Transcripts For BLOOMBERG Bloomberg Markets European Open 20

Billion euros. It is cutting the delivery target. Lowering the outlook for deliveries this year. This is amid economic jitters in europe and also in an unprecedented slump in autos in china. The world eats biggest car maker, lets remember, thats hat v. W. Is. Also got an upbayer. They are saying the plaintiffs have more than doubled to 42,000 plaintiffs. That is an important update there. It is confirming its outlook and it is aligned to continue operations. The agreements have been signed im trying to get my head around that. The plaintiffs more than doubled to 42,700 plaintiffs. Coming up, just to get back to v. W. Well be speaking with the c. F. O. After the german automaker reported Third Quarter results. Dont miss that interview at 8 00 a. M. London time. Of course in the car makers state, the other interesting story in terms of watching the start is the talks between chrysler and p. S. A. That we have been reporting. Back to jim mccormick. Looking through v. W. In terms of reading through the numbers here, the economic slump in europe and the unprecedent auto slump in china, how concerned are you about europe an china . There is a link between the two. We are seeing the impact on carmakers. I think this is telling us a lot on what has happened. When you look back on 2019, one of the most interesting around important stories is this unique weakness in german industry. Two reasons for it. They are under some pressure and the trade war. I think this unique weakness in german industry has been a bad thing for most of the past two years but it could turn into a good thing because we have been waiting for years for germany to start focusing on fiscal policy. We are getting there. Something close to 1 of miscal stimulus coming from germany fiscal stimulus coming from germany. Nejra peek who speak to policy make ergs there, the message they get is a lot of germany doesnt think fiscal stimulus is needed yet. How much longer might we have to wait . We have had this conversation many times on this show. The narrative in germany has changed a lot. Politicians are talking actively about it. If you look at the details to have budget they submitted, it doesnt sound exciting. It is something close to a balanced budget. Running a big Budget Surplus gives you close to 1 of g. D. P. Or fiscal stimulus. A pretty big number. Nejra would that impact the rest of the euro done as well . I spoke to somebody who said it is not a panacea for the eurozones problems. I think it helps. It is going to help germany more. This story of 2019 is not broad based euro area weakness. It is unique weakness in german industry. Other areas seem to be doing well. France is doing well. Taly is stabilizing. Nejra thats why youre seeing a higher euro. We talked about our curving steepening in term of the european bond. Jim mccormick staying with us. Great to have you with us this morning. It is a huge day for corporate results. Well hear from the c. E. O. Of Credit Suisse and the c. F. O. s of Deutsche Bank and our interview with Standard Chartered c. F. O. Is moments away. When it comes to where cars are made, President Trump wants to be in the driving seat. We learned the white house wants to dictate how and where global Auto Companies make vehicles and parts. Thats part of the new nafta agreement. Some are worried the process could be used for political gain. Nest sli weighing the sale of two local Chinese Brands after years of trying to turn them around. They are looking for more than billion. Nestle declining to comment. Now to boeing where a manager tried to halt production of the 737 max over safety concerns before the first of two fatal crashes. These allegations coming from a house lawmaker before the boeing chiefs executive testimony today. Dennis mullenberg appeared before the senate yesterday trying to salvage the companys reputation. Johnson johnson said lab tests showed no signs of as best owes asbestos in recalled baby powder. They are face nearly 17,000 lawsuits claiming asbestos gave people cancer. And overcoming a lackluster european market. Net knock n spains large eths bank fell 75 in the Third Quarter. It is a different picture in the mericas with brazil and mexico contributing to the groups profit. The crisis in lebanon is growing. The nations Prime Minister has resigned following a day of violence. Now calls for mounting for beirut to impose capital control and prevent a run on the banks. They have been closed since the start of the uprising two weeks ago and only plan to reopen when the situation stabilizes. A bill sanctioning turkey would hit the leaders and financial firms. The bill passed the house with a vetoproof majority. It reflects the widespread outrage over President Trumps policy in syria. And california is in the midst of another rounched blackouts as some of the seasons strongest winds fan wildfires across the state. 17 Million People are facing critical weather conditions. Utility Companies Make up power to as many as 2 Million People. Pg esays they will issue a onetime rebate to customers for the shutoff. This is bloomberg. Nejra thank you so much. Now surprise profits at Standard Chartered. They made 19 more revenue the Third Quarter. Combined with a 2 increase in revenue from Greater China and north asia they reported a pretax profit of 16 . Joining us now is the c. F. O. Of Standard Chartered. Welcome to the show. Great to have you with us this morning. You must be feeling good after a set of . S like this. Is it a good as it gets . No, i dont think it is as good a it gets. The things which we have been focusing upon have been coming off well. 8 top line and 16 bottom line is good. Particularly against a backdrop when people are nervous about what is going on in the world we showed by sticking to what were good at actually we can make good progress. This is a good quarter for us. You also stuck with your profitability target as well. That is a key headline that came out this morning. Youre going to keep pursuing that goal on return on equitable target. How is it going to beon on that . Costs were pretty stable in last set of numbers. I think it will be a combination of many things. 2015 we were negative on our return in capital. 2021 we would like to get to 10 as our target there. The world is more difficult now outside. Interest rates heading more down than they were at the start of the year. And the macro sort of the geopolitical tensions are fairly present. Some of that will be income and some of it cost control. Basically it is just continuing to focus on on our more Network Corporate business and we will push as hard as we can do and see how far we can get. Nejra there is a couple of things i want to pick up there. First, the costs. 2. 