>> good morning from the city of london. this is "bloomberg daybreak: europe." stocks slide as investors wait for progress on a trade deal. demand in retail almost half a decade in beijing. japanese industrial production falls more than expected as tokyo eyes big fiscal stimulus. in india, markets brace for the worst gdp performance in years. boris johnson said he would walk away from a u.s. trade deal if it includes the nhs. u.k. consumer confidence sits at its lowest level since 2010.

welcome to "daybreak: europe." we will see a little bit of selling in the asian session. a lot of read on the screen. rates --of korea cut kept rates unchanged, but cut its growth outlook. the bloomberg dollar index, we have seen an eight-day winning streak. the sixth-week high for the bloomberg dollar index. steady as she goes. taking a look at equity markets in terms of u.s. futures. the markets were closed for thanksgiving yesterday. stock and bond markets. futures under pressure for a second day. we saw europe close lower, too. oil, just a little weaker, but it is heading for a fourth weekly gain ahead of the opec plus meeting.

opec and its allies are expected to extend the current supply pack rather than deepen those reductions. following president trump's signing of the hong kong bill, there is one big question left unanswered, how would china hit back? the foreign ministry has issued a threat of retaliation, but they have been vague on details. beijing will set the future course of trade talks and escalations risk for the delays to the phase one deal. joining us now is the cio at barclays investment solutions. a little bit of selling at the month's end, but we are selling -- heading for a third monthly gain for global equities. are we being too overoptimistic and pricing some sort of a phase one deal between the u.s. and china? >> it does not think like it. -- seem like it. markets are right to expect some kind of miniature deal to be signed. how economically consequential will the deal be? it is not the one people were fantasizing about early in and

it is not the one the white house was fantasizing about early on, but just having some intentions may be helping to allow the corporate sector to find its feet a little bit. seeing a little bit of an upturn and new inventories. generally, the world economy seems to be finding its feet. is if what is interesting you look at the performance between the u.s. and chinese equity markets, there has been a divergence in terms of the u.s. outperforming and looking at correlations, you can see those coming down as well. are investors right to be moving money and what could be considered a more defensive market over china if we actually have a right to be optimistic about the potential for some sort of deal? >> it is a fascinating question and one we have been debating a lot about whether we should be adding. over the last month or two, we have been adding to equity risk,

adding back equity risk. we have been building that back up again recently, but we haven't been adding back into em. the point here is that there are other factors that play be in the trade war. china's economy is slowing. actually, probably that slowdown has very little to do with the trade war in some senses. if you look at the trajectory of the slow down, it is hard to identify where the trade war starts and begins or where trade tensions start to escalate or not. there are other domestic factors brewing. nejra: in china, it has been brought to our attention by chinese authorities that the risk of's -- risks of financial stability. china's financial warning signs are flashing almost everywhere. defaults threatening. because they are wary of the moral hazard, officials have been reluctant to step in.

has china been mismanaging it slowdown? william: it is very difficult. they have a tight rope to walk. over the last couple years, and this may explain the last chunk of the slowdown, private sector in china has been pretty much been starved as credit. as china has been trying to combat bank and non-bank credit risks and you have seen the credit spigots turned down a little bit, what you automatically found is that credit within the economy has gravitated to the areas where there is an implicit state guarantee. whereareas are the areas the return on assets is lowest and the leverage is highest, so credit is automatically going to where it will be less productively used. that is a difficulty for the chinese. i'm not quite sure how you get around that the moment. nejra: how do they get around the stimulus issue? a lot of people say that any stimulus they do implement this time around, particularly any kind of big bank nature, is not

going to have as much impact as previously. william: there seems to be a reluctance on the part of the chinese authorities to do any big bang moves. what is the old saying? feeling her way across the river by touching the stones. i am misquoting deng xiaoping. nejra: that is alright, you never misquote homer. [laughter] william: they will want to do something very gradual and very steady. more broadly, the demands on the chinese authorities are for reforms. how do you get credit to be more optimally allocated across the piece? how do you stop this kind of quasi-nationalization going on as private sector becomes ever more starved of credit and collateral put forward in terms of shares? youa: you were saying that worry cautious on emerging markets, but what about more developed asia that could be impacted and perhaps is being impacted by the trade war?

i'm thinking about japan. big fiscaleing stimulus. is japan an area you see value in at the moment? william: it has always been an interesting one. one of the things we are watching and this is a longer-term story, it is a corporate reform story. it is not so much a tactical call. it is what you are starting to see is some of the behaviors you would want to see with regards to clustering of agm, higher dividend payouts, those types of things, which could eventually return onthe japanese equity starts to trend at level more comparable to the u.s. and europe. when we have added to equity wek, we have done so where have not actually singled out anybody from the region. that is our preference at the moment. in the developed segment, rather than singling out this particular region. nejra: looking ahead to 2020, i understand you think a moderate

bounce is in the offing. you are reasonably sanguine about global growth. does the u.s. or maybe even developed markets in the basket outperform emerging markets? or do we see emerging markets -- just more of a synchronized growth outlook? william: i think that is the thing we are watching for. so far, you have seen a very tentative turnaround or maybe even just em finding a floor, but you need a bit more than that to start getting more excited about em potential to outperform. at the moment, we have a bit more conviction, but make no mistake, there is not much profit growth to get excited about for next year. i suspect even potentially got a bit of a tax headwind for the end of the year. even without that, kind of the wage story is likely to impinge on that profit story a little bit. if you've got a world where recession risk looks in events,

