. welcome to "street signs." i'm joumanna bercetche these are your headlines hours to go until voting opens in the midterm elections but a race row over the trump add is adding to things dhl weighs on third quarter profit >> our u.s./china trade doesn't

play an important role we will not be hit by that in particular. adeck cco shares hit a high note despite challenging market conditions. and a fashion faux pau zalando hits its outlook after the weakest quarter ever for sales. good morning we have a busy show, just to kick things off. starting off with eurozone pmi data we have the final composite pmi numbers out of the eurozone. those came nin at 53.1

a bit weaker than september at 54.1 actually to put these into context, these are the lowest numbers since september of 2016. on the services side, the services pmi number is 53.1. again, higher than the flash, which was 53.3 weaker than in september this is the weakest number we've had since january 2017 so, what i would say is it's better than the flash numbers, but still weakness versus where we were the previous month we're seeing a bounce in the currency euro/dollar up more than a tenth of a percentage point ritght no. let's look at fixed income right

now. generally the numbers in europe have more or less been moderating, with the exception of today we're seeing a bounce in the currency and core yields are coming off a bit just to give you an idea while we wait for that, yields are up by a half basis point. italy and spain which are a focus of the market, are coming off a bit as well. that's the picture for fixed income and currency. let's talk about equity markets. you can see it's 50/50 green/red. stoxx 600 is flat. absolutely flat. let's get into some of the individual bourses to see what the picture is like as we break it down. overnight we did have some strength in the japanese currencies nikkei up more than 1% weakness in shanghai but actually we'll talk about european bourses in a bit.

our main story is that of the u.s. candidates and supporters have made one final appeal to voters ahead of key u.s. midterm elections later today. president trump held rallies for republican hopefuls as polls suggest democrats could gain a crucial majority in the house of representatives. blayne alexander has more. >> it is the final stretch >> go out, get some votes. >> reporter: across the country from the senate race in texas -- >> we are going to win this race >> we have a chance to do something amazing for this country. >> to the governor's contest in florida and everywhere in between, candidates in tight races making their closing arguments. democrats getting a hand up from former president obama driving home the party's message on healthcare >> you vote, you might save a

life >> reporter: this week making a final push for joe donnelly, and tonight president trump hitting the hoosier state. >> is there anything like a trump rally? >> stumping with republican mike braun, the republican making his own legacy top issue on the ballot >> everything we achieved is at stake tomorrow everything >> reporter: it's his second of three rallies today ending his midterm push in missouri working to unseat claire mccaskill >> there's a big difference on healthcare >> reporter: a scramble with votes with early voting numbers already breaking records hours before election day. tomorrow polls will begin to close starting at 7:00 p.m. on the east coast blayne alexander, nbc news, washington the likely impact with u.s. equities is the consensus view

that a split congress and the results gridlock would lead to a slowdown by the fed. citi and blackrock said a clean sweet by either side would be a net negative for stocks. goldman says the u.s. needs to slow to avoid a dangerous overheating. a senior economist from goldman sachs joins us on set. >> great to be here. >> let's talk about the midterms and the likely impact on markets. typically markets would not be that fussed by a midterm election it's not something that the stock markets are reactive to. this time is different why do you think that is the case >> i think, as you said, normally markets respond much less to the midterms than to the presidential elections usually because much less power shifts in the midterms i think this time there's a clear consensus, at least in the

expectations, that the republicans will hold on to the senate, about ybut the democratl take over the house, which would result in a split congress the implications of that are policy gridlock. so we don't think that would be a particularly pronounced market >> don't you think those impacts will be short-lived? >> expectation is that we'll live with a split congress most of the notes i read said this could lead to pullback in s&p and equities ultimately aren't the bigger macro stories more important i'm talking about the strength of the u.s. economy. the economy trade discussions. the fed outlook. aren't those way more important than the outcome of the next 24 hours? i agree wi . >> i agree with that the overridingissue is going t

