>> this is "bloomberg daybreak: europe." the new normal data out of china makes the investment grows at the slowest pace in over 20 inrs as industrial output retail sales also miss the mark. the view from the chair. jay powell tells congress that china's economy is hard to understand, but he says monetary policy is in a good place in the u.s. mary daly does not disagree. >> i see the level of the policy rate right now as appropriate for the economy we have. good consumer

spending, good domestic momentum, but facing these headwinds in manufacturing. we are in the moderately accommodating stance, and that's appropriate. >> a shallow dip. technicaloks at a recession. but this month data points to stabilization. we will be live in frankfurt for the reaction. welcome to "daybreak europe." numbers coming through on the bloomberg. let me get to those before i take you through the markets. what we are seeing from rwe is that it's raising its standalone -- and that forecast for 2019. that is the red headline coming through here. it is confirming its dividend target for 2019. it has a nine-month standalone itda is 1.5 billion

euros versus 1.3 billion euros year on year. there are raising its profit guidance on the return of u.k.'s capacity payments. it has raised that profit forecast for the year on earnings in its trading position and the reinstatement of the u.k. capacity market designed to protect supply. that is what we are getting through from rwe. we are also looking for numbers coming through from merck on the bloomberg. at therck is seeing moment is that it still sees organic net sales up 3% to 5% on the full year. the forecast and sales of earnings has been raised. it is saying that third-quarter net sales came in at 4.0 5 billion euros. that is a beat on third-quarter net sales. it comes in to the beat at 600.8 million euros. estimate of 542 .7. the third-quarter adjusted down

1.1 one billion euros. estimate of 1.106. quite a few for merck. they are beating the highest estimates in terms of what investors will look for. their attention will because caught by the red headlines saying that merck is raising its four-year full cast -- forecast for sales and earnings. that is one of the main things you want to take away. strengthwere expecting from a health care divisions with particular folks on the in the latter. performance material was expected to have seen a tougher anticipated semi conductor market in 2020. that is the broader context, but the numbers are that it has raised its forecasted sales is earnings. coming up on bloomberg, we will speak to the ceo of merck, marcus kuhnert.

the big focus is data in the markets. data coming out of china. andttle bit of strength chinese equities, weakness in japan. the data was not so pretty there. still seeing losses on the hang seng. overall, a down day in asia. the aussie on the back foot following the unemployment data out of australia. that was paring some easing. switching the board around. yesterday we ended flat on the s&p 500 in terms of the trade narrative. a little bit of concern with reports that it might have hit a snag. futures up .2. slight loss at the opening. have five basis points. continuing to slide down. brent crude a higher by 6/10 of a percent on the api stock while . getting back to china. china's economy slowed further in october. the company's factory output all missed estimates. investment grew at the slowest pace since 1990, with private companies pulling back.

industrial output and retail sales also slowed more than expected. it may be an indication that demands continue to weaken across the economy. this data shows further evidence that china is trying to break the forecast a fine behind the curve. your own power said beijing's deleveraging campaign is part of the reason for slower global growth. ome: i feel it is very hard to understand china. you can read all you want and visit it all the time, but nonetheless, it is still very hard, for me, anyway, to feel like you understand the way the economy works, the way the society works. i think as a general matter, you have to accept that it is really hard to know. >> joining us now is the senior economist. one thing that seems to be -- good morning -- seems to be concerning people in the data is that it's not all trade war related. there are signs that domestic

demand is slowing, and that is reflected in the data we have had today. is that something that concerns you in china? >> there were two phenomenons going on in china. the long-term slowdown and its potential growth rate. that is normal as economies mature. then you have the cyclical downturn in domestic demand that has taken place. the decline needs to be taken place in context. what worries me is out for a good year we have seen the chinese authorities try to stimulate domestic demand with indirect measures. you have tax cuts, easing policies. i wonder if things get really bad we start to see more heavy-handed's melissa measures. they are going to more direct heavy-handed and you build the bridge and we finance it. that is probably what is around the corner from what they will start to improve two. >> so far the stimulus has been piecemeal. if we did get the heavy-handed stimulus, opening infrastructure

support, opening that has its limits. would it have limits? is,um part of the problem as you become a more mature advanced economy, you push open the productivity. you become more -- less dependent on capital investment and more on services and consumption. you are going backward by retaining to infrastructure. the other problem is, you only need so much infrastructure in an economy. you are not really raising the productivity in the economy. that is the allocation issue. think back to the 1900s in japan. there was a lot of allocation. there is too much misallocation that worsen the growth rate and starts problems for the future. it is very different from a policy makers point of view to decide which way to go. there might be a slowdown in the economy. it's fine if you could adjust for the higher costs in the

exchange rate. but the change will make it very difficult at the moment. >> you do wonder whether the green on the screen will see it today. there may be a reaction of expectation and bigger stimulus to come. the other concern is that we might be in some sort of industrial recession. then it spills over into the labor market. and that further exacerbates the issue of domestic man and services. that's one of its priorities to support the labor market. how can i do that and how can i going to the labor market. kallum: we are having a global trade recession. places likeand germany, the u.k., the more industries.port you expect that phenomenon to happen in china which is also a very export oriented country. country wouldthe

