rally. the u.s. and china will rollback tariffs in phases as they move towards a deal. the european commission cuts its inflation and economic outlook. cut?e resist a rate bank of england out with its latest rate decision forecast in moments. welcome to "bloomberg daybreak" on this thursday. i'm alix steel. the surprise, they do not change their benchmark rate coming in. unexpectedly, you did have two dissenters to actually vote to cut rates by 25 basis points. that is a very surprising thing. a new forecast coming out. it used to be the inflation report. now it is the monetary policy report. it will be a lot for the markets to digest. they see inflation at 2% in two years, 2.3% in three years. they keep all their bond purchases the same. they continue to say a smooth

brexit and global stabilization may mean a gradual -- may mean gradual hikes, but they did change the ascension on brexit for their latest projections. they wound up looking at brexit for their latest projections. they see inflation not hitting 2% until two years from now. most importantly, two dissented and voted for a rate cut up when he five basis points. we are joined by bloomberg's nejra cehic outside the bank of england. you are looking at these headlines the same way i am, as they come out. what stood out to you? david: yes --nejra: yes, that ters, one ofo dissen whom was michael saunders. if there had been 80 dissenters, he was one that was expected. that split vote -- had been any dissenters, he was one that was expected. that split vote coming as a

surprise. i am just taking a look at some of these headlines here. in terms of cutting the inflation and growth forecast, that was expected for both 2020 and 2021. it really is that split vote that has come as a surprise because all of the economists surveyed by bloomberg did expect a unanimous vote 9-0 for rates on hold today, but with increasing risk on brexit and entrenched uncertainty, as the bank of england called it, that seems to have a dovish tilt here. you have hsbc and bank of america merrill lynch saying they like the front end of the gilt curve, rather than seeing to cuts in 2020. ubs putting on some tilts as well. we seen a selloff in gilts today driven by the global bond selloff.

it will be interesting to see if that turns around. alix: the long end of the curve is paring some of those losses. they had been up by about six. the front end actually slipping into positive territory, supplying the short end a good call. the cuba day could be pretty interesting -- the q&a could be pretty interesting. what you feel will be the most interesting question that could be asked to mark carney? nejra: he's going to be asked lots of questions around brexit and exactly how the changing scenario is changing the bank of england modeling. the u.k. is going to an election december 12. that changes everything from their previous forecasts. if he lays out three different scenarios and how the bank might react to those, the way he has in some previous meetings. he's also likely to be asked questions, though i'm sure he will probably declined to answer them, on secession plans. that's been another question now that the u.k. is heading to an election. if there is a different

leadership in the u.k., all of that might change. he is do to step down at the beginning of 2020. a number of names in the hat. a well-known name in the city, helena morrissey, as well as some insiders at the bank having lend. there will likely be -- at the bank of england. there will likely be lots of questions around brexit, justifying changes to the forecasts, and possibly questions around secession as well. alix: really appreciate you helping me break down those headlines as they come through. so a dovish boe. let's see how it is reacting in the markets. s&p futures look to open at a record high if we open at these levels. euro-dollar holding onto those gains. you still have a global bond

selloff. on the u.k. in particular, paring off some of that on the front end. that really still permeating in the market. time now for global exchange. we are going to bring you today's market moving news from all around the world, from hong kong to frankfurt to new york. all of our bloomberg voices are on the ground with this morning's top stories. china and the u.s. agreed to lift tariffs in phases as the deal progresses, according to a chinese official. they say if they reach a phase i deal, both sides should rollback additional tariffs, simultaneously based on the content of the agreement, which is an important condition for reaching the agreement. joining me from hong kong with more is in the current -- is enda curran. what do we know about the potential tariff rollback? enda: it is a conditional claim of progress by china's commerce ministry that the u.s. is

granting some concessions on one of their key redlines for china, which is that tariffs should be rolled back when any deal is agreed. the commerce ministry in beijing is talking about rolling back tariffs in proportion simultaneously. all of this depends on whether or not an agreement actually is reached and signed. don't have the final details on any agreement yet. the question will also be how the u.s. response to this. will they interpret china's commentary is an attempt to front run any negotiating process, or is this a broad tract that both sides are on? agreementon't have an publicly for any venue for signing a trade agreement. progress appears to be being , but in terms of the details and the timing of when any agreement would be signed, remains unclear as of now. alix: thank you very much for joining us.

next we want to go to frankfurt, where commerzbank downgraded its full-year profit outlook. bloomberg spoke exclusively to determine lenders's cfo under efforts to ease the pain of negative interest rates. >> everybody is getting a little bit more scared by the quarter because it is unclear how to reverse the situation to something that allows interest rates at the end of the day to do what they are supposed to do, capital flowsite in an economy. alix: matt miller joins us now from frankfurt. different than the unicredit ceo who says, deal with it. what was your take away? matt: really very different stories, and they, too, had some things in common. unicredit profit was up 26%, better-than-expected. they are offsetting the drop in lending income with higher fees

and better trading. so unicredit looks good, and capital buffer was boosted up to 12.6% in terms of the cte one ratio. that's what the two have in common. commerzbank also boosted to 12.5%. that is the good news. on the bad news side of the coin, they cut yet another target. this time it was profit. the last time i spoke with them, they cut the revenue target. before that, they had a new plan to cut costs, a new plan to cut jobs. almost every quarter, commerzbank cuts a new target. o said it is negative rates, higher taxation. they will try to pass on the rates, but they don't know, and you can't advise anyone as to how to get out of the situation. it is edging towards a crisis for german banks. alix: thank you very much. we turn now to tech.

qualcomm reporting fourth-quarter earnings after the bell yesterday that were stronger than forecasted, indicating that smartphone demand they be picking up after , with five years of revenue declines. 2020 is the year of 5g. i want to thank everybody for their hard work. we are on the cusp of it, and i am very excited about it. alix: joining me on the phone is bloomberg intelligence's senior tech hardware analyst. is this a qualcomm story or a chip side story? reporter: i think it is a combination of both. qualcomm has been preparing for this for a long time, and we are starting to see early 5g, particularly in china. china wasn't as weak as they had expected, number one. number two, i think there are going to be some 5g handsets sold in china, potentially as

many as 200 million, and that is going to raise the prices of handsets. they're going to participate as much from the royalties side of the business as much as selling chips into them. they are going to benefit from both. it could be apple hangover behind them. i think that is a positive. finally, they have a royalty agreement with huawei like they did with apple that is going to be yet another positive. but i think five years of revenue and earnings decline, this is a much more positive tone that people had anticipated , and something to look forward to, for sure. alix: thanks a lot. here's another story that caught my eye this morning. we talk a lot about how china is going to really support its economy. here's what it might be doing when it comes to small banks. it is considering a wave of bank mergers. problematics banks with less than $40 million in assets would be forced to restructure or

merge. this is about 13% overall, about 1/8 of china's banking assets. in the past two weeks, depositors rushed to withdraw money from two small banks, and this could end up spurring a merger to help them. in the u.k., the cable rate dropping 0.2%. 10 year yield up by about four basis points, paring some of the losses we saw earlier. it is all about the dovish tilt. two dissenters look forward to a rate cut at this meeting of 25 basis points. theill break that down, peak dovishness conversation for central banks may be pushed out a little bit more. coming up, much more about that in today's first take. this is bloomberg. ♪

