a 15 oil holds a mirror month high as russians and saudi pledge to join efforts and limit production. yuan's image. take note.ers

a very warm welcome to the program. this is daybreak europe. we have renamed our flagship morning show. they have gathered in turkey. the russians are ready to talk about opec and not opec getting together. crude is near a 15 month high. what we do best which is take the data and look at what happens. what happens to volatility in when you go to an opec meeting. here are the opec meetings in 2014, 2015, 2016. volatility typically almost double after the meetings. all of the goodwill in the marketplace tends to change and become more volatile. .72.47 this is 30 day volatility on the

white line. the question is, how much would the russians we prepared to do? we know they would prefer a freeze versus a cut. anna: the saudi's are optimistic for the oil markets. let us put up the risk radar. the oil price has been making way felt across the asian market. topix is near a four-month high because of the weak yen. there is a lot going on in the asian session, a complex picture. -- the energy stocks are getting a boost. manus: looking at the government bond markets coming back into play in the u.s. market. werk.and

but bonds have lost. the u.s. treasury bonds are the worst performers. anna: central-bank back in focus. rate cutsl bank puts back on the agenda. rate cuts, talking about how interest rates -- they still expect to cut interest rates to a fresh record low. manus: keep an eye on the yuan. stepping back from preventing the next move? here is rosalind chin. saysind: goldman sachs china's outflow is worse than it works. any sign of increased out close quiet inturb a recent the chinese market.

the republican party chairman has held a hastily assembled conference call. that after house speaker paul ryan said he will not defend or campaign for donald trump after his vulgar comments regarding women. donald trump tweeted that paul ryan should keep to the budget. street journalll poll, hillary clinton is shown in enjoying a large lead. charles edmonds is arguing in favor of keeping interest rates low. central banker who is slated to become a voting member of the fed next year says prematurely tightening policy could carry high costs. >> repairing damage incurred from the great recession forinues to be critical

longer-lasting growth. in this context, overestimating the natural rate, incorrectly inferring that the u.s. is at full employment and prematurely tightening policy would carry particularly high social costs. rosalind: norway petroleum and energy minister says opec is still some way off from forging a deal to limit despite optimism from saudi arabia and russia to has such crude prices higher. >> the differences between the opec conference is probably larger today than it has been earlier but still, they have made great progress and this could end up in an agreement that will materialize around christmas and the first quarter of next year. brazil's finance minister says the benefits of an economic recovery will start to be seen in 2017.

the country is currently in the midst of the deepest recession on record and a presidential impeachment. he told bloomberg that it is important to control spending. >> we have been talking to ongressman -- congressmen several occasions and it is quite clear the importance of controlling the growth of public expenses for the next years. rosalind: global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i am rosalind chin and this is bloomberg. manus: let us get straight to juliette saly. in termsr on samsung of one days demolition, it gets to be a tougher and tougher story. i am showing you hear a three-month chart of samsung. you can see it is still up about

6% from the last three months but this egg fall into the trade is the racing those good gains that we had at the end of last week when samsung came through with that unexpected third quarter number. the fall is down 6%. a huge drop coming through as samsung a sickly said to retailers, stop selling the note seven and stop replacing them for the replacement. if all of 6% in samsung share price weighting heavily on the kospi, the most heavily weighted stock on that index. other markets around the region -- there have -- there has also been some selling in hong kong, 1% despite aover pickup in consumer stocks and energy players on the back of the rally coming through in crude. hong kong was closed yesterday for a public holiday. an upside in shanghai, the nikkei is been boosted by the weaker yen and australia

finishing slightly higher. the energy sector there is a standout on the rally in crude. it has been an interesting session. ono in focus, the weaker you and -- the weaker yuan in the japanese yen. anna: let us talk about oil because it remains above $51. above $53 on brent. as anticipation of a deal to cut crude. russia and saudi arabia both sounded a positive tone at the world energy congress in his temple. manus: andrea gordon joins us now from istanbul. if you look at the various notes, goldman sachs says the risk and the reward --what is the feeling on the ground? >> the feeling on the ground is positive at the moment.

