clear. up --und on the rise come rise, up by around a quarter of a percent. december 12 is the date for the next u.k. election. a lot of corporate earnings, some m&a stories, particularly in the car sector. we are looking at the auto space , and earnings story, also looking at the banking sector because we have had a host of earnings from santander, standard chartered. credit suisse and deutsche bank, dws on the management side, we spoke to the cfo there, so lots to talk about on earnings. there are the other earnings stair is like airbus and l'oreal . all of those could make their morning. the ftse 100 down by about 0.2%, euro stoxx down about 0.2%.

still waiting for the french market and the german market to really get into their stride perhaps this morning. %he british pound up around 0.3 as we hone in on december 12. the options market is currently adjusting itself around that kind of timing. the dollar index is down by around 01%. 1%.'s look at -- 0. let's get a look at the sector perspective. and the outer space, what is good for one company doing m&a might be bad for another. financials looks to be an area of red, as does health care. a couple of areas of green coming through their but essentially read in both of those, as is staples. utilities and staples looks to be fairly green. that looks a bit defensive on of what we are seeing here from sectors. one of the sectors we have focused in on a lot is the auto sector of course.

the vw share price is trading higher, up by 1.9%. there was no change in revenue on margin guidance from vw. we've been speaking to the vw ceo, that is frank witter, about the cut to the forecast. frank: markets have been quite challenging. that is a reason we have lowered our outlook for -- to customers. markets are becoming more and more competitive around the world and we are a bit more cautious in terms of our volume forecast. anna: powerful story out of the auto sector today. that involves vw. another really interesting part of the auto sector involves pe f got. they are up 7% this morning so we are certainly seeing bigger reaction to this autos news. peugot haver and

been talking about a tire. previously, with -- tie-up. i also see standard chartered following on from the performance we saw in hong kong. daimler up by 1.5% this morning and porsche as well, so we see some upside coming through on the auto sector in general. to the downside, interesting to see that renault is one of the biggest fallers, down by 3.7%. chances of a tie up there much reduced. bank santander also down. of results. deutsche bank also down on results. matt? european markets are opening lower in general. let's talk about the earnings picture from this morning to with our guest joining us now, of european, head equity strategy at ubs. let me get your take on the all important banks.

we got credit suisse and santander out beating their course or -- third quarter estimates. deutsche bank coming out with the revenue that fell 4% at the core bank. in general, concerns across-the-board about the negative rate environment. how do you rate the earnings? nick: so sure, look. on the broader market, we have clearly seen earnings come down a lot year to date. the beginning of the year, around almost 9% earnings growth. the consensus numbers for this year have now fallen all the way down to 1%. there has been broader downgrades, but the best invoke of these downgrades have come through cyclicals, financials, and energy stocks. clearly, banks highlight one of the areas where these negative rates from the ecb and elsewhere around here are putting huge pressure on net income margins for banks and profitability around that area. i think they are operating in a very difficult environment. it is also a broader part of the

we havewhere as i say, seen these declining earnings over the last nine months also. matt: let me just take a minute. let's listen in for a moment for something james monroe, told me alka told me about the negative rates scenario. >> nobody thinks negative rates are a signal of a healthy environment, healthy rate economy. we have been vocal. as the economic picture stabilizes, we call for improved growth next year in 2020. the yield curve has begun to steepen. we think that can continue. the governments across europe are considering physical responses to the current economic environment. so one can certainly see a path to improvement and that the path would change the interest-rate outlook. it is one of the reasons we look with continued optimism about

our path forward and targets we have set out, the paddle described in july -- path we described in july. interest rates is a feature of that, but the environment can change over several years. we are taking action to offset the environment, whether that is pricing, introduction of fees, and as you say, there were terribly -- the relatively small impact of tiering. these are all impacts of how we think going forward. we are looking across our businesses at passing on negative rates to clients, where it is prudent and sensible and also legal. that is something we are doing. we are actively in the process of that, in client discussions, especially in our corporate bank, but also in the private bank.

fee change is another feature of our reaction to it. that will add to the revenue generation for -- against those client accounts. matt: so james and the bank learning to deal with the negative rates, but obviously, hopeful that at some point, the situation changes, we get back to positive. is itelson, how important for european stocks that the ecb someday get back to positive rates? when do you expect that to happen? if you look at the markets, they are expecting that not to happen until way out till 2027 and beyond. i think the expectations are certainly very pessimistic when you look at what markets are expecting for rates to normalize. fiscal, ande that there has been mentions from

mario draghi and madame lagarde, t look at broader areas where governments may help a little bit on the fiscal side of things. clearly, we have had this climate package in germany a few weeks back, which was about 54 euros of -- 54 billion euros of spending over several years. that may help with the margin and other areas where you see that your government looking at raising infrastructure funds. i think clearly, monetary policy, given that we have these negative rates now for the banks, negative rates in some cases for consumer deposits and in denmark, we have negative rates for consumer mortgages, i think we are getting toward the end of where we can go with negative rates. clearly, policymakers will look at the broader toolbox, as it work, of procedures, including fiscal. anna: we spent a lot of time rightly talking about the banking sector. let's talk about autos as well because we have had a lot of

earnings news and a consolidation story out of the auto space. let's check the share price reaction. we do now see an opening price on. fiat chrysler they are talking to peugeot. fiat chrysler rising 10% in this morning's trading session. peugeot up by 8% so it is seen as a positive for both of the businesses mentioned. renault down by 4% on the back of the story. volkswagen makes a modest move. let's ask you about the outer space, because you have actually quite liked the auto space recently, haven't you? you have been reiterating you are overweight not that long ago. is that the reason to buy into this space at the moment? nick: we looked at 30 sectors across europe and found that only 4 or pricing recessions across europe. lowestre trading on the

-- of any of the sectors out there. there are huge challenges. that is the move across to ev, the emissions issues, demand in china, demand domestically in europe. we would argue things are getting better. if you look at european consumer's intentions to buy a car, that is actually moving in a positive direction. we would argue there has been a load of downgrades already. we have already started to see a stabilization of some of the earnings mentioned. we we get, if consolidation that improves pricing power, that would be another reason to be positive on the sector. anna: nick nelson talking about the banking sector and car stocks. we will bring you the stocks on the move so far this morning and focus once again on cars, because fiat chrysler is soaring after confirming type talks with peugeot. the fiat chrysler share price up by just over 9%.

this is bloomberg. ♪

♪ matt: welcome back to "bloomberg markets: european open." we are seeing some green arrows in europe. not huge moves, of course. the dax, very little change, the ftse down 0.1%. typically on fed decision day, you get loader volumes and

traders kind of sitting on their hands before the decision comes out. they turn off the algorithms even around that time and trying to interpret the statement with human brings before moving on it -- brains before moving on it. right now, let's get the top individual stock stories. for that, we go to dani burger in london. >> may be this is where all of the algorithm action is, reading these headlines. we are seeing some major moves, especially in autos. fiat chrysler and psa, parent company of peugeot, looking at a potential tie up, which would create a market value of $47 billion, rivaling japan's honda. peugeot, for its part, trading at a record high. airbus, on the other hand, declining. they tried -- had to cut their full year out look and is saying that there free cash flow numbers were lowered. they should have capitalized off

that 737 max grounding from boeing. instead, some of the models that they thought showed huge spikes in demand, they could not keep up. l'oreal beating on the third quarter. we heard analysts saying from rbc that it was a spectacular quarter, really significant that where no able to beat other european consumer staples company was able to this quarter. l'oreal can credit its strengthening sales in asia helping prop up a market that saw basic decline in north america. anna: sales out of l'oreal were awesome, which is not something you see set often in an analyst report. let's talk about brexit. britain is headed to the polls for an emergency election on december 12, hoping to break the deadlock that has paralyzed the country's politics. nick nelson is still with us. how do you approach this from a stock market perspective? just in the last month or so, we

have seen a lot of appetite for domestically focused businesses. there seems to be more certainty to the brexit process and suddenly we are in limbo again, i guess. nick: exactly. when you look at ftse 100, it is such an international index. 80% of your revenues are coming from overseas. when you get good news on brexit or brexit risk off, brexit risk comes out, obviously sterling rallies very aggressively. 128 andcome from 120 to change. i do not think there is that much excitement at an index level for the u.k. as such. they are behind their headline levels and it is the domestics versus the internationals. domestict t -- the banks, the property companies, even some of the food retail were very domestically exposed. if you look at the performance,

in the last 2.5 weeks, we have had a solid rally, but since the brexit referendum in june of 2016, we are still down some way relative to those international stocks. i would argue actually if we get some clarity, we may get those things rallying a bit more. matt: what if you get a labour bourrnment, even a la coalition in the u.k. parliament? is that bad for stocks, is it that for the market? nick: it is tough to stash bad for the markets -- bad for the markets? nick: it is tough to say. the date has been agreed, it has not gone through the house of lords yet. we assume it will. we have that date, december 12, for the election. it is too early to call what the individual impact will be at a sector and market level. thosey, when we have

manifestoes, everyone will want to analyze what those policies are going to mean for the market. for the time being, i believe the equity market is behaving much more around the brexit risk rather than specifically around party politics. i am sure in the next few weeks that will start to change as we get closer to the sharp end of that election campaign in december. anna: a lot of thinking to go. thanks very much. nick nelson, head of european equity strategy at ubs, stays with us. there are some great stories out there from the corporate .arnings story, and also m&a autos and parts up 1.2% or so, the best gaining sector on the stoxx 600 in europe this morning. also, personal household goods and health care. to the downside, retail. next down by over 2% after their numbers actually came in better than expected but the key metric making a negative move around sales. , decision day. the fed is expected to cut

rates again today but is this the end of the easing cycle or could there be more to come? we will discuss. this is bloomberg. ♪