be unhappy with it. the question is, can they do that. mr. powell said it's very difficult to know it's going on in china. they generate a lot of domestic savings and naked control capital flight. if you pull the right fiscal lever, you can afford it. there is no inflation problem, they can afford it. if they need to put people to work, they will do it. talk about japan. in terms of japan, the world's third-largest economy adding a global growth concerns. the reported in unexpectedly weak third-quarter gdp this morning. growth came in at an annual pace of 0.2%, missing estimates as the global trade slump hit exports. is, ispan, the question the fiscal stimulus going to be enough, or will japan have to turn back to the monetary, and perhaps the further rate cuts? some are expecting a rate cut as early as january? kallum: i would not be

surprised. we have been able to trust that for nearly two decades. the problem with japan is, we should not look at it from headline gdp perspective. the democratic challenges are in japan, meaning it has a very low potential growth rate. think about japan in per capita terms. gdp numbers would pretty good. that's why part to reform the economy in the way it needs. part of thedvanced world that is export oriented. it is suffering from the industrial slump, which is affecting all we see in europe. you can stimulate domestic economy a little bit, but you are really pushing the domestic side of the economy because you have something going on in the external site. if the domestic side is holding well, let it hold off for a downturn. within three months, the china/u.s. trade war, brexit and europe, you will see the economies in europe start to improve on their own.

we probably won't need to do too much. nejra: would that be enough to generate inflation? that is the key thing in what the boj does next. kallum: the boj is very concerned about deflation. it has been for a long time. i can see it as a major economic problem. no big deal with inflation at 1%. but the boj has a 2% inflation target. it's very hard when japan's demographic hits that. it will be for the foreseeable future. if the boj is desperate to hit 2%, it may have to do more. i don't be go out much on the domestic japanese economy. nejra: we will be coming back to the trade talks. markets have gotten very optimistic's. -- optimistic. turnedhow much they have in favor of risk assets. yet, we get different news every day. now reports we might have hit a snag. how close are you to a phase one

deal to the end of the year, and a phase one deal that makes a difference to where we are in the global economy now, and causes a bottoming in pmi's? marketswe are seeing point towards an improvement. to that, we probably don't need things to get worse on the u.s. trade friend. step, a was a positive phase one deal, that would be an upside surprise. as long as things don't get worse. as long as markets don't look forward to escalation. as long as businesses don't look forward to a further escalation, momentum could improve. the global economy is not ready for a recession. we have a very particular -- a to one problem. it is about the global relationship coming from the u.s./china trade war. for the first time, mr. trump and mr. xi have an intention to strike have a deal. trump has an election, you have

economic problems in china. a deal would make a difference. nejra: let's get the bloomberg first word news from anabel jewelers. the first public hearings in a formal impeachment inquiry into president trump heard from the acting ambassador to ukraine and a senior state department officials. both thought that rudy giuliani was trying to dig up dirt. the u.s. president said he plans a phone call the ukrainian president. trump said the call was perfect and denies wrongdoing. all callssuspended until sunday amid a fourth straight day of chaos. a protester was shot during protests, igniting citywide unrest. hong kong subway operator has partially suspended services. two people, including a 70-year-old man remain in critical conditions from the

recent clashes. boris johnson is back in election campaign mode. his response was criticized by local residents. u.k. prime minister said getting brexit done would trigger a wave of investments. notmy corbyn said he would allow referendum on scottish independence in the first term of his government. putmberg latest poll johnson 11% ahead of labour, with the liberal democrats on 60%. . -- 16%. trade talks between the u.s. and china is said to have hit a snag . president trump said beijing agreed to buy up to 50% of soybeans and other farm products. aina is wary of putting numerical commitment into any commitment. are trying to see by how much the u.s. would agree to lift tariffs on chinese imports.

his knee shares soared to a record after its new streaming platform and attracted 10 million customers. disney + launched on tuesday in north america. figure surprised analysts, they expect his need to need more time to reach the level. it took hbo for years to hit the 10 million subscriber mark. one, robots, zero. robots.s dumping the it now plans to rely on skilled engineers to manually insert equipment into the plane's body. it should be completed by the end of the year. onbal news, 20 hours a day, air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: coming up, we speak to hisceo, mike cooper, as

company celebrates its 25th anniversary. we discuss what environmental pledges they are taking to mark the occasion. ole miss that later in the show. we will hear from the san francisco fed president on the central banks policy stance, the stake of the u.s. economy, and key risks. that is next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i am in london. tencent will have to wait longer for its comeback. the social media giants are profits plummet 13% last quarter. worse than the most pessimistic analysts anticipated. in a wok us through is juliette saly in singapore. tencent as having its

biggest one-day punch since august 26 after these numbers. it missed even the most pessimistic analysts out there. we saw third-quarter profit fall by 30 -- 13%. that was the third time we have seen tencent report a poor decline. that was worse than what the market was looking for. really underscoring challenges in reviving growth during these overall economic slowdowns. tencent was spending a lot of booston content to try to its video sharing streambeds similar to netflix. bloomberg intelligence just say that the media ad business could recover in the fourth quarter. this is after it saw a 20% plunge in the business in the third quarter. this should be coming as recovery with regulatory video content restriction starting to ease. growth withg robust bloomberg intelligence expecting it to continue. we know there has been strong revenue from peacekeeper a leap,

which will show up in the fourth quarter numbers. this was quite a disappointing number coming through. no change to analysts recommendations. 60 57 hold zero cells on the bloomberg. nejra: juliette saly in singapore. tencent's greatest sent -- sense is that it's not alibaba. that's pivot to the world's largest economy. they were unexpectedly called in october despite fresh tariffs on chinese goods. driven by deceleration in rent and power prices, policymakers are waiting to see if there are faring faster price gains. trump how is satisfied in sticking to the view that they will probably be on hold right now. monetarye do think policy is in a good place, but we will watch the incoming data. thehe limits emerge of outlet, we will act appropriately. nejra: the san francisco fed

president also answered his comments on the central banks policy stance. she spoke exclusively to kathleen hays in san francisco. >> the policy accommodation we have taken has put policy stance in a very good place to make that baseline come out where we needed to, which is slightly above trend growth, and continuing to move up in inflation to target, and further progress on full employment. i do think of that as the economy is in a good place. we continue to be data dependent and look forward and look at the risks to see if the baseline changes, even with this accommodation. pods and so is this a the fed rate cut path? or is it fed policy? mary: we will stop into a happens. kathleen: what needs to happen next?

