Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240713

Controversy, but mark said we believe in Free Expression. We believe in political speech, and ads can be an important part of that. Manus the saudi Energy Manager says mohammad bin salman will determine the timing of aramcos ipo, saying it will be soon at the right time. Yousef it is 9 00 a. M. In the emirates. This is bloomberg daybreak asia least. Im yousef gamal eldin. Manus im manus cranny. The bond market, hoping there will be another rate cut in 2020. December might be a debate. Found by seven basis points yesterday, back at 7. 18 . U. S. Treasuries are a must buy. There is risk to the upside. 2 by the end of the year, it is said. Equity futures taking a little higher in the last hour or so on additional traction on the trade front but now the s p 500 is trading 20 times earnings. Some fanfare around Apple Earnings but caution this rally have beenar and they cutting back on their estimates in terms of what to expect in the coming quarters and you could be seen your end around 3000 according to a bloomberg survey. Lets get the other Market Action. Sophie, what is on your radar . Asian stocks are gaining the hang seng heading toward 27,000 points as we wait on a gdp report that may confirm the economy in a recession. Opix fluctuating after the boj stood pat on rates and drop the timeframe of keeping rates low until at last 2020 spring. The aussie dollar, above 69, set for the best month since january, which may be a headache for the rba and onshore you on rising in the face of dollar weakness, 7. 04 as the pboc brings down the daily fixing. Currency traders are shaking off the soft pmi data for october and china indicating a worsening picture for the sector. To you,ood morning india is up and running. What is the story . Devina the fifth day of gains for the indian equities and more interest on the back of betterthanexpected earnings. The first half of the earnings season has not been a disappointment on the side back of the softer cuts that have boosted the bottom line for most companies will. Theop on the nifty, but sensex is close to alltime 40,312 on june 4 this year. As we continue this move, we could create a new record high on the sensex. Aside from that, most indices are doing well in the session. Ip, Information Technology stocks, one of the bestperforming indices we have seen. Broader markets continue to pitch in. Yousef thank you for that, divina, and sophie kamaruddin. Headlines with annabel. hope seven initial u. S. China trade war are in doubt after ongoing protests to cancel the summit where the leaders were expected to sign an agreement. The white house said it will press to finalize the deal in the coming weeks and event organizers say they have no plans to hold the event elsewhere. They also cancel the Climate Conference for september december. The pentagon released footage of the rate that led to the death of the Islamic State leader. The head of u. S. Central command presented the images of the american attack. He said he couldnt confirm president trumps description of albaghdadi whimpering and crying and screaming when he was cornered. Apple thinks the new iphone will help return to growth in the key holiday period. Projected revenues have beat analyst estimates, signaling solid demand for iphone 11 models and services and wearables. By fallingered revenue in many markets outside the americas and a weaker performance from the Mac Computers division. Twitter is banning all political advertising on its platform starting november 22. Ceo jack dorsey said the move is about stopping campaigns paying for reach, not limiting their Free Expression. Targetss ban political candidates and broadbase lobbies. Two exceptions include allowing ads in support of voter registration. Earlier,to Bloomberg Sheryl Sandberg said the platform she works forward not be doing the same. We are not doing it because of the money. This is less them 1 of our revenue and the revenue is not worth the controversy, but what mark said is we believe in Free Expression and we believe in political speech and ads can be a part of that. News, 24elle global hours a day, on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. Im annabelle droulers. This is bloomberg. Yousef the fed has cut again, reducing Interest Rates by. 25 for the third time this year but Jerome Powell signaled a pause in further cuts unless the Economic Outlook changes, saying he believes Monetary Policy is in a good place. We see the current stance of Monetary Policy as likely to asain appropriate as long incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 objective. Manus the bank of japan has maintained its policy rate and its jgb yield as expected. The timeframe was dropped from for the guidance while cutting growth and inflation forecast. We got a great guest who joins us from riyadh. Martin gilbert, vice chairman of Standard Life aberdeen. Great to have you with us. Thank you for getting up early for school. Lets talk about the fed. A shift in the language, theyve removed act as appropriate to maintain the expansion. Is this the fed trying to regraspsome control some control from the markets in the cycle of cuts . I think so. I think the economy is slightly stronger than they predicted with the last quarters figures. Labor market is strong, so i think they are pausing at the moment. We are unlikely to see another rate cut this year and we are unlikely to see a rate rise, as well. Andink it is just a pause they will hold it at this level the rest of the year. Yousef what does that mean for u. S. 10 year yields . You look at the gtb for additional context. Thatis a story of yields have been relatively resilient in the last couple of weeks but Going Forward, given the indications we got from the fed, would you agree with folks at Janice Henderson investors saying 2 by the end of the year . Martin 2 , i think so. Im not sure why youd want to invest in the 10 year