There are some things moving including the likes of nike which received an upgrade. Weaker by 2 10 of 1 . Reports, well the will see how that plays out. Is weaker byira almost 1 . We will talk details in a few minutes. There was a deal. The active investors here. They have agreed to sell their Management Services business to some private equity investors. European markets, european stocks are down by half of 1 . The pound is also down. We had a massive rally on friday. The turkish index, the stock market, down by 5 . What istalk more about happening with turkey and syria later. Lets get to the main story. China, once more talks have fallen citing the president s phase one deal. Steven mnuchin says more talks and negotiations are on the calendar. We are joined by George Saravelos, Deutsche Banks global head of fx research. I real risk rally. We saw the brexit story and the trade story, both are faltering this morning. Lets talk about the trade story. There is confusion as to whether or not we will get a deal. The market is trying to understand what is going on. If you look at what is going on between these countries and try to understand the Bigger Picture , they are struggling over even getting a deal done on agricultural purchases. What does that tell us longterm . Mr. Saravelos longterm it tells you there are important Strategic Issues that will be hard to resolve, and you have the u. S. President ial election looming large. It will be positive if we can shift from worrying about tariff hikes to tariffs being delayed. That is a positive. Like to put myself in the shoes of a ceo or cfo where i think about whether i should be investing more in the next three to six months. The china trade truce is not a game changer. In contrast, brexit talks potentially are. Guy we will talk about brexit in a moment but lets stay with the trade narrative. The data at the moment are very bad. We are not talking about the escalation here. , giveni expect that data the current tariffs staying on, to continue to get worse . That will affect countries like germany very badly. How do i position for the next manufacturing isn out of the states . On saravelos it depends what your view of the source of the weakness in the data is. If it is the tariffs you will be positive. If you are worried about the main driver being uncertainty which has been arguable, then things are not necessarily going to get better. We will have more certainty that tariffs will go up in december, but the biggest challenge to trade and the political urgency around the u. S. Next year will not go away. I am still fairly pessimistic on growth. I dont think this truce will result many things. Vonnie is there a dollar or yuan play . Mr. Saravelos i think a big picture dollar trade is evolving and will become relevant next year. That is pointing towards weakness. Past six to the nine months it has been about globally centered negative sentiment and negative data surprises. Into next year the focus will shift more towards u. S. Centric drivers. Continued fed rate cuts, we anticipate the fed continuing these policies and this policies. This u. S. President ial election is far away in november, but the uncertainty around policies and whether they stem from trump or the democratic candidate will be hard and will roll over from trade to domestic u. S. Policies around tax and regulation that will be a drag on the u. S. Economy and u. S. Assets. We are slowly rotating into much more dollar negative world. It will take time but into next year it will be a dollar negative year. Vonnie what would it take off the dollar index . How much weakness are you pricing in . Mr. Saravelos if you start to price more uncertainty around the u. S. Election you see u. S. Centric downside risks. You could easily see a 10 move in the dollar. We think the euro could go back up to 120. The reason the dollar has been so strong is the u. S. Exceptionalism story. The fed cutting rates through 1 so the yield advantage that has been elevated is reduced. I think these things will happen over q1. The dollar dynamic has changed quite dramatically. The euro has had a reasonably good month so far. Currently trading down a little bit today, trading just north of 110. The yield for the short term for the euro is painful, how does the euro over the next into year end make headway if the fed only cuts once . Mr. Saravelos our view is the fed will not only cut in october but once more this year and next. Haveield advantage, we identified 1 as a critical threshold. If that falls below 1 sustainably that becomes more negative. Risk of have the tail potentially the spd pulling out of the german coalition. There is the spd leadership election, if they move out the market will price out a higher probability of fiscal stimulus from germany. That is not a baseline but a potential positive for the euro. We are watching what the europeanbring up politics, lets talk about brexit. You move your guide on the pound on friday based on a big shift you saw from the irish Prime Minister. You took the pound to neutral. The market does not feel neutral. After the convinced politics over the weekend that this brexit story will progress in a positive direction . Mr. Saravelos i am. Even though the news has pointed negative, if you look at the type of news flow it is related to detail. What is important here is that you have engagement. ,e know the two big shifts number one is the irish. The irish have never been sounding optimistic in terms of this new policy proposal. It is up to the European Commission to debate the details. The British Government has shifted away from this do or die brexit position. We have had people like iain duncan smith, t brexiteers publishing oped saying they may have to make concessions. The deadline may be extended to beyond october 31. Noticeable shift away from the hard brexit argument. Even if the agreement does