mary: can i give you a third option. my third option is where i am today. level of the policy rate right now as appropriate for the economy we had. which is good consumer spending. the domestic moment of, -- momentum, but facing these headwinds. we are in a moderately accommodating stance, and that's appropriate. i feel we can stay in that stance for the time it takes to get inflation back up to 2% on a sustainable basis. kathleen: what i am hearing from youis, you were upon is, got a policy that was appropriate. figureu are trying to out now is, -- you are saying you probably don't have to do anything, but you are just as willing to say inflation is rising, i guess the headwinds have stirred up again and we will go in the other direction. mary: one of the things we have

to do is look forward. even though i characterize the economy is it a good place, we also look at the risks that could emerge. on one side you do have the potential for the accommodation we have given to further the economy and the trade uncertainty settles, and the stimulus that other countries have pit -- put in place and we have upside potential. there is downside risk that could continue to emerge and we could, with slower global growth. we can get the furthering of trade uncertainty. we still have the brexit issue. to thelittle bit open idea that the risks are on the downside, but right now, i see the policy stance we've got is the right one for the risk that we had ahead of us so far. that was san francisco's fed president mary daly speaking exclusively to bloomberg's kathleen hays. we just heard from mary daly, that she is open to the facts of the risk and might be more skewed to the downside.

some people honed in on jerome powell's comments, that low inflation could lead to an unwelcome to slide in the public's longer expectations of inflation. suggesting that the three cups we have had are not just insurance against the global slowdown. there are further cuts to come. kallum: i do not think there will be further cuts unless the global picture darkens further in the coming months, which i think is unlikely. there are major downside risks. trade war seems to be the big downside risk. that is without a doubt. the fed will be data dependent. with a bit of luck, the data starts to improve that the global level into next year. the fed feels as if a kinky policy on hold. there are two problems. we are looking at the 2% inflation. you need to decide whether it is a supply issue or a demand issue, which is causing deviations from the 2% target.

monetary policy could make you have interest rates. instead, you have a low oil strong dollar. these are positive supply factors for the u.s. economy. second, what harm is it doing the u.s. economy with inflation? it's below the 2% target your it can the fed fine-tuned the economy with 25 basis points to get inflation back to 2%? probably not. i think this fosters an unhealthy relationship with financial markets. the fed needs to stand back. nejra: you were even putting the case forward for hike. if we get a bottoming in the global economy that you say might happen, could the fed be hiking again next year? kallum: you have to see a clear argument that could generate inflationary pressures. we don't see that, but that could be the key number to watch. you are staying with us for the hour. europe insurance revealing its new financial targets to investors today.

we will talk to the company's ceo. do not miss that exclusive interview just after the break. it is setting ambitious new targets for 2020 to 2022. this is bloomberg. ♪ whether you're out here on lte.

or here on a wifi hotspot. xfinity mobile has more coverage to keep you connected to what matters most. that's because it's the only wireless network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. switch now and see how you could save up to $400 a year. and get 50% off when you buy any new lg phone. xfinity mobile. click, call or visit a store today.

nejra: this isnejra: "bloomberg daybreak: europe." i am in london. joining us for an exclusive interview is the ceo mario greco. thank you for joining us. ambitious said new targets for 2020 to 2022. deepening its focus on innovating to meet customer needs. top to me a little bit about the next three years in terms of where you are going to find new areas to grow. big tiltingve capabilities, we have been investing and preparing for the next three years. now we are setting the goal for

this ambitious target and achieving them. we have a strategy focusing on customer service and customer intimacy. i think we made progress, and now we feel ready to go for it and achieve the benefits of it. he certainly made progress on the cost-cutting front, but finding that recipe for growth has perhaps been a little bit more challenging, is there anyway you can talk about how you will grow organically or through m&a? m&a is not what we plan to do. it is driven by digital and technology and customer awareness. with that, m&a does not really help you. you need innovation and the capability to service the customers a different way. this is what we have been building, preparing and later this year -- this year we are growing a market in all the main it is a very good

indicator for us in the future success. me about how far digital technology and big data can transform the way in which zurich does business? what do you think could be the most radical change in a way that zero transacts business? mario: connectivity is what it is. it is the capability to track and follow them in remote using technology to prevent damages. is shifting from claims to prevent claims. claims are bad things. we are moving towards preventing them, which is socially much atter and is individually much more satisfactory way of dealing with your life. on the social impact that you have as well, i am wondering

what you and the insurance industry can do in the fight against climate change. mario: we can do a lot. we have been helping communities thesocieties to show climate issues. but also, we can select what we want to underwrite and take the risks, and what we do not want to do, and we have been doing on coal, but also on some fossil fuel's. we have stepped aside and decided not to have them anymore. more and more we will take these customers tong our have a sustainable view of the world. otherwise, we are not going to support them anymore. you have reiterated that to be one of the most responsible business in the world. but you have previously said that making those choices has had an impact on the business. how are investors responding to that?