then you've got to pick where you put your money, where your money is going to be best used. nejra: right, so you are underweight bonds. william: we are underweight high-quality bonds, very underweight duration. nejra: william stays with us for the hour. we were talking about china and it is china's biggest stock listing and almost a decade we are going to look at. it is receiving a lukewarm recession. it comes amid a flurry of initial public offerings that have faded quickly and concerned about the chinese banking sector. joining us now is tom mackenzie for the details. great to have you with us. take us through the details and what we know about the listing. say, it is on track to be the largest listing here domestically in china in the 2010,ai exchange since potentially also the fourth-largest globally after the likes of uber, alibaba, and budweiser. they are looking to raise,

postal savings bank of china, about $4.6 billion u.s. dollars. they have not been met with a lot of enthusiasm. they have been looking for subscriptions. they potentially list by the end of this year. currently, it is oversubscribed by about 79 times. that sounds like a lot, but in the context of china, where these listings are often oversubscribed by the thousands, this is a muted response. it points to lackluster enthusiasm, where we have seen in terms of new brokerage accounts opening, those have fallen off in terms of turnover in volume. war,mpact of the trade some of the corporate earnings. the banking sector is under huge amounts of pressure. retail investors are not really chomping at the bit. were just having a

conversation with my guest host on set about some of the cracks and financial stability in china and you have hinted at those as being an issue, but is the lackluster demand also to do with this being a state owned lender and concerns around that? or what else can we read into this lackluster demand that could give us a sign of how authority might even respond to this? tom: i think you bring up a good point. the stock is up about 25% year to date in hong kong. if you bought in at the beginning of the year, you would have done fairly well. it is a state owned bank. what does that mean? officials are leaning on state owned banks, which dominate the sector, to lend to small or medium-sized enterprises. topotentially exposes them risky loans. bad debt is picking up already. in terms of the story, we have takeovers,ank

essentially bailouts by the government, so far this year. we have had a number of bank runs at smaller, rural banks. 13% of those according to officials are now labeled as high risk. we are talking over 500 banks out of about 4000 across the chinese market. yes, there is concern that maybe there is going to be contagion. there is concern that they may not be able to handle some of the pressures in the rural banking sector and whether some of the bigger players will have to effectively bailout some of the smaller lenders, as well as having to support the small or medium-sized enterprises that have been the backbone of future growth in china. those pressures are there and we have not even mencius to be in -- mentioned the interest rate cuts. all of these are factors being weighed by retail investors no doubt. nejra: great to have you with us, bloombergs tom mackenzie. let's get the bloomberg first word news in hong kong. >> good morning.

president trump making a surprise visit to afghanistan for thanksgiving, meeting with the country's president and u.s. troops. saying peace talks with the taliban have resumed. that is amid a purse -- push for cease-fires to reduce deployments in the region. >> wants to make a deal. we will see if they want to make a deal, we will see, but they want to make a deal. they only want to make a deal because you are doing a great job. saudi arabia has had enough of opec plus producers cheating on quotas. for the last year, it has cut more than agreed to offset production by iraq and russia. it is now signaling it is now signaling will no longer do that. opec meets in december 5. morgan stanley firing or placing in londonour traders and new york over an alleged

mismarking of securities, concealing losses of between $100 million and $140 million. morgan stanley is investigating the move. the lender is declining to comment. some ecb officials are pushing back against calls for the central bank to lead the fight against climate change. of rejecting the idea environmental goals in the asset purchase program. he is calling on credit rating agencies to improve their ability to assess climate risk. global news 24 hours per day on air and on twitter powered by more than 2700 journalists and analysts in 27 countries -- 100 27 countries. nejra: thank you so much. coming up, it is black friday and shoppers look to nab the best deals. we will look at what the bargain frenzy means for retailers. when you are traveling to work, tune into bloomberg radio. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." let's check in on the markets in asia. you, a thirdto see month of gains in singapore, but it is not looking too pretty. david: if it gets a little bit uglier, we might wipe out that statistic. we are barely up for the month across asia. a lot of risk aversion in hong kong. you haveh care sector, seen these chinese health care stocks feeling really sick. on track for the biggest drop so far this year. this continued reform in that sector will continue to put pressure on drug prices and that is not a good omen. to give you an idea of risk aversion, and they held

rates at a record low. data has not been good, industrial production missed estimates. they have again cut the growth outlook for the economy. nextd time for this and year. anyone who tells you that the data is bottoming, that does not apply to asia. u.s.,e the uptick in the to a lesser extent, the flatlining and europe is not happening in asia. the pmi numbers due out tomorrow out of china. not like you to end in a down note. we thank you very much. let's move to an up note because it is black friday. official start of the holiday season -- shopping season. and marie horton joins us now taking a break from online shopping. good to see you. will the shorter period impact retailers?

