>> good morning from dubai. this is "bloomberg daybreak: europe." i am manus cranny. .ejra: i am nejra cehic these are today's top stories. incremental gains. china stock split higher as the pboc pushes ahead with its easing program as negotiated from beijing and washington holds a constructive trade call over the weekend. saudi arabia sets the valuation target for aramco's ipo well below the initial goal of $2 trillion. riyadh withfrom reaction. a possibility of tax cuts at the cbi conference today. we will be speaking with a man

on the others of the aisle, jeremy corbyn. do not miss it. manus: it is "bloomberg daybreak: europe." it is all about global trade and the impact. singapore export orders crash and burn 13%. have you got a mindset of what is china growth, sub 6%? nejra: have you got a mindset of what that will mean in terms of stimulus? some of the signals from the pboc when they talked about growth and inflation over the weekend was as things get worse, they want room for more policy moves. you can take something away from that, too. policyyes, and those adjustments have moved the dial

slightly. they are back at levels we have not seen since 2015-2016. constructive discussions in trade help the equity markets a little bit and the pboc drip feeding rate cuts. before biggest central banks in the world are on easy mode and perhaps we are under assuming the capacity of qe 2020. let's look at the s&p futures. credit suisse says an extraordinary rally can endure. the u.s. will underperform in 2020 because of peak earnings. small issue of politics at having a look at goal, we see a news alert at the moment. gold holdings post the biggest outflow in three years. we are seeing gold. etf holdings with the biggest weekly drop in three years. the hedge funds cut their bullish bets by the most, to the smallest amount in five months. narrow. jra.e

nejra: the 10 year yield dropping four basis points in today's session. the pboc saying china's position as one of the few major economies still has room in conventional monetary policy and should be actively maintained. will chinese bonds continue to outperform? we never got to 2%. we dropped 11 basis points last week. a critical few weeks for treasuries ahead. the offshore yuan would need to strengthen for 10 year yields. morgan stanley saying the u.s. would have to remove tariffs if imposed in september for 10 year yields to preach to preach 2%. cable on the front foot for a fourth day, hitting a two-month high after boris johnson said all conservative candidates pledged to vote for his brexit deal if he winds the december 12 election. meanwhile, the conservatives still leading in the polls. that's get back to our top story. top negotiators from the u.s. and china spoke by phone on saturday with talks over the phase one trade deal described

as destructive by beijing. manus. manus: that comes after china removed the curves on poultry imports. the trump administration is poised to extend a license for u.s. companies to do business with huawei. the new york times reported back on saturday. the pboc trimmed the short term policy rate. that was the first move since 2015 on that particular seven-day reverse repo rate. nejra: matt came after the pboc warned the chinese economy was facing greater difficulties from a slowing of investment and sluggish industrial production. joining us now is jim mccormick, global head of strategy. great to have you with us. what would be your strategy for chinese assets, bonds and the yuan, given what we have learned? jim: i think the pboc is right, they are one of the only major central banks that have a lot of room left to ease.

we think they probably will signal another cut on the loan prime rate. got the central bank that is doing what it needs to do, which is modest easing in the face of what has been a pretty weak economy. manus: this is a debate on mliv this morning. good morning, good to see you. morgan stanley under assumed the robustness of quantitative easing and central-bank action. as we sit in the closing embers presume moreld i asg for my central-bank buck i going to 2020 than i currently think at the moment? jim: it is probably the opposite. you are right. if you look back at this time last year, there was a lot of negativity around asset markets. it had been a very tough time. i think, heading into next year, the lesson is that central banks

have had an incredible ability to move asset markets in 2019 but this could very much be the swansong. they are running out of ammunition. they are sounding more reluctant to cut rates further and i think this will be the big story for next year. nejra: a big story for the rest of the year is where we get to with these trade talks. i pointed to a couple of strategists at the top of the show who made the link between trade talks in the yuan and treasury yields. do you make any link between those things? jim: certainly the yuan. if you look at the yuan performance, it pretty much go step for step with the level of tariffs. if you do get some relief on tariffs, which looks like it's a real possibility in this phase i deal, i think the yuan will hold on to some of its gains, but it's hard to see significant strengthening from here. piece over the weekend is from ben amos.

this is money market assets expanded to $2.6 trillion. ben calls this opportunistic liquidity. no duration or volatility risk. me, kind of momentum, for screams to me of a concern about liquidity shortage or some big bolt from the blue. how would you look at $2.66 trillion? opportunistic liquidity or a fear factor? jim: it is very surprising in a world where asset markets have been going up, where you know your yield in money markets is very low. i think it tells you that there is a fear factor out there of something potentially coming in 2020. nejra: right, what would we need to see for the 10 year yield to preach 2% and actually stay there for a little while? bmo thinks the offshore yuan would need to strengthen to 6.93 per dollar. they would need to remove tariffs imposed in september.

