nejra: good morning. welcome to "bloomberg markets: european open." we are live from our european headquarters in london. i am nejra cehic alongside not miller in berlin. matt: asian stocks down. u.s. futures falling after disappointing earnings from tech that he then -- behemoths. european equities start trading in just 30 minutes time. ♪ nejra: the route resumes. asian equities slump, but u.s.

futures point to another day of pain. hotel tightens the first strings. -- pursestrings. less than half an hour away from the start of the cash trade here in europe and over there in the u.k. taking a look at futures, down across the board. probably more pain to come for those who are long equities in general and have rotated into defensive baskets. , speaking of defensive, at u.s. treasury yields. investors are flocking to the perceived safety of u.s. government debt and pushing the yield down. 3.10%.ow, we are at really weighing on the yield. this is a three-day chart.

we just increasingly lose ground as the equity route continues. nejra: that equity route certainly continuing in asia. asia just can't catch a bid. msci pacific index still in the bear market. we really have seen a broad-based losses. china's lower as well. india, not down quite as much, but still lower. you talked about the 10 year yield on a 310 handle. we are also seeing bond yields move lower elsewhere. it is a strong dollar day. aussie dollar is down. korean won down. the yen higher by 2/10 of a percent. that tells you something about safe havens. how much does dollar strength pose a risk to u.s. equity? that's a question at the moment .

it seems like u.s. futures pointing lower is a reaction perhaps to some of the weaker tech earnings after market. many questions over why we are seeing that. copper on the lme down 1.3%. the route in copper is there. resuming losses after jumping a little bit yesterday and heading for a weaker loss as well, looking at wti. down 9/10 of a percent. let's talk more about the markets. red october continuing in asia. stocks extending declines. the msci pacific index set for its worst month since the financial crisis. u.s. futures falling off of disappointing results from technology giants like amazon and alphabet. the question of the day, what is most to blame for the stock route? is our us from singapore bloomberg analyze strategy. i'm hearing everything from earnings to concerns about raising rates to geopolitical

tensions, liquidity squeeze. what is most to blame for the stock rout? reporter: good morning. i think the consensus is building around geopolitics. that specifically, the relationship between the u.s. and china. i don't think there's much doubt for anybody that is the biggest factor that people are having difficulty trying to price into markets. how long will it last? which direction will it go into? who else will be affected by it? which other countries are going to be hurt? geopolitics in the big picture, , that's athe u.s. major part. it doesn't help that the u.s. is also having trouble with russia, iran, to some extent with saudi arabia. there are other factors as well. the fed is raising interest rates. certainly by throwing the relationship on trade on top of all that, you have a huge weight that has seemed to topple the

equity markets. matt: i want to point out that our viewers and live viewers can write in with their suggestions and answers to the question of the day. at plus tv type ib for the answer. . you can see it there on the screen. i want to point out another big drop we have seen. speaking of red october, a big drop for oil here. , thisnthly drop for crude is wti, similar for brent, the worst we have seen in a few years. 2016.oes back to what is going on there? >> it is partly i would say to do with saudi and increasing supply. there are thoughts that they may have increased supply a little further.

there is an interesting point being made today by china. their majorling petroleum companies not to do transactions anymore with iran. they are trying to tell of the way america is doing that. if iranian supplies don't make it to china, they could tighten the markets slightly. --are also hearing of stood disturbances in libya and nigeria, which affect supply as well. we see in wti may be coming to an end if we see disruptions from other key suppliers in the middle east. nejra: let's talk about the dollar as well. king dollar, as it's being called today. is that causing a lot of pain in fx markets and elsewhere in asia? >> absolutely. today is all about the dollar yuan exchange rate. we saw a surge this morning. the fixing by the pboc with that much higher than people expected. move thatuge

triggered moves in the aussie dollar and other currencies today. pboc has been on the wires this afternoon. a bit of job owning to strengthen the yuan slightly. the remarks,ok at they are shifting the blame at the u.s. they say the reason why it is weak is because the u.s. dollar is strong. and the strength of the u.s. dollar is because of the fed hiking rates, the strength of the u.s. economy, trade wars started by the united states. it is causing disruptions in emerging markets. really the pboc is doing a good job of shifting the blame back to the united states. if there is somebody trying to say the yuan is weakening, they will say, no, we are weakening in response to something else elsewhere in the world. from them and has caused volatility in the fx market today. is it inevitable that we go through seven year mark, and if so, what happens? way that thee

chinese authorities are speaking is that seven is not an important number to them. they are not going to defend it. there's no line in the sand. is just another fx rate for them. that probably means if necessary, they can fluctuate back and forth just like any other exchange rate. if the dollar pushes higher, it is almost inevitable seven will be seen and probably higher as well. if there's reasons for the dollar to weaken, if the fed slows down the hiking, maybe it will be lower. seven is not an important number for china. nejra: seven is not an important number. mark cranfield taking it from equity to oil and the dollar. bloomberg mliv strategist, thank you. can follow mark and the rest of the team and join the conversation on the question of the day by going to ib plus tv go on your bloomberg. the question of the day is about the equity rout. what is the single biggest reason for the stock rout?

