hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. bloomberg's european headquarters in london. ybreak europe." turkey's president speaks for the first time since the most recent of zero rout began. the currency has lost one third of its value this year. tesla's wild week. on reports that its board is meeting with advisers next week. costs mount at ryanair. major strikes with at least ordered flights canceled. can it come to terms with pilots?

-- at least 400 flights canceled. can it come to terms with pilots? ♪ morning, it's 6:00 here in london this friday morning. let's look at asia. equity markets in red down by .6%. we seen broad-based selling in the japanese markets in particular. the yen a little bit strongly by nearly .4% against the dollar. that's taking the edge off some of those japanese equities. despite that, the dollar managing to hold on to some of the gains in made. .5%,rday we saw it up really interesting analysis about 10 year yields at the moment which are around 2.92% but they are falling. how this ist interesting in context of

economists putting up their estimates of u.s. growth. how do those two things stack up? because inflation is not seen as getting out of control. in turkey we are weaker by another 3.25%. another down day. we will hear from the finance minister who has a new economy plan. we have another record low on the turkish lira in session yesterday. mark cudmore saying only two things. the route. those two things are capital controls or higher interest rates. everything else might prove short but won't be long-term changing the game enough. let's look at u.s. futures. things do look weaker across the equity market, and not a

surprise giving the asian session. not enormous clarity of what the catalyst is but we are expected to go weaker at the start of the u.s. trading day. let's get a first word news update with juliette saly. turkish lira has gone to a fresh record low as concerns about souring relations with the u.s. and runaway inflation outweighed the nations plans to stem a market route. government set a growth target of less than 4%, down 5.5 percent. the lira has lost more than a third of its value against the dollar this year. capital investment has germany strong rebound in the second quarter as companies turn to technology to cope with a labor shortage. at a rate of 1.9%, eating forecast. business spending jumped 1.3%

which is the biggest increase since the fourth quarter of 2016. donald's -- donald trump's lawyers continue negotiating with robert mueller over being interviewed and they say to topics are off the table. andfiring of james comey trump's comments to comey about his investigation of michael flynn. the president's lawyer, rudy giuliani, says if asked trouble say he did not urge coming to stop investigating his former advisor and did not fire him for investigating russian interference in the campaign. the number of people killed by earthquakes has razz -- has risen to 319. indonesia is prone to earthquakes because of its location on the ring of fire. killed --e 9.1 quake triggered a tsunami that trick

-- that killed thousands of people in a dozen countries. according to did fail, the ceo of asset managers says it was underperformance. it's challenging and disappointing to him more than any of us but certainly to all of us, we are not where we need to be. if you look across his record, that's the anomalous. iodthat's the anomalous per and in time he will come around. thantte: powered by more analysts,alists and you can find more stories on the bloomberg at top . for a weeklyck gain of around 0.5% in asia. if you take a look at those big moves from tuesday and thursday,

the hang seng being brought lower by tencent. a look at samsung and some stocks in detail. samsung unveiled their priciest phonon record yesterday. new $1300 for the smartphone. the iphone x. investors seem to think us to pricey. in india, jet airways slumping significantly. budget price were among the airlines in india really starting to bite into profits. in australia down 7.4%. anna? anna: thank you, juliette saly. subject, both sides

have turned up the volume in the ongoing u.s./china trade war. trump claims the upper hand but china is hitting back. global executives have expressed concern about the dispute. war's never helped anyone so we are not a friend of that that we have to do with the issues as they are. andre well set up worldwide we are producing where we are selling and we have a clear plan forward. i hope these uncertainties will definitely go away because for all involved parties it can only be good to have a solid and stable environment. >> uncertainty and tariffs are never good. globalization has been the key driver of taking people out of -- out of poverty. any hindrance of that will only increase prices for consumers and consumers will pay the price for tariffs. it has not created destruction in the business.

we will see how it will erupt but with the knowledge of today, we see a continuation of growth. >> it has the potential to represent some challenges as we go forward but this is not the first time we've been through difficult trading conditions or the potential for difficult trading conditions. a host of executives that we have been speaking to this week giving us their thoughts on the potential for a global trade war. what does this mean for currency markets? viraj patel joins us for this hour of the program. the dollar, these executives are worried about the business and they have to be worried about the stronger dollar, and it has been good for the dollar. these net longs not the whole story for you. i think trade war risks and geopolitics continue to wreak havoc for fx markets in

the short term. there are two dollars to consider here. one is against e.m.. with sustained geopolitical uncertainty, the dollar could do well but against major currencies like the euro and the yen, we think the cyclical dynamics may have peaked and we are looking for tactical opportunities to reenter short dollar against that. what makes you think the dollar has peaked? because the trade war can't be sustained? the u.s. what when? -- the u.s. won't win? one is that the currencies that have been hit will recover against the dollar escalate in -- things and if they do the euro and yen will become safe havens.