bond at case, the, in any platform is better than european sovereigns, but i would agree with that level. Manus ok, martin. If 10 year paper doesnt wet your appetite, emerging markets. Emerging market currency flow and it is clear the fed is on board, it sets up p. M. On one side for a good bid, but you got the china slowdown to contend with. What are you seeing in terms of the flow into some of the em space you look after at the moment in the company . I think the fund that is getting the most flows is the China Asia Fund at the moment. We are fortunate enough that one , ande biggest in the world we are seeing a large percentage of the flows into that he fund that fund. As i said to you before, i think the china asian market is very interesting. There are Good Companies, good quality businesses and we like a re, so the companies the we are seeing flows into that fund at the moment. I think as for china, we dont really foresee a huge slowdown there. I think the domestic market is holding up growth there. Merits of shows the having switched the economy more towards internal growth rather than export led growth. Thatf let me follow up on because we had a china pmi that came out a few hours ago, and it showed a surprise to the downside. Is the pressure now higher on both china and the u. S. To make this phase one deal happen and how confident are you that will actually come through . Im not convinced we are going to see any big movement in the trade war. I just think it is more deeprooted in the u. S. Than people perceive it to be, and i think it is going to take some time if at all in the shortterm, for any big movement. I think there will be some tokenism, some small movement, but i dont really see it improving in the shortterm. As i say, i think it is deeprooted in the u. S. And popular on both sides of the political divide. Manus martin, can we just take that forward a little bit . An interim phase one tokenism deal, do you think that will push the chinese side to respond more with nuanced stimulus . Im thinking more the low crime rate . Prime rate . What is the response mechanism from the china side . Martin again, i dont think they will panic to much, and the perception is china will make longterm decisions. Extremeit would show an sign of weakness if they did situation,is trade so i dont really see a huge amount there, either on that side of the table. You always have an interesting view when it comes to the Bigger Picture theme seen the World Economy is facing. Europe, asia, or the United States, a general push toward easing. How sustainable is that given how quickly that is piling up and growth is not picking up . Worrying. Mean, it is i dont foresee a recession but i definitely see a slowdown in the World Economy, and that is why it is so difficult for cios, the asset allocators in the big asset owners of the world at the moment, because they just cant work out where the best place to put their money is. They can work out were not to put it, but finding summer to put it is very, very difficult for them. Manus martin, we had a couple cohences, jones and talking about the risk of a warren victory. Accordinguld drop to a survey. Is there enough consideration to a political change in the United States in 2020 . Martin what i found most surprising over the last five how the market has shrugged off geopolitical events around the world. It just seems to carry on regardless of risks in the middle east, risks in hong kong, risks everywhere, and sort of goes on. They are either discounting it or for seeing the future better than we are. Yousef hold that thought. We have a lot to get through. That is martin gilbert. But get a preview of what is coming up next. At ameren joins us to discuss the theater chaind pushing to saudi arabia. Manus the election by line has been drawn and Boris Johnson squared off against Jeremy Corbyn in the first parliamentary clash of the campaigns. This is bloomberg. Yousef more lines coming through in averted berdych busy earning season. Dubai investments hold everything from dairy farms to publishers to real estate. A revenue on the Third Quarter of 691. 3 million. Stock has been range bound since june. Other Market Action in this part of the world, lets the Guitar Center qatar center. For on the earnings action in a second but broadly in the gulf, indices higher, led by abu dhabi. That main index up 1. 9 . The saudi will rise 1. 3 and in qatar and dubai, the main indices rising about. 6 . Lets flip the board because i promised some earnings news and the big mover we have seen in days, shares up 14 in the past two days after positive earnings earlier this week. The emirates, missing estimates and dragging the buy index almost 2 dubai index almost 2 . Reporting profits that almost fell 50 from last year. Finally, watching lebanon because the situation, the crisis is deepening. Banks are set to start back operations today and reopen friday. Yields rising past 39 yesterday. We will have to keep watching that as banks reopen. Ththat. Thank you for squared off at Opposition Leader Jeremy Corbyn in their first parliamentary clash on the election campaign. He choose johnson of cutting funds for the National Health service and planning to privatize it. Wouldn said Jeremy Corbyn delivering economic catastrophe for britain and a second brexit referendum would ruin what should be a glorious year in 2020. Still with us from riata, martin gilbert, Standard Life aberdeen vicechairman. Cable has been on quite a run. Gtv for our clients. It is almost the best monthly performance in 21 months but you cant help but think where the polling companies are going to get it wrong again, thinking of the shock in 2015, but to 16, and the 20 2016, and the 2017 election shock. Think yeah, i mean, i boris has positioned this pretty well. Hes realized the country is andd of this discussion wants it finalized. Hes got what he wanted, which is an election that he thinks he will now get a