Make their singhas biggest theye day moves as move toward a brexit deal. President trump says u. S. China trade talks are going very well. They continue in washington today. Plus, reports of an explosion on jeddahian tanker near send oil prices spiking. Matt we are 30 minutes away from the european open. I have got those oil prices on my screen. This is a threeday chart of brent crude. It has been climbing anyway on optimism for a u. S. China trade deal, so it was already up to almost 60 a barrel. Now it has jumped over that at 60. 40 on these reports, first from reuters, then from the oil news agency that i missile has struck an oil tanker and it is leaking oil into the red sea. Lets take a look at futures here. Weer we saw stackocks rally, are seeing futures rise on european indexes as well. On thet on the dax, and continental indexes, gaining when you have a big rally in the pound, then you expect to see a loss in equities, that negative correlation. Is it breaking down . I know you were talking with the possibility of a breakdown. Anna certainly that was around the no deal story, so it does remain very intact as we have seen the surge in sterling. As you point toyed the negative committee as you point toward the negativity. Risk assets are clinging to the positive. The reasons to be positive rather than jumping on geopolitics and the nervousness around oil prices and saudi violence. That is clearly moving the oil prices. Other markets looking beyond that, looking at places to be helpful. Trump says talks are going very well, a pathway to a deal on brexit seems to have revealed itself. Lets talk about what is going on in the markets. We have moved to the asset moves to the upside in assets. It is very clear to see on the gmm. We can see the story on commodities, we have brent crude rising, wti rising. That is all to do with what is going on in iran, plus to do with the Global Growth story. It had been on the rise already. Plus the message from the secretary general of opec said whatever it takes to prevent a slump in oil prices. There is a lot going on. Managingberg markets editor joins us in singapore. We mentioned the individual stocks stories, but the market clinging to these troves of optimism, both on trade and brexit, rather than being derailed by geopolitics. Your thoughts on the trade narrative as we go in toda day two. Guest there is an immense amount of positivity. There are hopes there will be a trade deal. On brexit, we had the most optimism we have had in a long period of time. In the last hour or so, i received morning notes from u. K. Commentators and previous cynics, expressing more optimism than they had seen before that because the irish side is standing up, that means they are having faith. The narrative is going to the fact that there may be a brexit deal. The narrative is in the camp that there will be a mini deal. It does not change the fact we have this massive data global slowdown. As we get this many trade deal, if it does not remove tariffs it will not be sufficient to change the story. The bigger backdrop remains strong as ever, but i would say that the asymmetrical word is for more disappointment. You probably should have seen there will be some sort of trade deal. We have a surge higher in stocks. There is some reaction still to play out. Matt a many trade deal is easier a mini trade deal is easier for me to envision than a brexit deal that solves the irish border problem. Isnt this a chance to make some money selling the pound . I think both deals are very feasible. I think the eu has a history of going against the wire and ultimately getting the save the bacon. That would tie in with a lastminute brexit deal. The nuances and subtleties around the u. K. Politics story are immense and too much to discuss in a five Minute Program , let alone a several hour program. Many people believe that Boris Johnson ultimately will be happy if he has a deal. That means he can deliver brexit, and that would help his support base. The fact that ireland is standing up gives me faith that there may be some deal before the deadline. The base case is both sides probably want some kind of deal. They are both negotiating. They probably want some kind of deal for the sake of the economy. I think the positive narrative makes sense, but both are massively uncertain and the downside of a no deal brexit, it is not priced. If there is a no deal brexit, it would be cataclysmic for assets. Do not make the mistake of thinking negativity is priced, absolutely not. It is the same with a trade deal in the u. S. Some progress is assumed that if there is a complete progress and no sign of further talks it would be terrible for u. S. Assets. While the positivity is understandable, the downside is very scary if something goes wrong in either case. Anna i came back from dublin wondering if the irish wanted a delay and the chance at a second referendum rather than a deal, but the optics do not seem that way. Let me ask you a question because i think it is interesting. It will test your faith in the rally we are seeing in equities. Even with an agreement between the u. S. And china, do you think it is comfortable with the bull makrket and the data . There is a loop between the two. There is a loop between the trade conversations and the weakness in the macro data. There is no chance of this bull market continuing. I