in particular, our convention it -- our conviction is really on the yen. that's where we see the value in any paradigm going forward. anna: it moved by .2% stronger for the end this morning. if that's your view on the dollar and you think the trade story will take the dollar, of course the fed is hiking. that is from the fed typically quite dovish but now veering to the hawkish side lately. talking about how they might need to increase interest rates to combat fiscal stimulus. to september. trees this kind of common by the fed on your view? in thethis commentary is

environment that we don't get a global trade war. the fed hasn't factor that into their outlook. they copy sure that the global economy sustains its momentum. occur, weose comments think the default to dollars is in the mindset of investors because the fed is the only central bank seemingly tightening. if the global economic method does come back, that will rekindle spirits in the rest of the world and the rest will join in the tightening. the value is rather than chasing the last fed hikes. anna: central banks having to make big assumptions on things that will or won't come to pass. the stakes are so high. the fed assuming the trade war doesn't have a negative fallout. the bank of england assuming brexit is smooth. we want to bring you this chart. it puts the cpi story into context.

this excludes food and energy. the core in the blue. why do we still keep talking about inflation been under to dol when it's expected 2.3%? higher than the target. we seem relaxed about inflation. the things is because we haven't seen a step change. the figures have been spiraling out of control or moving on another gear. last year was a soft ear and this year is a better year, but there's just nothing there. it was flat on the month. the underlying price dynamics aren't as strong as the headline figures are suggesting. that's one of the reasons why bond yields have been relatively contained for now. break out get a there, it's hard to see investors pointing to higher inflation.

anna: thanks for your thoughts so far. peter trubowitz stays --peter staysitz --viraj patel with us. we will be live from istanbul. stop?an he say to how much contagion will we see? we see the euro dropping in 0.4% against the dollar on concern of contagion from the lira slump. how will this work through the banking sector? more on that next. this is bloomberg. ♪

anna: good morning, everybody. it's been a roller coaster week for tesla. the latest for us including the

after hours move. certainly a roller coaster ride for the stock. been a wild ride since elon musk first tweeted saying he's considering taking tesla private . this was at $420. it closed down in u.s. trading. --l-off that for 20 mark that for between our mark. in after-hours trading, we did see tesla get a bit of a chilled. this was after cnbc reported investors plan to meet financial investors -- advisers. has actually dropped now and is losing that bit of a jolt. we did hear about this ambitious plan. you've also been hearing from hisstors talking about plan. we did speak to one of them. richard wells owns about three

or thousand shares. 300,000 shares. the ideat understand of what was suggested in the potential for them to go private. an incredibly large vibration to take into the private market. there was also the suggestion that the current shareholders would stay in the combination of financial engineering that i don't really understand what is being suggested. who owns a bit of shares in tesla. according to people familiar with the matter, the sec enforcement attorneys were already gathering general information about teslas public pronouncements on manufacturing goals and sales targets and now they are also examining whether must we've had a funding -- whether the tweet was meant to be factual. an sec inquiry is pull him

area and will necessarily lead to anything more formal -- the inquiry is preliminary and won't necessarily lead to anything more formal. to all the other interesting stories with juliette saly. ,uliette: and deutsche bank ceo pushing to get back into growth mode. there is one specific business in which there are no hovering limits. the private bank in asia is still recruiting even after bringing on board more than 100 relationship managers and report staff in the first half. they told bloomberg, quotes, i don't think there's a limit beyond what we can digest. ryanair is grappling with major strikes for the first time in its history. to hit a new set peaked today with 400 flights lost.

pilots will ramp up a bid to get better contracts from a company defined by its pennypinching culture. ryanair try to stop pilots in the netherlands getting in on the strike. samsung has unveiled the see note nine. screen note nine 1249.99,t as much as $ making it one of the most expensive consumer phones. includes an upgraded camera that can take sharper photos than the model released earlier this year. samsung shares fell. you. thank the lira has plunged to new depths and turkey's relationship with the u.s. continues to shower. this comes ahead of key meetings

to outline plans for a new economy with single-digit inflation in a move aimed at reassuring investors. joining us now is bloomberg's -- bloomberg's reporter. what is the latest on the tensions? the turkish delegation has traveled to washington, d.c. to try and iron out the differences between the two countries but they seem to have come back into handed. handed.empty there under said investigation in the u.s. to evade u.s. sanctions against iran. the u.s. goal is to get a pastor home who has been in turkey for two years in a jail.