♪ alix: time now for the bloomberg first take. joining me from our in-house team of wall street spurts and insiders, vincent cignarella, brown, ubs and evan asset management head of multi-asset strategy. love when we get something unexpected. it's what we live for. trading cable today? vincent: you asked me yesterday about sterling and the risks inherent in the cable rate. if you look at it, especially today, the bank of england says if there is a brexit, they are looking to ease rates. in the short-term, generally negative for sterling. if you have a brexit scenario which doesn't play out well,

that is negative for sterling. so the asymmetric risk is to the downside of sterling. if you go to trade it, the topside seems to be capped around 130. onedownside could be dweller $.24 -- could be $1.24. alix: mike, your take? michael: basically, the bank of england joining the rest of the world in saying we have uncertainty and we have headwinds. alix: and not just brexit, global. michael: that is their view, then they might have to cut rates. the idea was based on the idea of a global slowdown, not just a brexit event. so at this point, they are acknowledging what the rest of the world said. going into the meeting, their view was if we had brexit as scheduled on october 31, we would probably have been raising rates in the euro to because the economy is stronger than thought, and we would be

bringing in inflation. at this point they are saying we don't know what's going to happen, and there's a chance that because of the global slowdown, we might have to cut rates. evan: put simply, if you don't have to trade sterling, then don't. [laughter] alix: that is vince's motto, right? don't you hate trading cable? vincent: it was one of the most exciting times of my life, to be perfectly honest with you. it is just the adrenaline you get from trading sterling is probably more so than anything else. alix: so maybe to evans point, you don't need that. evan: the bank of england is dealing with the same uncertainty we are. we actually were long sterling against the euro until about a week ago, and then took it off because with the new election, it is too unpredictable where this can go for brexit, future economic policy, and bank of england. we would rather take a step back, let the politics go where it will, and see if there are

other opportunities down the road. vincent: the fact that the person who is going to be making a speech in a few minutes isn't going to be there to make this decision, so what follows and who follows will be very influential. obviously the head of the bank tries to mold people she's thinking, and we don't know who that is going to be yet. holtzman official mr. weighing in on just that. here's what he had to say. >> monetary policy seems to have reached its end. going further negative will quite likely not have a positive output on inflation. alix: ok, sure. i get it. michael: good luck with that. there's no indication that anybody is going to do any fiscal policy. the germans still have this law

that they want a balanced budget, and they've got to limit the about of stimulus they can put into the economy. they don't even knowledge they are in trouble. we did see some numbers yesterday that suggested maybe things are bottoming out, so it is not likely we will get anything in the short run. if all goes pear-shaped in the european economy really heads out, somebody might change their mind. but at this point, waiting for that is sort of like waiting for a unicorn for christmas. alix: which my daughter is probably going to want. to that point about bottoming out, you have global pmi's bottoming out. at the same time, we didn't even talk about trade yet. we might have tariffs rollbacks if we wind up having a deal. people are looking for the reflation trade. what do you guys think? is this at all i think? evan: we are in that camp. manufacturing is what took us down, and manufacturing is what is going to take us back up. we are seeing a bottoming out of the pmi's. we are seeing some big inductor prices and volumes picking up --

seeing semiconductor prices and volumes picking up. we actually like europe, japan, emerging markets. everyone knows the european .conomy has been struggling germany more or less in a technical recession. markets are forward-looking, and global manufacturing is picking up. that should be positive for germany, and generally european assets. vincent: the question is, is the bottoming due to inventory drawdowns, especially with germany with factory orders? at some point, people do have to buy something. inventories drawdown. i would like to see another set of numbers in another month to follow through. we are obviously getting some positive talk from trade, but it was very interesting yesterday. after the decision was made by china that it didn't fit in president xi's schedule, we really know it was the optics of signing a deal in iowa, the white house said, what is your schedule like? they are in desperation come on

my opinion -- they are in desperation, in my opinion. they want the u.s. to roll them all the way back to basically zero, and china has not made the commitment that they would do the same. a lot of the forward progress china is making, they are making with all countries, like breaking down the financial sector, essentially trying to move finance out of hong kong to shanghai. this is all too china's benefit, and it looks like a fig leaf to the united states, but -- and olive branch -- an olive branch. [laughter] vincent: i get confused with that. michael: you've got to remember rolling back, the u.s. rolling back the additional tariffs donald trump put on at the beginning of september and the countervailing tariffs that the chinese put on would take us back to where we were in august, still in the middle of the trade war. on a percentage basis, the gross figures get better because they

don't get worse, but that doesn't improve the economy of either country because we are still in the middle of a trade war. we just don't have escalation going on. the trade are in headlines, worry about the details later mode. but it doesn't look like it is going to be something significant that is going to lift the headwinds of the global economy. alix: so what do you care about? you have a cyclical bias now, but you've heard the counterargument. what do pay attention to next? evan: we want to see continued follow-through in the manufacturing pmi's. alix: better, or just stable? evan: over the next three months, and improvement -- over the next few months, and improvement. on the trade front, i do think that rolling back the september tariffs would be pretty impactful. you may not see the economic effects of it immediately, but the optics of it are important.

it's not something, as we saw overnight, that the market is quite pricing in. alix: they are not pricing and that all of/-- that all of -- that olive/fig leaf. bloomberg television later today for "commodities edge" on what the impact of the trade deal could be, and also saudi aramco. you can find all of the charts we just used and more if you go to gtv under terminal. browse the features, check it out. this is bloomberg ♪ -- this is bloomberg. ♪

ritika: this is "bloomberg daybreak." the company best known for tv ratings nielsen is spinning off its business to create two independent, publicly traded companies. the new company, global connect,

is expected to raise debt. the spinoff will be complete within a year. offer,as made a takeover but it is ready to say yes. a deal between the two iconic names in technology could reshape the printing industry. bloomberg has learned that citigroup has agreed to provide xerox with financing. company would likely need at least $20 billion of debt to close the deal. that is your bloomberg business flash. alix: thanks so much. one of my favorite stories this morning is the european traders want more of a work/life balance. they want to reduce the trading day by 90 minutes. in a letter to european exchanges, the groups has a shorter day would help traders' wellbeing. the group also says shorter hours would create more efficient markets by condensing transactions. the london stock exchange says it will consult with members and customers.

ubs actually reduced hours. when with the last time you worked an eight hour day? evan: it's been a while. [laughter] evan: i think this is a good initiative. traders have a very focused and stressful period during the day, and depending on where markets so it isfects trading, probably better for their focus and trading skills. alix: a four week vacation in august might also be helpful. cuts growthhe boe forecasts for 2020 and 2021. mark carney's press conference just around the corner. this is bloomberg. ♪ here, it all starts with a simple...

