Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240713

Nejra welcome to daybreak europe. Lets get this to the softbank numbers. Secondquarter operating loss for softbank comes in at ¥704. 37 billion. A ¥497. 7also seeing billion onetime loss in nonconsolidated earnings. His recognition of the loss on the valuation of shares as well. The loss on the fair value of we work comes in at ¥497. 7 billion. Onetime loss on the fair value of we work. Thats the details as we look at softbank. Have a look at the tliv blog to get more details. Of ¥537. 9ized loss billion in the second quarter. Thats the number they are putting on it. Thats the headline coming through. Fundecond quarter vision loss comes in at ¥970. 27 billion. A little bit of a painful number here coming through, the secondquarter loss is wider than estimates. That secondquarter operating loss was 700 437 billion yen. It still sees a fullyear dividend of ¥44. That is in line with estimates. Comes indquarter loss at ¥700. 17 billion. Again, a lot bigger than expected. The tliv blog is up and running. Lots of headlines on there. First thought from our Bloomberg Opinion columnist. Lets take a look at whats happening elsewhere in the markets. Not any huge moves in terms of the macro picture right now. Take a look at you features. We are dead flat. Did came in better than expected in the u. S. That pushed out bets on fed rate cuts. Yield is down by one basis point. Are there signs of a bottoming in the Global Manufacturing picture . We will discuss that this hour. The yuan strengthening for a second day as well. That takes us to the trade story. China setting its price. Any interim trade deal with the west, drop the tariffs. The question now is whether President Trump will agree to give up his weapon of choice. Astrazeneca is doubling down on its presence in china. The drugmaker is teaming up with one of the countrys largest investment banks on a 1 billion biotech fund. The ceo told bloomberg in an exclusive interview that the needs are enormous. Suddenly we have to invest more in china. Look at the momentum we have experienced in the last few quarters. We have to continue fueling our growth in china. The needs are enormous. Chief joining us now is economist at him you gordon. Welcome to the show. Lets start with the trade talks. China has insisted that trump give up his favorite trade weapon, tariffs. Do you see this going anywhere . It has a chance. One of the problems is, tariffs are easy to communicate. Soundbitet it into a that the electorate can understand. One of the quid pro quos for the drop of the tariffs will probably be greater market access, greater protections for intellectual property. Think about the marketing and messaging of that. That is harder to make tangible to make it a message that this is what the u. S. Has gotten in the trade war. We know the president will want to cash it like that. That might be the barrier. It wont be about the financial benefits on both sides. It will be about the message equality. Nejra its about timing as well. The opportunity for the meeting xi in chilemp and has been put aside. China wants some sort of commitment on this rollback of tariffs before agreeing to a meeting. They are said to be discussing locations at the moment. That would be quite a tough decision for President Trump to make. Whether thes replacement for santiago on the 17th of november, if it is done in a golf resort in china, it would be quickly made. I think the easiest path forward is to find a place in the world that would want to host this in order to sign a stage one agreement. In terms of the calculations as to whether the china requirement for the latest round of tariffs, 120 billion, to be rolled back is going to be palatable. That thethis tradeoff Trump Administration is trying to push. Hawkishness on trade through the campaign trail. Versus the damage it is doing to the was economy. I think a juxtaposition of those two factors is the key calculation for the president ial race in 2020. Nejra what does this mean for the yuan . Does that hold . If a nearterm we must stop talking. It is going as if to go away. Absolutely not. Its not going to go away for many years. If we get a phase one deal, the requirements on the Chinese Government to support their export sector, it will be less of a requirement for their macro strategy. I would expect a further strengthening if we see the pathway to a stage one deal and further deals on a set of issues going forward. Nejra what would that mean for 10 year treasury yields and u. S. Equities . Would you expect a further backup in 10 year treasury yields . Backup on a bit of a treasury yields. There was been a lot of conversation about treasury yields going to zero, seeing a stagnation affect. Demographicserent in the u. S. Anybody who looks at the structure of the population, that is the key driver in those other two geographies. In the near term, a steepening of the curve. Lets not get excited about moving back to a three handle. We will not see that given how benign inflation pressures are. Also, household inflationary expectations are very muted. Not a scenario where the fed will be back in hiking mode anytime soon. Nejra we will not go back to 2. 5 anytime soon. His 2 within sight . You could be there within a couple of sessions. It is for those that are looking for their investment horizon over the next 12 months, it is difficult to see the inflationary picture and the policy picture pushing up materially be on there. Nejra are we seeing a bottoming in the Global Manufacturing cycle . For me, yes. The big calculation we have had to make is whether you will get contagion from what has been a Manufacturing Sector recession into the services sector. You mentioned the printout of the u. S. Manufacturing, you are about to see the Global Manufacturing you for. Me up against that should start the inventory cycle. Theres no guarantee on these things. In thehe drop down difficult concept came in the first half of the year, and the jury build should mean we should start to see glut global pmi ticking up in the Manufacturing Sector by the end of the year. Nejra great to have you with us. Some live pictures just coming the chinese and french president having a meeting in beijing. Macron has been saying he has told