be u.s. growth as you know, the growth numbers in the u.s. have been strong this year. we do expect growth to slow heading into 2019. there are really two reasons for it the first is that the tax cuts of early 2017 boosted growth a lot this year. but i expect that to diminish moving through 2019. the second is that we have seen a notable tightening in final conditions over the last month or so. we also think that will weigh on growth we have growth going from about 3% at the moment to a little bit below trend at 1.5%. >> i want to pick up on the first point, the fiscal stimulus subsiding. that's something you've been saying all along we got the stimulus from the spending package yesterday i had a panel with two congressmen. one thing they seemed to agree on is the democrats would be

open to the idea of an infrastructure package if that discussion were to materialize and we would get a infrastructure package delivered in 2019, would that pose upside risk to the growth forecast? if we were to see an infrastructure program, i think that would be right. we are skeptical we will see that i think both parties would like to see that, but the details are somewhat different so we think it's going to be fairly difficult to find common ground on an infrastructure program in the end regardless of the election outcome >> also let's not forget the running up into the debt ceiling yet again for the 50th time. stay with us we'll continue the conversation in a bit french finance minister

bruno lemaire urged the eu to agree on a digital tax by the end of the year. he said taxing large international companies is a red line for his government but it remains open on the implementation google and facebook have agreed on a new set of principles it will require internet firms to respect privacy regulations and keep the internet free >> for a long time, 20 years i thought all i had to do was keep it free and open and people would do wonderful things. there's wikipedia, wonderful things th then, in fact, if you talk to people on the street there's been a big change. >> karen is live from lisbon it's interesting some themes coming up is digital taxation,

and the other one is actually trust in these tech companies and how peoples expectations of social media has evolved over the times. also over the last year or so. >> they are all major points we are hearing different angles from how academics try to bring you platforms into the mix that might change conditions for consumers, also talking about how business still makes profit. also what regulation is coming into force on that note let me introduce the european justice commissioner good to see you. >> thank you for having me >> one conversation we had at the start of the conference was from the man who created the web in 1989, he's concerned about how data privacy is evolved. i know europe made enormous

steps with gdpr. what comes next? i gather you're working on greater protections? >> we heard yesterday that the initial idea was that the internet will bring more humanity for people. instead we see the abuses of private data, which is my identity, that's me. that's why we have gdpr and we want to bring back under control of each individual what's happening to their private data when they disappear somewhere in the virtual sphere so gdpr is our response. i hope gdpr is future legislation. we want to bringit back to the people to have it under control. we mean that we want the digital industry to be compliant

it's fine for me to hear on this play that the business has taken this seriously that the giant digital companies are fully aware that if they do not respect the right for privacy, the business will go wrong. >> do you think the rules have gone far enough? some consumers don't care. others do. if you care, it's hard to opt out. there's still data gathering going on in the back drop. you see it you are targeted with marketing, with advertising something is still clearly happening in the backdrop. >> yes, people should be more careful about where they provide data they should be vigilant about what kind of communication is ongoing. very often people tell me we got the question -- or the request for consent, we didn't know we had any contact with some company or some entity

it's not only compliance from the side of the companies which is needed, it's the vigilance and carefulness of the people. we still have to explain better that the gdpr is bringing new rights for the people. they should use them actively. my personal view is that we should not create some new society of paranoid people, but to be more careful it will be a very important element of the success of gdpr >> it's one thing to be targeted with ads, it's another to have targeted content around elections. election meddling has been an enormous issue there was a warning from the former cto of facebook that nothing has changed despite all the scandals, all the hearings on capitol hill. regulations in europe. nothing changed and election

meddling can still happen. how can you see that the simis not fire proof >> in the european union we're understanding that we must not allow this to happen in the case of european elections coming next year. free elections are the basic element of democracy we have to do everything we want the idea sector to take alerts from states in case foreign meddling is up and running. we want the people to be more resilient, able to use the krir critical thinking regarding some alerts or news coming to their ipads.