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that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. alix: this is "bloomberg daybreak." still looking at potential record highs for the s&p when it opens up this morning. potential rollbacks and a trade

deal potential positive for the markets. semis doing well also after qualcomm. in other asset classes, looking at a bond selloff. it is all about risk on. the cable rate down 0.2%. we will hear why from mark carney in just a second. french 10 year yields in positive territory for the first time since july. evan brown of ubs is still with me. we are waiting for mark carney to come in. you much and you like europe. where in europe evan: -- where in europe? evan: germany. alix: really? evan: the country most everyone is negative on. we want to be going where the puck is going to be as opposed to where it is right now. alix: i think we have to leave it there. mark carney come a bank of england governor, is speaking now.

let's listen in to his press conference. it is important to not lose sight of the big picture. the world risks slipping into a low growth, low inflation rent caused by limited policy space and growing concerns about the fracturing of the global trade system. over the past 18 months, global growth has slowed markedly. trade has contracted. many of these dynamics occurred first in the united kingdom, particularly the heavy drag on business investment from entrenched uncertainties over future trading arrangements. now it's become possible that the picture in the u.k. to -eunge, with the recent u.k. withdrawal agreement crating a prospects for pickup and growth. that will depend critically on the extent to which uncertainty over the future trading relationship actually dissipates, and to a much lesser

degree, by how much the global economy actually picks up. both are assumed in the latest projections. neither is assured. in this context, and with inflationary pressures weak globally and contained domestically, monetary policy will need to be carefully calibrated to sport -- to support a sustainable recovery. the world economy has moved down from a broad-based expansion to a widespread slowdown. growth decelerating from around 4% two years ago to 2.9% at present. the world economy is now expanding at its lowest paste since the end of -- its slowest pace since the end of 2009. trade related uncertainties are clearly weighing on global activity. global trade has been falling since late 2018. but the global manufacturing pmi and new export orders remain in contractionary territory, and global services pmi is now softening as well. investment growth has fallen,

accounting for most of the slowing in gdp growth in both advanced and emerging economies. the headwinds from elevated uncertainty are likely pushing down on the global equally brim interest rate, exacerbating concerns about limited monetary policy space. in the latest projections, global growth remains subdued in the near-term, consistent with significant protectionism and growing concerns over the reordering of the rules of global commerce. against those structural headwinds, the recent material easing in monetary policies and financial conditions in most major economies is projected to support a gradual recovery in global growth to around potential rates by the end of the forecast period. turning to the u.k., the underlying pace of growth has slowed below potential, and the economy is now operating with a small margin of excess supply. quarterly gdp growth is expected 0.2% this year,

about half its pace in recent years. reflectsth partially the external backdrop i just described, which is weighing on both net trade and investment in this country. but as has been the case for some time, brexit uncertainties are dominating, weighing particularly hard on business investment, which unusually during a business expansion, has contracted during five of the last six quarters, estimated to be just 0.5% higher than at the time of the referendum. has provenending more resilient to briggs that uncertainties, growing steadily in recent quarters, underpinned by strong employment and a pickup in wage growth. however, there is no evidence of a degree of precautionary behavior with the latest data revealing that household savings rate has drifted up since the start of 2018. moreover, uncertainty has weighed on the housing market, and recent data suggests the

labor market could be beginning to soften. employment growth contracted by 1.2% in the three months to august, the weakest out turn since 2015. the vacancies has been following continuously since the start of the year. direct demand for staff index is at its lowest level since january. . 2012 indicators of pay growth -- since january 2012. indicators of pay growth have also fallen back. turning to would be withdrawal agreement and its potential implications, the nbc rejects -- the npc projects growth is likely to contract in the near term, but will pick up after. the brexit uncertainties facing businesses and households will decline naturally over the forecast period. the npc's standard practice is condition its policies.

although the details of that new trading relationship are still to be determined, the withdrawal agreement and a flexible extension to 31 january have some of reduced the uncertainty faced by businesses and households, lowering the risk of no deal significantly. the perceived likelihood of no deal brexit has also led to an appreciation of sterling, which has risen by around 4% over the past three months. assumedrojections, the reduction in brexit related uncertainty supports activity. in particular, fourth-quarter business investment growth picks up materially from current negative rates to around 4.5% by the end of the forecastperiod, the fastest pace since the referendum, and it recoups about 1/3 of the estimated shortfall since that vote.

household consumption rises broadly in line with real income growth over the forecast period as a whole, picking up from 1% currently to 1.5% in 2020 and 2% by 2022. demand in the u.k. is also supported by the gradual recovery in global growth and a boost from u.k. fiscal policy reflecting the planned increase in spending announced by the chancellor and his 2019 round. --e that these predictions these projections are on the current path for market rates consistent with bankrate below its current level through 2022. the extent of the pickup in u.k. growth is likely to be limited by continued weakness in growth in the supply capacity of the economy. potential supply growth is expected to remain subdued relative to historic rates, averaging around 1.25% over the forecast period.

that was let's a continuation of the postcrisis trend, as well as the impact of the u.k. transitioning to its new trade relationship with the eu. consistent with the provisions of the withdrawal agreement, the npc's latest projections are now conditioned on the assumption that a greater proportion of the adjustment to the uk's new trading arrangements with the eu take place within the three year forecast period, whereas previously, the npc's projections had been conditioned on a stylized assumption of a smooth transition to an average of possible end states, with adjustment taking place over many years. support for lower uncertainty, easier fiscal externalnd stronger demand has u.k. growth expected to pick up from around 1% this 1.8 to 1.6% in 2020,

percent in 2021, and 2.1% in 2020 two, so it picks up throughout each year of the forecast. ,n the committee's projections demand emerges in 2021 and builds over the remainder, reaching a sizable 1.75% of potential by the end. the npc judges that the risks around its projections for potential supply growth, and therefore gdp growth, are skewed to the downside in the second and third years of the forecast, reflecting uncertainty around the exact nature of the fta with the eu and the transition to it. turning to inflation, and has been close to target recently. it is expected to decline to ,round 1.25% by the spring owing largely to temporary effects of falls in regulated energy and water prices. while unit labor costs have been growing above target consistent rates and core services inflation has begun to increase

somewhat, employment growth has slowed and pay growth is likely to fall back in the near term. in the second half of our forecast, as a significant margin of excess demand builds, domestic inflationary pressures are expected to build as well. current market yields, cpi inflation is a specter to rise to 2% in the second year of our forecast, and slightly above that towards the end. let me conclude by turning back to the bigger picture into policy. followingf the period the eu referendum, the degree of slack in the u.k. economy has been falling, and global growth had been relatively strong. more recently, briggs that and slower global growth -- more recently, brexit uncertainty and slower global growth has led to -- we expect both of these trends to reverse.

that is an expectation, not a certainty. if global growth fails to stabilize, or if frexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in u.k. gdp growth and inflation. provided these risks do not materialize and the economy recovers broadly in line with the latest projections, a modest tightening of policy at a gradual pace to a limited extent may be needed to maintain inflation sustainably at target. the nbc judged that the current stance of monetary policy is appropriate, but however events unfold, it shouldn't come as set that the npc will monetary policy consistent with a sustainable turn of inflation to its 2% target. with that, we would be pleased to take your questions. >> usual drill, please. please, ones, and

question each the first time around. >> for my tv news, the bank is theming -- from itv news, bank is assuming that u.k. will leave the eu with the deal that's been negotiated. you are also assuming that the net effect of the deal on the economy will be slightly negative. is that right? gov. carney: the first part is right. the second part is wrong. we are conditioning our forecast, as is has been our long-standing practice on government policy, this is an agreement between the u.k. and the e.u.. it has passed the second reading in the house of parliament. now that we have a deal, it is conditioned on that. that is moving from a stylized brexit assumption to a specific assumption, as you say. but the way to look at the impact of that on the economy is to look at where the economy is it goes.sus where growth has been very weak

weaktly, suffering from global growth, but also intense brexit uncertainties. the economy growing less than an annualized rate of 1%. our current estimate is that for the year as a whole, growth this year will be about 1%. in every subsequent year in our forecast, conditioned on that deal, growth picks up to 1.6 2021, and 1.8% in above 2% in 2022. that growth is helped a bit by fiscal policy, a bit by a stronger world, a world that has stopped weakening and picks up a little bit, but 3/4 of that rise in growth is driven by domestic factors, the most important of which is a reduction in uncertainty driven by an orderly transition to a new brexit arrangement.