are they coming on board with your long-term view? mario: i think they are very supportive of that. there are three areas where we think we can take a sustainable position and lead the rest of the markets. one is climate, the second one is work. digital and cyber risks of the connected society with all the implications that that has. we have been acting on each one of these, trying to lead the industry, and lead all the other companies in creating a more sustainable world. you put a lot of emphasis in the past, and you continue to do so in fostering a sustainable workforce. you put a lot of emphasis developing your workforce. today's equal payday in the u.k.. it basically marks a moment or because of the gender pay gap, women are not being paid for the rest of the year in the u.k.. what steps are you taking at

zurich insurance to deal with the gender pay gap? mario: we are monitoring carefully. this is a very nasty thing. it is almost not admissible that you discriminate by gender. it is almost offensive. also looking at the other conditions. we created equality between men and women, for example, this is important. because it's another kind of discrimination that forces women from take the work. we are looking at this very for the single markets. again, we hope that we can lead the way of being one of the more open companies in the world. with the gender pay gap is that it's not necessarily that men and women at the same level are paid

differently, but the pipeline, there are roadblocks rate it can be difficult for women to reach the highest levels of a company were you get paid the most, what work are you doing to accelerate women's progress up the ladder? mario: we hate quarters. quarters,t instituted but, we are carefully monitoring what is the pipeline composition, and monitoring what is the growth of the female composition by rains -- rank in the organization. we are very well represented at the top of the organization where women in the board and women in the executive committee are highly represented. almost half of the board's women. 30%, 35% of our executive committee is women. now we are checking ring ring.

his will continue and will improve over time. we are also looking at other kinds of discriminations by color of the skin, by religion and by age, which is another thing that we are very careful about. a diverse group of management by age, and we want representation of the youngest generations as well. nejra: i just want to come back to the business, about your unchanged dividend policy. one of the challenges in the insurance industry is basically satisfying investor demands for ever increasing returns. how will you do that when there is an unchanged dividend policy? mario: we set out three years were 75%ke sure there of our work in net profits. we have increased the dividends twice already. are committed to continue

increasing dividends. we also have a dividend that we commit to. the increased dividend we will take and try not to reduce it down after we increase it. this is a challenging dividend policy. i think it will be maintained and will give shareholders very interesting returns over the last years. we gave them i-96 percent return over the last three years. we are committed to continue rewarding them, as well as in the next years. nejra: really great to have you with us this morning. thank you for your details and honest answers. mario? , great to have you on set with us. we are staying in touch with developments in hong kong. authorities said all schools would remain suspended through sunday amidst a fourth straight day of chaos. the cityt has seen

subway operators suspend service and protests continue to block the road. let's go to bloomberg's first word news with annabelle jewelers in hong kong. the public hearings in the former impeachment inquiry to president trump heard from the acting ambassador to ukraine, and a senior state department official. both thought rudy giuliani shadow deployments was intended to dig up dirt for the local and. the u.s. president said he plans to make a summary with the april phone call with the a's ukrainian president. trump said that call was perfect and denies wrongdoing. boris johnson is back in election campaign mode after a flood in northern england. his response was criticized by local residents. lens --ctory that make makes london taxis, he said getting brexit done would trigger a wave of investment. jeremy corbyn said he would not allow referendum on scott is independent in the first term of

his government. johnson is a little point ahead of labor with the anti-liberal democrats at 60%. chinese economy slowed further. the factory output, retail sales and fixed output all missed estimates. investment grew at the slowest pace since at least 1998. private companies falling back. japan supported in unexpectedly weak third-quarter gdp print this morning. the world's third-largest economy came in at a pace that 0.2%. missing estimates. powell isairman jay pushing back at president trump's call for lowest interest rates, saying that it doesn't fit the u.s. economy. he told lawmakers that rates are probably out hold after three reductions. but did signal he is ready to act if the outlook folders.

his comments echoes his message last month when he noted continuing threats to the economy. jerome: our economy is in a strong position. we have a strong consumer sector, inflation is a bit below target. they're very, very low and even negative rates that we see around the world would not be appropriate for our time. annabelle: trade talks between the u.s. and china are said to have hit a snag over farm purchases. president trump said beijing agreed to buy up to $50 billion in soybeans and other farm products. bloomberg understands china is weary of putting in numerical commitment in the text of any agreement. offered when and by how much. the u.s. would agree to how much to change on china's imports. air, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. much. thank you so

let's focus on europe where investors are asking, is the worst over for the german economy? expected to gdp is show a decline of 0.1%, marking a technical recession. the row question is, how long it will persist. the latest evidence suggests we won't have to brace for a deep downturn. the business survey rose to a six-month high while the data jumped 1.3% in september. all signs that the industrial recession might be reaching a bottom. among those, it could feel the impact is german energy company, but it ceo told bloomberg that there is reason to be cheerful. >> we are not completely depending only on germany. we have rush, scandinavia as well. great britain. we have a mix of activities, which are reporting our business going forward. you are right, probably some countries looking for a climate, or a cooler

it will probably have an impact on us as well. but the politics are more in favor of us. nejra: let's get back to our senior economist at barron berg -- let's deal with whether we will find a bottom in the german economy. are we at it now? that's what i should have said. m: we will find the bottom with a bit of work. we might be at the bottom p or do probably have to persist for a few more months, the heading into next month things could improve or germany is the most export the intent the major economies. when the global economy is doing well, germany looks great. think of 2017 and 2018 and when the global economy is bad, germany suffers a lot. we are experienced a very isolated problem in the industrial and experts that your , the domestic side consumer is doing ok. if the global outlook improves, that means the trade wars don't escalate.