if algiers was about building consensus within opec, istanbul has been about rallying the troops outside of the cartel and building can then says from the likes of russia to join the agreement and that is what president clinton did here yesterday. he pushed the oil price higher saying russia is ready and cut or to join opec in a a freeze. he also encouraged other exporters to follow suit. i spoke to the saudi oil minister and we spoke about the russian president's comments. take a listen. >> we will be talking to them. and producers from opec and non-opec. we will reach a consensus. it is moving in the right direction. i am not expecting anything anytime soon. the next couple of days are primarily consultations and moving towards that agreement. i am sure everyone will come to

a decision that is reasonable and takes into account everyone's circumstance is. seen oil trade lower and flatter. it will be interesting to see oft kind of comments, out these unofficial meetings today. all eyes will be on the russians. alexander novak is here as well as the audi delegation. as well as the saudi delegation. anna: give us the other details. andrea: they signed a deal on the pipeline running under the black sea. they said it could be done by the end of 2019. as you know, this has been a long time coming, this turkish stream pipeline. it was shelled due to -- it was due to a crack in the relations between russia and turkey. over the summer, when the

turkish president apologized, it looks like the relationship heels. manus: great work on the ground. tuned because anna and i will have a conversation with the executive director of the iaea as he publishes his monthly oil report. anna: we are joined now by philip short. with that oil conversation in a broader context. let us look at the oil story. we are at 51 on wti and 53 on brent. how much upside is there for the oil price? that wee not convinced will see oil heading back into the stratosphere. we are still looking at a $60 a-term rate around

barrel as a working assumption. what has changed it is not so much the equilibrium rate but the fact that we are getting there sooner than we thought. ofworked on an assumption the end of 2018 and that has brought -- that has been brought forward by a year or so. manus: a shot in the arm. --, the 40 day correlation the correlations are high. this is good for the markets and middle east and inflation. >> it is good for inflation. i think it is as long as you do not see too much of a surge in oil. that is true of the stock market. at the beginning of the year, our view was that deflation in commodity prices was the biggest risk to the global economy in the sense that it could spread to a pervasive, long-term expectation that prices could fall. that has been taken away now.

is still aar as that little risk on the horizon, the latest rally has helped stock markets. i am not convinced we will see a rally in oil prices -- the -- the markets would necessarily greet that warmly. oil prices were around $50 a year ago. look at the fourth quarter of last year. they came down to about $37. we had this downward pressure in the fourth quarter. if we stay here, that will be a boost for all of the markets. >> absolutely. prices fall the oil below $30 a barrel at the beginning of the year and that is when we became twitchy for the long-term inflation risk. now, if it we see steady oil prices for a while, what you will see are those drops in

energy prices towards the end of last year and the beginning of this year, drop out of the year on year calculations. being heldse constant, you will see a rise in inflation and that is helpful for the european central bank for example. manus: let us take this to the u.s. conversation. downturn, the reg out has been greater than the number of downturns we had before. an economic point of the, i am trying to find the glass half-full. not like me normally. story is one that has the economy has benefited as a whole from lower oil prices because it has boosted consumer spending and non-energy related

capex as well. the declines were so large, they could not go back much further. a rebound in the oil price, you may well begin to see the beginning of shale investments becoming economic again. anna: thank you for your thoughts. a lot more with him as we go through the program. time, we:00 a.m. u.k. get a read on the state of the german economy. when :00 p.m., we get the irish finance minister delivering his sixth budget. is to put out its latest figures. coming up on daybreak, green light for greece.

the euro area approves the latest payout to the most indebted nation. anna: samsung takes another turn. manus: and with russia and saudi pledging a joint effort to limit production, we speak to the iaea official. this is bloomberg. ♪

anna: welcome back. 6:19 a.m. in monday. the hang seng is up 1.3%. japanese markets rising as a result of the weakness in the japanese currency and getting support for energy related stocks as well. samsung has suffered its biggest fall in months after asking all retail partners to stop sales and exchanges of its note seven phone.

there may be a new defect in the phone and they are advising owners not to use it. it has lost more than $13 billion in market cap this week. -- the hand bugs -- handbags and perfumes were snapped up. they rose to 19.4 billion euros. it has decided to pull its u.k. ipo due to uncertain market conditions. the no-frills fitness center change was expected to start trading today. it had weaker than expected demand for the shores -- for the shares on offer. -- -- investors

are demanding higher conversation. the german lenders head of investment says the firm is poised to win back market shares lost it to u.s. rivals. >> the american banks have taken shares rump as and has been good reason for that because through the latter part of last year and the early part of this, we were quite distracted by a bunch of internal related issues. over the last six months, we have seen that flatten and frankly i think we will see it take up again. rosalind: that is your bloomberg business flash. goldman sachs says chinese currency outflows may be worse than they look. the rising amount of capital is exiting the country in yuan rather than dollars. could disturbflow a recent quiet in the exchange market. image asng the yuan