what would you need to see for the 10 year yield to go about 2%? in: the removal of tariffs september is already in the price. we have an incredible rally and asset markets linked to the china story. to get 10 year yields about 2% and stay there, you really need to see some improvement in the u.s. data. the u.s. data have looked a little bit better recently, but frankly, you know, i think the market is getting way too optimistic around no fed rate cuts, this china tariffs story. manus: the other factor that you make very clearly in your notes, we have put it into the gtv library, so things are beginning to turn a little bit higher for you as far as global -- your perspective on global pmi's. this is something i was not going to show. that's have a look at the chart i have got here. you have basically -- that is live tv. let's not worry too much. abasing anding

pmi's p when i see the singapore data this morning, i do not agree with you. key on they, the pmi's or their sentiment as opposed to real data, they are a little bit more forward-looking. when i look at the pmi data, the two things that stand out is, one, emerging-market pmi's have been above 50 for the past four months, which is certainly a positive story. the orders numbers, the orders to inventory ratio, has had its biggest two month increase in five years, so i do not think this is a return to very strong industrial sector growth. we are starting to see a bottoming in those numbers. it to with china, we link the trade war a lot, but more and more, we are acknowledging the story is very domestic. if the trade war does not improve by the end of the year, does that china story become materially more positive for you and make you even more bullish

on emerging markets? is not atly, it bullish story in china. what china has been doing is for almost two years now inserting credit into the economy. if you look at the normal lags, you should start to see an improvement in china's economy, whether or not you have a very modest china-u.s. trade deal. on e.m., it is not a super bullish story, but emerging-market currencies are 15the 15% all of -- percentile. they are attractive to major economies more than any time in the last 10 years. there is a value story and a small turn in the business cycle and there is a market that has not really wanted to be invested in e.m. i think that changes heading into next year. manus: i think you must have had a bit of dinner with pimco over the weekend. you are all singing from the same a la carte menu.

they are saying em currencies are cheap. they focus in on where they want to be top picks. and this, they want to be heavy on the yuan, the korean won, and a couple of shorts they want to trim back on as well p aware do you see the biggest opportunity on phase one and perhaps into phase two on trade? one, you need to start looking at asia again. korean won is certainly a currency we are looking at heading into next year. we have cheap asset markets, a currency that clearly has taken some downside as a result of this u.s.-china trade tension. away from asia, we like brazil, russia, but again, i think the general e.m. complex looks like a pretty good investment strategy heading into next year. manus: ok, thank you very much. jim cormack with the very latest thoughts on phase one and going

into phase two. this is continuing in hong kong as protesters and police clash again. to cleares move activists from the university campus and made dramatic scenes of flames and smoke. the former hong kong democratic party chairperson spoke with stephen engle in the wake of the latest confrontations. >> the hong kong government, which of course is under complete order of xi jinping, president xi, they have to respond to the people's demand. if you look at turmoil elsewhere, in lebanon, in they responded, so they have to. we are not asking for a revolution or independence. we just want an independent commission of inquiries. manus: we are not asking for a revolution. stephen engle is on the ground.

strong words indeed. good to see you this morning. the latest developments from the ban on masks, which have not gone and the government's favor. -- in the government's favor. stephen: the government has been seeking ways to further clampdown on these protests. the government of carrie lam has taken quite a hard line. her deputy just a couple of days ago said we need to take more decisive measures. we had the government in the facebook live broadcast this morning say if their dispersal operations are going to be met with more increased violence from the protesters, then it will be ok that the police officers could use live rounds. of course, the government, according to the protesters, has has quite entrance again -- been quite -- towards their demands. several options have been invoking more elements of the

emergency powers, the emergency provisions ordinance, which dates back to 1922, which will give the government sweeping powers. they have already evoke to of those emergency powers, including last month, the ban on facemasks. any kind of facial pain ariella area --ind of facial this is a blow to the government as they try to find other ways to invoke provisions within that emergency powers. let me just review really quickly what the high court today, ruling in favor of this filed byor measure, the pro-democracy lawmakers here , the high court said the masked is unconstitutional because the instructions it imposes on the people's fundamental rights are more than what is necessary.

nejra: thank you so much. stephen engle joining us from hong kong. coming up later this hour, we speak to the director general of the confederation of british industry. later on, we will speak to u.k. labour party leader jeremy corbyn. do not miss that interview at 1:00 p.m. u.k. time. manus. manus: up next, it is all about the valuation for saudi arabia is aramco. -- saudi arabia's aramco. we take a look at the implications, next. ♪

nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. manus: i am manus cranny in dubai. juliette saly is with us in singapore. juliette: i am looking at this big surge in hong kong stocks, which is interesting given the

escalation between university students and the police today and the fact that we saw hong kong stocks last week had their worst week in three months. mliv is saying perhaps this is superficially negative, the beginning of the end, we could see stability coming through and therefore, that could give a boost to hong kong equities, which have been under performing. property stocks, which last week had their worst week since february last year, up by 1.4 percent. you are seeing volatility lower on the index today. weakness coming through in the hong kong dollar. this is ahead of hong kong's jobs data, which is coming through after the bell in hong kong. we have seen hong kong unemployment hold up pretty resiliently at 2.9 percent, although it is expected to pick up to 3.3% in the october reading. you can see underemployment, this blue line, remaining very resilient at 1%. we are expecting it could pick up as we continue to see the

impact of the protest and trade war on the overall economy. inra: juliette saly singapore. first word news with selina wang in beijing. selina: thanks. and the u.k., the election is ramping up. boris johnson is trying to win business leaders to his side with tax cuts. of the first televised election debate, johnson will take on opposition leader jeremy corbyn tomorrow, but before that, we will speak to the labour party leaders this afternoon. istish royal family suffering yet another public relations disaster. this over the attempt to explain away his friendship with jeffrey epstein. criticism is mounting over why the queen's son decided to talk to the bbc. the prince denied sleeping with virginia roberts -- teenage sex slave. in london, house prices resumed their downward slide in november.

asking prices fell to an average of just over 600,000 pounds. newly's team's were down 27%. it is another sign that political turmoil is hitting the u.k.'s housing market. bill gates is the world's richest person again. it is the first time in more than two years that the microsoft cofounder has taken the top spot. gates was helped in part by the pentagon -- jeff bezos is still worth and eye-watering $108 billion. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank. in beijing, selina wang. mohammad binco, -- salman's goal. a. back the size of the sale as it looks to ensure the world's