we want to apply the rules for political marketing, which apply for offline as well as online. so we have adopted a series of recommendations, which the member states should take seriously and apply before the elections. >> speaking of the member states, talk about digital taxes. there are two layers to what europe is trying to achieve. one is a longer term reform about taxing revenue and sales where that revenue is generated, the other is an interim digital tax. there's a push by a number of didn't parties in europe for their own taxes. how long will it take before europe has a digital tax or will it be a job to come up with

universal tax? >> i think we have an important task ahead of all of us. as far as i understand and listen to the opinions across europe, everybody understands that the tax should be placed where they are started and if they are using the private data of europeans, part of the money should stay in europe part of this money should be reused for better or stronger resilience of the society against thepossible risks whic come from daj taigital spheres we will have lots of important debates with the heads of

states, with the relevant stockholders in the states, but the determination of the european union to take this step is very strong >> thank you very much for your time here today. let's toss it back to you. digital taxes, one issue is whether they could be retaliatory tariffs coming from the u.s. that seems to have stalled some conversations, particularly from the german perspective who are concerned that the car industry could be targeted. the nordics are concerned about how this taxation would be put into practice. it doesn't feel like it's happening in 2018. it still might be a story for 2019 >> and it's coming at a time when the eurozone economy started to slow a bit. coming up on the show, italian officials refuse to make changes to its 2019 draft budget

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eurozone finance ministers have pressed italy to abide by their rules, but giovanni tria is sticking to his guns. willem, i believe you spoke to him? >> i did i said what happens next tuesday if rome refuses to make revisions to the draft budget proposal this is what he told me. >> we will have some disagreement, but this doesn't mean that we can't have dialogue between the commission and ital italy. >> do you feel like italy is being unfairly target the in these dialogues compared to the behavior of countries in the past >> we'll have to wait for the commission i don't want to have an anticipated answer

>> during the latest economy financial meeting, i asked whether there was room for interpretation when it comes to how european rules are applied to the situation like we have in italy. here's what i was told >> rules can be interpreted, and i myself was always and i'm still the defender of some flexibility because i think that we must not have a rigid approach but one thing is to be flexible. the other thing is to be against the rules. our flexibility has always been there, especially for italy. if you are out of the framework, it's not a matter of flexibility, you are outside the rules and you need to do something else this is something that's not the role of the xhicommission the commission is there to make sure treaties are implemented. when you may tennis, if the ball is just touching the line, it's

borderline the point is there if the ball is totally outside the court, no referee, even a blind one can say that the point has been won so rules are there to be interpreted. we're not there to say we'll implement rules halfway. that's not how things are done that's why i expect, again, strong answer from the italian government by the 13th of november and we will continue discussing all the way around >> he may be waiting in vain for that revised budget to come from rome he wouldn't speculate what would happen next, but there are rules in place to guide the european commission as it responds to a country that is refusing to bend

to its will. this could end in financial sank shups down the road. -- sanctions down the road. >> willem, thanks for bringing us the latest from brussels. how do you see this italian european standoff playing out in the end? ultimately because it's europe aren't we just going to get to some form of a fudge >> i think that's probably right in the end in the near-term tensions are quite elevated so we think that in the response next week the italian authorities are probably not going to back away from their plan to increase the deficit then we'll have to see what happens from there we think things might have to get worse before they get better in terms of market pressure. tensions are still quite

elevated >> how bad is worse. already we look at the q3 gdp numbers, disaster already. we have had a sovereign yield widening, how bad do things need to get does italy need to tip into recession? do sovereign spreads need to widen out beyond 400 basis points for politic iticians to reacting >> i think market pressure is key for markets to signal they're uncomfortable with the prospect of a rising debt to gdp ratio in italy ultimately it's about the outlook for debt and the sustainability of debt of course as you said, the economic growth numbers are important for that outlook, too. those have been on the weaker side i think it's really that mix that is going to be important for the outlook knitly >> do you think things will ever get so bad that the ecb has to

blink? i spoke with the belgian central bank governor yesterday, i was trying to eke out a response on whether or not this would have a bearing on their asset purchase program. ultimately if things get bad, the ecb will have to delay withdrawing monetary stimulus. >> i think for now the ecb is still on track to go on with the normalization procedure to end the purchases at the end of the year then we think hike towards the end of 2019. as you said, i think the risks to that, particularly the rate hike in 2019 are towards the later side so i do think that is going to be an important discussion over the next few months. but it also depends importantly on how the growth numbers evolve in europe, how the i flahow theo

number evolve. >> thank you for joining us today. u.s. is the focus today, but italy still very much in the backdrop coming up, find out why several major media groups have stopped airing a controversial ad from the trump campaign more after this break. (vo) gopi's found a way to keep her receipts tidy, even when nothing else is. (brand vo) snap and sort your expenses with quickbooks and find, on average, $4,628 in tax savings. quickbooks. backing you.