now let's get first word news with debra mao in hong kong. saidter: brexit talks are to be on hold because u.k. prime minister theresa may's cabinet is not close enough to agreeing on a way forward. source, no new plan is likely to be put forward by the british side before next monday's annual budget statement. meanwhile, a report by the national institute of economic and social research says a note yield brexit would shave 1.6 percentage points off u.k. growth next year. by contrast, a trade accord that keeps most of the current arrangements with see gdp growth by 1.9%. chair richardce clarida has backed a central bank plan for further gradual interest-rate increases, as suggested policymakers will not change course in response to political pressure. the new number two at the federal reserve downplayed the potential impact

of recent stock market turbulence on fed policy, noting that the fundamentals of the economy are "very, very solid." green, the philip owner of the top shop clothing chain, has been named in the u.k. parliament as the businessman alleged to have used legal agreements and payments to hide accusations of sexual harassment, racist abuse, and bullying. lawmaker peter haynes told the house of lords that he felt it was his duty to reveal the name after being contacted by someone involved in the case. in a statement, philip green says he categorically denies the allegations of unlawful, sexual, behavior. bank of america merrill lynch says india's shrinking foreign exchange reserve could hamper the central banks ability to defend the rupee. the banks says a further $15 billion to $20 billion erosion would leave india with only enough to cover him -- eight

months of imports and short-term growth. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm debra mao. this is bloomberg. matt: thank you. debra mao in hong kong with the world and national news. says it willte how keep a leash on spending as profits jumped more than expected. any posting gains as well. more on the oil patch next. this is bloomberg. ♪

nejra: this is "bloomberg markets: european open." we are just over 15 minutes away from the start of cash equity trading. let's get the bloomberg business flash from debra mao in hong kong. outlook: raising the for this year's sales growth, but lowering forecast for profits. europe's biggest cement maker grow, downe will from a previous forecast of 3% to 5%. the team has been shuttling regional offices in a bid to streamline operations as it battles increasing costs. that- reported profits after analyst estimates an automotive slow down and higher raw material products.

the german company says the trade conflict between the u.s. and china has affected them. also, new admissions standards europe. the royal bank of scotland has posted stronger than expected capital in third-quarter earnings that beat analyst estimates. operating profit before tax surged 10%, 961 million pounds at the lender. getshief executive ammunition for potential buybacks and m -- after stress tests were passed. matt: thank you. debra mao in hong kong with business flash. french giant total says it will keep spending restraints this year despite that are then expected third-quarter profit due to rising oil and gas prices and production. also beating estimates on oil production. joins us kelly giblin

with some of the details. what is the story -- oil prices we have seen take a huge dive over the last month, but the recording quarter saw prices rise and that really helped. reporter: that's right. you are seeing a result of so much hard work. reducing spending, cutting breakeven costs for all projects, eliminating waste, and also in the height of the oil price boom, sanctioning new projects. now you are seeing that production come in and you are seeing this really great period for these oil companies. nejra: if it is a great period, when is the austerity going to end? reporter: it could end in a few years, but definitely not right now. investors are still really pressuring them to prove that to notve the restraint overspend and create these

fantastic megaprojects that are totally overengineered and way too expensive, like they've done in the past. it looks like other companies are spending more for -- is total doing better than others as far as self-restraint is concerned? reporter: is doing exceedingly well. lowas kept the cap at the end of projections. it was going to be between $16 billion and $17 billion, and it will be around $16 billion which means they are doing more with less. i would say they have done good in that restraint. why they liked oil in europe? the stocks in the oil and gas index is the only one in the green today. reporter: we are seeing

something interesting going on between the american and european oil companies. part of that is due to the fact that exxon was a bit of an anomaly in that it decided to increase spending while others are cutting. that's the difference. also, there's another interesting element where there is the energy transition. atre are investors looking whether the companies are preparing very well for a potential peak oil demand and what they will do about that. matt: i like to pull up come screens to look at a consistent measure of how much wealth is being created are lost. and this case, i have an easier at the bottom. to .2% annually compared to the others. to 10%e returning closer

annually. what are they doing wrong? reporter: they have been on a big exploration push to increase production. what you saw is basically the result of what happened years before. one thing total bid that was better than some of the other companiesis acquiring at very low prices. you also solid shell, if you 2016,t what they did in it was a massive acquisition. they are digesting it now. they are seeing this incredible golden era for gas production because of that acquisition. nejra: kelly gilblom, thank you for joining us on set. we are minutes away from the european equity market open. we will take a look at the stocks to watch in the market rbs, after the british banks third-quarter total income beat estimates.

