♪ anna: catalonia crash. the region may declare independence this week after hundreds of people were injured at holes yesterday. markets finally take notice. conservative conference underway in manchester. theresa may struggles to keep her foreign secretary in line. anna: signs of growth that china's officially official factory gauge rose. trump tells citizen he is wasting his time talking to north korea. ♪

anna: good morning. this is "bloomberg daybreak: europe." ." manus: welcome to the show. europe wakens up to the scene and catalonia, broadcast around the world where you have real risk that catalan may declare with 89% of the vote that they may go for independence. does that mean for risk -- what does that mean for risk? we are looking at the euro. we are down. that eurog streak on has been broken. the longest winning streak on the euro has been broken, and it is poised to end. if you go to the blog this morning, they say the markets are taking the risk in catalonia quite well. the euro is down, but it is not being flogged. the best case scenario for the market and spain is the scheduled government sanctioned

and official succession vote. the dollar is stronger this morning on the tax plan and the overall trump trade reignited. there are a couple different facets at play. anna: there is a euro and dollar store. there are calls on the e.u. to act from catalonia. radarg up the risk underlining your story that there is a euro and dollar story. the tax story in the united states, yields are higher. potential for less dovish fed chair potentially. it is all talk at the moment. the asx 200 from australia is giving up -- giving us the stock story. the japanese market is open. the australian market is open. the australian market was

replying to the chinese data, their top trading partner. the australian market is heading for its best day for months. manus: u.s. rigs are back. in had a good month september, up over 9%. saudi arabia is exporting the lowest amount of crude to the united states in 30 years. you are seeing crude come back a little bit. i think it is more the rig story. anna: we dropped a little on the china data. we have seen the week yen and the strength of the global economy supporting japanese exporters. manus: a number of asian markets are closed this week. let's get the first word news. juliette: u.s. president donald

trump has used twitter to tell his secretary of state that he is wasting his time in speaking negotiations with milk korea. -- with north korea. move highlights differences within the u.s. administration on how best to get kim jong-un to halt his nuclear weapons program. a state department spokeswoman said there is no contradiction in the position. theresa may has been to her conservative parties annual gathering, fielding questions on why she hasn't fired bastad them. -- fired boris johnson. yesterday, she could only laugh and dodge questions of whether -- was notr was on able to be fired. speaking at an event on the

sidelines of the conference, liam fox think britain is working to adopt 40 free-trade agreements that it is currently party to as a member of the e.u. and once you have been in place before the -- before that u.k. leaves. china's officially factory gauge has written into a five-year high. -- has risen to a five-year high. the private sector survey slipped to 51.6. in japan, confidence among big manufacturers has risen to the highest level in a decade. the survey came in at 22 for the third quarter, up from 17 in the previous opal. eriod.the previous p that underscores the run of success for the premature.

-- for the prime minister. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . and manus question, it is a quiet session in asia and will be for the week. todaye countries closed as china and south korea will remain closed all week. the nikkei is up. we are seeing the broader topix down .2%. a change in the clock means the asx 200 is now finishing the session up. the taiex looking strong, up .7%. if we have a look at some of the stocks we are watching in detail, it is about these mining players in sydney. we mentioned the strong china number coming through. domestic factories didn't follow the inspection process agreed

with the regulator in terms of car registrations in japan. they have been suspended for me fun. this is an indonesian stocks, a financial committee rising sharply -- the financial company rising sharply. we are string be strong dollar have an effect on some of these emerging-market currencies. -- we are seeing the strong dollar have an effect on some of the emerging-market currencies. anna: thank you. separate -- separatist leaders have signaled aey move -- they may move to freedom declaration. president catalan appealed to the e.u. for support. the spanish prime minister has

refused to recognize the referendum. president appealed to the e.u. for support. >> >> there has been no referendum. our rule of law is still strong and in force. a response to those that reach it, when faced with those that want to subvert it. bloomberg's reporter has the latest. we are seeing the scenes from barcelona over the weekend. what does this referendum mean for those struggling to keep their hands on power nationally the level of control he has. manus: we seem to have a problem with maria. get that fixed we will bring that back. the risk is this. 2.5 million people voted. those possibly voted for independence. it will come down to the off

intensity of that. -- authenticity of that. roughly -- he is struggling. what does this mean for europe? a difficultrship in position. support in terms of termination and what those prospects will be should they be independent. with that they will be recognized. recognition is important. the situation three years ago where despite a secession movement looking to separate itself from a large national entity, the supranational entity that is the european union actually has appealed to the separatists as one of where they go next. the european union can no longer look the other way he