.argest oil producer it successfully lists next month. we are asking the mliv question, how will aramco's ipo affect other assets? you can join the debate on the mliv blog, tv . at the need apollo is with us -- anthony is with us this morning. anthony: the 1.5% listing, this is a much smaller number than we had expected. you will remember initially, when they talked about making that ipo, they were talking about 5%. that went down to 2%, 3%. now, we are at half that rate, so 1.5% on the market is not that big. about one third of that, 0.5%, is going to go to retail investors, and we will look for the institutional's to, in. of course, buying shares with

, potentially a questionable investment strategy because we do not know whether those shares are going to go on the market so this potentially puts some of at risk of investors the fluctuation of the share price. nejra: saudi arabia has really been pulling out all the stops, hasn't it, anthony? a little bit of a skeptical audience. what does what we have learned over the weekend, including the valuation, mean for aramco and for saudi arabia's ambitious development plan? anthony: they have cut taxes on saudi aramco. they promised dividends and dividend sweeteners to bring investors in, but really, the whole point of this exercise was to bring foreign capital into saudi arabia. that is what we are not seeing here. those foreign investors look to be staying out. other than those qualified financial investors that can

invest through the riyadh exchange. the saudi's will not be marketing the sale in the u.s., in japan, canada, and australia. a lot of those foreign investors are staying out. that was the real point, to bring foreign money in so the country could use it to invest in other sectors. manufacturing and other industries area we are really missing that aspect, narrow. manus: at the need apollo -- anthony jacking that story. jim mccormick is our guest host this morning. we look at the oil market, the single biggest issue when we look at the commodity market, on one hand, i have to consider chinese growth, yet you say that world pmi's are based in the united states. how does that tie into a commodity world to your markets view? are i think commodities super interesting. if you take a look at 2019, the

way i but market returns is those markets that have been most sensitive to monetary easing have done very well, and those most sensitive to growth have not done so well. with commodities, it means precious metals like gold have had a really good year. oil, a little bit less so. industrial metals, even less so. next year, bottoming out in global manufacturing, more reluctance by central banks to ease policy, and you should see a reversal of that. i think precious metals will struggle a bit. oil, we have a small, bullish forecast relative to consensus, and metals should do ok. nejra: we heard so much last week about peak oil demand from legendary traders through to the iea, through to saudi aramco itself. are you also a believer in that he oil demand? you want to be bullish for now? jim: there's the structural story. the peak oil demand is a pretty compelling set of arguments, but

the cycle story heading into next year, to me, is a tug-of-war between can u.s. production continue to grow? we think there is way too much bullishness there, and can demand improve a little? we think it could. it is not a big year for oil. but i still think there's a lot of bearishness around oil, and that is probably not the right view. manus: with that in mind, you need 500,000 to one million barrels to prevent getting set up $50. does opec need to cut more to sustain the market briefly? jim: they may need to cut more. they seem reluctant to do so. again, i think the supply story for next year is centered on the u.s. there is an expectation that the u.s. could increase production by another million barrels per

day and that seems a little bit aggressive from our perspective. nejra: jim mccormick staying with us. speaking up, we speak to the director general of the confederation of british industry. boris johnson says he will introduce tax cuts. this is bloomberg. ♪ s is bloomberg. ♪ everyone uses their phone differently.

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and now get $250 off google pixel 4 during xfinity mobile beyond black friday. that's simple. easy. awesome. click, call or visit a store today. nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. manus: i am manus cranny in dubai. first word news with selina wang in beijing. manus peered you, unrest escalating in hong kong. the police have closed the cross harbor tunnel, linking hong kong island with calhoun. they moved to clear protesters from a university. smoke was seen bellowing after -- officials warned the police if the live rounds situation continues. the high court the government's mass ban is unconstitutional. the rulings in response to a challenge filed by the city's

opposition lawmakers. ban lastm imposed the month. she invoked colonial era emergency powers for the first time in more than half a century. valuationia cut the target for aramco and it could be as low as $1.6 trillion. that is well below the much touted to trillion dollars. it would allow the saudi oil giant to overtake apple as the world's biggest public company but fell short of the record-setting ipo. the lower end of the range could see it below alibaba's offering in 2014. in venezuela, the biggest protest in months as opposition seeks to revive its campaign to oust president nicolas maduro. drew hundredsaido of thousands of demonstrators earlier in the year but venezuela has been quite recently as protests hit another south american nation from ecuador to achieve a. many doubt he can unseat president maduro. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700

journalists and analysts in more than 120 countries. this is bloomberg. manus: thank. selina wang in beijing. the yucaipa prime minister, boris johnson, will try to win business leaders to his side today, offering them tax cuts as an olive branch for the disruption caused by brexit. johnson will make his pitch to the confederation of british industry's annual conference. it comes as a campaign for the u.k. election heats up with the first televised debate and the release of party manifestoes this week. anna edwards is tracking the cbi conference for us this morning. anna: good morning. i am joined by a great guest this morning to give us some insight into the relationship between business and politics at this point as we work our way towards the 12th of december election. they join us from the cbi director general. there to see you once again. good morning. thanks for having us at your

conference. let me ask you a little bit about what your preferences around brexit at this point -- what is the preference of business? on one hand, we have the relative certainty of what boris johnson has negotiated. on the other hand, a possibility of a referendum with jeremy corbyn. do they have a preference between the two? >> business really does want to be able to move on and the uncertainty has been so damaging. we talked about it many times on investment. what business is looking for is a good deal that gets us to a world where trade continues with european neighbors. we have been constant from the beginning on that. a great deal for our services. that is the main priority. if we have a government coming back in with a deal that looks like that, then we will be able to give it our support, and if there's not a referendum, that is not for us to say, but we will play those cards when they come. anna: business would be open if maintaining existing