have been in this camp for several months. Formately, what we need this bull market to continue is the removal of the tariffs that are already in place. I do not think an agreement of andval for huawei nonescalation of tariffs is sufficient. Manufacturing is starting to broadero the economy. Unemployment will start to rise. We have too many Major Economies in recession or getting very close to it, places like germany, the u. K. , south korea. That is heading into the bigger economies. Deal will not save this bull market. To the mean you can get top in the shortterm. I dont think we will make a new record high again, but if we do, it will only be marginal. I think we can see 300 up on the s p if we get a mini deal, but i would not expect us to be there long. We would get there for a day or two and people would say, what has really changed . Tariffsx will the will remain, Global Manufacturing is declining, global trade is declining. Earnings are misaligned. The earnings projections for next year are completely fantastical. They have not been cut yet. All those earnings forecasters think the growth is wonderful and there has been no trade war. The bull market will not continue unless all those tariffs are removed. Matt awesome to get your view. Thanks for joining us. Mark cudmore, bloomberg mliv managing editor. You can follow their work by typing mliv on your terminal. So far, so good. China expressand optimism after a day of highlevel trade talks in washington, but analysts remain skeptical. We will talk more about this next. Remember, Bloomberg Radio is live on your mobile device or on dab digital in the london area so you can tune in as you drive to work or anytime. This is bloomberg. Back to bloomberg markets. This is the european open. We are 17 minutes away from the start of catch trading. See ftse trainings down, we see ftse trainings down. Gaining on trade optimism. Lets get over to the oil futures right now and see what they are doing as well. Extending gains following ian tankerat an iran was shot by a missile, according to the oil Ministry News agency shana, and it is now leaking oil into the red sea. Annmarie hordern has details. Annmarie we are learning that the ship has been halted and the staff are safe. This risk premium coming back into the price of brent, which is trading north of 60 a barrel. We are up nearly 2 on the price of brent. This oil tanker was about 60 miles off the Saudi Arabian coast near the port city of jeddah. Shana, the oil ministrys own newswire, said it was attacked by missiles. I spoke to an oil analyst, and she is saying the market has been way too complacent, overly complacent given the fact that we are one security incident away from a conflict. Talks aboute had the threatening of the escalation, and if that were to spiral out of control. All this comes as we have had serious escalation of tensions in the region, given those massive attacks on saudi arabia. Seemed to be struggling shrugging it off. I have been asking ceos, is there too much money in the market . They are focused on the demand picture. Annmarie hordern with the latest. Lets get a first word news update. The u. K. And eu are a step closer to determining the terms of a brexit deal after a positive meeting between the british and irish Prime Ministers. Leo varadkar urged negotiations brussels. Talks in the discussions continue to hit a major stumbling block. What to do about customs checks at the irish border . There was a meeting today with the Prime Minister and our teams together. Very positive and very promising. Now i am absolutelynow i am absd that will ireland and britain what there to be an agreement. That is in the interest of the European Union as a whole, and i see a pathway to the agreement in coming weeks. Now to syria, and President Trump is pushing back against bipartisan criticism on his decision to have u. S. Forces pullback. Let turkish troops move in and attack kurdish forces. Trump says he is carrying out his Campaign Promise to stop u. S. Involvement in endless wars. But critics say he is exposing loyal allies to the risk of slaughter. Europes biggest Carbon Dioxide polluter is going green. Cutsays it wants to emissions by 70 by 2030 four foregoing Carbon Neutral. Going Carbon Neutral. We spoke to the finance chief of germanys largest utility. On a are going to embarq huge transformation and going to become Carbon Neutral and have a very diligent carbon reduction path from now to 2040 with clear measures. Of course, it is not the goal in itself to reduce carbon emissions, but also to compensate the lost Power Production by significant growths in the reusable space. Reporter global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt . Anna thank you. Trade talks between the u. S. And china will continue later today. President trump will meet with chinas top negotiator, liu he, at the white house. That is after an apparently positive first day. This is how the president described it to supporters. I am dealing with china right now. They are in washington. We are going to see if we can make a deal. But they want to make it. We will determine whether or not we want to make it, but they have been very nice. Anna Kathleen Hunter culvers politics for bloomberg and joins us on set. How optimistic should we be here on trade . The markets seem to have decided to be optimistic about