said. trying to bring the eu into the heart of something that it won't want to be at the heart of. they do not want to get involved. they will have a crucial role isause perhaps it psychologically, stability wise, easier to lead a nation state. >> absolutely right. it is more mattel europe for the spanish state. growth comesic from the cathy lanier regions. despite having 60% of the population. billion tax service computing more than they get back. there is a lot of economic significance in the nation of spain. andthat plays into europe integration, which is the macron

agenda. quite fascinating because europe is looking around and looking for tax revenue to put money in the pot. to what end? this is what we are quite fascie europe is looking around and looking challenging policymakers for this point. manus: from a market perspective, the euro was lower this morning. overall winning streaks we have had. i think that is more of a dollar story personally. forward?catalonia move they have to declare independence. does it spain it needed to offer a scotland style situation? a proper legal secessionist vote legally done, legally governed and then a deal with repercussions? isone question for rajoy does he think he can win on behalf -- on the half of the remaining vote? economic and political story

inside a controlled campaign. it could make his arguments, yes, he does not look to have -- he does not have to look far over recent years to look at other fiscal leaders who tried to defuse an issue in that way. move. brief how do they defuse this? they needed to look around and some additional powers to the region of catalonia which has got thomas power. that needs to be extended to mitigate those people. in a formal referendum. anna: what about the invocations in europe or the reaction? you drew a line between the ftp, what are they will be thinking, the conversations continue in germany with angela merkel having her hands tied by these new coalition parties. >> for the perspective of the euro and eurozone economy,

everybody in the market really knows that we need a complete monetary union. that's hinges on angela merkel's ability to find coalition partners in germany as crucial here. to say we are prepared to take effectively, for a more sustainable monetary system. the backdrop does not lend itself to german politicians allying themselves with merkel and saying we will put taxpayers on the hook in an environment where you have states that are taking that support. anna: perhaps a new finance minister. manus: with a different perspective. in a i, we are torn. we don't know if we want to use italy, spain, or spain-germany. we have gone to the broader consensus which is spain over germany. junction --at one

juncture in the eurocrisis. agency, set of the tax september 12 you see the telik -- boxes. has it the propensity to deliver systemic risk to europe? ontherein lies the story markets while you still have mario draghi in the ecb. -- preparedckstop to backstop the entire market space. i don't see that pressing much wider. you need a synchronization of economic challenges. say the spanish economy have been doing well over the last couple of years and has contributed to the tightening of the spread. if you sit best synchronized economic downturn -- absolutely. inwell as what will be

undoubted problem of tapering quantitive easing in 2018. anna: thank you very much. on the ground in barcelona, we will try to get a live report as soon as we can. manus: if you're on your way to work this morning, one us to an end to bloomberg radio -- why not tune in to bloomberg radio? anna: the conservative party holds the annual conference. president trump tells his secretary of state he is wasting his time seeking negotiations with north korea. this is bloomberg.

anna: the sun is out in singapore. 1:18 in hong kong. the markets closed in asia right now. this week the japanese market is open, yes trillion market is

open. let's have a look at what we are watching for the week ahead. manus: philip hammond addresses the conservative party conference in manchester. theresa may speaks on wednesday. what is your propensity to move the pound? anna: forced johnson will be eager. the reserve bank of india policies and a news conference. on friday -- manus: the jobs report for the united states of america. anna: numbers we can use because of the hurricane activity in texas and florida. here is juliette starley. juliette: monarch airlines being placed under administration and all flights are being canceled following the suspension of the air operating certificate to -- certificate to the ministers will work with the aviation authority and government regarding the repatriation of approximately all the 110,000

customers who are currently overseas and due to travel back to britain in the next two weeks. materialsstruction nearing an agreement to -- american cement. announced acould deal as early as this week. at $750 is valued million. a representative declined to comment. john cryan may pray -- may face if he fails to show results in the next six months according to the sunday times. one of the largest investors. manageror portfolio told the newspapers we have not seen any sign of growth. we need to see this to prove the strategy is working. boys to channel hundreds if not thousands of employees

out of the u.k.. they expect the bill to reach $500 million or more. they say costs are climbing and they find it more difficult than expected and reckoned the shortage. of bankers. that is your business flash. manus: thank you very much. theresa may holds the annual conference. the prime minister has been fielding questions over her foreign secretary, boris johnson. quarks may said her government backs the approach to brexit. cabinet that is united -- no, united in the mission of this government andrew. that is what you will see this week. that works mission for everyone and agree on the room -- the approach we make. a nest of's mean birds

with one enormous cuckoo and a variety of vultures. i think she could just be talking about her secretary. -- pictured when she was response.a bizarre is johnson unsackable? >> she does not have the majority to have his support. it is causing problems for her. she has knife edge votes to win over the next 18 months. menagerieck with her of singing birds. there are a number of animals who fit in there. johnson, andis david davis.

