Mark have a look at where european equities are trading. Equities are falling for a third day. These are the currencies rising against the dollar. We have defensive assets such as bonds falling, yields gaining, and commodities, that is the huge today. Lets get to the earnings. It owns caring and gucci, shares jumping as much as 9 , the highest since 2001. Fastest sales growth since 2012, boding well for luxury goods makers as christmas approaches. Reporting estimate beating sales indicating that the peak Holiday Season may see Strong Demand and potentially giving the luxury industry some respite. Demand is weighed down due to this company has risen to the highest since 2001. What a coincidence. ,ech shares jumping 18 today after theince 2001 Swiss Electronics Manufacturer reported betterthanexpected sales growth field by demand for its keyboard, computer keyboard, computer peripherals, speakers, and video gaming equipment. Logitech has benefited from the number of devices that people have in their lives. Erickson, we were just begin to who is ahief executive board member and he inherits quite a task, turning around this big Swedish Network equipment maker. We have witnessed a slump in spending by carrier customers, leading to a 44 drop in stock prices. A surprise profit warning in the last two weeks. Shares are up two thirds of 1 . He has a lot on his plate. 90 minutes into the trading day in the u. S. Lets get over to the markets desk. Julie we are watching oil prices. Ou saw oil turning around it is still very little changed but directionally, going very differently than it was earlier today, and that is having a Ripple Effect across equities. If you look at the s p 500, we are seeing it reach a tie of the day. The dow is following. All three major averages are up off the lows of the session. And thein the green nasdaq has paired its decline significantly. It has been a rocky week for equities as bond yields climb and equities go down. Orange and youin see the climate in the twoyear yield in particular. Percentagewise, some of the big movers, losers include edwards wised life sciences. Rdquarter sales misting missing estimates for the first time in two years. Southwest, lab corp. Of america. Out with an increased forecast after thirdquarter numbers missed estimates. Tumbling after at store sales fell by 21. 9 . Vonnie julie, thank you for the update. Lets check in on the bloomberg first word news with courtney donohoe. Courtney for donald trump the road to the white house has to go through florida. The republican president ial candidate leads Hillary Clinton 43 . 33 45 to if trump wins all the states mitt romney won in 2012 and wins needorida, he will still 35 more Electoral College votes to win the election. A new ad aimed at donald trump invokes one of the most powerful political attacks in history. It shows a Nuclear Mushroom cloud and trumpet being question about atomic trump being issues. Ed about atomic it is being paid for by a super pac paid by former democratic sandler bill bradley. And colette, france, migrant set fire to the jungle. Thousands of migrants are still there and will be relocated elsewhere in france. Wants alls president foreign troops out of his country in the next two years. Duterte said the philippines will survive without assistance from the u. S. But acknowledged without u. S. Help it will be a lesser quality of life. Global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Vonnie lets get back to the markets, stocks fluctuating in the United States while in the bond market u. K. Gilts are leading a selloff after mark carney sounded the alarm on inflation. 10 year gilt yield approaching the highest level since the brexit vote. Joining us as johanna kyrklund. Schroders has a negative view on starting grid now and you will let us know what your outlook for gilt is. Johanna it has fallen so markedly it has started to flash up in our valuation screens. It is looking extremely cheap. Gilt, it is true with fallen sterling falling sterling and Market Conditions we are likely to see a surging inflation and are likely to remain negative on u. K. Gilt. Vonnie many economists are saying the First Quarter of next year will be seeing the impact of brexit and you could not possibly know what that is going to be. Why do you think the currency has maybe found a trough . Thatna one is the view monetary conditions will be looser to offset the impact of brexit, but more clearly it has been about political uncertainty. We are at maximum uncertainty because we are still in the prenegotiation phase where theresa may has come across with a hardline stance, and the europeans have responded in kind. We may start to get more information on what those negotiations might look like and even if it is bad news, it is better than uncertainty and that would reduce the Political Risk currently being applied to sterling. Mark you talk about rising inflation in the u. K. Because of the weak pound. Securitiesrotected have outperformed securities in the s p 500, the white line, the blue line treasuries, and the s p 500 is the purple line. Tips are up by 7 . Would you expect that to continue or have we missed the tips boat . Johanna we still own tips. Sincee owned them february when we bought an important line opportunity in the market