this is bloomberg. ♪

matt: welcome back to "bloomberg markets: european open." i am matt miller in berlin. we are seven minutes away from the start of stock trading. let's get to the equities you need to watch. will kennedy is looking at eni. our equities team is covering rbs.

let's start with will. what is the story with eni today? reporter: it is actually a very strong set of numbers. the net income came ahead of the highest estimates. it is a big beat. the really striking thing about the results today was cash flow. cash flow doubled to more than $4 billion. a surge of money from higher oil prices. what did they do with the money? they didn't increase dividends are spending, they are paying down debt. a very conservative approach to the balance sheets, which investors should respond to. lots more money, but a lot of discipline. it is possible that will be's and the liking of shareholders in italy. matt: excellent. rbs also out with earnings. what is the story at the bank? reporter: rbs delivered generally positive results from the third quarter. it saw capital ratio and

earnings both beat estimates. whereaso rose to 16.7%, operating profits before tax surged 10% to 961 million pounds. that has a lot of investors wondering whether that means the bank can pass a stress test. they can think about buyouts are increasing dividend payouts. of course, there's always the brexit question with a british bank. we did see the bank put on an additional 100 million pound impairment charge. rbs story to watch closely this morning. we also have a cement story to watch. lafargeholcim. calls thisrom the morning, looks like the shares should open higher. rising thisenue quarter 5.8%. we should note dated lower the outlook for profit growth this year. the company is dealing with

higher oil prices, which makes their production prices higher, cost higher, as well as transportation higher, but they were still able to have higher prices in a bid to overcome higher crude prices. nejra: thank you for joining us, everyone. matt: we both are thankful to everyone for joining us. thank you. nejra: [laughter] everyone to byor the way, all the latest stock stories from the equities team by going to first go. i want to highlight as well electrolux. this is something i have been watching today. comments from the ceo i very interesting. further price hikes. electrolux is basically saying it could see a little bit of a hit of 3 billion swedish krona coming from things like raw materials and a currency hit,

and it sees those carrying through to 2019. coming up, is the european equity market open futures pointing lower? this is bloomberg. ♪

minute fromhan a equities trading. still in a bear market, nikkei closing down .4%. we've seen these numbers continue off concerns of tech earnings after market close in the u.s. euro can't catch a bid. star the strength is the story although we have seen the yen gain. oil resumes its losses. wti trades. brent goes lower. cable pretty much unchanged. let's take a look at futures.

we did see european equities close higher .5%. it looks like another down day. dax and cac 40 futures down more than .8%. he was futures pointing lower, as well. the bears are out again. the equity market open is underway. let's see how these markets open up. follow asia into the red. ftse getting going, getting momentum to the downside. opening up flat but down it goes, approaching lower by .2%. that selloff getting momentum in the ftse 100. let's wait to see how the dax and cac 40 open. lower .5%.n, open already negative straight out of the gate. really what seems to have caught the market not offguard, necessarily, but alphabet and amazon reporting after hours,

tech stocks leading the selloff in the asia session. so many reasons we could put forward for the general equity selloff we've seen. in terms of global market cap for equities, it's a bigger drop in terms of market cap. lower .5%.d what do you see in the industry groups on these stoxx 600? on the bloomberg europe 500 imap? matt: i think this is key, nejra, because what you see here is a reflection of how important amazon and google really are. someone asked me this morning if it was appropriate to talk to an economist about the tech companies. i pointed out how important they are to the global economy, probably the most important in the world. check out what is going on with the losers. of biggest losers you see,

course i.t. is down, but you also see consumer discretionary stocks in the bottom left-hand corner of your screen. cd, consumer discretionary. when people are shopping more, spending money more, they are probably googling things more. oftentimes, they are buying on amazon. you see consumer discretionary stocks down big. you see financials down big. energy stocks after a horrible month oil has had also down big. the gains you see are in places like consumer staples, which means if you listen to howard marks just a few days ago, he said you've got to reallocate consumer staples to more defensive sectors. we are not in a recession yet. we're at the end of the cycle. that's where we need to be. what are you seeing as far as individual movers? nejra: let's take a look at the mov section. here you can see the change in

the performers on the outside -- absent. -- on the upside. interesting because it did boost for your revenue forecast but lowered its profit outlook with energy costs increasing. investors are focusing on the positive for now. we spoke to will kennedy and he said it was a conservative approach to the balance sheet with his takeaway and investors could reward for that. will kennedy made the right call. we got numbers from total, as well. can't see it quite yet. in terms of other numbers, we been watching out for and those two along with total that i've already mentioned. on the downside, they looked like sap is one of the worst performance. asml, as well. chipmakers have had a hard week. perhaps that's still feeding through. european markets opening down.

