Spain’s Sánchez Calls Snap Election, Super Rich Exit the UK

GUY: GOOD MORNING. MONDAY THE FIFTH. HERE IS WHAT YOU NEED TO KNOW. THE EURO HAS BEEN HIT HARD OVERNIGHT. CLOSE TO A 17 MONTH LOW. FRENCH FOR SCHOOL, THE BIG WORRY. WE HAVE CALLS FROM MADRID THAT PEDRO SANCHEZ MAY CALL AN EARLY ELECTION. THE SAUDI'S ARE SLASHING CRUDE PRIDE FOR ASIAN BUYERS. IN BRAZIL'S PRESIDENTIAL ELECTION, BOLSONARO TAKES A SURPRISED LEAD AT HALFTIME. TOM: THIS IS THE MOVE ON THE EURO, DOWN 0.5% COME OF THE WEAKEST LEVEL IN ABOUT 17 MONTHS. 1.11 AS YOU FACTOR IN THE POLITICAL RISK OF FRANCE AND SPAIN. A DIFFERENT PICTURE AND SET UP THIS MONDAY. BRENT IS THAT $101 A BARREL. THE SAUDI'S CUTTING PRICES FOR THEIR ASIAN CUSTOMERS. THE COUNTDOWN TO THE OPENING TRADE STARTS RIGHT NOW. ANNA: GOOD MORNING. WELCOME TO THE OPENING TRADE. IT IS MONDAY MORNING. WE ARE HERE AGAIN. STILL FOCUSED ON EUROPEAN ACCESS. --EUROPEAN ASSETS. THE WORD OF THE DAY IS CONTAGION. AT THE END OF LAST WEEK, WE WERE WATCHING CONTAGION ACROSS THE EUROPEAN BOND MARKETS, FOCUSED ON FRANCE BUT SPREADING TO OTHER PARTS OF THE LAW SPACE. WE ARE CONTINUING TO WATCH FOR THAT THIS MORNING, BUT ALSO WATCHING FOR CONTAGION INTO OTHER ASSET CLASSES, AND WE ALREADY HAVE IT IN THE WEAKNESS OF THE EURO AGAINST THE DOLLAR, AGAINST THE YEN, AGAINST OTHER CURRENCIES AS WELL. WE BOUNCED OFF EARLIER LOWS, BUT WE WERE DOWN 0.8% ON EURO-DOLLAR. THAT IS THE FOCUS. NOT JUST THE FRENCH DRAMA BUT ALSO THE SPANISH. ARE WE HEADING INTO AN EARLY ELECTION? THE COALITION GOVERNMENT FAILED WITH TWO HOUSING BILLS ON FRIDAY, AND THAT LED TO A LOT OF PANICKED CONVERSATIONS OVER THE WEEKEND AND THE SUGGESTION THAT PERHAPS PEDRO SANCHEZ MAY BE WILL SPEAK TODAY AND MAYBE BRINGING FORWARD THE ELECTION. IT IS THE USUAL COCKTAIL A GRIEVANCE WE ARE SEEING IN SPAIN AND FRANCE. SIMILAR, HOUSING, IMMIGRATION. THESE THINGS VERY FAMILIAR TO THOSE TRACKING DIFFICULTIES. GUY: THE YEN IS INTERESTING. THERE'S CLEAR EVIDENCE OF REPATRIATION. THAT SEEMS TO BE A FACTOR. WE ARE STARTING TO SEE THE JAPANESE WITHDRAWING FROM THE EUROPEAN BOND MARKET, WHICH THEY ARE HUGE PARTICIPANTS IN. THAT WOULD BE A TREND THAT WOULD BE REALLY PAINFUL FOR EUROPE. IT WOULD BE ANOTHER FACTOR TO PUSH YIELDS HIGHER. BUT FRANCE FEELS LIKE IT IS STILL THE STORY. I EXPECT TODAY'S PAIN WILL TAKE THE NARRATIVE, BUT THE MOVES LAST WEEK WERE SO DRAMATIC AND YOU ARE NOW GETTING INTO A SITUATION WHERE IT FEELS LIKE IT WILL BE SELF REINFORCING AND FRANCE. TO YOUR POINT, WHAT STOPS IT? I DIDN'T SEE ANYTHING OVER THE WEEKEND THAT POINTS AT THE IDEA THAT FRENCH FISCAL RISK HAS DISAPPEARED AND WILL ONLY BE AMPLIFIED THIS WEEK. TOM: SOME ANALYSTS POINTING TO THE ECB IN TERMS OF WHAT STOPS IT. TO SUM IT SEEMS THAT WOULD BE PREMATURE. CONDITIONS HAVE TO BE MET. THEY WOULDN'T NECESSARILY BUY O.A.T.'S. IN TERMS OF QUANTITATIVE EASING, MAYBE THAT GETS RELAXED. IN SPAIN, THERE IS NO OBLIGATION FOR SANCHEZ TO CALL ON ELECTION UNTIL THE SUMMER OF 2027. BUT IT IS THE DOMESTIC POLITICS THAT FORCES HIS HANDS. FRANCE MAY BE ON THE VERGE OF A FULL-BLOWN CRISIS. ANNA: IN TERMS OF THE BATTLE FOR THE AIRWAVES AND THE PICTURES THAT COULD GO FAR AND WIDE, WE WATCHED THE FRENCH EDUCATION SYSTEM AND FRENCH STUDENTS ON THE STREETS, SCHOOLS BEING BURNED, TEACHERS BEING INJURED. NOT EVERYWHERE, BUT THIS IS WHAT IS BEING COVERED BY FRENCH MEDIA, AND TO SOME DEGREE GLOBALLY. THAT KEEPS THE FRENCH POLITICAL DRAMA ON THE FRONT BURNER. GUY: ABSOLUTELY. FRIDAY PAYROLLS, LET'S RECAP. 29,000. UNEMPLOYMENT FAIRLY STABLE. WAGES WHERE THE PROBLEM. WAGES ARE RISING LESS QUICKLY THAN INFLATION AT THE MOMENT. DOES THAT ENCOURAGE THE FED TO HIKE RATES OR DISCOURAGE THEM? THE LANGUAGE SEEMS TO BE A DISCOURAGING FACTOR COMING OUT OF MANY FED SPEAKERS. WE ARE PRICED AT 18%. ISM'S SO, KEEP AN EYE ON THAT. MANUFACTURING LAST TIME AROUND BECAUSE HUGE BOND MARKET TURBULENCE. OIL IS ALSO LOWER THIS MORNING. THERE IS AN INTERESTING TUSSLE THERE. THE SAUDI'S ARE DISCOUNTING OS P VERSUS THE BRENT CONTRACT. BIG DISCOUNTS OF SIX YEAR LOWS ON THAT CONTRACT FOR ASIAN BUYERS. THEN YOU HAVE HOUTHIS AND YEMENIS FIGHTING. THERE'S A NUMBER OF THINGS FLOWING IN AND IT ALL FLOWS INTO THE BOND MARKETS AS WELL, WHICH IS AGAIN A BIG FOCUS OF ATTENTION. ANNA: WE SPENT LAST WEEK AND BOND FUTURES PRICING OUT THE OCTOBER RATES HIKE. THERE IS ONLY AN 18% CHANCE WE GET THAT. THERE WAS DISAPPOINTMENT ABOUT THE JOBS REPORT. BUT AS YOU SAY, THAT DIDN'T SUPPORT BONDS. WE CONTINUE TO SEE THE BOND SELLOFF RETURN BY THE END OF THE SESSION. IS THAT BECAUSE THEY ARE INCREASINGLY FOCUSED ON THE MIDDLE EAST, WATCHING THE OIL PRICE, FOCUSED ON COMPETITION FOR CAPITAL QUESTION MARK OR DID THEY NOT WANT TO GO TO THE WEEKEND LONG BONDS IN ANY SENSE? TOM: THE G7 AS WELL. FRIDAY, YOU HAD ARGUABLY A NONFARM PAYROLLS PRINT THAT WAS CONSTRUCTED FOR TREASURIES, AND DEVELOPMENT ON THE OIL FRONT. THE HEADLINE NUMBER POTENTIALLY BELIES THE REALITY. 100 MILLION BARRELS FROM THE G7. PART OF THAT IS ACCOUNTED FOR. WE WILL GET DETAILS ON THAT PART OF THE STORY AS WELL. BUT DIESEL IS PART OF THE RELEASE MECHANISM. SEEMINGLY, THIS IS AN EFFORT BY EUROPEAN ALLIES TO OFFSET THAT PRESSURE FROM TRUMP AND CLOSE DOWN THAT DEBATE IN THE U.S. ABOUT WHETHER THEY RESTRICT EXPORTS. THAT SEEMS TO HAVE HAPPENED, AT LEAST FOR NOW, ON DIESEL. ANNA: SHOULD WE TALK ABOUT WHAT IS GOING ON IN BRAZIL? TOM: YES. FROM OIL TO ANOTHER COMMODITY, BUT THE POLITICS OF THIS IS FASCINATING. THE NUMBERS COMING THROUGH, THIS IS THIS A PRICE FOR THE MARKETS, IT IS THE STRENGTH OF THE LEAD IN THE FIRST ROUND FOR BOLSONARO VERSUS THE INCUMBENT LULA. IT IS NOT JUST THAT, IT IS THE GOVERNORSHIPS AS WELL, CONGRESS, SENATE. RIGHT WING CANDIDATES DID MUCH BETTER THAN EXPECTED. YOU'VE GOT CALLS FROM THE LIKES OF JP MORGAN THAT YOU COULD SEE A SIGNIFICANT RALLY IN BRAZILIAN ASSETS ON THE BACK OF THIS. I THINK IT IS RIGHT IN SAYING THAT SINCE 1989, YOU HAVE NOT HAD SOMEONE WHO HAS LOST IN THE SECOND ROUND THEN WENT ON TO BE VICTORIOUS. IT DOES LOOK LIKE THINGS ARE LINING UP FOR BOLSONARO TO WIN THIS ON THE SECOND ROUND, OCTOBER 25. GUY: A LOT OF EUROPEAN STOCKS HAVE GONE BIG BRAZILIAN EXPOSURE. KEEP AN EYE ON THEM INTO THE MARKET OPEN. ANNA: THAT COULD ADD COMPLEXITY TO WHAT WE ARE SEEING ABOUT EUROPEAN ASSETS. I LOOK AT EUROPEAN FUTURES AND THE FUTURES ARE WEAKER AND THAT COULD BE SEEN IN THE POLITICS. IT LOOKS LIKE SPANISH FUTURES ARE POSITIVE AND MAYBE THAT IS BECAUSE SOME OF THE BUSINESSES GET MORE THAN 20% OF THEIR REVENUE FROM BRAZIL. MAYBE SOME OF THOSE POP HIGHER IN CONTRAST TO THE POLITICAL NARRATIVE, WHICH MIGHT HAVE SUGGESTED A BIT OF A PULLBACK. GUY: OUR GUEST WILL BE JOINING US. AND ALSO THE ROBCO CEO. WE WILL TALK ROBOTS LATER IN THE PROGRAM. WILL THEY TAKE OUR JOBS? HOW WILL THEY IMPROVE OUR LIVES? THERE'S LOTS OF QUESTIONS WE NEED TO BE ASKING. TOM: LET'S LOOK AHEAD TO WHAT ELSE WE ARE WATCHING. LATER TODAY, EURO PRICES COME THROUGH AFTER CPI CAME IN STRONGER FOR THE EURO ZONE. ON TUESDAY, THE GREENWICH ECONOMIC FORUM GETS UNDERWAY. PLUS, OPENAI'S CHIEF STRATEGY OFFICER WILL ATTEND THE AUSTRALIAN AI INQUIRY AFTER IT WAS REVEALED THAT OPENAI AND SOME OF THEIR MODELS ATTEMPTED TO EXTRACT INFORMATION FROM SOME AUSTRALIAN WEBSITES. WEDNESDAY, PRODUCTION DATA COMES THROUGH AND WE WILL GET FED MINUTES. THE PRICE IN OCTOBER HAS BEEN PULLED BACK. LESS CHANCE OF A HIKE. BUT WE WILL LOOK AT THE MINUTES ON THE BACK OF THE PREVIOUS ONES. ON FRIDAY, UNIVERSITY OF MICHIGAN CONSUMER SENTIMENT SURVEY. ANNA: LETS RETURN TO THE THEME OF SPAIN BECAUSE WE JUST GOT CONFIRMATION WE ARE EXPECTING SPAIN'S PRIME MINISTER TO SPEAK AT 9:00 A.M. IN MADRID, 8:00 U.K. TIME. IN LESS THAN AN HOUR, WE WILL BE HEARING FROM THE SPANISH LEADER LEADING THAT COALITION, WHICH LOOKS TO BE UNDER PRESSURE. WILL HE BRING IT FORWARD FROM JULY OF NEXT YEAR, WHICH IS WHEN IT IS SUPPOSED TO TAKE PLACE. GUY: THE MINORITY COALITION HE IS RUNNING, HE HAS BEEN UNDER PRESSURE ON IMMIGRATION AND NOW HOUSING. CURRENTLY, THE CENTER-RIGHT PARTY ARE SIGNIFICANTLY AHEAD IN THE POLLS. IF THERE IS AN ELECTION, IT WOULD BE THE EXPECTATION TO BE FURTHER TOM: RIGHT. IT IS A COALITION GOVERNMENT THAT HAS FAILED TO GET THROUGH ANY LEGISLATION BECAUSE OF THE SPLITS IN THAT COALITION. THERE'S ALSO BEEN CORRUPTION SCANDALS AS WELL. IS THIS CLEARING FOR SANCHEZ AS HE LOOKS TO RESET ON THE BACK OF AN ELECTION? OR IS HE EXPOSING HIMSELF TO A VICTORY BY THE RIGHT? GUY: OR IS IT AN OMISSION -- AN ADMISSION THAT HE CAN'T GOVERN ANYMORE? I CAN'T GOVERN, I CAN'T GET LEGISLATION THROUGH. ANNA: WE WILL SEE WHAT HE SAYS. THE EURO UNDER PRESSURE ON THIS POLITICAL NEGATIVITY AND CONFUSION, DOWN BY 0.8% AT ONE POINT. NOW DOWN AROUND 0.6% AGAINST THE U.S. DOLLAR. COMING UP, WE WILL NOT LOSE SIGHT OF SOME OF THE CORPORATE NEWS FLOW. SCHNEIDER ELECTRIC'S BIGGEST EVER DEAL. MORE