evidence ine any any breakthroughs in one of these issues between the countries as of yet. anna: give us the context of the markets reacting. we've seen these new records for the lira. the stock market is an exception because of a mysterious investor known as the dude. that, turkish bonds have been performing really badly. this is because of sanctions due to the continued detention of the pastor. at amorning it was trading record low. anna: thank you very much. joining us from istanbul with the latest.

still with us. in terms of the message we will get later from president at one -- from the turkish president, you say only two things. the route. -- you say only two things will stop this rout. to be some serious measures to tackle turkeys invested -- inflation problem. focus on the economics and that vision. and lest we get that, the lira will remain under pressure. it's hard to see the fate of the turkish lira and all eyes are on the president today. moves,he size of these this is a four-year regression.

two standard deviations weaker than the trend. and foreignime exchange trading doesn't seem to be easy. e.m. affects is a tough place to be in august. seems to be a tough place to be in august. you've seen that transfer over multiple currencies. anna: what is the rate across? -- the read across? now we hear the ecb is raising concerns about banks that have exposure because euro loans will be a little less affordable for lira earners in turkey. is now playing on currency markets.

we are at 114.60 on euro-dollar. one thing we note about contagion effects is they haven't been broad-based. we would expect the same for turkey. second, it has to be something major. to actively take down the euro it has to be a sustained crisis. nervous but to actively take the euro down there has to be a next step. anna: this is tempering optimism on this chart here. the forecasts have been sliding. moree market is turning

bearish on the euro it's pushing against an open door. we can anchor back to the fundamentals. we think the anka -- the fundamentals say 1.15 here. my producer points out to me that it is dollar strength as well. .6%.r index is up dollar-yen's the euro is flat but the substantial move -- sorry, dollar against the yen is flat and the move is coming in the pound and euro. much, viraj patel , staying with us. don't forget there's always bloomberg radio on your mobile device or on digital radio in london. we will talk brexit and the

pound. the pressure on britain to avoid a no deal scenario. what is happening to the pound and what can the boe do? ♪

anna: this is "bloomberg daybreak europe." some dollar buying that we seem to be seen this morning. we are up on the dollar index. thepound is weaker against dollar, the euro is weaker against the dollar and the euro move is quite substantial. .ollar-yen is pretty flat we also see weakness in the turkish lira. let's check in on the broad markets. >> bit of a down day in asia

taking things lower. japan off more than 1%. south korea also down. modest gains lower in china. tit-for-tattrade between the united states and china and it continues to weigh on stock. also overshadowing a decline in american crude inventory. i want to show you what going on in the oil markets. oil is trading near a seven-week low. could be the longest weekly losing streak in two years. loss there we haven't seen since 2015. very interesting movements this morning. i want to look at what's happening in the lira. the lira is well over the second

deviation weaker than what we have been and should be seen in terms of the trend. lira declines have marked the steepest loss since the 2008 financial crisis. markets seem to be testing the limit. we should hear from the finance minister who will outline plans for a new economy. would be the opportunity to calm the market or see more -- selloffs. anna: let's get the first word news with juliette saly. juliette: in japan, capital investment has driven a strong rebound in japan's economy in the second quarter. product expanded at an annualized rate of 1.9%, beating forecasts.

is this spending jumped 1.3%. that was the biggest increases the fourth quarter of 2016. trump's lawyers continue negotiating with robert mueller over being interviewed. they say to topics are off the table. comey and of james trump's comments to him about the firing of michael flynn. would say he did not urge coming to stop investigating flynn and did not higher comey for his investigation into russian interference. meanwhile, president once congress to allocate eight billion dollars over the next five years for a space security system. vice president mike pence outlined the plan at the pentagon. for many years, nations have

pursued weapons to jam, blind, and disable our navigation and communications satellites. recently, we have been working to bring new weapons of war into space itself. the number of people killed in earthquakes in malaysia has reached 319. the island had three powerful quakes in less than a week. prone to earthquakes because of his location on the rim of fire. in 2004, a quake triggered a tsunami that killed many people in multiple countries. than 2700 more journalists in more than 120 countries, this is bloomberg. anna: thank you, juliette. ratchetingaders are