working majority a, deliver able to brexit and b, have a working termity for the fiveyear or whatever term of the next government is. Manus martin, lets walk forward on the assumption the polls are righthanded there is no shock. Lets assume the victory people suggest he has. A more distant relationship and a harder form of brexit, if that is the scenario . Martin i dont think so. I think he will go along with hes done. Ne i think he will not try to reopen those discussions again. Yousef if you think Boris Johnson is going to be successful and that is your base case scenario, are you recommending to clients or you yourself grabbing more u. K. Assets . Martin look, im not good at predicting it. I think that is what his view is and that is what his advisers will be telling him. He has some very good advisers that have delivered victory for the conservatives before, so if that does come to pass, there is cheap,tion that pound is London Property is cheap, and u. K. Equities are cheap. If you do believe that is going to be the result, i would say equities look as good a place to put your money in globally,s anywhere just because they been under this pressure for the last few years. Manus like myself, under loved and underground, and underappreciated. Lets talk about aramco. You are in riyadh. It is the dzhokhar the hallways over the past two days. Would you buy aramco it comes to market . Is this the proposition that will fly on a global basis . Martin it depends on what price it comes at. The decision to list it in saudi is a wise decision. Think if you are not going to lift it on your home market, what message does it send to the other Good Companies in saudi arabia that want a listing in the future. That has been a good decision. The big asset owners of the world could buy a stock in whatever market it is in, so where it is listed doesnt really matter. The fact it goes into the index and the asset owners will decide, the Fund Managers will decide whether they want to buy it or not based on price. Yousef martin gilbert, Standard Life aberdeen vice chairman, thank you for joining us from riyadh. Dont forget to check out our interactive tv function at tv go. Catch up withand past interviews, and diving to the securities or bloomberg functions we talk about. The best part of all of this is you can join the conversation by sending us instant messages during our show. We love to hear from you. This is for bloomberg subscribers only. This is bloomberg. Manus a snapshot of how Global Markets are faring. 9 26 a. M. In dubai. You got msci asiapacific trading higher. Are we at peak centralbank easing mode . Is that what you read from the federal reserves move last night . Threeway cut this year. Traders are banking on another rate cut in 2020, and the dollar has broken some important levels. September slow was analysts say you could get to 1100 but that depends on rate cuts and recession. Everything will be driven by the headlines on trade. Yousef i want to recap what has been happening. Earlier in the day, we headlines from the chinese new is agency news agency saying topic negotiators will hold the phone call friday. Now some perspective from the global times, saying the cancellation is not going to affect trade talks and the trade talks are progressing smoothly. And ar secondary addition confirmation on direction of the ongoing discussions. That is helping u. S. Equity futures tick higher like the strong voices in the background, echoing the sentiments. Manus hopefully somebody in the Sales Department will pick up the telephone call that has flashed to the entire newsroom. Because we do such a great job making the product shine every day when we are on the roads. Yousef going the extra mile. A snapshot of what is coming up. Central banks in the gulf follow the fed, with to wait joining the party for the First Time Since 2012, but will boosting rates slow economies . This is bloomberg. The game doesnt end after that insane buzzer beater. Because with Nba League Pass on xfinity you can watch the out of market games you want all season long. And with the allnew xfinity sports zone, you get everything nba all in one place even notifications about your favorite teams. Watch the dropped dimes, monster blocks, and showstopping dunks. Plus get instant access to your teams with the power of your voice. Thats simple, easy, awesome. Say Nba League Pass into your voice remote to upgrade for a great low price or go online today. Manus midtown manhattan dressed or spookiness. Be a spookyto halloween day in the market . Sluggish start for bonds. It is tough to get up there. By 25 on a war in victory. Moran ms. Warren comes to power. Boris johnson squared off the firsty corbyn in parliamentary clash of the election campaign. Ofemy corbyn accused johnson attempting to privatize says corbin would deliver an economic catastrophe and that a brexit referendum would ruin what would be a glorious 2020. The time for protest is over. It is time for leadership. Calls are mounting for lebanon to impose capital controls after two weeks of protest. Restrictions on the movement of money would prevent a run on the banks when they reopened. Banks have been getting calls from clients to move money abroad when lenders resume operations. Pg e says it has restored power to 240,000 customers after a blackout in california. Service l weather with gusts reaching 130 kilometers per hour. At least 10 large wild fires are burning across the state. The winds are expected to ease over the weekend. Bloomberg sources say the psa group has approved a merger with fiat chrysler. The tie up would create one of the Worlds Largest auto manufacturers. We are told the combined equity would be split between shareholders of both companies. Investors will get a dividend with psa distributing 3 billion two its own shareholders. Global news, 24 hours a day on air and tictoc on twitter global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more. Han 