welcome to "street signs. i'm joumanna bercetche these are your headlines hours to go until voting opens in the midterm elections but a race row over a trump ad mires the campaign push. >> if the democrats take power they will take a wrecking ball to our economy and the future of our country. the dynamism of world trade has been damaged, that's the warning from dhl as the parcel division weighs on third quarter profits. >> the u.s./china trade doesn't play an important role we will not be hit by that in

particular. adecco shares hit a high note beating third quarter profit estimates despite challenging economic conditions. and a fashion faux pau zalando cuts its outlook after blaming a hot summer for its weakest quarter ever for sales several media organizations pulled an ad from the trump campaign which many called racist the ad tries to link an mexican immigrant convicted of murder four years ago to a group of central american migrants. speaking to reporters, president trump batted away concerns about the ad >> you're telling me something i don't know about we have a lot of ads

they are effective based on the numbers we're seeing >> why did you want that ad? >> a lot of things are offensive. your questions are offensive sometimes. >> tracie potts joins us there's so many things i want to ask you. first i want to ask about turnout and expected turnout of this election. traditionally midterms don't garner a lot of people it seems this time around mob e mobilization is high and indications from pre-voting showing that mobilization is up from 150% to 200% already. >> exactly we have 35 million votes already cast, in many areas that's typical of what's in a midterm you're right these elections, off-year elections between the presidential elections often they don't drive out a lot of

people that's different this year it could determine what we see today. president trump has been out campaigning a lot. he wrapped it up in missouri last night, even though, as you show, more than half of americans disapprove of his job performance. but he is still driving out huge crowds for republicans in hopes that they can retain power here. >> i want to ask you about some of the key spring states going on the latest polls, roughly prediction websites are estimates there is a 60% chance where we end up with a split congress, but there are about 16 swing states what are some of the key ones you're watching out for as these results start coming out today >> sure. >> some of these races are tight. in the south we have some states like missouri, for example,

where a democrat is trying to hold on to her seat. in texas, ted cruz trying to hold on to his seat with what seems to be a fierce challenge from a democrat there. indiana, ohio, a number of states out west and in the midwest that could tip the balance of power the magic number is 23 if democrats can pick up 23 of these seats, they can actually gain control as you note, we would have a split congress, assuming they don't pick up enough seats in the senate the polls are not predicting that, but in the house it could happen we could have a democratly c liy controlled house with a republican senate. >> tracie potts, thank you. i sat down with two former u.s. congress mmen and i asked

about the divisive political rhetoric in the u.s. right now and how it has impacted the midterm elections. >> the division is not as much among the members of congress as it is that they reflect division in the country if members of congress are punished for working across party aisles, you're going to see less people willing to stick their head up and do that even though they recognize it's in the national interest on a variety of issues. if on the other hand the public supports in both parties people who are willing to work across the aisle, then you'll see more of that. it is a representative democracy. the people are divided in other times in our history it's reflected in the congress it can be dangerous if it gets out of hand with what we saw with the civil war >> are we going to see a blue wave >> certainly a blue ripple

it's not going to be a tsunami it may be a wave but probably not as much of a blue wave if there had not been the supreme court hearings >> one final question to you both if we end up in a situation where republicans end up losing a lot of seats, do you think the republican party as a whole will take a stance as the president and that room may open up for an alternative conservative voice that is not necessarily the trumpian voice >> i think it's unlikely we'll see. if it's a large -- or maybe if there's 100 or more democratic majority in the house, that

might be possible. the republican base seems to be united against trump >> 35% of the base >> yeah. but we'll see. i don't think it's too likely. >> joining us for more is professor rosprooa professor. typically you wouldn't see this many people fired up and ready to go, across all demographics, but particularly among women what do you think that is attributed to? >> after the election of donald trump, we saw perhaps the biggest global march of women. that was in direct response to the accusations of sexism around

