like the antithesis of a capitalist market. if that is truly something that is part of this story with respect to the price yesterday, that is not healthy. >> and the earning story for you, is it dominated by the , is that the snb top line? >> that's the game we like to play where voices from within the company do a good job of guiding expectations down and then we can positively be on a long-term basis. but the reality is we did not see any discounting to reflect the expectations. i've seen this point a couple of times, earnings as reported by

the s&p five hundred or similar companies and profitability as reported by data, there is a gigantic gap, and some of that you report former earnings. history says that the data is right and will be right. conversationmilar yesterday, trying to put together a chart for next week comparing different measures on the earnings story. does not the issue over at southeast louisiana. we were talking about southeast louisiana and we were, now the fun trying to write down over $5 billion. what is the headline? >> southeast louisiana is rightdering a right pain -- down sometime soon. this is pertaining to the underperformance of some of the companies going public. we are yet to see the trickle-down effect of we work, , ich went softbank invested

think now it's kind of failing usm out, whether that those down the line, i think that is the question a lot of people will be asking. oftbank is in the process raising this second vision fund, and they are kind of right now talking to the sovereign wealth fund in saudi saying please give us more cash and that's not a good luck. probably an understatement. thank so much. mnang up, global cohead of joins us for an interview. york, and london, this is bloomberg.

advice foro christine. she knows better than anybody else what to do and what to say. goingch part of what i'm to do nest, as i said before, just ask my wife. i always thought some things cannot be done, nothing that you cannot change, and you cannot change the past unless you are a historian. this has been intense and profound and fascinating. if there is one general that i am proud of, that is with -- the way that we have constantly

pursued our mandate. never give up. >> never give up says mario draghi speaking after his final meeting as president. joining us now from frankfurt, james.r this story, is let me come to you with your reflections there in frankfurt and what we saw yesterday. it was pretty unspectacular in terms of how markets responded. 2019 has seen all her strength. we will see the euro strength next year? certainly the outlook for the euro has brightened a little bit least. we've seen it appreciating least. we've seen it appreciating somewhat because the economic outlook has stabilized. the pmi for example, still subdued, but at least it did not decline for october, and

obviously we are waiting for the measures of the ecb to support the economy as well. the outlook is a little bit more bright and the market is not necessarily expecting further measures by the ecb which would weigh on the euro, but certainly it's too early to sound the all clear. i think the outlook is still very uncertain, and so i think the potential at least in the short to medium-term is limited. anna: let's get the thoughts of james. i hear that data is starting to look a little better or maybe we are over the worst for europe, but without resolution on the trade tensions in which europe

is caught up, is it difficult to make that argument? james: a lot of people have been making the argument since 20 17, and we have seen a barely straight-line decline. it certainly the survey data, i don't see any evidence of anything materially changing in terms of the economic machinery. for me the fact that you have volatility in some of this is merely a reflection that it's difficult to take these more than anything else. i think we are still headed for a very tricky economic future very tricky economic future for the euro. what that means, it's difficult to tell. anna: i would love to get your sense a lot of dollar in that. let's find out what is going on. widely expected to cut rates next week, how does that way into your outlook for the greenback? i think the dollar has bit on thelittle prospect of further monetary easing by the central banks. i don't think it has sufficiently weekend. also the reason --recent weakening we have seen i think is more attributive to the fact

that we are seeing the --in thee and -- i and trade war, and they are therefore lowering the demand for the dollar as a safe haven. but still seeing it relatively strong compared to the beginning of the year despite the fact that the central bank has always -- already cut interest rates twice and expected to cut again at least once more this year and maybe next year. so i think there is still more room or the dollar to appreciate. anna: we will see what next week brings. us this morning. a quick check on sterling, we have lost that 129 handle. the brexit story -- ♪ everyone uses their phone differently.

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lies, that is what china calls mike vence's criticism of human rights. criticizedesident china's actions against protesters in hong kong and accused beijing of curtailing the liberties of the residence. a member of the saudi royal family telling the congress to get office moralistic high horses for the disdain they expressed for the saudis following the brutal murder of jamal khashoggi. they say when it comes to racism and gun violence, they cannot perform their own jobs. jeff bezos is about to give up the title of the world's richest person, knocking about $8 billion off his net worth. about $103 be worth

billion. beat --number would bill gates is valued at $107 billion. in indonesia, investigators found scores of missteps in the crash of a lion air flight. flaws on blames design the jet and the way u.s. regulators certified the jet. the report also pointed to pilot error. 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. i am viviana hurtado. this is bloomberg. anna: thank you very much. boris johnson's efforts to end the brexit deadlock with another extension have cast doubts on another extension. jeremy corbyn says his backing depends on the length of the brexit delay. the e.u. is said to be delaying