and if we hold them for now we think there is a potential upside surprise on inflation. Mark since another chart that i love, im going to bombard you with charts, is volatility. This has to be my personal favorite of the day showing you how we have got this low in low volatility across all asset classes. This measures swings in equities, rates, currencies, and commodities, lower since 2014. Does this tell us that investors are feeling relaxed about the prospect of a rate hike by the fed in december . Is this telling us investors are getting used to the idea of a Hillary Clinton presidency . Johanna i do not think it is investor complacency but Price Fluctuations have been dampened by the effect of quantitative easing. People have been forced into the market, forced to buy yields because of zero rates. That result in the suppression of volatility in this market environment. Vonnie you have become quite bullish on emerging markets, yet if you dip into my bloomberg and see the emerging market index, we have seen a runup. Is there still room to go and where . Johanna in the last five years we avoided any kind of emerging beent risk and we have reengaging with what we call emerging market access. On a fiveyear view we see fiveyear we see loss of valuation. The currencies, despite the fact that have rallied a still look quite cheap. Lira, and the turkish the mexican peso . Johanna we started off and moved into things like russian liraruble which sometimes feels volatile but has been delivering a very attractive kerry. We are rotating through a whole range. We are currently avoiding the mexican peso a generally we like emerging markets across the board. Mark your positive commodities, what is the take on oil . Are we close to this deal with and opec and nonopec producers . Oil is down for the third day, the longest losing stretch since september 1. Deal onhopeful for a output between opec and other producers . Johanna we are not making any assumption about the deal, it is more over time we expect the market to move into balance. Toare not opposed commodities themselves but we have Energy Stocks this year, it was an important valuation cushion. As long as we can achieve price stability for the oil price we reckon we can make money. Mark can we make money out of banks . This is a chart back to the charts, sorry showing the european banking industry, the stoxx 600. It is very simple but effective because it shows us where we are at brexit. Andame down by 20 or so have retraced all those losses in part because of Deutsche Banks resurgence. Still it is down 18 for the year. Our european banks a buy or not . Johanna we are generally avoiding them. Are interesting possibilities in u. S. Banks but european banks are cheap for a reason. Vonnie on japan you are fascinated by positive multiple fronts, you are positive on jgb, stocks. Johanna the jgb view is pretty tactical. Earlier we were favoring bond markets that were more sensitive to growth shocks and now we are moving on so on a relative basis we now favor jgbs. They have an interesting opportunity, a bit of a value take, and we quite like the currency. The yen exposure is quite diversifying to our overall portfolio. Vonnie that is an interesting view of things. Thank you to johanna kyrklund. Mark thanks a lot. We are going to hear from bayer firstexecutive about his Earnings Report since the megadeal with monsanto. Mark from london i am mark barton, counting you down to the european closed, just 15 minutes away. Vonnie from bloomberg World Headquarters in new york i am vonnie quinn. It is time for the Bloomberg Business flash. Sales in the u. S. Go to an almost nine year high. They rose at an annual rate of 593,000. June, july, and august were revised lower. A relatively strong job market and low Interest Rates are combining. Posted thirdquarter profits that Beat Estimates. They had their best quarter in a decade, or at least the best thirdquarter. Mercedesbenz is building luxury pickups for adventurers and are betting they will attract sailboat owners and wealthy parents the same way that offroad vehicles used to. They will be competitively priced. That is your Bloomberg Business flash for this hour. Mark shares of pharmaceutical fallingyer germany are after they reported a slide in profits of its Consumer Health unit. Spoke to us and commented on how the low rates environment is favorable to the business model. Werner the current environment in terms of Debt Financing remains very favorable. It is similar to trying to pick the stocks at the lowest level to only then enjoy the ride up. While we have a benign Interest Rate environment we believe that whatnuing to 2017, that is in all likely we will be able to take advantage of. Mark for the proposed acquisition of monsanto, he said bayer had finalized the 57 billion bridge loan and says he does not expect any regulatory snags. Werner monsanto is a relatively small player outside of the americas with i do roughly 80 of their business. In europe it is a combination that will of course undergo regulatory scrutiny, but we are very confident that we can resolve any issue that may come up in product overlap. Mark there has been the subject citizens criticism bayer has been the subject of criticism. Vonnie we will get more insight on what is next for europes troubled banks as monte paschi seeks capital from investors and Deutsche Bank considers noncash bonuses. This is bloomberg. Vonnie live from london and new york, i am vonnie quinn. Mark i am mark barton, this is the european close on Bloomberg Markets. 