Manus im manus cranny. We have got the pmi. We have the composite that comes in better. Germany slow down 54. Francine both manufacturing and services. We are better than expected. Manufacturing unchanged, but the services rising from a year earlier. That is the pmi data. The top story this week being the ecb. Lets take a look at the big market moves following draghis press conference. Ryan interestingly have not seen the euro strengthen very much at all on the back of the pmi reading which beat expectations. This is the euro over the last two days. It was tanking. It tanked for 11. 5 hours after mario draghi started speaking. Everyone anticipating more helicopter money on the way. Its settles a bit now. You look at the options market. Increasingly sense draghi started speaking yesterday, traders are getting more and more bearish on the euro. Lets go and look at the stoxx 600. A second day on fire. It rose 2 yesterday on the comments from mr. Draghi. And it is up again today about 1 . Finally, just because we can, i want to talk about italian yields, which are very interesting. Where have they gone . They have disappeared. The whole story is with the italian yields you look at the two year, they have moved into negative territory. It is Something Like 500 to 1 . They moved out of negative territory. The italians will be delighted, or at least the government will be delighted that borrowing costs have dropped to a record low on the back of mr. Draghis comments. Manus Ryan Chilcote on the markets. We are joined by neptune investment manager and cio. James, great to have you with us this morning. Lets get your perspective. There is so much expectation now. What do you think will deliver the most bang for his verbal book . Buck . James i do not think you will have any problem beating expectations in december. He knows he has to beat in order to get the effect. I think he will pull through. He always says. Francine im actually quite surprised because he has not spent a euro cent yet. Once again he is moving currency. Yields are lower. At what point, does he have to he has delivered so far. But the concern yesterday was actually at some point he is going to have to do something so massive to convince markets that he means business at the Balance Sheet may take a real hit. James i think there will certainly extend the period of the purchases. They might increase the size of the purchases on a monthly basis. He might lower the discount rate. When he speaks, he obviously delivers. Hes sure to deliver in december as well. I think the bulkl of the Market Reaction to what ecb is going to do at this conjunction is still to come. I think euro is going to go beyond parity versus the dollar. Manus thats a heck of a call. The magnitude. 11 straight hours of decline. We have seen this level of verbal intervention on the euro. The euro is critical part of the story. You are parity. What are the ramifications of that you are calling parity. Of 2016 is when we can expect it to hit. The ramifications are huge. This changes the outlook for the fed, because it strengthens the dollar against a very important trading currency. It alsoeds mind, changes the situation for the bank of japan. Will they do more easing of their own . I think yes. Francine we are tracking euro, talking,ems they start which is some kind of the european intervention, at 1. 14. This graphic. Ecb meeting yesterday. Will the fed hike Interest Rates this year . If you look at what draghi is overpromising, it makes no sense for the fed to move. James i think the reason for the fed to go is a Financial Stability reason. Draghis move will find financial conditions in the u. S. Because it will make the dollar that little bit stronger, but interestrate still on the zero bounce, still dangerous for risktaking behavior. So fast over the last year, and you want to deal with this problem early on. Manus i have a little bit of time to think about this overnight. What i would say is that china, weve got through perhaps the biggest double the sears so far with china. We do not know what we are going to get the next couple months. Is there some kind of stability going into the end of the year . You get the bank of japan doing more easing. And you get your cap counterbalance. I think it opens the gate for the fed to take that initiative and get that winter and get it done before the end the year. James i think not so much the ecb part of the argument, but i am entirely with the china part. The fed. The fed is chinadependent today. In fed didnt hike september because of the ramifications for china. The fed just has to wait until china is stable enough for the Global Markets and the economy to stomach a fed hike. The china data, that opens the door. The margin draghi promising a bit more against the fed. On balance, i think december is still the most likely date, which is not consensus in the markets. Manus you arein goldman sachs. Youre ok. It may give them a window but it depends on dollar strength, right . Manus the market was so long into weakens, if the euro the dollar rises. That may make it more difficult for the fed to ask. That argument is absolutely right if what you care about is inflation. But if its Financial Stability that you care about, if youre worried about the bad effects of keeping Interest Rates on zero balance, you need to stop that, the exchanges helps you with that. You need to go on Interest Rates. That is the key point. Manus lets talk about markets because we have seen some syndicate moves. Italian two year bonds a into negative territory for the First Time Ever. Weve seen that in germany. Ping, yields are moving. The momentum he punched into these markets. How do you look at it from a cio perspective . We have had quite a rebound in the first 20 days of this months alone, havent we . James yeah. I quite like on a shortterm basis china exposure right now. Manus brave call. James absolutely. Why . Life is very unfair. Manus, your china, you sneeze and i catch a cold. When it comes to the policy response, youre the only one with a handkerchief in the room. China slowdown has caused a knock on slow down across the Global Economy and we are seeing the ramifications of that in the team in the pmi data. Caning market, gdp, we discuss how much but really and within the bounds of reality, too. China all of a sudden looks like a bastion of bastion of stability. Wow, the world has changed in four weeks. He is staying with us. Manus lets take a look at what else is on our radar. Microsoft shares rose to a 15 tradingh in extended after a Beat Estimates and first corning of a sprintnet income 4. 