its decision to avoid getting caught up in westminster politics. e.u. diplomats are meeting to discuss the extension. joining us from outside the european tadeo. update us on the timing because corbyn wants to hear from europe and europe wants to hear from london. maria: good morning. this meeting is ongoing and it is quite a long meeting for e.u. ambassadors. it really does show the conundrum facing the e.u. today. there is one thing they do not want to do, get stuck in u.k. politics. they do not want to be dragged into a volatile political situation in the u.k. as far as giving more time, that is a no-brainer. there is an ongoing debate as to how long this extension should

go on for. we hear the concept of a two-tier extension. -- the u.k. could be given two deadlines. could have an you election happening on december 12, and the e.u. will say they want clarity before they make their move, so today perhaps we will not even get a date from the europeans if they believe they need to wait until monday. lisa: we have heard from emmanuel macron that he does not want to extend any sort of deadline to britain. how much support does he have in the european commission? maria: at this point, macron is the loudest voice. he is saying when you look at brexit, time does not fix the issues. you need to pile pressure on the u.k. parliament to focus minds

on brexit. interesting the difference between macron and boris johnson , they are both pushing for an early vote. the e.u. will have to come to a unanimous decision and at this point, macron is not in europe. that is making things more difficult. a lot will depend on the election date, but it is clear the e.u. wants a timeline from the u.k. first. pushing for a no deal brexit, that is something that has been mentioned. that seems very unlikely whether or not we get an election. lisa: maria tadeo in brussels. guests are still with us. i want to get your sense of how much complacency is baked into the pound and the u.k. markets more broadly that a no deal

brexit is off the table and there will be some sort of resolution. james: i don't think "complacency" is the right word. the repricing makes sense because while we do not seem to have gotten much in the way of clarity, the parsing of the been act and the deadline that triggered the letter to be sent to the e.u. largely takes the risk of no deal off the table. i understand the point about president macron and what he is saying. johnson ander boris macron are working well together. they seem to have formed a bond and it seems to be in president macron's interest to get this done because he has become the do factor leader of the european leader of thecto european union. the way to get this done is to keep the pressure on the u.k.,

that is what macron is doing. sterling is a long-term buy. lisa: do you agree? that the market is not complacent at the moment. they are waiting for more concrete details. in the short term, what matters is no deal brexit at the end of october has been avoided, and there is little doubt in the market the e.u. will grant an extension whether it will be short or long. that is supporting the pound at the moment, and as soon as we have more details regarding the ,iming we will see repricing particularly on the options market. to ask about how quickly we end up in an election. i have spoken to a couple of people from labour and liberal democrats, and it seems as if

their criteria for accepting a general election may never be met. that would leave us in limbo without the government that is able to pass much policy until 2022. is that possible? james: never say never. it has been very easy to go andugh rational analysis essentially the bodies acting and parliament down and across party lines are tying themselves do thingsrying to that are impossible. we have talked about taking no deal off the table. it is impossible to take no deal off the table permanently. , ayou legislate for no deal parliament could undo that. we did not need a referendum. we could have unilaterally decided to leave the e.u. on a parliamentary whim.

setting it as a criteria that it has to be permanent, that will not be met. i do not understand how these parties can achieve what they want. both sticking with us. china hits back after vice president mike pence weighs in on hong kong. >> hong kong is a living example of what can happen when china embraces liberty. yearst, for the last few beijing has increased its interventions in hong kong and engaged in actions to curtail the rights and liberties of its people. lisa: the key question for markets -- does this affect trade negotiations? that is next. this is bloomberg. ♪

viviana: this is bloomberg "surveillance." bloomberg has learned softbank plans to take a right down of at least $5 billion to reflect the plunge in valley of some of its because holdings including bear and -- uber and wework. they bailed out we work bank -- wework and exchange -- in exchange for 80% of the company. business in the u.k. and europe. even though business is still down, it is a significant improvement in north america. lisa: vice president mike pence gave a long anticipated speech in which he criticized china's

actions in hong kong, beijing firing back, calling his speech lies. the two countries remain locked in a trade war. buy $20id it would billion of u.s. farm products in year one of a partial deal. risk tothe bigger markets now? that we get a trade truce between the u.s. and china and stocks tear upward, or we get no deal and things drag on and the outlook deteriorates? james: that is a tough one. it feels like we have moved much ,urther towards the softer happier, risk on end of that spectrum in the last month. equities have not been able to get close to the highs in the u.s., but they have been