120 countries what are you watching . Is falling. The fed is done with easing. A softer dollar lifting regional currencies led by the korean won. 1 . Kospi is adding 9 10 of factoryhat rebound for outputs for september. We also saw that for japan as well. Yen is firmer for a Third Straight session. The hang seng creeping toward 27,000 points with apple suppliers leading the advance on the tech giants profit. Samsung has had a profit beat. This is the chip business, which remains under pressure for the third owner, doesnt it . The Third Quarter doesnt it . The chip side of the equation continues to be the achilles heel. A 78 drop in profits, the worst performance in three years. Bloomberg intelligence expects profit to continue falling through early next year despite optimism over anticipated recovering in the cycle. This chart on the terminal illustrates chip prices stabilize in the Third Quarter and samsung expects a bounceback in 2020. Chipompany indicating prices will rise. We saw a drawdown in september, which adds to that of the look up out to upbeat outlook. Weak seasonal effects. That. Nk you for lets talk about the fed rate cut plans. To the u. S. Ged dollar. A basket of currencies joined with the first cut since 2012. The timing of this is arguably not better from an economic perspective. Not good news for the lenders is it . At twohas to take a look factors here. It is cheaper to borrow money. When things get cheaper, demand goes up. You are seeing signs coming through in the qt earnings season with saudi banks on the back of the rate cuts we saw earlier. From a banking perspective, lower rates mean that they are going to charge on their loans. The cost of funding will come down. That will offset it. The reality is what they charge on loans will come down and as a result, they will start to see margins compressing. T differs by bank some banks are more sensitive to Interest Rate movements. Make asult, you cannot general statement. The one thing you can say, margins will roll over on the back of this. Manus we have had quite a few banks come through with reports. Quite well ahead in terms of your estimate. Are they on that slate . Ultimately it is two things which easing helps that lower rate environment. One is to grow your volumes. Having a top brand name, a strong Balance Sheet, and at the same time, having access to costeffective funding and having a good credit rating. From those perspectives, banks who can manage their cost will do very well. Also i think Balance Sheet is becoming important. We are seeing in the region bigger ticket loans being written and having the Balance Sheet to be able to write those is important. What you will see in the next few years maybe is further consolidation. You will see the bigger banks really starting to take more somet share and naturally of the Smaller Banks disappearing in the region as a result. Rateis really the lower environment. What about oil prices in terms of valuation exercises . There is going to be a shift toward the downside, potentially, given the pressure supply and demand side of the equation. It boils down to what happens to demand. Supplyside was known well for a while. There are some questions about how much the u. S. Can grow. This time last year we were thinking there is an unlimited source of growth in the u. S. That is being questioned more. Nevertheless, what affected oil prices is demand. Of the a function progress between the u. S. And china on trade talks. We have said time and time again, it is a demand driven market at the moment. As we consistently see well prices moving up and down, it is on the back of demand rather than supply. Hopefully it will have something more in it. We have had bear, this trifecta of banks. Are quitee synergies well ahead of what you originally estimated. Can you give me a little depth on that . Typically when a bank will merge with another bank, they will start to take costs out. Thats one of the main reasons they become more efficient organizations. Out withv first came their guidance, it was lower. In terms of their cost, they have increased that by 37 . They tendally because to get very conservative but alsoat the outset as time goes on and the organizations start working as one, they identify more in cost synergies. Considering banks here tend to be similar in nature, taking costs out can be relatively straightforward and can be done relatively quickly. If we look at abcds guidance in terms of how quickly they will realize the synergies, they are coming through quickly than they are more quickly than they originally set. Manus thank you for sharing your thoughts. Issues at play in the market. Next, we speak to the president and the ceo of saudi arabias mining company. This is bloomberg. Manus saudi arabias mining theany, known as maaden in Third Quarter. Business. About the the last time we caught up, you talked about growth. Wanting to push ahead with other commodities. Where are we with the growth story 2020 at maaden . Good morning. The Second Quarter and the Third Quarter again, headwinds risk pushing. We are pushing ahead with growth. We have a project under construction now. Obviously we are in a situation where commodities growth is dropping. We are fully bonded for those growth project. What we are looking at is the longerterm growth beyond 2020. Making sure we are focused on the right areas there. Financing, are you looking potentially at a cooperation with the pif . How big is it going to be . When will it happen . Announced is our Rolling Company in the aluminum business was overleveraged. We will draw a hundred Million Dollars into equity in a Holding Company. We have a Shareholder Meeting next monday. We are presenting to the shareholders that transaction to try to get it through. Manus what does that mean . At 5e partially looking billion growth. If you look at our capital, we have too much debt, especially for a commodity company. We would have to look at other