some kind of deal. Reporter i think this is positive news, however i would urge caution because i feel like we have been here before. It is telling in the tape you just played. Here we are, trump has promised a trade deal with china. The 2016 campaign trail, promising a deal. There are Political Forces here, and that is important to keep in mind. Matt what kind of deal do you think trump would accept here and china would give him . What do you think we might see . Oforter there has been talk a currency path, a first phase deal. That has the effect of leaving the more difficult issues for later, and allowing both xi and trump to claim a shortterm victory. Particularly for trump with 2020 coming up, that could be a really positive thing because he is being hurt in firm states by the trade war. If there is an ability to reach a shortterm deal, that would that some of the tariffs take effect later this month. I think that has very clear up shots for trump. Anna we talk about the timing of all of this, 2020 and the election. Clearly they are linked. Some people are raising concerns as to whether you can remove all of the impediments to global trade that have been put in place in time for 2020, whether impact onve an an the ballot box. Remind us of why exactly this is tied to his prospects in the campaign. Kathleen in some of the farm states, it is difficult because of the tariffs. Those are rural states where support has been strong, but where democrats are looking to make inroads. To your point, i think that whatever is happening in the economy, on the eve of the election, it will certainly affect trumps fate. I think if he is able to claim of a victory, that will resonate with his base. Matt thanks very much for joining us. Kathleen hunter on the possibility of a trade deal and the position of President Trump. We are moments away from the open. We will take a look at which stocks to watch, including another cut to the ad agencys revenue forecast, showing the industrys woes are not over yet. This is bloomberg. Matt welcome back to bloomberg markets. We have to bring you breaking news on turkey. The European Union is considering sanctions against turkey for invading syria and attacking and killing kurdish rivals there. This according to france. Bections against turkey may debated at the European Union next week. We are minutes away from the open, six minutes to go. Out of the newsroom, Annmarie Hordern is looking at publicis. Publicis. We are covering sap, and dani burger is focusing on hugo boss. What is with the french ad agency . Annmarie they have their Sales Guidance cut again. This is the second time in three months. Oft is taking a bite out this is the traditional advertising. We are seeing Companies Cut spending on tv and billboard advertising. They have not been able to make that up. Anna and what is going on with sap . Announced their Third Quarter results that look pretty good. Revenue went up by 13 , but more important, thei Cloud Business went upr by 33 . That is coming after mixed results. Announcedcompany their ceo is stepping down and will be replaced by two other ceos. Matt danny, you got the story on boss. Dani they cut their outlook for the financial year. Here is where we are seeing concerns about growth affecting companies. They say sales are looking weaker because of growth uncertainties and economic uncertainties, as well as unrest in hong kong. We are seeing shares that are sharply lower. We have seen analysts cut their rating on the stock. Anna thanks very much. Thank you for joining us. Get the you can on the on first bloomberg. We are five minutes away from the start of the equity trading day, and futures will be stronger. The story around optimism, trade, and brexit. The brexit story will weigh on the ftse 100. Matt absolutely, weighing in on the ftse because it is the pound. Otherwise, we see indexes across europe rallying on optimism for a trade truce between the u. S. And china, and maybe optimism from the eu side. A hard brexit would not be great for the European Union either. Britain is a big customer. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Equity trading. 8 00 in london, from the asian session, up i 1 . President trump thanks talks are going well with china as we go into day two. Should we because this and buy into optimism . The pound a subject of optimism around brexit negotiations. Boris johnson meeting their little pull yesterday, and they found a pathway to a brexit deal. S p 500 futures suggesting , ther, also bouncing Global Growth story connected to trade. What is being reported as an attack on a tanker in iran. We continue to track geopolitics there. Currency markets, we will get to that in a moment. They should show up nicely for us on the gmm. As we wait for europe equity markets to get into full swing. The pound is flat but we did see a move upwards at the end of yesterday when the ftse 100 closed. Inverse see the correlation between the pound and the dollar ftse 100. The ftse is down, but do not take that as part of the Global Growth story. 100 down by 0. 3 . The euro stocks fairly flat. Market giving a picture of optimism that has gripped markets in asia. Italy opening up by 0. 