DETAILS ON THE MOVE TO BUY PTC. PLUS, THE U.K. HAS A 160 BILLION PROBLEM AS THE SUPERRICH CONTINUE TO HEAD TOWARDS THE EXIT DOOR. WE WILL DIVE INTO THAT STORY LATER IN THE PROGRAM. NEXT, WE WILL TALK COMMODITY MARKETS. AMRITA SEN WILL BE WITH US. IF YOU WANT TO GET INVOLVED IN THESE CONVERSATIONS, WE DO LIKE TO HEAR FROM YOU. IB+BBTV <GO> IS A FUNCTION TO USE. THIS IS BLOOMBERG. TOM: WELCOME BACK. WE ARE 45 MINUTES FROM THE OPENING TRADE. EUROPEAN FUTURES ARE FLAT ACROSS THE BENCHMARK. A DIFFERENT PICTURE ON THE FTSE 100. YOU ARE LOOKING AT DAX FUTURES OUT 0.3%. WE ARE FOCUSED ON SPAIN. THE PRIME MINISTER WILL BE MAKING A SPEECH. SPANISH POLITICS AND FRENCH POLITICALS IN FOCUS FOR US. ANNA: WITH THAT IN MIND, THE EURO HITTING ITS WEAKEST LEVEL SINCE 2025 AS INVESTOR CONCERN BUILDS OVER POLITICAL AND FISCAL UNCERTAINTY WITHIN THE EURO ZONE. THE LATEST RISK COMING FROM SPAIN, GOVERNMENT OFFICIALS ARE SAID TO BE PREPARING FOR AN EARLY ELECTION WAS PRIME MINISTER BENJAMIN SANCHEZ FACING INCREASED PRESSURE. HE WILL BE SPEAKING FROM MADRID. LET'S GET MORE DETAILS. ANTHONY STEPHENS. THE ASIA SESSION SEEMS TO BE DOMINATED BY QUITE A LOT OF MOVEMENT IN THE EURO. EXPLAIN WHAT HAS BEEN HAPPENING. ANTHONY: THE EQUITY SESSION IS GOING FINE BUT ON THE FX SPACE, THE REASON IS THE DEVELOPING HEADLINES AROUND SPAIN. NOW THE PROSPECT OF FURTHER POLITICAL DRAMA IN SPAIN IS SPOOKING INVESTORS. THE JAPANESE BANKS, HUGE HOLDERS OF FRENCH BONDS. THERE WAS REPORTING LAST WEEK THEY WERE GETTING OUT OF THAT AND NO REASON TO SLOW DOWN. WE ALSO HAVE OPTIONS BEING HIT ON THE EURO AND PEOPLE PUSHING FOR MORE DOWNSIDE. ON THE VOLATILITY SPACE, THINGS ARE GOING TO GET WORSE BEFORE THEY GET BETTER. EVEN THE CASE WHERE THINGS GET BETTER, THE AMOUNT THAT THE YIELDS MOVE, PUTTING OFF THE ECB FROM THE RATE, THE PAUSE TO A HIKING CYCLE MAY HELP EUROPEAN ECONOMY, BUT IT IS NOT GOING TO HELP THE EURO, ESPECIALLY ALONGSIDE THE U.S. DOLLAR. IT IS BASICALLY GETTING IT'S SAFE HAVEN BID BACK. GUY: HOW FAR THROUGH THIS PROCESS ARE WE? THE JAPANESE HOLD HUGE PORTIONS OF THE EURO GOVERNING MARKETS. HOW SIGNIFICANT COULD IT BE IF THE TIDE HAS TURNED? ANTHONY: NOT ONLY DO THEY HOLD HUGE PORTIONS, WHICH THEY DO OF EVERYTHING, THIS IS WHAT THE BENCHMARK SHOULD BE. SO THEY CAN GET BACK TO BENCHMARK AT THE VERY LEAST AND THAT COULD BE A VERY MEANINGFUL MOVER. IN TERMS OF THE UNWINDING, WE HAVE ALREADY SEEN THE HEDGE FUNDS THROUGH THE FRENCH BONDS. THERE WAS POSITIONING AND FRENCH BONDS. THE LIQUIDITY AND THE BIG PART OF THE PLAYS. VOLATILITY SUB OPTIMAL. PEOPLE ARE NOT GOING TO WANT TO PUT A BASIS RATE ON SOMETHING IN THE MIDDLE OF A POLITICAL STORM. YOU WOULD WANT TO REDUCE THAT RISK. YOU HAVE A MECHANICAL UNWIND SCENARIO. THINGS ARE NOT MOVING DAY TODAY, AND THEN YOU DO HAVE THE OLD BONDS. GOING OUT AS WELL. AGAIN, THAT POINTS TO FORCED UNWINDS. PEOPLE HAVE BEEN PICKING THEIR SPOTS ON THOSE SPREADS AND HAVE CONTINUED TO GET BLOWN UP. THIS IS BECOMING A VERY HEIGHTENED RISK MACRO TRADE. AS A RESULT, PEOPLE HAVE TO REDUCE THEIR POSITIONS. GUY: THERE'S A LOT GOING ON. KEEPING AN EYE ON IT IS ANTHONY STEPHENS. LET'S TALK ABOUT WHAT IS HAPPENING WITH CRUDE . . SAUDI ARABIA CUTTING PRICES. THIS IS A WAS P VERSUS THE DUBAI CONTRACTS. WE ARE SEEING THE SAUDI BACKED GOVERNMENTS. THAT COULD PRODUCE MORE TENSION. THERE'S A LOT OF FACTORS TO FOLD INTO THE STORY. THE PERFECT PERSON TO TALK TO, AMRITA SAN. I HAVE LOTS OF QUESTIONS. LET'S GET GOING. WHERE THE SAUDI'S CUTTING? AMRITA: SHIPPING. THIS IS SOMETHING I HAVE BEEN SAYING FOR ABOUT THREE WEEKS NOW. NEVER SEEN SHIPPING AT THESE RATES. IT IS UNSUSTAINABLE BUT NOBODY KNOWS WHERE THE TOP IS. IT IS CAUSING -- COSTING ABOUT $30 A BARREL. IT WAS A FRACTION. IT DEPENDS ON WHERE YOU'RE TALKING ABOUT. BUT THE RISE HAS BEEN ABOUT FIVEFOLD. GUY: THIS IS FUEL COST, CRUDE COSTS, GETTING STUFF OUT OF HORMUZ? AMRITA: THE WHOLE THING, BUT THE BIGGEST THING IS A SHIP TO SHIP. YOU CAN GET MORE OIL OUT OF HORMUZ, BUT IT IS SO EXPENSIVE. THE COST OF DELIVERING THAT CRUDE IS SO MUCH HIGHER THAN WHAT IT USED TO BE. YOU'VE GOT DARK TRANSITS LIKE THE FLEET, WHAT YOU WOULD CALL SHUTTLE SERVICES BETWEEN LOADING AND OMAN. BUT SOMETIMES THAT PROCESS IS TAKING TWO TO THREE WEEKS. OR WE HAVE ALSO IDENTIFIED TWO TO THREE VESSELS. IMAGINE EARLIER, IT USED TO BE ONE VESSEL. TODAY, IT COULD BE UP TO THREE VESSELS. WHEN SHIPPING COSTS GO UP, PRODUCERS HAVE TO CUT A LITTLE BIT WORLD'S CONSUMERS ARE TAKING THEIR TIME. ANNA: DOES THIS TELL US ANYTHING ABOUT CHINA'S WILLINGNESS TO BUY? AMRITA: THEY ARE BUYING A LOT. IN Q2, CHINA WAS HUGE PULLING BACK AND BALANCING THE MARKET. THE BIGGEST DIFFERENCE WAS THAT WAS THE GOVERNMENT TELLING US WE NEED TO TEST ZERO MIDDLE EASTERN BALANCE. TODAY, DIESEL INVENTORIES ARE LOW. THAT IS WHY THEY ARE ALMOST BANNING EXPORTS AGAIN. ONE HAS FUNDAMENTALLY CHANGED IS WE ARE LOOKING AT WTI AND BRENT ON THE SCREEN, BUT THAT MISMATCH, DATA BRENT VERSUS PRINCE, THAT DIFFERENCE USED TO BE A DOLLAR. IN SEPTEMBER, IT WAS $20. DELIVERED PRICES TODAY ARE 40% HIGHER THAN WHAT WE SEE IN THE FUTURES MARKET. IN MY VIEW, THE FUTURES TELLS YOU GENUINELY PART OF THE STORY. SHIPPING AND PRODUCTS MARKETS ARE THE BIGGER CONCERN OVER HERE. WE CAN TALK ABOUT OR LOOK AT THE PRICES WE TEND TO LOOK AT, BUT THE REALITY IS BECOMING VERY DIFFERENT. ANNA: IT SEEMS THAT SINCE THE WAR STARTED, BRENT CAME HIGHER AND THEN CAME BACK A BIT, WHERE A LOT OF PRODUCT MARKETS WENT HIGHER AND STAYED THERE. WHAT IS YOUR TAKE ON THE DIESEL STORY, GIVEN THE DEVELOPMENTS AT THE END OF LAST WEEK? THERE IS A LACK OF DETAIL ABOUT WHO WILL RELEASE WHAT AND WHEN. ARE YOU SHOCKED? [LAUGHTER] AMRITA: I WOULD SAY I JUST GOT BACK FROM THE U.S. THAT IS WHERE ALL THE ACTION IS IN TERMS OF DIESEL. IT IS A HEADLINE NUMBER. WE HAVE SPOKEN TO ENOUGH IT OFFICIALS TO REITERATE THE VIEW THAT THIS IS THEM SAYING -- A RECOMMITMENT TO WHAT THEY ALREADY SAID IN MARCH. THESE ARE NOT GOING TO BE SIGNIFICANT NEW VOLUMES. LET'S BE CLEAR ON THAT. THESE 100 MILLION BARRELS INCLUDES THE 40 MILLION BARRELS THAT THE U.S. CAME OUT AND ANNOUNCED. IT IS NOT EVEN AWARDED. IT IS A HEADLINE TO GET THE U.S. PRESIDENT OFF THE FRENZY AROUND DIESEL. WHEN I WAS IN THE U.S. WHILE THIS WAS GOING ON, BECAUSE AS A RESULT OF THE HEADLINES, OIL PRICES HAVE COME OFF SO MUCH, EXPORTS FROM THE U.S. ARE SURGING. WE ARE TALKING 1.6 MILLION BARRELS. ALL THE PHYSICAL TRADERS ARE SAYING WE COULD RUN OUT OF DIESEL BECAUSE LATIN AMERICAN COUNTRIES ARE PANICKING RIGHT NOW. WE COULD BE BACK IN THE DIESEL BAND HEADLINES AGAIN. TOM: THEN WE ARE BACK TO A TRUMP ADMINISTRATION SERIOUSLY CONSIDERING AN EXPORT BAN. VISIT LEADING TO DEMAND DESTRUCTION? AMRITA: $200 A BARREL IS THAT NUMBER FOR US. FUNDAMENTALLY FOR ME, IT HAS TO BE AT THAT LEVEL. HOW YOU GET THERE, WHETHER IT IS CRUDE, REFINERY, THAT IS WHERE OUR VIEW HAS BEEN THIS WHOLE WAR. WE HAVE BEEN BULLISH CRUDE BUT WAY BULLISH PRODUCTS. THAT IS NOT CHANGING. I REALLY THINK FOR NOW THAT THE DIESEL BAND IS OFF THE CARDS. FROM A TRADING OR INVESTOR POINT OF VIEW, I WOULD NOT SAY THIS IS COMPLETELY OFF THE CARDS. TOM: THIS HAS BEEN GREAT. THANKS FOR GIVING US SOME CLARITY ON ANOTHER DAY WHERE THE FOCUS REMAINS LARGELY ON THE ENERGY STORY AND THE EFFECTS OF THAT. AMRITA SEN AT ENERGY ASPECTS. GUY: 28 DAYS UNTIL THE MIDTERMS. WHAT ELSE DO YOU NEED TO KNOW? THE PENTAGON HAS REMOVED BOMBERS BASED AT AN AIRBASE IN THE UNITED KINGDOM THAT WAS AT THE CENTER OF SUSPECTED ATTEMPTED TERRORIST ATTACKS. DETAILS ARE STILL HAZY. THE NEW YORK TIMES REPORTED THE WITHDRAWAL WAS CARRIED OUT WITH UNUSUAL URGENCY AFTER NEW THREATS HAD EMERGED. SCHNEIDER ELECTRIC SAYS IT IS ACQUIRING U.S.