means of raising capital or use their equity to achieve some of that growth. At the moment, there is no plan. You mentioned there is still work to do, there is too much debt. What about the subsidiaries . Are you looking at new refinancing . Thats one of the challenges you have like we have. You have the Holding Company ,ith all the debts in the jvs jvs with other companies. Having said that, the market in saudi in particular has been very conducive to making refinancing very attractive. We have a number of those in the last two years. We have more coming up. As long as the markets are as good as they are with Interest Rates dropping, it is a great time to refinance. Plans coming up in 2020. Can i get your perspective . Everyone has the conversation about the aramco ipo. From a Global Investment perspective, from your company, is that good news . , theramco ipo investigation into saudi companies. Is there a tailwind from this ipo if it comes . Im glad you did not ask you when. Hold on. Do you know when . Can you confirm on the ipo is going to come, first of all . Come on. I really dont know. Even if i did, i would not tell. I really dont know. Is such ant important transaction for the kingdom. It putsanies like us, saudi arabia more on the map. It is the Biggest Exchange in the region. It could become a useful source of capital for companies outside of saudi arabia. The listing rules have changed. It puts saudi arabia on the map as an area where the stock market is functioning. It has a good investor base. It is positive for us. To pusheen are you additional acquisitions . Have you identified additional targets . Any particular commodity . Theres always targets out there. The trick is to be disciplined. There are more targets now. To go through a commodity downside, one of the big advantages maaden has is we have a longterm investor base. It is difficult for most companies to start investing in downturn. We will be one of the few that will be able to do so. How we be disciplined in make domestic decisions. Two areas we have been looking at, consistently talking about. Oureed to complement existing business in fertilizer. That will become number two in the next five years. We need Distribution Channels globally. The third is copper in particular. Copper is a great metal for the future. We are not alone thinking that. We are looking at opportunities for copper globally. The ceo of maaden with a snapshot of whats next. We speak to the president and ceo of amc entertainment. This is bloomberg. Manus a Beautiful Day down under. The aussie dollar is rising. You have macro traders on the rba rate cut pricing scaling back in terms of the propensity for aussie to make rate cuts. Rba cuts are dropping according to westpac as they scrapped their forecast for new Zealands Central Bank to ease policy in november. There is a little bit of a shift in the aussie dollar. Lets also check with the wider Market Action. We have had very important events. Overnight we had movement from the fed. We had movement on earnings with apple coming in much stronger than expected. On top of that, we had additional traction on the trade conversation between the u. S. And china. 1 that s p 500 futures currently taking ever so slightly lower. Inthe bond market moved down terms of yield. There is this view that maybe the fed is not necessarily done even though you have powells language intimating they are in pause mode, investment mode. The market does this. 25 basis points into 2020. It is a fascinating time. Twitter is banning political advertising on their platform. Jack dorsey said the move is about stopping campaigns paying for reach, not limiting their speech. Twitter banned ads for specific candidates as well as issues. There will be exceptions, including voter registration. Facebooks Sheryl Sandberg said it would not be doing the same. We are not doing it because of the money. This is less than 1 of our revenue and the revenue is not worth the controversy. But we believe in Free Expression. We believe in political speech and advocacy is an important part of that. We are focused on transparency. D tracker which means you can see any add anyone is running for a political candidate anywhere in the u. S. If it is not targeted at you. That transparency is really important. You also talked about investing in protection. One of the things we talked about just now is the size of the investments we are making, working with election commissions all over the world, hiring engineers, using human reviewers. Really doing what we can to make sure people are kept safe. So when twitter decides to go the opposite direction, does that make you question your own decision . Do you stand by the fundamental reasoning . Mark set on the call, we have thought about this for years. Certainly we have been thinking about it now. We believe lytic goal ads political ads are part of the dialogue. Also believe Free Expression across the board is something we stand for as a company. People all over the world are using that. Certainly politicians are using that, but people are using it. Thats how you see our growth continuing. Talk more about politicians. Its going to be a tough year of regulatory scrutiny. Do you worry about the Business Model . How do you see your role educating those on capitol hill about this . We really have to help people understand that targeted ads and privacy are not at odds. We can do both. If you are an advertiser, the Biggest Company in the world or the smallest, we have 7 million advertisers, 100 40 million businesses, using our service. An ad who livew in california. We show it to that person. We give you back aggregated targeting that makes ads good for people and helps advertisers reach the right person without violating privacy. That is something i think we need to do a much better job of explaining. The integration you are doing at the moment, you talk about focus on the family of apps. You are also looking