62 billion. Pr ceo focused on omoting Cloud Services as the pc market continues to slump it francine amazons 30 quarter topped estimates. The company turned a surprise profit of 79 million. Amazon shares surged in afterhours trading. Manus net data, net profit Beat Estimates. We will be speaking a squeezable speaking exclusively to cfo at 9 30. Francine mario draghi evokes the old days with talk of fresh stimulus. What it means percent of bank to versions. Diversions. Albank manus welcome back to the pulse l ive on bloomberg tv, radio, streaming on bloomberg. Com, your tablet and are from. Atectrolux, Third Quarter be estimates. It expects appliance market in the u. S. To beat. Very welcome to the pulse. When a look at the guidance you have given to the market, your upping global expectations for the u. S. Flat in europe. You are warning on all of those emerging markets you are in. Question to you is this how robust is your 2016 outlook when you really see so much uncertainty in front of you in these emerging markets . Yes. Not actually given out 2016 expectations for market demand by region. But to your point, in general it is the opposite of what everybody was talking about a few years ago. Right now the strength in demand for appliances is primarily in the large, developed markets. So, western europe, north america, australasia and the weakness, of course, is in those Macro Economic environments that are having difficulty like brazil, russia, china. So, it is actually the inverse of that now. When does results on around . It does not look like a turns around soon to us. Russia, they have low visibility in terms of what is happening there. China probably turns back sooner. Theis not down as much as others and probably comes back sooner. But it is a different picture than a few years ago, as you know. Manus when i was reading through the various oneliners we printed on your report, what struck me was this the ecb is telling us that bank lending is getting better, things are getting better. We have more q. E. On the way. The consumer is not paying as much in oil prices. Why am i not seeing a stronger read in terms of europe here in the lines in your report . So, that is a good question. The reason why you cannot see it is you have to separate western europe from Eastern Europe. So, when you look at total europe, its trading flat and we are expecting 1 to 2 . Western europe is up 5 , which is very strong. In Eastern Europe is down 15 . So, that is why you do not see it when you look at total europe, but western europe is up quite a bit. Manus what is a chance of raising prices . If we look at the core of europe, things are better. Everybody else has disinflation all over i t. We are in that same boat. Appliances is still a deflationary market in western europe, in europe in total. So, i think, you know, it is coming off a 2006 peak down 20 . So, although there has been good improvement recently, in the last six of several quarters, we probably need another year or so before you get the asset utilization back to the point where you will not be in a deflationary market. Manus so, lets get to the big elephant in the room, then. Youre trying to get g. E. Electronics and get this deal done before the end of the year. Said you you you are prepared to sell certain assets to get this deal done. You have got to try to help me here. What are the assets . Give us some indication of what is up for grabs to get the deal done. Are in thee, we middle of litigation and remedy settlements with the department of justice. Cannot answer i that question specifically, but we are in fact pursuing parallel paths. We are preparing to go to trial in november and to, were quite confident that we will be successful on the merits of the case. At the same time, there is an opportunity to settle this thing with the doj out of court. Where pursuing that passes well. So, were confident we will get this deal done. Exactly how it gets done manus let me ask. I understand the restrictions. 1 billion youre prepared to sell . Is it 1. 5 billion . What size of revenue are you prepared to give away to get that size and scale that you need in the United States of america . What were doing as we are talking to the doj about a settlement and the best assures that address the dives titures that address challenges they raced with their objection. That is a settlement offer we have on the table. That the volkswagen saga theave been reporting on, issues raised at volkswagen have been about honesty, integrity, product, marketing, messaging. Im curious, have you started an audit at electrolux . Ar eyou looking at what you are telling the consumer about your product . What has the volkswagen experience evoked for you as a ceo . You taking any actions internally as a result of the volkswagen debacle . Have been andy continue to make sure that what we are reporting and what we are saying is correct. Situation,lkswagen of course, i would guess that every manufacture, including us, is making sure that what they have out there can be supported 100 . Of course, we are ensuring, but we have not found any