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