-BASED ENGINEERING SOFTWARE DEVELOPER PTC, WITH A VALUE OF $24 BILLION. THAT IS MORE THAN A 40% PREMIUM. SCHNEIDER SAYS THE TRANSACTION IS EXPECTED TO CLOSE BY THE THIRD QUARTER OF 2027. THE DEAL IF COMPLETED WILL BE THE FRENCH CONGLOMERATE'S LARGEST TODAY. AND THE U.K. IS EXPECTED TO IMPOSE TARIFFS ON CHINESE EV'S. IT WOULD BE A SETBACK FOR CHINESE AUTOMAKERS IN THE UNITED KINGDOM, WHERE THEY DO NOT FACE TARIFFS ON EV'S. CHINESE AUTOMAKERS GRAB 24% OF NEW CAR SALES. BASICALLY THE U.K. HAS MADE A CALCULATION, IT IS BETTER TO GO WITH THE EUROPEANS AND RISK THE IRE, OR TAKE THE IRE OF THE CHINESE. ANNA: AND DOES THIS PLAY OUT WELL FOR NISSAN AND BADLY FOR LAND ROVER? JAGUAR LAND ROVER, SOME CONCERN. TOM: THIS IS POTENTIALLY EV TARIFFS. THE BEST-SELLING CHINESE MODEL IS TERRACE J. CREW, WHICH IS NOT AN EV THESE TARIFFS MAY NOT APPLY TO THAT MODEL, AT LEAST FOR NOW. GUY: IT WILL BE INTERESTING TO SEE WHETHER THE CHINESE ACTUALLY CARE. THE COMPETITION IS SO BRUTAL THAT WE NEED TO EXPORT HEAVILY. MAYBE THEY TAKE THE TARIFFS AND TAKE THE HITS AND KEEP GOING. TOM: WE ARE GOING TO SWITCH FOCUS FROM CHINA TO BRAZIL AND POLITICS. COMING UP, FLUFFY VIA BOLSONARO SURGES TO A SURPRISE LEAD OVER PRESIDENT --FLOPPY THAT IS COMING UP. THIS IS BLOOMBERG. GUY: MONDAY MORNING, HALF PAST THE HOUR. FUTURES ARE FAIRLY FLAT ON BOTH SIDES OF THE ATLANTIC. NASDAQ DOWN BY 0.1%. SIMILAR PICTURE HERE IN EUROPE. EUROPE LOOKS MORE MIXED. STOXX 50 FUTURES NOT GOING ANYWHERE. THE FTSE 100, THAT IS MORE INTERESTING. KEEP AN EYE ON THE BRAZIL EFFECT ON SPANISH MARKETS. THAT COULD BE INTERESTING, TOO. THE OIL PRICE IS ANOTHER ONE. POLITICS REMAINS FRONT AND CENTER. ANNA: WE NOW HAVE SPANISH POLITICS TO CONTEND WITH. WHERE DOES THAT ADD UP TO THE BOND MARKETS IN EUROPE? IT DOESN'T SEEM AS IF IT ADDS UP TO HIGHER YIELDS RIGHT NOW HERE IN THIS MOMENT. FRANCE IS NOT YET OPEN. IT DOES SEEM AS IF THE AREAS WHERE WE WERE SEEING IT, IT IS NOT LOOKING THE SAME. YIELDS ARE COMING DOWN IN EUROPE DURING FRIDAY'S SESSION. WE ARE SEEING A CONTINUATION OF THAT. THE SPANISH STORY TAKING A LITTLE WHILE THE OPEN AS WELL. WE DON'T SEE ANY UPWARD PRESSURE PARTICULARLY THERE. GUY: IS AN UNCLEAR STORY THIS MORNING. WE HAVE A HALF-HOUR TO GO UNTIL WE THINK THAT PEDRO SANCHEZ WILL SPEAK. WE WILL GET AN UPDATE ON THAT STORY. TOM: 9:00 A.M. LOCAL TIME. WE WILL BE COVERING THAT FOR YOU. BEFORE THAT, LET'S GET THE DETAILS AROUND THE POLITICS OF BRAZIL. BRAZIL'S PRESIDENTIAL ELECTION WILL BE DECIDED IN A RUNOFF VOTE ON OCTOBER 25. FLAVIO BOLSONARO UNEXPECTEDLY FINISHED AHEAD OF PRESIDENT LULA DA SILVA IN THE FIRST ROUND. BOLSONARO THE SON OF FORMER PRESIDENT JAIR BOLSONARO. HE SAID HE WANTS TO BUILD A GOVERNMENT INSPIRED BY HIS FATHER. LET'S BRING IN OUR REPORTER FOR THE DETAILS. HOW SURPRISING WAS THIS RESULTS ULTIMATELY? FLAVIA: PRETTY SURPRISING. THE EXPECTATION GOING IN IS THAT LULA WOULD BE ABLE TO HAVE A LITTLE BIT OF THE EDGE AND HE NEEDED AT LEAST 3% IF HE HAD A CHANCE TO WIN IN THE RUNOFFS. ESSENTIALLY THAT HAS BEEN OVERTURNED. THE BIG TAKEAWAY IS INTERESTING REBUKE TO LULA AND WHAT HE REPRESENTS. HE IS 80 YEARS OLD. HE WON BY A SQUEAK LAST TIME AND HE SAID THIS WILL BE HIS FINAL ELECTION. HE CENTERED A LOT OF HIS CAMPAIGN AROUND HIM. IT REPRESENTS THE DEGREE TO WHICH THE BRAZILIANS -- HE BROUGHT IN THE POLICIES THAT WERE EXTREMELY POPULAR WHEN HE FIRST WON. IT WAS GROWING QUICKLY, IT BROUGHT BILLIONS TO THE COUNTRY. BUT IT HAS BEEN TIRED, UNINSPIRED. BOLSONARO IS NOT A CHARISMATIC KAMPETER, HIS FATHER IS MUCH MORE PROVOCATIVE. WHAT WE ARE SEEING NOW IS THAT THEY CAN DEAL WITH HIM, THAT IS HERE TO SAY -- HERE TO STAY, WITHOUT THE SOFTER EDGES. ANNA: WE JUST PUT UP A GRAPHIC THAT SHOWS THE PERCENTAGE THAT BOTH OF THESE LEADING CANDIDATES GOT. 7.8% WENT TO OTHERS. WHAT DO WE KNOW OF THE MAKEUP OF OTHERS AS WE GO TOWARDS THE SECOND ROUND? FLAVIA: A LOT OF THOSE OTHERS ARE RIGHT-WING PARTIES THAT HAVE DONE EXCEPTIONALLY WELL. YOU CAN EXPECT THEM TO CONTINUE IN THAT DIRECTION. WHAT WE ARE LOOKING AT, AND IT WILL BE REFLECTIVE IN THE MARKETS, IS THEY WILL PRICE IN A BOLSONARO WIN. IT WILL TAKE A MIRACLE FOR LULA TO MAKE UP THAT GAP. IN ESSENCE, BRAZIL SHED ITSELF OF THE SHACKLES OF A DICTATORSHIP. THE PERSON WHO HAS WON THE FIRST ROUND HAS GONE ON TO WIN THE SECOND. TO BE CLEAR, LULA HAS PULLED OFF SOME REAL MIRACLES IN THE PAST. HE HAS BEEN IN PRISON, HE HAS COME BACK, HE HAS PROMISED HE WILL NARROW THAT GAP. AND I THINK THE GENERAL CONSENSUS IS THAT THE OTHERS WILL HELP GIVE BOLSONARO EVEN MORE OF AN EDGE. EVEN THOUGH WE WENT INTO THIS IN TERMS OF NECK AND NECK, THE REALITY THAT HAS EMERGED IS THE BIGGEST COUNTRY IN LATIN AMERICA WILL ALSO GO RIGHT WING. THAT WILL CONSOLIDATE THE WINDS IN COLOMBIA AND MAKE A CERTAIN OCCUPANT IN THE WHITE HOUSE EXTREMELY HAPPY. TOM: THERE IS THE GEOPOLITICAL RAMIFICATIONS OF THE VOTE AS WELL. FLAVIA KRAUSE-JACKSON, THANK YOU FOR THAT UPDATE. LET'S GET A MARKET LENS NOW BECAUSE WE CAN BRING IN THE GLOBAL HEAD OF E.M. STRATEGY AT CITI. WE BRACE OURSELVES FOR A RALLY IN BRAZILIAN ASSETS OR IS IT PREMATURE BEFORE THE SECOND ROUND? >> I DON'T THINK SO. I THINK WE ARE GOING TO RALLY. DESPITE THE DIFFICULTY IN THE BACKGROUND, MARKETS WERE PREPARED, EVEN IN A SCENARIO OF A SMALL BOLSONARO DEFEAT, MAYBE ONE TO THREE PERCENTAGE POINTS. AND LOOK AT THE RESULTS. HE IS AHEAD IN THE FIRST ROUND. MOST IMPORTANTLY, DID THE SECOND ROUND ARITHMETIC FAVOR HIM MASSIVELY? WE HEARD FLUFFY A DISSECTING THE NUMBER -- WE HEARD FLAVIA DISSECTING THE NUMBERS FOR US. WE ARE CENTER TO RIGHT-LEANING. THERE IS A PRETTY BIG BIAS TOWARDS FLAVIO BOLSONARO, SO I DO BELIEVE THE MARKETS WILL RALLY AND WE ARE PROBABLY TALKING ABOUT 1.5% TO 2% AT LEAST IN DOLLAR BRAZIL. IT WILL BE VERY INTERESTING AS WELL ON THE FRONT END OF THE CURVE WHEN WE ARE PRICING IN A VERY CAUTIOUS CENTRAL BANK. WE HAVE A CUT LEFT IN THE CURVE GETS FLAT. IT WILL BE INTERESTING. WE WILL PROBABLY PRICE IN A MORE RELAXED CENTRAL BANK HERE. TOM: THIS IS AN ASSUMPTION FROM THE MARKETS THAT IF FLAVIO BOLSONARO WINS WILL BE MORE FISCALLY CONSERVATIVE, THAT THERE WILL BE A FISCAL ADJUSTMENT. LUIS: LET'S TAKE A STEP BACK AND SAY IT IS GOING TO BE VERY DIFFICULT. THEY HAVE A HUGE CHALLENGE. THEY HAVE TO CONSOLIDATE 3% TO 4% IN SURPLUS IN ORDER TO STABILIZE THAT. THEY ARE A LONG WAY FROM THAT. YES, PEOPLE WILL PRICE IN SOCIAL GRANTS, WHICH WE KNOW HAS BEEN THE BASIS OF LULA'S GOVERNMENT, NOT JUST THIS ONE BUT PREVIOUS GOVERNMENTS AS WELL. THEY ARE A LONG WAY FROM STABILIZING THAT. THE FISCAL PATH IS STILL VERY CHALLENGING. ANNA: WHAT ABOUT THE CONSUMER DEBT ANGLE? BECAUSE THIS WAS MUCH COVERED IN THE RUN UP. HOW MUCH OF A MACRO FACTOR IS THAT? LUIS: THIS IS AN ECONOMY THAT WAS ALREADY SHOWING CRACKS IN THE WALL. THEY WERE STILL VERY SURPRISED WITH THE RESILIENCE OF THE BRAZILIAN ECONOMY. ECONOMIC OUTPUT COMING DOWN. THIS IS IN A VERY PERVERSE WAY, THE NEWS OF THE CENTRAL BANK THAT WE WILL PROJECT TRANSMISSION TO LOWER INFLATION. THEY WILL BE ABLE TO KEEP IT GOING IN TERMS OF INTEREST RATE CUTS. PUT THIS IN THE CONTEXT OF OTHER EMERGING MARKETS WITHIN LATIN AMERICA.WE HAVE SEEN A MOVE TO THE RIGHT. ARE THESE ALL JOINED UP IN SOME WAY? LUIS: ABSOLUTELY. THIS IS A RIGHT WING WAVE. THIS IS NUMBER ONE WHEN IT COMES TO CONCLUSIONS FROM THESE ELECTIONS. SINCE 2023, 2024, IT ALL STARTED WITH PANAMA. IT IS EIGHT LATIN AMERICAN JURISDICTIONS MOVING TO THE RIGHT. BRAZIL IS JOINING THE GROUP. THIS IS AMAZING NEWS FOR THE WHITE HOUSE IN TIMES WHEN THE AGENDA OF THIS CONSOLIDATION OF POWER, CONSOLIDATION OF FOREIGN POLICY DOMINANCE IN LATIN AMERICA, THIS IS GREAT NEWS FOR THE TRUMP ADMINISTRATION. GUY: A FEW OTHER QUESTIONS I NEED TO ASK YOU. BUND SPREADS AT 147. OVERNIGHT, THE EURO IS GETTING TANKS. WHAT DOES THAT MEAN IN YOUR WORLD? LUIS: IT MEANS A LOT. WE ARE VERY NERVOUS ABOUT THE BACKEND OF DEVELOPING MARKETS. IT IS NOT ONLY U.S. WE ARE SEEING THAT BECAUSE OF EVENTUALLY FRANCE, WE ARE FLARING UP ONCE AGAIN. WE ARE WORRIED ON THE BACK END OF THE YIELD CURVE. IT IS STILL A HUGE PROBLEM FOR EMERGING MARKETS. I GO AROUND TALKING TO CLIENTS. I WAS IN ASIA A COUPLE WEEKS AGO, AND IT IS INCREDIBLE. AS MUCH AS THEY ARE STILL QUITE KEEN FOR RISK, DURATION HAS BECOME A CURSE WORD. THE DIFFERENCE BETWEEN NOW AND 2023, THE DIFFERENCE THAT WAS KEEPING INTERNATIONAL RISK TOGETHER WAS EQUITY RISK. THAT DRIVES INTERNATIONAL CAPITAL TO U.S. EQUITIES. IF EQUITIES CRACKED, WE ARE BACK TO 2023. THE RISK WILL TRADE REALLY POORLY. GUY: DO YOU GET A MUCH STRONGER DOLLAR FROM HERE? LUIS: DOLLAR IT WILL BE MORE LIVELY. I DO BELIEVE THAT EURO-DOLLAR BELOW 110 IS JUST A MATTER OF TIME. YOU PREFER TO FUND YOUR TRADES IN EUROS. WE CHECKED THE DOWNSIDE, THE EURO-BRAZIL DOWNSIDE IS LOOKING QUITE INTERESTING AS WELL. BUT THE CARRIED PREPOSITION IS STILL THERE. BUT CAREFUL HOW YOU FUND YOUR TRADES. TOM: HOW IMPORTANT IS THE CENTRAL BANK STORY IN E.M. TO SUPPORT AGAINST ALL HER STRENGTH? AND HOW WAS THAT PLAYING OUT? LUIS: THEY HAVE BEEN EXTERNALLY CAUTIOUS. CREDIT FOR THEM. SINCE THE START OF THE IRAN CONFLICTS, THEY STARTED TO BECOME CAUTIOUS. THEY WERE ALREADY CAUTIOUS, BUT WHEN THEY SAW THE RISE IN ENERGY EXPORTS, AND WE ARE NOT OUT OF THE WOODS YET, THEY HAVE BECOME MORE CAUTIOUS. THAT IS AN INTERESTING SITUATION. EMERGING MARKETS GENERALLY SPEAKING, WE ARE SEEING THIS CYCLE. THERE ARE FEW EXCEPTIONS. BRAZIL IS ONE OF THOSE BECAUSE BRAZIL WAS ASYNCHRONOUS. BRAZIL WAS HIKING WHEN OTHER CENTRAL BANKS WERE CUTTING. IT IS A STRANGE ANIMAL. BUT SPEAKING AS AN ASSET CLASS, THEY ARE USING CYCLES. ANNA: TELL ME ABOUT EXPOSURE TO THE DOLLAR IN TERMS OF DOLLAR-DENOMINATED DEBT. WHEN WE HAVE SEEN DRAMAS SPILL INTO E.M.'S, SOMETIMES THAT HAS BEEN THE TRANSMISSION AND WEAK POINT. MY UNDERSTANDING IS E.M. IS LESS EXPOSED IN TERMS OF DOLLAR-DENOMINATED DEBT. IS THAT RIGHT? LUIS: THERE'S LESS EXPOSURE, OF COURSE. HIGH FEEDBACK FROM THE ASIA TRADE, THEY LOVE THE NEW ISSUANCE IN LOCAL CURRENCIES. WE KNOW THE DEALS ARE