5 billion is what you said today. What more are you going to do to accelerate the cost cuts . This is postly about cost cutting but partly about reinvesting so that we can get more income momentum. We have had absolutely static costs this Third Quarter compared to the Third Quarter a year ago. Despite the fact that we have increased significantly investment n. I. T. And in digital platforms and things like that. I think the position going forward, taking costs down to invest for future but were much more geared up to how get that momentum on the income in the future and therefore fairly stable costs will keep costs below the rate of inflation and thats what were on track for this year. Nejra you said your predicting costs will be higher in this years second half than in the first. Is that down to the investment and when can we expect that to taper off then . We typically in most years have slightly higher vem in the first half than in the second half. Because some of that is written off, we will see the expense side go up slightly. That is not an abnormal position for us. It is behaving extremely well and very much on track with what we wanted. Nejra you mentioned rates. Of course we have a fed meeting this week. The question whether we have three rate cuts. If we see the fed move lower and lower, how much of a challenge will that be for you . Generally the banks rates are good. If you go back to the start of this year, people argued at that time that we were expecting a slight increase in rates over periods of time. Actually the opposite is now applying and the mood at the moment has changed a little bit. So long as it is a progressive change then it is something we and our clients adom date and having a lesser interest burden is a good thing for their businesses. Ust moving on the next eight months, sentiment can change equally in the opposite direction. T is something we work with. Nejra are you expecting a bottoming out or do you expect a slow easing cycle from the fed . I think well have to see where they go. Nejra lets talk about hong kong as well. You had a 2 increase in revenue from china and north asia. Have you seen any Contingency Planning by your own ultrawealthy clients in terms of hong kong . We saw hsbc saying on monday they see their ultrahigh clients opening accounts outside to have territory. Have you seen that in Contingency Planning . What we have seen in hong kong is the business actually continuing to perform pretty well. Maybe not growing quite as much as it would have previously but absolutely growing in the quarter and the full year to date. The Balance Sheet is holding up, slightly higher than where it was at this time last year. In terms of the concern about the direction of travel there, business is very robust. It is doing well. At the moment we are very comfortable with the way it is going. To the question about yes, there are some clients looking at whether setting up another account in another country might be a good thing to do. We are able to do it. It is not big time but it is a number of plants that are looking to do that. Nejra are you worried at all about the future of hong kong as a Financial Center . No, no, if you look back in history, there will be ebbs and flows in hong kong and it has a proven track record of resiliently coming through difficult situations. It is a very vibrant economy. It has a huge reputation. I believe over a period of time it will pull through this and become a thing of the past. Nejra you announced a buy back in april. Any further plans for an initial Share Buyback . Another billion dollars . We have not announced anything to date. But if we get in a position where we have more capital than we need and there is no obvious other use for it, we will not hesitate to return it back to shareholders. We are absolutely prepared to live by that promise. We will clearly that v that discussion and decide what we do at that point in time. Nejra thank you so much. C. F. O. Of Standard Chartered joining us this morning. The up, we speak to c. E. O. Of the Austrian Bank next. En youre traveling to work, tune in to your Bloomberg Radio or mobile device. This is bloomberg. Er nejra lets get to an exclusive interview. The austrian lender is fully loaded. It came in at 13. 1 . Joining us is the c. E. O. Welcome to the show. Really great to have you with us. Revenue is something i suppose for you to celebrate. Give us an update on costs. Net Interest Income momentum and margin pressure. Are there any sort of to any sign of improvement there . Lets talk about net income interest first. No signs of improvement there. We are lucky. We have a strong growing business in country where is we still have positive Interest Rates so we are in the forcing fortunate n situation where we can still grow our net income. Nejra with the low interest environment and negative rates are you finding at the moment that we are close to thers haval rate in europe where the positive impact of negative rates is no longer outweighing the negative impact for banks . I didnt see the moment when the positive impact was negative rates. It is not a good thing but were getting paid for living with it. We got pretty used to it. We manage it rather well. It is unpleasant for our clients. They put a lot of money into our bank. Our deposits grew 6 and we dont pay them anything. Makes you feel bad. In the Euro Currency to develop nicer margin overs the next years, forget it. It is not going to happen. Nejra how satisfied are you with your cost position at the bank . Do you expect any major Cost Initiative in 2020 . We the Cost Initiatives are things that you should do and not talk about. I find it utterly boring. Next year im going to cut my costs like that. Just go ahead and do it and show it. It is extremely important because at the same time we have to invest a lot. We have to invest a lot in tech and a. I. And a lot in good people. We still need them. We have to dinner vest in bad things and do that very quickly. Divest in bad things and do that very quickly. Nejra investments that are planned for your regional platform in 2020, what returns can you expect from that vex investment . George is the platform in the way that we have built tech in our house it is very difficult for us to say how much money did we make from george . Were making money on the way we serve our clients and the digital channel is one of the more prominent ways in how we serve our client. What we know is our client base is growing constantly, gaining market share all across the region and i would guess most of that is in addition to good people, we have a good digital platform. Nejra i want to ask about your corporate customers. What are they telling you about the outlook in the c. E. E. Region in terms of how significant the downturn is . Well, the downturn is not as strong in central and Eastern Europe as in other countries. You see we outgrow most of the european markets, g. D. P. Growth in our country is 3 and it is still next year. One of the main reasons for that is simply that our countries are not as developed in their social welfare system as western europe is. It is just a lot more flexible. The region offers still a lot better opportunities for entrepreneurs than most of the western European Countries and we benefit from it. Nejra interesting. I want to talk about your c. E. T. 1 ratio. You said a higher dividend or buyback will only be an option if they exceed 14 . Bloomberg intelligence said that may happen in 2021. Is that stale position you hold to . Very much. We include the Third Quarter profits. We are at 13. 5 for the moment. We are relatively close to the 14 . We are going to get there and we see absolutely zero reason why we should go above 14 . Even 14 i think is already really high enough. There is no need for more capital. Nejra why not return capital to shareholders now . Absolutely. Thats what we would like to do. Nejra would you announce anything, any point season given that you just said that is same thing about cost. Dont talk about it. Just do it. If you have excess capital, give it back to shareholders but dont make longterm announcements. Nejra like it. Just do it. Lets talk about just doing it and the e. C. B. And policy from here. What are you expecting from Christine Lagarde when she takes the helm . Are you worried well continue to see lower rates in europe and how will you offset that . I have high hopes in christine laggard. She is a wonderful lady. Lagarde. She is a very skilled politician. I think the most important thing for the european Regulatory Environment and yesterday they did a very good job on getting the National System out of the crisis but for the moment i think they are overdoing it quite a bit. They have to turn pragmatic and be really careful. The european Financial System is a lot