now, i will finish by just noting that that is an expectation, and assumption in the forecast, that the impact of the transition will be this reduction in uncertainty with a knock on effect, particularly in business investment, and events will see whether that transpires. >> "the times." previously you said that theresa may's deal would be largely better for the u.k. economically than the bank's central assumption on brexit. we have now got boris johnson's deal, and clearly, you state in the monetary policy report that there are aspects of it which will effectively weigh on growth relative to the model you have been using. is that not the judgment on government policy? is that not a judgment on boris johnson's deal relative to theresa may's deal? gov. carney: the first thing is

that what we have with an actual deal -- so, we never did a forecast with the previous agreement, what you are describing, because what happened was the agreement was struck with europe, and then voted down in parliament in the intervening period between it being struck and our forecast. as you recall, there were subsequent attempts, each time voted down. we were never in a position when it was government policy that could be put in. so we don't have an actual comparison of the two. the second thing, and to understand the dynamics of the forecast, what your question goes to the heart of, is that the big shift between what effectively was a stylized representation of an average brexit deal, at some

point in the future, with a very smooth, many year transition, to an actual deal with an actual transition timeline, albeit with an option to extend, is to bring into the forecast horizon some of those transition effects. customs procedures are put into effect is the first impact potentially of some reduction in passporting, gradual ling overtime -- gradual building overtime come potential divergence of product standards. you get some of the transition in the forecast period. deal -- theion of biggest impact is deal reducing uncertainty, at a minimum taking off uncertainty about the possibility of no deal. if you remember back in august, no deal possibilities were up around 1/3, in some cases

higher, so that is a big reduction in uncertainty. ,hen a path for transition balanced a bit by some of the adjustments that take place at the latter part of the forecast. last point, but we don't have is we only do forecasts for the forecast period, so what we don't do is assessments of the long-term impact of this deal or any other deal. ed. >> thank you. sky news. we are at the start of an election campaign. a lot is being talked about. extra spending plans, extra borrowing for both of the major parties, as well as some of the other ones. you will be wary of intervening in that in any way, but given that you are one of the few institutions out there still forecasting how the economy is doing, what are the applications

of looking not necessarily at any particular party, but big spending, big borrowing for the economy and for what the npc would have to do? well, there's always develop meant in government policy, whether there's an election or just in normal course. we take those as given. we adjust our forecast once policy changes. one of the advantages of monetary policy is, in many respects, it is much more nimble than fiscal policy, and we can respond accordingly. there's upside and downside risks in any forecast. one of the upside risks to this forecast would be around future fiscal policy. that is not uncommon in any particular platform or program. again, we would take those into manifestoes, but as actual government policies.

i will give one example which is notable in here, that the decisions in the spending round last month adds just under 0.5% to the level of gdp over the forecast. that is a set of actual decisions that will have a notable effect on forecasts. following the election, there will be a budget at some point, and then we would take that into account. question,near-term you talked about trend growth being roughly half what it was a year ago. you talked about less pressure on the cpi front around 1.2% in spring of next year. you've added a line in the mpc minutes, saying that monetary policy may need to reinforce recovery in growth and inflation. are you gearing up for a potential interest rate cut in the near future? gov. carney: the first is that

that is just what growth, that is how growth is performing. as i mentioned at the start and in the report, it is growing at half the rate, the average rate, of the previous years. secondly, the biggest driver of the move in inflation are temporary factors. petrol prices are down a bit. sterling is up a bit, so you get some pass-through from that. most importantly, regulated water and energy prices, decisions that have been taken -- takenat and off jim will move down to around 1.25% by the spring. we will look through particularly the last of those, as you would expect. potentiallyout reinforcing the recovery is that , in the event that some of the downside risks to the forecast

materialize, given the starting point of the economy that it is imposition of the judgment of the committee some excess supply, so not operating at full potential, and given where inflation is, underlying inflation, not temporary moves, if we didn't see the expected reduction in uncertainty, and therefore the pickup in activity, or if the global economy were to stabilize, as we are projecting that it will, if those were to happen, there may be a need to provide some reinforcement. but that is not pre-committing to anything. it is observing the balance of risks on the forecast. larry.ill come to times. -- "sunday times." it looks as though you are assuming that what you describe

as a deep free-trade agreement concluded by the end of 2020. pretty well every trade expert says it will be impossible to conclude a deep free-trade agreement in that time. is that your assumption, and do you think it's realistic? gov. carney: there's a few flexibilities here, as you know. that there is a core timeline for concluding this arrangement, which is exactly as you just stated, by the end of next year. there is a provision under with the withdrawal agreement that the negotiating period could be extended by up to two years. that is a mutual decision that has to be taken by the middle of next year. potentiala range of -- well, there are certain things in the agreement that , veryeen agreed upfront

importantly, no tariffs, no fees , no other costs. that is agreed upfront indie, nation withdrawal agreement and political declaration -- upfront -- upfront in the combination withdrawal agreement and political declaration. i will note that one trade former director general of the wto, has observed that this is a very different situation given the starting point, particularly on goods standards and other aspects, making that point in a positive sense in terms of potential execution of an agreement. all of that said, he thrust of your question is could it potentially take longer. yes, that's possible. there's flexibility in the agreement that it could take longer. and is it possible that there peld be some info mentation -- some implementation period for the agreement?

yes, that's possible. so what we've done, which is a supplying assumption, not based on any knowledge of how this actually transpires, is to assume that there is an orderly transition over the time horizon. that customs checks come into effect. of thate other impacts trading relationship that are likely to happen come into effect, such as some reduction in passporting and financial services, which has an impact. some other services such as legal services, which can have an impact. there's gradual divergence, most of which will happen beyond the forecast horizon, in terms of product standards and other standards, which is to be expected because it is not overnight that either side would instantly change those types of rules. so they are simple flying

assumptions. i would have to say that what you can reasonably expect is that in subsequent reports, as more information becomes clearer about what is being negotiated, what is on the table, and the timelines around both completing those negotiations and any implementation, there will be adjustments that could have an impact on the outer years of the forecast. so we've done our best given what we know, and i'll finish with this because this is what brings it back to activity over the course of the next few years. the broad to which expectation of an orderly transition to some deep free-trade agreement is the expectation of businesses and households, then we expect these type of dynamics in the economy. but if that becomes an doubt for whatever reason, or there are profound uncertainties about the end results or timing of either

nature of the agreement or the transition to it, that will be pulled forward into activity, and we will see less of a reduction in entrenched uncertainty, and to go back to the first question, we will see less of a pickup in the economy in subsequent years. yourthat loops back to predecessors question, which is around what are the applications if there is anticipation of the entrenchment of uncertainty for monetary policy. >> barry elliott of "the guardian." the sad day of your departure is rapidly approaching, and the government has yet to appoint someone to be your successor. perhaps it is having trouble finding anybody as illustrious. but i wondered whether you've been asked, if you've been prepared to stay on past 31 january. if not, would you be prepared if

the government came to you and said, there's so much going on, brexit day is approaching, elections just happened, would you be prepared to stay on if you were asked to do so? gov. carney: well, you almost set all of that with a straight face. that i'vecommitment a smooth,een for orderly transition, both in terms of around no deal brexit risk, and that has been the work principally of the financial policy committee and the bra to get the financial system ready for any form of brexit, and the second element of that transition has been orderly transition to my successor. i'm committed to do what's necessary in both cases to make sure that the handoffs are appropriate. i think it's entirely understandable that, given the

thing -- the overall the overwhelming priority of brexit negotiations and the political process that is underway, that a decision has not been made about my successor. on the other side of the election, i'm sure whoever is in the government will take that fashion,in an orderly but we will make sure that the transition is smooth and orderly, just like our assumption in our npr forecast, although i must say, the transition to my successor is not relevant to the forecast. thank you. >> bloomberg news. another question on the assumption. i note that you are describing it as an orderly transition now, not smooth, like in the previous

assumption. what is the reasoning for that change? gov. carney: i mean, it's as much to make the distinction between the two, by which i mean , what the committee means, that we had this smooth assumption which, as we said, was based over many years. it was a gradual shift from the current relationship to some longer over a period than a decade, to be candid. so you just have it gradually fading into the forecast. that became increasingly untenable as an assumption. by the time we got to august, you had two factors. one, we are getting closer and closer to a brexit date. alix: you've been watching bank of england governor mark carney speaking live at the boe. continue to follow that news conference. welcome to "bloomberg daybreak" on this thursday, november 7.

