>> welcome to daybreak europe. let's get to the top stories that set your agenda. all eyes on u.s. jobs data. asian stocks gaining after following the s&p 500's best day since april. nasdaq futures pulling back, the drop off in apple's china revenue really pushing that index lower after they warn of a sluggish holiday quarter. guilty of fraud and conspiracy. sam begemann freed is convicted over the collapse of his crypto empire. the jury returning its verdict in less than five hours. plus geopolitics, u.s. secretary of state antony blink and sent to land in tel aviv after the u.s. house passes a $14 billion aid package for israel. doubts mounting on whether it is going to pass the u.s. senate. crosscurrents in geopolitics, monetary policy, even the legal drama of sam bankman-fried. when we talk about green on the

screen not only in the u.s. session but the asian session as well, already setting up a positive tone for what you are seeing in europe. euro stoxx 50 futures higher. the dovish tone coming from not only chairman powell but also andrew bailey from the boe talking about this idea that we are not leaning into rate cuts, we are not doubling down on the hawkish tone. markets are interpreting that is positive for not just risk assets but the bond market. you are seeing a pullback in s&p futures and nasdaq. the global rally really started in the u.s. session. the u.s. session taking a little bit of a step back, a lot of that has to do with the apple story. as well as when you have the best day since april it is only natural to pullback. apple down 3.4% in after-hours trading, a lot of that coming from china revenue.

the apple story is often indicative of the broader trajectory of the s&p 500. that's going to be key when we talk about what macro takeaways we get from apple. just as much as the micro is important i'm going to bring it back to macro because the bond market matters as well. let's talk about the msci asia and japan index. it is green on the screen higher by 1.7%. the entire asian region. that follows the global dynamic i was talking about. it is the bond market that could really throw a little bit of a curveball for a lot of these markets. that is why the 2-10 inversion matters. if you were starting to talk about a dovish pipit or interpretation from andrew bailey, from chair powell, you are using financial conditions. that is not what central banks want. we are going to dive into that in just a moment. that will have repercussions for

eurodollar and the cable rate. i want to get to our top stories from around the world. a great lineup of reporters. all joining me this morning. annabel, sam begemann freed has been convicted over the collapse of crypto exchange ftx. injury has deliberated for less than five hours following a month-long trial. take a listen. >> this case moved at lightning speed. that was not a coincidence. that was a choice. it is also a message, a warning, this case, to every single fraudster out there who thinks they are untouchable. kriti: so you heard of course what they were saying outside the courthouse. talk us through the details around the guilty verdict. >> you mentioned some of the key ones. the deliberations from the jury

took less than five hours to reach this verdict. the trial lasting a month, several different counts against him. in terms of key details to focus on, it is about the duration, less than five hours. compare that to elizabeth holmes, the theranos founder. they took eight days to reach a verdict. the speed is notable. in terms of sentencing, as i said, sam bankman-fried is guilty on seven counts of fraud and conspiracy. his jail time, how much time he will be behind bars, that is not clear because the sentencing date has been set for march. we do know for some of the more severe counts he is facing up to 20 years in prison. multiple decades behind bars it is looking like. kriti: perhaps not a surprise

but the guilty verdict did not come alone. a lot of other key figures at ftx and alameda research as well contributing to this very long saga. what do we know about the other star witnesses? annabelle: it was the u.s. prosecutors. the strength of their case was shaped by some of those key people. among them it is alameda research co caroline ellison. the ftx cofounder. the ftx engineering chief. these were three-star witnesses in the case. all of those people as well testified that sam bankman-fried directed them to commit fraud by transferring billions of dollars to alameda research. we understand just typically if you cooperate, if you turn into a star witness, you get leniency in these trials. how much time they are facing behind bars we understand from legal sources in the industry, it is likely to be short if they see any sort of prison sentence

at all. kriti: plea deals left and right. just to really nail down sam bankman-fried. i want to stick -- i guess with tech. the major market mover overnight , shares of apple lower in post market trade after tim cook failed to calm investors on worries over the chinese sales. matt leads our tmt research. welcome to the show. what a great day to join. let's talk about the china sale story. apple is not the dominant player in china but it is the key growth market. why do we care about their growth trajectory here? >> this is a company on book valuation multiples. it is expected to grow, china has been a growth driver for them. we have seen market share opportunity for them in china.