10 minutes left to the end of the wednesday session. Shares of monte paschi are falling for the second day, dropping double digits amid concerns about its future. Marco marelli joined bloomberg for an exclusive interview to discuss his vision to get the italian bank that contract by raising up to 4. 5 billion in new capital. Marco investors have been very proactive in approaching the bank or investment banks working for us. At this stage, we could not engage in formal talks for obvious reasons so now this is what we are going to do. Joining us as Bloomberg European finance team leader simone meier. The rally is sputtering or stuttering, choose your verb. Is that concern about execution risk . Simone you may even call it a roller coaster. Last week we saw gains of 58 overall and in the shares went up after he presented his ambitious Business Plan yesterday morning, only to reverse those gains later in the trading hours. There is a lot of skepticism and investors are maybe not entirely convinced whether he will be able to pull this off because all the other ceos in charge who have tried to achieve similar ambitious plans have arguably failed in the past. Mark isnt it crucial that he is thet off . This leading domino, as some have said, in the italian banking industry. Simone if monte paschi does not pull this off i do not know what it means for the rest of the Italian Financial consolidation that is underway to a certain extent, and that regulators are favoring. The government is trying to encourage to get rid of all of these ngls and attract Foreign Investors into italy. Right now marelli has one month to pull it off until about the end of the year to raise 5 billion euros in fresh capital. Keep in mind, that is a bank that has been bailed out twice in the past. There is not a lot of investor support so he will really have to go on that road and try to convince investors. Isnie Deutsche Bank reporting tomorrow and they have been in the news a lot lately. What are investors going to be looking for . Simone we will get thirdquarter figures again. Analysts project another loss, not surprisingly, after a 6 billion shortfall last year the same time. On cryus will be much ands ability to raise Capital Buffers further to deal with these oncoming litigation settlements. There is the doj that asked for 14 billion that really unsettled markets last month, and people just want to see some progress on the cost side, they want to see some measures. Hisn being on the top of game and ensuring investors he is the right guy to turn this huge European Investment bank around. Vonnie meanwhile, banks in other countries like spain, even beenny, the spotlight has taken away from them for a moment because of everything going on in italy and Deutsche Bank. Is there a potential for another many crisis down the road elsewhere that we are not really looking at . Obviously possible that because we are all being focused on Deutsche Bank as you said right now. The smaller lenders are struggling. We are possibly going to see more consolidation across europe, smaller lenders. With abn andge that was rejected by the ofernment, we might see more the same as larger and midscale lenders try to strengthen their Balance Sheet maybe through mergers. Isk on deutsche, one option paying bonuses in cash. Something that Credit Suisse tried in the height of the financial crisis. How is that going to go down . Simone that is a really interesting option and clearly cryan is looking at all kinds of measures to stabilize the lender they have toand if freeze bonuses or revert to this kind of measure, that is just one of many measures they may take, may have to take Going Forward even if it is painful. Mark you have to say morale is low already and abandon cash incentives, how long how low will morale go . Simone they have artie suspended dividends and scrapped part of the bonuses for last year so they may do more of the same this year, but keep in other large european banks are in the same position so wherever you want to go it is kind of the same. Mark simone, thank you for joining us. Other large european banks are in the sametake a look at wn equities are trading. Four minutes away from the end of the wednesday session. Apparently the americans call it hump day. 1 . 