annmarie: it is actually not going to. until6 shopping days christmas. last year was 32. look at this. americans planning to spend more than ever, shelling out more than a trillion dollars. where are all these dollars being spent. the markman stores, discount stores, they remain popular. here, can see at the top online still takes the top trend , consumers are just shelling out digitally. will get their holiday inspiration online or on their phones. jens e and millennials are turning to instagram, facebook, twitter, snapchat. likely, you will see a lot of advertisers hit the younger generation leading up to christmas to go. nejra: i'm such an atypical millennial. i will not be doing anything on

social media or online. i will walk to shops after i finish my shake today -- shift today. let's turn to the u.k.. boris johnson says he will walk away from a u.s. trade deal if the nhs is not taken off the negotiating table. the prime ministers remarks came after the opposition labour putting thed him of health service up for sale. a hotly anticipated paul sees the conservatives heading for a majority, but johnson told itv the election is still a very tight race. the cio at barclays investment solutions is still with us. we were talking earlier about your preference for developed market equities. the u.k. may have been a little bit of an outlier in terms of being an unloved market. is the u.k. and equity market you are interested in right now? william: i'm not singling it out. i think we set for some time

that the interesting thing about the u.k. is the sense that you want to add cyclical risk to your technical portfolio, that is probably not the place to do it. it indexes highly in pharmaceutical staples. there are high-quality defensive plays. the banks themselves and that index tend to be a little bit racy, as well. in a way, it can leave you stranded if you are looking for cyclical exposure, but that is offset for longer-term investors by quite an attractive valuation for the dividend yield. if you assume that my total return over several years can be sort of roughly summarized by my dividend yield plus my dividend growth, that return certainly relatively three domestically can trained investor, pretty attractive. isn't it? nejra: let's move onto to the inflation market.

it has been a fairly popular trade to start shorting u.k. inflation because of the strength we have seen in the pound. you can see the two lines diverging. our u.k. inflation markets and every over you would be technically wanting to make some bets? william: it is a very interesting question. one of the things that we would look at in terms of a much longer-term perspective is actually go the other way. we think the probability of inflation is underpriced. you have a bit more of a slightly different story, but we are very underweight delta. that plays to a couple stories. one is that the sort of medium-term outlook for the u.k. economy is probably not quite as bad as is currently inferred by the gilt market, but there is a global story as well. it is generally that the price of safety is probably too high in this persistently jittery economic sisal -- cycle. the great shadow cast by the

economic crisis, it has people overpaying for safety. in 2020, in a way, regardless of the outcome of the u.k. election, do you see the u.k. re-coupling a little bit more with what happens in the rest of the world? mark carney made so much more reference to global risk and how that was impacting the potential decision-making of the bank of england. less of agoing to be story for the u.k. than the global economy? william: this is right at the heart of the most important question for the u.k. it has always been difficult. if you assume the u.k. slowdown , it is stillficult to be untangled. you will find out only in the distant future. what we can say is that the global factor may get a little

bit easier as we look into next year. you are seeing the european pmi start to find a floor. the u.s. is picking up a little bit. that there is some sense now there is a smaller probability than there was six months ago of a sort of an exit without a deal. that is allowing the private sector decision-makers to find a little bit more certainty or visibility. that should help some of that investment come back. nejra: i know that you don't make calls in sterling, but you must be factoring it in to your decision-making to some extent. we have obviously had a run-up in anticipation that the polls are going to bear fruit and we are going to get a conservative majority. boris johnson can put his brexit deal through. how does a stronger sterling, even if that fades later in the year, how is that factoring in? more than a month to

go, we had a very close look at the idea we wanted to take an overweight position in sterling. we could not quite muster the confidence. it is something that we are looking at at that stage. that you finde all of them screaming cheap. at that moment, sterling was. the matter what you saw coming down the political pipeline, it did look like there was an opportunity. viewe expressing a similar , you can see sterling rally from here with some of those outcomes. what you have seen over the last month is that the probabilities of a no deal exit have been priced out a little bit. nejra: what will get you over the line to add to that position tactically? william: it is something we continue to watch closely. the problem is that we don't see ourselves having a hedge on the

political situation. this is something we will stay on the sidelines for. nejra: william staying with us. partyt, angela merkel's survived a blitz to her leadership. her allies are now threatening to blow up the global coalition. this is bloomberg. ♪

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nejra: this is "bloomberg daybreak: europe." let's check in on the markets around the world. great to have you with us. how vulnerable are indian equities that recently hit record highs ahead of this gdp data? yes, they are a bit soft. morning to you. we had a good read on this one. we have been talking about how despite the political situation, onlyve only headed higher to pull back into today's

session. it could be normal profit booking or it could be nervousness that it is likely to not be all that great. themselves bracing for the possibility of a shock number in today's session. back to you. nejra: thank you so much. headinglooking at oil for a fourth week of gains. annmarie: yes, but we are lower in the day today. yesterday, opec signaling they had this meeting among delegates that they say 2020 is actually going to be balanced. the oversupply is going to offset a deficit at the end of the year. saudi'se learned seeming to get frustrated. they are going to signal that the opec meeting that they will not signal for deeper cuts. they are well below their target , but russia is actually above their quota. for russia, eight months out of

the 12 for the year, they have the months they did comply, they were killing with the key pipeline contamination crisis. saudi has to deal with these cheaters and it looks like they don't want to bear the brunt of the cuts anymore. the big question is how far will these prices fall at the start of 2020? analysts are saying we are seeing an oversupply. what does opec do then? nejra: exactly. thank you so much. the cio at barclays investment solutions is still with us. you are expecting growth to look ok in 2020, perhaps a little bit of a bounce back. how does that impact your view on oil? there is the supply-side that we were just talking about, but also concerns about demand. william: i thick it is really the supply story that stops you from getting too excited. and annmarielier