with geopolitical issues going on that has pulled back a bit. there have been -- they are having to look at markets like india. $2 billion short of revenue expectations. most people thought the weakness was going to be the iphone. because huawei has been resurgent. but actually it was mac sales. people are worried because of the timing of one of the huawei phones that the christmas quarters going to be weaker. the forward guidance, they essentially intimated the december quarter would be flat year on year. apple was looking for 5% growth so those kind of headwinds continue. one of the other issues was the wearable segment. people have talked about the success of ipods and the watch. there have been weak refreshers in those products. a soft area of the lineup in the

holiday season. kriti: the services numbers came out quite well. a good chunk of the apple revenue comes from when you go to get your iphone fixed at the genius bar. they take a tiny cut. that turns into quite a bit of profit. those numbers are looking good. >> $22 billion of revenue. you have this enormous universe of people using apple products, for my cloud storage to fitness plus, apple tv. those things generate revenue. the more customers you have the more likely they are use your services. that does point to the success of the ecosystem. this is something apple talk about time after time. generally analysts go that is interesting but the real focus is the iphone. unless you are getting a more important chunk of their business out of this much more profitable family of products. it is helping to compensate for margin pressure they see in product revenue.

it is becoming increasingly important. you could see more people focused on it and give it the kind to spotlight it should have had for some time anyway. kriti: my favorite part about that is there is a macro read through. you just laid out the micro. because it is such a growing part of their business you can use it as almost a proxy for consumer business, consumer disposability and things like that. during covid that was a big part when it came to things like foot traffic. from a macro standpoint you have to pay attention. matthew, thank you for your analysis this morning. it is the consumer, the macro growth that is driving markets as well. not just in the u.s. or asia right here in the u.k. as well. listen to what the chief of the bank of england had to say yesterday in his press conference. >> we should locate monetary policy -- we should not keep monetary policy restrictive for excessively long. we should be mindful of the

risks of doing too much. how long restrictive styles will be needed will depend on what the incoming data tell us about the outlook for inflation in the medium-term. kriti: joining us now for more is blumberg economist jamie rush. from the boe, we are talking about what it might take for them to hike again. i'm curious about the idea of actually pausing. the sensitivity to the data. what happens if the data flips next month? does the boe flip? jamie: they have been responsive. very responsive to mrs. in the near term inflation forecast. when inflation is high, it is because they are worried about expectations or what that might mean for the outlook inflation further ahead. as inflation starts to come down , the risk posed to inflation expectation starts to fade away.

it gives them more space to start thinking about the economy and other indicators. we have seen that shift in focus away from headline inflation toward the labor market, toward more leading indicators of economic growth. it would take really quite a big turnaround now in the data for the bank of england to consider hiking again. kriti: at its core if you look at what the bank of england says, andrew bailey talked about jobs and wage growth as well. that's going to be a theme from around the world. to be auger putting a large emphasis on that -- the boj putting a large emphasis on that. walk us through all can expect -- through what we can expect from payroll data and the global conversation around labor. jamie: you are right that no central bank is operating in a vacuum. they all have an eye on with the fed is going to be up to. for the fed the decision, the

economy is holding a better than the case in the u.k. or europe, the euro area. we are expecting the payrolls number to come in weaker than september, 157 k. there have been huge revisions this year. strike action in the u.s. which is money in the paycheck. the value of what is going on in the u.k. is quite low. we are interested in what's going to happen in unemployment. it would be a signal the u.s. is on the brink of recession. if the u.s. economy continues to hold up really well, i agree with my colleague in the u.s. build oddly -- in the u.s. bill dudley, if the data called for tighter policy it will be central banks and if that happens, the u.s. would need that pressure to transmit. that could be a debate at the