3 . We see more green than read. Than red. Staples and health care in the red. We have a risk on picture on markets. Energy, basic materials going higher on the back of the higher oil price. Positive Global Growth drivers there. What do you see in the individual movers . Matt i see more winners than losers, 340 stocks gaining, 235 are down. If you look at the stocks that are adding the most points to the stoxx 600, lloyds bank is there at the top. A british stock leading the pack because lloyds is gaining almost 3 . It is a big stock to begin with, but the bank is up 3. 5 . It continues to gain. Brexit Sensitive Companies may be boosted on optimism for a deal there. You see that evidence and lloyds shares rising 3. 5 . On the downside, nestle one of the biggest losers, and linda, 1. 6 putting up a decent loss. Nestle is not moving much, but it tends to take points off of the index. Linde is not small, we are talking about a 93 billion euro company. Out you are right to point what we are seeing and a large multinationals in london. Banks and retailers are a different story. A different take on the pound of course. A seemingly positive first day of highlevel negotiations between the u. S. And china. We talked to bloomberg guess on how the trade war is impacting the economy. Tomost businesses i talked want to stay number, and they realize there could be new policy pronouncements any time. With that amount of uncertainty, they are not cutting back business, but putting new projects on hold. The other thing they are doing is watching carefully if there is a broader slowing. Abound around trade and economic pressures. You will see more of that on the international side. On the domestic side we have in china and asia. In europe some of it has come down. Part of that is currency effects. Chinas trade deficit is running doubledigit on a combined basis. Of dollars. Ning out china needs a trade deal as bad as trumps presidency needs one. Anna we will talk about where china goes next. Some read headlines red headlines. , beating estimates. Lower sales and profit guidance, we also have news on the geopolitical front. Missiles that hit iranian tanker probably came from saudi arabia. We will bring you uptodate with further news as we get it. We continue to watch Oil Prices Going higher, the market perhaps focused on the geopolitical risk. Geoffrey yu, cio, head of u. K. Investment, ubs Private Banking is with us on set. We will come back to politics that is gathering momentum. Lets talk about trade and the optimism. How optimistic do you feel about a deal between the u. S. And china . Geoffrey going in the right direction, but everything in the context, Different Things for different people. You talk to market participants, what does a deal look like . Is it allencompassing or something partial . What does the white house and beijing want . Maybe moderate progress, no sides need some form of accommodation. Something comprehensive for the next decade is pushing it a bit. Matt the reason the equity index is rising if we think we will get a good trade deal is because the trade turmoil so far has impacted the economy so negatively. Aside from the headlines for day traders, there is no other reason we would want to buy stocks. How much damage has already been done . Ways to there are two look at this, one is the underlying hits to companies, tariffs and higher costs will absorb that nuc margin erosion. Secondly, it is the opportunity cost, how much Global Growth would be better. How much do the u. S. And chinese economies steaming ahead had we not faced the last 18 to 24 months of uncertainty, that is hard to quantify. Growth may be pushing for percent, but now we are talking about 3 . Anna let me talk about currencies in this potential deal. Going back to 1985, that was the u. S. And five other countries. Do you see anything that warrants that . Geoffrey the plaza accord in it andou mention everyone thinks of japan and what that did to japan. We can debate that, but you have had a generation of chinese economist and policymakers who ive the plaza accord find it hard to believe it is chinese not just economic orthodoxy, but all of asia really struggles with that. Anna geoffrey yu, cio, head of u. K. Investment, ubs private on the stays with us program. Up next, stocks on the move. Results, and we focus in on the oil stocks and the rally in oil market as a result of what is being reported as an attack on a tanker, and iranian tanker. We will get more details on that. This is bloomberg. Matt welcome back to the european open, we are 11 minutes into the trading day and looking at decent gains across European Equity indexes. The dax up about 1 . Sap is a huge contributor to that after naming a new ceo. Id not want to steal the thunder of Annmarie Hordern, you have sap on your list. It is jumping more than 7 , Bill Mcdermott stepping down, and two coceos reiterated their fullyear outlook for 201920. Wpp to the downside. Across, cutting its Sales Forecast again, the second time in three months they have done this. Plunging. Absolutely down some 12 , cut its outlook for the financial year. The unrest in hong kong is weighing on their bottom line. They look to make up the hong kong sales elsewhere. A lot of firms are downgrading the stock today. Anna oil also on the move, extending gains after a reported explosion on and iranian tanker in the red sea, that is the biggest jump in three weeks. Geoffrey yu, cio, head of u. K. Investment, ubs Private Banking is still with us. A little early to know what