referred to the opec side, so it is hard for us to get too excited and commodities were neutral for us right now. nejra: why are you neutral in commodities in general if you are fairly optimistic about growth? oil, it is the supply story. with precious metals, that plays a little bit into that overpaying for safety trade that we have seen. nejra: what about base metals? william: base metals are a bit more interesting, but with regard to precious metals, if you see real yields in the true safe havens around the world go up, that should reduce the traction around stuff like gold. there are offsetting factors which reduces our conviction and having a strong directional call on that right now. nejra: that makes sense. william stays with us. we have to get to some breaking news.

outlook and2019 citing the takeover in that. we are looking ateon's and power is to be restructured. numbers, third quarter adjusted coming in at 491 million euros versus 410 million euros a year ago. also, another update, that michael lewis is to take over as ceo for the u.k. division. let's get the bloomberg first word news. oanh: thank you. the conservative party has accused channel 4 news of breaking impartiality rules after the broadcaster use an ice sculpture to replace prime minister boris johnson. he failed to attend the live climate change debate and the program featured leaders from other parties. johnson and nigel faraj chose not to attend. the bank of korea said the nation's economy is bottoming out. it has kept policy unchanged,

insisting it is going through most of the painful moments. the guarded optimism is unlikely to curb calls for rate cuts. officials are pushing against calls for the central bank to lead the fight against climate change. the boon to spank president rejected the idea of including environmental goals in its asset purchase program. they are calling on credit region agencies to improve their abilities to assess climate risks. global news 24 hours per day, this is bloomberg. nejra: thank you so much. now turning to central banks and the quest for inflation was a theme this week. we heard that ecb policy makers expect to tweet their inflation target in an upcoming review, but will struggle to go much further than that. that is after christine lagarde

commented on relatively subdued price pressures in her first major speech last week. the fed governor recommends pursuing flexible averaging to bring inflation back on target. saying it mean supporting inflation a bit above 2% to compensate for the period of underperformance. the rba governor also spoke this week as speculation mounts that the central bank will be forced to turn to unorthodox measures to revive inflation. he said qe is an option, but does not expect to need it. we end the week with euros in cpi data out today. the debate around fiscal stimulus rumbles along while the ecb is calling on the government to take action. germany is expected to continue ignoring these calls as lawmakers expect to confirm the government's balanced budget for 2020. angela merkel's junior coalition partner is set to choose a new leader on saturday, spelling potential disaster for the coalition. for more on the economics and

politics, our reporter joins us from berlin. great to have you with us. is the coalition at risk? >> i think one can really say that. pastpd has said in the that this coalition with angela merkel has brought them down. they have been really unwilling to take part in this government and they want to take stock and they might even decide to leave the government. but rather than a straight vote on breaking up the coalition, which would follow in the outcome you are pointing to, what are the other things party leaders may opt to do? always the possibility and this is what they are planning to do, that they would go to the spd convention and they say, we will stay in this government, but only with strict conditions

attached, but it will very much depend on what kind of conditions this convention is going to give to the government. they have said they are not willing to give anything anymore to the spd. alreadyrnment has introduced a lot of spd policies like the basic pension, so they say there will not be a renegotiation and they will stick only to government programs. just run us through the opposing factions and what we are looking at. interesting to me sitting in the u.k. with all the brexit news. >> it is basically the finance minister. he has said that this government has actually achieved a lot, that they have followed the

balanced-budget, they have managed to introduce reforms, and this government should continue until the end of the year, also because the eu presidency of germany coming up and germany should be a strong partner in europe. on the other hand, there is the theleft wing that has said coalition is really bad because where the spd is standing is almost close to extinction and the best way is really gathered to get out or to follow more policy where the spd is getting bigger input into the government. nejra: great to have you with us. bloomberg's government reporter in berlin. william is still with us. i was having a conversation with one of our strategists in mliv yesterday. he was saying that the euro is vulnerable if german politics takes a dramatic turn in the coming weeks.

how honorable is the euro with regard to german politics? william: it is a really interesting question. i would say that probably overstates the risks. from thisen generation of politicians, still formidable commitment to the continuation of the euro. one of the things that is important is that this is an opportunity -- nejra: i'm not talking about europe breakup, i'm just talking about a bit of a decline in the euro against the dollar. [laughter] william: that is a reasonable thing to say. one of the things that people are hoping for a moment, one of -- less remarked upon trends one of the big hopes for the euro and continuing integration and getting to the next stage of the construction of a plausible fiscal and political major green is a new deal, a marshall plan, but

updating the infrastructure. we are not there yet and certainly the german political backdrop is clearly not ready to do that kind of big leap just yet. we are seeing little movements in that direction. we are seeing increasing choruses of people, external and internal, that germany needs to spend more. thele are expecting increase in german spending next year, that the needs to be more than that. maybe there needs to be more economic pressure or other pressure. nejra: before we had the conversation about german politics and the fiscal side of things in germany, we were talking about the rhetoric we have from central bankers this week. the ecb the fed and just to name two central banks. how does inflation factor into your investment strategy at the moment. is it something that is so far