to put them together in the back end. Do you think this is going to help in terms of ensuring your domain one whole business . A one wholen business . That is not where this is coming from. We want to make sure Services Provide their own unique experiences. Mark talked about this as one of the things that happened at instagram as it was growing. Instagrams growth is explained leadership, mikes but also what facebook brought in terms of infrastructure, in terms of ads. We want to support the apps we have in our family, make sure they do what they need to do to serve people around the world. And support them through commerce as well. Business is important to you. Its not about the individual, connecting with your family, connecting with business. How do you think of commerce on the instagram front . People are excited about commerce, excited about ig shopping. What we are is a great platform for people to find things. People discover problem products they want, services they want. We are going down the funnel to where people actually buy and purchase. Those are more nascent products, but we are working on them. We continue to see our role in helping people connect. Businesses are using it not only to sell, but to message. One of the coolest things happening on the platform is how businesses are connecting to be directly on messenger and whatsapp. It is cool for a person to have the opportunity to message business directly and business to do that with people. Is the libra project important to the comers part of the business . Are you still committed to that as it stands . We are committed to it. We are not going to roll this out until we have regulatory approval. Most commerce efforts have nothing to do with libra. That is a separate association. Our commerce efforts are things on our end services to help you go all the way from seeing a product you might like to checking out to buying it on our service. Manus breaking news coming across the bloomberg terminal. We will talk to you more about the results. Fixed income, commodities, as you can see, up 35 , 915 million. I will write down the rest on daybreak. Manus good morning from dubai. Europeanom bloombergs headquarters in london, these are todays top stories. The fed signals it is time for a pause as it cuts rates for a third time in a row. Jay powell says Monetary Policy is in a good place. The boj tweaks its guidance to allow swift using. The offshore yuan brushes off poor china manufacturing data. Fixed on positive trade signals. Top negotiators hold a call tomorrow. A Third Straight trading gain at bnp paribas. Frances biggest bank reports a surge in revenue in the Third Quarter. Euro area Growth Continues to be slow. You should look over all of what has been happening. One would say growth is still a bit dim. We will have to see what the overall impact is. Manus how to be your peers. That is what bnp paribas has done. A beat on revenue a beat on net income. Revenue, 10 point nine. That is above the estimate of 10. 7. 35 toncome surges by 915 Million Euros. In emerging markets. We saw the income decline by 15 . A lackluster market on flow activities. A warning on the ecb rates. New Monetary Policy easing at the end of the quarter. We are not going to see those until 2020. Cost cuts, 1. 7 billion. We are going to bring you our interview in full with the b. N. P. Paribas cfo in the next couple minutes. Ing has just hit the tapes. Nejra the Third Quarter underlying pretax profit comes in at 1. 9 one billion euros. A comfortable beat on the estimate of 1. 8 billion euros. It is also those are the key lines. The red headlines that Third Quarter underlying pretax is posting a third 2019 net result of a billion 1. 3 billion euros. We are going to be speaking to the cfo of ing just a little bit later in the so in the show. They comfortable buffer they have and not the dividend payout ratio. The Third Quarter underlying pretax profit beat is in focus right now. Now is theing us global macro strategist at rbc capital markets. He is our guest host for the next hour. Good to have you with us. Lots of headlines. Theres going to be a call from the chinese to the u. S. On friday. We have hsbc slashing rates in hong kong. One gets the sense we could be at peak centralbank cutting cycle. Statemento strong a as you look at the world this morning . Look, i would say we are past the peak already. We have seen the ecb a month ago announcing what they want to do. We now have the fed who eventually said that for now they are done and they want to assess what they have done and the impact of it on the economy. We look around, yes, you might get a few others cutting here and there. The difference is we have the bank of canada being relatively dovish. By and large, we are past the peak, peak cutting if you want. Get signs chinas factory output is dimming. There does not seem to be a huge amount of concerns in markets. Can we live with slowing china as long as we get positive signals on the trade talks . We understand there will be a call on friday. The market is firmly implying already that manufacturing is in a recession globally. China in particular is slowing. The market implications are probably lower than where the official guidance is already anyway. If you look at what potentially could turn the psychology of markets around, is as you said. Some positive news on trade in particular. Peter stays with us. Now lets get back to ing group. It has reported underlying pretax profit of 1. 9 billion euros ahead of estimates. Now is the cfo of ing. Right to have you with us today. Thank you so much for giving us your time. You beat on underlying pretax profit and also Net Interest Income. Update ve us an it an update on the capital buffer . Are we at a level where it is time to start increasing the dividend payout ratio . Morning. Very nice to be on your show. Very pleased with our results on q3. We seem to have an issue there. Rates,negative interest now Net Interest Income is holding strong. Our income is actually growing this quarter. That is nice to hear. In terms of answering your questions, on capital, indeed, more capital during the course of q3. It is now 14. 