those three are unsackable while they are working towards a transition deal. otherwise you put them on the back benches and they pontificate. this is not being true to brexit, that causes her more problems. i don't think so. anna: i think we hear from all of them this week. a brexit special tomorrow. [laughter] i am fascinated by your base case. and thenammond gallant they go before the brexit deadline and they go because the exit deal does not get passed through parliament. that opens up a whole load of questions. does that mean you are assuming that we crash out, there is no deal? >> is the most likely outcome

right now. the reason i say that is not because i don't think theresa may will get a deal. i don't think parliament will support it to -- it. anna: you think the alternative is no deal? party smelling the opportunity of a general election in which they can seize power. we can go back to europe and get something different. something to mystically. interestinge perspective. you don't want to transition that does not want a soft version, a swift plus canadian cta. they want self-determination. if they vote part of it alongside labor and the s&p, that is a could equal mass of

politicians with no deal. manus: this is what happened last year at the conference. we then had the flash crash at low point. this is the discussion about the pound. the difference between a run and fluctuation. >> labor, that is what they said the labour party would mean in this country. >> what has happened to the pound on your watch? it goes down and down and down. it means people queuing up to take their money out of banks. it means people really worried about their future. that is what a run in the pound would do. an economy into freefall. that is what labor would do. >> one of the pound is nothing like 118.41. from a buck 50.

it is interesting the difference she draws. >> neither of them are right. you have a problem, i'll prime minister thinks the run of the pound -- what she is describing is the optics of the crisis decades ago. what we have had since the brexit vote is a decline of 23% on the conservative watch. withholds good parallels previous runs on the pounds. u.k. left in 1992, a series of crises in the 1970's. a 25% decline. i think we have had exactly that. theresa may has to work harder on her definitions. anna: simon french, thank you very much. manus: a list -- eight boost for abe at the end of this election.

-- it isst level monday, it is hard. the highest level in decades. anna: bring more coffee. manus: yes, quickly.

"bloomberg daybreak it is 2:30 the afternoon over in tokyo. japan, we get an update on the latest survey of the businesses and how excited they are. that update in just a moment. for now, let's could look at the markets. some of them are open, some of their not. was some of them are not. >> hong kong, china, south korea, some close. not a huge amount going on today. but he much unchanged but i'm looking at dollar strength. the dollar gaining against all of its g10 peers.

of the worstne performers in the dollar with the euro, weakening after the developments in spain over the weekend. you are seeing a little en weakness -- yen weakness s -- as well. 0.08% on this. will the boj did return -- return to defend the range? we're almost at the triple top but not quite there. 0.1 percent, previously the bank of japan has not shown tolerance for that. looking at oil, around $51 per barrel today. het trading softer after gain from 9.4% in september. the weakness that we are starting to see coming through after some data. leaders have signaled

they meet move towards a thisrsal independence week. hundreds of people were injured yesterday and saw two stop spanish police shutting down and illegal referendum. the castle and president ifealed to the eu to support he says to inform departments of the results of those in the coming days. has refused to recognize the referendum. rajoy: there has been no referendum in catalonia. years have seen our rule of law is strong and in force. -- aponse that those response that reacts in the face of those that would subvert it. manus: maria, a good morning to you. the rule of law is strong but the long arm of the law was seen in full force yesterday during this referendum area legal or not.

>> we have both seen the pictures, videos, it does not look good. --is a double whammy for roy rajoy. the questions today, is he going to go? the short answer is no. he sees no reason to leave. he was defending the constitution, he says the rule of law has to be applied, and he believes -- something the government will make a point of -- the police had actually acted and done with a were told to do. a lot of the violence could have been prevented. i was on the ground at that time. and that isre open when the violence really erupted. we all work together to stop the

violence. a lot of it could have been prevented. anna: willow leaders declare independence that seems to be -- independence? how quickly can that happen? >> that is the next big question. leaders saying we have a mandate and we have the right to be a sovereign nation. i think it is early to say but we have to because this. when parliament and ask that law, catalonia would eventually become a republican 48 hours. the justice system works again. i don't want to speculate this is a case where we could see investigations. we have to be really careful. if he were to make an announcement, it could be probably sunday -- friday excuse me. again, the justice system will be closely watched. manus: thank you very much.