off that you kind of see a benign situation of decent growth in 2020, low-inflation? or do you read that is because it is so hard for them to meet inflation targets, we will see more of a dovish tilt? william: i think this is a medium-term question because there is not much inflation around. you may have found the kind of swoon and economic activity that has characterized much of this year, that seems to have created a bit more capacity in some sectors of the economy, so certainly the wage story and the more direct consumer focus areas are generating a bit more inflation, but there is still slack in other areas in the economy. but in a medium-term view, you can certainly argue that buying inflation is pretty cheap right now and certainly from a medium-term perspective, that is the call for the more patient investor. it is hard to argue there is much inflation around, but the interesting point from the ecb and others is that for those who

are worried about very low ratess, that the savings are punishing savers with low interest rates, the answer is to spend more. that has really got to be the answer. the government in europe has to do their bit now. the central bankers run out of road a little bit. equities anuropean attractive proposition right now? they have actually done pretty well. that for anyone that was not in them at the start of the year, they might have lost out up to this point. it is now kind of too late to get in or should you be making the bet now if you are expecting and bottoming in european pmi for 2020? william: one of the big stories with europe is always the european banks sector. it is a problem still. if you are looking at help from the central bank, it still looks a little bit distant. there have been some moves that

might be more encouraging, but it is effectively massive overcapacity with problems. it is a bit of hold your nose and jump in still story. i would expect you may need a more pronounced switch from the quality growth to something more valued at the market level to see europe really go, but it is something that we would have in portfolios. it is not one we are singling out again just yet, but it is one we are watching quite carefully. nejra: what would make you more optimistic on the outlook for european equity? is that the outlook for china? is it simply just sentiment shifting and more inflows? we have seen some inflows increase. william: you are totally right in identifying emerging markets. is strong.e particularlyt

characteristic of the problems of the wider euros in because it's exposure is very direct. turnaroundd to see a . if you saw massive consolidation in the banking sector, that would also be quite interesting. you would need to see a bit of an inflection point in the european economy and that would be quite helpful. nejra: william hobbs stays with us. the u.s. markets closing early today. the holiday shopping period kicks off on black friday with e-commerce expected to stay strong. germany is likely to continue to ignoring calls for fiscal stimulus. lawmakers are looking set to confirm the government's balanced budget for 2020. plenty of european economic data to watch out for, including cpi. itsa will show third-quarter gdp, expected to slow for a sixth straight quarter. more on the into story -- india

story next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." let's get the bloomberg business flash. morgan stanley's firing or placing on leave at least four traders in london and new york over an alleged mismarking of securities. it concealed losses between $100 million and $140 million. the lender declining to comment. china's latest big bank listing is drawing the lowest retail demand and almost half a decade. it is the nation's biggest stock listing since 2010, but it highlights concerns over trouble in the country's banking system and a lack of exuberance in it stock market. china is hoping to raise over

4.5 billion dollars in the listing of postal savings bank. troubles are mounting at hong kong airlines. it is delaying salaries, saying unrest in the city has severely affected the carrier. its finances were already under strain before the antigovernment protests began. only cabin crew and overseas employees will be receiving november paychecks on time. and that is your bloomberg business flash. nejra: thank you so much. let's get back to india, which is braced for a growth shock when gdp data comes out later today. india's economy is expected to have grown at its weakest in more than six years with the third-quarter growth rate falling below the psychologically important 5% level. joining us now to discuss is our reporter.economics what you expect from the data later today? >> good morning.

we are expecting the gdp data to come in at flat 5%. from the june quarter numbers. to a bit optimistic relative the consensus estimate. the reason being public spending by central and state governments have seen a sharp increase during the quarter. by ahas been aided transfer of surplus dividends. at the same time, i do agree with the broad consensus that the other areas in the economy have seen a sharp or slow down. that slowdown can be seen growth,a hive credit capital expenditure, so you do

see a slowdown in the economy. i think public support would be needed. nejra: it is interesting because some of the commentary i've been reading ahead of the data says that this is a broad-based slowdown and that the government has pledged more action, but actually, the policy room is narrowing. is it therefore a matter of time andre we see sub 5% growth can the government do much to arrest that kind of slowdown? really needs to be very clear in terms of what is causing this slowdown. reform hasstructural been very positive. by now, i would have expected it to take shape. nevertheless, the recovery has been further delayed. that delay of recovery has largely been caused by the rbs

excessively tight monetary policy last year and the tight liquidity squeeze and creating the shop to the indian financial system and it takes time to recover from that kind of shock. the accommodative policies this year has reversed some of the policy evers and my sense is that from here on, the recovery should start taking shape, supported by data in the december quarter and then we are likely to get into a recovery supported by growth in the rural economy, as well, during the march quarter. nejra: yes, on the r.b.i., they have cut interest rates by 135 basis points this year to the lowest since 2009. from what you are saying, it sounds like you may be expect there needs to be a little bit of time for that to see through. a much more easy do you expect r.b.i. policy to become? even if we just look at next