him that the hope for calming, there is a hope for the calming of u. S. China trade tensions and that the china europe relationship is strategic. Macron also says its encouraging to confirm that the Chinese Market is opening. We will keep an eye on that meeting for you and any headlines that might come through on u. S. China trade. Coming up, dont miss her interview with a deputy ceo. That conversation is next. This is bloomberg. Nejra this is bloomberg daybreak europe. I may retain pitch in london. Weve seen a tiny bit of profit. We saw the s p 500 close lower. Betterthanexpected Services Data. For the fed cut were pushed out. We had a record earlier in the week. The 10 year yield nearly september high. Edging down a basis point on a 185 handle. The juan strengthen for a second day. Perhaps hope around progress in trade talks. Its a big thing that china is asking in terms of President Trumps favorite weapon. Will he given ahead of any potential meeting between President Trump and shes a paying . Lots to discuss here. Numbers from earlier this morning. A steep decline in its equity trading revenue. Itearnings estimates missed earnings estimates. What we saw was a 20 decline in Equities Trading revenue. This is a traditional strength for socgen. It did worse than most peers. Socgen blamed adverse Market Conditions in august and waning climate client japan demand. It had the biggest restructuring and years. They boosted the banks capital strength for a second straight quarter. That is something that is positive to take away here. Revenue from fixed income bit did better than equities. Outperformed socgen in equities and fixed income in the latest order. Here is the ceo. Our fan tries franchise is driven by structure products. The client demand has been a bit low. Due to this global uncertainty environment, tariff wars, brexit, and so on. If you have a ninemonth blue view, are equities remain solid and keeping its market share. Are you struggling to gain more market share compared to your peers . As we announced at the beginning of this year, we are refocusing our Global Market activity on our core strength. Products, cross solutions,ancing what we call smart flow activities. We are refocusing that. Our intention is to gain market share. We are not competing to have Global Market share. We are focusing on the segment where we are the differentiating factors. Factors these external such as the trade war, such as they continue into 2020 . That ite an expectation could be had in hand at the beginning of next year. We will find solutions. If i may comment on brexit, from the beginning, we have taken the worstcase scenario to adjust our position. That is a no deal brexit. Whatever is the outcome, we are prepared for that. Links links of this discussion is creating more uncertainty. A lack of investor appetite in some european assets. Are you actively following the events in the u. K. Very closely . Are you interested in the day today brexit saga . I am following it. If im interested is another point. I have to follow it. It is a business issue. Overristine lagarde took as the head of the European Central bank last week. Theres a lot of discussion about the impact of negative rates on banks. We spoke with a ceo who thinks negative rates are not contracted. Do you agree or disagree . Depending on the perspective you take, the aim of the central bank is to support the global european economy. To bolster the conception. View, you can say the result is almost there. Theres a significant negative part of that which is the impact on the banking world. We have clearly to take into account of the situation, this negative Interest Rate well last for long. We are taking that as an assumption. We are adjusting our operational set and business molds. Nejra that was the deputy ceo speaking to bloomberg. Lets check on the markets in asia. Juliette saly has more. Great to see you. We are drifting a little bit. Whats going on beyond the surface . A little bit of consolidation here in asia. You can see the msci asiapacific index is unchanged from where it was yesterday. Weve had four sessions of gains. A little bit of upside from hong kong in late trade. Mainland china, australia are lower today. Been watching the big move on yields on japans keynotes, particularly the 10 year. It is at a fivemonth high. We had a 19 billion find a bond option in japan which was met with we demand. The kiwi is fairly unchanged. We saw a pickup in new zealand unemployment which could put pressure on the rbn to ease at next weeks meeting. We have a bank of thailand Rate Decision due later this afternoon. Lets watch whats happening with the juan. They moved past seven to the dollar for the First Time Since august. Is remaining at that little level today. A little bit of upward momentum are in the dollar. Again whengained tensions reescalated. Analysts are saying it might not last very long. Saysop forecaster in asia the rally will only be temporary and Societe Generale says its more likely to weaken to 7. 2 in the coming months rather than strengthen strengthen to 6. 8. That looks like the next trigger in terms of work and move. Nejra perhaps that strength may not hold up. Thank you so much. Lets get the Bloomberg Business flash from hong kong. Good morning. Walgreens is looking at a potential deal to take the company private. It could become the largest leveraged buyout deal in history. The recently held talks with a private equity firm. The drug company has the market value of around 55 billion. They declined to comment. The rocks is considering a cash stock offer for hp. Thats according to the wall street journal. It says the deal could be worth as much as 27 billion. It will combine two of americas biggest names in office hardware. The deal could result in 2 billion of annual cost savings. The companies werent immediately available for comment. Itsn martin is launching first suv in beijing this month. The move highlights chinas importance as a key market. It helps the new model will help double sales at the luxury carmaker. The stock is down over 75 since listing over a year ago. That is your Bloomberg Business flash. Nejra thank you. Turning to the u. S. The number of fed president s spoke on Monetary Policy and health of u. S. Economy. The dallas fed president