bouncing around closer to those highs. words on bothnd sides, talk about phase one. that is more positive than constant escalation. i am sure you have heard from just after guest, the content is still lacking. this is vacuous stuff, a veneer of positivity, whereas underneath issues are not going away as we have seen from the vice president's speech and the chinese reaction. being being wrong by bearish on risky assets but they are not going down. lisa: let's say the mood music is correct and we get a trade truce. i would love your perspective, if we get a trade truce which asset stands to rally the most? thu lan: i think we have seen

that the trade war has affected risk sentiment most. the main channel on markets has been risk sentiment, so extremely large swings particularly in the yen, which is a safe haven in this chinese trade war. benefit.hink it would quite contrary, i would expect it to depreciate if we see a trade truce on the risk within the current season asia to benefit on the other hand. anna: as we see the trade war, it is more akin to a capital war then to a cultural war, human rights war. your point about where the mood music lies, is there anything you are looking out for that changes the narrative around trade? even though we have seen the truce on the trade tensions, we

have not gotten a rollback. james: that is the big news. removed, that get is big news and that would be a big risk on move. i am not expecting that and don't know anybody who is. dynamics,f the wider that is an attempt to provide further legitimacy for the actions that have been undertaken. underlying this are economic issues but other issues between the u.s. and china which are likely to draw voter groups and bring constituents on your side of the action. in the run-up to an election, that is always good news. thanks to both of our guests. , who today, mark mobius

has spent more than 40 years working in emerging markets all over the world. he will weigh in on the trade 10:30 a.m. new york time. this is bloomberg. ♪

♪ anna: i am anna edwards in london with lisa abramowicz in new york. tom and francine lacqua are off. that lowhas warned interest rates will make it tougher to meet targets next tradersen as the bank's outperformed most of wall street in the third quarter. the ceo spoke to us. our return to tangible equity was in double digits. six of the seven last quarters we have generated return of capital over 9%. we feel good about the 9% target for 2019. what we are bringing up, as we

look into 2020, we have the macro environment in the u.k. where economic growth is somewhat muted. if we continue with the uncertainty of brexit, one has to think you will continue to have soft growth in the u.k. we also have lower interest rates and in the lower interest rate environment, it puts pressure on a bank's net interest margins and the profitability of its deposit base. and if we havet, economic softness, we could put some caution against the 10% target for 2020, but we will still maintain that target for now. what do you expect in terms of brexit? would you welcome an election in the sense that it could put an end to this uncertainty? : what we have said over the

last couple of days and weeks, we are hoping for an end to the uncertainty. i am not going to make a position from the bank whether it is this type of deal or that type. getting uncertainty behind us and allowing the financing and banking system to execute with an idea of what the future will look like, that is important for the country. the one vote in parliament that voted in favor of a deal that the e.u. had been supportive of, that was a good step forward. we have uncertainty now that may lead to a general election. we will have to see how that plays out. ceo: that was barclays speaking to bloomberg earlier about brexit and the earnings story of barclays, and if the impact low interest rates are having.

jonathan, good morning. thise ask you about seemingly quite negative statement from barclays that it has become more difficult to meet their target because of the interest rate environment. was that a big headline? jonathan: not at all. he is doing a good job in q3. q4 is relatively in the bag. say next year, it will be tough. 10% is a stretch. consensus is 8.5%. i do think he gets to 9% this year. a dose of reality and common sense they are delivering because they have a good quarter. i think they will get to 9% this year, which is the target. it is next year they are talking about that will be more difficult. lisa: the idea that trading income rose 13% compared to

peers where it was only 6.4% in the u.s. is barclays gaining market share? james: not really. bear in mind, barclays has the u.s. footprint. there is nothing that can compare to that, and the dollar has helped this quarter. if anything, they are probably holding share. a good quarter for m&a, but the u.s. footprint. i don't think we will see the europeans get near these numbers. lisa: banks have largely outperformed with the exception of a few. is that give you confidence to go into the financial sector? james: the big trade, we always keep banging on about the yield curve and what that means for net interest margins. i struggle to believe that if you are bearish and think the curve will flatten that you

would want to be on financials. technically, i don't have any idea. equities have been on a journey i cannot explain but medium-term my economic outlook is that we have seen the best of it in this cycle and things will get worse. the banks will try and stop that and will make it worse. anna: my next question is when values start to become attractive. it seems like it was trying to a month or so but that stalled. trading strategies. james: it is attractive today. whether it will perform in the next weeks, i don't know. happenedlike something among the momentum players and i would not be surprised to see more of that. everyone seems to have piled into defensive sectors and bond proxies because they want to be more defensive.

