Is the boeing breaking up the duopoly . Brexitress on the negotiations. U. K. Economy is not growing at a rip roaring rate. Carney speaks in less than two hours. Matt good morning. From the index opening, and castrating, we see Index Futures here. We had a mixed picture yesterday. Not a lot of action. Today we see the same thing. 0. 2 . Ex is down about little change on the dax. Blooms had been stuck in a range for so long. This is a onemonth look at the german tenyear trade. Investors have started to stock up on their safe haven bets. Buying them and pushing the yield down. It is up a little bit today. You can see from that red arrow pointing up, dont let that confuse you. Right now trading only at 38. That is a pretty low number for german bund it yields. Guy take a look at what is happening with the u. S. Shape of the curve. Yesterday the curve flattened, again, and big. It was a really big move. It is what we are seeing in europe as well. The markets should Pay Attention to it. Lets look at what is going on with the markets this morning. Copper into show you just a minute. That is pointing higher. The big metals producers, saudi arabia up. The oil story in focus as well. Lets show you whats going on with the commodity session. Here is copper. That is trading up. Yesterday we saw a big move. 2 on copper. Up, iron ore down 2 . That is worth paying attention to as well. But get a Bloomberg News update with juliette saly. Juliette north korea has warned that a nuclear war could break out at any moment. The comment from the nations deputy ambassador, as the u. S. And south korea again one of the off the westrills and east coast of the peninsula. The country has become a fullfledged Nuclear Power which possess the means, and warns uis mainland the u. S. Mainland is in range. U. K. Prime minister Theresa Mays Brexit mission to brussels has been a flop. She was hoping to unblock stalled negotiations. Following the meeting last night, both sides issued a statement that entrench their previous stances. Ministers are losing faith in the eus willingness to strike a deal. President trump and Senate Majority leader Mitch Mcconnell has presented a united front. The two appeared together in the rose garden, and insisted they are closer than ever before, despite having publicly attacked each other in recent months. Trump told reporters they are on the same page when it comes to taxes. Fighting forwere lower taxes. The biggest tax cuts in the history of our nation. We are fighting for tax reform. We are getting close to health care. It will come up in the early part of next year. We feel confident we have the votes. Catalonias Regional Government meets in barcelona to consider options that spanish me minister threatens to meanwhile spains court has ordered catalan fleet in ireland, three people have died as the country was hit with some of the worst weather conditions and 50 years. Banks closed branches and airlines canceled flights. Homes and50,000 businesses lost power while schools stayed closed today. Global news powered by 2700 journalists and analysts in more 120 countries. This is bloomberg. John taylor is said to have impressed President Trump in the search for the next chair. The stanford economist hawkish monetary role as risen to second to the betting market. How are fx markets reacting . How are markets in general reacting . We are seeing the dollar go big. We are seeing u. S. Yields rise. Yieldsseeing you will tick up globally. We are seeing a clear follow through on this. Taylor has jumped up and to being seconded investors thinking. Seen ask it was unlikely to happen. Now, yellen is still in there, and taylor is secondmost likely. It is important to emphasize that trump will meet with yellen later this week. Yellen is probably still the base case candidate. It makes sense that taylor is the second favorite. The market isnt surprised by anything right now. They are all trending lower and lower. The market simply does not anticipate that we will see any kind of tail risk events shaking things up. If we get a tale risk event, how aggressive could the move the given the setup we have on volatility gauges . In all cycles markets tend to go, that increases leverage and. Reeds complacency this cycle has gone a long time, but that makes sense. We have seen Extraordinary Bank action in terms of qe and liquidity pumped into the system. Overall, this declining volatility should continue longer. Willase case is it continue for another few months, another year, who knows . The longer it goes on, the more we have to prepare for tail risks that might be the catalyst to reset everything like we have seen in every other market cycle. North korea, which everyone is looking at, catalonia which is an underestimated risk, which is an ongoing situation that investors are overlooking, and near the end of the year we have the possibility of a Government Shutdown in the u. S. Matt i saw that in your macro view this morning. You talk about the reason the Government Shutdown is a main concern is that markets are so illiquid around the end of the year. What does the illiquidity come from, is it just the season . The Northern Hemisphere tends to take extended holidays. A lot of traders are out of the markets. Many banks, many hedge funds, they have their end of year, if youre a traitor there is no incentive to escalate your risk in december. Most likely your bonus has been decided by november. Why take that risk to make a little extra money in december . Youre not going to get paid for it and all there is is downside. There is little incentive to take extra risk in december for many markets. So there is less liquidity. On top of that, around here and you have funding issues. Especially around a shortage of dollars. Overall, the funding their december 31 tends to be a low liquidity moment. If this situation extends into december, it could get quite messy even if he gets resolved in q1. Thank you very much. Plenty of analysis around bloomberg. You got the Morgan Stanley numbers. I want to show you this curve from yesterday. This yesterday as the taylor story begin to gain traction. Charted against the euro. On iraq upto focus next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. I want to get the Bloomberg Business flash. Airbus has agreed to. Cquire a majority stake and a potential effort to circumvent the tariffs, airbus will add another Assembly Line mobile,series in alabama. Netflix added another 5. 