says he believes policy is exactly where it needs to be. Hes taking comfort from recent steepening in the yield curve. The richmond fed president echoed the sentiment. Now is the time to observe the policy impact. He added that the u. S. Economy remains healthy. Our guest is still with us. Do you take comfort from the steepening of the yield curve as well . A little bit. Im not a massive fan of the yield curve signals in this cycle, given historic parallels of what an inversion has told us. Not necessarily valid this time around. If youre telling me that doesnt distort the shape of the yield curve, i have to disagree with you. What it tells you when terms of steepening is that the sentiment around a nearterm contraction of the Global Economy, the kind of growth rates we would associate with a recessionary concession, are starting to be discounted away. I think that is positive. What we have seen from fed we would have seen some fed speakers try to recalibrate expectations. They havent. Theyve tried to reinforce the suggestion we are on hold. Nejra its amazing how quickly sentiment has turned given we havent got a phase one trade deal between the u. S. And china yet. Are you saying that what the fed has done so far has worked and is enough . Has it worked . To a point. I would point to the fact that financial conditions began to ease in the u. S. Economy in the middle of december last year, just after the Federal Reserve raised rates. Already, the market had gone ahead and started to lower the 30 year mortgage, lower corporate debt Interest Rates on the anticipation of a plateauing and an easing. Whether policy caught up with events or whether it led offense, the history books will be the narrative. I would argue the market already interpret this. Now is the market has assumed a stage one deal. It has got ahead of itself. The risk is that this will break down and everyones position is in the wrong direction for may for what may come. That a deal is in everyones interest. The market is positioned correctly for what is to come. Nejra i read a piece that says the market moves we have seen are more to do with relief rather than optimism. If we look ahead to what the fed might do, do you think they are ron pauls for the for seeable future . I think thats right. You cant rule out a december rate move. Particularly if talks break down. Where we situation must always stock back into that. If you look at the other lying indicators, weg have mentioned the services pmi, theres now a basket of Economic Data that suggests the other half of the feds mandate is sufficiently robust to not require a further easing. We could afford to see more data. They are back in a narrative they were in in the first half of 2018 of being data dependent. Nejra when we were talking about the Global Manufacturing cycle, a take your point on u. S. Services. Do you expect that to continue, the Robust Services . If you see an upturn in Global Manufacturing, what leads that . What leads that . Look at some of the areas that have been buffeted by trade war concerns. This is a bilateral trade dispute between the u. S. And china. Germany has been caught in the jobs. You may see their manufacturing pmi take up. I think its hard to see too much upside from here. We are short of capacity. Unemployment below what the fed thinks is the natural rate. It will be difficult to grow gangbusters from here given the absence of an apple gap. Nejra i love it when anybody says gangbusters. Our guest stays with us. Coming up, Dialog Semiconductor reports earnings. We speak to the ec the ceo. Tune in to Bloomberg Radio live on your mobile device or on Digital Radio in the london area. This is bloomberg. Nejra this is bloomberg daybreak europe. Im a wretch a hitch. Lets get the bloomberg first word news. Setback in the impeachment inquiry from President Trump. Two of the president s top envoys were unsettled by the actions of his personal lawyer rudy giuliani. They outlined a quid pro quo for out eight for ukraine. Says giulianis role started out as perplexing but kept getting more insidious. Mad with freegone money. Thats according to ray dalio. He decried the current policies that are leading to rising gas gaps in wealth and opportunity. He said money is essentially free for those who have money and it is unavailable to those who dont. Flight attendants for United Airlines are balking at flying on the 737 max 8 without a Global Safety record. It is working to get the plane cleared by the faa by the years end. The head of the eu regulator plans to decide by january. The labor Group Representing the workers once the regulators on board before the plane flies again. After zeneca is teaming up with one of chinas largest investment banks on a 1 billion biotech fund. Thats as the u. K. Drugmaker works to build a presence in the fastgrowing market. Its working with China International capital to target support for drug and diagnostic developers. Certainly we have to invest more in china. Look at the momentum we have experienced. Fueling ourontinue growth in china. The needs are enormous. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Nejra thank you. More breaking news. Lets get to the bmw numbers. The red headline is thirdquarter eberts coming in at 2. 2 9 billion euros. The estimate was 2. 12. Thats a beat for bmw on Third Quarter ebit. Looking at the sales number for the Third Quarter. That comes in at 26. 67 billion euros. A clear beat on thirdquarter sales. Thatmonth ebit comes at 5. 78 billion euros. Analysts have been expecting was a better vehicle makes for the Third Quarter and guidance consummation was expected as well. We got that confirmation and a bead on Third Quarter ebit and sales. Moving on to eddie dos. Adidas. Thirdquarter profit comes in at 897 million euros. The estimate was 876. 8 million euros. Onting the street here thirdquarter operating profits. It has kept its fouryear view. Thats what weve got. Income fromt continued operations at 1. 8 5 billion euros. Just to give a little bit more detail. Estimaterter revenue, 6. 