let's take it right from the top. pres. trump: we are so close. china wants to make a deal so badly. alix: one step closer to an interim trade deal. >> progress appears to be being made. both sides remain on track towards some kind of agreement. alix: the u.s. and china agreed to rollback tariffs on goods. the question is when and where will an agreement be signed? the bank of england is getting more concerned about brexit and the global economy. gov. carney: over the past 18 months, global growth has slowed markedly and trade has contracted. many of these dynamics occurred first in the united kingdom, particularly the heavy drag on business investment from entrenched uncertainties over future trading arrangements. alix: the central bank held firm on interest rates this time, but two policymakers unexpected lee voted to cut rates. >> everybody is getting a

little more scared by the quarter. alix: negative interest rates are just one of the problems for commerzbank. >> almost every single quarter, commerzbank cuts a target because things continue to deteriorate. alix: for the second time in a few weeks, the german lender has cut its full-year outlook. >> i am defending my client the best way i know how. this is not about getting joe biden in trouble. this is about asserting that donald trump was framed. alix: rudy giuliani says he was acting as the president's defense lawyer with ukraine, not conducting foreign policy. pres. trump: he's always looking for corruption, which is what more people should be doing. he's a good man. alix: the problem is that undercuts the white house explanation. and the hits just keep on coming. in the markets, it is a very different story. equity futures climbing to another record intraday high if we continue at these levels. you still have the bond selloff in full swing. the exception, the u.k., where

the front end of the curve, yields are now moving lower as mark carney continues to speak. 20 for the hour is romaine bostick, coanchor of bloomberg's what'd you miss. romaine: apparently, all of these tariffs, i get confused. tariffs,eptember december tariffs, tariffs i forgot about from last year. some combination of these could potentially be rolled back or eliminated, at least if you believe what we are hearing out of the chinese side, that the u.s. is at least considering this. i guess that would be a good thing, to at least have that removed from the equation. it gives companies a little more uncertainty. we've heard anecdotally a lot of reporting about businesses that have really said we are on hold not because we were so pessimistic about everything, but we have no idea what the tariffs are going to be from one months for the next, so we are not going to buy anything. alix: what i love about that,

let's roll back to august. it's not let's roll back to 2016. romaine: was it 25%, 30%? was it on legos or machine cogs? [laughter] alix: that's just part of the issue confronting the boe today. governor mark carney saying that risks to u.k. growth are skewed to the downside. pound and gilt yields declining after two boe members unexpectedly vote for a rate cut. guy johnson joins us from london. what has been your take so far? carney isally, that positioning himself and the bank of inland to potentially step in and provide more help for the u.k. economy. rather than just focusing on brexit, the npc has also taken a close look at what is happening globally, and that kind of relates to what you guys were talking about with relation to

the trade war. we are seeing a global economic slowdown, and that plus the brexit uncertainty seems to be putting the bank of england in a position where two members have decided they need to vote for a cut now. the rest of the mpc certainly seems to be moving in that direction. the governor talked about the fact that we do have this global uncertainty, and he talks about the entrenched brexit uncertainty as well. if both of those factors get worse, the bank could be looking at rate cuts to support the british economy. romaine: we didn't get an update to those fiscal projections that a lot of folks were looking for. what are we to read into this, specifically when you start to think about the potential effect that the next election and this brexit process could have on fiscal policy, and of course, monetary policy? guy: the reason the ob are decided not to publish those decided not tor publish those reports is because

it was now too close to it election. it wants to remain neutral, as a result of which, we haven't had targets being generated. the expectation is that both parties in the u.k. will be spending more money. the labour party would be spending significantly more money. the u.k. is one of the few european economies that is likely to get some sort of fiscal push, and that will, to a certain extent, cushion the u.k. against some of the issues happening globally. nevertheless, pimco has been making the point that there will be extra supply coming in, and that will likely weigh on the gilt market. alix: my question is more of the business sentiment here. i am showing u.k. business investment in its worst slump since the financial crisis. street?the word on the if you have rate cuts coming in, does that do anything to the chart? guy: it would probably assist it, but that would only come after back draft gets worse.

the expectation for the bank is that growth will pick up from here, and the reason for that is that we will now have an orderly lead to a deepl free-trade agreement with the eu. the question around all of this is timing. once we get to boris johnson brexit deal done, you have the issue of the next cliff edge, which comes at the end of a transition period. with that still in place, will british business be prepared to invest more? that is a key question we are trying to figure out at this point in time. we don't know whether we are going to get the boris johnson deal. we don't know whether we will get a clear victory in the upcoming election. we don't know whether or not there will be a smooth transition through that transition period and to that free-trade agreement. there is still a great deal of uncertainty. whether or not rate cuts would help at this point, maybe at the margin. we will probably get bigger bang

for our buck on some degree of uncertainty. alix: really appreciate the insight. thank you for joining us, guy johnson. joining us from london, david --n, jeffries chief you chief euro economy, and alisha levine, bny mellon chief strategist. what surprised you today? david: i actually haven't been able to look at the report just released. in terms of the rate decision earlier, no surprise about mark saunders voting for a rate cut. in his keynote speech at the end of september, he focused on brexit uncertainty holding back investment decisions in the u.k., not just right now, but his concern was that that will continue through 2020 for the reasons that guy alluded to. we won't know the final landing zone for the u.k. until late next year at the earliest.

there's obviously huge uncertainty now around what will happen for the election december 12. the other vote for a rate cut was a surprise. it's been a black box in terms of policy decisions because he hasn't really give any speeches. but he is an expert on the so-called paintable economy and investments. it will be interesting to know whether he detects more weakness than the official figures have suggested. in the tone of the report itself, as guy was saying, a lot of focus on the weakness of the go bill economy, particularly led by weakness in the u.s. also tradecycle, and and ongoing brexit uncertainty. this highlights the problem that the mpc in the bank of englund have right now, uncertainty layered on uncertainty, with likely uncertain outcomes as

well. the policy reaction function is very unclear over the next few weeks. romaine: one thing i thought was interesting was, for the first time, we saw them really addressed trade protectionism and the idea that there are global forces not only weighing on the u.k., but you are starting to hear more people talk about the potential systemic risk of brexit, even if it is a small risk. i am wondering how you view that. alicia: it seems sort of like a contained u.k. nightmare come but actually, it has been mediated to the fx market and bond market as well. it is uncertainty on top of uncertainty with this election because the truth is all four outcomes are still on the table, even though it feels like the most likely outcome is a negotiated exit at the end of january. you could also get a labour victory, and then possibly six months later, another referendum. that probability is not zero. with that, the bank of england is really in a box, waiting to see what direction the country