week, for example. r.b.i., i projected gdp growth of 5.3%. my own estimate is 5%, consensus is 4.5%. when the r.b.i. made that projection, it chose to stick with an accommodative stance. a 25-basis point rate cut is certainly likely next week. my sense is that if gdp growth slides for the below the 5% level to the consensus estimate, then they may go for a bigger rate cut of 40 basis points next week. overall, my sense is that there might be another rate cut coming in february. beyond that, it might be taking a long pause. nejra: really great to have you with us. thank you so much. will hobbs is still with us. if we look at 2020 and we look at a slowing china and a slowing india, two of asia's biggest

economies, what does that do for your view of the global economy and your propensity for investing in emerging markets? william: i think it is interesting. he rightly pointed out that the high-frequency indicators show that the slowdown is not done yet. that is all suggesting there is still more to come. we do think that the chinese and indian economies will level out a little bit going through next year. that is our expectation. remember, the chinese authorities do have the means to offset the slowdown a little bit. with regard to e.m. specifically, it is really interesting with regard to trade tensions and what you have seen already is kind of reorganization of supply chains, so parts of e.m. have benefited more than others. assuming kind of longer-term that trade tensions are here to stay, which is probably not an unreasonable the period when

global free traders have prospered, you need the presence of a dominant superpower. the u.s. in the postwar period, the british, the dutch before that. in the periods in between, you find that the barriers to international trade go up a little bit. what you tend to find is global trade could be reorganized on a global superpower model and that is something we might see starting to come up a little bit more into play as we look toward 2020 and beyond. nejra: thank you so much for joining me for the hour, william hobbs, cio at barclays investment solutions. it is black friday. we will look at with the bargain frenzy means for retailers. also looking at a little bit of risk off across equity markets today in the last trading day of the month, but we are heading for a third month of gains for global equities. bloomberg users can interact with the charts using g tv .

matt: -- nejra: good. i'm nejra cehic. these are today's top stories. stocks slide as investors wait for progress on a trade deal in beijing. retail demandest in almost a decade. japanese industrial production falls more than expected as tokyo eyes a big fiscal stimulus. and red lines. boris johnson says he would walk away from a u.s. trade deal if it includes the nhs. this as consumer confidence hits at its lowest level before an election since 2010.

♪ nejra: german retail sales data comes in much worse than expected month on month. we are down 1.9%. the expectation was for a gain of 0.2%. the prior reading was 0.1%. that is much worse than expected. we also come in soft on a gain of 0.8%. we have a gain of 3%. we have had many conversations on the strength of good consumers globally versus the strength in the manufacturing sector. it should we be concerned, or is it just one data point and a bit of noise on the surface? we will get into that with our guest. taking a look at futures, we are softer today. we saw a decline yesterday of

about 0.1%. it was not a big drop, but futures indicating bigger drops than that today. it is month end. some of this could be portfolio repositioning, but we are yet to get any positive breakthroughs on the prospect of a u.s.-china phase i. in terms of other breaking news, we have numbers from gazprom. 211income coming in at rubles. that is a beat. gazprom is something we are watching. in terms of other headlines, the 2019 investment program is set at two point one 3 trillion rubles. but it is really the third quarter net number drawing your attention because that is the red headline on the bloomberg. taking a look at bond headlines. the bond markets were closed for thanksgiving. 10 year treasury yield goes nowhere. we are sitting on a 1.76 and

all. in terms of the european market, info fromg a lot of that. let's check in on the markets in asia. david ingles is in singapore. how is that monthly gain for asian equities looking? it was looking precarious when we spoke earlier. on the ms the month ci asia-pacific, it is just 0.4 percent. we only have about 90 minutes left for the major markets. we will need to get that rate dropwhich is the biggest since september 27. we will treat each other to confirm that. i highly recommend for our clients and everyone else to read the story right now. the title is sudden stocks selloff in hong kong showing

market anxiety. i have health care, which will talk about in a moment. we have the trade war. we don't know what will happen in hong kong. a lot of selling pressure as we head into the closing. the kospi index to highlight the macro risk, they cut their growth forecast for korea for a second time. this year and next year as well. to the health care story, take a look at this bloomberg chart. it should be the worst day, if not the worst, one of the worst. this will concern a lot of the pharma stocks. there is some speculation that the central procurement program that beijing is pushing through the system right now, changes in regulation, might lead to lower drug prices as well. follow this story very quickly. we are going into the weekend, so a lot of risk being taken off the table as we speak. nejra: have a great weekend.

following president trump's signing of the hong kong bill, there is a big question left unanswered. how will china hit back? the foreign ministry has issued a threat on retaliation,. but has -- but has been vague. richie -- benbeen ritchie. as the market going to continue taking a glass half-full view of the phase one development? if all we get is a bare-bones phase one deal with no prospect of phase two and no rollback, will the market go higher? guest: i don't think so. i think the market is pricing the stabilization of the deal. once that is signed, i think people will see what the impact is that on the real economy. will that be enough to stabilize confidence? will that drive that economic rebound that equities are pricing into 2020?

i am not necessarily sure that is the case. there will be a question mark about whether or not that is a boost that you will see on the news of people taking profits. nejra: i am wondering whether people will take profits in u.s. equities versus china, because we have seen the u.s. equity market outperforming china recently. the correlation has been coming down between the two markets as well. we have reached record levels of pricing with the u.s. market versus china. is that a trend that is likely to reverse as people perhaps see the u.s. market as less defensive? guest: i think the u.s. tends to be more resilient to global economic trends. it has a big reliance on domestic consumption. they tend to be more resilient to those global trends. it will be the economies once we look at this over a period of time that are more susceptible to global trade that will suffer the most from uncertainty. that is europe and china as well.