up pressure on britain to avoid a no deal brexit. they slipped to the lowest level in almost a year. mark carney and international trade secretary liam fox of the odds of a note yield brexit have increased. --viraj patel is still with us. the pound is acting as the official opposition right now, act in to keep the government in check. you see validity in those stocks? -- you see validity in those lots? thoughts? viraj: it can be seen as that but it's too hard for investors to ignore. we are sliding towards about

level. risk. to peek no deal there are two probabilities to focus on here. one is perceived risk. there's a lot of game theory .nvolved here area -- here and the actual odds of a regime shift. that's where we see the probability as low. in the short term, it's too hard for investors to ignore. you think the trough is coming in q3? this moves out to march of next year. falling to the lowest level since february 2017. q3 or around march? viraj: i think we get the

clarity. one way or another, we know where the pound will go. you could see things spiraling down to 120. if you are an investor you will always focus on the negative and hedge your risks. i guess also one thing to note this week is let's not draw too , august is aons bad month seasonally for the pound. depending on how you spin it, things could get even worse. the politics is part of it and the bank of england story is another part. the reaction to the bank of england means the pound is simply not believing the data and not believing the bank of england's analysis of the world.

it's not a heroic assumption to be making. viraj: it's the only assumption they can make, it's what they have to do as an institution. the next three months will tell us if it's right or wrong. fundamentalg the disconnects with interest rates but that's ok because we have the political risk if we get through that. you can see sterling moving higher in the long-term. anna: the long-term is different. i've got this chart. an array of upside hope perhaps for the pound. the idea being here is once the pound has gotten over its discount around a hard brexit or no deal brexit, it has potential. that's your view. one, we get through this

the economicwo, data is so strong it knocks the market out of this low. that seems unlikely. because everything hinges on brexit. we have to get through the risk before we can make a proper proper assumption. given a conversation around wages from the bank of ratend, how many more hikes to you see? do we get another one from carney? when we looked at the boe the term we thought structure was 100 basis points to low. that has been anchored because of brexit risks. see the entire term structure lifted and it takes the pound with it.

it's all contingent on brexit. economics tells you one thing but the politics tells you something different and the politics is trumping the economics right now. great to have you with us, thank you very much. big moves we see in the currency market. viraj patel, ing bank nv london strategist. whatan get his thoughts on is going on in currency markets. brexit won't affect almost half of the ftse 100. that's according to bloomberg intelligence. half of the market cap reports in dollars or euros. join us now to talk about the u.k. stock market, tim cragin.

what is your view of the impact of a hard brexit on the u.k. market? in moves more with oil and sterling. -- than a sterling. the u.k. markets, like no other markets, has some very unique characteristics. if you look overall at the surface, you will see that i should direct -- say, an inverse relationship with ftse 100 earnings and the pound. pound goes down, earnings go up and vice versa. you can see that on this chart. it pits those two against each other. that's the overall view but it's much more interesting in the details. anna: the pound is down this

morning. oh no, back up. important different segments with local, domestic companies and others. how do you cut this? take these indexes, there's of these companies that are almost purely domestic. close to 100% of their revenue is in the u.k.. you have another group that's similarly sized that are global franchise companies. all these guys report their financials and pounds and this is where the attention comes. goes down it has an impact on the international guys, not the domestic guys. referendum, they do they doassively -- diverged they

massively. the question is, how do you cook a frog. frog in a pot of warm water and raise it to boil and the frog never knows what happened. we are hearing a hard brexit every day and we are getting numb to it in a way. see isu are starting to slowwed emergence -- a divergence. internationals are trading higher and flats -- and domestics are flat or falling down. global mining companies, how does that affect? almost half of the market

cap of the ftse reports in dollars or euros. this whole phenomenon of the weaker pound doesn't matter. it's more what happens to oil and metals. if you look at the correlation of that group with oil and metal , it's far greater than it is with the pound. think the risk to those guys is much more, is the u.k. a good place to have a global headquarters and if it's not because things went really pear-shaped, you pull a unilever and go to the netherlands. hopefully that's a very far, not of interest. unilever said it wasn't to do with brexit but thank you very much for joining us, tim. bloomberg intelligence senior editor. let's take a look at these markets.

we are seeing contagion from turkey into both currency and equity markets. equity markets are a little bit spooked. msci asia-pacific down by more than 1%. , alreadyese market under pressure from the yen. we are seeing a move higher in the dollar in that is part of this risk off move. -- seng also down 1%. to some extent this is all linked to concerns around turkish that is affecting other markets this morning. perhaps the turkish lira story hitting europe and other parts of the global economy. you can interact with all of the charts we have been using.