not pass parliament and you get an early election the government will be campaigning on a deal. This hard brexit confrontation with europe has gone down. Vonnie does it matter what any constructive dialogue would involve on the ireland question customs is a sticking point, if there is progress does it matter what kind of progress . Mr. Saravelos i think from a market perspective at the moment what matters is to add the pale risk of hard brexit being low. Is agreed of what will matter to the future of the relationship. We will be focusing on these factors in a few months. I think immediately as we look at the next few weeks and into november what matters is that the market understands and the government petitions a strategy of engagement rather than confrontation. That means the risk of a hard brexit is low and it allows the pound to be on a positive. Guy George Saravelos joining us from Deutsche Bank. He will stick around and we will talk about more on the pound in a moment. Vonnie lets check global markets. Abigail a mixed picture for global equity. We start off with the asian session. The shanghai composite up 1 on a trade deal, that phase one trade deal optimism. On the bloomberg scoop that china may want to sit down and negotiate more before signing the dotted line we have the s p rallying on the dax friday around a positive trade deal. We have some real weakness, lets take a look at the turkey related etf, five of the last six days plunging. Today down around 13 . The worst multiday slide for this turkey etf going back to march. President trump threatening more sanctions against turkey and tensions on the border with syria. One of the vegas sector movers in the u. S. , we have oil down and european crude down 2. 8 . Its worst daily slide since the middle of december. Weighing on that energy sector. Devon energy in the u. S. One of the worst decliners. In europe we have Royal Dutch Shell down 6 10 of 1 . Apple hitting another alltime high of half a percent. Investors wanting in on the one maker before they are before the september warnings report. Earnings report. Upgrading this to a buy. Pricets raising their target by 50 to 75 per share citing strong flash memory trends. Tesla up 3 , up six days in a row. The winning streak for the electric carmaker, the longest ands january. Vonnie abigail doolittle, thank you for that. The function g tv allows chartsfind recent featured on bloomberg tv. You can even save your favorites for you to reference. This is bloomberg. Vonnie live from new york im vonnie quinn. Guy lets check in on the bloomberg first world news. First word news. The eu is showing its unhappiness with turkeys incursion into syria. It has agreed to restrict arms sales to the turks. President trump says the u. S. Is ready to go with more sanctions on turkey, including shutting down all u. S. Dollar transactions with the turkish government. Problems for british Prime MinisterBoris Johnson and his brexit proposal. Their European Union warns that talks are far away from a breakthrough and johnsons lyrical allies are distancing themselves. U. K. Proposale for breaking the deadlock over the irish quarter does not have enough details. In spain, an Unprecedented Court ruling. A Catalan Leader was given a 13 year prison term for trying to break away from spain in 2017. The former catalan Vice President was handed this sentence. Eight other activists received between nine to 10 years. A legal referendum triggered a month of unrest. This could have an impact on the general election of spain. Three m. I. T. And harvard economists won the nobel prize and are being honored for their work to move people out of poverty. Only the second woman to win the economics prize. Global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Guy . Bonnie, pick it up. Still George Saravelos with us, Deutsche Bank global head of research. What is the new target for Deutsche Bank . Think thelos we euro, sterling to drop down to 83 or 84 pence. Sterling against the dollar could go up as high as 135 but that would require dollar weakness. Those are the sterling targets. Vonnie at what point do we have any certainty on where sterling will be headed more longerterm . In termselos the key of nearterm dates is the summit coming up on the 19th. If you do have agreement there there is still quite a lot of and premium to remove Sterling Price action can be quick as we saw on thursday and friday. If that is delayed and we get another extension, i dont expect sterling to selloff. Is in gaugingent proactively in these discussions that should be supportive of the pound but potentially pricing could drag on until the end of the year. Guy how much did friday change positioning . Mr. Saravelos our positioning metrics were close to record it is so historically very difficult to see prices change so much within the scope of a couple days. You have the shorts being reduced but there are some mediumterm under weights from investors and central banks. These will take more than a couple of days to change. You are sounding much more positive about the situation in europe than other people. You have highlighted two things which could contribute to that. The first is what is happening with the brexit story and the second is what is happening with the spd that could change the narrative in germany. Your list of of if they both come to pass and we end up talking more actively about fiscal policy in germany and getting a brexit deal that changes the entire narrative around the european outlook. Mr. Saravelos that would require powerful european more signs of fiscal stimulus. That is not our baseline in terms of the early german election. We look at where the market is pricing things. The market is pricing close to zero fiscal stimulus. The potential for more negative news is already in the price. A lot of they spd coalition allowing the market to price positivity the market is pricing enough risk around the u. S. Election. Not around the outcome but the uncertainty it causes and the risk premium it adds on to u. S. Assets. Is going on what over q4 or q1 of this year it is a rotation from global weakness to very u. S. Centric sources of downside political surprises and downside economic risks. Guy just looking at the dollar at 5. 