relationships with europe. >> we are not thinking in that direction at the moment. we can only play what is in front of us. we have different plans on the table. but we are really hoping for uncertainty to be entered as soon as possible. anna: what is your assessment for how brexit is affecting businesses at this point and the prolonged debate around brexit and the prolonged political process? >> it is really challenging. it really is. ordinary businesses have faced cliff edges. they marched up the hill and down again. now, the fear of no deal that has just passed and don again. it is undoubtedly chilling investments and we do see this in the numbers. we have had a decline in business investment. they really want to get the minutes. they want to get onto the next stage of trading relationships. at the moment, you have a lot of fingers on the pause button on investment. anna: isn't there a problem with

the deal boris johnson has negotiated that there could still be cliff edges in there? course johnson said he will not extend. they have the potential for no deal once again. >> this idea of rolling cliff edges and no deal on the table still is a real concern. no business is under any illusion that brexit gets done just because the agreement is over. it does not. no deal is still a possibility. a very strong message from business on this is do not box yourself in. do not get to a stage where we are boxed in and end up with that klepac yet again. instead, give enough time to get a good deal. actually, i think if that were to happen, that clarity about enough time for a new deal, that could bring investment forward and help 2020 to get off on the right footing. does what kind of -- business get to the top favorite number 10 at the moment? we have a prime minister who rather famously used a rude word

to describe business not many years ago. pervadet atmosphere still or is number 10 much more open than that? anna: i -- -- think our relation >> i think our relationship is good. the prime minister himself is here. i actually do think it serves a lot. we do want that relationship to be turned into action. conversations is one thing. action is a numbe another thing. we had a good conversation with boris johnson. i think the conversations are there. what we see is the policies that really -- anna: what do you expect and immigration?n both parties seem to be going out of their way to not commit to numbers and instead think and strategies around immigration, but we lack detail. >> immigration is a really important subject for business because we want to be able to grow. aboutave given some hints

their immigration policy. they are talking still about brightest and best and we know we need all skill levels. think about building 200,000 houses a year. you don't just need the architects and designers, you need the bricklayers, electricians, plumbers as well. so we are saying to them, make sure we create enough flexibility to be able to have people coming into our countries at all skill levels to help us renew our country. anna:anna: we heard on friday about plans from the labour party to provide free broadband. we talked about the need to roll out better broadband across the country, but the way they want to do it is to park national is to nationalize bp. what has been the latest thinking over the weekend from business on this? the business community was shocked by this announcement. >> it was a bolt from the blue. frankly, the effect is to immediately chill investment

into broadband development, which was moving ahead. i think it is a real concern. i have spoken to firms across the country who are saying where is the limit to this? the question is a good question. we do need good broadband in this country, but in the public-private partnership. this kind of announcement has exactly the opposite effect on investment and it will slow broadband pickup. anna: they have been moving too slowly? maybe this comes about because politicians were angry that this had already been delivered? >> we do need to pick up the pace but there are plans in place where there is a target of 2025 for the broadband rollout delivery. the real challenge, the huge challenge on this is the regions that are expensive to extend broadband two. that is where we need to focus the attention. this should be done by the

private sector in partnership with government. they slow things down. through businesses and other sectors as well. they don't feel like the right way to be going ahead. nejra: thank you very much for your time, director general of the cbi. nejra: anna edwards, thank you so much. jim mccormick is still with us. i want to pick up on basically the spending plans. a lot of the market are expecting it from both sides of the aisle. not just from labor. it was pushed into a massive short position in the u.k. rate market. the 10 year gilt yield could get to 2% over time. the thing is, historically, the 10 year gilt yield has not always risen. so would you want to be putting these short positions on now? jim: if i am going to be short, i would be short gilts heading into the start of the year. our base case, a small tory

majority and a withdrawal agreement. i think there will be a lot of excitement around the u.k., probably a bounce in the economy. i think people will pay a lot of attention to what will be a lot easier fiscal policy. i think a short heading into 2020 makes sense. as we get towards the end of 2020 and the trade negotiations start to be more difficult, maybe want to fade out. a short in yields makes sense. largess has been profitable. there's a huge amount of unknowns to get into the selection in terms of voting, time of day, shortened days, the multitude of issues that none of us are talking about, which is quite surreal. look at volatility. of 20 16. the morning this is one month vol 22 week -- o two-week vol.w

jim: again, i think our framework for the u.k. is good start of year. less so and of year. of year.end -- end i think sterling will be higher. i would expect, given that the trade deal negotiations are going to be very difficult, that volatility could spike quite substantially into the second half of next year. nejra: we are on a two-week high for the pound at the moment. what level does sterling have to get to for you to want to start fading that? jim: somewhere between 125 -130. there is a significant premium built and because of brexit. there is permanent damage that has been done to the economy. you are going to have hopefully some type of balance into early next year. nejra: jim mccormick with us. u.s. economic growth could be at risk for slowing further in the

fourth quarter as october for gays showed weakness. a number of retailers are reporting this week, kicking off tuesday -- on wednesday, we will get target and lows. we round out the week with nordstrom, gap, and macy's. manus. manus: would it be a strong showing? jay powell has commented the consumer really is driving growth and has not shown signs of being dragged down by the weakness in manufacturing exports and business investment. e-commerce is expected to stay nationalcording to -- retail federation. all hail the consumer. jim mccormick is still with us. it is meant to be a big week for these markets. ofwe look at the equity side the equation, credit suisse says the out performers can endure. morgan stanley are a bit more judicious. they see the u.s. underperforming in 2020 because

they see a peak in growth, a peak in earnings, and political risk. which of the trifecta peaked you the most? jim: we will see a peak in growth. i think we already have, for what it is worth, seeing a peak in earnings for very large levels. to me, the big swing factor is the presidential election. we ran a survey recently of investors, and two thirds of investors thought that there would be a trump win. that may or may not be the case. but our view is that it is going to be something closer to 50-50, and that will create a lot of anxiety for business and investors heading into next year. nejra: you were saying 10 year yields are on a downward trend because you see concerns about global growth shifting to the u.s. away from the rest of the world. does that drank the dollar down as well against other g10 currencies?