drum thap mobionald trump that d women. >> the presidenew poll shows 64 women fi women would win against donald trump in an election right now >> these midterms are being called the year of the woman, which has not happened since 1992 we have more women standing than ever before. let's see what happens we might see, again, perhaps not a surge but a ripple of more women elected, which will be a good indicator what are the parallels between

today and 1992, which is the original year of the woman >> in 1992 there was the clarence thomas hearings, where anita hill accused him of harassing her. we saw that parallel and also the year bill clinton was elected and accused of infidelity and harassment to some extent. a huge number of women running in '92 >> but again, to bring up the supreme court nomination, kavanaugh, which is the most recent parallel to 1992, if anything it seems to have incentivized the republican base to get more riled up you saw i was having this debate with the two congressmen, and the democratic congressman said if it was not for kavanaugh perhaps democrats would be more ahead in the poll. it seems the way the democrats handled the kavanaugh hearing has backfired?

>> not necessarily among democrats. women democrats are standing it's a much more flat line against republican women standing this is a phenomenon of the fact that democratic party has taken on this mantle so women are divided, but white women are more hostile to trump than white men are >> again, turnout is key many metrics suggest that african-american women, millennial women are less likely to show up do you expect them to show up this time around >> i think we've had surprises recently not least the election of donald trump. often those surprises have do with turnout when you get groups of people who don't normally turn out turn out to the polls, predictions don't hold out so tomorrow if some of those people turn out, we could see a real difference if they're

disaffected and fed up with politics being the way it is, republicans should do well >> in 1992 you said it was the first year of the woman. >> called that >> we may be getting a repeat of that now what happened in those 27 years? what's happened since then that women continue to be underrepresented in politics why has the momentum not continued in '93, '94, '95, et cetera >> it has to an extent after the elections in '92, women went from being about 5% of congress up to near 10% now women are near 20% of congress so there has been progress, just much more incremental. one of the reasons we may not see much change tomorrow is women are challenging against male incumbent candidates. so change is gradual

>> one interesting thing out of this survey is the public is keener on non-establishment women. so like an oprah winfrey stands more of a change than somebody like a hillary clinton or an elizabeth warren what does that tell you >> that is reflected internationally, a rejection of the political establishment and outsider candidates on the left and right being more attractive to many people >> professor, we have to leave it there thank you very much for joining me and for this all-important discussion about women as well as we head into the midterm elections. deutsche post reported third quarter net profit of 146 million euros, a 77% decline year-on-year on the back of weakness in its letter and parcel unit. the company backed its full-year

guidance and tsaid it was progressing swiftly with restructuring plans. shares have been under pressure since a regulator refused to raise postal fees. >> the postal world and mail, if you deliver mail, you deliver to every household every day. that's a fixed cost base we have increasing salaries, transportation costs and a declining volume if you have to continue to invest as we do because we have a service obligation, you will see declining profits if you can't adapt pricing. actually in all businesses you increase prices along the lines as we do in other industries so we have to have a right do that >> zalando shares have sunk to the bottom of the stoxx 600 after an unusually warm summer and increased costs are said to have weighed on earnings the retailer post ed its slowest

rate of shaales growth in a decade sales grew 12% in the third quarter. zalando cut its outlook twice amid increased competition from h&m and amazon pandora shares are under pressure after the jeweler disappointed on earnings and cut its full-year sales forecast for the second quarter in a row. the company says it will review its strategy as it abandoned its long-term revenue growth target of 7% to 10% coming up on cnbc, artificial intelligence is increasingly present in every day life, the best way to determine ai success is the cheering test. >> this is gum-gum, an ai company which uses machine learning to read and analyze

images, creating data sets which help businesses to identify ad placement opportunities. to demonstrate how powerful ai can be, gum-gum devised a cheering test which uses art instead of text. >> we were curious to find out how artificial intelligence could compliment the creative process. so we have a machine producing a piece of art based on the same parameters we've been giving them this is what we have in front of us today >> how detailed was the algorithm that went into the computer program >> the dataset was made up of a dozen pieces pieces of art from american 20th century, abstract expressionism. this is what was given to the machine and illustrators to work