if you see the entire market having negative performance, the positioning can mean that things that are defensive can even underperform. i would rather not own equities. anna: if we are looking at when values stocks pick up, is it topline at barclays that impressed you or the cost? jonathan: we just put out a headline saying the discount stays in the stock and i cannot disagree. it is not cheap. net interest margins are going one way and there is little lending growth. if over the next two years we have more sensible targets, m&a, and cost-cutting, the sector grows into some reasonable performance. from a standalone, topline basis it is still horrible. anna: jonathan tyce and james athey, thank you both for joining us. hour coming up in the next

, brian levitt joining us. we are looking at amazon shares lower at disappointing earnings. until shares are gaining quite a companies. of two amazon shares down at one point more than 8%. from new york and london, this is bloomberg. ♪

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drop for the first quarterly decline in more than two years. is keen to see brexit will not happen by october 31, the december election thrown into doubt. the opposition parties want to hear from e.u., who may want to wait for clarity from london. expect the fed to reduce rates one more time this year and then signal a pause before making more rate moves. surveillance." -- this "surveillance." we are getting a lot of earnings but not much movement when it comes to broad market action and conviction. anna: the broad market action is missing. moves around the earnings story -- interesting

moves around the earnings story, amazon the big focus. lisa: let's get the bloomberg first word news. viviana: boris johnson's government concedes that will not meet its do or die pledge to leave the e.u. by october 31, the chancellor of the exchequer telling the bbc the government has done everything possible to meet the deadline. the u.k. is waiting to see if the e.u. will grant its request for a three month delay. boris johnson is calling for an early election but needs a two thirds majority in parliament. the u.s. justice department examining illegal spying on president trump on his 2016 campaign. probe has been largely secret for months. the investigation is widening as the house impeachment is becoming a threat to the trump presidency.

in indonesia, investigators found scores of problems and missteps and the crash of a lion air 737 max 8. they blamed flaws in the jet and the way the u.s. regulators certified it, and also pilot error. shares of amazon are down sharply in premarket trading, posting their first market decline since early 2017. they were hurt by higher spending for faster delivery. the company says the spending binge is not over. 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. i am viviana hurtado. this is bloomberg. lisa: let's take a look at the market action. it is looking sleepy when you look at the averages, barely moving across the board in the u.s. crude a little bit of downside, upside momentum in u.s.

equities. -- really interesting thank thing is there are so many individual surprises but on a broad market level, basically range bound the past few days. anna: when we look at the european trading day, we have weakness coming throughout the overall level, stocks sex -- stoxx 600 down 3/10 of a percent. market, part of that is the individual earnings. paris,xury business in gucci, just shy of 10%, putting pressure on the french market. they achieved strong numbers despite the weakness in hong kong. broadlyking a look more , since we are not getting a lot tellrket action, i want to whether we are risk on or risk off. this is one of the most interesting stories.

investors are shying away from the riskiest debt. the orange line is the broad u.s. junk bond market that has returned since june 1.5%. the white line is triple c rated debt, the lowest rated debt. it lost 1.7%. this diversions continues to widen as a number of investors including blackrock say it is time to go more into risk because there seems to be better mood music coming from what is going on and brexit as well as u.s.-china relations. i wonder when it will converge, if at all. anna: really interesting insight into those markets. let me talk about the brexit narrative, picking up on the point about why is it that the markets are reducing their expectations of no deal? that is what we see on this chart and that is guarding the

euro-sterling or euro-pound. we keep hearing politicians talk about taking no deal off the table and there is a difference in time horizon. the markets are focused on the end of october and politicians are talking about taking no deal off entirely forever. it does not seem to be likely. do we end up in some sort of dreadful politico limbo -- political limbo? lisa: we will keep tabs on that. attempt tofect -- deliver your packages in one day decreased -- the spending binge may not be over just yet. levitt us now is brian and for more, we are joined by paulson meany, my cohost on bluebird radio.

with you, paul. what was your sense about the focus on the spending on be have of amazon -- behalf of amazon? paul: when you think about amazon, the topline growth story is still there. what is the spending and profitability? this company has made no bones about they will spend whatever it takes to grow their business on a global scale. near-term profits are not a focus, but investors have gotten use to profitability as their cloud business has grown. it has delivered nice profitability. this quarter, we got a sense that if jeff bezos wants to drive up the spending, he will do it and that will hit near near-term earnings. investors feel good about this name. lisa: last hour, james athey

said it is concerning him a company is penalized for spending on their business. do you agree? brian: i agree, and we are so short-term focused, the fact that we go through these quarterly earnings seasons and pay so much attention on what a company is producing over a short time, amazon is a company where if you are betting on management, you know they will continue to spend to drive growth and expand businesses and provide better services for customers. sales,k at topline, price to sales ratio. looks more excessive in valuations, so am i betting on management or am i personally concerned? lisa: are you buying? brian: yes. we will continue to be in a slow growth world.