♪ rates aree interest tough for the banking sector, everybody can see that. is something we will have to change at some point. anna: that was the credit suisse ceo speaking to francine lacqua

about the pain of negative interest rates. has comments, head of today's federal reserve rate decision and jerome powell is expected to deliver the third straight u.s. interest rate cut this week. the real news will be if he drops any hints of the central bank's future course of policy action. end of the easing cycle or is there room for more? >> the question is about what happens next. the fed already lowered rates twice this year. 's third time a charm before jerome powell hits the pause button? compared the cuts to taking out insurance. will this be the final insurance premium payout you can ask? so.market certainly thinks the market is pricing in 93% probability of an october hike. clearly, this is all but certain today, but only around 28% for a december cut.

on friday, we have the jobs number. that may take on more significance following the fed meeting. their survey shows the u.s. adding 85,000 jobs, which has actually dropped since monday. the bloomberg whisper number, which may include some viewers, is around 114,000. . the question for the labor market is whether it is running out of steam and whether this week's job sprint will sway the fed enough to sit out the rest of the year. matt: thank you very much. interesting that the whisper number is so much higher than the survey. you can access that if you have the bloomberg in front of you. whisgo.pe nick nelson, head of european equity strategy at ubs, is still with us. what do you think we are going to get for the nfp number? how important is it as an indicator for the u.s. economy? nick: look, i think it is a very

important indicator clearly. we know that there has been weakness in the industrial side of the u.s. because of exports, partly because of the trade war and the slowdown in global trade. in the last month, we have seen that sort of infected the ism services as well. we saw a weak is services numberm -- ism services number. the labor market, wages, consumption, that has held up pretty well. key.nk it is the one thing to remember is that we do have the general motors strike in this time as well. be acan be -- there can lot of volatility around the number we get. the headline number, you may want to back out some impact of striking autoworkers to normalize it somewhat. anna: we need to think about how trade plays in here as well, don't we? arenow that trump and xi

set to meet november 17, a meeting set up and south america. we have -- in south america. we have seen conflicting reports about what will be achieved then. if we do not make any progress from here, where does that leave us? nick: the problem is, we have these tariffs coming in and more coming in on december 15 on electrical goods, ipads, computers. this will start to hurt the consumer in the u.s.. we think there will be a weak patch in q1 and q2 2020 for the u.s. economy assuming we have these tariffs come on through. the market is looking forward, looking to say, can we get some deal around one area rather than whole tariffs spectrum. we have had a bit of a rally in s&p.ast month or so anin i think that is partly because

of some expectation for that november 17 meeting. like,sometimes it feels here in germany at least, that the u.s.-china trade war is hitting europe harder than either of the major participants. what do you think about that statement? secondly, is it possible that this could actually benefit europe? can they build a stronger trade relationship with asia while the u.s. is on the attack? nick: i think your first point is exactly right. us,,u look at the dax two that seems to be the index globally that is most exposed to. . trade wars. and has a very high sales exposure to asia and china. some of these european auto manufacturers are actually building vehicles in the u.s. and shipping them to china. they are already calling the tariffs between the china and the u.s., even though there are no direct tariffs on europe.

ofa: nick nelson, head european equity strategy at ubs is going to be continuing to c -- the conversation with bloomberg radio. we will get details on the various auto stories we have been covering today, including out of volkswagen. this is bloomberg. ♪

♪ matt: 30 minutes into your trading day. let's get your top headlines of the bloomberg terminal. failing to impress. shares in credit suisse and deutsche bank fall after third-quarter earnings. i spoke earlier to james von malolka. >> we are comfortable we have seen -- rebuild. that -- matt: talking about the rates unit. a new top dog. fiat chrysler and pugh zhou geot confirm they

are in merger talks. the u.k. is headed to the pulse for its third time in under five years. boris johnson wins approval for an election on december 12. welcome to "bloomberg markets: european open." i am matt miller in frankfurt this morning alongside anna edwards at our european headquarters in london. anna? anna: it has been a busy morning so far, hasn't it, with their earnings story, the m&a story out of. the out of space we are pretty flat on the stoxx 600, not really moving that far. the balance of gainers to losers is quite even. 303 stocks going down, 280 to the upside. we are in this limbo pattern, despite the best efforts of the quarter reporting season in europe. we wait for the fed. will we get that third rate cut? we have a technical's business, the biggest gainer in europe. we have seen earnings coming in better than anticipated. you mentioned the fiat and pe

ugeot story, and both of those surging. it is seen as good for both sides, at least in this initial phase. l'oreal reporting numbers overnight and that stock up by 5.9% as a result. let's move to the downside, because there are some interesting movers. the banking sector very much under pressure. deutsche bank is down by more than 5%, parentally down by 4 -- 4% on the back of their numbers. enault one of the losers, santander also weaker. let's get the bloomberg first word news update. the u.k. is set for its first to election in nearly a century. it is widely seen as a proxy referendum on brexit.

voters will get their last chance to choose between different visions of britain's divorced from the eu or vote for candidates wanting to cancel it altogether. prime minister boris johnson finally got the motion through the house of commons. it now goes to the lords. johnson & johnson says lab tests found no sign of asbestos and recalled baby powder, which puts the health giant at odds with u.s. regulators, who are sticking by results that detected a trace amount of the carcinogen. johnson & johnson is facing many lawsuits claiming asbestos get people cancer. california is in the midst of another round of blackouts, as some of the season's strongest winds send wildfires across the state. 17 million people are facing critical weather conditions. &e says it will issue a &e says it willpg

issue a one-time rebate for affected customers. global news 24 hours a day, on-air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt: thanks very much. its full-year sales outlook. the carmakers sees fewer vehicle deliveries this year on a faster than expected decline in auto markets around the world and auto market demand around the world. we spoke to the volkswagen cfo, frank witter, about the change in guidance. frank: markets have been quite challenging. that is a reason why we lowered our outlook for the deliveries to customers. markets around the globe are becoming more and more competitive and we are a bit more cautious in terms of our volume forecast. this pretty much applies to all regions, the only exception pretty much is south america, even though you have very

different developments in brazil, argentina. brazil being on a recovery. china, obviously our second home market, very important to us. strong brands do better and gain market share. this is likely true, particularly for volkswagen. overall, we know what needs to be done. that is basically getting our act together in terms of successful launches for new products to come, but also being very cautious on cost and expenses. >> 2 of your main competitors in ,urope, psa and fiat chrysler confirmed this morning that they are in talks about a potential merger. would that change the competitive landscape in europe for you? frank: we rely on a very unique, strong portfolio of brands. we have scale, and therefore, we know exactly what we need to focus on. it is all described in our 25 plus. 2020-20

it is not a surprise that one or the other parties talking. >> do you expect a broader industry consolidation? you mentioned the industry headwinds intensifying regulation. is that something that might produce a number of many factors overall at some point? frank: the number has been increasing, particularly in china. for the rest of the world, i think there has been speculation about industry consolidation for quite some time. that is no surprise, because we all know how difficult a a moreion from ice to electrified portfolio will be. we can rely on our own strength. we have technology on the hardware and software side, and we have scale, and most importantly, strong brand and attractive product. . we focus on our strategy and its implementation. matt: that was a volkswagen's

finance chief, frank witter, speaking. a little earlier, it was a busy day for the auto sector. fiat chrysler and psa confirm they are in talks about a possible tie up. . joining us is chad thomas, a veteran autos reporter. milan chief at our bureau who wrote the book on fiat. let me start with you, chad. how important is this outlook cap for the industry and for the german economy. --d: it was a pretty preston pretty pessimistic view that we sicallym the cfo, ba saying that markets around the world, with the exception of south america, are slowing. this shift to electrification is billions.eryone vw in the process is running out dozens of new models. they don't have that cushion of

a growing market when they are making that shift. we have more stringent regulations coming in so you have a perfect storm on the downside for the auto industry. marketow is europe's car holding up? from a european perspective, there have been so many headwinds, so many reasons for consumers not to buy of lay or be confused and holdback, what is the story at the moment? think about the situation with the u.k. and brexit and people say, let's not move forward with a purchase until we know how things are out. to play all of the uncertainty is having a huge impact on the european market. this is in part why we potentially see some of this talk about consolidation within the market. we had the announcement today from peugeot and fiat. matt: sergio marchionne during the end of his reign at fiat chrysler talk a lot about consolidation -- talked a lot

about consolidation. there was general motors first floated as a possible partner. afterwards, fiat, we confirmed, was in talks to combine with renault. why now psa out of this -- psa? how does this make sense? new sergios -- the marchionne? maybe. business with peugeot goes back more than a decade ago. there was an approach by sergio marchionne into the peugeot family, when they were trying to find a partner for fiat at the time. there were new talks again in 2014. in that year, carlos tavarez just arrived at peugeot. sergio marchionne at the time was much more interested in trying to find a deal in the u.s.. tavarez'sy, declined

offer. looking for a deal since 2014 at least. --knows that tavarez's route is well recognized as one of the best-performing ceos in industry. if you look at the margins peugeot is doing in europe in such a difficult time, it is really remarkable. more than 8% profit margin in europe. on one side, this has not been years.first choice for on the other side, you are taking on board the man who managed to save peugeot and revamp it. anna: what are the next steps from here? we saw the conversations between renaud and fiat -- renault and fiat fall apart. what is the next move? >> the next move, as far as we hear, is the board meeting of afternoon.s

that means that they will probably review the offer for a combination with fiat. if things go well, we might hear something as soon this week. anna: ok. thank you both very much for bringing the latest on the outer space. chad thomas and tamasso, our milan bureau chief, both joining us. credit suisse's numbers are boosted by trading strengths. we will bring you our interview with the. seo that's coming up next. this bloomberg. ♪