bank of england and the ecb. kriti: it is a fascinating story and it could turn the brief kind of reprieve we have gotten in the bond market as well. jamie rush, we thank you for your analysis this morning. as he was speaking about where the fed might lead we should mention the atlanta fed president will be joining us for an exclusive interview. you do not want to miss this at 7:30 p.m. london time. 3:30 p.m. in new york. do you hike in the face of the geopolitical risk? that is the part of the equation i want to dive into next. coming up, idf troops encircling gaza city as israel insists a is not on the table. this all as u.s. secretary of state antony blink and returns to the region. this is bloomberg. ♪

kriti: welcome back to daybreak europe. antony blinken is set to land in tel aviv shortly to meet with prime minister benjamin netanyahu. israel's military says its troops have encircled gaza city insisting a cease fire is not on the table. joining us for more, the head of middle east and north africa practice at eurasia group. a pleasure to have you on the program. let's start with the cease fire. it is turning into quite the debate. you have had major leaders in the u.s., president biden, hillary clinton, former national security advisor h.r. mcmaster on the program yesterday, all saying humanitarian cease fire is not necessarily the way to go when it comes to tackling hamas and it would only give them more fuel to the fire. what is the argument for it outside of the civilian toll? >> you are talking about many

different proposals. one would involve a very short humanitarian pause, that is different from a cease fire which could allow hamas to regroup, reorganize, and have a valuable break. secretary of state blinken is in the region with an aim to at least allow for a better environment in terms of the damage to the civilian population in gaza. the israeli operation is making progress. but there are many weeks of very intense fighting ahead. there is an effort to try to figure out if there is a solution to mitigate not only civilian casualties, but hospitals that need fuel, all of that when it comes to the civilian population of gaza. kriti: at the core of the issue though it feels like is to avoid some sort of regional escalation. it feels like the risk of that happening is only getting

larger. talk to us about the odds of regional escalation here, more involvement from not only the who the rebels -- houthi rebels, from hezbollah, but regional powers. iran. what are the odds? ayham: this is broadly looking like a gaza-centric conflict with extensions into different parts of the region. low scale, limited scale activity by hezbollah, militias in iraq and syria. the challenge on israel is that although it is not multi front, it does stretch is really forces. particularly with hezbollah attacks in the north. now the likelihood of iranian direct involvement is quite limited. iran does not want to be involved in a large-scale conflict. neither does the u.s.. president biden has 2024

elections in mind. a regional war would push prices up. i do not think there is appetite for that. the challenge is the gaza operation, the higher the civilian casualties, the higher the risk that forces, primarily hezbollah, would escalate military activity and get into a much messier geopolitical environment. kriti: but in the attempt to not escalate this regionally it does not feel like hezbollah is on the same page. something our bloomberg opinion columnist bobby goetsch says iran does not want and in agreement with you as well. what do we actually expect to hear from hezbollah's leader? he is due to speak for the first time since the attack on israel. could that change the game here? ayham: hezbollah's leader will have a very important speech tomorrow.

i think hezbollah has more pressure to get involved in a more meaningful way. but at the end of the day, the risk that presents itself to hezbollah is that a multi-front war with u.s. support provided to israel at this time could be catastrophic. i think he will exercise caution. perhaps signal an escalation in gaza means that all options are possible, or on the table for hezbollah. my expectation is an increase in intensity of the conflict on the northern front but not an immediate full-fledged entry of physical -- to this war. there is potential for full entry. kriti: there are so many other larger powers. you have the saudi's, the uae as

well, kind of it feels like shifting to the sidelines. although they are not pleased with what is going on in the gaza strip as we know. on the other hand you have china and russia pushing back on the israeli defense. of those players i just mentioned who do we pay attention to the most? ayham: i think the saudi's. the saudi's have the ability to set the tone for what is acceptable regionally. they are influential on so many levels in the middle east and north africa region. they are quite proactive in the first few days of the conflict pushing back against any large-scale movement of the gaza population into egypt, backing president lcc -- president sisi on that. if there is a movement of palestinians out of the west bank of gaza, that is something saudi does not want. the saudi crown prince wants investments and does not want regional war.