BECOMING ARE POPULAR. BUT OF COURSE, AS YOU MENTION, E.M. DOLLAR IS STILL VERY INSULATED. WHICH IS VERY STRANGE. AND I GO BACK TO MY POINT IN TERMS OF INTERNATIONAL EQUITIES. ANNA: THANK YOU FOR JOINING US TO TALK ABOUT BRAZIL AND THE E.M. LANDSCAPE. LUIS COSTA AT CITI. LET'S GET BACK TO THE EUROPEAN BOND MARKETS. WE DO SEE SOME MOVEMENT. WE HAVE HIGHER YIELDS IN FRANCE. CERTAINLY FURTHER OUT THE CURVE. UP FOUR BASIS POINTS IN THE 10 YEAR, 3.3 IN THE 30 YEAR. WE ARE NOT SEEING THAT THE REST OF EUROPE. THAT LEADS TO A WIDER FRENCH SPREAD. THE FRENCH ARE OVER GERMANY STANDS AT 1.45. GUY: NOT THE LOWS WE GOT TO ON FRIDAY. IT HAS BEEN WORSE IN RECENT MEMORY. BUT THIS IS NOT HOW YOU WANT TO OPEN THIS MORNING. YOU JUST WONDER HOW MUCH OF THIS IS A CARRYOVER FROM ASIA. SOME OF THE ASIAN POSITIONS MAY BE CONTINUING TO EXIT. HOW MUCH OF THAT IS GOING TO BE A PROBLEM TO THE REST OF THIS WEEK IF THAT TREND PICKS UP? ANNA: BUT THERE IS LIMITED CONTAGION EVIDENT FOR FRANCE THIS MORNING. THAT WAS NOT THE STORY AT THE END OF LAST WEEK, BUT WE SAW CONTAGION. I WONDER IF THAT IS A COMFORT TO THE ECB? GUY: IS AN ELECTION IN SPAIN A GOOD THING OR A BAD THING FROM A BOND MARKET PERSPECTIVE? YOU HAVE AN UNSTABLE GOVERNMENT, MINORITY COALITION, CANNOT RULE, CANNOT GOVERN, CANNOT GET BILLS THROUGH. BUT A MORE STABLE GOVERNMENT PERCEIVED AS SOMETHING THAT WOULD BE MORE POSITIVE FOR A BOND MARKET. WE ARE GOING TO WATCH THAT. 15 MINUTES AWAY. WE'VE GOT 15 MINUTES UNTIL THE EUROPEAN EQUITY MARKET OPEN. IT IS A BUSY MORNING. THE EURO IS ON THE MOVE. PLENTY MORE STILL TO COME. 40 FORM MINUTES -- 45 MINUTES PAST THE HOUR. THIS IS BLOOMBERG. ANNA: WELCOME BACK. THIS IS THE OPENING TRADE. WE ARE 12 MINUTES AWAY FROM THAT OPENING TRADE FOR EUROPEAN EQUITY MARKETS. IT IS A BIT OF A COMPLEX PICTURE. LOOKING FOR NEGATIVITY PERHAPS OUT OF FRANCE GIVEN THE CONTINUED FOCUS ON FRENCH POLITICAL UNREST AND TURMOIL. WE DO SEE FRENCH FUTURES POINTING A LITTLE BIT LOWER. THE SPANISH MARKET WILL BE INTERESTING TO WATCH AS WELL. WE HAVE SEEN WEAKNESS IN THE EURO OVERNIGHT LINKED TO SPANISH AND FRENCH POLITICS. LET'S TURN TO TODAY'S MARKETS IN THREE MINUTES. PAUL DOBSON, BLOOMBERG'S EXECUTIVE EDITOR FOR ASIA MARKETS. PAUL, IT IS USUAL WHEN WE SPEAK TO YOU THAT WE SPEAK ABOUT THINGS HAPPENING IN THE ASIAN MARKETS. TODAY, THE THING HAPPENING IN THE ASIA MARKETS IS THE EURO WAS SELLING OFF SUBSTANTIALLY. WHAT DO YOU MAKE OF THAT DECISIVE ACTION ON THE EURO? PAUL: GOOD MORNING. ABSOLUTELY THAT IS WHAT WAS CATCHING OUR ATTENTION IN THE ASIA TRADE THIS MORNING. QUITE A BIG LEG LOWER IN THE EURO, UNUSUALLY LARGE MOVE IN VOLUME FOR OUR TIME OF DAY. AND TAKING OUT LAST WEEK'S LOWS, THERE WAS A MOMENT WHERE IT LOOKS LIKE THE LOSSES WERE ACCELERATING. I THINK WE GOT DOWN TO 0.8 PERCENT ON EURO-DOLLAR, LOWER ON THE DAY. THE MARKET IS FACTORING AND A BUNCH OF DIFFERENT THINGS HERE, THE POLITICAL RISK IN EUROPE OBVIOUSLY IS ONE THING, THE POSSIBILITY THAT THE ECB PIVOTS, DOESN'T HIKE QUITE SO AGGRESSIVELY, OR MAYBE EVEN TAKES MORE FIRM ACTION IN ORDER TO CONTAIN THE BOND MARKET, PERHAPS SLOWING THE PACE OF QT, SHOWING ITS PROTECTION INSTRUMENT, THOUGH THAT SEEMS LESS LIKELY. IF THE ECB WILL NOT SLOW INTEREST-RATE HIKES, THAT WOULD BRING DOWN THE SHORTER TERM BOND YIELDS AND THAT IS WHAT WE ARE SEEING IN THE MARKET TODAY. THERE'S ALSO THE CONCERN THAT THE JAPANESE INVESTORS ARE STARTING TO LIQUIDATE MORE OF THEIR HOLDINGS AGAIN. THAT WOULD BE SOMETHING THAT WOULD ADD PRESSURE TO THE EURO. QUITE A CACOPHONY OF RISK IN THE EURO AREA TO START OUR DAY. GUY: HAS THE ACTION SWITCHED FROM THE BOND MARKET TO THE FX CHANNEL? IS THAT WHAT WE ARE WITNESSING HERE? THE MARKETS MAY NOT BE THAT MUCH CALMER, BUT A LITTLE CALMER? PAUL:PAUL: MAYBE A LITTLE. THERE IS THE POSSIBILITY OF ECB RATES AND PEOPLE HAVE TAKEN OUT MORE ON THE EURO. ALSO, THE EURO IS THE THING THAT YOU CAN TRADE AFTER HOURS. THERE IS POSSIBLE MORE VOLATILITY AS WE GET TO THE DAY . AS YOU HAVE BEEN DISCUSSING, ONE OF THE KEYS TO LOOK OUT FOR IS MORE CONTAGION TO THE REST OF THE EURO AREA. WE DID SEE THAT IN SOME OF THE BELGIAN BONDS, IN GREEK BONDS, AND ITALIAN BONDS. THE IDEA THAT IT BECOMES MORE UNRULY IS SOMETHING PEOPLE WILL BE WARY OF. TOM: I KNOW YOU HAVE YOUR EYE ON THE RESULTS OUT OF BRAZIL. WHAT ARE YOU HEARING ABOUT MARKET REACTION TO THAT? PAUL: EVERYWHERE BUT ASIA TODAY. ELECTION RESULTS ARE TAKEN BY THE MARKET IS A CLEAR POSITIVE FOR BRAZILIAN ASSETS. BOLSONARO WAS IN THE LEAD, BEATING EXPECTATIONS. IT WAS TAKEN AS AN IMMEDIATE. WE SAW THAT EXPRESSED A LITTLE BIT IN FUTURES TRADED IN AMERICA, ALTHOUGH THE REAL CURRENCY MARKET DOESN'T OPEN UNTIL LATER IN THE DAY. BUT ALSO ETF'S AND BRAZILIAN STOCKS TRADING IN JAPAN HAD A GAIN OF 30%. THAT SHOWS THE MARKETS ARE FOCUSED THERE. TOM: PAUL DOBSON, THANK YOU. LET'S GET YOUR STOCKS TO WATCH. LOUISE: THE FIRST STOCK WE ARE WATCHING HIS SCHNEIDER ELECTRIC. THEY HAVE AGREED ON A DEAL TO BUY PTC. THAT IS FOR OVER $20 BILLION U.S., WHICH MARKS A 40% PREMIUM TO PTC'S LAST CLOSING PRICE. YOU CAN SEE THE PRICE HAS BEEN FALLING OVER THE LAST YEAR OR SO, QUITE AN OPPOSITE MOVE TO SCHNEIDER. SCHNEIDER IN THAT TIME HAS BEEN BUYING UP OTHER COMPANIES. THIS IS PART OF THEIR STRATEGY FOR GROWTH. POTENTIALLY A POSITIVE FOR THE FRENCH COMPANY. NOW MOVING ONTO THE ITALIAN BANKING SECTOR. THERE HAS BEEN MORE DRAMA WITH TAKEOVER BATTLES. WE ARE TALKING ABOUT MONTE PASCHI. THEY HAVE THE BACKING OF THE BIGGEST SHAREHOLDER. THIS IS THE LATEST IN A LONG-RUNNING TAKEOVER. THE CEO IS TRYING TO BUY UP TWO OTHER ITALIAN BANKS. THE SHARE PRICE HAS BEEN REACTING THROUGH ALL OF THAT ON THE BACK OF THE LATEST BITS OF NEWS TO COME THROUGH. IT WILL COME TO A HEAD AT THE END OF OCTOBER AS IT COMES TO A SHAREHOLDER VOTE. LASTLY, WE ARE LOOKING AT U.K. AUTO. THERE'S BEEN A REPORT THAT THE U.K. IS PLANNING TO IMPOSE TARIFFS ON CHINESE ELECTRIC VEHICLES. THIS FOLLOWS SIMILAR TARIFFS FROM THE EU AND PRESSURE FROM THE EU TO DO THIS AS WELL. THE U.K. IS RELATIVELY LIGHT ON U.K. CARMAKERS, SO THE MAIN ONE COULD IMPACT ASTON MARTIN. A SLIGHTLY DIFFERENT PRICE POINTS, SO WE WILL SEE THAT REACT. IT COULD FILTER THROUGH TO PLACES LIKE A CAR PARTS RETAILER. WE WILL BE WATCHING THE RELATED STOCKS ON THE BACK OF THAT NEWS. ANNA: LOUISE MOON WITH SOME OF THOSE STOCKS IN FOCUS. WE HAVE NEWS AROUND BT THIS MORNING. THAT MIGHT NOT SCRATCH THE SURFACE, BUT THAT IS ONE STOCK TO WATCH. THE BIGGER PICTURE, WE ARE WATCHING FOR A HOST OF GLOBAL FACTORS INFLUENCE WHAT IS HAPPENING, AND EUROPEAN POLITICAL FACTORS TO INFLUENCE THE TRADE. GUY: WE ARE SEEING A LOT OF VOLATILITY. IT WILL BE INTERESTING TO SEE HOW BRAZIL AFFECTS THE SPANISH MARKET. WE WILL WATCH THAT REALLY CAREFULLY. TOM: A NUMBER OF STOCKS THAT COULD MOVE ON THE BACK OF THAT FIRST ROUND. GUY: AND WE HAVE FIVE MINUTES TO GO UNTIL WE THINK PEDRO SANCHEZ WILL SPEAK. ANNA: WE ARE WATCHING EVERY THINK TAKING PLACE IN MADRID. SPECULATION GROWING OVER THE WEEKEND THAT HE MIGHT CALL AN EARLY ELECTION. IT IS SET TO TAKE PLACE IN THE SUMMER OF 2027. WILL HE BE BRINGING THAT FORWARD AFTER THE KEY POLICY THIS WEEK? WE WILL KEEP OUR EYE ON THE MARKET OPEN. THE OPEN IS NEXT. THIS IS BLOOMBERG. GUY: MONDAY MORNING, A COUPLE MINUTES TO GO UNTIL WE START EQUITY TRADING IN EUROPE. THERE IS A LOT GOING ON THIS MORNING. BOND MARKETS ON THE MOVE. THE BRAZIL STORY WE NEED TO FOLD IN TO EUROPE. WE HAVE THE REPATRIATION TRADE OUT OF JAPAN AND ASIA. WE NEED TO TALK ABOUT FRIDAY. PAYROLLS CAME THROUGH, DISAPPOINTING AT THE HEADLINE LEVEL. CERTAINLY THE WAGE PRINT WAS DEFINITELY DISAPPOINTING. EQUITY MARKETS LIKES THAT, TECH LIKES THAT. THAT IS THE STORY IT FRIDAY. THERE'S NOT MUCH TO PRICE IN BUT THE STOXX 600 WAS UP ON FRIDAY. IT HAD A DECENT SESSION, WAS OK ON FRIDAY. THIS MORNING WE COME IN A LITTLE MORE MUTED. SO MANY FACTORS. TOM: THE FTSE 100 HAS CAUGHT UP BY 0.6%. I NOTICED GOLD AND SILVER IS UP. SOME OF THE BASIC RESOURCES GAINING A BIT OF A LIFT TO THE FTSE 100. WE WILL SEE WHAT STORY IS THERE. DAX FUTURES IN GERMANY, YOU'RE LOOKING TO ADD ABOUT 114 POINTS IN GERMANY EQUITIES. ANNA, WHAT ARE YOU WATCHING? ANNA: WE ARE WATCHING FRENCH STOCKS. POLITICAL UNCERTAINTY. ON THE OTHER HAND, A NUMBER OF BIG SPANISH LISTED COMPANIES HAVE EXPOSURE TO BRAZIL AND COULD GO HIGHER. A SPANISH STOCKS HIGHER. WE ARE ALSO WATCHING A PUSH THAT MEANS THAT SCHNEIDER IS IN FOCUS. AND BT GUY: HERE WE GO. FIND OUT EXACTLY HOW THAT GETS PRICED IN. BUT SCHEDULE THE OPENING TRADE THIS MONDAY MORNING AND SHOULD EUROS GOING ON. FTSE EXPECTED TO DO WELL, MAYBE TO OUTPERFORM. FRENCH STOCKS EXPECTED TO UNDERPERFORM. WAITING TO SEE EXACTLY HOW THE IBEX OPENS. FTSE IS UP TO TENS OF 1%. THE CAC IS DEFINITELY BOND MARKET-FOCUS. ARE WE GOING TO GET AN EARLY SPANISH ELECTION, WOULD THAT THE STOCK POSITIVE OR STOCK NEGATIVE? SEEMS TO BE STOCK