jim: eventually, calling the dollar down has been difficult work. but for us, the big story for next year is not necessarily a big global growth call. it would probably be better in very negative consensus. for us, the big story is there is a wall of worry outside the u.s. some of that will go away with brexit clearing up, fiscal policy in europe, and the worry starts to shift to the u.s., partly because of the presidential election, partly because of growth. next year, it will be more of a challenge. we are all trying to swallow this message of midcycle ease. three cats. and we are done. could that be the groundwork for another policy? ofit was hiking, the end 2019 is not easy enough. or is that just a little bit too dovish for you? nejra: i think the fed is -- jim: i think the fed is going to ease again. we have two rate cuts into the next european when you sort of

step back and recognize the fed has cut three times in an economy that has been doing very well, we start to see some turnover in growth, some weakening in labor markets, and this fed is going to be prepared to cut rates pretty aggressively next year. nejra: jim mccormick stays with us. coming up, we speak to the president of emirates airlines, tim clark, in his first interview of the day. you will not want to miss that interview from the dubai air show. we have that event next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. from a desert outpost to a sprawling metropolis boasting the world's largest long-haul airline, by has long epitomized rapid growth and its air has

typically mirrored that. the last two years have not been easy on the aviation industry or the mobile economy, turning the event into a barometer for future demand. yousef gamal el-din is at the airshow with a guest. great to see you. quite a bit of turbulence hitting the aviation industry, be it the slower economic growth or the trade tensions in the u.s. and china. the grounding of the boeing es is key.37 max we are joined by the chairman and managing director. fast-growing indian low-cost carrier in india. the biggest ever deal with an order for 100 737 max jets with an option for more. the planes are still on the ground. how much appetite is there from your end to pick up a few more? >> you know the india market

despite the doom and gloom of today, in the long term, will continue to grow. we have absolutely no doubt that india, with its 1.3 billion people, who really want to travel, and who want to fly, will need many, many more planes than exist here today to. we believe the issues that the issues are opportunities for us to reset our model, make sure we bring the costs down. and find growth. yousef: some of the people i have been speaking to in the last few hours made the point that we could get a surprise with an additional order for some of the 737 maxes. is that realistic? >> that are still under discussion but we will certainly look to see what we can do, because we have a requirement for several years, and growth with just 3% of india flying today, that is going to be great

years andthe next few decades. and therefore, we think that this will be an opportunity for us to provide for that growth. yousef: give me a sense of what the conversations with boeing have been like with the recertification of the 737 maximum how soon can they get these planes back in the sky? yousef: what boeing has said is that the technical fix is in place, and it is a certification process that they are going through at this time. of course, with the accidents that have happened, the faa is being extremely cautious, as they should be, but the expectation appears to be that boeing should receive certification by the end of this year. yousef: by the end of the year, there could be some progress. if there is a disparity between regulators -- if the faa gives a green light but some of the asian regulators say hold on --

do you fly or you don't fly? fly when they indian regulator certifies us to fly. we hope the indian regulator works closely with the faa. regulators that have their own time frames -- remember, the faa is actually an extremely reliable regulator. and we expect that other regulators will follow pretty quickly after the faa. the europeans might take a few weeks. the chinese and the indians might be somewhere in between. but it is a question of time. it could be a few weeks or a little bit more. but we expect that certainly in the first quarter of next year, most regulators should have certified this and the aircraft should be fine. yousef: the other component will be growth strategy. i want to talk about your push into the middle east, and you looking to set up a hub here. how much progress have you made and how do you put up a fight against an increasingly

consolidated united arab emirates opposition? >> our focus is largely the india market. we have 11 flights from india into dubai every single day. and we are looking to consolidate that by putting some flights into a new hub, which is -- we will also have flights going from there back to india, and we will try and see if we can get some of our passengers to get the the town and then use airline we are setting up there to be a short-haul trip into eastern europe. yousef: let's talk about some of the other opportunities, because the market is seeking clarity on progress when it comes to trade negotiations between the u.s. and china. is that something on your radar as well? could that unlock new momentum? >> india is incredibly important in this time when the u.s. and china have some disputes. itsink india -- the size of

market is incredibly important. i think it will be wise for us to leverage those strengths. yousef: where would the key opportunity be here specifically? is there anything outside india and the middle east you would be looking at? >> at this time, we want to consolidate in india and the middle east but there certainly will be opportunities in terms of our purchasing power, in terms of trying to get aircraft, in terms of trying to access certain locations, which previously was tough for us to be. yousef: a pleasure. thanks for running us through some of your thinking. that was the chairman of -- the managing director. nejra: daybreak middle east anchor yousef gamal el-din. christine lagarde is set to deliver her first major speech as president of the central bank on friday. investors will be on the lookout for clues of her policy initiatives. it comes one day after the ecb

releases accounts of mario draghi's final meeting. jim mccormick is still with us. philip lane says that policy is not at the lower bound. another saying more options are available in a really bad economic situation. the ecb could have more unconventional policies. will it need to use them in 2020? jim: i think that 2020 would be the year where europe feels a bit better. going back to the survey and talked about, investors expect growth in europe at about .5%, which has barely happened over the past 20 years. you have fiscal policy in germany, very easy monetary conditions. italy is a bit more quiet for now. i don't think we will see that. manus: what does that do to the rates market in germany? some people have begun to reprice further rate cuts from the ecb, scaling those back into next year. what does it do to the bund market in terms of yield? do we see that back up in conjunction with the u.s. call? jim: we talked about it a few