100 down by 9 10 of the dax is lower. Three days of declines. Earnings driving sentiment. I will leave you with the currency board today. Mark live from london and new york, you are watching the european close on bloomberg television. I am mark barton along with quinn. Quinn. The european stocks finishing the day lower. Retail auditors gaining. Real estate, oil, chemicals, and gas declining. Today monte paschi, love this chart because it shows the extent of the volatility we have seen in the share price from oversold to overbought in the space of a week. This is incredible. Below 30 is oversold and it jumped, double in the space of seven days and now it is overbought once again crossing above 70 as investors questioned the plan to raise 5 billion euros as vital capital. Still up by 66 in nine days. Has a nine day period it been for italys oldest lender and most troubled. This is a chart that shows how investors are paying the most since early june to hedge against swings in the benchmark ftse 100 index relative to its regional euro stock 60. The ftse is up 12 percent this year thanks to the slumping pound, hovering around 7000 for most of the month. It failed to maintain that intraday record reached october 11. This is the spread of the ftse 100 and euro implied volatility, and finishing with volatility, this is my chart of the day showing how volatility expectations have plummeted. This is a cross asset gauge of price swings in currencies and commodities and it has fallen to the lowest level since 2014. Are investors getting too comfortable or complacent . Some are still nervous about the threats from washington, the pending election to beijing, the economy. We have seen a drop in market anxiety and that has coincided with a reduction in uncertainty. When it comes to the election, Hillary Clinton, the probability of her winning is above 80 , and the expectation the fed is going to raise rates in december, investors have tuned into that and are coming to terms with that. It is possible investors are too nervous about the future to make any big bets. This is the chart of the day, limiting volatility. Volumes down as well explaining where we are seeing so many trading ranges in the u. S. In the u. S. Lets take a look at dollaryen, stronger about 2 10 of 1 as the yen weakened slightly. Interestinglyres just below 50 a barrel and holding. I do keep wanting to point out that offshore yuan is 6. 7827, not Much Movement in the past couple of days. Lets move on to the majors. We are seeing an increase for the dow about one third of 1 . Just a fractional increase the s p 500, one point. Lets go to the nasdaq were Abigail Doolittle has more. Abigail we may have the nasdaq down slightly as the dow and s p 500 are slightly higher. Trying tohe index is pull a turnaround off its lows and this reflects a turnaround or coming off the lows for the nasdaq drag on the today, apple down nearly 3 . Well off of the lows. After the close apple reported a basically inline september for december, guide revenues were slightly above consensus estimates. Overall in line and yet we have the stock down. Our team did sit through 16 analyst notes. 11 of those analysts are still bullish on apple saying the longterm turnaround story around the iphone 7 and iphone eight is intact. This includes Piper Jaffray and rbc capital. Three analysts are on hold including Deutsche Bank citing the gross margin dive being a little bit bigger. Aboutday we were talking the idea that there was a reset of expectations for apple after the rough first half, at the more than 20 after the better than expected lobar quarter in july. It seems with the stock down today marginally in the grand index of things, perhaps Investor Expectations and sentiment got ahead of itself as we reset the iphone 7 demand and what is ahead. We have seen this in the past. , back in 2013 the was a big decline as the iphone 5 had disappointed and then the five s started to exceed expectations, but there was an area of choppiness. We see something similar here so we could be entering into choppy trades were apple but overall analysts are blessed bullish. Mark monta leas reported earnings that Beat Estimates and boosted its profit estimate mondelez reported earnings that Beat Estimates and boosted its profit estimate. Lets get to greg g. M. Mona who rate ireneur rosenfeld. Craig welcome to bloomberg. As we enter the last stretch the guys were able to raise your profit with gave you the confidence to do that . Irene we delivered quarter after quarter of solid execution. As we look at the Third Quarter we continue to expand our margins. We are up 260 basis point year to date, 220 and a quarter, and it is fueled by activities where we are continuing to drive net productivity and reduce our overhead. As a result we are also able to continue to reinvest in our franchises even in these tough times, so we are starting to see some improvement in our overall franchise health. We saw for the first time positive volume mix underlying our 1 Revenue Growth in the quarter. The power brands that account for 70 of our revenue are growing about 3 year to date. That is in excess of our category, so we have a number of signals underlying these results that give us great confidence as we look to the balance of the year. That is really what gave us the confidence to raise our eps for the year. Craig we know you have been doing a lot to cut cost and you have had some currency issues. You are making a big push on chocolate in the u. S. Obviously oreo and cad berry are extremely wellknown. Where do you see those fitting in . Irene the u. S. Chocolate market is the largest in the world. Manufacturerate outside the United States so the opportunity for us to bring some of our strong brands to this market is a very attractive one for us. We are bringing both a mainstream offering under the milka trademarks and a prime offering under the black and green franchise. , we are going to begin to launch those in the Fourth Quarter of this year, and online each will be an important