china and russia are probably not on the same page. china wants de-escalation. perhaps russia is ok in terms of seeing a distraction from the ukraine conflict. i think the uae is not on the same page with saudi. the leadership there sees the attack on israel as something quite significant. they are trying to accommodate that. kriti: a lot of angles and inversions of how this is going to play out kriti: we have to leave it there but he is the head of the middle east north africa practice at eurasia group. plenty more ahead. stick with us. this is bloomberg. ♪

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>> china is a big player.

china's footprint with respect to trade around the world is significant. but i want to emphasize on the part of our administration there are so many reasons for the united states to be investing in enhancing our relationship with africa for africa. that is one of the most important messages i want to convey. this relationship is inherently valuable. kriti: the united states trade representative speaking to bloomberg tv exclusively. she did go on to say the u.s. is committed to seamless renewal of the african growth and opportunity act when it does expire. joining me now, jennifer who did conduct the interview. what more did katherine tai tell you about the future of the agreement? jennifer: the key is that katherine tai is the head of the u.s. delegation at the forum happening here.

this act is expiring in two years and what is critical now is how to make this 23-year-old agreement work better for both sides. there's been a lot of criticism that it has not worked equally across this continent in particular we see it more, industrialized countries benefiting and less smaller, lower income countries. what she told us is that she agrees it means modernization, it means utilization rates need to be increased the next few years. also, what does life after this mean? a lot of countries we have seen, they graduate and do not have a path forward. she wants to make sure this agreement is modernized to benefit everyone. we think about the numbers here. $9.4 billion in 2022. it is significant for both sides. when you mention timely we heard it from katherine tai and from

president biden and really this all hinges on getting an agreement together that all sides can agree on. then it goes to congress and congress needs to work through the kinks and make sure this looks -- looks like an agreement they want to improve going forward. kriti: we are going to be watching closely. that has international repercussions. we thank you for bringing that to us. you can watch her brand-new show, hosted by jen on the first friday of every month. the first exclusive interview debuting today. we have plenty more to digest. this is bloomberg. ♪ you're probably not easily persuaded to switch mobile providers for your business. but what if we told you it's possible that comcast business mobile can save you up to 75% a year on your wireless bill versus the big three carriers? have we piqued your interest? you can get two unlimited lines for just $30 each a month. there are no term contracts or line activation fees.

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kriti: welcome back to "daybreak europe." all eyes on u.s. jobs data today. asian stocks gaining after the s&p 500 posted its best day since april. but a pullback for tech. nasdaq futures dropping off apples week chinese revenue warning of a sluggish holiday quarter ahead. guilty of fraud and conspiracy. sam bankman-fried is convicted over the collapse of his crypto empire. the jury returning its verdict in less than five hours. u.s. secretary of state antony blinken set to land in tel aviv. he has just arrived. the u.s. house passes a $14 billion aid package for israel. doubts mounting on whether it is going to pass the senate. a lot of crosscurrents. before we get to what markets were doing i want to bring you earnings stories. bmw numbers coming out. we were on china watch. the idea of how much of that

competitive edge is eating into their bottom line. there ebita margin higher-than-expected. what is also important to keep an mind is that their sales are coming in at $112.5 billion. the estimate was about $37.5 billion on a quarterly basis. their sales coming in again for their nine-month at about $112 billion. for now it is the ebit margin getting the attention up to 10.5% for the full year up from the estimate of 9%. poised for a positive open when it comes to european markets in 90 minutes time. let's go from micro to macro and talk what futures are doing. you are going to see green on the screen at least when it comes to european futures. euro stoxx 50 futures higher by 0.6%. you also have some green on the screen from other -- the story on the s&p 500 and the asia

story as well. all in the face of geopolitics. we are bringing you live images of antony blinken in tel aviv. the question is going to be whether or not he's able to make progress on the humanitarian cease-fire. that is what the biden administration has been pushing for. there has been pushback from others in the region about what a cease fire looks like and the time for that. antony blinken live in tel aviv. we will bring you headlines as we get them. that is going to impact the global monetary picture when it comes to the federal reserve. do you hike in the fake of -- in the face of geopolitical risk? the idea that perhaps not only the fed but the boe is kind of being interpreted as having a dovish pivot. that is showing up in the bond market. -33 basis point conversion in the two stents curve -- twos tens curve.