POSITIVE BUT IS THAT BRAZIL OR IS THAT BRAZIL OR THAT DOMESTIC POLITICS? NORMALLY IT IS OPENED BY NOW. THE DAX DEFINITELY IS. THAT IS KIND OF WHERE WE LEAVE IT. THE IBEX IS LOOKING POSITIVE, THE FTSE IS LOOKING POSITIVE. TAKING A WHILE TO GET THE CAC OPEN THIS MORNING. TOM: DESPITE ALL OF THESE POLITICAL RISKS, CONSTRUCTION IN THE NEGATIVE TERRITORY BY THE SLIMMEST OF MARGINS. CHEMICALS OF ALMOST 1.8%, CLOSE TO 2%. BASIC RESOURCES ALSO SEEING SOME STRENGTH. AND OVER IN SPAIN, SANTANDER UP 1.9%. MAYBE THAT IS A BRAZIL STORY AS WELL. ANNA: I'M LOOKING AT THAT MOVE HIGHER IN CHEMICALS, THE BEST PERFORMING THIS MORNING. IT SEEMS TO BE LIFTING SENTIMENT. A 4 BILLION EUROS SHARE BUYBACK OVER THE 2027-2028 PERIOD, AND THEY'VE COME THROUGH WITH SOME NEW TARGETS. IN TERMS OF THE SPANISH MARKET WE ARE KEEPING AN EYE ON WHAT IS GOING ON THERE AND WE ARE LOOKING AT LIFE PICTURES. GUY: WE ARE EXPECTING A SIGNIFICANT ANNOUNCEMENT WE THINK PROBABLY FROM THE SPANISH PRIME MINISTER. HE HAS BEEN STRUGGLING OVER THE LAST FEW WEEKS IN TERMS OF HIS AUTHORITY IN PARLIAMENT. A COUPLE OF FAILED BIDS, AND WE NOW WAIT FOR NEWS AS TO WHETHER OR NOT WE ARE GOING TO GET AN EARLY ELECTION OUT OF SPAIN. HOW WOULD MARKETS TAKE THAT, WOULD THAT BE TAKEN POSITIVELY? THE EXPECTATION THAT SEEM TO SUGGEST THAT THE ELECTION MIGHT LEAD TO A TURN TO THE RIGHT. THE CENTRAL RIGHT PARTIES AHEAD IN THE POLLS, WITH THEY PROVIDE MADE MORE STABILITY FOR SPAIN? WE ARE GOING TO HEAR EXACTLY WHAT PEDRO SANCHEZ IS GOING TO SAY ABOUT HIS AND HIS PARTY POLITICAL FUTURE. ANNA: AND IN TERMS OF THE SPANISH IBEX, HALF OF 1%. COMPLICATED BY THE FACT THAT THERE WERE A NUMBER OF HEAVY LISTED SPANISH COMPANIES THAT HAVE EXPOSURE TO BRAZIL, SOME OF THEM WITH MORE THAN 20% OF THE REVENUE COMING THROUGH BRAZIL. EXPECTING A REAL RISK-ON MOOD IN THE BRAZILIAN MARKET BY THE TIME WE GET THERE. SPANISH AND BRAZILLIAN POLITICS COMING TOGETHER TO CONFECTED UPSURGE, UP BY HALF OF 1% THIS MORNING. STILL WATCHING FOR ANY LINES COMING THROUGH FROM PEDRO SANCHEZ. NOTHING FLASHING ON HER TERMINALS JUST YET. TOM: THIS TERM DOESN'T ACTUALLY FINISH UNTIL JULY OF 2027. CABINET MEMBERS OF THE HIGH-RANKING OFFICIALS DO SUPPORT AN EARLY ELECTION ACCORDING TO PEOPLE CLOSE TO SANCHEZ. GUY: WHY WOULD THEY BE IN FAVOR OF THAT, CONSIDERING THEY ARE BEHIND IN THE POLLS? IF YOU CAN'T GET WHAT YOU NEED THROUGH PARLIAMENT, YOU ARE NOT EFFECTIVELY IN CONTROL OF THE NARRATIVE. THAT IS THE TAKE AWAY FROM LAST WEEK. ANNA: SOME OF OUR WRITING SUGGESTING BECAUSE IT WAS HOUSING POLICY, SOMETHING SO CLOSE TO THE SOCIALIST MOVEMENT, THAT PERHAPS IT TOOK ON LARGER SIGNIFICANCE AS A RESULT OF THAT. HE IS CLEARLY SAYING A LOT OF WORDS, BUT NOTHING THAT HAS JUSTIFIED A HEADLINE JUST YET. BENEDICT LOWE JOINS US. WE WILL KEEP WATCHING WHAT PEDRO SANCHEZ IS SAYING THAT, SO EXCUSE US IF WE JUMP AWAY FROM OUR CONVERSATION A LITTLE BIT. BUT LET'S START WITH POLITICAL RISK BECAUSE WE SEE FRANCE, DOWN BY 6/10 OF 1%. WE DON'T SEE IT IN SPAIN, BUT WE SEE IT IN FRANCE. HOW MUCH IS POLITICAL RISK COMING BACK ONTO YOUR RADAR? >> THE BASEMENT THAT WE'VE SEEN RECENTLY IS THE BOND SPREAD WIDENING. PART OF IT IS COMING FROM THE GLOBAL ABOVE SELLOFF. YOU'VE GOT THE BUDGET DISCUSSION SET TO KICK OFF THIS WEEK AND YOU HAVE ALSO THE ELECTION THAT IS COMING NEXT YEAR. THIS IS A HEADWIND OBVIOUSLY FOR THE EQUITY MARKET FROM THE PERSPECTIVE ON TERMS OF SENTIMENT. OUR THINKING ON FRENCH STOCKS IS THE CAC CAN RALLY INTO YEAR-END, BUT THE REALITY IS THAT YOU PROBABLY CONTINUE TO TRAIL GIVEN ALL OF THE NEWS FLOW. ANNA: WHAT SHOULD WE WATCH, WHAT IS ON YOUR MIND? THIS IS AN ECONOMY THAT HAS GONE REALLY WELL AND TO SOME DEGREE THAT HAS SUPPORTED STOCKS IN SPAIN. HAS THIS BEEN A THEME THAT INVESTORS HAVE BEEN POSITIVE ABOUT IN EUROPE? WHAT IS THE WIDER CONTEXT AROUND SPANISH STOCKS? BENEDICTE: THE INTERESTING THING IS THIS GOVERNMENT TO REALLY STAND THE TEST OF TIME. WE ARE SEEING THAT IN GERMANY. IN FRANCE THAT WAS A BIT OF THE DIFFICULT PATH WHEN YOU HAD A GOVERNMENT THAT IS ABLE TO PASS REFORMS AND ALL OF THAT AND I THINK THIS IS ALSO SHOWING IN THE SPAIN NEWS THIS MORNING. I THINK WHAT WE ARE LOOKING FOR AND WHAT COULD BE THE POSITIVE TAKE FOR THE FRENCH ELECTION YEAR IS MAJORITY BOTH ON THE PRESIDENTIAL AND LEGISLATIVE ELECTION THAT COULD HAVE A POSITIVE SIGNAL THAT THEY WILL BE ABLE TO PERFORM AND THAT WITH THE ENIGMA POSITIVE TAKE ON STOCKS. TOM: THAT SOUNDS LIKE A BIG IF. ARE YOU SUGGESTING THAT INVESTORS SHOULD GET EXPOSURE AROUND THAT POTENTIAL EVENTUALITY? BENEDICTE: I WOULD SAY AT THE MOMENT THERE IS JUST BETTER OPPORTUNITY ELSEWHERE. THE DAX, WE THINK THERE IS MORE UPSIDE ON THERE. IN GERMANY, 65%. ON TOP OF THAT, WE HAVE THE DAX HEAVILY WEIGHTED ON INDUSTRIAL. THEY STAND WELL BELOW THAT HIGH, AND ANALYSTS ARE MORE POSITIVE ON EARNINGS, WHICH IS JUST THINKING OVER THE NEXT FEW MONTHS IS GOING TO BE BETTER OPPORTUNITY ELSEWHERE. TOM: AND AT WHAT POINT DOES THE ENERGY STORY STARTED TO BECOME A CHALLENGE FOR EUROPEAN MARGINS, FOR MARGINS THAT THE DAX WILL BE PUSHING THROUGH IN THE QUARTERS AHEAD? IS THAT PRICED IN AT THIS POINT? BENEDICTE: IN TERMS OF OBVIOUSLY SOMETHING TO MONITOR, WE'VE SEEN THE BOND STORY COME AND GO DEPENDING ON THE GEOPOLITICAL NEWS. THIS REMAINS STILL ONE OF THE KEY RISKS FOR EUROPE AND IF OIL MANAGES TO STAY AROUND THOSE LEVELS, EQUITY MARKETS ARE ABLE TO OVERLOOK PRICES RISING TO 120 , ESPECIALLY WHEN THE GROWTH BACKDROP IS POSITIVE. IF THE OIL PRICES KIND OF STAY IN THE RANGE THAT THEY ARE, EQUITY MARKETS SHOULD BE ABLE TO OVERLOOK THIS MOVE. GUY: A BIG MOVE ON THE EURO OVERNIGHT, IF YOU PLUG THAT IN, DOES THAT CHANGE IN TERMS OF ANY NEW SCREENING OF EUROPEAN STOCKS? DO WE START TO GET A SIGNIFICANTLY CHEAPER EURO? HOW DOES THAT CHANGE THE WAY YOU SCREEN STOCKS HERE IN EUROPE? BENEDICTE: IN EUROPE BECAUSE WE TEND TO BE EXPORTERS, SENTIMENT ON THE REGION IS QUITE NEGATIVE. SHORT-TERM, NEGATIVE SENTIMENT I THINK. ANNA: WE'RE WONDERING WHAT EVEN TALKING YET. PEDRO SANCHEZ HAS CALLED AN EARLY ELECTION AFTER THE HOUSING BOOM FAILED ON FRIDAY. HE SAID THE ELECTION WILL BE HELD ON NOVEMBER 29. THIS IS BRINGING IT FORWARD BY, WHAT, EIGHT MONTHS? NOW PEDRO SANCHEZ HAS CALLED AN EARLY ELECTION AFTER THAT HOUSING VOTE FAILED. THIS IT'S A REALLY INTERESTING DYNAMIC. DIFFICULTY THE COALITION GOVERNMENT IS HAVING RIGHT NOW STAYING IN POWER. WE WILL CONTINUE TO MONITOR THAT, OF COURSE. JUST A MONTH AND A HALF AWAY FROM THE SPANISH ELECTION. GUY: GOING TO TAKE THIS AS POSITIVE? HE HAS STRUGGLED FOR A LONG TIME. HE IS NOT ABLE TO DO WHAT HE WOULD HOPE TO DO IN GOVERNMENT. SPAIN CLEARLY HAS AN IMMIGRATION ISSUE WHICH IS NOW FLOWING THROUGH THE POLITICAL STORY AS WELL. YOU TALK A MOMENT AGO ABOUT WHY THE SPANISH ECONOMY IS AT FAULT. IS THAT A NEGATIVE, IF THE IMMIGRATION STORY IS MORE CURTAILED BY RIGHT WING GOVERNMENT, WITH THAT SLOW THE ECONOMY DOWN BECAUSE ONE OF THE WAYS IS BY PUTTING MORE PEOPLE INTO IT. YOU'VE GOT A BIGGER ECONOMY, YOU GET FASTER GROWTH. THERE'S LOTS OF REALLY INTERESTING DYNAMICS HERE. TOM: AND AS WE ARE WATCHING THE CONSERVATIVES AND SUCCESS IN BRAZIL AND MARKETS WELCOMING THAT, IT IS THE SAME DYNAMIC AT PLAY IN THAT MARKETS WANT TO SEE A CONSERVATIVE GOVERNMENT, THE CONSERVATIVE PARTY POLLING WELL IN SPAIN. IF THEY ARE VICTORIOUS IN THIS SNAPPY ELECTION END OF NOVEMBER, DOES THAT SET THE STAGE THAN, DOES THAT UNDERPIN BENEDICT'S CALL ON HIGHER EUROPEAN EXITS? IS THAT ULTIMATELY SUPPORTED THROUGH THE POLITICAL RISK OF THE NEXT FEW? ANNA: THE FACT THAT THE IBEX IS UP, IS THAT BECAUSE OF BRAZILIAN POLITICS OR IS IT ALL ON SPANISH POLITICS? IT GETS COMPLICATED AS YOU POINTED OUT. GUY: WHEN YOU TALK TO U.S. INVESTORS, WHAT ARE THEY SAY ABOUT EUROPE RIGHT NOW? THEY SEE WHAT IS HAPPENING IN FRANCE, AND ITALY AS WELL WITH ELECTIONS COMING UP. WHEN YOU TALK TO U.S. INVESTORS, WHY WOULD THEY INVEST IN EUROPE? >> WE'VE HAD A COUPLE OF MONTHS OF POSITIVE INFLUENCE FROM U.S. INVESTOR INTO EUROPEAN EQUITIES. I THINK THE ISSUE FOR EUROPE REMAINS THAT THERE'S GEOPOLITICAL RISK COMING OUT LEFT AND RIGHT, AND PROBABLY WITH THE TECH STORY BETTER AND BETTER ON THE U.S., IT PROBABLY WILL BE HARDER TO PUSH FORWARD. THERE'S JUST BETTER OPPORTUNITY ELSEWHERE. GUY: ASSUMING THE CHEAPER EURO MAKES THE ENERGY CRISIS THAT MUCH WORTH AS WELL. YOU GET A CHEAPER EURO, THE ENERGY STORY JUST GETS WORSE. IT IS EXPECTED TO START IN COLD OR AT THE END OF THIS WEEK. THAT STORY WILL START TO BECOME MORE AND MORE IMPORTANT TO THE EUROPEAN NARRATIVE. >> THE GLOBAL OUTLOOK FOR EUROPE REMAINS STRONG BECAUSE WE HAVE FISCAL SPENDING, WE ARE SEEING THAT FOR THE DATA BUT THERE'S A NUMBER OF HEADWINDS AT LEAST IN THE SHORT TERM AS WE ARE HEADING INTO WINTER, AS YOU MENTIONED ON ENERGY PRICES. IN A LOT OF GEOPOLITICAL NEWS THAT IS POPPING OUT, IT DOESN'T MEAN THAT OVER