this follows asian markets extending their decline with a benchmark. msci set for its worst month since the financial crisis. you us futures falling after disappointment ports of amazon and alphabet denting confidence. our question of the day is, what is most to blame for the stock rout? joining us now to discuss all this is a member of the committee. great to have you with us. let's kick off with the mliv question. what is most to blame for the stock rout? guest: you have to look at short-term influences and medium long-term influences. for us, it's to look forward and pick out some of the weaknesses and changes, real differences in dynamics. we have a low level of liquidity. we have a shortage of u.s. dollars. we are in an environment where

growth is nowhere near as strong in 2017 and we are adjusting to that growth by seeing what these earning sessions are all about, which is topline growth. a lot of them are missing revenue. they are not seeing as much demand as last year. the market is really adjusting to these changes, adjusting to higher interest rates. there are short-term influences also. very short-term influences really hit around the fact that we are now in and have been for two weeks and a back out -- blackout. that has created a hole in the market. and wehore are fueling will be out in the first week of november. we imagine there will be new support coming back to the market. matt: on the subject of support, sandra, i note that over the last year with the two big drops that we had, and you see one

obviously came at the beginning of the year, and of january, beginning of february, and one right here. we've erased $8.3 billion worth of market cap. this is globally. sorry, trillion. i said billion just because i'm not used to using the word that starts with a t. it means the money is sloshing around in the system and needs to find a place to go. where has it gone and how much is cash sitting on the sidelines? portion is cash sitting on the sidelines. there is short-term safe havens or search going on for short-term safe havens in the bond markets. we're seeing in europe, we're in an environment where political uncertainty is certainly creating quite a deal of concern for investors.

and backe moment, cash into the bond market, you was yields over 3% with real yields above 1% for some of those funds foundation endowments, great place to put short-term cash. nejra: if you see some support for the equity market and despite the rout we've seen and matt showed well on the chart in terms of global equity market, if you see a long-term buying opportunity, what is going to support that? is it earnings from here? is it a change in sentiment? is it how low valuations have dropped? sandra: for us, it definitely is an earnings case. the environment will be less robust because of rising interest rates, particularly on the side of the fed that we think will continue.

we've seen a decent level of headwinds, the wage rises. we also have energy prices underpinned at these levels. costs,lso seeing college competitive -- pushing costs up. we have quite a number of headwinds going forward in regards to corporate margins. globally are searching for is definitely quality growth companies with strong visible earnings, low indebtedness because we still see interest rates continue, and we can see that in the tech industry. we're just mindful of valuations. and also in the health care industry going forward. matt: what is your best advice for someone who wants to get defensive? what should someone who is extra conservative be doing right now? sandra: they should have a different side portfolio -- and diversified portfolio, more headwinds in regards to trade.

and also, they need to recover from this growth. we need to see the stimulus start to work through the chinese economy and how that will affect asia. as far as geographical allocations are concerned, still more weighted towards the u.s. and to a lesser extent, europe and japan, and also underweight in emerging markets. as far as sectors concerned, we're again looking for defensive sectors. staples, you may say why not there? because of the change of the spending patents because of the distractions -- disruptions in the staples industry. that's not really the new defensive going forward. they have lost. quitea deal of market share they've lost profitability because of the amazonization affect on products. we have to be careful. really making the right

decisions. on companies nejra: you are still weighted toward the u.s. i've yet to find someone this morning not weighted toward the u.s. us.ra crowl stays with join the conversation by going to id plus tv on your bloomberg. the question of the day, what is the single biggest reason for the stock rout? sandra answered it. up next, we bring you the stocks on the moves, including electrolux getting hit hard. we'll tell you why. this is bloomberg. ♪

matt: welcome back to bloomberg markets. this is the european open, 13 minutes into the trading day adn dnnd we're seeing drops across e board, 1% or more on major indexes. let's get a look at the stocks moving. for that, we go to annmarie hordern in london. annmarie: let's start with one positive mover, europe's biggest cement maker up nearly 3% this morning. they are dealing with higher energy costs, which is weighing on production. there are still able to report again in revenue, up 5.8%.

glencore down 1.9%. morgan stanley put out a note they were expecting shares to be marginally lower after third-quarter production missed morgan stanley's estimates in copper, nickel, and oil. rbs down nearly 5% this morning, the most it dropped since june. third-quarter earnings beat estimates but they took the cfo taking a conference call, saying it reflects brexit uncertainty. nejra: thank you so much. ending on the right note, brexit uncertainty. that's what we're talking about next. bloomberg sources say theresa may's cabinet is not close enough to agreeing on a way forward for top-level negotiations to resume. british officials will not put forward a new plant before monday's budget. sandra crowl is still with us.