that is what we see that when things have gotten sticky, it has typically been the european markets that have suffered the most. nejra: will that also include japan? guest: i think japan is pretty susceptible to those economic dynamics as well. i believe we have seen that in some of the asian markets, like korea. economies that are over dependent on exports and going toring are then have more question marks going into 2020. that will partially be driven because we have seen such strong performance during 2019. the european markets are up over 20%. if you go back to where we were in january where everyone was wearing about different factors, -- was worrying about different factors, is that there and see the best returns in nearly a decade, i think people would be surprised about that. you have to look at the context of trade against the returns we

have seen, which have been really good. nejra: the retail sales data we had on the top of the show from germany, how concerned are you buy that? you are expressing a little caution about european equities going into 2020. so far we have said, we know about the manufacturing slowdown, but the consumption is robust. then we get a number like that on retail sales. is that just noise? guest: we look at european equities, it is a view that we don't expect to see the same level of returns that we see this year. earnings are likely to be modest in terms of expansion. when we look at the data points in germany, they can be quite noisy on retail sales, so i would not put too much on one data point. but we have seen a slowing in services and some signs of employment. o

if we don't see that coming through on the industrial and manufacturing side, more some changes onl side, we may see more on the other side. it is an area of the market we should be looking for those caution signs. this would be another one. nejra: i completely take your point on all the caution, and the fact that markets are pricing a lot of optimism around u.s.-china trade. but if we get an outcome more positive than markets expect, how are you preparing for that? guest: it will be the stocks that perform well in september that will continue to lead the market. the heavy cyclicals, automotives, financials and banks. those are typically the areas. some are pretty underweight in those areas. which of those companies within

that segment, if we were to see a favorable outcome, would find interest and meet the requirements? certainly for strategies to have a quality approach, it is tough to find european banks that meet those criteria. but there are some. it is getting into the position where if we needed to, we could potentially make investments in this bank or that financial institution, if we found ourselves in a different environment. nejra: ben ritchie stays with us. now let's get the bloomberg first worl word news. making asident trump surprise visit to afghanistan for thanksgiving. the president meeting with both the country's president and u.s. troops. the president said peace talks with the taliban have resumed amid a push for a cease-fire. >> he wants to make a deal. we will see if they want to make a deal. it has to be a real deal, but we will see. they really want to make a deal because you are doing a great job.

some officials are pushing back against calls for the central bank to lead the fight against climate change. president rejecting environmental goals in its asset purchase program. he is calling on agencies to assess time at risk. -- climate risk. saudi arabia has had enough of producers's plus cutting. they agreed to offset overproduction, but now is signaling they will no longer compensate for noncompliance. december in vienna on 5. 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. nh ha.oah

this is bloomberg. nejra: with thanksgiving falling later this year, it will be a bit shorter. annmarie hordern joins us. is the shorter period going to impact retailers? annmarie: it looks like it will not impact them at all. thanksgiving is falling on the last possible date. there are only 26 days until christmas. people have already started shopping. still, americans plan to spend more this season than ever before, as you can see here. so where is all this money being spent? department and discount stores remain popular, around 50% of consumers expecting to make purchases at these brick-and-mortars, but online continues to be a top trend. speaking of the digital world, many consumers will be getting their holiday info from their mobiles and computers, facebook, instagram, pinterest. all of these for gift ideas.

i am holding back for looking online until we are off air. nejra: we have got that in common. we are atypical millennials. we like to go into the shops, so don't get in our way today. [laughter] coming up, not for sale. boris johnson says he will walk away from a u.s. trade deal after brexit if the nhs is not taken off the negotiating table. we will have the latest on the u.k. election next. this is bloomberg. ♪

7:16 a.m. in london. we are 43 minutes away from the start of cash equity trading in europe. i'm nejra cehic in london. let's get the bloomberg business flash with oahn ha. stanley placing on in london andders

new york over an alleged mismarking of securities. 140 millionsses of dollars. morgan stanley is investigating the move linked to emerging-market currencies. the lender is declining to comment. china's latest big bank listing is drawing the retail -- the lowest retail demand in a decade. it is the biggest stock listing since 2010, that it highlights concerns about trouble in the country's banking system and a lack of exuberance in its stock market. china hopes to raise over $4 billion in the listing of the bank. troubles are mounting at hong kong airlines. it is now delaying salaries, saying unrest in the city has severely affected the courier. finances were already under strain since before the protests began. only cabin crew and overseas employees will receive their paychecks on time. and that is your bloomberg business flash. thank you. ha,

boris johnson says he will walk away from a u.s. trade deal after brexit if the nhs is not taken off the negotiating table. the prime minister's remarks came after the labour party accused him of being involved in secret talks to put the health service up for sale. with less than two weeks to go until voting day, a poll has seen the conservatives heading for a 68 seat majority, but johnson told itv the election is still a tight race. ben ritchie is still with us. it is hard to say there is a lot of complacency in the market, because we have seen a lot of gain in sterling. if you look at the volatility markets and other positioning, it does show that nothing is being taken for granted at the moment. how does this translate into your equity strategy? guest: it was interesting when we saw the poll data come out. they disliked the fact that this was an anticipated pole and would give us insight. everyone realizes that the