♪ matt: welcome back to "bloomberg markets: european open." we are about 45 minutes into the trading day. right now, looking at a mixed picture but you will not see a lot of volume on a fed today, waiting for the decision to come out later by the fomc. widely expected to be an interest-rate cut. third-quarter results failed to bring relief for credit suisse investors after the bank's reputation was dented by a s pying scandal.- s shares are trading lower. francine lacqua sat down earlier with the ceo. tidjane: it has been a difficult time, of course, for the bank. i would like to think our

clients, because they really stuck with us. the sentiment is very strong. they like the bank, they stuck with it. i want to thank our staff. we asked him in switzerland in particular [indiscernible] switzerland has had to face a lot of questions from clients and they have handled them. our shareholders have been extremely robust. the share price is not the share price of a company in crisis. onto the events themselves. the people involved believed they were acting in the best interest of the company. who aree not people --ing to

they are simple agents of the company who believe they are protecting the interest of the company. the action taken was inappropriate, there is no question about that, and disproportionate. i did not order rackley or indirectly this action -- directly or indirectly with this action. >> do you feel like you need to rebuild trust after this? ane: not from what i can see. there is a lot of speculation, which is also carefully said. in the media, there is also a lot of lies. than peopleamage would think, [indiscernible] francine: you have had -- not have clients question by pulling out? anything like that? no.ane: no impact. anna: has the bank really put

the spying scandal behind it? we heard him say there is no discernible impact from the scandal, but have they done enough? francine: for the moment, what we know is that the chief executive was very quick to rebuff accusations that he ordered this. he says absolutely not. you can hear him say that actually there was a lot of questions about this not being the right thing to do, but that it was done out of interest for the bank. he is trying to emerge out of a pretty big reputational damage. ago was only 2, 3 weeks when we were talking about also him possibly losing his job over this. i think slowly it is emerging as a better picture. i think he was relying on these earnings to be better than expected to kind of brush off the criticism. it is very clear. he did not order the spying. it was done out of the interest of the bank, although it was wrong and disproportionate.

it was an appropriate, but is trying to really distance fromlf, like the finding the lawyers came out with a couple of weeks ago. is the market reacting so negatively to these results? francine: when the results came out, i have to say that a lot of the press, a lot of the analysts were saying that they were a beat, that they were better-than-expected. trading was extremely high, global markets, which tidjane thiam had a problem with in the past, with strong. i think the tone turned a little bit -- was strong. i think the tone turned a little bit too. a bit more caution. to a bit more caution. i think the share price is down a little over 2% today. anna: down 2.5%.

francine lacqua on the ground for us in switzerland with the latest on the banking sector after that great interview with tidjane thiam. we will go live to the future investment initiative in riyadh. manus cranny will be speaking to the ceo of the abu dhabi financial group. this is bloomberg. ♪

♪ anna: welcome back to "bloomberg markets: european open." just one minute into a weaker trading date -- 51 minutes into

a wicki -- weaker trading day. manus cranny is on the ground with the ceo of the abu dhabi financial group. manus? manus: anna, great to see this morning. yes, i am joined by jassim mohammed alseddiqi, the ceo of abfg. welcome to the show. the most controversial issue at home is about the overbuilding in dubai. disaster ifg a there is a moratorium on building. do you agree? jassim: i do not think so. i think the market is correcting itself, real estate is becoming much more affordable. people are underestimating the effect of -- it is a buyer's market. the first time the market is not easy but i think today's opportunities and maybe tomorrow's opportunities will

not be there in the near term. manus: it is not a level playing field between the state owned institutions and the private businesses like yours. is that a reasonable interpretation of the situation? lookm: i think you have to at things holistically, historically also. the citylp to initially, the infrastructure bringing the right bills to the market. i believe and our model is we need to engineer our way through different environments, tough environments. we have to try to find and make value for that. manus: let's tack about a hard environment. you have a major exposure in central london. give me a sense of the size of your exposure and in this current environment, are you ready to put more capital to work? do you want to see the outcome of the election first about? jassim: our developments in central london has about 2

billion pounds over the state that it will bring to the market in the next three years. we have seen recently a lot of demand from asia. i think brexit is fully priced in. i firmly believe there is pent up demand in central london that will be coming up very soon in the near-term. brexit is going to be over sometime soon hopefully. uncertainty is going to go away. we will see a serious pickup in real estate, especially real estate in central london. manus: has the decline in the pound been part of that story for you to look at new opportunities? jassim: absolutely. see -- wholobally see london as a great investment say today they are getting about a 30% discount between 2007-2008 pound pricing. that is an amazing opportunity and also affordability for the global investors. manus: where do you want to put

the money to work? if the right opportunities come up, if you see a good opportunity, what is a good opportunity in central london in the current market? jassim: currently, we are looking at the stress bulk deal from developers in central london. we believe those existed today. we are in discussions with a few of the come actually. manus: what size deals could you be talking about here? jassim: 50-100,000,000 pounds. will see you think you more distressed offerings come on the market? jassim: i think it will come but be quickly absorbed as it comes to fruition. manus: to close, in terms of the biggest opportunity for you globally, where is that going to be? jassim: i have always set for the past three years, it is the uae. i say that again. manus: thank you so much for joining us on this conversation today in riyadh. we wish you well. that was jassim mohammed alseddiqi.

i can actually make it work for brexit all the way from riyadh. there is the investment perspective. i told you, we would not tip over the brexit edge for you. how are you? anna: very well, thank you. the brexit conversation goes global. thanks very much for that, manus cranny. the auto sector moving in the market today, focusing on peugeot and fiat chrysler. they are in talks. that news has lifted both of their shares and ways on renau lt as they looked to be left in the cold. matt: we are seeing the banks move as well for deutsche bank, a drop of 6%. credit suisse down about half that much and santander falling. interesting, as credit suisse thesantander at least beat street's estimates with net income. deutsche bank had a net loss of a little over a billion dollars but they seem to be stabilizing,

as they say. core bank revenue with a drop of only 4%. that is it for the european open. stay with bloomberg television. up next, it is "surveillance."this is bloomberg. ♪

♪ francine: credit suisse hopes a

beat across the board will put a scandal behind it but the outlook is less obvious as negative rates cast a shadow. third times the charm. another cut is at doma -- all but short from the fed. will 2020 bd year of the dove or the hawk? reddish voters will head to the polls for the third time in five years in a vote that could finally decide the way forward for brexit. good morning everyone. covering a lot of the bank earnings tom keene in new york. what the fed means for treasuries although i'm keeping on turkish lira after you have sanctions put on turkey because of what's happening in syria. tom: fed day as well. in the next us hour. michael mckee in the press conference in the u.s. in the afternoon. the eu banking, i guess it's no surprise, but really tepid results from credit suisse and

deutsche bank. francine: deutsche bank was a little disappointing. you see the share price down 5%. credit suisse, a lot of people thought it was a beat and you see a lot of caution for the outlook and investors saying they could've done better in terms of profit and wealth. they are cautious about the future, so you see credit suisse losing some 2.5%. let's get to the bloomberg first word news in new york city with viviana hurtado. viviana: boris johnson got the early election he wanted. the u.k. parliament act king prime minister's ash backing prime ministers call for a snap vote in an attempt to break deadlock. the election is set for december 12. at the campaign puts johnson against jeremy corbyn or corbyn because the election a chance to build the country for the many and not the few. the u.s. federal reserve may be preparing to posits monetary easing campaign. for a third straight meeting, fed policymakers are expected to lower interest rates. they are likely to signal they

are done cutting for now. the decision will be announced at 2:00 p.m. new york time. president donald trump and his lawyer will be invited to any be invited to any impeachment hearings i the u.s. house judiciary thanks so much. equities bonds currencies commodities. lots to look at this afternoon. we will talk about the curves over all of surveillance today.