source of growth. Craig one of the things you also talked about was permissible snacking. We know people in the u. S. Try to avoid sugar, eat a little healthier. Whether they are delivering is not quite as clear. I am curious what you think your role as in the company for people to be ok to enjoy chocolate now and again. Irene we know that our consumers around the world are increasingly interested in health and nutrition, both in developing as well as in developed markets. We see a huge opportunity, about a 160 billion opportunity worldwide, and we have some very strong offerings underneath that. We have launched brands like lveta which continues to be a success. Ns are doing well. We see this as a big Growth Opportunity that is not only well aligned with where our can toomer is going, but can bring very positive quarters for us. Craig it sounds like the impact from brexit has been fairly muted. I am curious how you are navigating that and what you see as far as the year ahead with the currency fluctuations and some of the challenges that might lie ahead. Continuing under very strong share games gains and continued profitability. Frankly we have not seen any Significant Impact to our categories from the brexit announcement but it is still early. We will continue to monitor that and adjust our plans accordingly , but most of our case sales are sourced , but most of our case sales are sourced locally so that gives us a natural hedge. We have the opportunity of buying our cocoa in pounds sterling so those factors leave us relatively well positioned to whatever impact we see. Craig you talked about the challenges in brazil. He said there was no real shortterm thing that could fix the economy. All of these charges aboutnges overseas, is it the fact that the u. S. Is a good place to be . Distorting some of our markets away from brazil in the short term because we do not see any nearterm catalyst for a macro recovery. At the same time i have great confidence. If you look at the fundamentals of these emerging markets, the population growth, growth in gdp , and growth of the middle class, those are highly can tell highly correlated so we have confidence the market will recover. That is why it has been important for us to selectively continue to invest in our brands and infrastructure in these markets so as they recover, we are wellpositioned to benefit. Craig you have launched the milka brand in china. Are those the two things to be looking out for, the sales in china and the u. S. . Certainlyould say those of the two biggest new things. We have quite a robust pipeline of offerings that you will hear about as we get into 2017, so we have a very nice pipeline for launches around the world, all of which will contribute to our 2017 topline. The chocolate entries have a particular impact in the Fourth Quarter. Craig thank you very much for joining us. Vonnie that is Bloomberg News reporter craig jim otto. Guest is Ralph Schlosstein, ceo of ever core. Earnings jumped partly due to the surge in m a activity. Mark live from london i am mark barton. Vonnie i am vonnie quinn in new york. Shares of ever core bouncing around as they reported revenue was up 38 year over year as the company advised more clients with m a heating up. ,nderwriting fees were up commissions were down on lower trade volume. Schlosstein, ralph ceo of ever core. We were just speaking a moment ago for wreaking on air and you were mentioning what used to be an independent boutique has really become one of the behemoths and that is what is happening. The banks are taking a backstop and advisory boutiques like yours are becoming the major investment banks. Ralph one of the exciting things to us is that clients increasingly are embracing the independent,. Advisory model. Pure advisory, model. Number 6, 7,to be or eight in advisory fees. Vonnie you did more than citigroup . Ralph citigroup, ubs, Deutsche Bank, barclays. Say aboutat does that the major banks globally, are they done . Ralph not at all. Some of them are still doing well. There is always going to be a very significant role for large , andcing banks appropriately they insist upon being an advisory banker whenever they extend their Balance Sheet. Increasingly what you are saying seeing is in both larger and smaller transactions, the independent firms are playing a more Important Role and in some cases a sole advisor or a coadvisor with a large financing bank. Mark you have advised on the two health care deals in 2016 and you have had a record year for m a. What about the headwinds . What are the post election headwinds for m a . Ralph we have not seen any real effect preelection on m a activity. I think roger altman this morning on our Earnings Call said that in all the discussions he has been in, the election has not been mentioned once in the context of the transaction. Obviously, lets of people discuss it as a matter of interest. We do not expect that there will be much effect after the election either. Mark you are also big in research and it has been quite a tough year for research analysts. You are seeking to be the elite research firm. Can you tell us why it is still a Good Business . How has research helped you . Ralph i would argue that both of our businesses, the advisory business and the researchbased equities