more important for europe than the u. S. National system is for the u. S. They have to be very careful with it and make sure that banks can really fulfill a useful function in order to help europe grow. And there is a point where regulation turns not only creating stability but because of too much regulation chris instability. The most important thing for her would be to make sure to say we got a level playing field. Thats where we are. Were going to stay like that for 10 years. No more changes. Dont change the rules every six months. If she does that, im going to love her. Nejra your message to Christine Lagarde. Thank you so much for joining us. Really great to have you on this the show this morning. Going to get to more breaking earnings. Coming thick and fast this morning. Peugeot confirming ongoing talks with Fiat Chrysler on the merger. This is something we were reporting and get confirmation from peugeot. This is important in terms of the story we were looking at yesterday when we were reporting that a merger was being explored. That potential deal would reshape the global auto industry. Now were getting confirmation on that. Coming up, well be speaking to Tidjane Thiam from europe. Dont miss that interview just after 7 00 a. M. London time. Third quarter, net income came in strong. Well be speaking with the Deutsche Bank c. F. O. After the german lender reported earnings for the Third Quarter. You can catch that interview just after 7 00 a. M. London time. Lots more coming up. This is bloomberg. Nejra the morning from bloombergs headquarters in london. I am nejra cehic. Credit suisse the profit trading as the swiss bank hopes to put a scandal behind it. We will hear from Third Quarter<\/a> results. Dont miss that interview at 8 00 a. M. London time. Of course in the car makers state, the other interesting story in terms of watching the start is the talks between chrysler and p. S. A. That we have been reporting. Back to jim mccormick. Looking through v. W. In terms of reading through the numbers here, the economic slump in europe and the unprecedent auto slump in china, how concerned are you about europe an china . There is a link between the two. We are seeing the impact on carmakers. I think this is telling us a lot on what has happened. When you look back on 2019, one of the most interesting around important stories is this unique weakness in german industry. Two reasons for it. They are under some pressure and the trade war. I think this unique weakness in german industry has been a bad thing for most of the past two years but it could turn into a good thing because we have been waiting for years for germany to start focusing on fiscal policy. We are getting there. Something close to 1 of miscal stimulus coming from germany fiscal stimulus coming from germany. Nejra peek who speak to policy make ergs there, the message they get is a lot of germany doesnt think fiscal stimulus is needed yet. How much longer might we have to wait . We have had this conversation many times on this show. The narrative in germany has changed a lot. Politicians are talking actively about it. If you look at the details to have budget they submitted, it doesnt sound exciting. It is something close to a balanced budget. Running a big Budget Surplus<\/a> gives you close to 1 of g. D. P. Or fiscal stimulus. A pretty big number. Nejra would that impact the rest of the euro done as well . I spoke to somebody who said it is not a panacea for the eurozones problems. I think it helps. It is going to help germany more. This story of 2019 is not broad based euro area weakness. It is unique weakness in german industry. Other areas seem to be doing well. France is doing well. Taly is stabilizing. Nejra thats why youre seeing a higher euro. We talked about our curving steepening in term of the european bond. Jim mccormick staying with us. Great to have you with us this morning. It is a huge day for corporate results. Well hear from the c. E. O. Of Credit Suisse<\/a> and the c. F. O. s of Deutsche Bank<\/a> and our interview with Standard Chartered<\/a> c. F. O. Is moments away. When it comes to where cars are made, President Trump<\/a> wants to be in the driving seat. We learned the white house wants to dictate how and where global Auto Companies<\/a> make vehicles and parts. Thats part of the new nafta agreement. Some are worried the process could be used for political gain. Nest sli weighing the sale of two local Chinese Brands<\/a> after years of trying to turn them around. They are looking for more than billion. Nestle declining to comment. Now to boeing where a manager tried to halt production of the 737 max over safety concerns before the first of two fatal crashes. These allegations coming from a house lawmaker before the boeing chiefs executive testimony today. Dennis mullenberg appeared before the senate yesterday trying to salvage the companys reputation. Johnson johnson said lab tests showed no signs of as best owes asbestos in recalled baby powder. They are face nearly 17,000 lawsuits claiming asbestos gave people cancer. And overcoming a lackluster european market. Net knock n spains large eths bank fell 75 in the Third Quarter<\/a>. It is a different picture in the mericas with brazil and mexico contributing to the groups profit. The crisis in lebanon is growing. The nations Prime Minister<\/a> has resigned following a day of violence. Now calls for mounting for beirut to impose capital control and prevent a run on the banks. They have been closed since the start of the uprising two weeks ago and only plan to reopen when the situation stabilizes. A bill sanctioning turkey would hit the leaders and financial firms. The bill passed the house with a vetoproof majority. It reflects the widespread outrage over President Trump<\/a>s policy in syria. And california is in the midst of another rounched blackouts as some of the seasons strongest winds fan wildfires across the state. 17 Million People<\/a> are facing critical weather conditions. Utility Companies Make<\/a> up power to as many as 2 Million People<\/a>. Pg esays they will issue a onetime rebate to customers for the shutoff. This is bloomberg. Nejra thank you so much. Now surprise profits at Standard Chartered<\/a>. They made 19 more revenue the Third Quarter<\/a>. Combined with a 2 increase in revenue from Greater China<\/a> and north asia they reported a pretax profit of 16 . Joining us now is the c. F. O. Of Standard Chartered<\/a>. Welcome to the show. Great to have you with us this morning. You must be feeling good after a set of . S like this. Is it a good as it gets . No, i dont think it is as good a it gets. The things which we have been focusing upon have been coming off well. 8 top line and 16 bottom line is good. Particularly against a backdrop when people are nervous about what is going on in the world we showed by sticking to what were good at actually we can make good progress. This is a good quarter for us. You also stuck with your profitability target as well. That is a key headline that came out this morning. Youre going to keep pursuing that goal on return on equitable target. How is it going to beon on that . Costs were pretty stable in last set of numbers. I think it will be a combination of many things. 2015 we were negative on our return in capital. 2021 we would like to get to 10 as our target there. The world is more difficult now outside. Interest rates heading more down than they were at the start of the year. And the macro sort of the geopolitical tensions are fairly present. Some of that will be income and some of it cost control. Basically it is just continuing to focus on on our more Network Corporate<\/a> business and we will push as hard as we can do and see how far we can get. Nejra there is a couple of things i want to pick up there. First, the costs. 