is happening with the iranian tanker, but it is having an impact on oil prices. We find ourselves caught between geopolitical concerns, which are not new, and the Global Growth story. Geoffrey it is interesting. We had made a forecast adjustment to the downside because Global Growth was conservative to say the least. Of thee last round strike on the oilfield, we had to adjust further to factor in the risk which the market is embedding into prices now. We started with a moderately positive outlook. Story. Just a demand forecastlike to get a on a longerterm pressure to the downside pending the trade war resolution. Matt speaking of problems with 5 , in case anyone is holding that. Unfortunate if you are. Decent drop because of the cut forecast. What do you think about the supply side of oil . The saudis were able to get production up weekly after the attack last month. Production has easily fill the gaps. Supplies seems like there is no problem, and that does not weigh on it. Geoffrey i think we need to separate the ability of supply to react to shortterm shock in the market. The supply shock is compared to previous instances, given the advent of the u. S. Market able to fill that gap quickly. If we take it geopolitical risk premium, perhaps the market was in position to be oversupplied when we had the last at the end of 2015. That has been contained. Geopoliticalthis impasse, and we need to focus on supply and the underlying demand , and we need to know that will be soft going into next year. That is what the suppliers need to bear in mind. Anna we will see with the trade talks deliver and what the chinese growth number is. Geoffrey yu, cio, head of u. K. Investment, ubs Private Banking stays with us. In a week that saw markets equities arebal looking to end the fiveday change. Here with factors to watch is dani burger. Dani this week it was about momentum coming back in full force. Over the past week, factors globally, momentum posting return up to present, and momentum and growth are doing well. We see values fall, they did well in december and now it is starting to lag. Cheaper stocks in the value bucket. This has been one of the fastest resurgence is of momentum in history. When we see that, we see a lot of volatility come into the market. Lets look at other calls that strategists made this week. Bernstein said the calls for value to be dead is not true, value can have had return, but look out for companies with good free cash flow. That is the value metric they look for. Nomura says it is about growth, and that will be to the detriment of value. Jefferies says value is going to continue its september rally. Look out for this to happen in small caps. Matt very interesting, dani burger looking at the factors to watch. Coming up, is there a light at the end of the tunnel . U. K. And irish leaders indicate a possibility of a deal after they talked. We are live in brussels next and discuss whether this can get negotiations back on track, and what we can make of the irish backstop. This is bloomberg. Anna welcome back to the european open, we are 20 minutes into the trading day and the brexit affect clear to see on the equity markets. The ftse 100 down by 0. 6 . Elsewhere we rally on trade optimism. On dollaris impacting corporate earnings on the ftse 100. Hopes arising the u. K. And you can strike a brexit agreement, the pound has jumped the most in seven months. Joining us from brussels is maria tadeo. Is there renewed optimism in brussels about the deal following what we heard . Optimistic words. The tone of the conversation has changed. A few days ago, there was the controversial readout between a conversation between the Prime Minister and Angela Merkel. British officials were saying Angela Merkel had given up on the deal and it was unlikely we would get there. Yesterday it was a different , the issue is a joint statement. They believe there is a way to a deal, and Everyone Needs to find the light at the end of the evenl, but it is possible with the hard deadline coming october 31. Matt previously the big obstacle was the backstop, what is the obstacle now . Issues that are two have to do with the fact Northern Ireland would pull out of the customs union. There are question marks as to how that would work. Europeans are concerned about that four years vetoed the Northern Irish assembly would get. This assembly has not met and almost two years. , and theclay meeting task they have is to prove that optimism, and turn it into something that looks like a deal that european leaders can take a look at when it comes to the thursday make or break summit. Tadeo innk you maria brussels. Geoffrey yu, cio, head of u. K. Investment, ubs Private Banking is still with us. It is always the case you have to look at the hood of the ftse 100. We see a continuation of the negative correlation, but within the ftse we see domestic stocks going higher. Is this premature . Homebuilders, retailers moving higher 4 on the back of this optimism . Geoffrey i think that is sensible because the odds have beingd toward the market able to see a negotiated deal. The confidence points to a stronger rally if that will be the case. Lets see if the numbers in parliament add up, or if we need confirmation. The problem for theresa may was getting it through parliament. Matt what do you think about ftse exporters . Is brexit a bigger problem