this will be a slow growth world indefinitely and investors need to look at where companies are positioning themselves for true growth. anna: that is interesting. looking at the investment they are making, i wonder if you think there is anything in the changing nature of investment that means markets reacting this way when you see long-term investment taking place, machine driven trading and eps and the like. does the emergence of that side of the market jumping on easy to understand numbers post earnings release, does that make a reaction to amazon more likely? paul: honestly, what is going on in the markets as we are picking up on some india can -- idiosyncratic stories. the market is looking for a catalyst. there was a lot of volatility in the summer amid the trade

uncertainty and where is the fed going next. now we are slowly inching toward a little bit of better tone on policy. the market in general is looking for a catalyst to go higher, and that could come with increasing policy clarity into 2020. it is harping on individual stories, but in general the broad market's wayward. much.thank you both very up, the globals -- goldman sachs global head of m&a , an exclusive interview at 2:30 p.m. new york time. this is bloomberg. ♪

♪ bloomberghis is barclaysance." investment bank outperformed its peers on wall street. revenue from fixed income and trading was higher, revenue rising 13%. ceo jes staley was cautious, warning low rates and brexit will make it tougher next year. anheuser-busch and bev plunging after reporting third-quarter earnings ground to a halt. they pointed to a decline in shipments in the u.s. and china. they also lowered their full-year forecast. the most significant changes in the company's history, that is how google describes the new system.

search wello google -- will impact those who rely on it for web traffic. the: let's get back to brexit latest, headlines breaking across the bloomberg from brussels. we are bringing live pictures of a press conference. the e.u. spokeswoman addressing journalists and the conclusion that we have gotten is the e.u. 27 have agreed in principle, or to the principle of a brexit extension. that is as far as we have got e.u. diplomats deferred decision on length of brexit extension. we seem to be none the wiser as to how long this extension is going to be. our reporter on the ground in brussels listening to this press conference is maria tadeo. good to have you with us.

your thoughts as we get these lines coming through the e.u., saying e.u. diplomats deferred their decision on the length of the brexit extension. we have been talking earlier about how there were differing views in the e.u. 27 on how long the extension should be. maria: the meeting is over, went on for two hours which is exceptionally long for e.u. ambassadors to meet for the same subject. they have agreed there should be more time but have not finalized or come up with the final date for that extension. in many ways, it is no surprise because we knew there was division within the e.u. 27 for how long the extension should go for. the e.u. was thrown a curveball yesterday with the hypothetical election date.

one thing they told us as they want clarity from the u.k. parliament before they make their move. we understand they will continue to work over the weekend. perhaps we get final word on monday. another important thing they mentioned as they do not see the need for a summit. they think this can be done through ray leavitt -- letter -- through a letter. interesting, in terms of the choreography and time it takes to reach these decisions. e.u. diplomats to meet on monday or tuesday on that brexit delay. evans joined by edward who has been leading our brexit coverage, good to speak with you. headline,e latest e.u. diplomats plan to decide on brexit delay length on tuesday.

we have a catch 22, death spiral, whatever you prefer, do loop. politics,ays u.k. tell us what you plan to do with an election. edward: we are in a holding pattern. this is an entirely understandable result from brussels. why make a decision until you get more clarity? the problem is, we have very little clarity on an election in the u.k. lisa: it looks like there is little reaction in the pound. i am wondering what traders might learn in the near future that would cause the pound to move one way or another. edward: any movement on an election, and labour has come out and opposed it and the s&p has done the same. how does the government break that? another thing that would move it

as if the e.u. said a short extension only or not granted an extension. we have not gotten those. lisa: do we have a sense of how much consensus there is on the european commission for extending a lengthy deferral with respect to enforcing hard brexit? maria: in terms of granting more .ime, that is a no-brainer no one in the e.u. 27 would want to push the u.k. out of the european union and do not want to do this to the prime minister , because he is moving closer to get the deal through. in terms of the length of the extension, there is a lively debate and speaking the loudest is the french president emmanuel macron. he believes when you look at brexit, giving more time does not fix the problem. at one point a decision will have to be made and piling pressure on could get the deal done.

an election could be a good thing. that would mean the u.k. government and european parliament speak with one voice. that would allow the deal to go through. anna: one thing that has been dawning on me throughout the morning. democrato one liberal mp and one labor party lord. what would it take for you to vote for a general election? they are talking about taking no deal off the table forever through legislation. it does not seem likely to happen, so does this leave us in limbo until 2022? the idea that you can take no deal off the table entirely is difficult to get to.

under boris johnson's deal, there is still a cliff edge in 2020. even if the deal were to get through parliament, there is the risk of no deal. it is posturing on their part. they do not want an election. anna: thanks to you all. the european commission saying diplomats have deferred their decision on the length of the brexit extension and will meet again on monday and tuesday. that is the ambassadors doing their work in brussels. this is bloomberg.