euro a little stronger over the -- there is the 10 year yield. this to me is a key spread. a negative statistic, not that long ago. a difference in yield between the u.s. 10 year benchmark and the three-month t-bill. that is .2 percentage points or 20 basis points. that is an important statistic. stocks are moving sideways especially in europe. the pound is a little changed. the u.k. prime minister one backing for the december 12 election. the polls can change. after december 12, we may have a clearer path forward for brexit. looking at turkish lira, we don't do that often. oil edging lower as this week's

decline grew amid supply concerns. more on that throughout the day. tom: greatly appreciate that right now. in westminster, it will be turmoil. there's not an official election waiting for lords but december 12 is a key statistic. with that is all the history of the modern united kingdom. the liberal democratic party is part of that. it is -- joining us now, and davey.- ed what is the distinction of the liberal democrats right now versus the history of your party? ed: we have always been pro-european. this election, we are the party to stop brexit. we think britain is better in the single market, trading with our nearest allies and being open to free trade.

that liberal democrat message is appealing. in may of this year, we beat both parties in the u.k. wide election for the first time in 100 years. we can win this election. corbin with 36 years in parliament, you are going to lead the remain charge. how can you coalesce remain forward to this general election? how do you get remain team on board? votersot of conservative feel betrayed by boris johnson and brexit conservative party. brexit is so bad for business and will hit our economy, many normal conservatives are fed up with the conservative party. equally, a lot of normal labor voters who are moderate don't like jeremy corbyn, who is very extreme left-wing. we are the party who can bring people from both the conservatives and the labour

party and take this country forward. i think as the pro-european pro-market, pro-free-trade party, can win a huge amount of votes in this election. and when it. francine: it would be a long shot to think you can govern alone it if govern it at all when you go into a coalition -- would you going to a coalition with labor? ed: the polls are very volatile. we've never seen the polls move around so much. a few months ago we beat both the labour party and conservative party. if it's a balanced parliament again, we won't do any deal with jeremy corbyn. he's too left-wing for us, nor would we do a deal with boris johnson because we don't trust him. he has reneged on his word time and again, he said he would not write a letter to the eu to extend, he said he would pay britain out of the eu by halloween. he is failed on both accounts. people don't trust him.

i think they will trust liberal democrats to govern our country. francine: to be fair, i think boris johnson did not sign that letter -- ed: he said he was not going to and then he did. francine: he had to follow the law. would you go in coalition with the labour party and jeremy corbyn? ed: no. francine: under what circumstance would you do any coalition with anyone? party with as a leader who is moderate, who believes in free markets and free trade, who believes in britain staying in the european union, who shares our agenda of wanting to tackle things like change, that is mp's from the y

defecting and coming to us and that is why we are very confident that we will surprise people in this election and come through. they are fed up of two parties who've gone to extremes, who frankly would damage our country either by taking us out of the european union and stop us from working with our closest allies are going to the far-left under the labour party. the liberal democrats believe we can win this election. francine: thank you so much. the deputy leader of the liberal democrats. -- jordan, when you look at pound what does it do from here? for the past three

months we caught this move which was hope is a powerful thing. the idea that a deal of some sort would -- a time when we thought nothing would change and parliament would just pass it. going forward we've got six weeks of campaigning. the polls state the tories when this but the british electoral surveys show around 35 to best 35% to 45% of voters have been switching party leaders over the past three election cycles. very volatile. my vice to client has been over the six weeks anyone who tries to tell you who's going to win this election, they are kind of fooling you because you cannot say with confidence what's going to happen. we saw that in the previous two elections. invested --have investor flow slowing down. sterling goes higher.

88.50. there will be opportunities to get long again so if the tories get a majority or when this, there will be a short-term rally on a deal being struck with the eu, but we have to rein back those big hopes of a eureka moment. the end of the transition is a year away now and that could be when we have the cliff edge brexit. tom: our eureka moment was having you on today. i know you are a student of the politics as well as looking at the mix of foreign exchange. we saw mr. davey. to you come as a young guy in the city watching this, what do the liberal democrats symbolize? jordan: a status quo party in terms of if you want brexit to finish quickly these guys are offering you the best chance, revoking it. there's no negotiation for a deal, no referendum which takes a few months and there's no hard brexit like the brexit party would give. that is your big status quo.

that is a move higher in sterling. the electoral -- they are in third place. just like the recent interview with francine, it is about who they are in coalition with. i think revoking is unlikely. it would need a referendum. tom: thank you so much. greatly appreciate it this morning. driving forward to that fed meeting 2:00 p.m. this afternoon. scarlet fu with our coverage. a great set of guests lined up to really look at this meeting. hawkishg to dub it the cut meeting. this is bloomberg. scott minor, jeff rosenberg. stay with us. ♪

tom: bloomberg surveillance. fed day but with huge global news flow. important discussions on eu banking. a fed special at 2:00 p.m. this afternoon. to begin our fed discussion for the day, scarlet fu, 2:00 p.m. this afternoon. i will join and as i often do. jordan rochester with us and james pomeroy with us with hsbc as well. bring up a chart for james pomeroy. billis not -- the treasury benchmark spread. what you need to know is we got some curb aversion. horizontal line clicks and. james, it is significant for the , the curves have

normalized in the time of this hawkish cut. did we truly normalize the spread market away from the gloom of four weeks ago? bearishe maybe got too for the global economy. we've been arguing the slowdown in global growth is a manufacturing only slow down and not a services one and to get this global recession, curve inversion concerns were portraying, you need the service sector. the u.s. labor market may be slowing. consumers are happy, consumer confidence is up. all those things suggest a slowdown in growth, not a collapse. that is why the fed is likely to stop after cutting today. going tochairman's turn to michael mckee and say we are one and done this is it? jordan: he will not be that explicit. he will probably say we are very data dependent.

and might focus on the data green sheets. tom: you guys were not born when they were talking green sheets. continue. jordan: the market has 50 basis points of rate cuts. 25 today and another 25 to go. it will take a lot to convince the doomsters that their view is wrong. for me, the fed today, it's interesting, but i'm more focused on friday's ifn manufacturing number. we did not expect it to fall last month. the market this time thanks we got it wrong last time but it will bounce this time. if it does not, what is going on? manufacturing is slowing down more than we think. for me, i will be flabbergasted if the u.s. ism -- the fed will not be as dovish as the 25 basis

points extra priced after today and the data should start showing those signs. francine: how focused on you -- how focused are you on that ism number? james: i thick is important. not just -- i think it is important. the market survey for the u.s. surveys a broader range of companies. that number has been better in the past few months. theaybe get too attached to u.s. ism figure and not looking at global data. the global manufacturing pmi has at least turned up in the last couple of months. when you've got those signs that maybe the very worst is behind us in the manufacturing sector, you have to take these numbers in context and maybe it's too easy to get caught up in one figure making a big move rather than looking at the broader sense of manufacturing data we get on friday. francine: let's say the number holds on and we are looking at green shoots strengthening?

what happens to dollar? the fed has less rate cuts priced in and -- ign-exchange is still think that is a dollar positive plus. what could get me wrong as if we started to see european data do better. we saw the headline of the french pmi, the flash that came out the other week. it was up and lead to some short-term optimism. euro-dollar went higher on that number. -- there are these signs. is this a blip in the trend or the trend continuing? i think dollar is stronger this week and eventually toward year end i would start to fade that dollar strength. as james is pointing out, that's probably more obvious to accept there is a pickup the cycle or slow down is coming to an end and there's a bit of recovery in the data.

us. james pomeroy with tony consents he with -- a lengthy conversation with david rubenstein. on the state of the markets. david rubenstein on the state of our politics in washington. this is bloomberg. ♪

viviana: you're watching bloomberg surveillance. buyer -- people claim roundup causes cancer. that's turning up the pressure on the company to settle cases. al the crisis has cost bayer more than $30 billion in market value. deutsche bank is shrinking after getting rid of unwanted businesses. germany's largest lender reporting its first results after deciding to exit equities trading. revenue from deutsche's's remaining businesses fell 4%, led by 13% decline in earnings from trading's and securities and currencies. thank you so much.

another european bank in credit suisse third-quarter results were boosted by key trading units bringing little relief to the chief executive as he looks to emerge from a spying scandal that dented the bank's reputation. negative rates still cast a shadow. been -- i want to thank our clients, because they really stuck with us. strong.iment is very i want to thank our staff. facing a lot of questions from clients.

our share price is not a share price of a company in crisis. shareholders have been backing the company and its leadership. the people involved believed they were acting in the best interest of the company. they're simple agents of the company who believe they are protecting the interest of the company. -- inappropriate and disproportionate. i did not order directly or indirectly that action. francine: do you feel like you need to rebuild trust with some of your constituents? >> not from what i can see. there's a lot of speculation, which is carefully -- also a lot -- less damage

than people would think. you have not had clients actually question by pulling out money? it has not had any impact like that? >> zero impact. the credithat was chief executive talking about earnings but also the spying scandal. he hopes that is now behind him. they could still have an impact on reputation. coming up, we speak to the chief operating officer of facebook, sheryl sandberg. we get facebook on their third-quarter results. this is bloomberg. ♪