for them than the u. S. China trade deal . Geoffrey probably about even. They will be focusing more on the trade side. Exports have limited exposure to the u. K. Economy. Brexit isart where more relevant is Exchange Rates and earnings translation. The u. S. China trade issue cuts through Global Growth expectations and investment plans. That is the bigger deal, but broadly speaking they will want to call up their treasuries. Anna interesting to see on the downside, sticking with the ftse, wpp falling by 4 . They cut their forecasts again. This tells us something not positive about Global Growth. Geoffrey there will be no Global Growth and Companies Investing in advertising, this has been the longerterm trend. They are catching up with innovation. Global growth is weighing on multinationals, that much is clear. Individual companies will have idiosyncrasies to worry about in the domestic market in the u. K. , but globally is impacted by the trade side of things. Matt is the consumer in europe spending . Geoffrey they could be spending a lot more. It is not whether they can spend, the numbers right now are pointing to softness, not just in europe but globally as well. The Balance Sheets are healthy. If you look at germany and the u. K. , unemployment has been low, wage growth has been rising above inflation in real terms. Yields are why bond where they are. It is about lack of interest. Will demand come from trade talks or the fiscal side . Anna geoffrey yu, cio, head of u. K. Investment, ubs Private Banking, great to get your perspective this morning. Geoff will continue his conversation with us on Bloomberg Radio for the next hour, that is where you will find matt and i. Oil extends gains after a reported explosion on an iranian taker. Iranian tanker. We will focus in on this explosion. More next. This is bloomberg. Matt lets get the bloomberg headlines off of your terminal. The pound gains and dilts make their sinker single biggest move ever as Boris Johnson was closer to a brexit deal. Equities get a boost as u. S. Try talks are said to be going well. They continue in washington. Explosion on of an nian oilnian ira tanker send crude prices higher. Welcome to bloomberg markets. This is the european open. I am matt miller alongside anna edwards in london. Anna half an hour into the trading day. This is the picture on the stoxx 600. If we break it down by the upside and downside, 425 moving higher. So two thirds moving to the upside. We are up. 6 on the stoxx 600. A lot of optimism around trade and brexit and that is impacting domestic stocks. Story. He earnings there are many paths to the equity picture today. Sap is the biggest gainer. They put up numbers and a change of the top in terms of the management of the business then we have got a host of names that are really connected with the u. K. Economy. Whether that is the bank sector, lloyds bank, the construction sector, we have got retail is in here as well. This is all to do with brexit. Even though the move might be driven by the downside, we are seeing businesses doing quite well there we should bear in mind the words of jeffrey you. Shares it is maybe just being pared back as things change, but is it too early to count our chickens . Lets talk about the downside. Down, that boss is spills over into wpp. A lot going on in terms of individual stocks, the trade narrative, and the brexit story. Matt lets get more on the global News Headlines in london. Of talksrst day between the u. S. And china went very well according to president donald trump. He plans to meet beijings top negotiator. They are the first highlevel talks since july as both sides worked to end the 18th monthlong trade war. Both sides seem willing to agree to a partial deal that would leave some of the more controversial issues for the future. Associates of Rudy Giuliani have been accused of violating campaignfinance flow laws laws. That is because of a plan to add the u. S. Ambassador to ukraine agreements and is part of the impeachment inquiry. The fbi arrested two men at Dulles International airport leaving the country with one way ticket. Syria. The eu is floating sanctions against turkey. They will be debated at the summit next week after president erdogan threatened to open the doors for more than 3 million refugees seeking shelter in europe. Ats incursion into Northern Syria has entered its third day. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt . Matt thanks very much. As we have been telling you, oil is gaining after a reported explosion on an iranian tanker. That follows the biggest jump in wti. Joining us from copenhagen is the head of commodity strategy at saxo bank. There has been a lot of complacency in the oil market. Is this going to get shaken out . We are definitely seeing that now. Highlights what a very difficult time this is around the world very on one hand, we have got trumps tweets sending the market up and down and the middle east situation. We saw a earlier that the geopolitical risk premium was completely wiped out. Its just too soon to do that and were seeing some of that being retraced. We know what happened a couple of weeks ago. Anna good to have you. Let me ask you about how long geopolitical shocks last in the market. Our guest was making the point that shale, because they are able to turn the caps on and off, it means that perhaps the impact