francine: catalonian residences it may be cut. will prime minister rajoy be forced to act? taking down yellen -- will president trump listen to the chief today? for china's gdp, but investors shrug at 6.8%. good morning, everyone through this is david:." -- this is

"bloomberg surveillance." i am francine lacqua. we will be speaking with the former barclays ceo. , antony jenkins. movingf markets are sideways. a lot of people are looking at catalan and where they can go from here. seems that because brexit negotiations have stalled, the focus will not only be on catalonia and the spanish government's next move, but they will talk a lot about korea and iran's new sanctions. let's get straight to the bloomberg first word news. sebastian: the economy humming in the third quarter, gdp rose 6.8%, and industrial production

umped 6.6%, and retail sales o 3%. that gives president xi jinping the platform to shift to a more sustainable growth platform. probing ties between the agency and ties to south africa's family. is investigating whether they mishandled funds. this was the heart of the political scandal in south africa, who has denied any wrongdoing. catalonia's president has said he may declare independence unless the government in madrid agrees to talk. letter togdemont's prime minister mariano rajoy came out just before the deadline to confirm or declare whether it will ask for independence. the house and

senate is asking president trump not to reappoint fed chair janet yellen, who he is set to meet with today. aanet yellen would not be great successor to janet yellen." country'sland, the youngest prime minister in more than 150 years has been elected. the announcement's stunning rise for the 37-year-old, who became leader after last month's election. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. and thisstian salek, is bloomberg. thank you. the $14,000 treasury market may seem calm, but there is bubbling below the surface.

with a flurry of activity in the options market at which traders are looking at as people of to position themselves at the possibility of a hawkish move. is pimco's portfolio manager. thank you for joining us. what exactly is your big concern right now? it seems like the markets finally there could be a hawkish fed, but it is not janet yellen they are afraid richard taylor could become judge. guest: what we are focusing on is patterns globally. we have had 10-years very synchronized abroad, and it is gradually going to converged with 2% by the end of 2018, means rate hikes are

really not prized by the market, just a couple of weeks ago, and now the markets are increasingly pricing it. francine: why is the market pricing in? goes back to believing they cannot hikes too many times next year. geraldine: it is going to be the economy at the end of the day. game between the market and he said. a number of things before the situation is made a little more 10-yearand certainly treasury was around 2%. francine: i want to bring you to my first chart, a volatility showing correlation really going up to what does it tell you markets that needs to

happen for volatility to really pick up? i guess the answer's monetary policy, but what does it mean for your market? there is growth and things are going well when you look at earnings at companies, they are looking well. we know at some point, the music is likely to stop. somenk this is bringing kind of small volatility to the market, but not generally speaking, you need a surprise. a surprise could come from the fed hiking too much, maybe from trump really delivering on his promises, which, so far, has not been the case, or a political event -- recently spain -- but that is not part of the forecast. francine: what happens if there is a catalyst? you mentioned some geopolitical risks. is it a real catalyst, or could

it be a panic move on the market? we are seeing a little bit of a selloff today. gdp is moving by 1% because of catalonia. is there something on the market that is dangerous? geraldine: evaluations are really not cheap, and where we are trying to find the type of market where the value is a little bit better, structuring a portfolio in an esoteric manner, and using sometimes some of that fear in the market to structure trading in a better way. but you would be surprised on indications of the fed. francine: what is your favorite play at the moment? geraldine: in terms of asset portfolios, we still like equities. japan is one of the rare markets that have had protectionist series and has a phenomenal movement, so we're focused on

areas that are cheaper relative to other markets, like the u.s., which is relatively expensive now. francine: all right, jerrold income of -- geraldine sundstrom, thank you so much, with pimco. has voted to renounce its independence bid. it just pass. we will explain. later, theresa may will be in brussels to push for progress in brexit talks. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua in london. let's get straight to the bloomberg business flash. forecasting growth for the full year. the world was the biggest food 2.2%,y said revenue grew beating analysts' forecasts. trading operating points.y 40 to 60 unilever is reporting sales growth that fell well short of

estimates. underlying revenue grew 2.6%, ,lower than the 3% increase that accelerated for the fourth straight period. fall weather -- cold weather in europe and hurricanes in the u.s. cut demand for ice creams . rose $14.4 billion, beating estimates for roche. sop has raised sales forecast as more people sign up for the company's business software. it is up 100 million euros from its previous forecast. analystlso missed estimates. the london stock exchange says

-- will leave the board by next year. the company is looking for a successor. yesterday, he spoke exclusively to bloomberg and hit back at critics. >> you know, some say there is a of liquidity ruled as part inclusion in the premium market, and i have read some of these comments. ruled is anment liquidity test. sebastian: and that is the bloomberg business flash, francine. francine: thank you. in the past few minutes, a letter from catalonia presidents cataloniagdemont says

may declare independence unless spain agrees to talk. maria is live in barcelona. it just feels like it is going to further inflame the conflict. that is right, francine. we got this letter from president puigdemont. one, i want to have a meeting with roy. two, i want spanish police to get out of catalog. -- out of catalonia. if article 155 does get anggered, we will create independent capital republic within 48 hours. we have a little bit of breaking news now. the government has responded and put it a statement essentially saying we see this as blackmail

in the central government. it is very clear he is not following what we demanded of him, and we will continue in the process of article 155. it is clear that mentored has already engaged, and there is one way to go. it has suspended the economy and will take further messengers. -- measures. it is clear that 155 will be triggered and will go away. francine: what does article 155 mean exactly? do we know, do we understand when mariano rajoy will trigger this, and do we know what the implications are if he does trigger it? joy could have triggered this today, he could have died tomorrow if he wanted to get it done quickly. so there is still hope that we might get a last-minute backtrack from the catalonian government.