is going to go in the next four weeks. you can't make policy today if you have a trajectory that is very different for weeks from now. romaine: if you are an investor outside the u.k. and you have an interest in u.k. assets, do you worry? do you get more aggressive, or do you pull back and standdown? alicia: if you are interested in u.k. assets, this is an interesting time to go into the u.k. if you look at flows over the last three years into u.k. assets, it's been few outflows since brexit. when you have positioning like that, it is always interesting to look at going back in. in the end, we should have some sort of resolution one way or another. with underpricing the way it is and the willingness just to stay away because it is a mess, it feels like it is the right time to start building positions. you see it in the pound, but you don't see eight inequities yet. the equity market might be an interesting pice to go to

express some optimism of what the u.k. can look like going forward. alix: it is sort of a similar outcome when it comes to europe overall. the european commission reviving down their growth and inflation forecast. germany getting hit hard. on the flipside, investors wanting to go buy equities in europe. the dax is up 25% in europe this year. david: in the euro zone it is a very different story. i would not really focus on the european commission numbers, which are year averages. what we are seeing is very domestic manned -- very domestic demand fundamentals picking up in key areas. what is holding back recovery is weakness in the trade and inventory cycles, and obviously the manufacturing sector has been impacted by brexit. but the service sector investments and domestic demand has actually been pretty robust. if those uncertainties are removed, it will clearly

surprise on the upside. this is in contrast to the u.k., business investment since the referendum has been incredibly weak. what we've also seen is net buying of euro zone equity by foreign investors, but also substantial buying of euros on bond markets. so capital is being put back into work in the euro zone. the point about the u.k. is quite right about the equity market. it looks cheap on international valuation measures, on historical measures. if uncertainty disappears, the u.k. will be favored. ataine: david, when you look the attractiveness of europe specifically, and the euro zone, it is still being viewed on a relative level against valuations with u.s., but a lot of folks will back the case that u.s. assets, the u.s. economy,

and u.s. policy are all going to trump the stability or lack of stability you are going to get out of europe, particularly brags that overhang, with concerns around germany. how do you make the case for europe over the u.s. right now? david: in germany, the weakness is about manufacturing and trade. at the residential housing market, investment, ise data, germany outperforming what international investors, particularly out of the u.s., perceive. if trade issues get resolved, i think people will be surprised by the bounceback in germany going forward. the other point i would make, brexit is a huge disruptor. whatever happens now, we've got companies addressing supply chains, citing production, and this is also true with the trade dispute between the u.s. and china. a lot more companies addressing these complicated supply chains. i think we are going to see a

lot more focus on the eu 27, a lot more focus on the euro zone, as companies address these supply chain issues. there will be a lot more capital being put to work within the euro zone itself. we get a move towards a fiscal union of some description, and investment gets put to work within the euro zone. i think the euro down will surprise again on the upside. alix: thank you so much for joining us, david owen of jeffries. alicia levine of bny mellon investment management will be sticking with us. tune into "bloomberg daybreak" withrow with our interview the atlanta fed president. don't miss that. he has great regional insight. coming up, risk assets rallying. as beijing says, the u.s. will rollback tariffs if a trade deal is reached. is it a value trade you want to make? this is bloomberg. ♪

>> u.s.-china trade frictions have been the new normal. is that something you endorse? ♪

♪ alix: futures getting a dose of trade optimism this morning, around the highs of the session, looking to open right at a record after the u.s. and china agreed to rollback tariffs if a phase i trade deal is reached. is that enough to keep the risk rally going? one of the bears esther day of cantor fitzgerald talks to bloomberg yesterday. >> i simp lee don't see the catalyst for growth. i'm not buying the inflection story. i don't see europe turning. the data is less bad, earnings are less bad. that is not a catalyst for growth story. that is just a less bad story. alix: still with us is alicia

levine of bny mellon investment management. is it less bad enough to buy risk, or does it have to get better? alicia: less bad is enough to buy risk. it is the rate of change. it is the second derivative. it is positive, so you buy risk. with europe less bad than it's been and with sentiment already so negative, it's an interesting time to go back into europe. romaine: but there is also the sense that the whole trade issue has been a self fulfilling prophecy. that the more people worry about it, the more you see the business investment and decline -- and capex decline. it is kind of dizzying. you go all the way back to march -april 2018, when you had that first $40 billion. you had more in september, and then the big ones back in september. then another -- alix: you are already confusing me. [laughter]

but in all seriousness, when you look at all these numbers, whether you are an investor or a manager, business manager of some sort, it is kind of hard to get your head around and to know where we stand in the process, and how you make decisions going forward. when you talk about taking on risk, what are we taking a risk on when we are talking about a phase i deal that could potentially remove one of six different blocks of tariffs? alicia: the tariffs they are talking about possibly removing are those september $110 billion tariffs that hit a range of consumer goods. romaine: these are the type of goods you and i would see in stores in terms of pricing. alicia: that's right. this is very positive for the u.s. economy because the consumer is said to be 70% of gdp. in addition, it would be good for sentiment. now, will it happen? i think it only happens if there

is some giveback from china. it means there has to be some sort of movement towards some of the structural changes. today we saw the announcement able to go toeing u.s. credit cards. that has been a big u.s. demand, a sign that perhaps china is moving towards u.s. demands. i have to believe the administration is going to do something. romaine: when it comes to sentiment, it doesn't worried you that we still haven't found a location for the two biggest world leaders to meet? meet?an't find a place to i know conference rooms are hard to find here in bloomberg world headquarters, but i would think the leaders of the two largest world economies could find something. alicia: if there's a deal to be had, they will find a table. tariffs are really important to the administration because the administration has learned putting on tariffs brings negotiating partners to the table. it is very clear what brought

china to the table is the tariffs. at the same time, it is this gordian knot of not being able to undo what brought your sparring partner to the table. having said that, i have to believe the administration is going to do what it can to win the next election, and that would include some sort of trade deal. but the market is already pricing it in, so this morning, the chinese yuan is trading under seven, which means there is some sort of optimism about a trade deal. s&p stocks levered to china trade compared to where it is trading in the s&p is at the same high level they were back in april, when we thought that may 10 was going to be the big winning announcement of a trade deal. that didn't happen. alix: when you say less bad is enough to take on risk to -- on risk, is that enough to take on the s&p? alicia: i would go overseas. for the next few months, it is a

more interesting investment area than the u.s. right now. if you do get a trade deal, your cyclical works, your value works, but you can still buy overseas. it is less bad. alix: alicia levine of bny mellon investment management, thanks so much. coming up, the antitrust probe into big tech. the doj plans to move quickly with its investigation. more on that next. this is bloomberg. ♪

ritika: this is "bloomberg daybreak." the u.s. government has charged two former twitter employees with helping the saudis spy on dissidents in riyadh. a saudi national was also charged. only one of the three has been arrested. the other two are not in the u.s. they say the saudis wired the twitter workers hundreds of thousands of dollars. google may change its policies

on political advertising, considering a move in the midst of a raging public debate on the topic. it is not clear if google will rule out campaign ads altogether. that is just what twitter did. that is your bloomberg business flash. alix: thank you so much. what struck me, staying with big tech, is the constant conversation of regulation. bloomberg had an interview with the doj deputy attorney general, who said we are going to look at -- what is that -- expeditious. we not see this as one of those open-ended deals. tech valuations still sitting at a 12 year high. i feel this was a disconnect. romaine: i thought this was a weird comment. typically, any type of antitrust investigation is less than expeditious. it does seem there is a willingness by the justest