and for the selloff we can see on geopolitics does not have the same longlasting impact. It most certainly hasnt. We see that particularly after the aramco attack when the markets returned to the previous levels and because the markets are completely gripped by the worries of slowing demand and soonh headed into 2020, as as the market is stabilizing, they realized we arent seeing any actual disruption or longterm impact. Than the market starts to drift lower. Potentially, we can have news from washington on the trade front. If we do get a deal, that could reduce some of that focus in the markets and add extra support to the oil prices. How much of the slowdown in demand growth is a structural . So far, we are not seeing so much of that being structural. Were seeing quite a bit of a slowdown in car sales, so gasoline demand looks quite week. More of the it is general risks to growth in the shortterm that are driving this downturn. Going toil market is face challenges over the coming years. In the shortterm, potentially by not having made a investments. But it is still too early to say. Anna what do you make of the role of opec and all of this . From the secretarygeneral that they would do whatever it takes to prevent a slump. But they still in a position to do whatever it takes . I think they are struggling. Have beenusly supportive and have received help from the complete collapse in venezuela and the continued reduction from iran. But overall, they have to continue to keep tight production over the coming years. Theher they can keep compliance at a strong level for russia compliant as well. If we see the growth in u. S. Share production, we will see it slow a bit. Is still bullish in terms of the outlook. For the tanker attack, we should also focus on the monitor report. Anna thank you very much, head of commodity strategy at saxo bank. Thank you for joining us with that analysis. Another breaking news story is what is going on in the publicis. They lowered the outlook for the second time in three months and are suffering from a long lack of spending they struggle to push into digital market. Marketing. Another setback but there have been others. Good morning. Yes, another gloomy quarter. In july, they had warned that revenue would be at best stable. Now, it looks like its down 2. 7 and things are not looking any better, forecasting a decline of 2. 5 . This could weigh on the future of the ceo who has been on the job for more than two years after replacing the varied has very charismatic cofounder. He has not managed to turn around the company as we go from traditional media and advertising on tv, newspaper, and billboards to digital spaces. He said he had been making tough choices in the shortterm in order to be better prepared for the future, but this is the third time in one year that shares tanked after an earnings report. Matt lets talk about right now for a second. A second. For what is the board wants to replace anyone . It has been one year since the arrest of carlos ghosn in japan. The second in command at the time was seen as the continuity of strategic and operational the time. At but he has also been seen as the last hold of carlos ghosn and clearly they wanted to see some change in third second, there have been reports of tensions between the chairman and the ceo. The ceo has been seen as the architect of the failed merger with renault and field. Even though the chairman did support the idea, he is the one who said we are definitely abandoning the idea. This matter is behind us. Couldy, the french state also want to see some changing governments. The finance minister was telling us in luxembourg that they did not want to interfere, but they would support the chairman of the board. Changes,has to be any it is a very brutal move. He said in an interview yesterday and he found that through the press that the chairman wanted to replace them. Matt thank you. Talking a little bit about what is going on in renault and publicists publicis. This u. K. Bank is rising after constructive brexit talks boost optimism around a deal and the industry. This is bloomberg. Matt welcome back to the european open. 45 minutes into the trading day, we are looking at gains across the equity indexes. The dax is up. 9 more than 100 points. The ftse is down. 3 at the pound gains strength, taking a little bit out of the optimism for a brexit deal in stocks. Trade talks with the u. S. And anda will continue today donald trump will personally meet with chinas top negotiator, vice premier liu he. Positive first day. This is how the president described it to the supporters. I am dealing with china right now. A deal,ee if we make but they want to make it and we will determine whether or not we want to make it. But they have been very nice. The chineseg us is policy analyst at ts lombard. What kind of deal do you expect . It seems a narrow deal, possibly a truce is widely expected. Yes. I feel like we have been here before and when osiris and osaka in buenos aires and osaka. We got a small deal not to hike immediately, but this is not a resolution trade war. Not expecting a comprehensive deal that puts an end to all of this uncertainty. The negotiating sides have hardened over the last month and that trade deal is looking ever more elusive. We reallyooks like arent expecting very much we are just expecting a commitment to not