3 million subscribers beating estimates. It is expecting another 6. 3 million to sign up in the fourth quarter. Analyst estimates, while revenue beat forecasts. Steel has received a request from the u. S. Department of justice on its data scandal. Its own investigations will reveal the prices began more than 10 years ago. The Global Review of its Business Unit is also likely to show further instances of data falsification. Rio tinto is on track for shipment of iron ore from Western Australia will hit about 330 million metric tons. It will top the amount exported last year. That is your Bloomberg Business flash. Thank you. Lets stay with the commodity theme. Speaking exclusively to bloomberg, iaea inspector said conflict in the region wont have a major impact on markets. Say whattoo early to , what thee result implications on the markets. For the time being, we dont note a major impact on oil markets. Lets get another take on this. Is he right . The oil market looks the same. They are pretty much flat. They are slightly down. In terms of whats going on on 200,000nd, youve got barrels offline. Know, theres no action going on in the fields. You had some casualties, but you are also seeing negotiating between the kurds. It could be worse than we have seen. Matt couldnt to get much worse . Havent the peshmerga been really emboldened by their success in the fight against isis . Gain . They have a lot to they do. They have been emboldened by that. You have to remember to cook k has been a disputed area. It, but atontrol of the same time there is some dispute about who should have control. On the other hand, you are seeing a level of caution, and how the two sides are reacting. You have seen negotiated retreats to avoid bloodshed. That suggests we are not going for the allout war. Guy what happens next . How does this story evil . How does the story evil question how does this question evolve . How does the oil market deal with this . You have producers who will not be happy about this. On the other hand, it is affecting races and that is not good news. You have to consider iraq. They come from fields away from this area. You will not see a dramatic 400,000 barrels off of the market. In the context of a massive global oil market, that can be made up easily. The swiss activist investor has found a new target. According to person with the stake is around 100 million francs. Why is Credit Suisse targeted, and do we know yet what the plans are . I was asking myself the same question. Weeks ago he said he is not going to target the bank. His main rationale behind this move is the share Price Performance of Credit Suisse. That is something other investors would say as well. The big restructuring the bank was going through, and the Capital Raising shares have been up so far this year. This needs to be changed, and this is what he took a stake in Credit Suisse. The big plan is to break the bank of into three parts. I dont have concrete details at this stage. It seems to be the course of action. That is a huge plan. That is a big goal there. How do you think, how do you rate his chances of success . I was asking myself this question. Ofs is a guy with the fund 250 million. He is wellknown in switzerland and he has a track record. Success, ith some comes down to whether he gets enough support. He is speaking at a conference reportedly in new york on friday. It comes down to further investor support. I think the bank may talk to him and listen to his proposals. Given the restructuring theyre going through, it is hard to imagine this will lead to anything. Never say never, and many things are possible if he gets enough support. I dont think the bank will react to this at this stage. Thank you for joining us. You can follow Morgan Stanley and Goldman Sachs thirdquarter result. Check that out when they report earnings later today. Get to our stocks to watch next. This is bloomberg. Guy stocks you need to Pay Attention to. Airbus on the bombardier news. Credit suisse on the spec sale. Keep an eye on rio as well. This is bloomberg. Guy welcome, a minute until cash opens in europe. European equities, we have a spanish market that will probably drop more than most. Going to open up down another. 3. The rest of europe looks fairly flat, the dax a little stronger, the cac a little firmer. Keep an eye on rich more, richmore, airbus. Matt i have to show you a technical indicator. Cross, u. S. Oil nymex crude, the 50 Day Moving Average in pink, the 200Day Moving Average in gold. The 50day is about across the 200Day Moving Average. That is a positive sign for technical analysts if you buy into that, it means oil will go up. Guy psychology. , tradingopening flat around the 75 level. Keep an eye on the little line on the bottom, the ibex will be an interesting one. You could see weakness at the getgo. You may see a little more softness there, as well. Interesting to see where that trades on the nine handle as we worked our way to the thursday deadline in spain. Watchx yet to get going, inventories bouncing back strongly. Profits up on the back of that. Manus cranny has the details. Manus equity markets have moved of the asiane end session. The prospect of nuclear war at any time is the message from north korea. Other factors