situations there. The other thing we have in our industry is it is a little bit self policing because all of the competitors check all your claims. Its hard to be off for too long. Of course, we are paying attention, of course we are ensuring that what we have and what we are communicating can be 100 substantiated. Manus keith mclachlan, ceo of elektra looks. Wish you well on the deal and the doj. Francine can e. U. Leaders solve the differences with another summit . We go to berlin for the latest on the on the escalating refugee crisis. Francine welcome back to the ande live on bloomberg tv radio and streaming on your tablet and phone on bloomberg. Com. Angela merkel has called for solidarity admits the escalating refugee crisis p ritchie spoke in an address to the European Peoples Party in brussels she spoke. Chancellor merkel we are going to face it with solidarity. We must continue to keep talking. We must not work in isolation. Europe can do this together. I am completely convinced of that. Francine hans nichols is in berlin with the latest. E. U. Leaders increasingly strained. Will Angela Merkel be able to rally them effectively . John heilemann she is going ans Jeanclaude Juncker also speaking yesterday. Says she will not have resolution, not have a solution to this crisis by christmas heard this is going to be here for as long as leaders can foresee. The responses to hold another summit. An emergency summit on sunday will be the 20th of the year. When we look back on previous years, youve got maybe 8,9 summits. When there is a crisis here, european leaders want to get to brussels. There hasnt been a motto product progress. The last one ended in a stamina. An indicated that the very stake of europe is what they are debating. Issueminister orban this will determine the future of our political family. We are in a deep trouble. The migration crisis is able to destabilize governments, countries and the whole european continent. Strong, clearcut answer, timetable, and action plan. I heard froms chancellor merkel last night is that she was open to a European Border force. A further erosion of sovereignty. Trying toe control the borders, trying to increase controlled the influx of refugees. There is a new poll. The level of concern of German Society that this inflow and of f migration, how it will change society. 76 say it will change society. 21 say it will not change society. It will strongly impact society. The poll did not ask the respondents what they thought. They asked whether he will change society. Many expect that it will. Francine thank you so much. Hans nichols in berlin. Manus we still have james dowty, chief Investment Officer at neptune. This throws up a huge number of questions for visas for the opening of the german borders. Your perspective in terms of the refugee crisis amid economics perspective . This is very complicated. But i think the big point we should not lose sight of is that this is a great Economic Opportunity for europe. Whats one of the big challenges europe faces . Its the aging of the population, the shaking of the workforce. Francine as long as you can integrate them properly. James 3 4 say will change society. Of course it will change society. Look at the United States, a rapidly changing society. The most Successful Society and economy in the world. Manus thank you very much. James is going to stay with us. We get into tech after the break. It is super thursday. Francine we had amazon, microsoft, google shares surging atter earnings need be expectations. Manus join us on twitter while we save fran with a glass of water. Francine the tech has got me in a twist. We are back in two. Francine welcome back to the pulse live in london. Im Francine Lacqua. Manus our top headlines on the pulse. Chinese house prices rose in september and more than hlaf of 70 majorf of the cities. New home prices rose and 39 cities compared with 35 in august. The recovery extended to a larger number of small cities. Rate cuts and an easing of buying researchers. Riseine maersk shares this morning. It put the profit warning down to a weaker container market. Manus london for an Company Talktalk has been hacked. Email a just as details may have been compromised. The stock dropped. We are down 9. 25 at this stage. Francine of course, it is all about that draghi promise. You can see stocks gaining some 1 . Stocks advance in europe, they advance in asia. As riskier assets soared on the prospect of more stimulus from the European Central bank. We had better than expected u. S. Technology earnings. And chinese home prices. Centralbank largesse. Manus lets have a look at the foreignexchange markets. What you have got here at the bottom of your screen you have Italian Government bond yields. They were in negative territory for the First Time Ever on record. So the prospect of the european bonds, bank buying more going more negative and Interest Rates all adding to the momentum in the bond markets. So you are seeing german Government Bond yields, 10year up ever so slight. Francine positive news from the technology sector. The positiveon news. Run me through this. Three weeks ago we were worried about valuations. Now shares are soaring 10 . Nejra a big beat for big tech. Im going to start with amazon. What we saw is Third Quarter sales beating estimates. A surprise profit to the company that was driven by fastgrowing Cloud Computing, a boost from july prime day and them keeping a watchful eye on spending. The rally in shares in afterhours trading means that jeff a sows is the bezos is the third richest man in america. He is happy about that. Shares up 82 yeartodate. Moving onto google, or i should really say alpha but. That is the Holding Company that is going to include the Main Business of google and a lot of other businesses within it. What we saw today is the last time we are seeing the earnings