the newest global reserve currency. charles evansle is arguing in favor of keeping interest rates low. he says the u.s. economy is not at full employment and inflation remains below target. he is slated to become a voting member of the fed next week -- next year. incurreding damage from the great recession continues to be critical for improving labor force quality, and for stronger at longer lasting growth. in this context, overestimating the natural rate, incorrectly inferring that the u.s. is at full employment and prematurely tightening policy would carry high social costs. philip short is still with us. the cacophonybout of issues for the federal is about what can

they do in an election year. btv -- the blue line is what you want to focus on because that is when they left it unchanged. are only two election years when the federal reserve left rates unchanged. it would be highly disappointing as this federal reserve did not move at christmas. are two meetings left. our research shows that the fed is less likely to move in the three months ahead of a presidential election. that is an anecdote that is fairly well-known. i think that makes early november unlikely. but by contrast, december is going to be a critical focal point. economyok at where the is at the moment going back to september, we had stanley fischer say the other day -- look, it was a close call whether or not to raise interest

rates. but recent developments over the last few weeks really suggest that the economy has not been blown off track at all. inflation is rising, core inflation is edging up as well. our view is that we will get a hike in rates in december. talking aboutbeen the importance of talking about the capacity in the employment market and the importance of not thinking we were at will employment. janet yellen's big on labor economics. does that stand in the way of a hike? >> we don't think so. central bankers anticipate inflation movements a few years before they think inflation will hit the targets. the evolution of the labor market is one of those things

that tells you in advance if it is likely to happen. i don't think december is off track at all but what the fed thinks about the capacity of labor will have a big effect on where rates will go in 2017 and beyond. reserves have fallen slightly, below expectations. down for a third month in a row. dayyuan has dropped every since it has gone into the basket. my question is as an economist, is this the next big grace want. .he pboc not defending could we end the year with the yuan as a focal point of disruption? always look quite closely at hong kong when china is on highway and whether the pboc seems to be encouraging tighter money conditions.

and stops selling pressure on the offshore yuan. it did not do that last week. that followed through to the onshore yuan this time around. be not tooties would disappointed at a slightly weaker currency but somewhere you have to draw the line. we do not think the authorities in china or beijing would allow an unfettered depreciation in the currency because the risk is there that you would get uncontrolled capital outflow. that is what you had at the turn of the year -- a lot of pressure on outflows pushing the yuan down. intervention,g that's huge fall in official reserves as authorities tried to stem the outflows. anna: philip, thank you very much. up next, getting the green

light. hailseek finance minister the euro group as ministers sign off on a much needed aid agreement. that is up next. this is bloomberg. ♪

manus: it has just gone 6:30 a.m. here in london. you are looking at a beautiful shot of the emperor's palace. risk on for oil markets. -- let us take a look at the top stories of this morning's edition. anna: cam sensor recall. -- thertphone has smartphone maker has stopped sales.

they keep catching fire. it has told carriers not to sell them. juliet did this at 6:00 a.m. today,look at the drop, almost $13 billion. the stock has wiped off the value gained. it has been fined by the singapore authorities amid money laundering allegations. will be shut down. up 13%he ftse 100 is this year but the rally is doomed according to a bloomberg survey. analysts see the index losing 5.9% by december. that is going to be a fascinating mix of currency and

other influences. manus: the whole dissipation of sterling is already priced into that particular trade. let us go over to guy johnson. guy: think about this as your oil derivative daybreak set of charts. i want to look at the norway outperformance yesterday, 1.82%. no surprise there that we are seeing the oil trades working through. that is one example of what we are seeing. keep paying attention to the inflation coming through. columbus day, the last month to look at what treasuries have done. inasuries are picking up terms of the yield. they are selling off. yields are picking up which is inflation being priced into the market. the u.s. treasury market coming back on stream today. the other one i want to show you is what is happening with the

ruble trade. this is a trade that takes you back to 2011 but hedge funds are increasing their net ruble long positions to a record. a huge spike. russiaming through about and opec playing ball. the ruble is expected to go higher from here. dollar being the reasonably strong across the board except for the commodity currencies. you can see this movie yesterday. the dollar comes down and the cad goes up. this is the oil trade coming through. a series of ripples spreading out across the financial markets. it is all around oil and what happened yesterday. we have plenty more coverage. look at the derivative trades. the market is repricing in a number of areas. anna: the oil market with a number -- with its reach in the asset classes.

at a meeting in luxembourg, finance ministers agreed that greece has made progress with reforming its economy. join us shortly from luxembourg in terms of what is happening with greece and its propensity. philip short joins us again. greek storyif the has moved forward. it is him us like a game of poker around the table. i see you and raise you which is greece. they get a disbursement but then you have spain and portugal and italy. italy is the new issue for europe. >> in a certain respect it is. you tell an economy that has been so weak for so many years, the banks are under pressure.