99. Ira trading if we go to six what would that mean for the turkish lira . Mr. Saravelos if we go to six with these escalations for the lira it is all about sanctions. Turkey has a large self funding requirement in terms of dollar exposure for the banking sector. This is damaging because the market adds a risk premium. Very convoluted messaging out of the administration in terms of whether this is happening or not. Guy the u. S. Administration. Mr. Saravelos the market is gradually adding more probability. It depends on what is going on in the extremely complicated in terms on the ground of the military situation there. Vonnie are there other emergingmarket currencies that you like . In emergings markets we see areas where currencies are not very expensive or pricing and a lot of good news. The yuan is one. We are not particularly positive on it. The dollar china we think the risks are higher. In terms of positivity we like currencies that look cheap with high real yield. One example of that is russia. In fiscal accounts seem order and the central bank is behaving very responsibly. Theome senses and Turkey Central Bank has been cutting quite aggressively over the last few months. Guy george, we will leave you there. Thank you for stopping to see us. George saravelos joining us from Deutsche Bank. This is bloomberg. Bloomberg. Guy from london i am guy johnson. Vonnie i am vonnieit is time ft Bloomberg Business flash. Considering a bailout that would hand over control to a group. The investment giant is convinced they can turn around the start up. Weighing 5 billion in Debt Financing led by j. P. Morgan chase. They are on the verge of running out of cash. Apple is seeing higher iphone demand than expected. The reason is falling prices and the aging a aging a boulder models. They have cut prices and offered more attractive trading deals. The iphone 11 went on sale at 699, 50 less than the previous iphone xr. Has agreedquity firm to buy the british cybersecurity company. The price for 3. 8 billion. A premium on fridays close. A provides i. T. Security to range of clients as well as dentists and neighborhood stores. That is your latest Bloomberg Business flash. Lets have a quick look at u. S. Markets. A quieter session than usual due to columbus day. The dow higher by a 10th of 1 . Markets reflecting on the potential china deal after fridays rally. The s p unchanged and the nasdaq guy a quick look at european markets. 1 ,ftse 100 down by half of one of the worst performers in europe. We are watching the pound. In terms of the downside in europe, some mining stocks are feeling it. Undermes like bhp pressure. The big european banks that had strong days on friday fading as well. Some tech stocks are trading down. All under pressure there but only just. The dax is outperforming but still on the downside. We are counting you down to the european close. Three minutes to go until the end of trading in europe. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Guy 30 seconds until the end of regular trading this monday morning. The afternoon turning out to be less exciting. We are watching a situation developing that is quite hard to fathom when it comes to the trade story. European stocks not going anywhere in a hurry. You can best see this in this chart. This is the friday rally we got into the close. We went lower first thing this morning. Since then, the bulk of the day has been much less exciting. Trading in an incredibly tight range after that gap down first thing this morning. On the two database is still up nearly 2 , up 1. 81 . It shows you how big the move was on friday. That does not take into account the gap higher we got friday morning. In aggregate, a positive story. Volumes are light in europe because of what is happening with columbus day. The ftse 100 down. 5 . The miners are taking a big chunk out of the market. The dax, which is normally a high beacon trade on the trade narrative is not moving. That encapsulates the story. The market cannot make up its mind whether or not all of the news is being discounted on the downside and you need to worry about extra tariffs. The market is struggling this one. The dax sums it up. The cac 40 down. 4 . Lets take a look at the sector breakdown. The only sector in positive territory is the auto story. Care higher as well, but not by much. You have a mix in terms of the stock sectors. The high beta defensive names ours names are trading not too badly. Food and beverage reasonably flat. Utilities as well. The bottom end of the market you have cyclical sectors. You get autos and mining stocks sidebyside. Today they are completely opposite ends of the spectrum. That may have something to do with trade data we have out of china. The insurance sector trading down 1. 16 . The basic resources story is one that tells you about what is going on in terms of what china is consuming, and that is softer. The auto sector is looking more positive. Lets take a quick look at some of the other stories we want to focus on. Turkey. We were just talking about what is happening with the turkish lira. Lets talk about the parker stock market. This is the last five days lets talk about the turkish stock market. As the situation in Northern Syria has escalated, we have seen the stock market take a turn for the worse, down 8. 75 . Today down around 5 . Vonnie a federal holiday. Keeping things quieter than normal in the united states. Stocks are trading and they are in a range, up. 1 , down. 1 . At 76. 81. The sox index, one of the more exposed to a chin