♪ lisa: i am lisa abramowicz in new york with anna edwards in london. federal reserve policy makers will cut interest rates again next week according to everyone, and we'll take a break. 85% expect the fed to reduce rates a quarter of a percentage point. still with us is brian levitt. right now i am looking at an expectation of more than one rate cut through the end of the year. do you think the market is wrong or will the fed capitulate and signal additional cuts? brian: i think the fed will signal additional cuts. the federal reserve raised interest rates last year and what was still a slow growth, disinflationary world, and the markets called them out.

the dollar rallied, the yield curve inverted, so the central bank's -- central backing off of what was seen as a policy mistake last year. the dollar has eased and the yield curve has steepened, but i suspect they will keep going. lisa: who is driving the bus, the fed or the market? brian: james carville said he wanted to come back as the bond market so he could bully everyone. the bond market, currency market bullied the fed into having to respond. you look at the expectation numbers, the 10 year breakeven down to 1.5% in the middle of the summer. that is the market saying policy has been deflationary and that is a problem. the fed needs to respond. the fed is backing off and easing further. anna: how would you characterize

the period of fed policy we are in at the moment? they talk about being data-driven but it seems they are doing insurance cuts against weakness that might come in the future. fed,is a new era for the the insurance cut era? call it mored backing off of policy that the market viewed is a mistake last year. had is fed that i tightness, slow growth, disinflationary world meaningfully strengthened the dollar and inverted the yield curve. a guy like me who has been saying no recession for some time has to start being concerned about a recession. it is positive to see the fed backing off. i think these are cuts responding to a short decline in

deflation expectation. their mandate is full employment and price stability. a break even at 1.5% where we were this summer is not stability. markets, inof u.s. towel, amazon dropping after rising,g -- intel amazon dropping. anna: barclays shares up 8/10 of a percent, the market not focused on the warning of being in a challenging market. on market is focusing trading revenues outperforming wall street peers and cost-cutting. ♪

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for the much part what i will do next, just ask my wife. i always focus on things that can be done, not things you cannot change. you cannot change the past unless you are a historian. this situation has been intense, profound, and fascinating. one thing i am proud of is the way in which the governing council and myself have constantly pursued our mandate. this is part of our legacy, never give up. anna: never give up, one of the wise things said by ecb president mario draghi, some of the highlights from his press conference. breaking news coming through on the bloomberg terminal, we take you to russia. the russian central bank lowers its key rate to 6.5%. the estimate was a reduction to 6.75%, so that move was bigger than anticipated.

the bank of russia may weigh further easing. we are at a global cutting cycle and the russia central bank is part of that, lowering their 20 forecast as well. a new lower range for inflation expectations coming out of russia, different economic back stories and russia and the developed markets. we see some of the similar drivers, low inflation pushing to rate cuts. saudia: a member of the royal family telling u.s. congress to get off its " moralistic high horses." he criticized lawmakers for the disdain they expressed for the saudis following the brutal murder of jamal khashoggi. when it comes to racism and gun violence, they say they cannot perform their own job. pg&elifornia wine country, had a power line failure moments

before a wild fire broke out, blackening 16,000 acres. electricity to half a million people in california to prevent powerlines from starting fires. jeff bezos is about to give up the title of the richest person in the world, knocking eight billion dollars off his worth. at the close of the market, bezos would be worth $103 billion. gates, number one, bill valued at 107 billion dollars according to the bloomberg billionaires index. 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. i am viviana hurtado. this is bloomberg. u.s. vice -- lisa: president mike pence gave a speech in which he criticized

china's actions against protesters in hong kong. beijing called his speech lies. the two countries remain locked in a trade war. d.c.ng us from washington, -- brettbrewer and bruen. what ought we be paying attention to when it comes to to.-china trade relations determine whether things are getting better or worse? it is hard to tell. brett: it is, and they will do this delicate dance over the next few months to try and seek out an adventitious crowd. yesterday's speech by vice president pence was another part to remind beijing the u.s. can use leverage, but ultimately trump is desperately seeking a deal and will do his best to wrap that up before we get into