♪ "surveillance," from zurich new york, thrilled you are with us. withlow -- a fed day

jordan rochester and james palmer. eroy.m chairman powell and make the statement, he is central banker to the world, how much is he is central banker of the world at the press conference? james: you have to look across the emerging world for all of those countries who have raised rates last year and have been cutting this year, as the fed has clearly changed tack. in the developed world, that is not so clear. looser policy has allowed the ecb to ease a little more than australia and new zealand, and some countries are moving away from that. in scandinavia, you have two central banks hiking rates. the federal reserve is setting the global path, but many

emerging banks -- market banks have followed that. tom: is his degrees of freedom limited or constrained because he is central banker of the world near the zero bound and over his dead body, or will we have negative rates in america? will we have or negative rates in america? need tohe fed does not be easing too aggressively. if you look at the u.s. and global economy, there are countries who are faring much worse, weaker growth and weaker inflation outcomes, but fed does not set the policy just for them. the fed may need to step in more for the global economy, whereas most central bankers do not have any problem easing in this environment. unless they are constrained by what the fed is doing, they are able to do what they need to do for their economies. i don't think the fed is too

constrained at this point. francine: what is the chance of a global recession that starts in china or elsewhere? james: a few months ago, much higher. less.falling, 33% or if you look at the new york fed's version using the curve, it is roughly around that figure. we have started to see bottoming out of data and started to see china doing some measures to ease monetary policy, and some fiscal stimulus hopes kicking in. this trade peace deal with the u.s. opens up the chances of something next year from china for fiscal stimulus. we were worried if the trade wars carried on the way they were in the tariffs go on in december than the chinese might hold off on stimulus and focus on domestic issues. if we have a deal with the u.s. to keep things neutral, it means

you could see some of that feedthrough in the positive data, such as the credit imposters and -- turning positive. it is about zero today, one of the key facts macro investors should be watching, what is credit doing in china. when it starts going into that positive territory, that is when you have the big risk on move. francine: what is the chance -- this is the impossible question -- what is the chance of a trade deal between the u.s. and china and how does that change what the fed has been doing? james: the chances of a trade deal immediately are pretty slim. even if you make progress in terms of a trade deal this month , the end of the year, early next year, the overarching problem the trade wars have created does not disappear. we are in a world of greater uncertainty and this u.s.-china

relationship is very different than it was. that hurts global investment. if we were to see steps toward a deal, it is easy for equity investors to pile back into assets and for business investors to think, now we are going to build the new factory and open up new supply chains. that is not likely to be fixed and the trade side of the economy is likely to stay weak through 2020 or 2021 unless we see significant progress. meroy and jordan rochester. here is viviana hurtado. viviana: the u.s. house overwhelmingly passed a bill threatening to impose sanctions on turkey in response to the military offensive in syria. lawmakers warning a deal struck with the trump administration will not necessarily save it from economic penalties. steven mnuchin open to looser

bank liquidity rules. the regulations were put in place during the era of the global financial crisis. there may be a way around current regulations that would create liquidity without increasingly risk. some have pushed for the rules to be eased. in california, wildfires continue to rage and power cuts have left 1.3 million people in the dark. pg&e turning off the power to prevent more fires from starting . in southern california, they warned they may cut service to 345,000 customers. 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. francine: we are just getting breaking news out of the norway wealth fund, one of the biggest in the world. we found out the chief executive

said he will resign from the norwegian sovereign wealth fund. gainedearlier on today $26 billion because of the u.s. assets it was invested in were rising. it said it would not invest in the ipo of saudi aramco. there is a clear shift toward climate change and renewables. we will have more on why he is stepping down. fiat chrysler confirmed it is in -- group. it is fiat chrysler's attempt to reshape the auto industry and make the transition to electric and autonomous vehicles. joining us as a little bit of an expert when it comes to fiat chrysler, having known marchionne.r. this is a megamerger. does it make sense? >> yes, it makes a lot of sense.

why? because peugeot is the best performer in europe and fiat has an issue with its business in europe. that comes because fiat is bringing to the table its u.s. division and namely jeep, which is one of the most valuable brands in the globe. sergio marchionne is getting on board, one of the best in the economy and the man who saved peugeot. tom: we have so much news flow today, i have one more question. who is driving the bus here? tommaso: carlos tavarez will drive the bus. -- will be the chairman and the family will be the biggest investors.

carlos is driving in his car. tom: you say peugeot will get rolled up into fiat chrysler, right? tommaso: we still don't know the details. they are still in talks and the deal has not been signed. peugeotely it will be making an offer to combine with fiat into a holding company. they will say most likely it will be a half and half deal. we will have to see the terms of the deal to understand exactly who is running the show. thank you so much, expert on fiat chrysler joining us today. it is a central bank day, chairman powell. there will be a conversation before the fed decision in the 1:00 hour. stay with us on economics. this is bloomberg. ♪

♪ this is bloomberg "surveillance." airbus is struggling to capitalize on the grounding of the boeing 737 max 8. they cut their full-year target saying cash flow will be lower than expected. airbus says through september, at won orders for 300 three planes versus 170 at boeing. oftle is considering a sale two chinese units after trying to turn them around. they are seeking more than a billion dollars for controlling stakes. the ceo has been weeding out nestle's portfolio, selling about $15 billion worth of businesses the last two years.

that is your bloomberg business flash. francine: thank you so much. we are getting breaking news on the norwegian sovereign wealth fund with the chief executive resigning. we are trying to figure out why the reason is. we did find out from the norway sovereign wealth fund that their assets grew, thanks to some of the investments in the u.s. second of all, they said it wouldn't feel right to take part in the saudi aramco ipo. that is something that was said before the ceo said he would resign. we have plenty more on banking. to thet miller spoke deutsche bank chief executive officer. we are comfortable we have seen momentum since the repositioning, but that was the main driver, rates and emerging markets debt, of the decline and our fixed revenues. tom: the deutsche bank cfo and

edging the message. he never manages the message, he writes the message. jonathan tyce joins us. let me cut to the chase. urgency.n the new guy he wants to be the head dog at hsbc has an urgency. what is the urgency meter at credit suisse and deutsche bank? jonathan: they are two different stories. deutsche bank, what is driving the show today, is the realization that all the assets they will have to work out, the drag will be worse than people thought. you will see earnings downgrades, roe expectations falling, whereas credit suisse is a bit like hsbc. 2020 isn't looking like a great year. here, ihole new urgency want to go to your decades of

banking analysis and living the dream in banking as well. q4 2019 an urgency in and q1 2290 -- 2020. how will this be affected in europe different than america? james: in europe, we will see a bit of a shift from policymakers because we have had negative rates for a long time. they have run out of firepower and they have gone the fiscal route, so we need m&a. you will see changes to liquidity requirements. they will try and set up cross-border mergers because revenues, probably not falling as fast as they have been and consensus has caught up which is why we are incrementally less negative on the sector. it is still a very ugly environment to do banking in, so we need to strip costs. the u.s. is ahead of the curve and are talking about stripping out costs while they are very profitable. francine: where will we see

consolidation? a french bank by a german one? a german one consolidating with another one? any insight? james: i think we will get cross-border. we cannot have it yet. santandericredit, will probably do consolidation. near term, we need consolidation in italy. germany does not have many listed banks but that sector needs consolidation, so you will see market moves and talk about cross-border consolidation, but we need regulatory change to move the dial for that to happen. tom: maybe share price will move the dial. jonathan tyce at bloomberg intelligence, overlooking our european bank coverage. going to the general counsel timeout chair, jordan rochester and james pomeroy with us. you can talk about the finance

europe has been handed. this goes back to the degrees of freedom of negative interest rates. where is the theory that you can do commercial banking, given negative interest rates? james: negative interest rates, particularly interesting story in europe, is worth taking a look at. what is the best example across the board? sweden, a country that gets relatively little attention, but has a good example of what is happening. corporated feel the squeeze -- corporates feel the squeeze of the banking sector. negative rates help other parts of the sector where negative rates have encouraged lending and encouraged mortgages. the reaction of banks to negative rates is not just one way. it is worth pointing out that this loose monetary policy creates a situation where you have got a big pickup in leverage in the economy, and that creates the challenge for

these economies going forward. loose interest rates, negative interest rates are not necessarily a free lunch. growth see benefits for or inflation or currency in the short term, but you have to pay that back and that may start over the next coming years. tom: in french, they say fiscal space for that. let's focus in on sweden. we are honored the central bank of sweden comes on bloomberg often for pearson conversation. what is the sweden distinction? what is it right now? jordan: well, in terms of foreign exchange markets and rates, the market is trading at like an emerging economy. why am i saying that? they are looking to raise rates, and typically when you have higher interest rates, investors chase higher reserve -- returns and the currency -- keeping it infx, what we are seeing

norges bank and riksbank, they are looking to raise rates. weaker currency boosts inflation in their forecast because you have the currency impact from import costs going up, so it means more rate hikes to make sure cpi stays on target. it is this weird bloop they need to get themselves out of, and if the risk environment improves and the data in europe and the u.s. get better, that is their way out of this problem of the doom loop of higher inflation and higher currency. francine: when you look at negative rates, how much more negative can they go without really decimating the european banks? james: it is hard to say in terms of the banking sector. we are probably close to the bottom. it is worth thinking about philosophically how far negative rates can go before banks have

to pass them on and if they do, how that will impact consumer behavior. people talk about wanting to cut rates very negative, but what will the impact be? will it be that you get a big revival in the economy and people take all their money out of savings and spend it? maybe not so much. once you have gone negative in terms of the policy rate, additional cuts may not stimulate the economy in a way the bankingurts sector, the impact is so small. you are almost in this experiment we have had for the last four years, and i cannot see the sense that it has worked particularly well in terms of listing longer-term growth potential and listing inflation. the banking probability and because people have levered up too much, so although people may want to cut rates further negative in the future,

experience has not been a glowing endorsement. francine: thank you both, jordan rochester, james pomeroy. on yourhave plenty more markets and negative rates, and some of the bank earnings today. mondelez's -- international's chief executive joins caroline hyde. this is bloomberg. ♪