this goes on and on. we keep hitting walls with this. and the pound, a little bit of a slave to it. cable lost .5%, at 128.17. how do you approach this on the investment committee? do you stay away? do you do it through the bond market? sandra: there are several ways. for the last 18 months, we wanted to hedge all our sterling risk behind the u.k. investment. those are tending to the investments and companies that are pretty multinational, benefiting from a lower pound. that really have no direct effect coming on a hard or soft exit. -- soft brexit. some of the announcements about growth of this morning leading into the budget announcement, it's so logical to see a hard brexit with so much uncertainty

to think of growth deficit in the u.k. really bordering on recession, and that will have some affect on europe. we are invested in some new they'res, for sure, but not domestically focused. matt: which industries do you like in the u.k.? in which asset classes do you think is best to buy in the u.k.? is there anything outside of equities you think would be great to buy outside britain right now? sandra: the e-commerce retailer has been in the portfolio for quite some time. that is a perfect example of the type of investments we are making across other geographies because of the fact that these companies have an excellent business model. they're able to bring in new products online. they are benefiting from the e-commerce growth around 30-30

5% try at best. are pal nejra: how party are stocks like that? you highlighted as off, to consumer sentiment, and the risks to that. true, but they are probably the most defensive. they've got some legacy costs. we're still continuing to search for those types of companies that are bringing in -- e-marketing there -- and marching there market. ing theirnd -- enlargen market. do you like exposure to these companies in the u.k., mainly to equity?

or do you look at credit, as well? we were talking about sterling and sterling credit. small-ish amount we invested in the u.k., we did have a couple of bank credit positions. us someat least giving coupon and some reward for the risk we're taking. we'realright, sandra, going to give you with us. crowl is going to stay with us. up next, america's winning streak. the was economy is on track for the longest string of quarterly growth since 2014. we talk about that ahead of the all-important midterm elections next. this is bloomberg. ♪

matt: welcome back to the european open. we are 21 minutes into the trading day, red across the board for western europe there. italy just flashing red, but we've got the bigger drops in the core countries of europe. the cac down .33%. on the other side of the atlantic, we get a reading of

u.s. gdp today for the u.s.. we're expecting to see 3.3% growth. however, the streak of quarterly growth that's interesting, the longest consecutive streak of quarterly growth since 2014. that would hand president trump a win ahead of midterm elections on november 6 to go with the bloodied nose of the stock market is received over the last month. us.ra crowl is still with sandra, what do you think about the state of the u.s. economy right now? it's not being very well reflected in u.s. markets as the s&p and the dow jones both erased losses yesterday, the day before yesterday for the hold of the year. sandra: well matt, it's certainly pretty well-timed for the election, isn't it?>

we're invested in the u.s. market but our eyes are open into the u.s. economy moving to overheat. this is the first time we've had such fiscal stimulus in an economy already at full employment, already caused a stopgap in a lot of industries. continued stimulus over some of these capitalized sectors, wages will continue to rise. unnatural through an rollover of the cycle. to fed is working towards extinguish this growth that is, in fact, above trend, and certainly far too much stimulus in an economy that is already at

full employment. so we anticipate that the u.s. growth will come back, probably 2% or 3% as the cycle will push investment growth phase into next year. nejra: how close are we to the end of the cycle? sandra: that's a question we been asking for nearly two years. we are starting to see the effect of higher interest rates in the consumer sector in existing home price sales, in prices and sales falling, the affordability is also difficult for u.s. households now. so just through the consumer component, we can see the effect will seep to lower consumer spending next year. i think we believe it's still going to be pushed on because is going on 6% or 7%. the tax cuts are having a decent positive effect on the industry.

matt: working in a sense against that, we look at the dot plot. we can see that the fed and listen to richard claritin today, we can see the fed wants to continue raising rates. 3.5% in 2020. to is this going to be a problem for the u.s. economy as the president stated he believes it is? sandra: you raise a great point. look at where the market is. the market is not anticipating that many hikes, only anticipating hundred tw -- under two rate hikes. they are not anticipating the neutral rate to be the high. there is going to be some correction with a market realizing that the u.s. economy is in overheat and we will have further wage inflation and other types of inflation.

what about the input costs from tariff prices? that will start to feedthrough into inflation's as well as somey, so there are growthges ahead for u.s. for sure. nejra: thank you so much for joining us. sandra crowl, great to have you with us. sandra will be joining us on bloomberg radio, as well, live on dab digital. vallejo falling 16% in the session, biggest loss on record. this makes components for the automobile sector, down 19% today. extending those losses. profit forecast cut on china slowdown is the headline here. a french car parts maker cutting profits forecast because of a

slowdown in china but also in new rules on admissions testing in europe. coming up, big tex disappoints. the growth engines of one of america's just industries starting to suffer. this is bloomberg. ♪