the throes of the presidential election. lisa: the narrative has shifted from we are not going to trade on these headlines, we are long-term money, to the ongoing uncertainty has caused businesses to reduce investment and it has weighed on markets. how are you positioning, for a trade truce, or for this to carry out indefinitely? brett: i would say carry out indefinitely within improving tone. the uncertainty around trade that leads confidence to go down, capital expenditures to go down, that slowed significantly, and this is the third growth scare of the cycle. i think it is too late to get defensive. the time to get defensive was the 10 year yield going to 1%

and the yield curve adverting. we are seeing the yield curve normalizing a bit. i do not think there will be a truce or a great trade deal, but things have been so negative you need to see the tone get better relative to expectations. the administration won the election on part that we make good deals, the economy will be strong. for trump, it is important if he wants to win reelection, it is important to go into this election year with the tone improving, the currency weakening, the yield curve steepening. if not, reelection becomes more problematic. anna: i wanted to push further into your assessment of how close we are to a resolution of trade tensions. if you look at the way the trade war has turned into criticism of china's human rights record, push back from china on that

front. we are into new territory. chinese be able to separate that criticism from their willingness and ability to do a deal on trade? well this strategy work for the u.s.? brett: the two are intertwined, and trump feels as if he has the most leverage. you see at the same time that issuess throwing around -- beijing is throwing around issues like the nba that it can inflict economic pain if it is backed into a corner too much. we will see this tension continue to play out. i will offer that the general trajectory is toward a deal. it may not be that full package that trump and xi would like to have, but he needs to show

progress. he came into office as the author of "the art of the deal." if you cannot get this on, it will be a weight on his reelection effort. anna: when we look at what this means for stock market investment, a lot talk about the vulnerability in the stock market and the tension between the u.s. and china. how do you invest around european stocks? if we see resolution, people wonder if trump may set his sights on europe. brian: europe is cheap compared to united states so it is not as if the market has not priced in low growth. the question i have is whether there is a catalyst in 2020 two unlock that value in europe. if the federal reserve's easing policy conditions and china is

working to stimulate growth, that should create a good back assets andn-dollar to support european equities. for europe, a bigger story is whether the china stimulus starts to gain traction and whether that starts to support ,arnings for the larger capital multinational companies. i suspect a better policy makes or2020 further weakens stabilizes the dollar and starts to unlock value outside the united states. bruen, thank you so much for joining us. brian levitt, you are sticking with us. just want to reiterate the news earlier that the bank of russia did lower their key rate more opposedected, 6.5% as to the expectation of 6.75% and

it may lower that key rate again. we are seeing ruble strength against the dollar in response as people expect this to shore up the russian economy. at theup, the director council on foreign relations sits down with david westin. this is bloomberg. ♪

anna: i am anna edwards in london with lisa abramowicz in new york. -- third,rth quarter

barclays outperform its peers on wall street. trading income rose 13%, twice as much as its u.s. rivals. despite a note of caution for the bank in 2020, the ceos stayed confident in discussing the competition. jes: we are pleased with our up 13%s performance come year-over-year. we look quite good compared to the u.s. peers. we will see how our european peers do. we continue to gain market share and had a good quarter in terms of investment banking fees, up 24%. , debt capital markets, and equity capital markets, the strongest third quarter in the history of the bank. we like the diversification benefit the business gives us

and it is heavily weighted to the u.s. and the u.s. dollar. the corporate and investment bank delivered a strong quarter for us. revenue wasole cib better than expected, but if you had to look at one unit, when you wake up in the morning, which opportunity in the investment bank do you get excited about? what do you think is the best opportunity for barclays in this economic advisor meant? characteristic i feel best about when i 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 investment bank. you need to serve the full range of buy side clients and offer clients a full range of debt and

equity capital markets services. we have a bold bracket investment banking position in new york and europe. the two biggest capital markets in the world. we are a strong european alternative to the u.s. banks and i feel comfortable we can compete with them. i like how we are positioned. lisa: that was barclays ceo jes staley speaking with bloomberg earlier. it is time for the single best chart, brian levitt still with us. this too may really catches my attention. this chart is of all auto loans in the united states, the total volume outstanding. record see it reaching a $1.3 trillion. the reason why i find this so interesting is because even though everyone points to the

strength of the consumer, they are levering up in areas that are not providing value longer-term like investing in a house. this is very interesting. set,tempkin joining us on who just wrote a story talking about subprime auto loans they are seeing an increasing amount of delinquencies and defaults. can you give a sense of what that was about? adam: the largest lender, santander, some of their loans last year are performing the worst they have had since 2008, going sour at the quickest rate, and people are defaulting within the first months. wasy payment defaults, that a signal before the mortgage crisis. here we have auto loans from subprime consumers performing the worst they have in a very long time, and the fact that people are defaulting so quickly