3. A beat. Fullyear outlook confirmed in case that wasnt clear. The fourthquarter outlook was key to analysts going into this. Perhaps that will give them some cheer as well as the beat on the numbers. Campaigning in the u. K. General election begins today after parliament was dissolved. Boris johnsons pitch to voters is to get brexit done with an outright majority. Germany carbon has attacked his bracket brexit deal. Negotiatorief brexit has issued a warning over downing street ambition to strike a trade to the end of 2020. He said the talks would be difficult and demanding. Our guess is still with us. Lots of threads to put together. Philip hammond has now stepped down from his seat. That has implications for whoever takes over. Lets take all this together. Where do we go heading into the selection . What is your base case for the outcome . Base case is conditional on the opinion polls remaining largely where they are right now. A small but relevant conservative majority government. The reason i caution about the impulse staying where they are is the u. K. Has a general election two years ago. From aosition moved position of pulling in the mid20 s to more than 40 . We have to be mindful that the most recent political president sought an enormous swing in the opinion polls. A confident person who sits here and says, this is where we will be on the morning of the 13th of december. Theres an awful lot to play for. Nejra theres a lot to consider. Look ahead to the election. You and vis investors on how to position, there are five things you bring up. What are they . Key here is the role of minority parties. This is the first issue. The smaller parties are going to be competing. Those who are the brexit party will be standing in a large number of constituencies. Will they split the conservative vote . Theres also the liberal democrats, the greens. We may see some streets seats where results that normally are between the labor and conservatives get drawn in because of the role of minority parties. Is,second thing to consider will this be a campaign drawn based on brexit or on domestic issues . The opposition will make this about domestic issues. They dont have the best soundbites regarding brexit renegotiating. It is somewhat muddled. That is difficult to do. Going forward, trying to work out how to position for this, ive said to investors, historically, equity markets has tended to rally on anticipation of a conservative government and off the back of a conservative government. The other way regarding a labor government. The worst outcome, the when you have to end on, is if we get a hung parliament. Soldrically, that has a off aggressively after that. , lack of clarity over brexit which is the opportunity in this election, investors will look at u. K. Markets quite unfavorably. Nejra what would you do then . Would you say, still by u. K. Assets right now because of valuation . Or hold back . I would still be overweight u. K. Assets. The rest of a 20 discount on u. K. Assets when you benchmark on valuation against the global benchmark. That has emerged since june 2016. The fact that you can get a significant part of that upside in the event of political maturity. Caution, there will be another deadline at the end of june 2016. Ofther deadline at the end december 2020. The deadlines keep coming. He issues become harder i dont think all of that 20 discount will close. In the event that we get a clear outcome on the 12 of december, some of that cap will close and investors wont want to be sure. Nejra thank you so much. Lets get back to more earnings. Dialog semiconductor, we had the numbers a few minutes ago. Thirdquarter revenue coming in at 409 million. Thirdquarter adjusted operating profit at 103. 8 million dollars. Thirdquarter revenue at 409 million. Ofcan now speak to the ceo Dialog Semiconductor. An exclusive conversation. Great to have you with us on the show. Thank you for giving us some of your time. Before we got these numbers today, you actually preannounced some sales. That was a beat but details on the revenue beat were somewhat thin. Can you fill out that picture on the revenue side . Im very pleased with todays results. A record quarter for q3. The growth came from strength in our mobile market but also very much so from iot products that we have released in the market. For example, bluetooth products. Nejra ok. There was a bit of a mix in terms of what you achieved. The price recovery you have seen this year and Dialog Semiconductor has only brought dialog to where it was before apples decision to drop dialogue as an iphone supplier. Talk to me about the relationship with apple right its beneficial given the changes you have seen over the past year or so. So, the relationship is extremely strong. Consider the products that we have licensed excludes those, the new products, we have already grown 100 over the same time last year. Announced several new take contracts that would the company much further forward, particularly from 2021 product releases onwards. We are very pleased with the way we worked with them. We are getting quite a few new design contracts. Nejra so, what does apple make up in terms of your revenue at the moment . How is that relationship been changed . The revenue you are making from apple versus other new products and Business Opportunities you just mentioned. Think it is essentially overall, apple is about 70 or so. A lot of that is legacy. Our new products with them are not on the transition agreement. They are going very fast. The rest of our products also show Significant Growth in areas ,f iot and also other products automotive industry. Said youve previously that you want apple to account for less than 40 of your revenue by 2022. Right now, you are at 70 . Will you be able to reach that target . We are on track. If you look at our numbers, we are growing new businesses with apple and outside apple. In addition, we have about 1 billion of cash to deploy. Fort of that is earmarked inorganic growth acquisitions. In the october alone, we close a deal buying a German Company called creative chips. It takes us into industrial iot. This is the second acquisition we have done this year. Theres a pipeline of such acquisitions ahead of us. That with organic and inorganic additions, we will be hitting those targets as outlined. Little bit more about the pipeline of acquisitions then. Youve talked about the cash and the fact that you want to grow in organically and organically. What other targets might you be looking at in terms of