if we avoid a hard brexit, then germany can get back by next year. you should see an improvement in industry and exports. that means only talk about fiscal stimulus, how much impact in that actually have if what you say is true that all it takes is for the trade war to go away. theum: you throw money in economy and gdp numbers go up, it is why it is so tempting to do that when the gdp numbers are soft. only have the headline number and looks at what's happening under the hood, with the domestic side of germany looks ok, why stimulated heavily through fiscal policy? full-motioneady a fiscal stimulus taking place in germany. turning that tap for the economy and so forth. to try to offset the industrial slump with domestic fiscal stimulus, i don't think there is a good political argument for it. you have to watch the risks and make sure that problem remains contained. if you see a rise in unemployment in germany and a

weakening of the domestic side of the economy, and the economic argument for fiscal stimulus grows. watch the's better to risk in hopes the global economy returns to something like health next year. is the political risk underappreciated as everyone focuses on the impact on the trade war on germany's economy? german politics is noisier now that has been an a long time. it's whether the alliance between the csu can hold for long. germany is a contentious the scene -- machine. like the u.k., it's a winners take all system. if you look at the consensus, whichever way you mix politics, you end up with the same policies on the domestic front and european issues. even if there is some political uncertainty for germany, it could still cause risks for anyone else, its neighbors and the domestic economy in any way. here is a look at what to

watch. preliminary euro gdp is out at 10:00 a.m. the consensus is for a 0.2% growth. the ecb governing council member speaks. across the atlantic, jerome powell testifies at a house budget committee hearing that will focus on the country's economic outlook. money managers with more then $100 million of u.s. traded equities must disclose their holdings by filing the sec's form 13 s by the end of the day. coming up, we speak to the ceo, mike cooper as the company celebrates its 25th anniversary. we discuss what environmental pledges it is making to mark the occasion. that is next. when you are traveling to work, tune in to bloomberg radio live on your mobile device and live in the london area. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." the 14th is nicknamed

equal payday. the day that women effectively stop earning in comparison to men in the u.k., according to the office of national statistics. we asked if it was a responsibility of shareholders to hold to the account of the diversity. i think the responsibility of individual firms, supervisors and shareholders, and everyone involved in the ecosystem to have a progressive issue. we are starting to see some shareholders will more pressure on their investment firms to adjust gender barriers. starting aboard levels. that starts to trickle down into mid-management. bothnk the commendation of the individual firms policymaking for those external forces, that is the only way we are really going to push them onto the next wave of change. >> in an economic downturn, the will bemidable groups

disproportionately affected. i'm thinking about social economic diversity and diversity. where the companies you spoke to in this report focused on that? absolutely, gender is one aspect of diversity. it's becoming increasingly prominent. often we talk about gender because that is 50% of the population. that applies to many of the aspects of diversity. while we are talking about gender initiative, it can certainty be used, and should be used as a way of broadening out into those topics. if you are launching a gender initiative, thinking through, how will this impact women of color, women from the lgbt community, women from different social backgrounds, and using that to continue the dialogue, and starting to understand the differences of the intersections of different aspects of

diversity you can have it. nejra: that was jessica clempne r. the trade line that connect london and paris is 25 years old today. year-old star has become a stable in both the british and french transport system. the company aims to position itself as the most environmentally friendly choice for short european travel. how likely is it for train travel to replace airlines in an .ra of flight joining us is my cooper, ceo of euro star. we are delighted to have you with us today. talk to us about what you are launching for the 25th anniversary. mike: it is a celebration. the celebration the last 25 years and we have transformed travel between the u.k.. but also we are looking forward and taking the euro star is the right environmentally friendly choice. 90% zero carbon emissions. that is very much part of what

we do. talking about legacy as well is that environmental consciousness. instarted this program back 2007. over the last 12 years we have seen a 40% reduction in our own carbon footprint. -- thisthe agenda agenda has been the top of the line for many years. nejra: it has been regarded as competition for short tour flights. is yourciently advanced network to actually compete both with the short term and the longer flights in the future? mike: we compete very effectively. if i look at the market for joint air between london and paris, or london and brussels, we have a 75% market share. are saying that they prefer it in terms of the city sensors and the convenience. we are in a good position.

as you say, we are building a network, london through amsterdam in april of last year was launched. it is a promising foothold and a promising class there. it is happening, and happening increasingly in the u.k. and across the continent. up that youew tie announced in september, how does that fit into the strategy that you have just outlined in terms of potentially being the beginning of a major new european high-speed network? mike: it works both ways. we is to offer them access to the u.k. markets, and they turned people through to germany, to frankfurt, they offer that to germany. it is a win-win both ways. has been a absolutely explicit in their content and they're looking for over 60%

growth in terms of passenger numbers in the coming years. it is a great platform from which to build, but it is very much a growth strategy. about growth. me you have any new routes planned, or plans to source new trains? we have very scratch -- barely scratch the surface. our market shares are around 10%. we compare that with paris or with brussels north of 75%. it is give some illustration of the potential that is still available on london amsterdam. london amsterdam is a 4.3 million flight market at the moment. is vast, and we will grow that vary significantly in the years to come. nejra: any concerns about the impact on passenger numbers from the outcome of brexit, mike? mike: im not seeing it at the