times here. in relative yields, bund yields go up versus u.s. treasury yields go down. there is a real possibility that bund yields are back above zero next year. that makes is you convinced we will see the bottoming in 2020? improvement in germany? better data out of china? jim: if you look at where the problems lie in europe, it is mainly germany. it is mainly german industry. if you look at the last three or four months, the german government has would've cleared their hurdle and is prepared to provide the fiscal stimulus as needed. we expect close to 1% of gdp fiscal impulse next year that sets the floor for german growth. manus: thank you so much for joining us this morning. rates and thoughts on global risks. jim mccormick, global head. coming up, top negotiators from the u.s. and china spoke on the saturday.

beijing described those conversations as constructive. what does it mean for markets as we see the pricing of phase one? a reminder, everything recover on "bloomberg daybreak: europe" is available on gtv , your destination for global charts. ♪ when it comes to using data, everyone is different.

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nejra: good morning. i am nejra cehic. crannyand i am manus from dubai. it is "bloomberg daybreak: europe." these are your top stories. incremental gains. china stock split higher as the pboc presses ahead with targeted easing programs. this as negotiators from beijing ad washington hold constructive trade call over the weekend. saudi arabia says the valuation target for the aramco ipo, well below the initial $2 trillion. for theo riyadh reaction. u.k. prime minister boris

johnson will tempt industry leaders with the possibility of tax cuts at the cbi conference . we are live to the event. we will be speaking with the man on the others of the aisle, opposition leader jeremy corbyn. do not miss it. nejra: welcome to "daybreak: europe." risk assets do not seem to convince. but what has got markets moving and shaking is the cut to the seven-day reverse repo rate by china. the pboc saying they want to actively maintain their position as one of the central banks with conventional monetary policy in their toolkit. manus: they have already done rrr. the question is how much more aggressive will they be and do they need to be?

bloomberg economics reckon you need to begin to think about a world sub 6% chinese growth, down to the five -- nejra: we are seeing some green in asia. chinese equities in the green for sure. we had six weeks of gains for u.s. and european equities. the s&p 500 hitting another record on friday. the longest winning streak into years. look at the futures. we are not getting a lot of direction either from u.s. or european futures at the moment, so we have added to risk-on optimism around trade. perhaps on friday. but that is stalling a little bit today, manus, as we saw yields dropped last. ofus: by the way, talking yields, it is looking like the best year. one week closer to the best year since 2011 when u.s. treasuries were up 7%. the bank of singapore -- phase one deal. 2.4%. on the others of the coin, the trade war's, bmo bancolombia,

and columbia,s -- both have notes out this morning. could take you back to 1.5% for bmo and that correlates with the yuan. path of least resistance for the treasury yield is higher so everyone has those. 1.4 on the downside. 1.5 on a breakdown. if they go according to plan. in singapore is with the very latest on the hong kong stock markets. and the rest of the asian markets. juliette. juliette: yes, manus. we have been seeing hong kong stocks really outperform today, despite that negative week we saw over the course of last week. we are awaiting unemployment data. that is expected to show a little bit of a pickup in the jobless rate in october, which has been holding resilient despite the months of protests, 2.9% bloomberg data.

take a look at underemployment, the blue line, which has been holding steady at 1%. you need to scratch under the surface. we know that hong kong is reliant on the services industry area the tourism sector has been seeing workers have their shifts and hours cut. that could be reflected in this data as well. this resilience may only hold up for so long as we start to see the protests bite into the city and jobless rate and of course, the effects of the u.s.-china trade dispute on the city as well. manus. inra: juliette saly singapore. thank you. taught negotiators from the u.s. and china spoke by phone on saturday with tom some of the phase one trade deal described as constructive -- poultryoved curbs from imports in the u.s. they are poised to extend a license for u.s. companies to do business with huawei. the new york times reported that on saturday. manus: a few hours ago, the pboc trimmed back the short-term

policy rate for the first time since october 2015. it is the seven-day repo rate, 2.5%. that came after the pboc warned that the chinese economy was facing greater difficulties from slowing investment and sluggish industrial production. how does all of this come together? have the economist from hsbc. he joins us now. chris, good morning, good to see you. our team are talking about the slow down and we need to begin to repair our thought processes for the chinese growth story, which is sub 6%. this is about a domestic slowdown rather than a trade were induced slow down. what do you make of that proposition? chris: our forecast is below 6%. and i think we are seeing a combination. we are seeing a combination of trade tension induced weakness in sentiment, and that is affecting domestic demand. we are seeing bright weakness in the global economy.

all of those sorts of things are conspiring to create these headwinds with regard to the chinese growth outlook. so when we look at the data that have been released, yes, they have been soft. we don't think growth has yet hit the bottom. in terms of the long run, we have chinese potential growth and the ability to see pretty decent pace of growth in the long run. having said that, there are cyclical headwinds. it is not surprising that we are seeing policy stimulus from the authorities. nejra: in terms of the policy stimulus, i wonder what their reaction function is from here. my attention vision is one of the few major economies that still has room in conventional monetary policy to be actively maintained. does that mean you would expect a continued drip feed of stimulus? a little bit of liquidity injections?