often is linked to fraud in the auto market and fraud in auto applications. people are struggling to make their payments. lisa: everyone talks about the strength of the consumer. weakness a sign of egregious underwriting standards on the part of santander or the sense the consumer is not that strong? brian: everything else would tell you this is about underwriting standards. what is important to note, you hear subprime and people immediately go to 2008 and it will this be the next crisis? by 2008s for households was 100 percent of disposable personal income and that is down to two thirds. , theseans, student loans are smaller components of disposable personal income and

auto loans have been steady over the last 10 or 11 years. student loans have doubled from 5% to 9% of disposable personal income. this is not the mortgage crisis. this is a smaller part of the market. the u.s. consumer, you have not seen jobless claims break or unemployment pick up. wages are ok. we have not even seen demand for credit go down. this is not a picture of a u.s. consumer that is breaking. thatve known for some time anyone who wants an auto loan can get an auto loan. sometimes you go too far and end up with loans who people cannot pay. thereinlies -- anna: lies the problem. you talk about how these auto loans are packaged up and turned into bonds, and how the risk

stays with the original lender. some of the risk goes back to santander or other lenders in the auto space. it sounds different from what we saw during the subprime housing crisis. adam: an interesting thing is that santander, in order to save their bonds, sanitize them, they have to repurchase these early payment defaults, get them out so the bond investors are not touched or are less affected. however, the company, that cuts into their profitability. they have to cover those losses and this could be a problem because we have low unemployment. what if we go into way more severe downturn? how will subprime borrowers fsre then? -- fare then? other banks truly might not do well if there is a bigger

downturn. yes, they repurchase these bad loans and they are doing more and more of that within the first three months. lisa: perhaps this does not indicate a broader problem among u.s. consumers but points to a potential problem for santander, and some of the banks with loans, other loans whether it is leveraged loans that they have to hold because they cannot sell them. how closely are you watching these trends to determine which financial firms to stay away from? to watch these trends because the banking cycle will inform where we are heading. if you get the credit cycle right, everything else should take care of itself. things like leveraged loans and corporate debt, a lot of this is very low interest-bearing.

the companies are very well positioned. the balance sheets look good. there is no wall of maturity. the credit cycle looks intact. you are talking about consumer loans and deterioration in lending standards, for banks that are exposed to that and in a flat yield curve world, you would expect some credit growth. that is why the more growthy part of the market outperformed the value part, and why i don't think the u.s. economy gets to this higher level of growth. we stay in lower growth with pockets of weakness, but when this ends you will see far more euphoria and credit growth and significant tightening from the federal reserve. anna: brian levitt and adam tempkin. thank you both for joining us. we talk emerging markets next.

this is bloomberg. ♪

♪ anna: i am anna edwards in london, lisa abramowicz in new

york. argentinians will head to the polls sunday to vote in a presidential election, and the economy continues to prevail as the biggest issue. a key job for the winner will be tackling the debt crisis. the front renter -- front-runner is expected to sweep macquarie out of office -- macri out of office. what are your expectations for this weekend's election? odd few: it has been an months since the primaries. they had doubled the margin then what they expected. racemost seemed like a gun it asvestors, who viewed a complete miracle to overturn the election. this changed the market

sentiment and we have seen it across the argentine economy. lisa: talk about how that is coloring the view of the voters. is headingrgentina into its third year of recession. the peso has weakened almost 50% last year. real argentines on the streets are feeling the pinch. we are seeing unemployment and poverty rise. it seems like the government was not able to react fast enough. this has become a campaign issue, the key campaign issue, and the issue for many voters that seems to be overshadowing some of the other achievements especially in foreign policy. anna: what market reaction will be look for on sunday? carolina: it will depend on whether the margin mirrors what we saw in august. if that is the case, the markets

-- bute that, but we we we will be watching closely for any speeches on sunday or monday morning that would indicate the details of the financial policy. upset, you canan expect a rally. "surveillance" continues on radio. you can check it out with jonathan ferro and today, paul sweeney. from new york and london, this is bloomberg. ♪

>> amazon angst, the company suffers its first profit decline as it battles its slowest ever growth rate for its cloud business. small-capr values, responsible for pushing the s&p over 3000. european stocks to near 2018 highs, can it last? the new we work affect. .hey try to save we work yft other unicorns like l and uber. i am alix steel. we made it to friday. it was a lot of earnings that came out over the last five days. here is where we stack up. in terms of absolute level to the s&p, we have not gone anywhere t