moment. if i look forward to your end and forward sales into 2020 for where we would want them to be. i think customers have been reassured with our strong plans in place. is a safety certification operating licenses and what we have transferred. we have that certainty of supply . u.k.,qual payday in the what are you doing to fight nejra: -- it is equal payday in the u.k., what are you doing to fight the gender gap? mike: we recognize it is an issue. we are making progress. improvement in that differential, but it is still not good enough and we have plans in place or at the senior level. we are very much aware of the gender pay gap and what we will be standing for in the future. thank you so much for

joining us, ceo of euro star on euro stars 25th anniversary. coming up, we will get the much anticipated gdp figure for the third quarter. we will find out whether the country enters a technical recession. this is bloomberg. ♪ when it comes to using data,

everyone is different. which is why xfinity mobile is a different kind of wireless network that lets you design your own data. choose unlimited, shared data, or mix lines of each and switch any line, anytime. giving you more choice and control compared to other top wireless carriers. save up to $400 a year when you switch. plus, get 50% off when you buy any new lg phone. xfinity mobile. click, call or visit a store today.

>> good morning from bloomberg's european headquarters in the city of london. this is "bloomberg daybreak: europe." the new normal data out of china makes the glimmer eating. investment grows at the slowest pace in over 20 years as industrial output and retail sales also miss the mark. the view from the chair, jay powell says china's economy is hard to understand, that on the u.s., he said monetary policy is in a good place. mary daly does not disagree. i see the level of the policy rate, right now, as appropriate for the economy we have, which is good consumer spending, good domestic momentum, but facing these

headwinds for manufacturing. we are in the moderately accommodating stance, and that is appropriate. nejra: a shallow dip, germany looks to a technical recession, but this month data points to stabilization. welcome to "daybreak europe." germany's economy has avoided recession with a surprise growth the third quarter. the expectation was for a drop of 0.1%. that is an upside surprise. meaning that germany has avoided a technical recession. the euro weakens and some of the losses earlier from trade flat right now just straight off the back looking at euro-dollar. we trade at 110.

we were just below it, now we go above it. that is the key bit of data we were looking at from germany. in terms of how this might impact the market, let's look at futures and bonds. european future saw a down day. a little concern in risk off coming through in the markets. u.s. futures are dipping a little after we saw the s&p 500 closed. disney helping the dow hit a record. lossesng some of the from earlier. this might be an instantaneous reaction to the number coming through from germany. taking a look at the bond markets. we saw yields fly yesterday. both in the u.s. and in europe. the 10 year treasury yield continues to slide by two basis points. not getting a huge amount of direct there from the futures. at the very least, we are not seeing any kind of slide or gain at the moment in those futures. that's get to our reporter from frankfurt, bloomberg's economy reporter joining us to react to this data.

your first take away about what this number says? like, indeed, it seems avoided this. has economists are expecting a slight decline of 0.1. we came out at 0.1. basically where we see in here is where the recession has been avoided. obviously it does not really change the overall picture of the economy. based on the fact that we do not have the details data underlying those numbers, just the headline. the economy suggest has been german by the consumer spending. we are still seeing the weakness in manufacturing. that is still the powerhouse, the main driver of this, which is very much dependent on it. as under straight conflicts continue, we will still see manufacturing. the question right now is whether this situation that we

are seeing in manufacturing eventually impacts consumer spending sumer -- sooner. we are not seeing this in the third quarter. there is some stabilization showing, but the jury is still out whether the consumers will continue to pull the economy forward until the situation improves and the economy. will today's number be interpreted by german politicians, that actually they don't need to roll out the stimulus yet? >> i am afraid so. what we have heard from the minister, we are not in a crisis, so there is no need to roll out stimulus, and certainly another argument for doing this -- i would not say nothing, but the german government is actually spending and there is an investment program going on.

their argument is, we are already spending, but we are actually facing some kind of constraints in finding jobs and having workers to fix the roads. the investment is there, but i don't think, at this point, seeing that number, we will see more spending from the government, they will continue to stick to their ways -- wait and see mode. as long as unemployment situation is still ok. so far it is. we are not seeing much of the deterioration in the labor market. it is not significant. as on his that continues i would not count on government changing the tune. a bloomberg's economist reporter. really great to have you with us. joining us now is guest hosts jim mcdonald. welcome, great to see you here. what is your first reaction to this data out of germany? i know it is one quarter of data, but the expectations for

the technical recession, we have just skirted it by the skin of its teeth. does this make you more hopeful about the outlook for germany? politics --modest positive. consumer spending across all of europe has been holding up better than manufacturing side. germany is the point of the spear when it comes to manufacturing. especially exposure to china. we have started to see improvement in the leading indicators. investors are how analyzing the situation, with the dax up 20% this year, there is not a belief we are going to significant recession across germany. i would put nonpositive as a description in the german gdp report. nejra: how did that affect your view in europe and how you would invest in europe, specifically in germany? jim: i think it is illustrative that the european expansion is more durable than people feared. lot with other a developed economies over the last five years.

we expect it to keep pace with that the development markets over the year. mas -- a moderately positive outlook. if there was an upturn in global growth, europe would be a clear beneficiary because of germany's exposure to the european markets. to a: we seem to be going turning point where we have optimism over the last couple of months. the merrill lynch survey showing fear of missing out leaving investors coming up the sidelines and putting money back in equities. when this starts the happen you start to ask the question of whether the money starts to move away from the u.s. and back into some of these more unloved markets, like europe, perhaps like emerging markets and even the u.k.. a u.s. point are you might stop thinking about that and shifting the pressure away from the u.s. to an area like europe? jim: our biggest overweight it's -- overweight is the u.s. we are underweight emerging markets. i don't see these conditions being sufficient for us to materially shifted that.