2. 5 billion is what you said today. What more are you going to do to accelerate the cost cuts . This is postly about cost cutting but partly about reinvesting so that we can get more income momentum. We have had absolutely static costs this Third Quarter<\/a> compared to the Third Quarter<\/a> a year ago. Despite the fact that we have increased significantly investment n. I. T. And in digital platforms and things like that. I think the position going forward, taking costs down to invest for future but were much more geared up to how get that momentum on the income in the future and therefore fairly stable costs will keep costs below the rate of inflation and thats what were on track for this year. Nejra you said your predicting costs will be higher in this years second half than in the first. Is that down to the investment and when can we expect that to taper off then . We typically in most years have slightly higher vem in the first half than in the second half. Because some of that is written off, we will see the expense side go up slightly. That is not an abnormal position for us. It is behaving extremely well and very much on track with what we wanted. Nejra you mentioned rates. Of course we have a fed meeting this week. The question whether we have three rate cuts. If we see the fed move lower and lower, how much of a challenge will that be for you . Generally the banks rates are good. If you go back to the start of this year, people argued at that time that we were expecting a slight increase in rates over periods of time. Actually the opposite is now applying and the mood at the moment has changed a little bit. So long as it is a progressive change then it is something we and our clients adom date and having a lesser interest burden is a good thing for their businesses. Ust moving on the next eight months, sentiment can change equally in the opposite direction. T is something we work with. Nejra are you expecting a bottoming out or do you expect a slow easing cycle from the fed . I think well have to see where they go. Nejra lets talk about hong kong as well. You had a 2 increase in revenue from china and north asia. Have you seen any Contingency Planning<\/a> by your own ultrawealthy clients in terms of hong kong . We saw hsbc saying on monday they see their ultrahigh clients opening accounts outside to have territory. Have you seen that in Contingency Planning<\/a> . What we have seen in hong kong is the business actually continuing to perform pretty well. Maybe not growing quite as much as it would have previously but absolutely growing in the quarter and the full year to date. The Balance Sheet<\/a> is holding up, slightly higher than where it was at this time last year. In terms of the concern about the direction of travel there, business is very robust. It is doing well. At the moment we are very comfortable with the way it is going. To the question about yes, there are some clients looking at whether setting up another account in another country might be a good thing to do. We are able to do it. It is not big time but it is a number of plants that are looking to do that. Nejra are you worried at all about the future of hong kong as a Financial Center<\/a> . No, no, if you look back in history, there will be ebbs and flows in hong kong and it has a proven track record of resiliently coming through difficult situations. It is a very vibrant economy. It has a huge reputation. I believe over a period of time it will pull through this and become a thing of the past. Nejra you announced a buy back in april. Any further plans for an initial Share Buyback<\/a> . Another billion dollars . We have not announced anything to date. But if we get in a position where we have more capital than we need and there is no obvious other use for it, we will not hesitate to return it back to shareholders. We are absolutely prepared to live by that promise. We will clearly that v that discussion and decide what we do at that point in time. Nejra thank you so much. C. F. O. Of Standard Chartered<\/a> joining us this morning. The up, we speak to c. E. O. Of the Austrian Bank<\/a> next. En youre traveling to work, tune in to your Bloomberg Radio<\/a> or mobile device. This is bloomberg. Er nejra lets get to an exclusive interview. The austrian lender is fully loaded. It came in at 13. 1 . Joining us is the c. E. O. Welcome to the show. Really great to have you with us. Revenue is something i suppose for you to celebrate. Give us an update on costs. Net Interest Income<\/a> momentum and margin pressure. Are there any sort of to any sign of improvement there . Lets talk about net income interest first. No signs of improvement there. We are lucky. We have a strong growing business in country where is we still have positive Interest Rates<\/a> so we are in the forcing fortunate n situation where we can still grow our net income. Nejra with the low interest environment and negative rates are you finding at the moment that we are close to thers haval rate in europe where the positive impact of negative rates is no longer outweighing the negative impact for banks . I didnt see the moment when the positive impact was negative rates. It is not a good thing but were getting paid for living with it. We got pretty used to it. We manage it rather well. It is unpleasant for our clients. They put a lot of money into our bank. Our deposits grew 6 and we dont pay them anything. Makes you feel bad. In the Euro Currency<\/a> to develop nicer margin overs the next years, forget it. It is not going to happen. Nejra how satisfied are you with your cost position at the bank . Do you expect any major Cost Initiative<\/a> in 2020 . We the Cost Initiative<\/a>s are things that you should do and not talk about. I find it utterly boring. Next year im going to cut my costs like that. Just go ahead and do it and show it. It is extremely important because at the same time we have to invest a lot. We have to invest a lot in tech and a. I. And a lot in good people. We still need them. We have to dinner vest in bad things and do that very quickly. Divest in bad things and do that very quickly. Nejra investments that are planned for your regional platform in 2020, what returns can you expect from that vex investment . George is the platform in the way that we have built tech in our house it is very difficult for us to say how much money did we make from george . Were making money on the way we serve our clients and the digital channel is one of the more prominent ways in how we serve our client. What we know is our client base is growing constantly, gaining market share all across the region and i would guess most of that is in addition to good people, we have a good digital platform. Nejra i want to ask about your corporate customers. What are they telling you about the outlook in the c. E. E. Region in terms of how significant the downturn is . Well, the downturn is not as strong in central and Eastern Europe<\/a> as in other countries. You see we outgrow most of the european markets, g. D. P. Growth in our country is 3 and it is still next year. One of the main reasons for that is simply that our countries are not as developed in their social welfare system as western europe is. It is just a lot more flexible. The region offers still a lot better opportunities for entrepreneurs than most of the western European Countries<\/a> and we benefit from it. Nejra interesting. I want to talk about your c. E. T. 1 ratio. You said a higher dividend or buyback will only be an option if they exceed 14 . Bloomberg intelligence said that may happen in 2021. Is that stale position you hold to . Very much. We include the Third Quarter<\/a> profits. We are at 13. 