go to gtd go if you want to browse. gtv if you want to browse. this is bloomberg. ♪

anna: good morning, everybody. been 49 minutes here in london. currency markets on the move. some slight weakness in the asian session. contagions fear about from the turkey development into other markets, the banking sector in europe, and potentially into stocks. let's check out what has been

universe.cross the softbank is said to invest in a startup that makes and delivers pizza with the help of robots. truck's cable of cooking food en route to customers. russia has threatened to retaliate to sanctions from the united states. more on the sanctions environment in a moment. most read story, bill gross's performances have been disappointing according to dick vitale -- dick vial. things to be forging ahead with elon musk's go private gambit. deutsche bank's growth. we will talk about international politics.

furtherish lira slumps setr the united states sanctions over the continued detention of the u.s. pastor. the trump administration said it will persuade companies to cut iran oil exports after it re-imposes sanctions. for more on how the u.s. is using sanctions as a foreign-policy tool, we are joined by peter trubowitz. professor, great to have you with us. warm studio be in a this time around. how unprecedented is the use of sanctions that we have seen by the trump administration? usingth a -- are they them more and on different types of countries that we have seen previously? peter: it's not a break with the past in the sense of other

administrations. they've used sanctions. obama used sanctions against which is against iran one of the things that brought them to the negotiating table over nuclear weapons. what is unprecedented or unusual is that trump is using sanctions against america's allies. primary sanctions in the case of turkey but secondary sanctions in the case of america's , and threatening the european allies or european companies that if they don't subscribe or abide by the ,anctions being imposed on iran that they will come down on european companies. anna: anything unprecedented there? is that something others do? another version of this

would be using tariffs. what you are saying from this administration -- what you are seeing from this administration is leveraging the american market to put pressure on allies and adversaries to amend their ways and do things that are consistent with what the trump administration wants. it's taking advantage of america's structural position in the international economy. does that play out? are there any negatives? it's as simple as we are the biggest economy so we get to set the rules and tell others which sanctions to apply, that sounds and credible is simple. -- thatocusing strictly sounds incredibly simple. looking atou're sanctions, the american market market, theyanian

are likely to case. market, they are likely to cave. but these tariff war's are not that easy to win. it's complicated and involves pain inside the united states as well as china. i would say that moving down with america's allies, it just causes a tremendous amount of tension in the transatlantic relationship and we've seen that on trade, we seen in on sanctions, we seen it on defense spending. it's hard to understand how this advantages the united states in the long view. anna: strategic goals by the united states could be jeopardized by worsening relationships. soer: trump is fighting on

many different fronts at the same time. normally you set priorities and don't try to have multiple conflicts going on at the same time. strategy seems to be that he has many balls in the air at the same time and has many -- more flexibility. we will have to see. anna: you see any kind of off ramps diplomatically in the tension between the united states and china? the application of tariffs, the tit-for-tat, do you see a way this gets to a negotiating table? the mood seems to change week by week. peter: i don't see an offramp immediately there. would be to connect somehow the trade issue to some set of security issues.

perhaps china can provide some relief on that front and then trump backs off on the trade front. that's what people originally thought might happen on the north korean issue. china would provide some leverage in return and provide some economic concessions but that fell apart. anna: the midterms. after that a big change or no change? peter: if the midterms go the way that most pundits and analysts who follow politics suggest, which is the democrats take control of the house, trump's domestic agenda will be dead so i think he will increasingly look towards foreign policy because he has much more discretionary authority area -- authority. anna: thank you so much. the londonwitz from school of economics & politcal

science. a quick look at markets. currencies losing it's the dollar. fear about turkey contagion is part of the story. ♪

>> good morning from bloomberg's european headquarters in london. i am anna edwards and this is bloomberg daybreak: europe. turkey's president erdogan will speak today at noon. the currency has lost one third of its value this year. tesla shares gained in after-hours trading in reports it ordered a meeting with advisers next week. ryanair is grappling with major strikes, with at least 400 flights crass -- canceled across five nations. can it come to terms with pilots looking for better pay?