acquisitions . We look always for a noncommodity differentiate a product where we can keep better margin. Our margin has been improving. Lastat the trend of the three years. We want to continue with that. Signalnds to be mixed analog products. They are in areas of iot. Thats one of our key areas. More recently, weve also been investing in automotive products. Data systems, entertainment systems. We have a huge leverage in those areas. Looking ahead three years down the road, we see a more balanced business with a much more diverse product. Not only from mobile which is our largest segment, but we will have iot, industrial, automotive, and computing as other sectors sectors of the market we can serve customers in. Nejra are you preparing for any kind of negative hit to the business if we have an escalation in u. S. China trade tensions into next year . I didnt hear that. Trade friction with china . Nejra yes. U. S. China trade tensions. You preparing for any negative hit . Our direct exposure to some of the customers, which are on the trade distinction, is relatively small. The majority of our products are not subject to the trade restrictions because they originated from europe or asia. I think the impact on us is not so huge. We obviously prefer to have no trade frictions. That sucker for anybody. We look forward to a resolution of those frictions. Nejra ceo of Dialog Semiconductor. Thank you for joining us. Now to china. Six years ago, beijing launched its belt and Road Initiative. Since then, more than 130 countries have signed deals were expressed interest in the venture. Estimates 575 billion worth of energy plants, railways, and other projects have been built. The president s signature has come into criticism in the risks and costs associated with the project. Lets get to Tom Mackenzie who joins us from shanghai. He is joined by someone who knows a thing or two about the project. Great to see you. Tom thank you. Im joined by hsbcs head of the belt and Road Initiative. He is well versed in all things belt and red. Nejra was talking about the risks associated with these projects. You talked about belt and Road Initiative mark two. The government is stressed to ensure these projects are sustainable. In termsess the risks of financing environmental standards. Are you seeing any of those commitments by beijing implemented on the ground . An instrument statement was made by president xi. He said the next stage had to be open, green, and clean. We are seeing a focus of effort to make sure that International Projects are much more open and inclusive in terms of international involvement, the financing, the feasibility behind these projects is robust enough to attract capital from multiple sources. Tom there has been a material change. Many would say those are nice words. The reality is, it is not being met. We are in the midst of that change right now. What i would hope to see, there will be a number of these transactions which evidence proof of contact concept. Tom how do you advise businesses in terms of navigating some of these risks . The advice we provide, we provide conductivity and genetic tip geographical opportunities. I think the advice that we have to give clients is how to navigate those complexities. Whether they are Political Risk complexities, credit risk complexities. Of all how to assure the the execution risks are well tailored and well met. The value of these projects fell in 2018 by about 13 . It fell 7 in the year to august 2019. Is that a reflection of the lack of funding or a push back from these host countries . Its difficult to give you specific reasoning behind that. Some of this relates to the fact that event space activity, large crossborder m a, didnt repeat year on year. Some of the volume drop may be related to that. Other aspects of decline might be that the projects are taking longer to negotiate as countries are becoming more concerned around fiscal comments and ensuring that whatever they do commit to in terms of longterm expenditure is soundly structured and met. Tom how does the trade war in the slowing Global Economy impact the belt and Road Initiative . What it actually has provided for is a diversification. It relies historically entree between the u. S. And china. It has been replaced by a recognition that there is a diversification opportunity available in terms of trading. We see injure asia trade as being something that will continue to grow at a fast rate than trade with europe or the u. S. Somesome a visit about of it is shifting that capacity as well. As china moves up the supply chain in the value chain of activity, the opportunity for china to push down lower cost activity into other more efficient centers. The anon, bangladesh. They have been significant beneficiaries of supply chain renegotiation. Tom hsbc has been involved since day one. What was the value to your business . Could you give us a metric . Hsbc, this initiative plays out in many different respects across our geographies and lines of business. Its not just one transaction in one market. We have a very large catch of opportunities. Across our businesses, we think the volume of overall business we have originated through the belt and wrote is in a is of 100 billion. Thank you very much. That is hsbcs head of belt and wrote initiative in shanghai. Road initiative in shanghai. Tom mackenzie in shanghai. Thank you so much. Coming up, manus cranny speaks to the president of south africa. Dont miss that conversation at 9 30 a. M. London time. This is bloomberg. Nejra this is bloomberg daybreak europe. South africa is pushing forward with an ambition and and bridges investment drive. They have a 100 billion target in new funding. Moodys the outlook for the nations debt. Mica linker manus cranny is in johannesburg. Great to see you and catch up again. That southssues africa is dealing with. What is the biggest one you will be talking about . Its the credibility gap. The political credibility in terms of dealing with changing this economy. He financial credibility when i arrived in johannesburg yesterday, there were triumphant scenes. This is a nation gripped in the ecstasy of sporting victory. The reality of it is, do they have the political wherewithal to really stand up to the people who have put him in power . This is my barometer. Three taxi journeys. Three taxi drivers all talking to me about moody downgrading this country to junk and that this president should stand up to the structures and infrastructure and change. If they loseapital their Investment Grade status. Three months to convince the reigning agency. I heard word on the street about your taxi driver misread index. Im loving that. I was conduct and in that euphoria over the rugby over the weekend. Things are tough. How tough is it from the numbers . How important is swift implementation and execution . The most important trading relationship for this country comes from the heart and soul of the businesses down here. That is mining. Look at growth in this country. It has been sub 2 . It has been incredibly difficult. Fiscally, a deficit of 6. 