we think the trade war tensions will persist. the concept that we will get a meaningful deal out of phase one discussion is very low. do i think the odds of europe and the japan seeing and proving outlook over the next year versus emerging markets are higher. of the central bank reaction. we will talk about the fed and the moment. if we look at the ecb and ask ourselves questions of whether global develop central banks are on pause, does the data today give you less reason to think that the ecb needs to stimulate as much? on the margin,y yes, but the inflation data remains very low. i think central bankers are most worried about the inflation out lead. if we are getting 1% inflation across europe during a very low growth environment, what happens when things turned negative. that is what they are worried about and trying to do their best to ensure we don't get to that position. let's get the bloomberg

first word news with annabelle jeweler's in hong kong. annabelle: the first day of public hearing in the formal impeachment inquiry into president trump. they heard from the acting ambassador of the ukraine and a senior state department official. both that they thought rudy giuliani's shuttle diplomacy in the ukraine was intended to dig up dirt political ends. the u.s. president said he plans to make public a summary of an april phone call with ukrainian president. trump said the call was perfect and denies wrongdoing. hong kong suspended all schools until sunday amid a fourth straight day of chaos. been paralyzed since monday when a protester were shot during protests igniting citywide unrest. has kong subway operator partially suspended services. two people, including a 70-year-old man is in critical condition from the recent clashes. for us johnson is back in election campaign mode after a difficult it in northern england.

his response was criticized by local residents. factory thatt a make london taxis, the u.k. prime minister said getting brexit done would trigger a wave of investments. said that he would not allow referendum on scottish independence in the first term of his government. averageg's latest poor put johnson's conservative some 11 points ahead of labor. what the anti-brexit liberal democrats on 16%. fed chairman jay powell is pushing back at president trump's call for lower interest rates, saying that it does not fit the u.s. economy at the moment. he told lawmakers rates are on hold after three should -- three straight reductions, but said he is ready to act if the growth falters. that echoes last month when he noted a continuing threat to the economy. exclusively to bloomberg, the san francisco fed president also echo jerome

powell's comments on rates. mary: i see the level of the policy rate right now as appropriate for the economy we have, which is good consumer spending, good domestic momentum, but facing these headwinds that occur in manufacturing. we are in a moderately accommodating stance, and that's appropriate. trade talks between the u.s. and china are said to have hit a snag over farm purchases. beijing agreed to buy $53 billion in soybeans and other farm products. bloomberg understands china is worried about putting a numerical commitment in the text of any agreement. pulled sides want to know when and how much the u.s. would lift tariffs on chinese imports. local news, 20 for hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. china's economy slows further in

october. the factory output report -- retail sales all missed estimates. investment grew up the slowest pace since the -- since 1998 with private companies pulling back. retail sales also slowed more than expected. this may be an indication that demand continues to weaken across the economy. this data has further evidence that china's effort to break a slowdown is falling behind the curve. joining us is the chief investment strategist at northern trust. how should investors look at this? we have not seen chinese equities falling on this worse than expected data. they are bucking the trend elsewhere to be in the green pure it should investors view this is slowing down? that we expected that anyway. jim: i don't think there will be a boost in stimulus. they cut their reserve rates by zero point 05. so, five basis points. a tiny moving accommodation.

we think the slowdown is tied to two issues. number one, the trade war impact. there is an intermediate term the system that is leading to slower growth. i think that underpins the slower growth numbers that china is reporting. underweight emerging markets is a big part of that. your outlook for china. would it take china for that to change? absolutely, china is the 900 pound gorilla in that way. 30% of that, plus the willful test ripple effect on all the other economies driver emerging-market equities. the other thing that drives it is the outlook for the dollar. we don't see a reason for a particularly weak dollar. both of those could be things that could change the outlook, but we don't see enough evidence for an improvement in the chinese economy to think it's time to go over this. china's commerce ministry

said the trade war begin with tariffs and should and by removing them. also saying that china and the u.s. are in talks on a phase one deal. how hopeful are you that we get phase one done by the end of the year? jim: full. we think that it is disappointing that there cannot even be in agreement reached. the amount of agricultural purchases. china has purchased $20 billion the year for the last 10 years of u.s. agricultural products. they need to buy them from someone. if we cannot strike a deal that gets them to commit to that, that tells me that there is a more substantive than just an agreement of agriculture currency evaluations. backup we have had in 10 year treasury yields, does that reflect how, i don't want to say technically overbought, but overbought treasuries were over doing the recession scenario?

value onck to fair treasuries, or could we see much more of a backup as we have positive news? i just want your take around phase one. driver ofrincipal rates and the steepening that we see, which is constructive development for risk-taking, has been driven by the odds that we go into recession. we think rates are more likely to back off modestly from here than they are to move up in the 2% range. messages, the positive slope and the one-month for the investorssign that are now putting money to work saying we will not go into recession. i think that underpins the equity rally. more toe have lots discuss her just to bring your reaction that germany avoided a technical recession. germany's economy minister saying that german growth numbers are still too weak.