chris: i don't think we will see a big stimulus package but there are bits and pieces of stimulus that can be done in terms of monetary and fiscal policy in contrast to europe, where interests rates are as low as they can go. fiscal policy is looking for a constraint from a political perspective. in china, there is scope for that stimulus. i think there are concerns with regard to debt, for example. there are concerns about the structural slowdown, although we are not too concerned about that, which means you might start running into capacity constraints in the chinese economy, so for those reasons, it is not necessarily the case that we will see that in the near term. we think there is stimulus that can and should be done. manus: what do you think we get more of in 2020? we have had rrr's, the medium-term lending rate adjusted, and we have had this repo rate. where is the most impactful form of policy response in your assessment so far this year? chris: i think in particular the thing that would be most impactful over the coming year or so would be fiscal policy.

we see that from a global perspective. even though there's still more room in terms of monetary policy easing, there may be issues with regards to debt issues, financial stability risks, in terms of too much monetary stimulus, so combining that with loose fiscal policy can give you more bang for your buck in terms of stimulating the chinese economy, which will have a beneficial impact. nejra: are you expecting we are going to get a phase one deal by the end of the year? chris: who knows, to be honest. currently, what is already baked in without the prospects of a phase one deal is the increase of tariffs in december we do not expect trade tensions to get worse from here. but we are still unsure about whether this deal will actually be signed. i think the big issue is given signing of the phase one trade deal, will it actually be the case that we will see a substantial rollback in the protectionist measures between the u.s. and china that have implemented?

we are a bit skeptical about that. to the extent that you do not necessarily see this big role at -- rollback in tariffs, you might see uncertainty in the trading relationship between the u.s. and china and the continued headwind with regards to sentiment, which will still be a headwind for the global economy through this year and next. globalin many ways, the supply chains have had an opportunity to respond and adjust. our last guest in the last hour suggests that he thought that some of the pressure on global manufacturing is coming to an end and that we are possibly putting in a bottom. would you agree with that? are there any bright lights on the horizon that would reinforce that view to you? chris: possibly the data here and there are starting to look a little bit better. in europe, tentatively, there are signs we have seen a bottoming out in terms of the indicators. if we look at the data towards the end of this week, we have the pmi data in europe and the

u.s., but we don't think necessarily it is the case that manufacturing indicators are weakening from here. having said that, we are seeing this continued weakness in china. we don't think we have found the bottom yet. i think there are some silver linings here or there. we do not think manufacturing is getting too much worse from here. we do not think we have seen all that much widespread contagion to broader economic growth in service sectors, but yes, there are still those? the ou -- those question marks. mccormick'slly, jim point, he talks about the order -inventory ratio having to garner the largest two month increase in more than five years. we move along. chris from hsbc, you stay with us. more economic analysis to come. first word news.

selina wang is with the team in beijing. selina: thank you, manus. unrest escalating in hong kong with the police closing the cross harbor tunnel linking hong kong island with kowloon. officers moved to clear protesters from a university there. smoke was seen billowing after multiple fires at the campus. officials warned police may use live rounds as the situation continues. the british royal family is suffering another public relations disaster, this time over plans angers attempt to explain away his friendship with pedophile financier jeffrey and steen --jeffrey epstein. criticism is mounting over why the queen's son decided to talk to the bbc. the prince denied sleeping with virginia roberts, a teenage sex slave. the opposition seeks to revive its campaign to out president nicolas maduro. juan guaido through protesters earlier in the year but venezuela has been quiet

recently as protests hit another south american nation from ecuador to chile. many doubt he can unseat president maduro. bill gates is the world's richest person again. it is the first time in more than two years that the microsoft cofounder has taken the top spot. gates was helped in part by the pentagon -- $10 billion cloud contract. do not feel sorry for jeff bezos. he is still worth and eye-watering $108 billion. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: selina wang in beijing, thank you so much. saudi arabia has set aramco's valuation well below mohammad bin salman's goal. the kingdom. back the size of the sale as it looks to ensure the world's largest oil producer successfully lists next month. joining us on the phone from riyadh is matthew martin.

great to have you with us this morning. although what we have learned over the weekend is the plans are a long way from the initial aims, will saudi arabia still see this ipo as a success? matthew: i think that is a great question. the goal posts have shifted significantly since this was first mentioned around three years to four years ago. initially, it was going to be a $2 trillion company, a 5% stake, with an international listing, a way of attracting foreign investors into saudi arabia. now, what we are seeing is very much a local deal. it will be listed on the stock exchange in riyadh. it will be a much smaller states, one .5% of the company. evaluations up to 1.7 trillion at the top end of the range. and no word as yet as to if or when an international offering may well take place. i think if we see the listings

successfully take place, reach the top end of that valuation k up a little bit in the first few days of trading. i think the saudis will try to paint that as a success. it is not a deal that most like what people were expecting when it was first announced three or four years ago. matthew, let's see where the valuation comes in. maybe by constricting the flow of equity, they can control the price a little bit more. .atthew martin in riyadh thank you for joining us. coming up on the show, on bloomberg, we speak to the u.k. labour party leader. jeremy corbyn. as we get closer to the election, you do not want to miss that interview today. nejra: m&s, protests continue in hong kong -- and manus, protests continue in hong kong. the high ruled the government ban on the wearing of

masks was unconstitutional. we continue to monitor. this is bloomberg. ♪

nejra: 7:18 a.m. in london. we are 41 minutes away from the start of cash equity trading in europe. this is "bloomberg daybreak: europe." i am nejra cehic in london. manus: i am manus cranny in dubai. in europee exchange which confirms they are in talks with -- this is a statement from them. speculation around this. they are confirming they are in talks with the board. of course, you think of all of the dislocation within the exchange landscape, you have the hong kong exchange bidding for it. that was rejected.