the s&p 500 posted its best day since april and it's showing up in the asian markets as well. japan is closed but that is not stopping the region from rallying 1.7%. the bond market rally pushing the dollar lower. 122 on the cable rate. that is your macro markets picture, your geopolitics. i want to bring you another top story. sam bankman-fried has been convicted of a massive fraud that led to the collapse of ftx. the jury deliberated for less than five hours before coming to a verdict following a month long trial. >> this case moved at lightning speed. that was not a coincidence. that was a choice. it is also a message. a warning, this case. to every single fraudster out there who thinks they are untouchable. kriti: let's get more with annabelle droulers live at the hong kong fintech conference. walk us through the details of this guilty verdict.

annabelle: you just heard, it was the speed of the essence. the decision reached by the jury was less than five hours of deliberation. it tells you how much clarity there was from the case that was put against sam bankman-fried. he was in the courtroom when he was delivered the verdict of guilty on all seven counts of fraud and conspiracy before being led away from the courtroom. his parents as well in that session today. the question now is how much jail time he is likely to receive. we are still a few months away from finding out. the prosecution or the sentencing day has been set for march. he could spend as much as 20 years in prison on each of the most serious charges. you are talking about something that could amount to decades of time behind bars. really it is a big win for the prosecution here.

they are calling this one of the biggest financial frauds in american history. it is being attributed as a win to a lot of people in the crypto industry. a number of participants, exchanges, all of them, the overwhelming message, this is a good thing because it tells us this behavior from sam bateman freed will not be tolerated. kriti: a lot of plea deals, most notably with the head of alameda research. who also was sam bankman-fried's ex-girlfriend as well. in addition to his close peers and parties who helped build the business, all basically ratting him out to make the prosecution actually work. let's take a 60,000 foot view. you have spoken to the u.k. fca chief. talk to us about regulators in the u.s. and elsewhere, how they are taking this. you mentioned they are viewing it as a positive. where does it go from here? annabelle: certainly a positive

from people in the industry. definitely i think for regulators it is a reminder to them and also sort of validation of those that have chosen to put rules in place. of course as we know each regulator has a different approach to this. the u.s. sec has been reluctant to engage with the sector. places in the u.k., mainland europe as well, have been more proactive and that includes the financial conduct of authorities. i spoke to that u.k. body ceo -- he told me about the implications. >> as long as people are meeting our standards, we support innovation. also looking more broadly at additional assets we announced a partnership with our colleagues in singapore and japan and switzerland. how we can support the use of digital assets across borders. these are cross-border issues which can make a very big difference.

annabelle: sending a message that the u.k. is open to business for reputable or licensed crypto companies. the collaboration he referred to as a joint project being led by the singapore monetary authority in collaboration with a few others. the point to make from it is that it is really about the direction of where travel is heading. i do not think sam bankman-fried is likely to play into any sort of regulatory decision to backtrack on the progress we have seen in different jurisdictions so far this year. kriti: perhaps a warning to founders who are trying to create that new innovative platform the way ftx did. you mentioned there and does and elizabeth holmes -- you mentioned theranos and elizabeth holmes. when we talk about monetary policy we actually in the last