good morning, everybody. aces bloomberg daybreak: europe. getting numbers from japanese corporate's this number. japan post still sees that full-year dividend in line. nol-year net income at change carried where you were on holdings. interesting in the context of may from this business and from the three listed japan post companies. afterll dropped in may disappointing numbers from them and guidance, new plans, new medium term plans. japan holdings down, japan bank down, japan post insurance down. all of that was in may. haven't made up the ground they lost in may, so we will see if this changed what we heard

from them this morning. let's leave the japanese corporate earnings there and get to the futures. this is what futures look like for europe. we would expect them in the red because the asian session -- equities session has been weak into the morning in europe. same as the futures. futures looking weak. we are weaker across the equity market space. we have seen volatility in currency markets. this time last hour, the dollar was pretty flat that now, we see it substantially stronger. the yen is not really moving, so perhaps money going into both of those. the euro is weaker, the pound, the yuan is weaker, the new zealand dollar, all weaker. the turkish lira, weaker. there are other things going on there, but this is linked. in the this weakness euro and the strength in the dollar is because the markets are making a link between turkish lira weakness and

exposure to the european banking sector. let's see how the bond markets deal with that. if we see european equities weaker, we may see bond markets go higher. futures in italy and u.s. bonds. we will give them time to settle down, but we would expect bond -- money to go into bond markets on a day like today. juliette saly has your first word news update from singapore. the euro is lower against the u.s. dollar on fears of contagion from the turkish lira round. the financial times reported the sees bbva, bnp paribas has particularly exposed to the lira's plunge. the turkish lira fret -- plunged to a fresh low with concern about souring relations with the u.s. and runaway inflation outweighing a market route.

the government said a groep -- set a growth target of less than 4%, down from 5.5%. lost around one third of its value against the u.s. this year. in japan, capital investment drove a strong rebound in japan's economy in the second quarter as companies turn to technology to cope with a labor shortage. -- grossrowth domestic domestic product expanded at an annual rate beating forecast. jumped 1.3%nding from the first quarter, the biggest increase since the fourth quarter of 2016. donald trump's lawyers continue negotiating with robert mueller over being interviewed. two topics remain off the table. fbi director james comey and trump's comments to comey about his investigation of michael flynn. the president's lawyer said if asked, trump would say he didn't urge comey to stop investigating

his former national top security advisor and didn't fire comey to cut off his investigation into russian interference in the 2016 campaign. legendary bond manager bill gross's performance has been disappointing and will take time to take -- to recover from lawsuits. the underperformance it is seeing now is challenging and disappointing to him more than any of us, but certainly to all of us. we are not where we need to be, but if you look across the record, that is the anomalous. thing -- anomalous period and he will come back in time. news 24 hours a day, powered by 2700 journalists and analysts 120 countries. find more stories on the bloomberg at top .

a negative into the trading week, asian stocks in the red for four sessions. japan closing out weaker by 1.3 percent. a little turnaround in chinese stocks, but hong kong has been on -- under pressure today as tencent falls. beingrket in singapore called lower. after the closing bell, the prime minister said the trade war would start to impact singapore. asian stocks, on track for a weekly gain. let's look at stocks moving and macro themes in general. samsung coming under pressure and weighing on the cospi. it unveiled its new smartphone overnight, but investors think the $1250 price tag may be too much. we are continuing to watch the dollar strength, the dollar higher against the offshore yuan. we have a lot of data coming through on china tuesday of next week and we will talk about the weakness in the euro against the dollar. watch for european banks when

the european session opens today. anna: thank you very much. we will watch out for the european banks. wasing up on what she saying about dollar strength, we are seeing contagion fears across the currency market in contention -- connection with the turkish lira. the selling continues in the turkish lira. the dollar is generally stronger, up by .5%, the bloomberg dollar index up by .4%. weakness in the euro, in particular. joining us in london, the managing partner and cio at -- is with us. good to have you with us. i wonder what your thoughts are when we see these contagion fears spreading across markets even into asian equity markets. should we be about what is going on in turkey from european perspective? clark: i think we should be concerned. to turkeyly due

specifically, but more importantly, we are looking at a period of great u.s. dollar strength putting a pressure on a variety of emerging markets, including turkey. this dollar strength is likely to continue and when you have a issuescountry specific and the dollar strengthening at the same time, it can expose them further. anna: that is the nexus, dollar strength. i got this line from economists talking about how exposed is they eurozone to what is going on in turkey and they are looking at the trade flows and is saying the impact on the euro zone gdp growth would be small, even if the eurozone export to turkey would fall by 20%, this would subtract 0.1 percentage from growth in the big euro zone that is not the full story. it is about dollar strength. >> that is right. there would be european banks

with greater exposure than others. one could worry about that from a bottom-up perspective, but the greater issue and what should be focused on is the u.s. dollar and how that impacts emerging markets more broadly. anna: this chart talks about dollar positioning. hedge funds boosting their market is geared to a strong dollar. in the last hour, there are a number of reasons he thinks the dollar rally has run its course, it won't carry on like this to the end of this year. would you disagree? clark: i do disagree. it is a fairly unique set of circumstances with the u.s. dollar today. it was monetary policy. the fed is ahead of most central banks exiting extreme monetary looseness >. two and what is interesting about the situation, the u.s.