this is all about scale. they are confirming the talks are underway. it may or may not lead to a deal. nejra. nejra: interesting. i do remember from your conversation with a former ceo in the middle east, he was saying he expected a lot more m&a and consolidation in the global exchange world. i do listen to your interviews and always take notes. [laughter] nejra: manus -- manus: good for you. [laughter] nejra: boris johnson will try to win business leaders to his side today, offering them tax cuts as an olive branch for the destruction caused by brexit. johnson will make his pitch at the annual conference, and it comes as the campaign for the u.k. election heats up. is still withc us. one thing manus and i have been observing today is the fact that you have some people in the market putting shorts on gilts

because they expect more spending either way from both sides of the aisle. is that something you, as an economist, are also bracing for after the election? chris:, certainly we will have loose fiscal policy under any conceivable government for the u.k. i want to wait until we see the full manifestoes from each party wath of we have a s spending announcements and i am looking forward to seeing how all of the numbers stack up and how much fiscal loosening each side will end up promising. i think that is something that we have already factored in to some extent in our forecast but let's see what the number say. it also depends on the outcome of the election itself. if the government were to be returned with a majority, the budget has substantial fiscal loosening. could see stronger growth in the medium-term and the u.k. but also potentially some concerns about the long run sustainability of that.

there's lots on the table. looking forward to seeing those manifestoes. manus: what sort of fiscal largess would really concern you? was talking about bond vigilanting. is the bandwidth of the real concern at hsbc on fiscal largess? chris: to be honest, i think there is a fair bit of bandwidth. if we look at, for example, the government's plans, we have had governments investment boost. we think that would add up to 100 billion pounds over five years or so. this is largess. that in itself we do not think would necessarily be enough to really start concerning us about long run fiscal sustainability to the extent that it would start affecting the gilt market. we still have a central view for gilts. the yields are said to fall based around a few dovish

outlooks for the bank of england policy. we think there is a fair bit of wiggle room. surely there is a point where you can only go so far and markets really do start to worry about the sustainability. that could start changing the flavor of the debate a little bit. nejra: if we get a conservative victory in the election and the brexit deal that boris has negotiated goes through, how quickly and sustainably do we see a bounceback in u.k. growth in investment in the labor market? chris: we could see a little bit of an improvement on two fronts. we could see a little bit of a boost to business investment in terms of near-term prospects for the u.k., and as just discussed, looser fiscal policy as well. under the current withdrawal agreement between the u.k. and the e.u., embodied within that is a transition period until the end of 2020. there is another thought of potential klepac brexit at that point. to the extent that that deadline is looming, the extent of the improvement in terms of tariffs may only be limited. a little bit of a boost, but it

is still a bit dicey in terms of those potential headwinds with regards to the future u.k.-e.u. relationship. overall, growth prospects are looking pretty uncertain in our view. , chris,hank you so much hsbc's economist on the markets. let's get your business flash headlines with selina wang in the -- -- and the team in beijing. rejected thes takeover offer within the board saying the $22 a share deal is too low. hp says it is open to exploring a merger but there are close fundamental questions to address. the printing company saying xerox's revenue decline raises questions about the future. airbus is in talks with general election over engines for its over-- general electric engines for its a350 turbines. a new engine could offer fuel savings and potentially lower carbon emissions.

lowe's companies saying they are looking for new offerings to benefit customers. in california, pg&e is warning of more backyards. it may cut power to 180,000 customers starting wednesday. that is due to a forecast of dry, windy weather. the shutoffs are designed to prevent powerlines from sparking wildfires, but the utility company has faced a backlash. leftmonth, some outages customers in the dark for days. that is your bloomberg business flash. nejra: thank you so much. let's talk u.s. retail now. u.s. economic growth could be at risk of slowing further in the fourth order as october figures showed weakness and a majority of retail categories. a number of retailers are reporting this week, kicking off -- on wednesday, we will get target and lowe's. we round out the week with nordstrom, gap, and macy's. manus: that will be a strong showing. jay powell has commented the consumer is really driving

growth and has not shown signs of being jacked down by the weakness in manufacturing exports or business investment. chris from hsbc is our guest host this morning. chris, the consumer lives triumphantly i suppose because of low mortgage rates and just generally very, very cheap money. chris: yes, i sort of agree with jay powell to an extent. if you look at the labor market, it is still pretty strong if you look at monthly payrolls rose, although it has slowed somewhat relative to a year or so ago. john's growth is robust. wage growth is much stronger than it was two or three years ago, and inflation is pretty low. if you look at household income, the prospects, we think they look relatively firm. so far, households are broadly shrugging off that broader weakness we are seeing in investment. in the near term, we think households are in a pretty

decent place to keep growth going. nejra: does that mean the fed stays on pause in 2020 or we actually get text? chris: obvious that the fed -- or do we get cuts? chris: the underlying rates of inflation will not be all that weak. having said that, there are downside risks. when we are talking about u.s.-china trade talks, when we are talking about that risk, what if that manufacturing weakness does flow through to the service sector? for the time being, it does seem like the fed is on a policy pause. potentially, the bar is quite high for the fed to go on to further cuts from here. dida: even jim bullard suggest that recently. thank you for joining us, economist at hsbc. that is it for "bloomberg daybreak: europe." the european open is up next. we are not getting a lot of directions from futures half-an-hour from the equity market open. we did see the s&p 500 hit another record on friday.

manus: sterling is a little bit stronger this morning. all the tories are running. they promised to back boris. we talk with the labor leader on bloomberg. this is bloomberg. ♪

>> good morning and welcome to bloomberg markets, the european open. i am anna edwards in london alongside matt miller in berlin. >> the market say hold your fire. start the week muted as investors await fresh developments regarding trade. the opening of trade is less than 30 minutes away. anna: saudi oil