5 for the moment. We are relatively close to the 14 . We are going to get there and we see absolutely zero reason why we should go above 14 . Even 14 i think is already really high enough. There is no need for more capital. Nejra why not return capital to shareholders now . Absolutely. Thats what we would like to do. Nejra would you announce anything, any point season given that you just said that is same thing about cost. Dont talk about it. Just do it. If you have excess capital, give it back to shareholders but dont make longterm announcements. Nejra like it. Just do it. Lets talk about just doing it and the e. C. B. And policy from here. What are you expecting from Christine Lagarde<\/a> when she takes the helm . Are you worried well continue to see lower rates in europe and how will you offset that . I have high hopes in christine laggard. She is a wonderful lady. Lagarde. She is a very skilled politician. I think the most important thing for the european Regulatory Environment<\/a> and yesterday they did a very good job on getting the National System<\/a> out of the crisis but for the moment i think they are overdoing it quite a bit. They have to turn pragmatic and be really careful. The european Financial System<\/a> is a lot more important for europe than the u. S. National system is for the u. S. They have to be very careful with it and make sure that banks can really fulfill a useful function in order to help europe grow. And there is a point where regulation turns not only creating stability but because of too much regulation chris instability. The most important thing for her would be to make sure to say we got a level playing field. Thats where we are. Were going to stay like that for 10 years. No more changes. Dont change the rules every six months. If she does that, im going to love her. Nejra your message to Christine Lagarde<\/a>. Thank you so much for joining us. Really great to have you on this the show this morning. Going to get to more breaking earnings. Coming thick and fast this morning. Peugeot confirming ongoing talks with Fiat Chrysler<\/a> on the merger. This is something we were reporting and get confirmation from peugeot. This is important in terms of the story we were looking at yesterday when we were reporting that a merger was being explored. That potential deal would reshape the global auto industry. Now were getting confirmation on that. Coming up, well be speaking to Tidjane Thiam<\/a> from europe. Dont miss that interview just after 7 00 a. M. London time. Third quarter, net income came in strong. Well be speaking with the Deutsche Bank<\/a> c. F. O. After the german lender reported earnings for the Third Quarter<\/a>. You can catch that interview just after 7 00 a. M. London time. Lots more coming up. This is bloomberg. Nejra the morning from bloombergs headquarters in london. I am nejra cehic. Credit suisse the profit trading as the swiss bank hopes to put a scandal behind it. We will hear from Tidjane Thiam<\/a> right now. Deutsche bank, revenue falls again. Comments from the ceo in a few minutes. The fed is poised to cut rates again amid a slowdown in thirdquarter gdp. The u. K. Goes to the polls again in december in a vote that could break the deadlock over brexit. Welcome to bloomberg daybreak europe. Credit suisse be estimates, lets get to Francine Lacqua<\/a> and Tidjane Thiam<\/a>. It is the same amount. F Capital Investment<\/a> trap in banking is to pour more capital, it is not a longterm strategy. We are pleased with what we did, and we grew. Yes,ical uncertainties u. S. China, big oil, we will wait to see if we get a deal or not. Course. Xit of where you see that happening impact is on big transactions and capex. All the decisions go beyond that to be scrutinized and delayed some times seecine do you still pockets of growth untapped . Tidjane yes. A few countries right now have positive Interest Rates<\/a>, and is strong over the middle east, not to mention asia. Southeast asia is doing well. China is under pressure. Fundamentals of wealth creation. Francine going forward, do you worry about geopolitics, is there anything else that can make you nervous . Negative Interest Rates<\/a> are not helpful to the Banking Sector<\/a>. Everyone can see that. It is something that will have to change at some point, to get the sector back on track. Francine how have you been coping because of the bank scandal . Tidjane it has been a difficult period for the bank. I want to thank our clients because they stuck with us. Sentiment is very strong. They like the bank. I want to thank our staff. We have had to face a lot of questions from clients to my and we have answered them. Clients have been backing the company and the leadership. Involved believed they were acting in the best interest of the company. We believe in protecting the interest of the company. Inappropriate and disproportionate. I did not order directly or indirectly that action. Like you do you feel need to rebuild trust with constituents . Tidjane no, not from what i can see. There were a lot of lies. Nejra that was Francine Lacqua<\/a> with Credit Suisse<\/a> ceo Tidjane Thiam<\/a>. Deutsche bank revenue has fallen again. Matt miller is in frankfurt and spoke to the ceo james von moltke. Drop about 60 of the year on year is the impact of decisions we made and announced in july, the exit of our equities business. Another 20 reflects what we think are specific items that are transitory which the market tends to look through, and another 15 represents in our corporate and other segment the impact of Interest Rates<\/a>, and if you like hedging effectiveness. The underlying performance of our core business is only down to low Single Digits<\/a> in revenue terms, its given we are executing a significant restructuring, we think is a sign of stability and success. Do you expect that to be for 2022 . James we have been consistent that our focus is maintaining is our stable business, private bank, corporate bank, and asset management. And stabilizing and growing. Evenues in the Investment Bank<\/a> in the Investment Bank<\/a>, down Single Digits<\/a>, 3 yearoveryear. We have seen growth in areas, corporate, advisory and get underwriting we are up. In fixed sales and trading, we were down, but even their stability and growth in our core credit business, and continued strength in fx. Matt we had a report that you were looking to make more cuts on the right side, but what can you say about that unit . James we reposition our rates franchise in september consistent with our strategic weouncement and the strategy have put together. We are comfortable we have seen momentum rebuild in that business since the repositioning, but that was the main drive for rates, and the decline in our fixed revenues. Seemsvix trading difficult not just for Deutsche Bank<\/a> but other competitors. When is that business going to be a consistent winner . Mixed you have seen a performance with some strength in areas, and we have tended to be under indexed to the pockets of strength in that market, but that changes over time. We are confident we are taking the right actions to rebuild that business. It is not going away, investors require it. It is a Risk Management<\/a> business, one we are committed to. A broadbased capability in global rates. Matt in terms of the , where does of 20 that come from . What are the deals . James we saw strength in advisory, up over 50 yearoveryear. That can reflect the timing of deals, but we are pleased with the increase in revenue market share. Some of that was brought forward from the fourth quarter. It can be volatile im a but we are pleased with the stability. Underwriting was strong, both in Investment Grade<\/a> and highyield and our loan syndication business. We earned revenues of 37 million, in an equity franchise we have significantly equitiesned in primary , and we are pleased with the early success of our model fromed on primary equities corporate issuers. We either mandated or completed 50 equity deals of the quarter, and the performance in the Third Quarter<\/a> are strong, and good validation of the strategic position we took to stay in the primary business and support our clients. Matt what about the inflows we saw . What is driving that . James we are pleased with the performance of nwbs. They are on target to hit our heading towardr 70 . That is encouraging. We have seen consistent performance for several quarters despite what has been a difficult environment for asset managers. Nejra that was matt miller spoke into Deutsche Bank<\/a> ceo james von moltke. Earnings from germanys largest lender reporting for the First Time Since<\/a> exiting. Revenue from Deutsche Bank<\/a> fell 4 in the Third Quarter<\/a> led by a slump in the Investment Bank<\/a>. We just heard from the executives of Credit Suisse<\/a> at Deutsche Bank<\/a>. Hordern, what have you found . Annmarie it was a be similar to eat is a beat 24 lower than what total did last year. One . 