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matt: welcome back to bloomberg markets. this is the european open. let's get your top headlines. the rout resumes. u.s. futures point to equity pain on wall street ahead. tech wreck. weak outlooks from amazon and alphabet dampen the rally that in the aftermarket hours. that's what's behind all of this, at least for today. and total titans the pursestrings. the oil giant says it will see restrains. welcome to the european open. this is bloomberg markets. i'm matt miller in berlin alongside nejra cehic in our

european headquarters in london. nejra: we might be seeing a sea of red in terms of equity benchmarks. that move we had higher in the stock 600 yesterday. i want to show mrr but we've got mov up again. in terms of performance, outran is one of the better performers. this is to do with third-quarter sales. it's confident with its execution plan. you're also seeing nestle higher, the gliders rather than the profit, judging by what the market is doing here. conservative with its balance sheet about that company. perhaps the market taking that will. vallejo having its biggest loss on record, the profit forecast cut. also electrolux is something to highlight, even if you can't see it here, dropping the most since

2015. the numbers were basically in line. more on the cost guidance that could because and concerns for investors. let's get the bloomberg business flash with debra mao. brexit talks on hold because theresa may's cabinet is not close enough to agree on a way forward. no new plan is likely to be put forward before next monday's u.k. budget statement. nonwhile, a report says brexit would shave points off exit. a plan that would keep most of the arrangement with to the plan grow by 1.9%. yuan has slid towards its weakest level in a decade and closes into a key support level. it's come under renewed pressure after the people's bank of china

cut its reserve ratio requirement for a fourth time this year. the deputy governor of the pboc says the central bank will continue to keep the yuan at a reasonable equilibrium level. >> china is a responsible nation. we won't resort to competitive devaluation. this point of view has been reiterated by the pboc many timesm and i'm reiterating this again today. debra: the new fed vice chair backs the central banks plan for gradual interest rate increases and suggests policymakers won't change course in response to political pressure. in a speech, the new number two at the federal reserve downplayed the potential impact of recent stock market turbulence on fed policy, noting the fundamentals of the economy are very, very solid. theionaire philip green,

owner of top shop clothing chain has been named in the u.k. parliament as the businessman alleged to have used legal agreements and payments to hide allegations of sexual harassment , racial abuse, and bullying. he felt it was his duty to reveal the name under parliamentary privilege after being contacted by someone involved in the case. he says he categorically and holy denies sexual or racist behavior. global news, 24 hours a day on air and at tic-toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm debra mao. this is bloomberg. nejra, matt? matt: thanks so much, debra mao with your headlines. a rash of stock earnings out today, with big winners like total and the fossils some, but also big losers like electrolux and the royal bank of scotland. joining us is that director and

research of bloomberg intelligence, saying fundamentals are notably different in the midst of this market downturn compared to the last major european selloffs. tim, why do you say that? tim: there are a couple of things to keep in mind. a big thing is market composition. if you look at at the 2011 period in particular, you had commodities that were significantly bigger, relative to the market at that point. well over 20% of the market. versus now, and we basically gone from a commodity super cycle to a more normal period. in contrast to that, you've got defenses, whether it be staples or health care, that have continued to expand. you basically got a global consumer brand, as well as some

brands that are less cyclical basis, on a relative it -- then on a relative basis. it gives you a different flavor, different tilt to the marketplace. nejra: when you ask people why they are long equities, whatever, people keep tooting the earnings horn. how is that picture looking in europe? not so much this earnings season, but also in forward earnings? tim: interesting item. to give you a couple of different answers, number one, this earnings period from a europeans perspective, we're in early days. but about 50-50 in terms of beats versus mrs.. beateighted average to a has actually been pretty positive, well over 1%, which

mathematically is significant. on a longer-term basis, one of the key things to think about when you're in the midst of a selloff in the market, are you seeing profit margins starting to deteriorate? we haven't seen that yet. i think that's important to note in 2011 and 2013, we saw profit margins roll over with the margin. hasn't happened this time. again, that's a notable difference. third-quarter earnings guide as into next year. what happens to china will play into this outlook, clearly. so far, fingers crossed. matt: in the u.s., the s&p is dax iswn 8% whereas the down 17% from its highs. is there any hope that the big drops we've seen in europe, compared to the u.s., is going to help because people like the valuation compared to earnings

outlook? tim: there's a couple things to think about here, matt. 12.5 earnings is a notable level, down from 15 times earlier this year. put this into context. it's back to the point, low point in 2014, before qe really kicked in from the ecb. qe of that inflation from seems to now be well washed out. that's one. number two, we're still above where we were back in 2011, 2012. yes, by going back to the market composition comment, the multiple was really dragged it down back then because of the heavyweight of commodities. we don't have that so much now. so at this point, as we look into next year, i think a key