let's change our attention to japan because the big manufacturers delivered their confidence, highest in over a decade. that is what has been underscoring shinzo abe's run of success on the economy as he had into the election later this month. china rose to a five-year high, efforts to clean up the environment are not dampening economic growth just yet. sophie, good morning. , a veryhe key takeaways strong showing this time. yeah, the report indicating it was not a recovery made from the risks in the north korean situation. to 22.anufacturers rose when it comes to services players, they remain unchanged

at 23. they also anticipate improving outlook for the fourth quarter. smaller companies seeing an update -- an upbeat mood. there could be concerned with capital spending. 10.7% increase. this could indicate companies are channeling resources towards higher pay. thes: how robust is confidence with the chinese manufacturers? >> given that the pmi data coming out over the weekend was robust, 52.4 september, the strongest level since 2015. improving the picture for chinese manufacturers on the ground. the growth engine is still strong despite activity in july and august. aside from pmi data, we also have the pboc announcing the targeted lending plan lending to small businesses.

little tolerance for shaky growth leading up to the october party congress here. in --vernment remained remaining undercover. anna: thank you. joining us from hong kong, samuel still with us. the data there out of china and japan. i was fascinated by the japanese story because we have got the prime minister calling an election at a time when he is ok in the polls. the -- the economic story in japan reflecting the weakness in the yen. supporting japanese exporters. still, the missing part of the puzzle, inflation and wage growth. the bank of japan sees inflation turn 2%. many would say that is optimistic but that is pushed three backs -- three months back from 2018. despite an incredibly tight labor market, one of the

indicators in the survey was the anxiety they are feeling. on implement rate of 2.7% is an extraordinary tight labor markets. curve,ditional phillips it has not been seen for 20 years in japan. it is busted. in that environment, how are you against the 2% backdrop of a very strong economy when the transition mechanism seems to be broken? manus: i was having this conversation with a friend yesterday. this is groupthink. this is groupthink. nobody saw the price is coming. nobody saw the asset bubbles would be traded. here we are with groupthink, 2%, 2%, 2%. nowhere near 2%. the thing needs change. >> it does. just over a week ago, a speech was one of the more fascinating

that i've seen. he challenges the assertion that we still need a rigorous 2% inflation target given the disconnect between the financial cycle and the business cycle. you can go to many other geographies and i think this for in place the conditions academics to start talking about new policy framework that moves away from the 2% which has dominated the discourse for 20-25 years. it starts to for academics to start talking about new policy recognize that there are costs of exceptional monetary policy that you need to start putting up on a similar pedestal. anna: we put our conversation to the united states. wrecks thompson acknowledges he has a direct channel of medication to the north korea regime. manus: tillerson did not mention north korea remarks, he said to have raised the issue in private.

undermined his secretary of state on twitter with the following comments. tillerson that he is wasting his time trying to negotiate with little rocket man, save your energy. we will do what has to be done. these are the words of president to theo when it comes u.s., markets, the fact that we are -- all times -- all time highs, anything but average. it is a quite amazing this connect between the geopolitics. that such a risk market assumes it will not happen. say,e clients i speak to can any of us with any level of insight understand the dynamic of the north korean regime? we can't. it is a closed operation. we've seen nuclear tests, the intercontinental missile over japan. -- they ultimately,

you go with the data you do understand. singer nice pickup in economic growth. >> what gets the word on tax. be profferings to this figure of 10%. if i'm a u.s. corporate i can pay over based. it is a 3, 3 .5%. be proffering this figure of 10%. if i do repent. i give it away on share buyback. i don't see that this is a great boon. it can be a boon for markets, stocks. i don't think that is what mr. trump had in mind. >> no. to give the tax package it's full marriage was part of a broader speech by corporate america and american icehouse -- households. theproblem, of course, was $2.2 trillion increase in the deficit that was estimated by

the nonpartisan budget office. what you see there is the real sticking point for all of these projects. i agree. taxn't think repatriation really changes the dynamic given underlying costs. manus: make it easier for normal people to pay less tax. is 3% attainable with these kinds of propositions? is it necessary? anybody withard other hogwash that you needed 3%. i'm paraphrasing. basically, you need 3% at all. >> it is a political message. weekc, he tweeted last 3.1%. everybody said we would not get there. is, through the annualized economic growth in

the u.s. at 3% has happened a number of times under obama. the sustained 3% growth which the white house as set out, very difficult to do under the current graphics. you end up going back toward previous conversation. generating bubbles and inefficiencies elsewhere in the financial markets. i would agree that you do not want to be targeting that. you don't want to be targeting a recognizeu want to what is important is getting the deficit under control. when you look at what is happening to the dollar recently, september scenes different over the summer. pricing, thesing former fed governor as a successor.