it does not look like it, but it could be that the government is it does not look like it, but it could be that the government is hoping they will get it because it does mean unusual movement on saturday, which is unusual. it takes two days for the government to go over the document, for example, who will get approved to replace and demands, set a timeframe for elections in catalonia. it goes beyond suspending the government. of the it takes 2/3 senate to look at the document and vote on it. puigdemont may even be called to madrid to explain it. we are looking if article 155 may be triggered on saturday, but it may take another week, so we'll take us to thursday, friday of next week. francine: we are just getting breaking news now, the latest from the spanish government, speaking suspension of the catalonian government. maria come up we do not exactly know if this will happen today or happen in two to three days.

terminaloomberg the spanish government will proceed well suspending the catalan government. maria, i do not knows you can see where you are on the ground a palpable sense of people being wary of what will happen next, people concerned, if it will turn more people in favor of independence. maria: francine, what i can tell you is the community in catalonia has been very concerned about this, which they make no secret of. they do not like the way this is going, and they inc. this is a big mess. the community is very concerned. there have been protests pretty much every day this week. prisonple were sent to this week on an investigation. the crucial thing here is that article 155, we may run into a

little risk of being complacent here because the fact that it is triggered this not mean the parliament is going to make it go away, in fact, we make it the opposite -- a major pushback from people who support independence. what will happen depends on the resistance we get from the catalan government and also from the catalan people. it has been protests after protests since i got to barcelona about a week ago. it is very polarizing for the catalan society, and they are obviously not happy about the way the referendum went, the violence we saw, and the fact that there have not been any calls here in barcelona. you very much, maria, our spanish economy reporter in barcelona. we still have gerald in some -- geraldine sundstrom, pimco's portfolio manager.

italy and germany are probably next in line with uncertainty in politics. how do you hedge? geraldine: the big case is that a complicated political situation remain peaceful. point. the starting when you look at it throughout the year, they have been relatively stable. us, we think it remains a localized event. a reason think it is to review our forecast in terms of europe or monetary policy, and it should remain contained. someything, we use volatility to benefit from entry points on bonds in catalonia, for instance. francine: euro-dollar, i , is the euro.1778 going to take some of the brunt

of this? when people start worrying about italy, because people are unclear about what will emerge after the next election, which will not happen until next year. france, weitaly and have been reassured on the risk on the italian front. the fact that the euro is weak or is good news for the ecb. it is not positive for the growth of the area. i would say come in the same way of the french election, it may be a little bit weaker in terms of growth and financial assets. a weaker euro is positive for the market. so long as the countries remain peaceful. brussels will be talking about china today.

humming innomy was gdpthird quarter, with raising 6.8%. president xi jinping to go to a more sustainable growth path. they were talking about deleveraging some of the data out there. thehis why we are seeing markets -- they are not really listening to gdp growth. i suppose the gdp -- it was a surprise to the upside, and growth is probably better in 2017 and shanghai than even we thought. the concentration of power of president she has been growing steadily and reaching a very high level, therefore it opens a lot of uncertainty for what happens after congress, how hard

is he going to crack on deleveraging? we have seen already a market the property sector, and we need to see better exporting, better global growth. we will have to see. mes is one thing we have on horizon for pimco. the president has a lot of power . we will really keep our eyes on the. francine: what should they do china?e debt in there was an initiative a couple of weeks ago to roll some of the debt into equity for some of the companies. do you just assume that there will be trials and a verse, but that they will be minimal, or do you worry? geraldine: i think for us, if anything, it is a soft landing that has been managed properly. they need to address leveraging,

reform on the state-owned enterprise, and some of the internet companies are concerns of president xi. so how this plays out, we think in a soft manner, no genuine worry, but this is something we will keep our eyes on in 2018. francine: this is a chart that is basically the holding of treasuries by china and belgium. you can see that kind of went down 2014, 2015, and they kind of pick up here. can you look at all the market trends, including the government movement, in relation to what happened in china, or is that a conspiracy? puredine: i think it was luck. next has made the dollar weaker and has pushed billions of dollars of into the

market, and of course china is a benefactor of this. this brings a lot of study to the world in general. this is certainly what happened. china with cn a lot of outflows before the election. seeing a lot of outflows before the election. the election of trump was good news for a lot of the world, the emerging markets. francine: how closely will you look at china? geraldine: this is one of the major economies. we will look at it as absolutely as the united states. on theenormous influence way emerging markets, countries behave and thrive or not. europe, u.s., and china is the three to look at. francine: what does it mean for the european central bank? the ecb is smart when it comes to trend growth. geraldine: i suppose anything that is going to weaken a little

bit the euro is going to the be welcoming. anything from the outside that will help weaken someone zero will help the ecb breeze easier -- breathe easier, which we think will happen in 2018. they really need the euro to cooperate with them. francine: is there a concern that he wants to normalize, mario draghi wants to normalize, instead of actual real convictions? geraldine: we won't know, but certainly it is a constraint that he has to deal with, and we think he would much rather deal with a weaker euro than a strong euro because that might be what breaks the camel's back. geraldine, thank you for joining us, geraldine sundstrom, pimco portfolio

manager. -- we willked with also talk with antony jenkins, former ceo at barclays. , former ceo at barclays. that is coming up. looking at the markets, you look at stocks falling a touch. i think this, as geraldine was saying, has a lot to do with china. about deleveraging, but it also may have to deal with some uneasiness about how the european union and spain deals with catalonia. if you look at euro holding onto gains, bonds seem to be steady. small gains earlier this week. the treasury yields a little lower. this is bloomberg. ♪