be too gloomy about the italian economy if you look at the budget deficit. levels,t at dangerous fairly close to 3% of gdp. bond yields are relatively low. a direct comparison between italy and greece is a little unfair on italy. 40 minutes, it didn't take long. has been euro group talking about greece. ministers which still inc. philip hammond, a lot of conversation around brexit. we do not really learn much detail as the day goes by. >> there is a lack of news flow.

the government quite understandably is saying that we will not give you a pie day commentary on what is going on in the negotiation tech six. that is understandable but what that leaves is a vacuum and it makes markets more sensitive to rumors and leaks about hard brexit and soft brexit. is therefore that underlying causes behind the uncertainty leading to decline over the past week or so. whether we will get much news or whether the government will the amounttact given of currency volatility we have seen in the last seven days remains unclear but a little more color or news would be welcome in that respect. manus: what we have here for you yields inar to year white and it is the bond market. we have had this move upward in the uk's yield curve in recent

sessions. to ftse 100 may not be able sustain and is ripe for a selloff. do yields in the u.k. begin to unravel more aggressively as harder brexit rhetoric ratchets? agreem not sure that i with the prognosis on the ftse. if you look at bond yields, they have risen over the past couple of weeks, notably in the u.s. it is true that the gilt market has outperformed u.s. treasury over the last few days. that is something i would be watching out for. in terms of the wider rally in the ftse 100, we have had quite a rally in risk asset markets since mid july, globally. since the ftse has been taking part in that. the other point is something like two thirds of the ftse 100

earnings are based from overseas. if you get an appreciation in the currency, they are worth a lot more and that supports the ftse. one of the big cases for wondering whether the 100 index will fall is not so much what is happening to yields yields but to currency. giltat is happening to yields but to currency. philip, thank you so much. the eurozone ministers have authorized a 1.1 billion euro payment degrees and signaled a further 1.7 billion euros will follow later this month. anna: they agreed that greece has made progress with reforming its economy. what is the next step on the greek story? the euro zone finance

ministers have all said that greece has made significant progress and the greek finance minister said we should not worry too much about the small delay on the part of the tranche for the bailout because it has to do with technical issues. what is important is what comes next for greece. greece wants some kind of debt relief and the euro group president also needs some clarity from the imf. is important to have clarity on that as soon as possible. the imf on the basis of the agreement in may has said they will go to the board before the end of the year and that has been confirmed in washington. so that is what we should all work for. and i have no reason to start talking about later periods. >> the imf has until the end of

the year to decide to return to the greek current bailout program. and we also had some discussions about the financial transactions last night. it has been delayed until the end of the year. it is a group of 10 countries led by austria. ministerian finance has said the implementation should not start before at least the end of 2018. manus: the eu finance ministers are meeting today. philip hammond still has a seat at the table. what other business do these ministers have to talk about? is it about brexit? >> of course it is about bragg -- brexit. every minister has something to say that i spe with. the finance ministers including the french one has been calling

here in luxembourg for the u.k. tone onnt to soften its immigration if they want to maintain the same access to the eu single market. up until now it seems to me hard brexit approach has been taken more on the other side of the channel. our willingness best it has been decided that brexit will happen. the date has been fixed. the negotiations need to be as cooperative as possible. no remaining eu countries will give way on those principles. >> the u.k. gensler -- chancellor will be here today will occur.it all over the brexit story

today in luxembourg. let us talk about samson. the company has asked carriers to stop sales. manus: it has instructed users of the original and the replacement devices to power down and store them until further notice as it investigates the cause of the latest problems. anna: let us get more from peter l stremme. how serious a blow is this for samsung? an ongoing story taking another turn for the worse. samsung a setback for in -- and a serious one at that. that pridesmpany itself on its manufacturing expertise and quality and now it is having to halt sales of the note seven phones after a recall. it first came out with the phone in august.

the phone got good reviews and then these problems emerged where the batteries were blowing up and causing problems. the first batch of 2.5 phones. it figured out with a battery problem was and it began to issue replacement very and then problems emerged with a replacement phones. now it has said it will stop selling the phones through its retail partners. what do we know about the current problems? what are the new unknowns? samsung needs to figure out the root cause of this battery problem. when they did the first recall, they said the problem was with one supplier. it is clear that it is an affiliate with the samsung company. they said they had figured out that was the problem. it did that. and it started to make the replacement phones.