24 hours heard from andrew bailey and the boe which is holding rates. we know they are sensitive. we know they are following the lead of the fed and perhaps even the ecb. the most hawkish tone really getting pared back from the big three. joining us now, jamie rush. from the boe, what would it take for them to hike again? jamie: what we are seeing is when inflation was 10% they were hypersensitive. they were worried about what that might do to expectations. now, with inflation going toward 5% by the end of the year, there is more space twofold other things into their thinking. they are focused on growth and the labor market. in our view, it would take a massive turnaround for the bank of england to hike. you need strong growth, you need wage growth to start drifting

upward. that's not our base case by any stretch. you have disincentive to keep talking tough on rates. they do not want financial conditions to loosen up to early. pretty sure the next move is going to be down, not up. kriti: at its core comes the labor market. we have been talking about this time and time again. the idea that not only in the u.k., arguably around the world, is the labor market very strong, but the fact the sensitivity to what happening in the payroll support and wage growth data is something the markets are trading. we are going to get live reaction today from the nonfarm payroll report we get in the u.s.. how does that feed into the conversation? . -- jamie: you are right to stress the labor market is the most important. they want to see loosening.

we get payrolls data today. we are expecting it to come off quite a bit. 157,000 gain -- that is roughly half of what it was in september. we should remember, the signals for the survey is muddied. it is prone to revision recently. the strike action in the u.s. makes it very difficult to get a clear picture. we are going to be focusing more on the unemployment rate. up slightly, suggesting the u.s. is on the brink of recession. our call is for a mild recession. the danger, and i agree with my colleague in the u.s. bill dudley, is if the market continues to tighten and the economy stays hot it is not going to take bond rate hikes to turn that around. it is going to take several. it is not whether they hike one more time. it is whether there is a lot further to run.

if that happens the bank of england and the ecb are going to be under similar pressure. kriti: i feel a lot of that also depends on what the bond market actually does. the idea here that if you have this selloff in the bond market and that is the equivalent of rate hikes, does a massive bench in the bond market function as a rate cut as well? we thank you for your analysis this morning. later on today rafael bostick will join us for an exclusive interview. you do not want to miss that at 7:30 p.m. london time, 3:30 p.m. if you are stateside in new york. also making news this morning, isabel's naval saying the fight against inflation might require another increase in interest rates. a week after the ecb left rates unchanged for the first time over a year. she also said while it took a year to get inflation down to current levels it is expected to take twice as long to get from here back to 2%.

elon musk has renewed his calls for regulations on artificial intelligence. during an onstage conversation with rishi sunak the tesla billionaire said having a -- is a good thing. he went on to claim the technology will end the need for jobs. sticking in the corporate space the presence of united auto workers is confident we can take on tesla telling bloomberg, quote, we can beat anybody. fresh from contract wins at the big three u.s. carmakers sean bane says he's already seeing nonunion planes and workers react to the deals and is ready to go after them. the uaw has unsuccessfully tried to organize at the electric car maker the past. -- carmaker in the past. jeff bezos says he is leaving his home of 29 years in seattle. the move takes him closer to his parents and to the space

exploration company operations in miami. coming up on the program we are going to dive into warnings of a sluggish holiday quarter from apple after reporting a slowdown in chinese demand. this is bloomberg. ♪

kriti: shares of apple ended after hours trading lower after tim cook failed to calm investors over worries over sales in china. we thank you so much for joining the program. let's talk about these apple results. . we are talking about china being the big weight. why does this matter if china's only a growth market and not its

main market? >> on the margin you are looking for growth because you have so many other developed markets so much are. -- mature. that's where they are going to get profit expansion. it was a big miss. you have people looking for growth 10% year on year and it is 2.5%. a $2 billion differential. the interesting thing about china is people were expecting softness in the iphone because of the rival huawei and geopolitical issues there. but it was a record quarter for iphone in china. it was the mac and the ipad that were weaker. they saw that elsewhere in the markets. some of that was kind of difficult. year on year comparables had a big quarter last year. but also it is about product refresh. they have only just announced a refresh of the mac pro. there's a lot of issues but

perhaps not the issues people were expecting to see. maybe there are question marks about iphone sales in china into q4. that is where you will start to get more impact coming. kriti: when we talk about product demand at the end of the day apple is -- provides luxury products. matthew: essential luxury. kriti: but luxury nonetheless. these products are expensive. from a macroeconomic standpoint consumers are pulling back. and yet when you look at services growth they are almost spending more. how do you square the two? matthew: on the product side we are seeing people keep their devices for longer. rather than the two-year cycle people after three or four years because they are so much more expensive. once you have the iphone even if you got it three or four or five years you probably have icloud storage. you may have apple tv. you might subscribe to apple