THE COMING MONTHS WE CAN'T SEE -- BUT IT IS HARD TO SEE EUROPE OUTPERFORMING IN THE CONTEXT WHEN YOU HAVE BETTER UPSIDE STORY IN THE U.S. TOM: THANK YOU VERY MUCH FOR THOSE INSIGHTS THIS MONDAY MORNING. THAT'S GET MORE DETAILS ON THE SPANISH STORY RIGHT NOW BECAUSE THE SPANISH PRIME MINISTER PEDRO SANCHEZ HAS CALLED FOR AN EARLY ELECTION AFTER TWO EMERGENCY HOUSING BILLS PRESENTED BY THE GOVERNMENT WERE DEFEATED IN PARLIAMENT. LET'S BRING IN RODERIGO IN MADRID. WHAT HAVE WE HEARD, WHAT DO WE KNOW, WHAT DOES IT MEAN FOR THE POLITICS OF SPAIN? >> WHAT HAS HAPPENED IS THAT SANCHEZ HAS BEEN STRUGGLING TO GAIN SUPPORT. HE SEEN AS POSITIONING WEAKEN AT OF ELECTIONS NEXT YEAR, AND THE DEFEAT GIVES HIS COALITION IN THE NARRATIVE TO GO INTO THE ELECTIONS, SHOW THAT THEY ARE THERE DEFENDING THE RIGHT OF PEOPLE WHO NEED HOUSING WHILE THE RIGHT WHO DEFEATED HIS BILLS THE OTHER DAY ARE AGAINST IT. THAT IS THE NARRATIVE THEY ARE GOING TO TRY TO BUILD ON AND IT OFFERS THEM A SMALL WINDOW IN WHICH THEY BELIEVE THEY WILL BE ABLE TO MOBILIZE THEIR VOTERS, THEIR CONSTITUENCY AND HAVE A CHANCE OF DEFEATING THE CONSERVATIVE BP AND THE FAR-RIGHT GROUPS WHO ARE SET TO WIN. THESE TWO PARTIES HAVE A HUGE MARGIN AND NOW SANCHEZ CLEARLY BELIEVES THAT HE CAN CHIP AWAY AT THAT MARGIN. GUY: RODERIGO, WHERE THE POLLING TO THE CORRECT AND HOW SIGNIFICANT A POLICY SHIFT WOULD BE SEE IN SPAIN? WHAT ARE THE KEY AREAS WE NEED TO NOW BE THINKING ABOUT IN TERMS OF THE WAY THAT SPAIN THEY OPERATE DIFFERENTLY? >> ONE OF THE CORE THINGS HERE IS THAT THE PP LEFT TO GOVERN WITH VOX. VOX IS QUITE A BIG UNKNOWN. WE EXPECT THAT VOX WOULDN'T HAVE WHAT ARE CALLED THE MINISTRIES FINANCE DEFENSE, THE CORE MINISTRIES THAT THEY THINK OF THE MOST IMPORTANT ONE. THEY MAY NOT GIVE THOSE, BUT THE CULTURAL WARS WILL DEFINITELY BE PART OF THE GOVERNMENT. IN THEIR EARLY NEW POSITIONS, NEW THEMES THAT WILL GO AGAINST WHAT HAS BEEN BUILT ON. CLAIMING HE IS VERY PROGRESSIVE, FAIRIES PRO-CLEAN ENERGY. AS FAR AS THE ECONOMY GOES, THEY'VE BEEN TALKING A LOT ABOUT CUTTING TAXES. THEY ARE VERY BIG ON THAT. HOW FAR THEY CAN GO, IT IS NOT CLEAR. SPAIN HAS BEEN GROWING VERY STEADILY IN RECENT YEARS, SO THEY WILL FIND AN ECONOMY THAT IS ON THE UP. THE ONE THING THAT THEY WILL HAVE TO FACE IS THE FACT THAT SANCHEZ, AND THIS MAY BE SOMETHING POSITIVE, SANCHEZ HAS NOT PASSED A SINGLE BUDGET OVER THE LAST FOUR YEARS. SO NOW WHEN THE PP COMES IN, IF THEY COME WITH A CLEAR MAJORITY, WE WON'T SEE A NEW BUDGET, AND THAT MAY GIVE A NEW POWER FOR SPENDING OR FOR TAX CUTS IF THEY DEFINITELY DO. THE LAST THING IS THAT SANCHEZ HAS BEEN ACCUSED OF BEING VERY INTERVENTIONIST IN CERTAIN PARTS OF THE ECONOMY. HE TOOK A BIGGER STAKE IN THE DEFENSE COMPANY. BUT THEY'VE SAID THIS HAS TO BE ROLLED BACK. THE BIG QUESTION IS IF THEY WILL INDEED DO THAT. IT DEFINITELY THEY WON'T WANT TO INTERVENE IN THE HOUSING MARKET IF THEY GO ACCORDING TO THEIR ARGUMENTS. GUY: YOU WONDER WHAT IT WOULD MEAN FOR RELATIONS WITH WASHINGTON. THERE'S A LOT OF MOVING PARTS. THANKS FOR THE UPDATE. THANKS FOR THE QUICK UPDATE. THE SPANISH MARKET IS UP. IT IS INTERLINKED, SANTANDER IS A BIG GAME THIS MORNING. LET'S TAKE A QUICK LOOK AT THE CORE SIX AND SHOW YOU WHAT IS HAPPENING. EUROPEAN EQUITIES GENERALLY ON THE FRONT FOOT, ASML IS DOING SOME LIFTING. IT IS INTERESTING, SCHNIDER IS SOFT ON THE BACK OF THAT ACQUISITION, POTENTIALLY IN THE UNITED STATES. LET'S TALK A LITTLE BIT MORE ABOUT ALL OF THIS AND FIGURE OUT WHAT IS HAPPENING OUT THERE. >> AS YOU SAY, SCHNEIDER SOFT ON THAT, DOWN ALMOST 7% AFTER A MORE THAN $20 BILLION DEAL TO BUY PTC, POTENTIALLY THAT PRODUCT WAITING FOR SCHNEIDER. NEXT, LET'S TAKE A LOOK AT THE SHARES, THEY HAVE ISSUED A $4 BILLION BUYBACK, 2.5% HIGHER. UNSURPRISINGLY, SHAREHOLDERS WELCOMING THAT NEWS OF THAT FOR MILLION EURO BUYBACK. -- 4 BILLION EURO BUYBACK. STICKING WITH THE REGION, WE ARE LOOKING AT SHARES DOWN OVER 2% OF HERMES, THE ONLY TEO SELL RATINGS THEY'VE GOT COMPARED TO ABOUT 16. BAD NEWS, THEY ARE EXPECTING THE STOCK TO CONTINUE TO UNDERPERFORM. AND FINALLY, A QUICK LOOK AT EUROPE'S BRAZIL-EXPOSED STOCK. BOTH LISTED IN EUROPE, BOTH EXPOSED TO BRAZIL, BUT RISING INTO THE GREEN. ANNA: THANKS VERY MUCH. THE UPDATE ON THOSE STOCKS THAT ARE MOVING. COMING UP, TRADERS ARE ON ALERT FOR SIGNS OF CONTAGION IN EUROPE'S GOVERNMENT BOND MARKETS. WE WILL GET MORE NEXT ON FRENCH POLITICAL FALLOUT. THIS IS BLOOMBERG. ANNA: WELCOME BACK TO "THE OPENING TRADE." 21 MINUTES INTO OUR TRADING DAY, SOME INCREDIBLE NEWS FLOW ALREADY. THIS IS THE PICTURE ACROSS THE EUROPEAN STOCKS. OVERALL, THAT NUMBER DOESN'T REALLY DO IT JUSTICE. THE FTSE IS ACTUALLY FLAT. THE CAC IS DOWN, AND MAYBE THROUGH THE WEEKEND THIS IS WHERE WE GOT THE FOCUS MIGHT BE BECAUSE WE HAVEN'T HEARD ANYTHING THAT MADE THINGS BETTER OVER THE WEEKEND. BUT ACTUALLY, THE SPANISH STORY HAS KIND OF CRACKED UP ON THE RAILS. GUY: WHAT IS THE FRENCH STORY THIS MORNING? LOOK AT WHERE THE POINTS DROP IS, IT IS SCHNEIDER. SCHNEIDER IS DOWN. THE CAC IS DOWN BY 71 POINTS. SCHNEIDER IS DOWN BY 57 OF THOSE POINTS. IS THIS A POLITICAL STORY OR, DAY STORY THIS MORNING? >> THIS IS A $20 BILLION PLUS ACQUISITION OF THE U.S. SOFTWARE COMPANY. I'M JUST SLIGHTLY WARY OF DRAWING A CONNECTION BETWEEN THE FRENCH BULL MARKET AND THE FRENCH EQUITY MARKET THIS MORNING IN TERMS OF THE NARRATIVE. IT FEELS LIKE THIS IS AN IDIOSYNCRATIC SCHNEIDER STORY. WE'RE CLOSING BACK INTO THE LEVELS THAT WE SAW THIS THURSDAY AND FRIDAY MORNING OF LAST WEEK. >> EVERYTHING IS JUST DRIFTING LOWER IN TERMS OF EQUITIES. WE ARE DOWN ON THINGS THAT NOT 20 MINUTES AGO WE WERE TRADING IN BIT MORE POSITIVELY. GUY: FRANCIS PRINTING 148 OVER. IT WAS WORSE I THINK FRIDAY MORNING. THAT WAS WHEN WE KIND OF SAW THAT COMING THROUGH. HAVE TO POP THAT TO ONE SIDE AND SEE WHAT IS GOING ON. WATCHING THE JAPANESE STORY DEVELOP AS WELL. ARE WE NOW GOING TO SEE THAT STARTING TO MOVE IN TERMS OF THE DIRECTION THAT WE NEED TO BE WATCHING? IN TERMS OF THE NARRATIVE THAT WE ARE WATCHING IN TERMS OF WHAT IS GOING ON? LET'S FIGURE OUT WHAT IS GOING ON. ALICE IS HERE WITH MORE DETAILS. WHAT ARE WE WATCHING HERE SO CAREFULLY THIS MORNING? HAS THE FEVER BROKEN OR ARE WE JUST STILL RUNNING A HIGH TEMPERATURE HERE? >> A HIGH TEMPERATURE, I THINK, FOR SURE. CERTAINLY THIS IS WIDER AGAIN THIS MORNING, SIX OR SEVEN BASIS POINT WIDER. I THINK WE ARE STILL IN THE RANGE THAT WE SAW LAST WEEK. THE HIGHEST SINCE 2011. BUT I THINK IT IS REALLY THE LONG END THAT WE ARE SEEING THAT PRESSURE. YES, CERTAINLY MARKETS REMAIN. TOM: YOU WERE TALKING TO ANTHONY STEPHENS EARLIER FROM OUR MARKETS TEAM OVER IN ASIA SAYING THAT THERE'S COMPLACENCY IN TERMS OF ASSET MANAGERS IN JAPAN AND THEIR EXPOSURE TO FRENCH DEBT. HAS THAT BEEN PRICED IN YET, THE POTENTIAL FOR PRETTY SIGNIFICANT ADJUSTMENTS BY ASSET MANAGERS IN JAPAN IN TERMS OF THEIR EXPOSURE? ALICE: I THINK PEOPLE WOULD SAY THAT A LOT IS PRICED IN NOW. WE'VE SEEN SUCH A MASSIVE MOVE, IT HAS MORE THAN DOUBLED WHERE WE WERE EVEN TWO MONTHS AGO. I THINK THE JAPANESE STORY IS AN INTERESTING ONE. I DON'T THINK THERE'S BEEN THAT MUCH FOCUS ON IT YET BUT WE KNOW THE JAPANESE INVESTORS ARE MASSIVE BUYERS OF FRENCH GOVERNMENT BONDS OVER THE YEARS AND NOW WE ARE SEEING ALL THESE POLITICAL, FISCAL, BUDGET CONCERNS AROUND FRANCE AND I THINK THAT IF THE JAPANESE HOLDER STARTS BUYING IS ANOTHER FACTOR THAT COULD PERHAPS SEND THE SPREAD WIDER AGAIN, ESPECIALLY SINCE THERE'S BEEN NO YIELDS ON JAPANESE GOVERNMENT BONDS. ANNA: CAN WE WERE WATCHING CAREFULLY LAST WEEK, THE FRENCH OVER GERMANY, BUT AS WE'VE BEEN SAYING IT, IT BLEW OUT THURSDAY AND FRIDAY. IT CAME BACK IN, MAYBE PAYROLLS HELD A LITTLE BIT ON THAT FRONT, MAY BE GETTING A BIT OF INFLUENCE FROM TREASURIES. THIS MORNING, DID BC ANYTHING THAT WORRIES THE ECB? WE DO HAVE A BIT OF CONTAGION IN THE FORM OF THE ITALIAN YIELDS GOING HIGHER IN SYMPATHY WITH FRANCE. MAYBE DEBT IS NOT WHAT THE ECB WANTS TO SEE. >> CONTAGION IS THE WORD THAT IS KINDA STARTING TO CREEP INTO SOME OF THE MARKET COMMENTARY. PEOPLE ARE TALKING ABOUT THAT IDEA TO US. THINK YOU ARE SEEING SIGNS OF CONTAGION IT IS SAID THAT YES, WE'VE SEEN THE LIKES OF ITALIAN AND BELGIAN BONDS SELLOFF ALONG WITH FRANCE EVEN THOUGH THERE HASN'T BEEN ANY AROUND THOSE COUNTRIES. I THINK IT IS SOMETHING THE ECB IS WATCHING VERY CAREFULLY. THERE HE FAR FROM LEVELS OF THE SERIOUSLY CONSIDER DOING SOMETHING. I THINK WILL BE HAVE SEEN DID THE MARKET STARTED TO RAIN AND SOME OF THE RATE HIKE THAT HAVE BEEN PRICED, AND I THINK THAT IN AND OF ITSELF WILL HELP THE MARKET MAYBE GET A LITTLE BIT MORE DOVISH COMMENT FROM SOME OF THE ECB SPEAKERS. MAYBE THEY DON'T HIKE THIS MONTH. I THINK THAT IS THE KIND OF THING WE SHOULD BE LOOKING AT. IF THINGS GET MUCH WORSE, MAYBE THEY WILL BE MORE FOCUSED. >> YOU SEEM TO BE TALKING ABOUT THE