they sent the replacements onto the market. now, they need to figure out if it is an issue with the battery replacement maker, if it is a design flaw, or if it is a combination of factors leading to the overheating. this outeeds to figure quickly. it is facing stiff competition from apple but also a whole host of new competitors including google which just came out with new phones running on the android operating system. there are a lot of good choices on the market and consumers will now have many alternatives. anna: thank you for your analysis. coming up, with russia and saudi pledging joint efforts to limit production, we speak to the iaea's, fatih birol. manus: we will get the latest on the story. outflows bechinese

worse than they look? we have the latest on that. this is bloomberg. ♪

1:47 a.m. in new york. you can see that futures indicators are down. alcoa in series --anna: oil is trading near a 15 month high as a leading producers said they will cooperate on limiting output. latimer putin said he supports saudi arabia's plan to freeze or cut production echoing other economicat the world -- world energy congress in istanbul. manus: -- >> we will be talking to them

and producers from opec and non-opec will reach a consensus. it is moving in the right direction. but i am not expecting anything anytime soon. the next couple of days are primarily consultations and getting that consent. anna: let us speak now to the .aea's director, fatih birol what do you think of the opec deal? will it make a material difference? morning you and good from the beautiful city of istanbul. that the opecood countries and russia are agreement in terms of their oil production prospects. cutting or freezing. somee may well here

statements from them soon. and this would definitely affect the markets. andave seen after algiers, such a statement would further push the price is up. one needs tohat, take two factors into consideration. -- what higher prices would be the impact of this on the fragile oil demand? expect without this price increase, 1.2 billion barrels a day. the higher prices one may well expect the demand would be slower as a result of efficiency improvement.

number two -- appreciate your comments. we had just heard what you said. the most important thing for the markets to understand is the russians what prefer a freeze rather than a cuts. do you think we need a cut to move the price higher to a new level? toyou think it can get back $60 and in what time. period? what time >> i would not speculate. not american producers -- we are watching the debate closely and they will make their investment decisions.

in a six months or so, we will see the north american production increase again and put a lot of oil on the markets. this decision, cutting or , and the price increase afterwards could lead to a bigger oil glut and higher production from north america which could have significant consequences. anna: what do you want to see, a cut or a freeze and at what level? >> it is up to them. our colleagues from opec and russia to decide what to do. one has to think about the cutting ors of freezing the production. in my view, the process should be determined by the market forces. supply and demand.

without intervention in the markets. -- is saudi arabia changing -- are they becoming the swing producer again because of the economics and pressure domestically in saudi arabia? think many oil-producing countries in the middle east and also russia are facing serious challenges in terms of their economic growth, their trade deficits and it is the reason government is pushing diversification into the economy under the motto -- so these countries would not rely on a single product and broaden the base of their economy. a single product puts

a lot of pressure on the economies as a result of price fluctuations. anna: we have not seen any details. the country by country breakdown. do you think all of the producers will stick to that breakdown? i think hitting a target is important. a serious attempt. but the hard work starts now. who is going to cut how much? it is important to see which country will make which effort and for which consequences for their revenues and their economy. it will be interesting to see the contribution of different countries to reach that target that the countries are lookg at now. manus: when i look at russian

production and saudi production, they are at or near record all-time highs. musturden of any cuts surely come from them. should i ran be given -- should given an exemption? is at ann production all-time high and middle east countries today share in the global oil production about 35%. sincethe highest level 1970's. it is mainly because of the low oil prices pushed down the high cost of producers reduction levels. process is a result of these efforts, freezing or cutting the production, if a

successful and the prices go up, we may well see in a short period of time strong production growth coming from north america. to make a decision will be important for the producers but it is important to see what are the next gaps. anna: what price is too high? encourage toould watch production from north america in your view? view, the price around $60 would be sufficient enough, oilot all, most of the places in north america to be a profitable business. $60 -- it will not be the case that their production will grow from one day to another.

and that the investors will have confidence that the price will stay at that level and they will have to bring back -- manus: iaea's executive director. thank you for giving us your time today. this is bloomberg. ♪

manus: crude heats up, oil holds near a 15 month high as russians and saudis pledge a joint effort to limit production. goldman sounds the alarm on china's currency outflows, potentially ending the reserve of the currency. samsung electronics asks carriers to stop the sale of galaxy note 7 smartphones, leading to a $13 billion share wipeout.