75buying back billion of shares in 2019 to keep their threeyear goal. The thing that has put pressure on the super majors is the price of oil and natural gas. Brent crude and natural gas down about 20 over the past year. This will put pressure on big oil as we get results this week. Announcee set to a plunge in this quarter. Bp a beat yesterday, but they were massaging that message down, lowering expectations. , but lookanother beat out for tomorrow. We have shell and then exxon mobil and chevron. Nejra thank you so much. Latin america is a bright spot for santander, we will speak exclusively to the ceo, that is next. When youre driving to work, tune into Bloomberg Radio<\/a>. This is bloomberg. Negative Interest Rates<\/a> are not good for the Banking Sector<\/a>, everyone can see that. It tells you we will have to change at some point, to really get the sector back on track. Nejra those comments from Credit Suisse<\/a> Tidjane Thiam<\/a>. Now lets hear from brazil led growth across the. Ain latin american operation the u. K. Business declined 31 . Joining us by phone is cfo, dws group, claire . Great to have senior exec vp cfo, banco santander, Jose Antonio Garcia<\/a> cantera. With political paralysis on brexit and no deal risk has receded for now, how likely is it you may have to report in the u. K. A for the writedown . Jose good morning and thank you for having me. There is uncertainty regarding brexit. The key impact in the u. K. Is the consequence of regulatory change and the pressure on margins this has created in the mortgage market. The Cost Reduction<\/a> last year with the restructuring charge in the Second Quarter<\/a> is starting. O fit into costs we expect these benefits to continue going forward. Relative to other banks, it is relatively small charges. We think we are managing the situation in the u. K. Very well. Today we do not see the need for further adjustments in the medium to longterm some large institutional clients, but i do not think that is the only answer. I think the answer in europe is improving efficiency and profitability, adjusting the cost base. There is a significant capacity of physical Distribution Networks<\/a> in europe that are used less and less as penetration increases, and we need to focus on it in our cost base. If this situation stays where it is for a long time, we will have to think about charging institutional customers large deposits. That would not be the only answer. Nejra do you think the ecb will make much difference to the banking landscape in europe given the impact of negative rates so far . Jose no, it basically neutralizes the increase from 40 to 50. That increase of basis points is neutralized by the deposit. But it does not improve banking in europe. I wantede other thing to ask about in terms of the global outlook, with significant pressures in the u. K. And spain, i am following the purchase of the mexico minorities. What are your thoughts of minority interest globally . The we are buying back minorities in mexico is one opportunity that we took advantage of. It was a successful transaction. The current structure of the group is the one we want to have. No further buybacks of minorities at this stage. Nejra the u. S. Can be a tough nut to crack given the size of local banks, is now a good time to divest from there as you did in puerto rico . Jose no, rather the opposite, we see opportunities in the u. S. Business isance registering and doing very well. , it is becoming more profitable. We have quite Significant Competitive<\/a> advantages. Basically our presence and latin america, that we are the lowest cost producer in any country where we operate leaves advantages and basically make us confident we can grow and be successful in the u. S. We see the u. S. As a great Growth Opportunity<\/a> for us. Nejra great to catch up as always. Jose Antonio Garcia<\/a> cantera, senior exec vp cfo, banco santander, thank you for giving us your time this morning. This wednesday asian investors are treading water withasian stocks mixed, lackluster moves across the region. This is ahead of the fed meeting. Earnings,reaction for a lenderong kong, defied expectations for a drop in profit. The hang seng under pressure and extending the decline on tuesday. It report on thursday will confirm the economy will fall into recession. Chief executive carrie lam not adding any cheer, with a grim outlook for the economy. One outlier in the region, topping 40,000 pints on reforms. In bonds we are seeing aussie data gaining ground after prompted traders to trim the odds in a november rate cut from the rba. Chinese funds continuing to drop. The pboc refrain from injecting liquidity. The 10 year yield adding two basis points. And checking on risk sentiment, hovering below 1. 09. Areher the boj nor the fed expected to be Game Changers<\/a> when they make the decision. Nejra thank you so much. Has reported adjusted net income ahead of estimates. Amory quarter and has been looking at the sector. What is below the surface of the headlines . Annmarie the super majors are coming out and it was a beat in coming in on about 3 billion. This is 24 lower than this time last year. Offset the drop in crude prices. Production growth coming in at 9 this year. They are cutting more costs. If we look at what is going on in the oil space and why the super majors are relying on the price, brent crude down 20 from this time last year. Natural gas down 17 . Super majors are dealing with this big slump in energy prices, and they will likely have a drop around 42 in Third Quarter<\/a> result. We heard from bp yesterday. They had a beat that was about messaging. They were flagging factors that will hit the bottom line. For bp, they were able to offset lower crude prices with refining operations. Total came in as a beat. We have shell tomorrow. Then we will hear from exxon and chevron. It is a difficult time with these oil prices for the majors. Biga from big oil too banking, we have had numbers from Credit Suisse<\/a> and Deutsche Bank<\/a>. And we spoke to the ceo of Credit Suisse<\/a>. Let me update you. Starting with Credit Suisse<\/a>, beating estimates on Revenue Growth<\/a> and profit, net revenue was 2. 