has embarked on fiscal stimulus at the same time at a period when the economy has already been strong, pushing into fiscal stimulus has given an extra boost to the dollar, i would say because it is the reserve currency. for many countries, one would say if you do fiscal stimulus, it could be weakening the currency, but with the dollar issuing debt because of the u.s. treasury market being so big and the status as a reserve currency, it is sucking dollars into the country and creating shortages elsewhere. anna: the turkish lira 5% of fresh record lows versus the dollar. that headline won't do anything to stop the questions being asked about contagion into the euro and other parts of the global economy. sticking with the united states, you think the dollar strength will continue and you say interest-rate differentials, the fed is hiking interest rates. one line you to retention to was

around u.s. corporate debt. u.s. corporate debt as a percentage of gdp has been rising steadily. does that worries you? terms of how long the strength of the united states continues, if rates are going up in the u.s. and this is the picture for debt? clark: it is a concern. themes has been that we think the market cycle has been ahead of the economic cycle. a chart like this doesn't necessarily portend the end of the economic cycle, but it does show that markets have priced in a lot of the good news already. in equityrtainly true markets, but even more so in credit markets and that is the area we are most wary. anna: when do you pencil in a recession in the united states? ben bernanke talked about the wily coyote moment in a couple years where the fiscal stimulus runs out of energy and we see a drop-off in the u.s. economy. clark: yes, that is about the

right time we would agree with and that is what we are expecting. anna: good to have you with us. clark fenton. coming up on the program, we will keep across the currency markets. everything in the lira, everything with the broader fx market story. we see euro weakness, dollar strength, but we will talk about the corporate news. ryanair, the first major strikes in its history mean for the budget airline. they are struggling to come to an employee base that is unionized and able to organize strike action. staying on the currency story, we talk about brexit as currency traders ratchet up the pressure. what does that mean for the pound? we watched the turkish lira, dropping 5% of fresh record lows. what does that mean for europe? this is bloomberg.

anna: this is "bloomberg daybreak: europe." let's tell you what has been going on with the turkish because we see further moves there. the crops 13.5% against the dollar. big moves in turkish lira this morning, building toward a speech by president erdogan, the finance minister set to present his new economy plan. be substantial enough to stem the moves we are seeing in the currency? mliv colleague mark cudmore says only capital controls or a hike in interest rates will do

in the long term to avert the selling pressure on the turkish lira. we will continue to focus on that. this has a risk off move across assets. 2.89%, the below yield on the u.s. 10-year. moneys going into bonds, out of equities as the markets digest these quick moves in the turkish 13.5%.own asian equities on the back foot, u.s. futures on the back foot, suggesting by around .5% on u.s. equities. let's get a bloomberg business flash with juliette saly in singapore. tesla's board is forging ahead with its review of elon musk's bold and ambiguous gambit to take the electric vehicle maker private. directors plant to meet with financial advisors next week and are likely to tell the founder to recuse himself.

meanwhile, in an exclusive interview, the coo of softbank spoke to bloomberg about reports his company had held talks with elon musk about helping with a plan. we wouldn't comment either way, but if there is a deal going on, there is a chance that we are going to be informed or part of the common -- conversation. juliette: deutsche bank's ceo pushed back to get into growth mode. one specific business there is no hiring limits. the private banking a.j. still recruiting after bringing on board 100 relation managers and support staff in the first half. told bloomberg "i don't think you're is a limit apart from what we can digest." sampson has unveiled the galaxy note nine, banking on the fendst screen device to

off apple's upcoming iphones over the holidays. the 6.4 inch screen note nine will cost as much as 1200 $50, making it one of the world's most expensive consumer phones. it looks similar to last years note eight, but sports a upgradedstylist and camera that takes sharper photos than the s9 earlier this year. that is your bloomberg business flash. anna: thank you, juliette saly in singapore. one corporate story that will matter to you if you are traveling by ryanair. with majorappling strikes for the first time in its 30 year history. it matters if you are an investor, because obstruction is set to reach a new peak. or hundred flights lost across five nations as pilots ramp up a wrest better-