TPI. MAYBE A FEW WORDS COMING THROUGH. THANK YOU VERY MUCH. TOM: COMING UP, GERMAN INDUSTRIAL ROBOTICS FIRM REACHES A MAJOR MILESTONE IN A BID TO MAKE ITS MARK IN THE WORLD OF PHYSICAL AI. WE SPEAK TO THE COFOUNDER NEXT. THIS IS BLOOMBERG. GUY: -- TOM: WELCOME BACK, THIS IS "THE OPENING TRADE." "THE OPENING TRADE." EUROPEAN STOCKS OF JUST 1/10 OF 1%. A REALLY DECENT SESSION ON FRIDAY. OF THE WEEK, WE ARE FACTORING IN THE POLITICAL RISK IN FRANCE, BUT ALSO IN SPAIN. THE FRENCH SPREAD WAS ABOUT 148 AGAINST THEIR GERMAN COUNTERPART. IN TERMS OF THE DOWNSIDE WE ARE SEEING FOR FRENCH STOCKS, ALWAYS MORE WHAT IS HAPPENING WITH SCHNEIDER ELECTRIC. YOU ARE DOWN JUST 1/10 OVER IN GERMANY, JUST DROPPING 32 POINT AND THE FTSE 100 HAS BEEN A LITTLE BIT MORE POSITIVE. SEEING SOME MOVEMENT IN THE COMMODITIES SPACE. GUY: VOLUME IS A LITTLE LIGHT BUT IT HAS BEEN HIGHER OVER THE LAST FEW DAYS. WE LOOK AT THAT NUMBER WITH A LITTLE BIT OF CAUTION, WE ARE DOWN BY 7.3%. DEFINITELY ON THE DOWNSIDE, AND THAT IS KINDA SIGNIFICANT IN TERMS OF THE DOWNSIDE MOVES WE ARE SEEING. FRANCE IS THE FOCUS OF ATTENTION ONCE AGAIN BUT ACTUALLY FOR DIFFERENT REASONS. A STORY THAT WE ARE WATCHING, BIG BUYBACK THAT IS LIFTING THE CAC THIS MORNING. BUT IT HAS BEEN OFFSET IN JUST A MOMENT. ONE OF THE STOCKS WE HIGHLIGHTED BECAUSE OF ITS BRAZIL EXPOSURE, I THINK THAT IS INTERESTING AS WELL PARTICULARLY TO FULTON TO THE SPANISH MARKET. UP BY 5%, NEARLY 6%. LET'S GET TO THE MAIN ACTION THIS MORNING. WHY IS THE CAC DOWN AS HARD AS IT IS THIS MORNING? MAYBE IT HAS TO DO WITH FRENCH POLITICS. THAT STOCK IS DOWN BY 7.4%. THE DEAL NOT BEING TAKEN WELL BY THE MARKET IN FRANCE. YOU GOT COMING THROUGH. ALSO POTENTIALLY DOWN AS WELL, POTENTIALLY BUYING A STAKE IN ARMANI. 1, 2, 3 FRENCH STOCKS. THAT IS WHAT YOU ARE MAYBE SEEING COMING THROUGH. ANNA: A RECAP ON SPAIN, SPAIN'S PRIME MINISTER HAS CALLED AN EARLY ELECTION THAT'S GOING TO TAKE PLACE ON NOVEMBER 29. THIS COMES AFTER PARLIAMENT REJECTED A HOUSING PLAN LAST WEEK THAT HIS GOVERNMENT HAD HOPED WOULD QUELL PROTESTS. SANCHEZ FIRST TO POWER IN 2018 AND HAS NEVER COMPLETED A TERM, HAVING CALLED EARLY ELECTIONS TWICE ALREADY. BRAZIL'S PRESIDENTIAL ELECTION WILL BE COMPLETED -- DECIDED IN RUNOFF VOTE AFTER BOLSONARO UNEXPECTEDLY FINISHED AHEAD OF DESILVA IN THE FIRST ROUND. BOLSONARO JR. TOOK ABOUT 47% OF THE VOTE. OIL IS FALLING THIS MORNING. SALLY A CUT PRICES FOR ITS BENCHMARK OIL GREAT TO ASIA TO A SIX YEAR LOW. THE MOVE COMES EVEN AS A NEW OFFENSIVE AGAINST MILITANTS BY THE GOVERNMENT THREATENS TO ADD TO TENSIONS IN THE RED SEA. TOM: LET'S BRING IN A FOCUS RIGHT NOW ON ROBOTICS, PARTICULARLY WHAT IS HAPPENING IN TERMS OF THE INDUSTRIAL SPACE IN EUROPE. A POINT OF HIGHER CAPITAL COST BECAUSE DESPITE GROWING CONCERNS THAT HIGHER YIELDS COULD PUT PRESSURE ON THE ABILITY TO FUND THE EVER-DEMANDING AI BUILD OUT, THERE IS A WINNER THAT HAS EMERGED IN THE PHYSICAL AI FIELD. IT'S WORTH NOTING THE GERMAN ROBOTICS STARTUP HAS BECOME A UNICORN AS IT BUILDS THE NEXT GENERATION OF ROBOTICS, DOUBLING ITS VALUATION IN NINE MONTHS. WITH US NOW IS THE COFOUNDER AND CEO OF ROB CO.. THIS IS NEWS ON ROBCO. IN THIS ENVIRONMENT OF HIGHER COST OF CAPITAL, YOU WORK WITH THE BIG INDUSTRIAL PARTNERS IN THE LIKES OF BMW. YOU ARE GETTING LIQUIDITY BACK TO INITIAL SHAREHOLDERS AND EMPLOYEES. WHAT IS THAT COST OF CAPITAL TO INTO A BUSINESS LIKE YOURS AND THE KIND OF RELATIONSHIPS YOU HAVE WITH BIG INDUSTRIAL GIANTS IN EUROPE? >> I THINK BEFORE WE GET TO THAT, TO OPERATE THE ORDINARY SO HUMANS CAN DO THE EXTRAORDINARY. MACRO TREND IS SO STRONG THAT HIGHER COST OF CAPITAL. NUMBER ONE IS WE OFFER A ROBOT AS A SERVICE PACKAGE. WE PRY PHONE -- PRE-FINANCE A ROBOT SOLUTION THAT IS VERY ATTRACTIVE WHEN IT COMES TO A COMPARISON TO HIGH COST. SECONDLY, WE ARE A VENTURE-BACKED COMPANY. WE DO DEPEND ON LOWER COST OF CAPITAL BUT THAT IS GOING TO CONTINUE FOR THE TOSHIBA FUTURE, AT LEAST. TOM: WHERE IS MOST OF THAT DEMAND COMING FROM? IT IS AN INCREASINGLY COMPETITIVE SPACE AND EUROPE CLEARLY HAS SKIN IN THE GAME WHEN IT COMES ROBOTICS. EUROPE DOES HAVE SOME NAMES COMING IN. WHERE DOES YOUR PRODUCT FIT, WHAT SOLUTIONS ARE YOU OFFERING AND HOW MUCH DEMAND ARE YOU SEEING RIGHT NOW? >> AND YOU'VE LIVED IN CHINA YOURSELF, SO FOR US IT IS THE OPPOSITE. WE ARE FOCUSED ON THE EUROPEAN AND THE U.S. MARKETS. WHAT WE ARE DOING IS EFFECTIVELY SELLING WORK DONE BY ROBOTS, NOT THEM BY HUMANS. WE HAVE A PLATFORM THAT WORKS FOR ALL OF THESE INDUSTRIES AS LONG AS THERE ARE REPETITIVE TASKS WE CAN TAKE ON. ANNA: SO YOUR SYSTEM THAT YOU INTRODUCE IS MODULAR, I FOR YOU DESCRIBE IT AS KIND OF LEGO-LIKE BECAUSE THEY CAN BE SORT OF PUT TOGETHER LIKE LEGO DEPENDING ON NEEDS. SOMETHING THAT IS MISSING IS LEGS AND ARMS, AND THEN A LOT OF FRENZY ABOUT HUMANOID ROBOTS. YOURS ARE NOT THAT. IS THAT OVER ENGINEERING FOR WHAT A LOT OF BUSINESSES MIGHT NEED RIGHT NOW? >> INDUSTRIAL APPLICATIONS, FOR THAT WE HIGH ROBUSTNESS AND VERY, VERY STRONG TECHNICAL FEASIBILITY. AND WE TAILOR MADE THE PLATFORM AND IN THE STRONG SOFTWARE PLATFORM. TO KEEP UP WITH THE CHANGES THAT EVER OCCUR ON THE SHOP FLOOR. FOR US, WE THINK THE RIGHT FORM IS NECESSARY. IT CAN BE A HUMAN TORSO, HE CAN BE A ROBOT ARM. WE BASICALLY HAVE A MODEL PLATFORM THAT IS TAILOR-MADE FOR THESE TASKS. ANNA: SO YOU ARE A MANUFACTURING COMPANY BUT YOU SELL ROBOTS AS A SERVICE. YOU ARE PART OF A SERVICE AS ASIAN OF THE MANUFACTURING SPACE. WHAT DOES THE PRICING LOOK LIKE WHEN YOU SELL ROBOTS AS A SERVICE? >> WE LIKE TO MAKE IT AS EASY AS POSSIBLE FOR CUSTOMERS TO START. IF YOU THINK ABOUT THE CURRENT APPLICATIONS, THERE IS A SHIFT OR TWO OR THREE. SO MANY OF THESE CUSTOMERS CAN FILL THE NIGHT SHIFT. THAT COMES WITH A MONTHLY PRICING. THAT IS WHAT DRIVES THIS AND MAKES IT MUCH EASIER TO GET STARTED IN THE FIRST PLACE. GUY: GOOD MORNING. HOW MANY OF THE ROBOTS THAT WE ARE WATCHING ON THE SCREEN RIGHT NOW, DO THEY JUST DO ONE JOB? >> WE HAVE MORE THAN 1200 SOLUTIONS. MOST OF THOSE HAVE A COMPLAINT TO THEM WITH A CAN TAKE ON SEVERAL TASKS WITHIN A SPECIFIC SETTING. AT BMW WE DO INSPECTION TASKS. THERE IS BOTH A COMPONENT TO SCANNING AND INSPECTING, TO FEEDING THAT INFO BACK INTO THE SYSTEMS THAT GUIDE THOSE OPERATIONS. AND THEN THERE IS MOBILITY FOR THAT SPECIFIC TASK. IN OTHER TASKS, THEY TAKE ON DIFFERENT PARTS OF AN APPLICATION. GUY: HOW FAR AWAY ARE WE FROM THESE ROBOTS BEING ABLE TO DO MULTIPLE TASKS? A HUMAN COULD SWITCH QUICKLY FROM ONE TASK TO THE NEXT. HOW FAR AWAY ARE WE FROM ROBOTS BEING ABLE TO DO THAT? >> BROADLY SPEAKING, THERE'S TWO COMPONENTS THAT. NUMBER ONE IS TECHNICAL FEASIBILITY. WHAT WE DO WITH THESE TYPES OF TASKS AS WE ARE LOOKING INTO IT MAKES THE MOST SENSE, FRANKLY. YOU CAN START VERY SIMPLY AND THEREFORE VERY CHEAPLY TO DEPLOY SEVERAL ROBOTS FOR TASKS THAT HAVE PREVIOUSLY BEEN DONE BY SEVERAL HUMANS. BUT YOU CAN ALSO COMBINE THEM. WHAT WE DO IS WE POSITION AS AN ABSOLUTE AUTOMATION PARTNER TO THESE COMPANIES AND WE LOOK AT THAT ON A CASE-BY-CASE BASIS. TOM: ALMOST CONSISTENTLY WHEN I SPEAK TO FOUNDERS OF ROBOTICS COMPANIES IN EUROPE, THE TALK ABOUT TIGHT LABOR MARKETS. WE SAW THAT CERTAINLY DURING COVID. THERE IS AN ARGUMENT NOW THAT THE LABOR MARKET IS LOOSENING. BMW AND SOME OF THE BIG GERMAN AUTOMAKERS LAYING OFF TENS OF PEOPLE. DOES THAT BECOME A HARDER CASE TO MAKE AS WE SEE JOB LOSSES ACROSS THE INDUSTRIAL SPACE IN GERMANY, AND IS THERE POTENTIAL POLITICAL BACKLASH TO THE BUILD OUT OF ROBOTICS WE ARE SEEING? >> THIS IS ONE OF THE NUMBER ONE THOUGHT THAT INDUSTRY LEADERS AND POLITICIANS HAVE IN MIND. THE WAY WE THINK ABOUT THIS, THERE'S TWO STRONG COUNTER ARGUMENTS. ESPECIALLY THE U.S. IS VERY VOCAL ABOUT BRINGING MANUFACTURING BACK FROM ASIA, BACK FROM CHINA TO THEIR HOMELAND. AND IT DEPENDS VERY MUCH ON THE VERTICAL. IF YOU LOOK AT THE STEEL INDUSTRY, I THINK YOUR CLAIMS ARE RIGHT. IF YOU LOOK AT ELECTRIFICATION, IF YOU LOOK AT AEROSPACE, THOSE INDUSTRIES CAN FILL THEIR TASKS. THAT IS WHERE WE COME IN. TOM: BRIEFLY ON THE PRICING, YOU HAVE A PRICING SYSTEM THAT ALLOWS YOU NOT TO HAVE TO SPEND HEAVY. SO YOU ARE PRICING BELOW AVERAGE LABOR WAGES. OR IS THAT OVERLY SIMPLISTIC IN TERMS OF HOW YOU THINK ABOUT IT? >> THAT'S THE WAY WE LIKE TO THINK ABOUT IT. AS SOON AS YOU RUN A FULL SHIFT OR SECOND SHIFT, THIRD SHIFT, THAT IS HOW WE SET IT UP. GUY: THE EURO IS BACK ABOVE 1.12. FRANCIS TRADING 145 OVER GERMANY THIS MORNING. PLUS, ALSO WHY THE U.K.'S UBER RICH ARE HEADING FOR THE EXIT. WE'LL TALK ABOUT THAT NEXT. 41 MINUTES PAST THE HOUR. THIS IS BLOOMBERG. GUY: 44 MINUTES PAST THE HOUR, THERE'S A LOT OF ACTION IN VARIOUS ASSET CLASSES THIS MORNING. EQUITIES ARE FAIRLY MIXED, I WOULD SAY. MAYBE THERE ARE MORE INTERESTING SINGLE STOCK STORIES THAT A TOP-DOWN MACRO STORY. YOU'VE GOT FRANCE MOVING LOWER, YOU GOT HAVE A LOT OF