5 above projections. Also there was relief in a surprise surgeon profit in the global profits which is double what analysts were looking for. Private banking was below expectations. Costs also missed even if they trended down. The bank expects headwinds from geopolitics. Those are the headlines in terms of the numbers. Us, he thiam speaking to said the Third Quarter<\/a> was tough and the chinese Wealth Management<\/a> was under pressure. He said the spying scandal was a difficult period, but no discernible impact from that. He had a couple of comments on m a sang european m a is desirable but will not happen. A beat on those numbers overall. Turning to Deutsche Bank<\/a>, still looking challenging and basically this week in the sweeping rebound has failed to stop the slump in revenue. Fixed income trading declining 4 in the Third Quarter<\/a>. Fixed Income Securities<\/a> dropping 13 . We also spoke to james on volcker we also heard from volkswagen and getting numbers from them. Keep an eye on the carmakers. We got confirmation earlier this morning, and the volkswagen ceo will speak to us. This is bloomberg. Whether youre out here on lte. Or here on a wifi hotspot. Xfinity mobile has more coverage to keep you connected to what matters most. Thats because its the only Wireless Network<\/a> that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. Switch now and see how you could save up to 400 a year. And get 50 off when you buy any new lg phone. Xfinity mobile. Click, call or visit a store today. To Bloomberg Markets<\/a> european open. I am anna edwards alongside matt miller who is in frankfurt. Matt the market say the third times a charm, poised to cut rates again. U. K. Is separate december election. U. S. Futures pointing lower. The cash trade starts in 30 minutes time. Anna Deutsche Bank<\/a> tanks, Credit Suisse<\/a> beats. The german lender revenue falls again. Credit suisse puts it spying scandal behind it with thirdquarter earnings despite caution on negative rates. Areegative Interest Rates<\/a> not acceptable to the Banking Sector<\/a>. Anyone can see that. It is something we will have to change at some point. Fiat a new top dog, chrysler is in talks with peugeot. The u. K. Is heading to the polls for the third time in under five years. Boris johnson wins approval for election on december 12. Less than aorning, half hour from trading. Lets look at what we are seeing in the futures picture. Downy Index Futures<\/a> were this morning, we are seeing losses on dax futures, 0. 2 . And ftseok at cac futures, red arrows there too. In terms of u. S. Futures, we did have a mixed picture this morning. S p, dow jones, and nasdaq futures not all pointing in the same direction after the highs we saw. Now we are looking at a collection of red arrows, all down by about 0. 1 . Patternholding narrative today, not Much Movement<\/a> in many of the asian markets. Close to they flatline as we wait for the fed to see if we get the third rate cut. That is the big picture, what we are waiting for. We have earnings stories to get through, and that will be one of the big drivers. Futures look a little flat as we wait for the individual stories. , the lira very much in focus, down by 0. 4 . That is a result of what we have seen from the united states, the voting. We are digesting news around the u. K. Election, and getting some ftse headlines around global trade. Thats get to the markets with Mark Cranfield<\/a>. Lets talk about the runup to the fed. Set piece the big event today. What is your expectation . What are you thinking as to the hawkishness or otherwise which we have seen these rates cut . See Jerome Powell<\/a> trying to thread the needle to get the message across that i will cut rates today, and i am ready to do so again in the future should we need to. I would like to take a pause at the meeting after this one. He has to convince traders that 75 basis points of insurance the is enough to keep economy going well for now. He would like more time to see how that plays out over the next few months. Preferably they do not want to do it again in december. This will be a tricky message to give the market. It could easily upset equities, bonds, or both. The markets look calm today, but there is no telling what they will do in a few hours. It is a delicate balance to get this through, and there is a chance for choppy trading later today as people digest this message. If he upsets the equity market too much, it will not be before long the rates market will price in the fed having to lower rates again, which is probably not what the fed wants them to do. We expect a volatile afternoon. Aside from not cutting rates, what is the worstcase scenario for equity markets . Having an uncertain picture where they see things going. If the message is not clear enough, it could sound as though the fed wants to do an extended pause as though they do not see any need to lower rates again. They could think we are complete lee subject to whatever happens on u. S. China trade, whatever weakness in the global economy, the fed will not help us out anymore. The equity market could take it badly and we could be down several Percentage Points<\/a> the next few days. It could get ugly quickly, and Jerome Powell<\/a> will try hard not to do that. His wording has to be precise and he has to please the bond market and the equity market at the same time. Anna let me ask you the about thef the day, u. K. Election story, how best to. Rade the brexit election we have seen markets trying to work out when the next big politically that might be an position accordingly around it. Now at least we know the date. Mark people who have to trade it will use the option market, and you will see it skewed between the shortterm and longterm. They will pick out the dates. Thank you very much, Mark Cranfield<\/a> from the mliv blog. You can join the discussion, contribute your answer to the question of the day which is how to trade the brexit election. You have some time to do that on your bloomberg terminal to participate in the conversation. Lets get to the first word news from hong kong. The u. K. Is set for its first december election in nearly a century. It is widely seen as a referendum on brexit. Voters will get the last chance to choose between different versions of their divorce from the eu, or wanting to cancel it altogether. Boris johnson got the motions to the house of commons and it now heads to the lords. Where cars areo made, President Trump<\/a> wants to be in the driving seat. He wants to dictate how unaware global Auto Companies<\/a> make vehicles and parts. It is part of a new nafta agreement. It is the most direct intervention yet in manufacturing, and some are worried the process could be used for political gain. The price of aluminum is growing. Minister tome defend a run on the banks. They have been closed and plan to reopen when the situation stabilizes. Global news, 24 hours a day on air and at tictoc on twitter, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you very much. Up next we speak to the cfo of germanys largest asset manager over at deedws. We will talk to cfo, dws group this is bloomberg. We are comfortable that we have seen momentum build since the repositioning, but that was the main drive for rate and emerging markets of the decline in our revenues. Matt that was Deutsche Bank<\/a> cfo james von moltke. Deutsche banks asset manager, dws posted a Third Straight<\/a> quarter of net inflows, 6. 2 billion euros that beat the 2. 7 billion euro estimate. The influx of investor cash did not translate into higher revenues. Dwssis in part because the lower cost strategies were the main recipient of those inflows. Oining us now is claire peel, mix andyou change that see your customers toward more profitable strategies, or yuri or are you happy and having a chunk and passive . We have seen the inflows of 6. 