6 . We see more headwind in terms of new regulatory capital pressure. I think in terms of dividend policy, it remains what it is today. Sorry for interrupting you there. We had sound issues on my side. Can i get a sense from you in the race discussion, are we at a reversal rate in terms of negative rates and the impact on lending . Give me your take on where we are in that debate. Thatat we do see is negative Interest Rates have less and less effect in terms of stimulating growth. Gdp growth in the euro zone is down to 1 this year, possibly below that. We do see for example slowing loan growth in our wholesale banking business. In fact, we have a small decline in wholesale, but the Retail Business continues to grow at a good pace. In terms of effectiveness of the negative rates, we see little sign at the moment. Case, what is the prospect of you passing on that impact of negative rates to consumers and clients . The deposit rate is almost zero. Could you go negative anytime soon . I dont think we are there yet. We do diversification away from the euro zone in terms of lending. We are looking at repricing loan goals, which we have successfully done during the course of 2019. We are looking to basically provide services and increasing income. Negative Interest Rates on retail deposit is something for the future i believe, not now. What discussions have you had . When we saw you refinancing or opportunities to take loans from the ecb, what has been your biggest concern about that new program . I think you are referring to the tltro. We are a big fan of additional liquidity in the banking market. There is far too much liquidity in the market already. So far we have not participated in the program. I think we will be opportunistic whether we participate in the future or not. We are quite illiquid bank. Liquidityeed to tap for volume. It is more pricing if it is opportunistic for us. Nejra can i ask about cost pressures as well in terms of Compliance Costs see . You have been increasing those for some quarters. Indeed, that is part of our q3 announcement. We mentioned the cost of compliance is rising. It is our number one priority to make sure improvements are made. The way we look at it is that standards on antimoney laundering are here to stay and we need to overtime make sure we compensate for that somewhere else. A lot of the Cost Increases you see hopefully will plateau over the coming quarters. We are constantly trying to benchmark where the Global Economy is. A lot of our guests talk about germany, the recession, dramatic slowdown. If there a wash back to you . What can you tell me about the pace of slowdown on your business as a result of the slowdown in germany and europe . What we see is that in the retail bank, the slowdown we dont see quite just yet. We see quite strong growth in terms of Retail Banking across our businesses. In wholesale banking, we see that impact coming through. We have a modest decline in terms of growth during the course of q3. The moree are one of robust banks in that market. We see loan growth in germany. That remains robust for us. We are cautious of course given the slowing Economic Situation in the euro zone. Recentlyur ceo said ing would consider acquisitions outside the netherlands to defend economies of scale. Can you give us an update in the is that acquiring something you are looking to pursue soon . Comments ongive any a particular situation that goes on. Geely thing we can say is that we have a great franchise in poland, one of the largest banks there. They are doing a great job in terms of growing business organically. Thank you so much. The cfo of ing with his very first numbers, that response breaking here on bloomberg. We are going to bring you our interview now, the cfo of franks biggest bank. 950 Million Euros the last three months. Spoke to bloomberg in paris. Equities look first at , it was in line with the market. Equities inlso has more structured products, cash products. He overall demands , bothr, when we go back products in credit even on the g10, they stay there, there was demand, we have adapted to bank. We have declines in an optimal way. That led to a fair evolution. Do you think you can sustain growth in fixed income over the next two quarters into 2020 . The main thing, what is important is that we continue to serve clients. That is what we aim to do. In physical numbers, that is something else. The main thing is we remain there for the client. Christine lagarde will take over at the helm of the European Central bank friday. The two tiering system, is it going to help bnp paribas . When you look at the levers the bank has, it can have an impact more on the longer rates. These things have an intention to help the economy, but they can also have an impact on qe. Is true that banks have to deposit reserves at the central bank, which costs money. It is basically compensation for that. So it is going to help offset the negative impact of negative rates . If you look at the overall impact, it depends. It could offset 10 basis point impact of the shortterm term. However, the impact on the longer term is not within the reach of what is to be addressed by the current hearing the current tiering. Do you believe you have been more helped by the ecb . If you look overall out what has been happening, if you look at the overall growth, it is still timid. We will have to see what the overall impact is of the latest events. You expect these negative rates to keep impacting over the next few quarters . Particularly if you look at qe, which is impacting also the lower rates. That is going to have an impact on the banks and on business. Bnp paribas speaking to bloomberg. Coming up, interviews galore. We will be speaking to the ceo of