BRAZILIAN STORIES BEING FOLDED IN AS WELL. AND THE BOND MARKET IS DEFINITELY ONCE AGAIN ON THE MOVE. NOT QUITE AS DRAMATIC AT THE BACK END OF LAST WEEK, BUT STARTING TO FEEL LIKE IT. ANNA: THAT'S PITTED TO OUR BIG TAKE STORY THIS MORNING, AND EXODUS OF THE SUPERRICH FROM THE U.K. APPEARS TO BE UNDERWAY. BUSINESS FIGURES WORTH MILLIONS ARE LEAVING THE COUNTRY FOR TERRITORIES LIKE MONACO, SWITZERLAND AND THE UAE. FOR MORE, WE'RE JOINED BY BENJAMIN WHO HAS WRITTEN THIS STORY FOR US. WHAT DO THEY TELL US? WE ARE TALKING ABOUT THE SUPERRICH BILLIONAIRES COMING IN AND LEAVING. >> WE TRACK THE INDEX, ABOUT 1000 FORTUNES AND WE ARE TALKING ABOUT THE TOP, TOP LEVEL. WE ARE TALKING ABOUT $3 BILLION AND ABOVE. WITHIN THAT GROUP WE'VE SEEN ABOUT 16 INDIVIDUALS LEAVE. COLLECTIVELY THEIR NETWORK IS $160 BILLION. THAT NUMBER IS NOW BIGGER THAN THE U.K. INDIVIDUALS WE TRACK ON THE INDEX AND U.K. INDIVIDUALS WHO STILL CALL THE U.K. HOME. SO WE ARE AT A POTENTIAL TIPPING POINT HERE, AND CRUCIALLY LAST ON THAT LIST IS A HOMEGROWN TALENT, SOMEONE WHO PRODUCES THE EQUIVALENT OF ABOUT 35,000 AVERAGE U.K. TAXPAYERS. WE ARE AT A POSSIBLE TIPPING POINT WEEKS AFTER THE NEXT FISCAL BUDGET. GUY: IS IT GOING TO CONTINUE? WHAT IMPACT ON THAT BUDGET COULD IT POTENTIALLY HAVE? >> OBVIOUSLY I WISH I HAD A CRYSTAL BALL HERE. I THINK WHAT WE HAD OVER THE LAST FEW YEARS, WE'VE MADE OUR U.K. ENTREPRENEURS GLOBALLY BOTH DOMESTIC POPULATION THE SENSITIVE TO CHANGES. IT IS ABOUT MORE THAN 50 BILLION IN EXTRA TAXES, A LAW THAT COMING FROM PEOPLE WHO ALREADY CONTRIBUTE WHAT A LOT OF THE U.K. ECONOMY. FAMILY BUSINESS OWNERS AND INVESTORS ALL WATCHING WHAT JOHN HEALEY IS GOING TO SAY IN A COUPLE WEEKS. IF HE TOUCHES CAPITAL GAINS TAXES THAT'S GOING TO MAKE A LOT OF PEOPLE THINK I LOVE LONDON, I LOVE THE U.K., IT'S BEEN MY HOME, BUT THEY MAY FOLLOW THE SAME PATH. TOM: YOU CAN READ THAT, OF COURSE COME ON BLOOMBERG.COM AND ON THE TERMINAL. MEANWHILE LET'S GET TO WHAT IS HAPPENING IN TERMS OF THE AUTO STORY. THE U.K. IS PREPARING TO IMPOSE IMPORT DUTIES ELECTRIC VEHICLES. THE MOVE WOULD MEET A KEY DEMAND FROM THE EUROPEAN UNION THAT MADE WITH A BACKLASH FROM CHINA. ELIZABETH LEADS OUR TEAM FROM MUNICH. IS THIS THE CASE THAT IF THE U.K. DOES GO THIS ROUTE, HOW BIG OF A BLOW WOULD POTENTIALLY BE FOR CHINESE EASY MAKERS WHO HAVE PROVEN THEIR SUCCESS AT CARVING OUT MARKET SHARE HERE IN THE U.K.? >> EXACTLY. THEY'VE HAD A RUNAWAY SUCCESS STORY SO FAR IN THE U.K. IN THE LAST COUPLE OF YEARS, AND JUST IN SEPTEMBER, WE SAW THE TOP 23% OFF THE TOTAL IN THE U.K., AND THEY ARE ALSO PROVIDING THE BEST SELLING MODEL IN THE U.K., THE INFAMOUS TEMU RANGE ROVER. JUST JUDGING BY THOSE NUMBERS, IT COULD BE A PRETTY BIG BLOW HAVING TARIFFS IMPOSED. THE DEVIL, AS USUAL, WILL BE IN THE DETAIL. HOW QUICKLY WILL COME TO THIS, THERE ARE A LOT MORE CARS ON SHIPS FROM CHINA TO EUROPE NOW AS THE MARKET CONTINUES TO BE IN DEEP DECLINE. SO THE PRESSURE LOOKS TO BE KEEPING ON. ANNA: THAT FLOW OF VEHICLES FROM CHINA INTO EUROPE REALLY GETTING SOME EUROPEAN POLICYMAKERS HEADACHES. FROM A U.K. PERSPECTIVE, IS THIS TO DO WITH THE RELATIONSHIP WITH CHINA, IS THIS VERY MUCH DO WITH THE RELATIONSHIP OF EUROPE? >> IF YOU LOOK AT THE STOCK NUMBERS, IT'S VERY CLEAR WHY THE U.K. IS THINKING ABOUT THIS. EVEN THOUGH IT DOESN'T HAVE A NATIONAL HERO, NATIONAL HOMEGROWN CARMAKER ANYMORE, THEY STILL MAKE A LOT OF CARS. JUST LAST YEAR THEY MADE ABOUT 720,000 PASSENGER CARS, AND JUST UNDER HALF OF THOSE GO TO THE E.U., AND THEY LOSE ACCESS TO SIGNIFICANT INCENTIVES. THEREFORE IT'S VERY CLEAR WHERE THE U.K. IS THINKING ABOUT IT. TOM: WHAT IS THE RISK FOR THE U.K.? WE DO MAKE CARS, MOST OF THEM GOING TO THE E.U., BUT WE ALSO SELL TO CHINA AS WELL. IS THAT WHERE THE RISK LIES? >> YOU COULD SAY SO. THE RISK FOR RETALIATION HAS BEEN A FACTOR IN THE E.U. DISCUSSION AS WELL. OF COURSE, THE GERMAN CARMAKERS SO MANY CARS IN CHINA FROM THE CHINESE OPERATIONS. THEY ALSO IMPORT A LOT OF VEHICLES INTO CHINA. HOWEVER, I WOULD POINT OUT IN TERMS OF THE SHEER NUMBERS, THE PROPORTION OF THE CARS THAT THESE LUXURY CARMAKERS CELL IS ACTUALLY PRETTY SMALL. THE OVERALL NUMBER THAT I THINK PEOPLE WILL BE FOCUSING ON IS THE TOTAL NUMBER OF CARS MADE IN THE U.K. AND GOING INTO THE E.U. TOM: THANK YOU FOR THE DETAILS AROUND THAT POTENTIAL DECISION FROM THE U.K. GOVERNMENT. LET'S LOOK AHEAD FOR WHAT ELSE TO WATCH THROUGHOUT THE WEEK. GOING TO GET THE EURO AREA PRODUCER PRICES. THAT DATA IS GOING TO CROSS LATER ON TUESDAY. THE GREENWICH ECONOMIC FORUM GETS UNDERWAY, PLUS OPENAI'S CHIEF STRATEGY OFFICER WILL ATTEND AUSTRALIAN AI INQUIRIES, WATCHING THAT AS WELL. WE GET FED MINUTES AND ON THURSDAY, THE E.U. TRADE COMMISSIONER VISITS BEIJING, TALKING TRADE RELATIONS BETWEEN CHINA AND ON FRIDAY, CONSUMER SENTIMENT. GUY: SCARLET IS HERE TO TALK US THROUGH THE ACTION THIS MORNING. NOT LOOKING MUCH IMPROVED, IS IT? >> PARTICULARLY LAST WEEK GOT A LITTLE BIT OF A SAFE HAVEN BID FOR U.S. TREASURIES, BUT YOU HAD CORE PCE COMING IN AT LOWER. YOU HAD NONFARM PAYROLLS MISSED AS WELL AS THAT WHICH COMPONENT IS REALLY WHAT I WAS LOOKING AT. AND YIELDS ARE STILL QUITE STICKY, PARTICULARLY AT THE LONG END. THE HAVE -- BECAUSE YOU HAVE WHAT IS GOING ON IN FRANCE, IT IS JUST AT INFLATION PERSISTENCE FROM A REFINED PRODUCT PERSPECTIVE AND WE WON'T GET A RESOLUTION ON THAT ANYTIME SOON. OCTOBER IS PRICED IT AT LOWER NOW AND THE DECISION ON WHETHER MACRO THREW IN TERMS OF A HIKE WILL BE THE CPI DATA BEGIN ON OCTOBER 14. BUT INCREASINGLY, MARKETS ARE JUST WORRIED ABOUT HOW PROLONGED A HIKING CYCLE IT IS AND WHERE THE ENDPOINT IS. ANNA: IN TERMS OF THAT PHRASE DYNAMIC, ARE WE SEEING CONTAGION? IT IS ONE THING FOR IT TO BE A FRENCH DRAMA, BUT TO SPREAD TO THE REST OF THE EURO ZONE, WE ARE SEEING A LITTLE BIT OF ONGOING CONTAGION THIS MORNING, AREN'T WE WITH FRENCH YIELDS HIGHER BY FOUR BASIS POINTS, ITALIAN HIGHER, SPAIN A LITTLE BIT, BUT NOT MUCH. THIS IS NOT NECESSARILY WHAT THE ECB WANTS TO SEE HERE. >> I THINK MAYBE THE BIGGER WORRY IS THAT IT IS GOING INTO THE EURO. PRIOR TO FRENCH CONTAGION INTO EUROPE, COULD SAY THAT THE FAIR VALUE OF SOMETHING AROUND 110. SINCE FRENCH RISK HAS SPREAD, IF YOU LOOK AT A MODEL WITH A RATE VOLATILITY, ALL OF THOSE THINGS HAVE GONE WORSE FOR THE EURO BECAUSE OF FRANCE AND SO FAIR VALUE IS NOW AT 107. THE ISSUE FOR FRENCH BONDS IF THERE IS A HUGE AMOUNT OF FOREIGN OWNERSHIP. MORE THAN 50% OF FRENCH DEBT IS OWNED ABROAD AND YOU ARE GETTING LOSSES NOW. IF YOU ARE A LONG-TERM INVESTOR YOU CANNOT REALIZE THOSE LOSSES BUT YOU'RE ALSO LOSING ON THE EURO SIDE. SOMETHING THAT HAS BEEN TALKED ABOUT TODAY IS THAT JAPAN IS OVER ALLOCATED FROM THE BENCHMARK PERSPECTIVE. THESE INVESTORS ARE MORE LIKELY TO BE UNHEDGED. AS THEY COULD GREATER LOSSES NOT ONLY FROM A FRENCH PERSPECTIVE AND ALSO FROM A CURRENCY PERSPECTIVE, THAT IS MORE LIKELY TO ME MONEY COMES OUT OF THAT MARKET AND PARTICULARLY WHEN YOU THINK ABOUT THE RELATIVE VALUE OF FRENCH 10 YEAR YIELDS HAS A SIMILAR FISCAL RISK TO THE U.S. AND DOESN'T HAVE THE KIND OF BACKING OF THE RESERVE CURRENCY AND YIELDS ACTUALLY LOWER. TOM: YOU SAY FAIR VALUE IS MORE LIKE 107. OBVIOUSLY FURTHER PRESSURE ON THE EURO. THAT HAS IMPLICATIONS FOR JAPANESE INVESTORS. IT HAS POTENTIAL INFLATIONARY EFFECTS AS WELL FOR EUROPE, SO THAT IS ALSO PART OF THE MIX. JAPANESE INVESTORS, THEY MOVE INTO TREASURIES? BECAUSE RIGHT NOW TODAY, TREASURIES ARE NOT RALLYING UP DESPITE THE FACT THAT WE GOT DATA ON NONFARM PAYROLLS. >> WHAT WE'VE SEEN IN THE PAST WEEK YES, THERE WAS A LITTLE BIT OF A SAFE HAVEN BID FOR TREASURIES BUT I DON'T THINK YOU CAN REALLY GO FULLY INTO THAT MARKET UNTIL YOU HAVE A MORE CLEAR VIEW ON WHAT THE FED IS DOING. MORE SO YOU'RE SEEING PEOPLE ROTATE INTO GERMAN GOVERNMENT BONDS. AND I THINK YOU COME BACK TO JGB AS WELL BECAUSE THAT IS A SAFER MARKET NOW. INCREASINGLY I THINK PEOPLE ARE SEEING VALUE, WE KNOW WHAT THE BANK OF JAPAN IS GOING TO DO, WE KNOW AT THE END OF THAT CYCLE IS. FROM AN INFLATION PERSPECTIVE, I THINK THAT IS REALLY IMPORTANT BECAUSE WHAT YOU SAW IN 2022 WAS THAT RISK FROM ENERGY PRICES BEING HIGHER AND MADE SO MUCH WORSE BY THE FACT THAT OIL, DIESEL PRODUCTS ARE PRICED IN DOLLARS. WHEN YOU HAVE YOUR DEPRECIATING, NOT ONLY DO YOU HAVE DIESEL PRICES HIGHER, BUT THEY BECOME EVEN HIGHER WHEN YOU THINK ABOUT THE EURO. GUY: THANK YOU VERY MUCH, SKYLER. WHAT DID WE LEARN FROM THE LAST HOUR? THAT IS THE HEADLINE STORY THIS MORNING. ANNA: IT WAS GOING TO BE JULY NEXT YEAR, THE END OF NOVEMBER. WE ARE GOING TO GET A VOTE. TOM: DO YOU KNOW WHO HAS VIEWS ON POLITICAL RISK? JAMIE DIMON. TALKING ABOUT POLITICAL RISK, WE PUT SOME OF THOSE QUESTIONS TO JAMIE. DON'T MISS THAT CONVERSATION TO :00 P.M. TOMORROW. ANNA: THAT IS IT FOR "THE OPENING TRADE." WE WILL LEAVE YOU WITH "THE PULSE." THIS IS BLOOMBERG.