♪ the clouds lift across parliament, and election december 12. francine in zurich, tom keene in new york. she is a senior research fellow and provides wisdom on the combined political cross -- process of her united kingdom. whose message will cut through 12?he dash to december who will cut through the blur of it all? >> it is difficult to tell.

we have still got the best part of six weeks of campaigning to go. for the u.k., that is quite a long time. you do elections in the states rather longer than we do. the prime minister has a simple message, he is the man who will get brexit done. he has a deal needs to get rid of those frustrating parliament that has thwarted his ability to get rid of brexit -- not completely true, but that will be his message. i can get brexit done and then move on to other priorities. labour is putting out what people are saying, professional ads with the message, stop boris going for no deal. they would do a better brexit and they will address the underlying problems of the u.k. coming off all that austerity, rising inequality. i think we will see how those

play out. meanwhile, we have two other parties playing in the u.k. the liberal democrats say, let's stop brexit and revoke article 50, and the brexit party will say, let's just be gone and go for a clean brexit. there will be some focus on these other issues. francine: quickly, boris johnson's election gamble, can it really backfire? dems win, orib labour? jill: i do not think we will see the lib dems win. nobody thinks labour will win outright but there is a chance that boris johnson finds himself with parliamentary arithmetic not sots's -- looks

different from now, or something couple together we might call a remained coalition as the largest party. both of those are possible. system, with the u.k. you have potential four-way splits, they arithmetic can get difficult. you may have independent conservatives standing as well. tom: we have to leave it there. we will drive forward the conversation on this fed day, and the politics of washington. david rubenstein out with an important new book on american history. this is bloomberg. ♪

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the theme is hawkish cuts. in this hour, we have questions of tony crescenzi of pimco, questions, and curb dis-aversion. it is the end of the clinton doctrine. rubenstein on the value of our considered history in these turbulent american times. it morning "bloomberg surveillance, everyone. this is "bloomberg surveillance -- good morning, everyone. this is "bloomberg surveillance ." what is the urgency at credit suisse, deutsche bank, and all to get it going? is like: the urgency any bank needs to get it going because they are under pressure to cut costs, to prove their business model. if you look at the different banks, they are in different phases. if you are do shebang, you're different from ubs. if -- if you are deutsche bank,

you're different from ubs. i tried to understand whether there was a credibility concern for him, and for credit suisse, and then we talked about negative rates and the impact it has on their bottom line. tom: let's get to first word news in new york city with viviana hurtado. viviana: the early election he wanted -- boris johnson got the election he wanted. is set for december 12. the campaign pits johnson against labour party leader jeremy corbyn. corbyn called the election to -- a chance to build the country for the many, not the few. peugeot psa confirming they are exporting attire. fiat says the deal would create one of the leading mobility groups. under one proposal, psa would be the acquiring entity. deutsche bank is still shrinking, even after getting rid of unwanted businesses.

terminate's largest -- germany -- deutsche bank has reported a 13% decline in earnings from trading, fixed and some securities, and currency. we spoke with the cfo. >> we are comfortable that we have seen momentum rebuilding that business since the repositioning. but indeed that was the main drive for rates and emerging-market stats of the decline in our fixed revenues. viviana: deutsche's announced plans to cut 1/5 of its workforce. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am vivianatries, hurtado. this is bloomberg. tom: thank you so much. general electric has come out early with earnings. let's talk about that for a second. earnings are up. there is free cash flow guidance. we will have more on this as we migrate through surveillance this morning.

let me go to the data check. pre-fed data check. i will call it on the edge of quiet. there is ge with a nice pop, not if you have owned it for 20 years. futures at negative one. a little bit of curve movement. onto the next screen quickly. francine? francine: i am looking at european stocks, moving sideways. a lot of the folks -- fed, pound, 187 -- 1.87. then i am looking at crude. we saw some concerns. then turkish lira, because of the u.s. sanctions on turkey because of syria, is that 5.7437. tom: on ge, the key headline from the olden days was organic revenue growth of the industrial segment, and they are calling it

mid-single digit. that sounds about right. a little bit of a lift to ge out of the valet of the last 24 months. the presskee in conference. is he going to ask the same question? it is a brilliant question. if you cut interest rates, well, what is the effect? what does it do to the economy? we will find out if michael mckee redux is that question at 2:00 p.m. this afternoon. anthony consents he of pimco. let's wander through a bloomberg chart. it is the treasury bill compared to the benchmark yield -- the benchmark 10 year yield. the flattening of the yield curve, the inversion of three , 10.s not only have we come back, but we have come back near two standard deviations, better than this trend. that is a nice set up to one of paperrld's experts on the

market. anthony chris enzi -- that is what everybody talks about, that we have broken and the flattening trend. --is astonishing >> it is astonishing that the curve has re-inverted. confidence in central banks is lacking. it is also confidence in democracy and capitalism. sense mean is, we all that the federal reserve is pushing on the preserve reels -- the proverbial strain, the fed chair from -- 32. i have to go back to really doing't very much. central banks are. that is what is the astonishing thing about the lack of inversion in the curve. especially between the two-year note and a five-year note. a he thought there was likelihood of a --

there is a high chance that the fed puts the policy rate at zero in the five-year period, which is why the curve inversion is in the first place, not necessarily because there is a feeling inflation will fall sharply. we are feeling that the fed might lower the policy rate in the next year or so, but that it might somewhere in the future. the market is saying it may not. it may not get to zero. that is the astonishing thing given where rates are in japan and europe, of course negative. francine: tony, are you saying that it is the markets -- hi there. are the markets leading central banks the echo tony: are they leading central banks? of course. this is the judgment of millions of investors. alan greenspan said that who are we to put judgment up against millions of investors when looking at signals in the bond market? are 17 members of the federal open market committee

that will make the decision today. so, yes. i stress this suggests confidence in capitalism, democracy, or even in the u.k. you see -- where even in the u.k. you see the ball rolling. old man river keeps rolling along. there is no confidence in companies continuing to strengthen income and households as well. tom: does old man river -- that was a joke. tony: pushing aside populists who are distracting us, causing us a lot of stress. am: come on, tony, you are fat cat from pimco. the chairman has been very good about mentioning these inequalities. tony: inform, but there is nothing the central bank can do about that. they can produce nothing but money. they create money, they cannot produce productivity, which defines changes in living. if americans want to boost -- want to use their standard of

living, they need to focus on investments, not produce more money and more things that change a nation. doing much, and why? because they do not have a lot of money, a lot of foresight. why don't they? a lot of money goes towards programs that become pretty large relative to the available moneys, and we have to look out decades forward to say future generations, we may not have as much for you in your retirement. perhaps we can take some of that money now, invest it in the nation, and you will benefit in the long run. but that is not the choice that politicians are making. it is the third rail of politics to talk about. entitlement programs are absorbing a lot of the nations' capital. francine: let's get back to the data in the next couple days. what are you expecting from the isn? would that make you change your , with what is expected on

what the fed does next? that is a small part of the u.s. economy, about 85% of the 150-plus million jobs in america, in the service sector, so we can often get distracted. all that said, the economic calendar is laden with statistics for the factory sector, so market sentiment can be driven by the factory sector. it is an important statistic. it seems likely in the months ahead to rebound a bit, that that will help feed optimism and perhaps the stock market and the credit markets. tom: tony crescenzi with us. it will be our discussion through the day. on general electric, i want to go back to the inorganic -- listen to me -- the organic growth of general electric, mid-single digit, which is there. the ship is being righted on the

headlines as they still come out. they talk about positive territory for 2020. it is a long time from the general electric of mr. welch under the years of early immelt as well. scarlet fu is leading our coverage this afternoon. hawkishh cut and the will come from the tone of the statement. with the close questioning of chairman powell in the press conference. again, on european banking, disappointment from credit suisse and deutsche bank. please stay with us. this is bloomberg. ♪

>> nobody thinks negative rates are the signal of a healthy environment, healthy economy. rates --ve interest >> for our business it is not a good thing. >> if this situation stays what it is for a long time, we will charginghink about institutional customers a large customer deposit. across ourooking businesses passing on negative rates to clients, where it is proven sensible and also legal. >> they have put a lot of money into our bank. our deposits grew by 6%. >> it makes you feel like you have to change at some point. francine: those were banking executives we heard from this morning, talking specifically about negative rates. tom, we spoke at length at about negative rates. we also heard from italian banks.