6 . Thats an 11 year high. Withey do not get to grips the utility, the national utility, and really deal with , thatbt goldman said debt millstone is around as governments net. Issues. E some of the tony parsons is back on the payroll with me. We will have a cracking day. Good morning. Nejra so great to see you. Thank you so much. We cant wait for that interview. Coming up, manus will be speaking to the president of south africa. Dont miss that conversation at 9 30 a. M. London time. Bloomberg users can interact with all the charts shown using to tv. I will show more in the next hour. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Nejra good morning from bloombergs European Headquarters in london. I am nejra cehic. This is bloomberg daybreak europe. These are todays top stories. Line in the sand. China sets its price for an interim trade deal, saying the u. S. Must drop tariffs. Will President Trump buy it . Revenue misses the lowest estimate amid a steep decline in equity trading. Usually, it is global uncertainty. You can quote brexit and so on. E have a nine months view our softbanks hardness hard miss. Welcome to bloomberg daybreak europe. As we ask ourselves whether the worst may be over for the Global Economy and whether we are seeing a bottoming in the manufacturing cycle, german factory orders might give us another signal. Year on year factory orders down 5. 4 . The estimate was for a drop of 6. 3 . Yes, it is a drop, but not as bad as expected. As far as the orders month for month for september, a gain. Better than expected. That is what we are getting from germany, in terms of the data. The other thing we are digesting from yesterday is the Services Data out of the u. S. Coming out better than expected. Let me just take you to the numbers from marks and spencer. What we are seeing is first half adjusted pretax coming in at 176. 5 Million Pounds. The estimate was 170 6 Million Pounds so a bit better than expected. The first half interim dividend 9 versus 0. 68 year on year. Operating costs will be cut by between 1 2 . 1 . Iously was zero to down a bit of an update on u. K. Operating cost cuts. More aggressive than expected. Its views of capex are reduced to 350 Million Pounds. It says Market Conditions remain challenging. It sees some improvement in trading in the second half. Comp sales upd 0. 9 , estimate 0. 3 , so a bit better than expected. U. S. Futures really not giving us much direction at all after we saw a bit of weakness yesterday. Better than expected Services Data but expectation for fed rate cuts got pushed out. We saw some green on the screen in europe yesterday. Does not look like it will hold today. Ftse futures down by more than 0. 25 . Market, of the bond along with u. S. Equities rising, we have seen 10 year yields rising as well. We are near a september hike today. Hight moving much today. It is not moving much. We might see a bit of an edge up in yields given what the futures are pricing right now. Lets check in on the markets in asia with the Juliette Saly in singapore. Good to see you. Are we still drifting . Juliette yes, we are pretty flat on the msci asiapacific index today. Perhaps a bit of consolidation happening. Closing out pretty much unchanged. It was flashing signs of overboard. Pi did well, similar gains in hong kong, but you have seen weakness in the Chinese Market, also the likes of australia. Uan at seven to the dollar it pushed past that yesterday. We have been seeing some signs of overboard on the hang seng index, which is reflected in this chart. 34 of the members on the hang seng index are now at overbought territory. This index has risen 11 since august despite the months of protest we have seen the city and pushing back towards that 27,000 point level. Thanks to increased optimism on the u. S. China trade talks and that surge in the yuan that i was just talking about. We have seen momentum on the gauge and now the strongest since april on the rally the most widespread since january of 2018. Nejra Juliette Saly in singapore, thank you so much. , any is setting its price interim trade deal the u. S. Dropped the tariffs. They want the threat of any new tariffs withdrawn. The question is whether President Trump will elect to give up his weapon of choice. Withzeneca is teaming up one of chinas largest investment banks on a 1 million 1 billion biotech fund. The companys ceo told us that the needs are normas enormous. It does not divert resources to much. Certainly, we have to invest more in china. If you look at the momentum we have experienced in the last few quarters, we have to continue fueling our growth in china. The needs are enormous. Nejra joining us now is nikolaos panigirtzoglou, Global Market strategist for j. P. Morgan. Welcome to the show. Great to have you here. Although china has been asking it for a while, it is quite big to ask for the rollback of tariffs before any kind of significant move towards a phase one trade deal. How optimistic are you that we will get to phase one . Nikolaos i think there is evidence that President Trump , clearo clear the way the macro picture. He wants a deal with china. That is important politically. He also wants to avoid any escalation with europe. There is speculation that he will not impose any tariffs on the european auto sector. I think these two go together. There is political weight here to put tariffs behind him and behind us into 2020. Nejra the reaction in the market we have seen recently, the s p 500 has seen record high after