you're welcome to bloomberg's "daybreak." we follow the sun, renaming our flagship morning programming in london. anna: let's talk about the oil price. the iea, all the great and the good of the oil industry in istanbul. we have a chartier of 30 day volatility on brent, marked out with these lines that represent the opec meetings and the volatility we see in between. manus: the volatility ratchets higher. you have your opec meeting, talking about $60, headlines streaming across the bloomberg. $60 is where he sees the factors coming back in. didn't say about whether he wanted a freeze in output or a cap and production. anna: let's have a look at the risk radar, showing where we are on a number of assets. the picture is a little confused in the asian session, showing it

down by .7%, heavily weighed down by samsung. energy stocks are getting a boost. japanese stocks getting a boost. topix near a four-year high because of the yen. manus: european equity futures are indicated lower, london down by .2%, harris also off b -- paris also off. this is where the focus will be. the u.s. bond market comes back online today, pimco saying three hikes in 2017. what is that going to do to bond markets? what is that going to do to yield around the world? the probability of a rate hike rises, but bonds lost 6% in the last few months. the function suggesting through the week that there a greater probability of a rate hike in december, 67.6%. the dollar is losing just shy of

1% as the central bank expects to cut interest rates to fresh record lows. we have the chinese currency under pressure here, but this is linked back to the u.s. yields sorry. manus: the longest losing streak in almost two years. let's get the bloomberg first word news with rosalind chin. rosalind: thanks, anna, manus. china's currency outflows maybe worse than they look. the u.s. tank is warning that are rising amount of cap in yen rather than in dollars. outflows could disturb a recent calm in their foreign exchange market, adding to pressure from a potential fed reserve interest rate increase, and denting the image is the new global reserve currency. the republican party chairman hastily assembled conference call to rally members behind donald trump's embattled

campaign after house speaker paul ryan said he won't defend or campaign for the billionaire after his vulgar comments about women. trump tweeted ryan should stick to balancing the budget and tackling illegal immigration and stop fighting him. showsile, a new poll hillary clinton enjoying a 14 point lead, the largest gap so far in that survey. chicago fed president charles evans is arguing in favor of giving interest rates lows -- of keeping interest rates low. the central banker is slated to become a voting member of the fed next year and says prematurely tightening policy has perilously high costs. >> the damage incurred from the great recession continues to be critical for improving labor force quality, for stronger, longer-lasting growth. in this context, overestimating the natural rate, incorrectly inferring that the u.s. is at full employment, and prematurely

tightening policy would carry particularly high social costs. minister the energy says opec is still some way off forging a deal to limit supply, despite optimism from saudi arabia and russia, which said crude prices were higher. >> the difference is the opec conference is larger today than it has been, but they have made great progress, and this could end up in an agreement around christmas or first quarter of next year. rosalind: and the world finance ministers says the benefit from the economic recovery will be seen in 2017. the countries in the midst of the deepest recession on record and a presidential recession. sticking to bloomberg, she said growth will still be slow and it is important to control spending. >> we have been talking to

congressmen on several o ccasions, and at this moment it is quite clear the importance of controlling the growth of public expenditures for the next year. rosalind: global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i'm rosalind chin. this is bloomberg.. anna, manus? anna: thank you. let's get to the latest market action in asia. juliette saly has the big picture and the picture coming out of samsung as well -- a real dominating story when it comes to the headlines. juliette: absolutely. we're seeing samsung closing down by 7% in korea, a big impact on technology shares across asia, wiping more than $10 billion from its market cap. from this time on friday, when

samsung shares were at a record high, the note coming through one of the regulatory bodies saying there have been more phones recalled in china. of course, that weakness in samsung is very much weighing on we are alsond seeing other technology stocks under pressure as well. kong, we areng seeing developers pay for retreat we saw on mainland stocks during monday's session in china, this as a number of chinese cities are now trying to cool the property market. taht's weighing on the hang seng, and the weakness in taiwan was closed yesterday with some of these southeast asian markets are closing pretty flat. the energy sector did rally on the jump in crude. and the performer is the nikkei, closed higher by 1%, a good rout coming through from softbank.

all of this is due to the fact that we have seen the yen weaken. that's the story of dollar strength, but certainly an interesting session across asia. that pull is weighing on the overall regional index . manus: juliette saly with the latest from hong kong. let's talk about oil. wti made it above $50 per barrel in anticipation of a deal to cut crude out that supports prices. anna: russia and saudi arabia both sounded a positive tone on efforts to limit production of the world energy congress in istanbul. emory heart 10 joins us. anne-marie, is there more upside on the back of the latest developments? it had a big impact yesterday. well, as you say, it's positive at the moment. the russian delegation is definitely taking a big stance today and yesterday president putin backs the deal, saying they are willing to cut or