increase tariffs anymore. The rally we are seeing in risk assets suggests the market is looking for more. We wrong to think we could get something on Agricultural Products or fx . Those two things are definitely part ofhe chinese sie expecting an agreement to thehase soybean for example brazilian crop comes in and a couple of months, so they really need these soybeans. There is space for negotiations on the smaller issue, but regarding the structural issues are far from a deal. And thew does hong kong andachment play into this the possibility of a deal . The hong kong issue, interestingly, xi jinping is using the hong kong issue in addition to the trade war month to accuse the u. S. Of meddling with their internal affairs. From the u. S. Perspective, hong kong has not been a big issue with the trade war. What i think is more important is this sudden addition of the xijiang and the human rights issues. I see that issue is being far more important than hong kong. Anna this seems to have come slightly late, hasnt it . There might have been more International Buy in for transplants to change the course instead, he went in on the trade tensions and we see this easing in of the human rights narrative. How successful do you think he in these early stages the early stages . International community is becoming more and more aware of the situation. What this means for the trade negotiations is that, suddenly, they are moving from china being enemy to ac and political and moral and. That is for the perspective of trying to reach a negotiation on the train the. Makes it much more difficult. Anna thank you. Lets get to the stock movers this morning. Annemarie has an update. Update. Rie has an annmarie publicis is plunging after cutting Sales Guidance for the second time in just three months. We are seeing u. S. Consumer companies not spend as much as traditional advertising revenue the digital push is not going as fast. Dartgroup is surging group is a surging after thomas cook entered compulsory liquidation and we could see profits beat estimates. Is up alongside other u. K. Financials. This is after the irish premier said they see a pathway to a potential brexit deal after they met with Boris Johnson they are moving these sensitive u. K. Financial stocks. Matt thanks, Annmarie Hordern looking at the individual movers. Up next, stocks advance on optimism over a trade truce. But is it the most important thing for markets . We put that to richard jones. This is bloomberg. Matt welcome back to the european open. About almost one hour into the trading day. We see gains across europe and the dax index is up 121 points. Stocks really rallying on optimism that a trade deal is going to get done between the u. S. And china. Is because there is optimism of a brexit deal or continue to be discussed. That has caused a rally in the pound which is why you see the stocks dropping. Richard jones, our fx strategist from the mliv t. On trade, theres optimism we deal anda mini optimism there will be a truce or maybe a delay. Is this just a day traders . Deal and optimism there will be atacticas up . It does not seem to really solve the whole problem. There has been a lot of noise this week. The s p futures are a must at the identical level. That to me tells me that this is priced in. We had a lot of noise windows titfortat action. There was doubt into the mini deal being done at the fact that it is likely gets us back to where we are. It meets market expectations. Anna let me ask you the market my question of the day. Gdp matter to assets more than a trade deal . They . O are linked, arent very much so. Expectedade deal is and is already in the price. The gdp does take on greater significance. Trade deal isthe priced, gdp will take greater significance. Matt it really depends a lot on those things. Chinese gdp comes in at 3 , it matters more. If the trade deal is that donald trump and xi jinping merge the two countries, that matters more as well. As far as brexit, i cant understand how traders by the pound thinking a deal could get done when the big obstacle today is still the same, the irish border. Yes, these gains are behind us and it will be buried difficult to add games very difficult to add agins. Gains. The devil might be in the details and i share your skepticism. Anna crunch time. How may times has it been punchdrunk crunch time . Richard joins jones joining us in berlin. You can answer our mliv question of the day. It very much depends on what the gdp number is. Tv is the function to use. And we do see the brexit story impacting European Equity markets. We see divergence direction of the ftse. Matt absolutely. The ftse is still down and european markets are trading strong to the upside. Thats it for the european open. Stay with bloomberg television. Up next, you will get surveillance. Anna and i are headed to radio. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Francine oil jumps after an iranian tanker is damaged. Missiles werei probably responsible. We bring you the latest from the region. As the irishps premier says he can see a way forward. Will positivity extended to brussels . In Global Equities get a boost as President Trump says china weks are going very well meet he meets with the chinese vice premier in washington today. Welcome to bloomberg surveillance
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