saying the north koreans may be in moscow for discussions trying to come off the fever pitch. Down for a 14th day in a row as the dollar is better bid on the story of john taylor going from wild card to one of the key contenders for the fed. By point 1 . P we are keeping an eye on the luxury in the form of rish mor richmore. The pound is under pressure. That dinner was served cold. In transitions, no breakthrough in terms of prospects of a discussion of trade. Sources saying europeans are less than bothered about back trying to get a deal done. This is the probability of a rate hike in the united kingdom. Inflation expected to come in on a fiveyear high. We are not getting paid as much as the inflation rises, the green line is the new target for the market. One rate hike in november and done, they say. The First Quarter of 2019, which would be the end of carneys ten ure. You get another rate hike. Will he go in front of the committee today and stick to the line, which is coming off . Wipro quote, sterling could be as long as u. K. Equities, so could the gilt market. This is your christmas gilts. These are the markets which are going to be in place. Your gilt yields 1. 35 . In saying look, you have to roll out your programs, think about no deal and what that might mean for you ks assets and for gam, that could mean the pound could drop as much as 10 . A moderately dovish call. I am off to Digital Radio with caroline. Manus, lets talk about the movers. Well,got daily mail doing airbus is a heavyweight on the back of the story with the cseries. Buying into that business. Is it a defensive move . Komen and about that concern around that. Danoneis on the up, rising on the back of better numbers. China a factor in that. Credit suisse at the bottom trading higher on this stake build a story, possible breakup. It aready talked about little bit. Quick look on the downside, Standard Life everything, airbus surely on the front foot. Is one we will talk about. Agreed to acquire a majority stake in a cseries jetliner program. For more,s Benedict Campbell joins us in berlin. Arbus walked away from similar deal years ago. What has changed now . Last put the question in night. They sprung this deal on us overnight. Tom wants to speak to you, and his response was, a couple of years ago, the cseries wasnt where it was now, wasnt certified, wasnt flying. , rampingr own issues up production on the 350, a couple of other programs so the timing then didnt seem right. Now it does. You also need to remember the bomber story is not a good one. They have had an issue on the train side. They were probably waiting long enough for the pain to build up so they could walk away with a steel. Much of this is about not letting the chinese get it . If they were to put this in their reduction, how would it change the duopoly story . That is always the big fear, lurking around the airshows. Benedikt that is absolutely right. They have just started flying its playing, it is a real plane, not a paper plane. There was the concern there is technology here owned by bombardier that would be interesting to them. Airbus is closing that flank now by essentially controlling the cseries. That is good news for them. It is great news for airbus in that they dont have to spend anything on this and they get a brandnew plane. They could probably use plug and play for their future technologies. The 320 is a nice plane, but it is from the 1980s. They will be looking at what can we take from the cseries that we like . How can we save on Development Cost on the next generation of three 20s. Of theght, i heard some aeronautics are the kinds of things on the cseries they like. You can probably see some of that technology transferred to airbus. Guy where does this fit in . If you are told you have to start selling cseries jets, as well, how do you make this work . Fit with the 319, at the bottom end of the narrow bodies, there is an interesting dynamic at work here. Benedikt there is a bit of revision for airbus. For the long time, we heard people were upgrading. The 319 is all but dead. They havent had a new order since 2012. The 318, the super style version of that doesnt sell at all. A lot of people have upgraded into the 321. Probably the admission that airbus from airbuss people want to fly pointtopoint. It is a brandnew plane. They are probably thinking we will kill the 319, we get the Bombardier Cseries which has served a market of 140 people with a new plane, why not go with it, especially if it doesnt cost money. Matt i hope there is a decent amount of legroom. Benedikt that is what people like about the plane. Matt what about boeing . It has made some pretty strong accusations here in response. Benedikt boeing is the one with big on their face in this because they tried to keep on the deer out of the u. S. Market. We saw tariffs slapped onto the cseries and then we hear the idea, why dont you assemble a plane in mobile, alabama where we have a new Assembly Line. Matt ive been there. Benedikt good casinos. For airbus, it is a way of adding capacity to its line. For bombardier, you get a made in the u. S. Sticker. Interesting to see how trump response to this. This ebook it as a success and say, i put up a fight and we get u. S. Jobs, or does boeing call and say hang on, this doesnt seem like seems more like a trojan horse. What is going on . That is something we need to follow up on. Matt they say it is a questionable deal between two heavily subsidized contributors. Thank you for joining us, benedikt kammel, bloombergs global is this manager talking to us. Madrid finds evidence of Catalan Police force and a new deadline for barcelona to back down. The latest on the spanish crisis. This is bloomberg. Guy welcome back, lets look at the markets to see what is going on. Stoxx 600 is just up, but the main forces around europe are fair