record high, 10 year treasury yields backing up as well. Is that justified . What does that tell you . I was reading a piece saying all that actually shows is relief, not optimism. Would you agree with that . Nikolaos i agree it is both. Initial phase is a relief and then optimism followthrough the. That is the tip optimism follows relief. That is the typical sequence. And the idea here is Global Manufacturing is that is very important. It is more important than services pmi. If you look at previous cycles, to cturing pmi tends services pmi. The factor that Global Manufacturing appears to be bottoming out is very the fact that Global Manufacturing appears to be bottoming out is very important. The most successful signal over the past year has been actually Global Manufacturing pmi. Nejra that is the sign youre looking at. We will pick up on the conversation in a bit. Nikolaos panigirtzoglou from j. P. Morgan staying with us. Lets get the bloomberg first word news. Another setback in the impeachment inquiry for President Trump. Topof the president s envoys were deeply unsettled by the actions of his personal lawyer, rudy giuliani. They outlined a quid pro quo for aid for ukraine in exchange for investigateit will joe bidens son. Giulianis rule started out as perplexing but kept getting more insidious. To the u. K. And the former chancellor is quitting parliament after his expulsion from the conservative party for voting against Prime Minister Boris Johnsons brexit strategy. He will stand down on the election on december 12. He had out at johnson for not allowing a wide range of views in the tory party. The world has gone mad with. Free money that is according to with free money. That is according to ray dalio. He decries the current policies that are these into rising gaps in wealth and opportunity. He says at the same time money is essentially free for those who have money, it is essentially unavailable to those who dont. Global news 24 hours a day, on air, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra thank you so much. Lets get to softbanks Masayoshi Son, who is speaking live right now after we had the earnings earlier, the first quarterly operating loss in 14 years. Uber contributed. We have seen the shares drop in postmarket trading as well. The tliv blog you can follow with all the details. Some of the commentary saying the Masayoshi Son saying hi wework decision investment was his decision. Nothing,lly dodging straight out into lengthy investments in wework. 4. 5 billion dollars from Softbank Group itself and another 1. 5 billion in warrants. Lets get to Annmarie Hordern standing by with more details. Tell us what we learned. It was quite the morning for softbank. Their strategy of aggressively backing Technology Pioneers is backfiring. It posted its first quarterly operating loss in 14 years. The loss of more than ¥700 billion, much bigger than even the most bearish estimate and a huge blow to last years ¥700 billion profit. This stems from the writedowns the japanese conglomerate took from wework and uber. Had a in particular spectacular implosion after raising money at a 47 billion valuation in january, was said to be valued at less than 8 billion. Softbank is bailing it out. Masayoshi son is paying the price personally, has net worth down 30 since july. One asset manager says they dont know if wework was just the tip of the iceberg for softbanks trouble. Had anion find unrealized loss of 1. 1 28 trillion, that is 10. 3 billion. The key takeaway is that yes, this was flat, it was going to be a tough quarter. A Bloomberg Opinion columnist says these are horrendous numbers coming out from softbank this morning. Nejra i picked up on his comments on the tl blogiv tliv blog. Vontobel,o the ceo of zeno staub. Dont go anywhere. This is bloomberg. Nejra softbanks Masayoshi Son speaking live after of course we had numbers earlier from the company, painful numbers they were as well. You can follow everything on the tliv blog. The Company Reported its first quarterly operating loss in 14 years. Gains in erased aftermarket trading, falling some 3. 1 at one point. If you think it has been a bad week so far for uber, youre not wrong. The bad news for the shares is not over yet. Here is dani burger to tell us why. Already, uber yesterday tumbled nearly 10 , but Options Markets and other investors are gearing up for even more pain. Today, the lockup expires, which means early investors are finally able to sell out and put their shares back into the market. Options volume is going wild. When you look at puts, what they are doing, so these are bears options that payout these are bearish options that payout once the stock value begins to fall. Far is a record and how pace is what we have seen for options. This is a market saying we are going to see share prices fall even further from here so we want to make money from it. Aret 1. 5 billion shares said to come in the market, according to estimates from renaissance capital. That will be one of the biggest releases of a Venture Capital backed fund since alibaba. Get prepared for a bloodbath today. Nejra on to some more earnings and vontobel said it benefited srom new money flowing into it boutique funds. For more, lets get to the ceo, zeno staub. Great to catch up with you as always. Thank you so much for giving us your time. Lets start with the good news. New money in Asset Management well above your target. Talk to us about how you got there . Zeno focus on performance quality, focus on High Conviction active Asset Management and a relentless focus on the needs of claimants clients and bring them the added value that we can deliver. Nejra ok. Turning to sort of what is not looking quite so good, Wealth Management, you said, is challenging with client money outflows. Is this something that you expect to change anytime soon . Confident we are very about the underlying strength of our franchise and about the underlying attractiveness of our offering. We are surely having one of the industryleading investment led offerings for Wealth Management. We are having a nationwide platform. We have a boutique approach to serving our clients. We are very constructive going forward, yes. Nejra i mean, one part of this is that you have got a book of u. S. Based private clients where you