how far through pricing of that are we? >> nowhere near. kevin worship is a significant threat not to the u.s. economy per se but to the ideological driven,of in output gap inflation driven central bank. he would like to do so -- to see the federal reserve have a better system. real danger for bond markets, equity markets. below interest rates in perpetuity. burdenmore ideological and that is very dangerous. >> you are an economist. which do you think is better, rules or reaction? >> i take reaction every single time. i want my policymakers to be day-to-day dependence.

i would rather them ideologically pursue a path come what may with the data. to have aare going cracking conversation with the oracle ceo at 4:00 u.k. time on bloomberg. >> if you are heading into work, if you have to turn off bloomberg television you can listen to bloomberg radio. in the available to you london area. wrecks saudi arabia's gdp , is the kingdom heading for eight recession? declaring an evidence from spain this week. live in barcelona coming up later in the program. this is bloomberg.

"bloomberg daybreak

♪ s&p futures suggesting there will be a balance at the beginning of the u.s. trading day. off of levels on friday, the indices in the united states. let's get an update on the bloomberg business flash. here is juliet start a. juliette: moniker lines has been placed under the ministry should and all flights have canceled following the suspension of the air operating significant -- certificate. work with thewill civil aviation office and government regarding the repatriation of the 110,000 were currently overseas and the due to travel back to britain in the next few weeks. global construction materials maker crh is nearing an agreement. according to people familiar with the matter of the companies could announce a deal as early as this week. -- asay that agreement may

representative declined to comment. john cryan may face pressure from investors as germany's biggest lender fails to show results in the next six months. one of the bank's largest investors. manager toldfolio the newspaper we have not seen any sign of growth in the investment bank. we need to see this to prove the strategy is working. thanks channel hundreds if not thousands of employees out of the u.k.. brexit to reach $500 million or more according to people with knowledge of contingency planning. they find it more difficult to persuade them to move abroad.

crispin audi says new european rules on research will result in less training, less efficient markets. if itte a letter that causes the cost of capital to rise it will get different levels of information in the market, resulting in those trading less. markets startised on january 3. saudi arabia has posted it is showing the economy contracted in two consecutive quarters in the first time since 2009. that is after the kingdom supplied the u.s. with the lowest amount of crude and petroleum projects in 30 years. -- riyadhnna money joins us live. are we there, are we nearly there yet? >> it is a technical thing

because the statistics does not publish ordered data from the year before. it's kind of depends on how your roof -- defined the recession. the most worrying part of this is the nonoil economy, the part of the economy they really want to drive forward, they want to replace the economy. while it is growing it has not grown more than 1% for six quarters. that must be of concern to them. if you look at the data even further, even growth is being driven by government -- government spending. the weakest part is the private sector. drivingt to start economic growth and replacing oil. manus: replacing oil. good morning. if we look the story that is been written this morning, he is

pushing for reform. when you look at the data, does this tell us anything about that push or are there other forces at play? >> i think what it tells us is uncertainty among the private investors in saudi arabia, the saudis themselves, i think investment plans are on hold. you see that in the construction sector. that is pulling down the economy. it used to be a big driver in the saudi economy so people are waiting before putting their money in, deciding what to invest in. the government is trying to get spending under control. it has a program of cutting back on capital spending. is holding back the nonoil weighing onin a way to takeerences planned

the economy to diversify away from oil. >> thank you. bloomberg middle east investor joining us. simon the french still with us. look at the saudi story. disappointing to those who want to see the reorientation away from the oil side of things. disappointing to see that that nonoil part of the economy can't pick up the slack. it has to be a long game. , quitee non-oil dependent on oil. >> the saudi arabian economy has which isproblem structural reform. you try to become a rate your economy away from core industrial dependence. that is not happen in years. the timeline for this will be correct to assess in a decade's time. result ofterm are the the ongoing weakness in the core performance.