partner to get something done, to get some concessions out of the tech industry. it will be interesting. this is the justice department. states pursuing their own cases, not necessarily doing it lockstep with the justice department. alix: and europe, where tech companies have to prove something different. really interesting stuff. stay tuned with bloomberg television later on this morning. we will have a conversation with sheryl sandberg, facebook coo, at 9:00 a.m. eastern time. coming up on this program, john waldron, goldman sachs president and coo, joins us live from goldman sachs' analyst impact day. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. highs forecord equity s&p futures. up .4%. getting a boost in europe

after qualcomm delivered stellar earnings. no doubt that leads to a decline in treasuries. you are seeing a big underperform or in italy. the exception will wind up being .he u.k., the curve steepening additional jobless claims right now. 211,000. slightly higher. all in all, stable, because the rhetoric was at some point you will wind up seeing the impact of the g.m. strike. so far, it does not seem we have seen that impact. the question that comes from yesterday is the bad productivity number we got, what that indicates in terms of margins in wages. romaine: you can see on the jobless grahams -- the jobless claims we are hovering around the 200 day moving average. we are still stable, which i guess could be interpreted as a good sign.

alix: jobless claims coming in bang in line with estimates. we want to give you an update on what is making headlines outside the business world. ritika gupta is here with first word news. the u.s. and china may be one step closer to an interim trade deal. both countries have agreed to a rollback of tariffs on each other's goods. since the start of negotiations china has demanded president trump lift tariffs. those now apply to the majority of chinese exports to the u.s. the european commission warns the worst may be yesterday,. come.be yet to

commission says the economic stability will not last forever. the forecast calls for 1.2% growth in 2021. germany and italy are seen as the slowest economies this year. saudi aramco is promising dividends to lure investors. yieldsuld make competitive with rivals like exxon and shell. it could also threaten to stretch the world's largest crude producer if prices fall. 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 ritika gupta. this is bloomberg. alix: thanks so much. one of my favorite stories is they marketing the saudi aramco ipo on atm's in saudi arabia to get retail investors interested to buy. romaine: that seems like a good sign. the thing i find interesting is the dividend.

the minimum was at $75 billion. she says that makes it competitive with exxon, but there is chatter they will have to bump that up. they will be able to entice their own citizens for a variety of reasons, but trying to entice folks in europe and the u.s. to come into this, you will have to boost that dividend and put it above exxon. you will have to put it above what you pay for western oil company. you get 6% dividend yields were less than 6%. right now to $75 billion. that is a 5% dividend yield. investors want more. alix: the 20 banks on this ipo will go over that question. stay tuned on bloomberg television later today on bloomberg "commodities edge." we will find out what happens of oil goes to 40. that is coming up at 1:00 eastern times. sonali basak is sitting down with the goldman sachs president and ceo.

sonali: we have john here taking a break to give a couple of analysts half $1 million to give to charity. >> we are running the goldman sachs analyst income fund which is giving our analyst, which is 25% of our population, the opportunity to choose not-for-profit organizations they think need the money of goldman sachs to advance their cause. we have just had six finalists present to us and we are getting ready to choose a winner and we are excited. sonali: here's the thing about analysts. some people spent two years on wall street and move into the private equity world. what is your pitch to young people to build a career at goldman sachs? asset is the breath and capability we bring to a long-term career. we have a diverse workforce in a global business. we offer analysts opportunity to do very different things across a long time career at the firm, and we think there is enormous

opportunity to stay longer and benefit their skill set. sonali: we have less than eight weeks left of this year. it is almost 2020. it is almost a new decade. you are in a new job. can you tell us what goldman sachs is supposed to look like in 36 months? sachswe will be goldman for as long as we are running the firm. we have several attributes. we will keep investing our businesses and make our current businesses stronger. there market expansion opportunities. we will attack those make sure we make the businesses stronger. sonali: to those expansion opportunities mean m&a? john: we bought a company called united capital group earlier this year. we will continue to look for acquisition opportunities if they are interesting in advance our cause. fundamentally, we see tremendous organic growth opportunities. it is investing in our current franchises and building new businesses. launching our market platform is

an example of a new business. we are launching a transaction banking platform which is a new business, and it is a combination of investing in existing businesses and launching new platforms. sonali: another thing everyone is thinking about is what bonus season looks like. what do expectations look like? we have been hearing bleak numbers across the board. not: it is november, it is december. we have several weeks to go. sales are strong and markets are opening. given some of the uncertainty we have seen in the markets, what are your expectations for what the year end and next year looks like? our clients stifled or will there be a revival? john: we see a pickup in risk appetite. what has happened with the federal reserve and central banks injecting more liquidity has helped. i would say the markets are wide open. activity levels are high. strategic activities are coming back.

yields being contemplated. i we say -- i would say we are constructive. sonali: you lead the sponsors group at the golden age of buyouts. now we are seeing once of the ever -- the biggest ever buyouts being considered, walgreens. is that type of deal impossible in this era? john: there is tremendous liquidity in the markets, public markets and private markets. we have seen an explosion of capital. obviously private equity firms but also credit funds and other structures. enormous liquidity in the market that could support big transactions. sonali: you disagree with steve schwarzman who said a deal that big was a stretch? john: i would not like to disagree with steve schwarzman, but i would say there is tremendous liquidity in the markets. sonali: i am wondering if you think this is late cycle

behavior. are people trying to get deals done because they are worried about what the next year will look like? john: i do not know if it is late cycle. i think we are seeing a shift in capital moving from the public to the private. public capital formation has been significant. both on the growth equity side and the more traditional side. it is more emblematic than that shift. sonali: speaking of private markets, you have a big private market operation yourself. what can you tell us that is new? what do people expect of this business that is the size of kkr? trackwe have a 30 year record of being a large-scale merchant bank with investment of our own capital and client capital. we will grow that activity. we see significant secular growth and we think we have a reason for being in business -- we have a long and successful history. we have investment banking deal sourcing capability and a long track record of making good investors -- good investments.

sonali: david solomon said investors are being more discerning when it comes to private market. what does that mean? even your business has lost money. what are the changes we might see in terms of your professional investments, in terms of investments in venture capital, for example? john: you refer to the fact it is later in the cycle and valuations are high. you need to be thoughtful about where you are investing in the capital structure at what price you are paying for assets. we are making up the valuation like everybody else and you will see people continue to be thoughtful as they think about allocation of capital. sonali: are changes to corporate governance part of that? john: we always think about governance. governance is an important component of the company. sonali: another big overhang --dman sachs is seeing is what can we expect in terms of a

resolution? john: we put out an ak that tells as much as we can tell. we are engaged in conversation. sonali: is there anything you can say in terms of your appetite for risk itself. you say people are getting closer to safer bets in private markets. does that mean you're also reducing risk appetite? john: i would not say we are reducing risk appetite but it is about how you allocate for risk. people argue there is a quality bias. people like to be in higher-quality names. they are like to be in names where there might be more cash flow production and less forward opportunity. you are seeing a rotation into more quality bias. sonali: one thing we did not talk about is apple and markets. can you tell us about where most of that consumer activity will be driven into goldman sachs? do you see more into the apple card or the markets business? john: we are trying to build a

storefront that has multiple products and capabilities that are uniquely goldman sachs. i say there is one channel that will be -- the apple card is an example. we have a deposit platforms, a savings platform, there will be a number of different elements of the platform. it will be modern age and a digital in form with no legacy infrastructure. we are focused on being forward thinking. sonali: when we be able to give us numbers on what the apple cart looks like? john: stay tuned. sonali: thank you so much. alix: great interview. basak speakingli to the goldman sachs president and ceo. i want to highlight what is happening with the cable rate. we are now in a two week low. all of the dovish conversation from the boe, with two centers wanting a rate cut.