business are great businesses if you are a global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. A. A plus or if we hire an a minus for the plus, chances are they are not going to do much revenue because in our business you compete solely on the basis of your ideas, intellectual capital, and relationship. If those are not strong he will not get in the door with the most important clients. Research is exactly the same way, the top analysts will always be listened to by the largest institutional investors, and those investors whether it orunder the current regime not, will be increasingly focused i think on paying for the best research. Vonnie you are in a sweet spot you do not use your Balance Sheet to lend and yet out there and corporations they are going out on a bench. The idea that on a binge. What is the future when it comes to the fat raising rates . Wilbanks be able comes to the fed raising rates . Well banks be able to do it . Ralph rates are extraordinarily low and credit is highly available. Changing verythat dramatically over the next couple of years. One of the reasons we are pretty positive on the outlook for the overall m a markets is that the general conditions for good m a have been in place and are in place today. Reasonably Strong Equity markets, relatively low interest cost, and strong credit availability. And reasonably good visibility about the direction of the economy. Tose things together lead reasonably strong ceo confidence, which is ultimately e thaterry on the sunda you need to drive. Because the fed tightening as looming ever larger and people can borrow at pretty much zero, when he think about it the Regulatory Environment has not been all that accommodating. That might get worse, so why are companies doing this . Ralph they are doing it because in a slowgrowing economy, an economy where real growth is at is in the and that United States, and other places it is lower than that, and nominal growth is only a bit above that because inflation is relatively low. It is hard to get your top line and bottomline to grow in high Single Digits and low double digits. Putting businesses together, taking out some cost, diversifying is a pretty strong motivation in a slow nominal growth environment. Or 100way, a 50 or 75 basis points increase in short Interest Rates is not going to affect that. In theour stock fell 23 couple of days post brexit and you have recouped those losses and then some. Impact from the big brexit on Companies Like yourself, or do you expect further turbulence as the process continues over the next one, twoyear horizon . Ralph i think you are in the best geography to judge that. I spent a lot of time in london and my observation would be that we are not going to know the answer to that question for two plus years. Market is the egregiously overreacted. Saw a 45 week air pocket four to five week air pocket right after the vote and things have pretty much picked up exactly where they left off before that. Areclearly if there significant economic changes in trade and passporting, that will affect our clients. Vonnie the sterling get weaker . Ralph i think sterling has not bottomed yet. Vonnie Ralph Schloss nine, thank you for joining us. Happening in washington, donald trump is taking a break from campaigning to speak at the grand opening of the Trump International hotel. This is bloomberg. Mark live from london and new york, i am mark barton with vonnie quinn. This is the european close on Bloomberg Markets. Time for the Bloomberg Business flash, a look at some of the biggest is the stories in the news. Third quarter fell 27 at airbus, spending money wrapping up production of their wide body plane to make up for delays. Sales of helicopters declined. The management of swedens bank is actively looking to leave the home market. There were talks about merging this summer but the chief executive told bloomberg he is focused on transforming the lender. It will not have a direct impact on our activities. I think the Brexit Impact is indirect through the u. K. Economy and euro economy. That creates uncertainty and it is the uncertainty that probably is the impact on our activity. So far it has been muted but we will monitor that. Nor diaz thirdquarter earnings were better than expected. That is your latest Bloomberg Business flash. Take a look at where equity markets ended the wednesday session. Stocks declined for a third consecutive day. Stick with Bloomberg Markets americas. This is bloomberg. Vonnie it is noon in new york, 5 00 p. M. In london, and midnight in hong kong. I am vonnie quinn. David and i am david gura. Welcome to Bloomberg Markets. We are covering stories from washington to geneva to riyadh. James gorman spoke and we would hear what he is what he has to say. Tesla earnings out today, how they are expending extending beyond on is to become a clean energy company. Donald trump has a twopoint lead over Hillary Clinton in the swing state of florida. Lets go to julie hyman. Julie things have looked up a little bit from this morning. We are seeing the dow up 53 points, the s p little changed, and the nasdaq lower by one quarter of 1 . Andnasdaq more tech heavy apple is helping to drag it down with its disappointing forecast. Take a look at the sep s p 500 over the course of the day