the oil markets. i think there is a bit of light at the end of the tunnel in that regard. you have a bull market on wti. there's a couple structural factors that started to play in the old market. chief executives from the oil majors come on saying, the capex for the last two years will start to manifest itself and slow down in new projects coming on stream. i think the bull market expectations are that that will start to play out in terms of supply for the next six months. manus: that may help crown prince in his transition process. societies have also delivered in terms of what they are delivering. it is the list and all must 30 years. trying to smooth the transitions. you talk about transition, saudi's asian -- i don't know

how to capture women in society and a phrase. these forces are about evolution. >> they are evolution, not just economics but aspects of statehood. -- blueewsletter week -- news last week that saudi arabia will promote women drivers. from the labor market, that facilitates greater engagement. if you look at the growth developed in the g7 economies, it has been increased over those parts of the labor force. women and older workers. a key you never are -- key enabler. we talked about that as well. thank you so much. really good to see you. ago --just over an hour to go until the start of the trading day. back in the spotlight again, they are certainly something we

understand. cementing a deal. anna: reporting numbers of the top of the hour. we will be back with the latest on spain and caps on -- catalonia.

manus: catalonia clash. the leaders may declare independence this week after hundreds of people were injured i police at polls yesterday. markets, will they take notice? anna: the conservative conference underway in manchester, made may struggle to keep her foreign secretary. manus: china growth. the factory gauge rose to a five-year high. the competition comes to a tenure high. president trump tells silicon that he is weighing his time. ♪

manus: you are welcome to "bloomberg daybreak: europe." our flagship show. i am manus cranny. anna: i am anna edwards. today's session, we've got so many markets closed. very strong data coming through asia. manus: we are going to see a stronger opening. you saw the u.s. market make another record high. it is jobs week. high.r janet yellen is good to speak this week. we are going to get the jobs report. we -- you are seeing a somber tone to the equity market. that is affecting the risk radar and the dollar. anna: let's take a look at the fx story. there were two really big scenes, the dollar strength and it euro weakness -- and the euro weakness. there has been a weakness in the

wake of what we have seen in catalonia. the police reaction, the government in madrid putting the spotlight of international media on what has happened in catalonia. the dollar strength story, the u.s. tech story. gary cohn talking about repatriation taxes. the potential for a left desk for less dovish fed chair -- for a less dovish fed chair. effectlet's see what the of that is. the s&p is reflective of the chinese data. let's have a look the bond market. this is spain and germany. it is going to be seat -- is going to be interesting if we see cash print. the visuals of catalonia versus the reality of the european central bank. you got german gone -- german government bond use.

spanish government bond yield, not a huge amount of change on the spanish government bond yield. will the spread wide echo if it is -- spread wide? if it is temporary? anna: to extend will it widen? interesting to mention as we will do to the program is the eu. talking about more europe and what that does to the expanse around the european union. let's get the bloomberg business flash with juliette saly. juliette: donald trump has used twitter to tell his secretary state that he is "wasting his time" in seeking negotiations with north korea. the comments came a day after tillerson acknowledged the is communicating directly with a rogue nation. the move highlights the

difference within the u.s. administration on the best way to get kim jong un to halt. may prime minister theresa the conservative party -- johnson has challenged her strategy on leaving the european union in the past two weeks in critical moments. yesterday, a weekend may could only laugh. >> what i have is a cabinet united the mission of the government, andrew. that is what you will see this week. united in the mission to build a country that works for everyone and agreed on the approach that we take in florence. britain is likely to post-brexitrst

trade deal. speaking in an event on the sidelines of the conservative party conference, he said that britain is working to post-brext trade adopt 43 trade agreements that it is currently party to as a member of the eu. china's official secretary gauge has risen to a five-year high in an effort to clean up the financial sector. the manufacturing pmi data expectations rose to 56.4 in september up from 51.7 a month earlier. over in japan, confidence among big manufactures has risen to the lives level in a decade -- to the highest level in a decade. septemberatings since 2007. shinzo abe's run-up success as he comes upon an election later

this month. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . the other regional benchmark index flat but not showing the correct picture because you north korea just south korea -- south korea, india all closed. the nikkei is up by .2%. australia's just australia closed an hour ago due to daylight savings. it is up by .8% on that very strong data that we saw coming out of china which boosted the mining players. in terms of stocks we are watching in detail, nissan plunging the most in 11 months. a closed by 2.7%. -- it closed by 2.7%. maker. the japanese game