point, policy/politics notwithstanding, the u.s. is coming up against a very difficult comparison because of the tax boost this year's earnings. europe is not. if brexit has some reasonable ending, if italy doesn't totally fall out of bed, if global growth is moderate next year, europe should see an acceleration in earnings growth. that's a very different picture versus the u.s., what technology is now suffering a little bit. nejra: even though i said earlier people toot the earnings horn, usually they are referring to the u.s. it seems whatever happens, investors want to be overweight u.s. they see that as the safe market. how can europe actually make a comeback from that? it's very in love versus emerging markets. tim: very true. if you look from 2000-2010,

europe and the u.s. traded for a much in line. they went up, they went down together. one outperformed, one underperformed, whatever the case may be. since 2010, there's been a massive performance of the u.s. technology has been a big deal. it's a super heavyweight there. financials are a heavyweight here on a relative basis and that's a big part of why the u.s. has outperformed and why it is such the darling. 2019, 2020, to let's set aside politics. usually you don't want to play politics in the market because it's transitory. we can have a debate whether that's the case now or not. but europe does have an opportunity, in part because of valuation, in part because monetary policy getting back to

a stable footing, and a reflationary environment to where europe has an opportunity. matt: right. tim, thanks so much for joining us. appreciate your time this morning, director of research for bloomberg intelligence. by the way, it's pretty easy. on the bloomberg, type bi and you get a plethora of information. if you're investing in these markets, you need to do this. big tech disappoints. other growth engines of one of america's biggest industries starting to stutter? we'll get the latest. this is bloomberg. ♪

nejra: this is the european open, 44 minutes into equity trading day. let's look at your cap murder -- mid-cap movers. and reporter is with us. annmarie: let's start with electrolux. falling on its cost, that's what is weighing on the stocks. they came out with a note saying the currency transaction headwinds will be in focus for the company. also to the downside, 4s yet down seven point 9%. they agreed to buy clarion for one point billion euros.

they are tapping the technology for self driving the seems like investors on to happy with the spending. one of the biggest losers this morning, down 17%. third-quarter meet estimates but cut its full-year margins target. their update was much worse, pointing to margin targets and morning on the slowdown in china that disappointed them. nejra, matt? matt: thanks very much, annmarie hordern with your mid-cap movers in red. twitter jumps the most in months. bloomberg spoke with the cfo, net single. -- ned sigel. we're challenging more than we used to. we have become more sophisticated in our understanding at how people create suspicious accounts so we can protect their creation or

stop them after they've been created. how many get through really depends on how many of them should get through. we test them. far more accounts than are suspicious and that helps us understand the behavior. just because an account is created on a web browser with a certain ip address doesn't mean it shouldn't be on the platform the way another one might. there's a lot goes into it. >> you said monthly active users will decline. how much will they decline? decline inmau will the mid-digits because our ongoing health work and decisions around smf contracts with carriers. we don't forecast when they go out further than a quarter. we've done it each of the last two quarters because we saw a decline coming and we wanted to share it with people. one look at our health more broadly, we don't want to be constrained i disclosed metrics.

we know it's a critical growth factor for the company to make sure that twitter is a safe place for you and me and the people who should be on the platform. i now we are moving suspicious behavior. sometimes it affects the disclosed metrics. other times, they were largely inactive, it doesn't affected as much. emily: let's talk about the health. yesterday, we talked about the tweets talking about the fake bomb scare. how is this still happening? >> we still have work to do to improve the health of the conversation on twitter. there's so many ways for us to address these challenges as people get more sophisticated and how they create the bad behavior on twitter. one of the great things about twitter we're able to benefit from, because it's public and open and real-time, we often find things.

but often things are created by the platform themselves. nejra: that was ned sigel, twitter cfo. really ending and we are seeing u.s. futures point lower, given that we had those numbers come through from alphabet and amazon. nasdaq futures now down 1%. speaking of earnings, they've been thick and heavy in the european session. lots to focus on here. we talked about a number of these stocks that i want to highlight electrolux again because it's a drop the most since 2015. it wasn't so much the numbers, but the guidance on the cost coming through. it talked about tariffs, raw materials costs. that's something that struck my attention. we'll hear from the ceo later, as well. what have you been looking at? matt: the oil companies have been fascinating. total and -- are beating.