contracts from the company. how did we get here? is basically the unions trying to show they also have a voice here. about a year ago, there were no unions at ryanair and now, this is what they have to contend with. management was always forceful in their opposition to union voices, but this is something to deal with now. the big thrust of the strike is about 250 with flights canceled here today alone. that is almost 40,000 people affected and will have a substantial hit on the operations in germany. they warned about this a couple days ago, but germany is a key market for ryanair. they are expanded here and others are expanding here. they need to be careful this doesn't become an issue of people rebooking on other planes. anna: what is this that really about? pilots posted other bases, is that the essence

of it? benedikt: that is about it. it is technical on some degrees. some pilots want to be moved around too much. ryanair can move people where they see a need and pilots say, we are not nomads. we don't want to be moved across the european chessboard. others are downright bizarre. want to pay for the water we drink on the flight anymore. uniforms is one of these famous areas of debate. be paying for our own uniforms. and essentially, it is the pilots and cabin crew saying we helped this airline grow up and get big, get to where they are today, we want to reap some of the benefits. youmanagement is saying, are very well-paid carried they say some pilots make as much as 190,000 euros a year, a big salary for somebody of that ure and more than anyone makes in the industry, they say.

you shouldn't be unhappy. let's try to get along. they have also made threats and said if you don't like it, we will move these posts to other places and deal with those people there. anna: thank you very much. bloomberg's managing editor for global business, benedikt kammel on ryanair. the lira is casting a long shadow on a fear contagion is spreading. andmore, garfield reynolds from istanbul, our economy reporter. as we bring you into the conversation, the u.s. dollar climbing against the turkish lira. the turkish lira slips through six, changing direction a touch in the last few minutes. we slipped through six to the u.s. dollar. something has changed in terms thehe markets testing

erdogan administration overnight. it field: -- garfield: looked like the fx market was giving up on the administration, saying we don't even need to listen to what you are going to say. we are gone. spread has widened massively and this is a panicking move that we saw in the pound when brexit happened or a number of when everyone headed for the hills. it is that level of panic in a smaller market. it is not as strong as it would have been if it is something bigger. full on panic, but is there anything the administration can say to them that can undermine that? capital controls being talked about, higher interest rates being talked about. is there anything they can say to stop this rot? nothing they can say

will stop the rot. they have to do. they have to act. you would even suggest with as far as it has gone, some level of capital controls will temporarily have to come in to stop the bleeding while you move to raise interest rates and especially -- turkey has a very complicated interest rate regime as it is, so you might need to tweak that and make sure you are clear on that. you could argue that part of the ofic is if there is talk capital controls, people are worried about getting trapped inside and say ok, now it is time to go. that is part of what feeds the panic. anna: get out before those controls. -- are implemented. to you, then. what are we expecting to hear from president erdogan, the finance minister, later on? about a new hear

economy. what is on the cards? and finance minister -- said yesterday he would be new economic his model later today. we expect that to happen at about 2:30 p.m. in istanbul. what exactly that model entails is anyone's guess, although we have clues about what he might say here or there. we know he will talk about his growth targets for this year and next year and might have -- indicate some fiscal tightening down the road but judging by the first reaction of the market, when some of the numbers came out, we knew those figures and those measures that will be announced today may not suffice to stop the panic we see in turkish markets. as for mr. erdogan, he has been very silent over the past week, which is not something common

for a politician like him at heated times. he made an unscheduled speech with off-the-cuff comments in his hometown outside of a mosque and told people that even if they have all this, we've got our people, our rights, our god, our allah. what that means for policy, we don't know but it looks like erdogan maybe more defiant than expected when he speaks today in eastern turkey. anna: some of our mliv colleagues making the point that those comments in themselves perhaps underlining that president erdogan was not willing to do anything drastic enough to satisfy -- markets. garfield reynolds and bloomberg's economy and governor reporter onur ant. the lira move, slipping as much as 13.5%. as is set to be the big theme

that dominate the european trading day. look out for a cross into european banks. this is bloomberg. ♪

welcome to bloomberg markets, the european open. we are live from london. i am matt miller. stocks across asia are in the red as the lira hits a record low carried the cash trade is less than 30 minutes away. the lira plunge deepens. turkeys currency hits a fresh record above six to the dollar, falling as much as 18% over two days. fears ta