it is missed out on this newest energy has-- beach risen the most since september in sydney. it is seen a 90% take-up guess seen a 90% take-up -- seen a 98% take-up. one of the better performers but overall, really hard to tell the picture here in asia with so many markets closed. manus: thank you very much. catalan have signaled they may move toward a unilateral declaration of independence. this comes as hundreds of people were injured yesterday as they sort this as they saw it to stop stop -- tosaought to inform the parliament that the result of the vote in the coming days. mariano rajoy has refused to

recognize the result. >> there has been no referendum in catalonia. today all spaniards have seen that our rule of law is strong and enforced, that response to those who breach it. manus: the prime minister of spain speaking later this evening. us.a taddeo joins this referendum for rajoy talks with the ability of the law in spain hold firm but the world saw us what firm law meant in catalonia yesterday and look pretty gruesome. maria: exactly. i was on the ground covering the protests. it has been pretty peaceful until police stepped in to remove the balance. then he get really nasty. rajoyyou could argue

delta double whammy. the yes vote has want and at the same time he was tried to contain this and now it is a front-page story all caps the world. again i think the question for the market is probably going to be, is he going to have to step down? what we understand is no, he has no reason to resign because he was upholding the constitution. the rule of law applies to everyone. this is the line respect the government to pursue. expect the that we spanish government to pursue. anna: will catalan leaders declare independence? and when will that happen? we have heard that that is their intention. what date is it most likely? maria: that is the next question. as today he hinted at it but he fell short of saying this is how

we will do it. we are going to tell the parliament, this is the result and act on it. there is a law that would make it an independent republic within 48 hours. were to that if it happen, it would happen friday because it is a very iconic day in catalonia. i want to be cautious, before he does it it is a very serious issue. there's a case that he might be considered or disqualified from thinks it isudge against the constitution. manus: maria, in terms of markets, anna and i are looking at the italian-spanish spread, markets seem to be moderately laissez-faire. it is not aggressively being sold off. maria: that is right. we talked about this last week we said our markets are being

too complacent. reflecting this idea that maybe they were. even though the catalan business story has never taken it to this level, this picture doesn't help the rajoy administration. the market feels relief but we have to see what will -- how the events unfold, especially as we had closer to friday, whether the government will deliver on the pledge. anna: thank you very much, maria. joining us here, ian harnett. good morning. as we sit here and watch with the euro is doing at thisjoinin. and normal selloff of .4% lower. is that story in their? how much do you think market should set up and take notice?

off because backs it is a key role to play. the spanish market is down significantly. it is a global market that we look at. if you get that euro weakness, that tends to support the core -- against the peripherals. the bigger macro themes are playing out. the focus on politics is possible because of the economics is still very muted around the world. that is allowing this focus short-term. unless we see institutions change or regulation change, politics only has a limited impact. it is very unlikely that catalonia declares independence and be recognized. manus: let's talk about the euro. this is a much bigger chessboard. i want to type back to the equity story. if you look at the trade with

the value of the euro, they have just put in a little bit of a prompt. investorquity interview, if the euro is beginning to top out, does that shift the view in european equity? ian: absolutely. we moved that to neutral because we were looking for this dollar rally. the euro coming off and that is feeding back into a bit more positive sentiment in the european equity. the international stocks tend to be more core european stocks. they tend to be the largest ox and the more internationally -- largest stocks and the more internationally focused. anna: you say you upgraded the region from underweight to neutral. your expectations are limited by structural concerns about consistent low return on equity.

ian: what we've got is r.o.e.'s just 10.9%. in the u.s. it is six and .4% for the nonfinancial guess it is 6.4% for the nonfinancial. -- it is 6.4% for the nonfinancial. it is one to be difficult for eurozone equities to carry on after such good runoff the less six months. manus: this is a little bit of breaking news on taiwanese semi conductors. the chairman is to step down in june 2018. a little bit of time and distance. he has been with the company for 31 years. got morriso see you chang, the founder. he has been there since 1987. how did he perform? you can check on that while i am looking at that. anna: they are saying that the chairman is going to be replaced

by mark lou. through ins come that particular industry. .ack to the conversation why we have these low returns on talk aboutet's another part of the european story and that is the u.k. assets ahead of brexit. ian: let's have a look at what we've got today with conservative party conference, the chaos. we would feel that all u.k. assets, equities, bonds and sterling are currently overvalued. that is one of the ongoing stories that international investors should be wary of. sterling is back to its closing parity level. we still have a massive structural current account deficit. we are borrowing money to try and keep the economy going.

savings rates are very weak. we was a watch out because the risks around the physical positioning are very high and the risks for equities remain elevated. manus: ian, you stay with us. coming up. anna: president trump tells the secretary state tells him he is missing is time. manus: in the next hour, will discuss monarch which is taking a nosedive as it goes into administration. giving you a live shot of the barcelona where cattle and is catalan is- where waking up. the catalonia leader says catalonia has won the catalan is waking right to form its own state while mariano rajoy says the vote will have no legitimacy.