growth,ficulty with growth due to the downside. coming up, qualcomm giving a stronger forecast for this quarter suggesting smartphone demand may be picking up. if you have a bloomberg determinant -- if you've a bloomberg terminal, check out gtv . ♪

>> this is bloomberg daybreak. i am ritika gupta with your bloomberg business flash. hp has concerns xerox made a takeover offer but it is not ready to say yes. a deal could reshape the printing industry. bloomberg has learned citigroup has agreed to provide xerox with financing.

the company would likely need $20 billion of debt to close the deal. the company best known for tv ratings, nielsen, is spinning up its business that tracks consumer preferences. that would create two publicly traded companies. the new company is expected to raise new debt. nielsen expects the spinoff to be complete within a year. four yeare announces operating profits toward the lower end of guidance ranges. the british company expects to take a $1.8 billion charge, the cost of fixing its troubled jet engines. problems have led at least one airliner to temporary ground its boeing 787. that is your bloomberg business flash. alix: time for bottom line. we will dig deeper into three companies worth watching. first i'm looking at the disaster that is expedia. i'm editorial i think, but it is down 14%. one analyst at piper jaffray's

say they see "multi-quarter challenges." they seem to be losing their ability to rank high on google and google is favoring other search engines. that is bad. romaine: this was a growth story a couple of years ago. people were talking about the move into airbnb rentals. that fell apart. i guess it does boil down to people not being able to find it or not being optimized to the level where you get it in a google search engine. jonathan: part of -- alix: part of it is macro. vacation rental is not holding up. what you like? romaine: roku. cord cutting. if you think expedia is a disaster, take a look at roku. new additions have slowed down. they also cut their full-year forecast. this was a company that was benefiting from the streaming wars. they were agnostic, they were

the switzerland in the middle of the wars, the main platform where a few had this array of choices, you can get it all on the roku app. that growth rate has gone down. alix: looking ahead to disney, disney will not have to say what their streaming numbers are. they can wrap it into general earnings, which is a roku or a netflix. it puts them at a weird disadvantage in terms of being exposed to users or not. romaine: roku made a bake acquisition in the ad space. they're going to try to push ad space. speakingl be exclusively to roku ceo on bloomberg television at 10:30. romaine: i did not know that. did you know sarah jessica parker will be on the network? alix: is she the building? romaine: do we care about her? that has to be on streaming. sex and the city. alix: hbo plus.

everything is on hbo plus. we just got disney for my kid. the third thing will look at is qualcomm. there is brooke sutherland of bloomberg opinion. really good. what happened in the last four months? brooke: it really good in the context it is better than feared to add a little sunshine to the gloom. qualcomm has struggled from a slump. people are keeping their phones for longer. you are also seeing huawei take market share and that has hurt qualcomm because while while -- because huawei makes most of its chip components. they are banking on 5g. that is where they think they will see a surgeon upgrades of phone models. a lot of people looking to upgrade their phones to get that new technology, and they hope to keep upgrading. qualcomm is also up. to enable 13.2 trillion dollars of sales through 2035.

romaine: the idea with 5g and qualcomm is qualcomm is one of the only shops in town to get you the chips to do whatever 5g is going to do? brooke: that is what they say, but keep in mind this is not a proven technology. we are talking about the starting to roll out next year but we do not know how great it will be. is it the type of thing everyone feels they must have or do we need more time to work out the tanks? -- to work out the kinks? they are certainly positioning themselves as a u.s. champion of 5g, but they are still trying to work out the antitrust case. you also have the trump administration trying to intervene saying they do not want -- they believe it is an important national champion of this technology. alix: on the flipside, i saw an article that china is now looking at 60, they are trying to one up the -- looking at 6g, they are trying to one up the 5g. brooke: it is like the six

minute abs and seven minute abs. exactly. this is not a technology race that will slow down. once you cross the hurtle into 5g, it becomes a race for the new technology. crushed alonging with that of deking university founder group. you are seeing a lot of doubt about how much state support there is for these chipmakers, how important is the technology race to china? a lot of that is being fueled because you had a conversation where the majority shareholder was selling a big state to a local government entity and that raised concerns about whether china is trying to focus its universities undoing education. romaine: one question. you cover a lot of industrial companies. when we talk about 5g it is in the context of smartphones. the future is the idea it will apply to bigger things. cars and things that have more

impact on our lives. brooke: absolutely. industrial companies are actively pursuing this. it is the industrial internet of things. the idea is you hook up this machinery to sensors and data to tell you how these things can run better. how do you make the plane run more efficiently? everyone is investing in this. the issue for industrial companies is technology companies are investing. microsoft is making a huge push in terms of ai and industrial technology. where this all falls out, it is still to be determined on the industrial side, honeywell is one of the furthest along in terms of having a solution that can deliver results and is implementable at this point in time. alix: always great to catch up with you. brooke sutherland of bloomberg opinion. romaine bostick, thank you for joining me. romaine: i love being here. alix: we actually learned we went to the same college, we did not know it.

i am like 100 years younger than him. the s&p rallies on trade optimism. what is the next rebel of resistance? we will break that down. sirius xm 119nel on the bloomberg business app. this is bloomberg. ♪

alix: time for "technically speaking." bill maloney joins me now. listen to bill every day on bloomberg. we talked about the s&p opening another record high. what is the resistance? where we at? bill: s&p futures up around 12 points. they broke out of the july trading range in october. the next potential resistance around 3100, then 3107 is the forecast level of the july to august range. weekly back to a tenure -- to a 10 year weekly, we are in a long-term channel uptrend

since 2011. bearish on the s&p. alix: how overbought are we? bill: i do not know if we are overbought. there may be resistance, but the chart looks good. alix: let's talk about individual names. qualcomm, july they wind up forecasting not great earnings. then months later they deliver. bill: qualcomm is up 5%. first resistance is 90. that goes back to this island in april and may. if i go back to a max chart, if 1999,ok back going to second resistance around 93 and above that is 100. first resistance is 90 and qualcomm. roku is getting crushed premarket. you are looking at the 100 day. bill: roku is down 15%. current bid around 120. first support zone, 118.

100 day moving average, 122. if that fails, 98 to 104. alix: not quite there yet. bill maloney of bloomberg. check him out every day. that does it for bloomberg daybreak: americas. coming up, sheryl sandberg will be joining bloomberg live from the bloomberg year ahead conference where we could be opening in another record high. you are buying equities and selling bonds. trade optimism percolates despite the fact that the bank of america is more dovish. happy thursday. this is bloomberg. ♪

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪

jonathan: coming up, equities rallying. bond markets drop as trade optimism builds again. china says the united states is ready to agree to a tariff rollback if a deal is reached. as reports indicated, a summit between trump and president xi might slip until december. here is your thursday morning price action. futures up more than 10 points on the s&p 500. positive .33%. 1.1066.lar stable, treasury, yields higher by five basis points to 1.88 on the u.s. 10 year. let's begin with the big issue. where is the phase one trade deal? >> there is no trade deal yet. >> the tray news has been volatile. >> we are moving closer to a deal. >> a deal has been partially agreed on how to roll the tariffs back. >> removal of tariffs.