with. >> reporter: it's considered the create i ive industries will bes disrupted by the fourth industrial revolution. this seems to indicated the type of program we're talking about here could be disruptive to creative industries looking to save time and money. >> i don't think it's replacing or mimicking the human brain, the role of ai is to help you become more efficient and productive >> to find out if karen could tell which pieces of art were created by artificial intelligence, watch tomorrow on the brand-new episode of "the edge." 23:central european time. i want to bring you flashes out of the kremlin a kremlin spokesperson was asked about alleged interference in u.s. midterm elections

and he said we can't react and they will be monitoring the process. he was also asked whether or not putin wi putin would be meeting with president trump in paris this week president trump is flying to paris on friday for the armistice on sunday, and yesterday president trump said it is unlikely he would meet with his counterpart but this spokesperson said that putin and trump will still have a brief meeting in paris to discuss possible bilateral talks sometime later but that a meeting would have been difficult to arrange in paris, but they may have a side discussion there was also some talk of that happening at the g20 where the president is slated to speak with xi jinping as well. coming up, the u.s. and china are taking a first step to

solve trade tensions find out more after the break.

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welcome back the united states and china will take another step towards thawing relations this week holding a top-level security meeting on friday. the talks between jim mattis and his counterparts were originally planned to be hold in october but delayed at the americans request as trade tensions rose the dial loss comogue comes ahen expected meeting between president trump and chinese president xi jinping later this month. this morning lee said globalization faces unprecedented challenges but that china will continue to open its economy. and comments right now from premiere lee saying that trade frictions are affecting world

trade growth, china will not resort to forceful stimulus but they will implement proactive fiscal policy and push tax cuts. eunice yoon joins us from shanghai where earlier she toke -- spoke to a key u.s. ceo who is bullish on china. >> right now i'm standing in front of the world's longest coffee bar it's no surprise it would be here in shanghai, outside of the united states, that is the market that starbucks is focused on for the future. as you mentioned there is a bit of a trade war going on, souring relations between the u.s. and china. so i asked the ceo, kevin johnson, about that and if he saw impact on the business >> starbucks has been in business for 47 years. we now have 29,000 stores in 78

countries. there's also something going on in the geopolitical situation. we learned to navy gaigate thos things it's not impacted our business and we're staying focused on things that we do well bringing a premium experience around all things coffee to customers. >> johnson said despite the trade dispute there's no reassessment of starbucks commitment to this country long-term. these days the company is focused on delivery. food delivery is huge in china back in august the company talked about an initiative with alibaba, where customers can now tap on an app and have starbucks coffee delivered to their doorstep in 30 minutes what's interesting is that there are a lot to of places that can deliver coffee johnson said what makes the

system unique is thatre reengineered the packaging, so the condition of the coffee is the same as if you were at this long coffee bar in the store in terms of numbers, the company says since august, 1,100 stores offer delivery, about a third of stores here. and they plan to up that number to 2,000 by the end of the year. johnson said that the innovation he sees in china is so leading edge he expects to apply what he says here to digital strategies in other countries as well, including the united states. >> if they need a guinea pig to deliver coffee in a half hour, i'll put my hand up. thank you for the latest adecco has seen revenue growth half in the third quarter.

the figure fell from a beliepres reading of 4%. the group's net profit more than doubled in q3 thanks so its sale in beline holdings shares in morrisons have slid after the supermarket group saw third quarter sales growth come in below analyst estimates. like for like sales excluding fuel rose 6% the stock is down about 6% a quick look at u.s. futures, a very important day for the u.s it looks like markets will open up slightly in the red that's it for today's show i'm joumanna bercetche "worldwide exchange" is coming up next. (vo) gopi has built her business with her own two hands.

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it is 5:00 a.m. in washington, here's your top five at 5:00. more market volatility is ahead. a lot it happening the next 24 hours, we'll help you navigate it the midterms and your money. under armour under pressure. a bombshell story about the spor spor sportswear maker an strip clubs. starbucks on the record. the coffee chain ceo talking to cnbc about plans for its growth in china. call it the apple effect