how much are they going to spend going forward? if total says they are going to restrain its spending, it reiterates $7.7 billion forecast are spending for capx. this is one of the reasons the stock has underperformed the others over the past five years is that it's just been doing so much exploration and spending so much more. let's get bloomberg business flash right now. for that, we go to debra mao in singapore. debra: lafargeholcim has raised their outlook for this year's sales growth. europe's biggest cement maker sees revenue growing between 4% and 6%, up from a previous forecast of 3% to 5%. they been shutting regional offices to streamline its operation as it battles increasing costs. the asf reported profit that

analysts estimate, the largest chemical company felt the effects of an automotive slowdown and higher raw materials prices. the trade conflict between the u.s. and china was having an effect on its business and flag new emission standards in london. royal bank of scotland posted stronger-than-expected capital and third-quarter earnings that beat analyst estimates. 10% in 961 million pounds at the lender, majority-owned by the u.k. government. it gives chief executive ross mcewan ammunition for potential buyback and special dividends after stress tests have passed. electrolux has reported third-quarter operating profit of 1.7 6 billion kroner, beating analyst estimates. the ceo says the company expects for the price hikes to mitigate cost inflation. we'll speak to the ceo for first

interview of the day after 9:00 us morning london time. that's your bloomberg business flash. matt and nejra. oft: all right, debra, course you were in hong kong. i thought you were visiting singapore but i was wrong. bloomberg terminal users can interact with the chart you see on bloomberg tv using gtv . you can check out key analysis and save charts for future reference, use them in your work if you like. up next, we have the battle of the charts. this is bloomberg. ♪

nejra: this is the european open, 54 minutes into the equity trading day. time for battle of the charts. and recorder is going to go -- annmarie hordern goes head-to-head with justina lee. annmarie: talking about amazon all morning. i want to put some things in perspective. yes they had earnings were they saw shares drop 9%, struck a sour tone with investors. when you look at it against this index, amazon shares are still outperforming. financing plus index includes alphabet and twitter, but amazon is outperforming their peers, saving yesterday's sour tones doesn't look so bad when you look at the bigger picture. nejra: interesting. justine a, what have you got?

complainwe like to european stocks missed out on the bull run that markets saw, but that might be a blessing in disguise. you can see in this white line that european stocks are trading at the cheapest valuations versus forward one year earnings since 2013, whereas in this blue line you can see the s&p 500, you can see a nice run in valuations but it's come down a little bit. it's still a lot more expensive than in europe. that might be why one investor was telling me yesterday european stocks can be more resilient. at least you don't need to worry about price valuations. you can argue europe is cheap for a reason, but you can definitely find value in those european stocks right now. nejra: it is decision time. i'm going to go with justina. butve your chart, annmarie, why is it europe's time?

a's chart sheds light on the situation. you can see all the charts on gtv . south africa is helping investors will pass the midterm budget as it seeks to attract $100 billion of investment in the next five years, part of the president's drive to restore confidence and boost an economy that has expanded more than 2% annually since 2013. let's get to johannesburg where guy johnson is standing by with an exclusive interview. guy, great to see you. guy: thank you very much indeed. you just read through one of the big challenges the president of south africa set for himself, that target for $100 billion worth of investment over five years. six,id that back in april, seven months on from that right now. he just delivered the opening address for the investment conference. let's talk now to the president.

good morning. you talked to the beginning of the address about this idea that you are moving forward with this plan to raise $100 billion. how far are you moving forward? how much progress are you making? guest: we're making a novice progress. i appointed four -- going to the length of the continental, of the globe really. in africa and many parts of the world. north america, europe, asia, latin america. and they have been interacting with potential investors. and including the trips i have undertaken, we have received a wonderful pleasures for investment, pledges that those who pledge want to base on real projects, which would now present it to them. and thus far, we have already

received up to $35 billion of pledge investment. and today, we actually are going to be dealing now with real investments that a number of companies are going to announce. and they are going to come up to a really sizable number of investments, that number of corporate's both ensure, as well as offshore, to make it to the south african economy. so there is progress. i am pleased with how far we've gone in just six months. guy: are you on track with where you thought you would be? guest: i think we are ahead of the track. we are way ahead and i am overwhelmed by the level of interest that continues to be in the south african economy. many corporate and many potential investors are here, and we've got well over 1000 people here, and many of them are real investors.

they are not just people who just want to come and have a freebie at a conference. they are here because they want to put money on the ground and make money themselves. guy: let's talk about where the economy is right now because clearly, you need the numbers to look better if you are going to attract investment. it's a virtuous circle and you need to improve things. the midterms budget your finance minister delivered in cape town on wednesday delivered some tough news on the south african economy. the outlook for this year is half what was anticipated and the debt outlook, the trajectory the debt is on is less than anticipated, as well. is the legacy from the zuma era even tougher than you thought it was going to be? is the job of fixing the south african economy even tougher

than you thought it was going to be when you took this job? guest: yes, it is tougher because now president ramaphosa: yes, it is tougher because in the full glare we have been able to get into the full effects of what has been happening. we can see the damage that has been done to state institutions, government departments, and corruption has become endemic. heels did nothe w come off. we are beginning now to renew and roll back best practices that had come into play. therefore, we are now in a very determined way moving forward and making sure that we do indeed get rid of corruption, we do indeed reposition our state owned enterprises, we do