2 billion, and those inflows are coming across all Asset Classes<\/a> including passive and alternatives to multiassets. Wese are Growth Strategies<\/a> focused on for the Third Quarter<\/a>. We see there is a shift across Asset Classes<\/a>, and what is important for us is to offer diversified Solutions Across<\/a> all Asset Classes<\/a> in such an environment. Also, i were anna you need to ensure those inflows managed to work for you and increase profits. China getinvolve people to move from passive to active, or is that not all the role of the business . Claire i think our role is to offer Investment Performance<\/a> for a Client Solutions<\/a> that they require in such a market environment in all Asset Classes<\/a>. Clients will risk alternatives through different cycles. We are able to offer Solutions Across<\/a> all of our locations. The diversification we have in the portfolio is import to us. Robert ability is what counts, and that is what we have a cost income ratio that we measure ourselves against. Thate on track to achieve and have increased profits by 9 yearoveryear, and that has been achieved by managing costs and efficiencies as well as generating inflows across Asset Classes<\/a>. Thirdquarter revenue has been stable, but the Management Fees<\/a> have grown slightly in that Third Quarter<\/a>, and we are focused on inflows 3 to 5 ratio in the mediumterm horizon. Matt i am starting to think stable is market speak for falling, your revenues were down. On the bottom line you are a positive and she leader to Deutsche Bank<\/a>, but in terms of inflows the market is positively surprised were pleased with your track record that you are building, and you are hitting targets for sure. You want 3 to 5 annual inflows. Do you want to raise revenue . Do you have a plan to raise revenue . Think many parts of our revenue composition we have the Management Structure<\/a> and performances and income from our joint venture in china as well. We have many parts to our portfolio of revenue, and we look to grow revenue but also operate within a market environment and see compression across the industry. We have volatility and a low Interest Rate<\/a> environment. In those headwinds we must manage our revenue base, generating inflows across all Asset Classes<\/a> and across the globe to weave a global base for our clients. That diversification in this market environment is important to us. We have had revenues that are flat year on year. But we are growing. There have been conversations with dws, can you tell us about any conversations that are happening at the moment , any targets or direction in mind for m a . I cannot comment on market rumors of that type, but i can say we are focused on organic growth, and we will explore in organic opportunities as they arise, we will look at those as they come up in the market. We are focused on profitability and the organic Growth Strategy<\/a> in the mediumterm matt . Matt thank you for joining us, claire peel, cfo, dws group. Up next britain goes to the polls for the third time since 2016, but will it be good for breaking the brexit deadlock . Good for dispelling the uncertainty in markets . Curtis,speak to john politics professor, next. This is bloomberg. Anna welcome back to the european open. Start ofs until the cash equities trading. Lets talk about a u. K. Political story as britain goes to the polls. And emergency election on december 12 on the question of brexit. Joining us now is john curtice, professor of politics, university of strathclyde and one of the uks leading analysts. At this point, the starting gun bandeen standard sounded. It deal expect there will be any change by the end of this process . John perhaps there will be at the moment given the conservatives are ahead in the polls. The chances of Boris Johnson<\/a> getting a majority are relatively good. But by no means guaranteed. In order to get a majority, the conservatives need to retain because they are expected to lose seats to the Scottish National<\/a> party and the liberal who are revived. The conservatives have to make some gains in labour. , heif the polls are correct should get a majority. One important thing, Boris Johnson<\/a> does have to win this election if he is going to keep the keys to 10 downing street. If he has anything less than a majority, he is probably out because on brexit the conservatives no longer have any friends and have fallen out with the democrats in northern ireland. Could be expected to create an understanding with the Scottish National<\/a> party, the nationalists, the greens and everybody else. Form auld be allowed to toority on the understanding hold a second eu referendum, which i am afraid for those of you looking for certainty would mean another extension and the u. K. Making another decision about remaining in the european union. Maybe this in action will pave the way. It will at the conservatives get a majority. But if he fails, we could be looking at another Hung Parliament<\/a> that could end up resolving the brexit impasse in a different way. Matt is there anyway, aside ep,m some shock libdem swe is there any way for us to view this election as itself a referendum on brexit . Respects, not everyone will vote in line with the brexit preference. Remainthose who voted will vote conservative, and that has crept up a little bit since it is clear the conservatives will pursue a deal. There is around 12 of voters who will vote labour party. They are more proremain. The majority of the public will vote for a party whose views on brexit are in line with their own. If you look at the aggregate of support for the parties, you add the conservatives and brexit , the figures are roughly the same. Vote is divided between the labour party and democrats. Anna john curtice, professor of politics, university of strathclyde, thank you for giving us your thoughts this morning. We will look ahead to december 12. Right now we cant you down to the open of european markets, and we have earnings. We need to start with the auto sector. Does this deal have more chance of getting through . We will hear from vw, cutting delivery targets but no change in their gardens guidance. Matt we heard from a lot of banks today in terms of those outside germany, santander and Credit Suisse<\/a> surprised by beating the estimates with thirdquarter profit. Dropche bank had revenue of only 4 at the core bank, but it had a big loss of a billion dollars and saw trading fall 13 . Anna we will keep an eye on airbus, cutting their delivery target. Keep an eye on loreal. Rbc describing the numbers on loreal as awesome. Trading day is minutes away. This is bloomberg. Anna a minute to go until the start of cash equities trading. Welcome back to Bloomberg Markets<\/a> european open. A little bit of downside in the asian session, but not by much. Really waiting for the fed, waiting to see if we get that third Interest Rate<\/a> cut of 20 and crucially, waiting to hear the tone from Jerome Powell<\/a> 2019 and crucially, waiting to hear the tone from Jerome Powell<\/a> and team. S p futures also mindful of the fact that we need to hear from the fed. Also mindful of the busy agenda we have had on corporate earnings and also on the data front. We get gdp, and job data. The jobs picture set to get clear. Up und on the rise come rise, up by around a quarter of a percent. December 12 is the date for the next u. K. Election. A lot of corporate earnings, some m a stories, particularly in the car sector. We are looking at the auto space , and earnings story, also looking at the Banking Sector<\/a> because we have had a host of earnings from santander, Standard Chartered<\/a>. Credit suisse and Deutsche Bank<\/a>, dws on the management side, we spoke to the cfo there, so lots to talk about on earnings. There are the other earnings stair is like airbus and loreal. All of those could make their morning. The ftse 100 down by about 0. 2 , euro stoxx down about 0. 2","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia803105.us.archive.org\/5\/items\/BLOOMBERG_20191030_063000_Bloomberg_Markets_European_Open\/BLOOMBERG_20191030_063000_Bloomberg_Markets_European_Open.thumbs\/BLOOMBERG_20191030_063000_Bloomberg_Markets_European_Open_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240716T12:35:10+00:00"}