are hoping to gain share in Wealth Management. What is the growth rate actually like there . Yeah, interest from u. S. Based clients into a global diversification offering is actually increasing. What we bring to the u. S. Market is not competing with the on shore leaders in the brokerage type, advisory based businesses. We are a boutique offering that complements the solutions base for u. S. Investors. Savvynvestors are very Financial Investors with a global view. What we bring to the table are our capabilities for international diversification. We are one of the top five investors in emerging markets. When you look at the european offering, we are one of the esgding investors with an approach that we can bring to the table. That whole range of global diversification in combination with being, adding a swiss aspect in terms of quality, service, reliability resonates very well with international u. S. Investors. Zeno, negative rates are a challenge for the industry. What is vontobel doing at the moment in terms of passing on the pain of negative rates to clients . Zeno yeah, first, thanks for the question. Put things in perspective, so for us, net Interest Rate margin of our revenue. This is not our key challenge, just one of the aspects. Second, we are profiting from that challenge, as obviously investors move money globally in massive amounts out of deposits and Balance Sheets into more promising, more flexible Global Fixed Income strategies. That is actually one of the drivers of our growth, because through our fixed income , we Bring Solutions to depositors and banks that can offer their clients an alternative. Thirdly, we are also in the business of bringing platforms to the marketplace, because we think that negative interest. Ates will accelerate negative Interest Rates will push the meeting of the blind demand in financing out of the realm of banks. We try to support investors in that. Nejra i mean, when we spoke target foryour inflows in Wealth Management was growth of 4 6 . Is that still a target that you hold onto given where we sit now and the fact that once again, you said you expect the market environment to be characterized by low Interest Rates, and geopolitical uncertainty, and a slowing economy . How realistic is that inflows of Wealth Management . Zeno we stick to that target, because we are a boutique, small, specialized. We will deliver on these targets in the midterm on winning market share. Nejra great to have you with us this morning. Clear as always. Zeno staub, ceo of vontobel, thanks for joining us. A number of fed president spoke on the Monetary Policy and health of the economy. Robert kaplan says he believes policy is exactly where it needs to be. He is taking comfort from recent steepening in the yield curve. Now is the time to observe the policy impact. He added that the u. S. Economy remains healthy, the risks are tilted to the downside. Treasury 10 year yields may surge while stocks grind higher over the next six months after the Federal Reserves third Interest Rate cut, according to strategist at j. P. Morgan. Nikolaos panigirtzoglou is still with us. Lets talk about that pull you are making in terms of what happens from here. Why do you expect that 100 basis point rise in 10 year treasury yields and further moves in the s p 500 . Nikolaos the fed told us they are done in terms of rate cuts. Any rate cuts, if they happen from here, will be because datasatad wakes wake. Opinion,vitable, in my that the market focus will shift sooner rather than later. We are already seeing that in the forward curve. If you look at the spread of the onemonth rate in two years time minus the onemonth rate in one year, that rate is about to turn positive for the first time in more than a year. A change both in terms of rate markets but also in terms of how markets think about the fed. It is effectively getting credibility by that resteepening of the forward curve. That happened in 1995 and 1998, which were the previous midcycle adjustments when the fed delivered 75 basis points of insurance rate cuts. We had a very rapid resteepening of the forward curve. It is less rapid this time but it is happening at last. After more than a year of negativity and that is important. How can we get 100 basis points in the 10 year treasury yield . Negative thehow term premium has been in recent months, normalization of that premium from very negative territory to positive territory is enough, in my opinion, to create nejra got it. One thing we have to watch for is the forward curve but there is also another potential stumbling block in terms of retail fund flows that we need to watch for to actually see the market moves you have talked about come to bear. Just to be clear, do you think that the fed is done here . That it is done it has done the three insurance cuts and it is done . Bottomingassuming the out of the Global Manufacturing cycle is taking place and assuming here that manufacturing in the services sector, i think it is very likely that we have seen enough of an improvement in the macro picture to effectively be confident in saying that there are no markets. That is inevitable. If there are normal cuts, the market no more cuts, the market focus will sees to be on reacts nejra if you expect a rate hikes to come back on the table, why are you so positive on emerging markets . Nikolaos because they emergingmarket universe is a high of the Global Market cycle. Nejra thank you so much for joining us. Nikolaos panigirtzoglou, Global Market strategist at j. P. Morgan, great to get your thoughts this morning. Coming up, manus cranny speaks to the president of south africa, cyril ramaphosa. Dont miss that conversation at 9 30 a. M. London time. That is it for bloomberg daybreak europe. Bloomberg markets european open is up next. Futures were looking a little bit mixed, not giving us a whole amount of direction after gains yesterday. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Anna welcome to Bloomberg Markets the european open. I am anna edwards live from the city of london. The market says time to confront the data. Asian stocks higher in the absence of trade developments but europe septa sold open software as we await softer as we await services pmi data. Stock trading woes. Generale Revenue Misses estimates and me