that is the first reaction that we are getting from the news on germany. we are also going to hear from the san francisco fed president on the central banks stance. the state of u.s. economy. we don't want you to miss that conversation coming up. this is bloomberg. ♪

nejra: we just heard that hong kong is expected to announce a curfew for the weekend. this is according to the global times. if this is confirmed it could be the first curfew in the city that has seen protests now for five months. looking at live pictures of protests continuing for a fourth straight day. let's get the bloomberg business flash. annabelle: disney shares soared to a record after its new streaming platform attracted 10

million customers. disney + launched on tuesday in north america. fans have had months to preorder at a discounted rate. to analyst expected disney need much more time to read the level. it took hbo for years to hit the 10 million subscriber mark. the next ceo was mike henry. lead the chpborn marketing division in coal operations. having joined the company in 2003. it clears the way for a new executive to meet the challenge of slowing growth and demand in china. the source of -- the source of most of bhp's revenue. after of years of trial and droppingeing is robots. it plans to rely on skilled engineers to manually insert the product into the plane. boeing said the shift to humans should be done by the end of the year. that is your bloomberg business

flash. thank you so much. let's talk about the world's biggest economy, a key measure of u.s. consumer prices called in october, despite fresh tariffs on chinese goods. jerome powell is satisfied with current interest rates, sticking to the view that they will probably be on hold right now. ome: we do think monetary policy is in a good place, but we will watch very carefully in incoming data. if developments emerged that cause material reassessment, that we will act appropriately. nejra: mary daly also echoed jerome powell's comments. she spoke exclusively to bloomberg's kathleen hays in san francisco. mary: the policy economy has put policy stance in a very good place to make that baseline come out where we needed to, which is slightly above trend growth, and continuing to move up in inflation to target, and for full employment.

i do think of that as the economy being in a good place. nejra: jim mcdonald from northern trust is still with us. listen to what jerome powell was saying yesterday. did you get the sense that his comments on inflation was sending the message that, yes, the fed is on pause, but there is a bias to cutting because the three cuts were not just about insurance against global risk? jim: i think the odds of there being a cut are much higher than the odds of a hike. nejra: what about a hold? they could be on hold if the data continues to be solid. they are worried about the long-term outlook for inflation. we haven't outlook that is a view of technology bringing all kinds of new supply into the industries, which is preventing placing power from taking hold. we have an 11 year expansion in the u.s. core inflation is well below what the fed's target is it i think they are worried about what the next downturn is.

the bias will be easier as opposed to tighter policy. nejra: you are overweight u.s. equities. you're also overweight high-yield and underway investment grade fixed income. i want to get my head around the thinking. earlier you were not that optimistic about phase one, or any deal between the u.s. and china. what did u.s. equities for the support. is it rate cuts from the fed? because there is a chance those could be seen as a concern over the global economy. growth.is organic we are hitting the bottom in a slowdown global. we are seeing signs of an improvement over the next year or so. we are in an environment were earnings growth could be in the 4%-6% range at a 2% dividend. you have a single digit returning out of the equity markets over the next year. we do not think on slip that, but you have to find your overweight from somewhere. with the lowest returning asset class over the next year is likely to be investment grade box. nejra: -- bots.

nejra: you don't think the trend in dollar weakness will continue, why not? i don't think it is clear what the dollar will do over the next year. if you look at the policy standpoint, maybe a nethercutt or two in the u.s., which could put weakness in the dollar versus the euro. if we get some recovery in the european economy, maybe there is a fight hint that the downside is not as big as people expected, that might give some strikes to the euro. i would not make a big that on currencies over the next year. i would rather use my risk budget to bet on things like the region of the u.s. over emerging markets, or high-yield bonds, which we think corporate credit looks pretty good. and with very less lower risks in the equity markets, you could see a 5-6 return. high income is really attractive in this marketplace. nejra: if we do see those cuts that might come. perhaps the next to cuts. what does that do?

does it revert to recession, does it lift inflation? jim: it is not likely to lift inflation. it is likely to give investors and the real economy confidence that the fed is behind a sustained recovery. it will have more of a financial market impact than it will a real economy impact. what really matters is, what is the environment that they end up doing that in. if they end up being forced to do that because of the material downturn of the data, that would be less constructive for risk-taking. nejra: you don't expect a material downturn in the data. how quickly do you expect any kind of resolution and u.s./china trade talks? do you expect we will get something meaningful that will give us a lift to risk assets before the november 2020 election? jim: we don't. we have a five year outlook with a thing called it records are will differences. the differences between china and the u.s. will not be resolved. they will not likely ever agree

to it. we think there may be smaller cosmetic agreements. the fact that we cannot get the agricultural purchase agreement, when all they would be doing is agreeing to purchases that are at a level they have been doing over the last 10 years, tells me there is not a lot of motivation to strike a meaningful deal. nejra: jim mcdonald, thank you for joining us. the chief investment strategist from northern trust taking us through his investment ideas. we are looking at live pictures of the hong kong protests. the latest headline we got our reports that hong kong is expected to announce a curfew for the weekend. if this is confirmed, it would be the first curfew since the protests started five months ago. we are seeing market reaction to that. the hang seng extending losses down or the 1%. we are looking at a fourth day of protests. straight day of protests in hong kong, adding to the global risks out there. including the data we had out of

china, coming in worse than expected. perhaps a snag in the trade talks. those are the things seeing a risk off tone in markets. germany averted a recession. this is bloomberg. ♪

anna: good morning. welcome to "bloombergtechtv markets:- "bloomberg european open." the cash trade is less than 30 minutes away. germany's close shave. afterg a recession surprising growth in the third quarter. we will speak to a big german business. china sputters.