news. all these other services, the app store. even if they are micro payments it adds up. you have over a billion active subscribers across the services portfolio. small payments add up over time. 22 bullion dollars of revenue this quarter, superhigh margin. that is helping to compensate for the pressure on the product side. kriti: i love apple because you can go so many directions. talk about the product, the services, do not get me started about bond issuance and credit. that is a whole podcast where the conversation. we have to leave it there. matthew bloxham, thank you for joining us this morning. i want to bring you another corporate story in the banking sector. goldman sachs has named 608 executive to the managing director rank. 5% fewer than the last round of promotions in 2021. the company has suffered in recent quarters amid a dealmaking slump and costly efforts to expanded to consumer businesses.

of the total executives women made up 31% just up from last time. sticking with the banking sector, socgen has disappointed in the third quarter as the french lender wrote down the value of some of its businesses. that income and revenue both coming in well below estimates. numbers that may be the market might not be a fan of at the open. carolyn, walk us through these numbers. what happened here? caroline: the difficult series continues for the new ceo just wanted to have months after the strategic plan, hugely disappointed investors in september. today there quarter net income missing on bloomberg estimates down 80% compared to a year ago. maybe because it had more than 600 million euros of what they call one time adjustments including provisions on different tax assets, impairment abroad, and other hedges.

huge impact basically in 2021. they bet that interest rates would actually fall. these hedges are for two years so the maturity comes now. interest rates have been constantly rising for the past year. so this is also having a huge impact for the french unit. the outlook also disappointing. they said the net interest income should go down 20% this year. it could actually be worse. there is one bright spot however for socgen this quarter. it comes with trading. equities and fixed income revenues growth were not as bad as expected. for example, fixed income revenues down 4.6% in the third

quarter when you look at peers. it was down 12% at deutsche bank and bnp paribas for this quarter. of course all of this adds a lot of pressure for the new ceo to deliver going forward. kriti: of all of that pressure, the price-to-book ratio for socgen tells you so much. if you pull up a chart it is a vertical line lower. what happens to the stock being forward? -- the stock moving forward? caroline: it has the biggest discount to book value among all the large european banks. it has been the worst performer among the french banks since the financial crisis. remember when the strategy plan was presented in september. shares of socgen lost 12% in a single day. the stock has not really recovered since then.

we will see at the open how investors react to these numbers. clearly there is room for improvement in the socgen stock. investors are very nervous about the strategy. they are also very frustrated with the fact there is a lack of clarity when it comes to asset sales. they have exited africa but they are exploring options for security services. some other units in africa. clearly all of this will also have an impact in investors minds going forward. kriti: room for improvement. you are more generous than i am. caroline connan bringing us the update. plenty more ahead. this is bloomberg. ♪

kriti: we have an hour until the euro and market open -- european market open. if there is one thought i can leave you with, it is the idea the markets are interpreting with the federal reserve and the bank of england as taking a dovish stance because they have not doubled down on hawkish position they have been on for the last two years or so. the question is if the market is interpreting it as dovish, does that mean the yields come down and really weigh on financial conditions? that is what the chart is showing. the ideas the white line is the yield move. yields have been higher and higher and higher and are suddenly dropping down because of the interpretation. look at what it is doing to the financial conditions, bringing them down as well. if you simply talk about the matches in the selloff we saw on the long end of the bond market functioning as a little bit of a rate hike, does it work the

other direction as well? if you see a sustained bid for the bond market, a bond rally if you will, does that mean there is a rate cut in the works simply as a function of this market pricing? that is the chart i want to leave you with. i imagine it will be part of the conversation mike mckee will be having later today sitting down with raphael bostic for an exclusive conversation at 7:30 p.m. london time. plus we have an schools of interview here with the german vice chancellor and economy minister coming up at 9:10 a.m. u.k. time. just ahead we will speak to merck ceo vincent clark on the back of the company's results this morning. markets today starts right now. this is bloomberg. ♪

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