outcome is too close to call even the fragmentation of the electoral system and the structure we have in the u.k. this will be difficult to say exactly where we are until we get the exit poll at 10:00 p.m. on the 12th. as far as strategies going it isd, it is fair to say still likely to be more positive for the outlook on the u.k. we have more domestic exposure. some of our strategies, we anticipate this will be the opportunity to get people more interested in u.k. risk assets than they have been for most of the last three years because we could see the prospect of a market friendly administration with a reasonable majority and finishing brexit, phase one brexit negotiations, which may well bring people back into the u.k. market, which they have been staying away from. nejra: one area they have been

coming into if you look at foreign investors art u.s. etf fund investors, tiptoeing back into small-cap stocks. million to the3 small-cap etf on friday. it has pushed the assets to a record. small-cap attracting assets. you take a selective stockpicking approach. our small caps an area where you are implement in that approach? guest: it is seen as a more domestic play, so i don't think investors realized that an investor on the ftse 100 is an investor in the u.k. they are looking to try to get that exposure. it is one of those areas with the ftse 250 with a more liquid opportunity. bias, not more domestic which will attract more inflows. if we see a market friendly

outcome to both the election in the brexit negotiations. there before, you said are structural issues with the u.k. equities as well that have nothing to do with brexit, that perhaps may be some investors are under considering. if you take that into account, what stocks does it draw you to or away from? guest: you always have to remember there were big chunks of this index which are in sectors that are probably structurally low sectors. mining, oil, banks. they can make up 35%, 40% of the index. as a result, it is likely that equities will be trading higher. i think there are pressures on domestic companies to do with brexit, especially on retailers, issues to do with segments of real estate. areas which are more likely to benefit from a better economy domestically are going to be selective within the u.k. banks,

some areas more exposed to u.k. consumption, and more exposed to sterling as well. if you look at those assets, those are the kind of things that will perform well if we get more market friendly election outcomes. nejra: we are going to talk about europe as well, because as we approach the end of the year, analysts have begun to publish their outlook for european equities. bank of america said that in the event of a strong growth rebounds, equities could rise up to 13% next year. analysts at barclays see a moderate upside/ . goldman predicts an all-time high. earlier, you were expressing caution about equities going into 2020. why are you feeling cautious, given the good performance we have had this year? guest: i think it is because we have seen that good performance. markets are pricing in a

successful outcome on trade negotiations. i think they are pricing in stabilization. if you think about within the market, the more cyclical sectors, automotive's, banks, some of the industrial components, those things have done pretty well since the beginning of september. they have performed strongly. they are certainly pricing in not only that we see the pmi data stabilize, but it starts to inflate. i am nothat is a step prepared to get to yet because i think we need to see the extent of this trade deal and see corporate confidence improve. moreld like to see a stable environment from an economic perspective in 2020, but what does that mean for earnings? perhaps more of a flat outlook for earnings, and with multiples relatively full across the market, even though the cheaper areas have already re-inflated, i think it will be difficult in that environment is the equities make much progress next year.

nejra: they are part of the market where you see double-digit growth in 2020. tell us about that and aspects where you see solid returns? guest: it depends on your avenue for the year ahead. we continue to see an environment of low growth, low inflation, low interest rates, and expect that to be punch rated by periods of political volatility. if we can find companies, even if we have to pay a premium, that we think can deliver those double digits, we think that looks relatively attractive. with earnings that give us a degree of confidence. sake you don'ts want to invest in those companies. you want to look at the cyclicals. i think that is fine, given that they have the opportunity to deliver. you need that climate to carry the stoxx threw two next year. if you don't see that -- to

carry the stocks through to next year. the company's be most sensitive to do that on the downside. it is taking the risk. do you want valuation or earnings risks? at this stage, i am more comfortable taking valuation risks. nejra: which companies are you most comfortable taking that valuation risk? guest: when we look at the technology space and spaces in europe, like s&p, within the thosere space, amadeus, sorts of businesses, we see those driven by strong structural drivers. they trade on relatively high multiples, but we believe the earnings are relatively cyclical. it could be within the health care space, like novo nordisk. we see this as a business which can deliver high single digit

earnings with a relatively low degree of risk, a strong balance sheet, and strong social trends. the global economy is operating at subpar rates where we are concerned about the cycle, political risks, and it seems like a decent out turn to us. if we can deliver a high single digit, double-digit return, we think that looks pretty good. nejra: for a global investor concerned about relative value, how much do you expect europe to over perform next year? guest: europe always has to be a stoxx specific story. in as that, europe is good company as any market. you just have to be selective. i don't see any reason why a well picked portfolio could not do as well from stocks in any other market. nejra: really great to have you with us on the show today. that's it for bloomberg daybreak: europe.

the european open is next. we saw a down day in european equities esther day -- yesterday. futures on the back foot. this is bloomberg. ♪

anna: good morning. it's the european open. i'm anna edwards, live from the city of london. european futures point lower. the cash trade is less than 30 minutes away. ♪ anna: morgan stanley ousts traders. they remove at least four traders who concealed losses of up to $140 million i mismatching securities. downbeat data. german retail sales dip unexpectedly, and