,f you have nonperforming loans the negative interest rate environment is beneficial. for the rest, it hurts them. i also asked if this is an unfair advantage or if they are penalized because they are less dynamic than u.s. banks. he says they can still compete with u.s. banks, but it explains a lot in the focus. he wants to compete with the u.s., but negative rates make it more difficult. something that we talk about ti ering, it is important. but we have not had the effect tiering on thef banks. tom: lori l is a company that does 16.2% per year off of things like fragrance. maybe that will appear to the gentleman going after tiffany's in the united states. it is again a conversation, loreal out a number of hours ago and the stock moving up

smartly. their chief executive officer, on what they have been doing and frequents and across all of the l'oreal world. here is the chief executive officer. >> we have grown. you know, there is a very strong boom in asia. in asia, and china, and everywhere. even japan and korea are doing pretty well for us right now. double digit growth. so that is good. western europe is a bit better than before. 3.5 percent growth, which is not bad considering the .arket north america is a temporary drag. the market is positive. we have been under the market,

but we are doing everything it takes to buy back. >> what are you doing in north america to address these issues, and when do you see a turnaround there? >> it is actually not america. we have two divisions that are doing very well. there is the active cosmetics division. with two other divisions, consumer and luxury, and we are doing what we know what to do in terms of new launches, new communication, better commercial excellence, and we are confident that not this year, but the year -- because the year is almost over, but that next year we will see improvements. in terms of fragrance -- is that what you are going to keep, these new launches continuing to drive growth into 2020?

>> i think so. we are very happy with the launches on the fragrance side. countries are in the top two, and it does not equalize at these two fragrances are very strong. we are also launching a new valentino fragrance, and we have soon the acquisition of two fragrances from france. boosting ourlly fragrance portfolio to maximize. tom: a 90 day message from l'oreal. i am not going to link them together, but mr. erdogan is speaking in and kara, managing his domestic -- in ankara, managing his domestic message he

has surged in a polarized turkey from what we have seen on the border. now in a headline, vladimir putin will not attend the apec meeting in she lay -- in chile. stay with us. this is bloomberg. good morning. ♪

tom: good morning. "bloomberg surveillance." francine le kwak, and tom keene.

francine lacqua, tom keene. and of course fed day. tony crescenzi is with us, of pimco. joining a snuffer a shockingly extended time, david rubenstein. shockinglyus for a extended time, david rubenstein. here is the book. when it lands on your desk, you go, damn, i have to read this. we will get this in the next half-hour on doris kearns goodman and the other giants who have written about our ancient history in modern time. we will do that in a bit. i want to do the american story and dovetail tony crescenzi's expert. here, a trillion there, pretty soon it adds up. is anybody in washington or your financial word -- financial world concerned about trillion

dollar deficits? a whatever was said, it is billion dollars there. trillion is now because billions are not up anymore. chileans are what we are talking about. tom: that is semantics. 20the truth is we are trillion dollars in federal debt, piling up that at a rate that no other country has seen in recent years. and normally you pileup this kind of debt when euro -- when you're in a war. there is a theory, monetary theory, that it does not make much difference because it is all in currency. i am not sure i subscribe to that. to answer your question, nobody in washington is that concerned because they keep passing bills that increase debt, and nobody in the market is concerned about it because the market keeps going up. tom: you are physically shaking as you hear this wonderful summary. yields are low, we don't care, right? tony: the question people often ask me is, when will it all matter? when will we blow up?

will there be another 2008? well, indebtedness is affecting us now. we do not have the money that we could use toward transformational ideas and infrastructure, technology, so on and so forth. so does anyone in washington speak to the idea of investing more? we know that the president wanted an infrastructure program. democrats typically do. yet washington cannot get it done. can you envision after the election any change in the fiscal story that moves the money around in a different way to help america boost productivity? is it will noth be better because there is not likely to be any major infrastructure bill. the democrats have one view and the republicans have a different view about how to do it. the truth is we have a big fiscal problem but we are not worried about it because the stock market is doing ok.

it will come down when it comes down. then people will say it is obvious, and then there will be memos from economists saying i predicted this, but nobody is listening to them. francine: when do you think the next -- david, when do you think 2008 ugly recession comes? where will it come from? david: economists and business people are good at predicting -- they are good at session why a recession happened but not predicting when it will happen. the recession will come at some point, but nobody knows. not seem therees will be a recession until the 2020 election. on the other hand, if some exhaustion is political event or -- some political event happens, i don't think there will be the chance of recession in a near future, but we have very slow growth. it is not spectacular. tom: is there a scoop jackson

out there for the democratic party? david: nobody quite of his existsg capabilities right now. scoop jackson was a senator from washington state who was seen as very liberal on domestic policy, conservative on foreign policy, and he was a legendary figure in the united states senator there is nobody quite like that right now. has been magical. tony crescenzi and david rubenstein. we will continue on this on fed day. very important, and also a celebration of the american story. david rubenstein. coming up later today -- this is bloomberg. ♪

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tom keene in new york. anixter will be taken up by clayton as well. unchanged right now. premium pricing is a little confusing. isould mention that sam zell involved in this transaction. tony crescenzi and david rubenstein are with us. next week david rubenstein will be interviewing the manager of the houston astros or the washington nationals. in celebration of the american story. covering the american story each and every day in washington is kevin cirilli. the lady from hawaii, she is writing up the end of the clinton doctrine. mrs. clinton's failed legacy -- this is not a pretty spat between secretary clinton and me. it is a serious contrast about the choice of who is best to do -- best equipped to defeat the president.

a gabbard presidency would mean the end of trying to police the world, only when we recognize the feelings of the past, embodied by clinton and her minions in the media can we move forward to a future of peace, dignity, transparency, and a loja. -- aloha. to kevin cirilli. our chief correspondent in washington. give us the view of the gentlelady from the second congressional district of maui and hillary clinton. kevin: it is not just hillary clinton who has criticized tulsa gabbard. has garneredbard praise for her military service. it is whispered about in washington, d.c., which is foreign policy views. she has taken a more libertarian libertarianesque view,

akin to rand paul, with whom -- with whom she works with on for on foreign-policy legislation. the criticism for hillary clinton helped propel her and to some extent to be able to write op-ed's like that. tom: is she running for vice president? kevin: no. that mean it this way. i don't think that she would make the shortlist in terms of a serious contender, given her foreign policy views that are so ,t odds with so many democrats not just hillary clinton. so much, thank you kevin cirilli. let's go back to the thing that is worrying the markets, the fed a little bit later on, and of course the u.s.-china trade war. let's go back to tony crescenzi of pimco and debit rubenstein at carlisle.

also the author of "the american story." if the trade war changes course, and i don't know the likelihood of an agreement in the next couple of months, what does that mean for the federal reserve? david: even a trade agreement will not get rid of the underlying facilities. the u.s. and china are traversing toward decoupling, the battle for power. it is not like it was with the soviet union when that was more, you could say, military. this is more economic. the u.s. may stand to be second somewhere in the far future, and this worries many. many think far sinister ideas from the chinese. it will not go away completely, if if you are an investor, you shied away from taking risks, you lost. so you have to simply not worry so much about the ups and downs, so long that it is relatively stable. and you think about what to do in terms of being a capitalist.

with the u.s.-china trade war -- go ahead, david. david: i am pretty sure there will be a trade agreement. both sides want a trade agreement. it will not be as comprehensive as both sides want it. it will be a scaled-down, phase one agreement. both sides want it and needed. the markets will be happy to have had it, though they will say there should be a bigger agreement down the road. when you have two economies that are the leading economies in the world, it has never been the case that those economies say they love each other and we should cooperate on every matter. think the trade agreement will reduce tension somewhat, but not eliminate it completely. francine: is this because china that if the democrats win the next presidential election, they will be even tougher on them? david: i think the chinese

government, it is hard to know what they want, but i suspect they would be probably pretty happy with president trump in many ways. he has been tough in some respects, but they know what he is and what he is not, and i think the devil that you know is better than the devil you don't know. beuspect they would not unhappy to see president trump reelected. that would be my guest -- my guess, based on talking to some chinese officials. i don't think any one person could speak to the chinese government. tom: i think it is inaccurate to say you are a visible come out front member of the democratic party, but clearly associated with your public service with president carter a number of years ago. simply, the view from your library of congress, the view of washington right now -- what do you make of it, as a general statement? david: i did work for president carter. i am an independent. i give no money to politicians

on any side. i interview historians, members of congress, they want to cooperate because the tension is in washington -- because the tension is in washington -- i cannot interview great historians in front of members of congress, have them sit with members of the opposite party. i would not say the era of good feelings has broken out, but tensions have been reduced somewhat. tom: is that like a wedding, with each side of the room? david: know, because there is no press there to make sure they are doing certain things. members of congress like to hear about american history, and i try to give them background from some of the greatest scholars we have in american history. tom: when you look at his contributions to ford's theatre and the library of congress, among many -- david rubenstein, this is an important book, and the most important part of the american story is down at the

bottom, saying "and more." bunch of stories including cokie roberts. stay with us. ♪