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anna: this is "bloomberg daybreak: europe." 7:19 here in london. let's put up our market chick board and see where we are on a host of assets. the expectation goes a little higher. we had a mixed picture from asia. the strong data coming out of china and japan and the pmi from china, all of that putting fire under he the australian market in the japanese market. we got the german and spanish yields and therefore you and we are seeing a little bit of spread widely. you talk about the charts. manus: with the longer-term chart, but you said pop it into three days. this is spain over germany. it is a ratcheting higher. 1.62 is where we are in terms of percentage moves. youtegists are saying that

want to have a bearish buyer on german is just german governor -- german government buyers. will european central bank backstop an explosion in yields? if you want to understand explosion yields, let's show you that. when you talk about risk, i want to reflect back and this is going back five years. that lets you see what risk looks like. that is what you talk about risk in european bond markets when germany over spain. anna: let's get a bloomberg business flash update with juliette saly. juliette: monarch airlines has been placed under administration and all of its flights have been canceled following the suspension of its air operating certificate. executives were appointed as the administrators to the carrier and the administrators will work with the aviation or authority in the government regarding the repatriation of approximately .ll of the 110,000 customers

global construction materials is nearing an agreement to acquire a company according to people for me with the matter. the company could announce a deal as early as this week. the agreement may value it at 750 million dollars. the jim banks john cryan may face pressure from investors --n deutsche bank's john cryan may face pressure from investors. bankager at frankfurt union investment told the newspaper, we haven't seen any sign of growth in the investment bank paid we need to see this to prove the strategy is working. known was immediately available at deutsche bank. that is your bloomberg business

flash. manus: juliette, thank you very much. china, you have had the strongest reading of manufacturing in five years. ian harnett joins us. in monday morning, you've got very to nice big beefy, bullish facts. do you buy the bullet story that go -- bullish story? ian: we would say this is as good as it gets. they are selling the rallies rather than buying. that is the message we are trying to get a cost just get across, that if we get the dollar pickup, -- get across, that if get the dollar and -- dollar pickup, it will undermine the asian markets. the eurozone, we are seeing the pickup.

anna: in terms of analyst expectations, do you think there a little comfortable? ian: global numbers are running around 10.5% on the expectations . we think top-down when you look at things like the yield curve, unemployment rates, some of the leading indicators. we are talking about low single digits. there are final adjustments to come through. there's lots of liquidity around. the more willing we are likely to see central banks willing to take away some of the punch bowl. manus: let's talk about that. it is a question of how much tapering the eurozone might do, how much more aggressive the fed might be. this is tenure german-u.s. spread. it has been widening. how aggressive do you think the european central bank will be in terms of its paper?

ian: there will have to be tapering. they are running out of bones by -- they are running out of bunds to buy. the core inflation is accelerating across 80% of the eurozone. that mix a quite difficult for the more dovish elements of ecb to stand up against the more hawkish side. we will see some more of that pickup. if he yields pickup, you are going to see a short-term rally back into some of the value. anna: on the other side of that, german versus the u.s., how high the u.s. yields go? we had gary cohn talking about every patch ration guess talking about a repatriation -- talking about a repatriation. how much less dovish does the fed become under new leadership? ian: will be see a more aggressive fed leadership under the hat of kevin walsh?

we would still say, unless you get global growth, we are still stuck in the muted economic cycle, and that limits pricing the pound. stronger dollar limits pricing pound and that limits the 10 year treasury. difficult to break out of this range until we have a new dynamic growth and inflation at from that point of view, actually regime based is what we will talk about. manus: ian, thank you for being with us. us. is it from anna: 7:26 here. the european open is up next. allwill bring you all the desperate all the expectations. -- bring you all the expectations. we will join the surveillance team at 10:30 a.m. u.k. time. manus: you can join us on radio.

futures are indicated stronger, up boy -- up by .2%. keep an eye on airline stocks this morning. ♪

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guy: good morning. you are watching "bloomberg markets: european open." cash will open in europe very shortly. equity, bonds already starting to trade it i am guy johnson in london. matt miller off this week. what are we watching? the catalonia question. declare --iginal declare regional independence? las vegas police says it is investigating reports of an