freeze, then urging other exporters to follow suit and joined the deal. it will be interesting to see with the mexican delegation and others want to do in terms of whether they will join or not. then, after president clinton spoke, i spoke to the saudi oil minister about what russia had to say. saudis think that by the end of the year we could see $60 oil. you both just spoke to -- who says that $60 oil would be sufficient. let's listen to what the saudi oil minister had to say. >> we will be talking to them, and i think producers from opec and non-opec will reach a consensus. i think it is moving in the right direction. but i'm not expecting anything soon. the next couple days are primarily concentrations. am sure everyone will come to decision that is reasonable and takes into account everybody's

circumstances. so it's really happening on the ground, what the saudi oil minister is saying -- building the consensus. algiers was about finding unity, and istanbul was all about building consensus within opec and outside for other exporters like russia. manus: anne-marie, the other critical meeting is putin and erdogan, who last night signed a rapprochement. both of them need it, don't they? they both need a real rapprochement from any economic point of view. >> yeah. this is the turkish stream back in play. they signed the deal for the pipeline under the black sea. which they said could be done by the end of 2017. president putin will get another outlet into europe instead of going via ukraine. this is another outlet for him.

and for the turkish president, thisdiscounted gas for their state-owned energy company. they are both getting what they want. but over the summer when heard a apologized, it seems like things are back to normal. anna: anne-marie, thank you very much. a little bit of breaking news on the ipo front. earlier on we brought you a that -- we're hearing plans have been withdrawn for which they say is not in the long-term interest of the company. the board cited market volatility. earlier on we brought you the story that the fitness center chain had decided, according to our own reporting, that it had decided to pull, withdraw its ukip of due to uncertain markets. that turns out to be entirely the case. they were expected to start it got weaker but

than expected demand for the shares. manus: market volatility abound. what happens next? trying to make sense of it all, a partner at capital generation. he joins us -- great to have you. welcome to the show. it's not the biggest ipo in the world, but the story is oil. we just spoke to the head of the iea, $60 with the frack or his comeback in. make sense of it for us -- is a good news, good for markets? equities quite like it -- what do you make of arising oil story? >> i think your chart their shows a correlation between enterprises and equity prices, and what lies behind that is that they are both exposed to general perceptions of growth. if oil prices are going up because people are positive on global demand, it will be positive for equities. so maybe the oil price going up

as that to it. i think probably, in a funny way, it makes things a little bit easier for central bankers. there they are, searching for inflation. they had that dramatic fall in q4 2014.ollowing their now you have a little bit of a push behind inflation, which they will be quietly smiling at. but it can only go so far. we don't want to see oil prices going to the point where you have demanded destruction. as your interviewer said, there's a point where the shale producers come in, so if the oil deal happens, it's capped. the momentum we have seen will continue, but it is capped. anna: you, so, think that -- though, think it is cap to little higher than that. >> you know, markets tended to overshoot for a bit and then come back. what we know about shield producers is that they're super

efficient and very innovative. but we forget that the cost of energy itself is a big input into their cost structure. the fact that energy has come off a lot in the last two years means what we thought was the breaking cost is much lower now. and while financial conditions in the u.s. are ok, the cost of financing is pretty competitive. i think they could kick in at a relatively low price. but imay be an overshoot, think pretty quickly the shale drillers will be back. manus: we have to look at all the asset classes. removal is on the move. you are seeing equities take it hard. anna and i -- this caught our eye. this was a drop in bonds less than zero. try to join the dots. if you have new momentum in oil, perhaps just a little bit more inflation -- does this bond story shift?

are the eyes -- the whites of the eyes are inflation. would you agree with that? is that a possible consequence? >> yeah, and i think it would be very traumatic if we go to the point where we have very large levels of negative yield in debt to a point where there is positive return. i think there is a powerful sentiment effect, and i think the risk to all of this is an oecd recession, which would just puts every -- put everything back again. we are a long way to the business cycle. anna: and because of that, you position your portfolio for a slowdown? >> i was in italy last week, talking to some of italy's wealthiest founders. they are grappling with where we are. what we are saying is now is the moment to really focus on your long-term asset allocation. be on target.

don't reach for yield. don't reach for risk. stick to your target and be ready to respond. manus: can you really not reach for yield in the current environment? do you not have to change some of your asset allocation? >> i think so much depends on who you are, but honestly, our message to our clients is you are playing a long game. there's a danger now, particularly when we could be on the move, when things could be happening. anna: thank you very much. ian barnard stays with us. up next? manus: could china's currency outflows be worse than a look? that is the view from goldman sachs. we have a little bit more. this is bloomberg. ♪

anna: welcome back, this is "bloomberg daybreak europe."