the cfo of swiss re. The insurer just reported thirdquarter earnings. They will not launch the second Share Buyback program. Manus it is bloomberg daybreak europe. Nejra weve got numbers from air france. A thirdquarter operating profit missing 900 Million Euros. The estimate was 963 Million Euros. It is also cutting its outlook. To six to the outlook 8 . It also sees slightly down year on year. In terms of profit being hurt, the reasoning is it has been hit by lastminute bookings lower lastminute bookings. Also demand for cargo transport height of the Summer Travel season. Lets talk about bba. Inemonth income falls the net income for the Third Quarter is a nice beat. Nethe Third Quarter interest income, four point 49, pretty much in line with the market. Beat even the highest of the estimates. There is only one topic that matters. It is the fed. Powell regrasp . Nejra officials have cut basis point pet have cut rates for the third consecutive time. The pausealso hit button unless the outlook changes materially. The fomc promised to monitor data. Theme powell justified Central Banks position in a News Conference following the rate decision. The policy adjustments we have made since last year are providing and will continue to provide meaningful support to the economy. We believe Monetary Policy is in a good place. That was a key mission, acting as appropriate to sustain expansion. The markets dont seem convinced the fed is going to be on board. Are you . We have been above the market in general, how we see the u. S. Economy anyway. When you look at the rate cut, when you compare that, where the fundamentals are, where the inflation rate is, we think there is a decent chance the fed is going to be on hold for quite some time, unless we take a substantial hit. You think they are going to be on pause for a substantial period of time. The bond market does not. 2 by the end of the year. Fidelity says the markets if we are on hold in the market is not pricing that correctly, where does that take you on tenancy echo we think going into year end globally the risk is for at least slightly higher yields. That is true for europe as well as the u. S. I would not rule out to percent. Pointld that be an entry where you think the lines are going to start coming in again . Yesterday, saying to percent is where the buyers come in. In the short run, that is likely. We have seen towards the end of the year, we dont have a sense for the situation is. We have not spoken about trade yet. We dont know what the outcome will be. , with the of the year election outcome in the u. K. Theres a lot of things to reconsider once we get there. For now, i would be cautious on the fixed income market. You sound like Donald Rumsfeld there. Say for millennials, google Donald Rumsfeld. This is what jay powell referred to last night. Have a look. 77 powells comment was that serious inflation is required to push the fomc to raise rates. Iat is the strongest form of have seen from powell. Have i interpreted that correctly . Serious inflation would be required to push the fomc. I think that is strong forward guidance. I think you are right. We are seeing a tendency toward one of the things that has very clearly happened over the past year and a half is the Central Banks have turned hawkish. The fed has raised rates. To mildly talk hawkish, if you want. The expectations in general have collapsed. They have cut Interest Rates, which they did not want to. They are thinking, what can we do Going Forward to avoid the same situation again . One of the key things, we have to stay at lower levels for a substantial period of time until we see Inflation Expectations going up. That might be in years to come. Air francethe numbers, they cited the trade tensions weighing on cargo. Fedme powell thinks the might have succeeded so far in engineering a soft landing. Do you think they have . I would not go so far. I think what they are trying to do is trying to cushion the blow to some degree. When you look at the earnings u. S. , coming out of the there are quite a few companies mentioning the trade tensions. Withstand at the moment. Basically i think we are in a situation where you can put a lot of outward pressure on the economy in general. That is exactly what the fed is doing as well. Intow does politics play 2020 for the fed . There are those saying markets are not pricing the potential risk of a warren or joe biden victory. Do you talk much about a warrenesque risk for the markets . Clearly those risks are there. I would go so that i would go further and say when you look at the u. S. In particular, we dont know who the contender is, but we know who the incumbent is. What is the policy, particularly trade policy after a potential election . We dont know that, but its not going to be pretty. The elections clearly have investors on their toes. Thats for sure. While we are not talking more concretely, i mean, in your comments you just highlighted, we dont know. Hey warren is scaring markets more than biden. But we dont know. If you believe the fed could be on course from here, dont u. S. Treasuries look attractive relative to the rest of the world . Also have tout you compare what is priced in in terms of further rate cuts. If we compare to the euro market over here, we have repriced a lot of ecb rate cuts already. We have not done that to the same degree in the u. S. Relatively speaking, we are going to be careful there. Coming up, apple tops estimates for the key holiday season. Will their new installment plan and iphone trade program see a return to growth . Manus this is bloomberg daybreak europe. Projected holiday sales above analyst estimates. Iphone revenue was down from a year ago. The iphone 11 will see a return to growth come yearend. Manus apples rival Samsung Smartphone sales were up from last year. Investors see a return to profitability and their recovery in the memory chip market. Carr Bloomberg Opinion columnist joins us from