"om: "bloomberg surveillance right now. francine lacqua in europe, i'm tom keene in new york. right now on apple, a gentleman in the market 2008, 2009. he has provided immense value to not only mario gabelli, but also bloomberg surveillance. howard, once again, we see apple is terrible, the product is going to die. you and i have seen this cycle. i mentioned to larry the other day as well, and upward we go.

is there a sustaining ability for apple to move units, or is it a flash in the pan? howard: tom, stock has been a perennial low expectation stock. they have executed flawlessly now for a number of years. ebitda has gone five times since 2013, multiple on earnings from 15 to 20 in the last couple years. demand come as you mentioned, lots of people has been --ptical, that iphone demand iphone demand, the iphone 11 is doing very well. everything suggests very solid quarter. the china business, there has been a lot of fear that the china business was at risk given trade friction that has developed with china. then you have the services business.

be about 30% of revenues, growing north of 20%. that is why you own the stock. you really own the stock because you are getting a higher ittiple on the services, and is faster growing, far faster growing than the rest of the company. after all, the company of this staggering size, with $260 billion of revenue, revenue is going to be growing i think at best over the next five years, navy at 4%. so if you have part of your business growing north of 20%, that is a higher multiple, more annuity-like business. that is what drives the stock. in the meantime, there is excitement. we are going into a year where they will launch a five to five g cycle. there is excitement about that. they will launch apple tv plus in the next few days. there is excitement about that, even though it is financially immaterial at this point. i just have to tip my hand -- tim cook has been doing a

fabulous job. francine: let me jump in here. expecting revenue to come in around 3% lower than in the previous quarter. they have held up because they managed to raise prices for the iphone. how much more can they do that? how many more prices can they raise? well, this was not a big year for apple revenues. revenues are down in single digits. -- markets are looking revenues are higher for the next projected two years, and part of this is a 5g ramp, and therefore a into health care, which they are planning. they have had -- they have done a great job of managing the price of the iphone or the average selling prices are about $733 this year. they will probably go up next so., maybe to $750 or

this has been one of the other points of skepticism about apple. the asp's and growth margins, people thought they would be much lower than they are today. they are not. the demand for apple products is so strong, brand loyalty is so great, that is so great, that tom: howard ward, we have to leave it there. what a joy to speak about apple. with david rubenstein, a student of the history. google laggingt, behind. what is so important to understand on this chart is everything else in america is essentially down with that white blue line -- with that light blue line at the bottom. 91% rockefeller controlled of refining in 1985. invented the standard oil company of new jersey to royal up -- to roll up

the industry. is that the equivalent that we are taking, the oil company, with technology, and now they are breaking it up? david: these technology companies are really working around the world. they are global companies, not u.s. companies. breaking up any of these technology companies is not likely to reduce their power that much. many companies will just be three or four companies as opposed to one or two in a different -- in a given area. because the united states is the technology of the world, we have to be careful because there is a race between the united states and china to control world technology or dominated. i am not sure we would be a strong around the world as we would like to be. tom: senator warren is leading the charge on this with others, and it is not so much anticapitalism but fear of success. these people -- when did you first meet jeff bezos?

david: about two years after he started. tom: we want to tell jeff bezos how to create jobs and paychecks for americans? david: i think the largest technology companies -- amazon, apple -- have created in a norm us amount of jobs in the united states. -- have created an enormous amount of jobs in the united states. congressman and senators do not break up companies. i don't think the justice department right now is likely to break up these companies. trying to break up a company really does not yet done so easily, if at all. in terms of targets, are you looking at anything in europe and asia? is there good value in asia right now? david: the private equity right now is worried about prices. prices are high for sure. on the other hand, that is relatively available and

inexpensive, and the economy is growing at a reasonable rate in the united states and around the world. we are doing deals but relatively fewer and with very careful concern about the prices that are being paid. the private equity world is in good shape, money is coming in, and there are a fair number of -- i think it is in reasonably good shape. francine: is it money that is not going elsewhere because negative rates in europe? are you seeing money from investors saying let me go into private equity because it gives me some kind of return, chasing yields? there is a general view around the world that we will have a recession at some point. but aced on the last recession, private equity -- but based on the last recession, private equity did very well. investors are putting a fair amount of money into private equity in the fear that private equity will buy things at a cheaper price, and that then -- that when the recession ends, rises will be pretty good.

it will probably be used when the recession hits whenever it does and prices are relatively lower. tom: david rubenstein with us. when we come back we will dive into the american story. it is truly extraordinary. coming up, again on technology, she manages the message for he -- that would be facebook -- ms. sandberg of facebook. it is fed day. this is bloomberg. ♪

>> on fiscal policy there is no room for additional tax cuts because we already have such a big deficit you could not cut taxes anymore. do you not agree with that? >> i believe in terms of spending that probably there will be increases in spending, that probably will not be well-funded. when you ask about that, i think we have a political question. which is relevant to also the markets. between now and the elections, we are probably going to have very different policies. more of the be left, policies more of the right.

greater polarity and the choice will be great. francine: that was the bridgewater associates co-chief investment and cochair ray dalio , with david rubenstein. you can catch that tonight at 9:00 p.m. tom: very good. david rubenstein with ray dalio. the american story -- david rubenstein out with an exceptional set of discussions on how we manufacture our history. i would suggest this change with ron chernow and alexander hamilton. i remember the day were somebody set up and said, you sold 340 5000 hard-core additions. we did not know you liked -- hard-core additions. more: i tried to give information to american -- two members of congress. once a month i hosted a dinner at the library of congress.

i will have ron chernow or david mccullough, and members of congress are like schoolchildren or they come with their dogear copies of the books. they have read them, they want to get their books signed by the authors like anyone else, and they care about american history. ahistorical? are we losing our history? -- of gum -- our 75% of americans cannot name the three branches of government at 49 out of 50 states, citizens who are nativeborn cannot pass the citizenship test that naturalized americans have to pass to become citizens. in our country, the nativeborn citizens cannot pass it we do not teach civics anymore in high school, and we do not teach american history very much. if you don't know the past, you might make the same mistakes we have made in the past because you do not know about those mistakes. know the david, you

past because you have written this book where you interview great master historians. what other great parallels between your interviews and the history of the u.s. and what we are living at the moment in washington? times we always say that in washington are the worst we have ever seen and people say it is terrible and people do not talk to each other. it is nothing like the civil war. the civil war, we were killing each other. other times in congress, we have had members of congress hitting each other on the head or physically beating up members of congress. it is not that bad. there is tension, but it is not worse as in previous times. francine: what would george washington make of what we are living at the moment? david: i'm sorry? francine: what would george washington make of what we are living at the moment? washington did not want to be president of the united states. he was 57 when he became president. he wanted to retire after a few

months he did not like the job, but -- he did not like partisan politics. he did not like the kind of political parties that arose while he was president. i would say he would not be that happy with the partisanship that we now see. tom: my book of the year, spectacular on george parson -- shores washington and the early parts of the revolution. elijah cummings, he got the play but polarized in washington. why should republicans remember the gentleman from baltimore? david: elijah cummings is somebody i knew. he went to my high school a couple years after i graduated. he was a very talented legislator, but he had a sense of integrity and a sense of commitment to the country that is rare in some respects. he was universally respected by members of congress. tom: there is white marble in washington, from reagan into the northwest district. the scaffolding of the jefferson memorial. have you been up top of the

scaffolding with your new commitment to the jefferson memorial? david: i was there yesterday and i did a tour of the jefferson memorial. the jefferson memorial is going to be redone. in the future,re underground, you will be able to see more of that and learn more about jefferson. the same thing i tried to do at the lincoln memorial. is: the jeffersonian thrust something president trump is trying to emulate. he has andrew jackson in the oval office. but there is that distrust from washington, from reagan, and in your book. and all the way to trump. it is not jeffersonian, isn't it? david: jefferson did not believe in what we believe as common principles per he wanted the constitution rewritten every 20 years. his friend james madison was heavily involved with it. i would say jefferson although -- always believed there should be a bill of rights, but jefferson believed in relatively

small government, until he was president. when he was president, he said i need more government because i need to buy the louisiana purchase. which he did. here to peer on bloomberg, the american story, i cannot say enough about this. and a gentle chapter was cokie roberts. please stay with us. it is fed day, an extraordinarily important day. i would say the press conference, word by word, will be crucial. it is a day of a hawkish cut. please stay with us through the day. this is bloomberg. ♪ the game doesn't end after that insane buzzer beater.

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[indiscernible] suisse ceo sounds the alarm bell for the rest of the year as deutsche bank suffered a setback in its turnaround plan. and the $49 billion dream. two car companies talk about a merger while volkswagen warns of a challenging market. in sustaining the expansion. the phrase markets are waiting if chair powell will signal a pause or cut. welcome to "bloomberg daybreak" on this wednesday, october 30. a very busy day lined up for you. equity futures are pre-much flat. are pre-much- flat. -- rp much flat. sb futures reporting today.