7:19 in london. 1.23 on the pound. let's get the bloomberg business flash with juliette saly. juliette: anna, thank you. samsung has suffered its biggest intraday fall in a month after asking all retail partners to stop sales and exchanges of its galaxy note 7. korean authorities say there may be a new defect in the phone and are advising users not to use it. samsung lost more than $13 billion in market cap this week. lbmh has reported revenues that beat estimates. shoppers in asia and the u.s. the world's biggest luxury goods maker saw sales rise, led by stronger than expected gains. gym has decided to pull its ukip oh due to uncertain market conditions. the no-frills fitness center chain says it is not a long-term

interest of the company and cited market volatility as a reason for the withdrawal. deutsche bank is paying twice as big a premium to borrow in international debt markets compared to a year markets compared to a year ago. meanwhile, the german lender's head of investments as the firm is poised to win back market share in its loss to u.s. rivals. >> the american banks have taken share from us, and i think they have had good reason for that, because through the latter part of last year in the early part of this, we were quite distracted by a bunch of internal issues. but over the course of the last six months we have seen that flat, and i think we will see pick up again. juliette: and that is your bloomberg business flash. manus: thanks very much. goldman sachs says china's currency outflows may be worse than they look. u.s. bank is warning that a rise in the monetary capital exiting the capital rather than in

dollars. anna: any size of increased -- any sign of increased capital outflow could cause problems with foreign exchange market, and is adding pressure to an interest rate increase, and denting the yuan's image. manus: still with us, ian barnard from capital generation partners. when you talk about china, there are so many different directions, but the latest obsession is the reserve currency status and their fx was. 471. the trifecta today. a storyou wantuan -- this is that is beginning to brew. could china be the fourth could this be the disruptor for global markets in q4? >> i think it could be. and i think the economic news out of china recently has been

better than expected. the chart's pretty revealing, because despite low oil and commodity prices, of which china has been a big buyer, it's still seeing capital outflows. you would think it would lower commodity costs but it might be the other way around. this has a message about what chinese, private, and public actors are doing, and we ignore that. china --ssue in they've got a very large nonperforming loans problem, and the question is how do you work that out in a state dominated economy? the premier is saying they can do it i think we all hope so. it's not good to have china not growing. but the challenges are substantial. visit this quarter? i would guess not. but between now and 2020? i think it is. anna: how do you play emerging

markets, as we sit poised for probably another interest rate hike from the federal reserve? we are creeping up slowly in the interest rate story. that might not be great for emerging markets. >> so -- what we are doing is we made an equity move toward the tail end of last year, an overweight. i think that mady be the story. historically, e.m. doesn't really survive rising rates in the ocd, particularly in the u.s. i think the credit, though, does look possibly interesting. again, there has been tremendous rallies. at the margin, we will probably be more biased with credit in the end than equity. manus: the other story on the news these days, the organic revenue coming in better than the market estimated. tied upury has been

with the emerging markets. in terms of portfolio allocation, where does 2017 hold for you and exposure to luxury and harder stocks? think we are going to be playing broader themes. china, we think that has had a ripple through into luxury stocks. when you are investing, you are really making e.m. trade by proxy. i don't think they stand particularly distinctively away from that brought e.m. trend. manus: can i ask you why the credit appeals more, relative to the equity story? >> i think because it has more of a downside protection. there has been a good equity move -- not in the asian markets, that has happened. if we are saying now there is a risk of u.s. interest rates, that's particularly bad for

e.m., so you want to be in the lower risk basket of e.m. ina: you say consensus december -- are you around the market consensus? is that impacting your strategy? >> we are on the market. i think the more it becomes monetary consensus, the more compelling it is for the fed to do it. what they want to do is raise rates when everyone is expecting it. so i think there is momentum going that way. it comes back to what i was saying earlier, that at this moment of great change, now is the moment to be on your target long-term allocation, not to be taking bets away from your long-term goals. anna: thank you very much for joining us. good to see you. ian barnard. manus: ok, that'll do it from anna and i. taking a look at the futures board, a lower opening in london, paris, and frankfurt, down .2%. anna: mix in the asian session

but samsung is the big weight. bloomberg markets, the european open, is up next. they will take you through everything you need to know. this is bloomberg. ♪

guy: welcome to bloomberg markets, european open. where we bring you the first trade of the day. i'm guy johnson, alongside caroline hyde in frankfurt. what are we watching? create heating up. -- crude heating up. the oil story holding your a 15 month high. this is the russian and saudis close to jointly limiting production. we will take you to that meeting live in istanbul later in the program. ryan walks away. the highest-ranking republican says he will not campaign for