anna: good morning from bloomberg's european headquarters in london. i'm anna edwards. manus: and i'm manus cranny live in dubai. this is "bloomberg daybreak: europe." here is today's top stories. anna: turkey turmoil. the lira continues to spiral. resident erdogan shows no signs of backing down in his standoff with trump. we are live in istanbul. ♪

anna: good morning, everybody. this is "bloomberg daybreak: europe." we are live in istanbul. that is the only headline that matters. we will talk about a european and global asset, and emerging markets asset, and across the banking sector. but the latest on the ground with yousef gamal el-din. f: on all sides, we saw more from the banking regulator. we had more sharp rhetoric from the government. they are sinking in their heels and arguably raising the stakes. this is monday morning. we saw consumers already heading into the shop yesterday. trying to get good value from what they have. those who have harder currency bargains.some real

ultimately, it is the question of what happens with the bigger institutions worth billions of dollars that they need to roll over. yousef, thanka: you very much. we are back with yousef on all the details from the weekend. radar.et to the risk this is the picture on asian equities that we have been handed over. 1.7% weaker on mci asia-pacific. weaker on emerging markets, foreign exchanges. very much on money going into dollars and yen. we see the dollar is the highest in more than a year. will central banks and emerging markets have to respond? we have seen a bit of that already. indonesian assets being -- the central bank forcing to intervene. we need to see higher interest rates. another part of the contagion story, the south african rand. we see the dollar up by 4% against the rand. the rand was weaker by 9%. we are coming back a little bit, but risk aversion very much the

theme. we heard a lot about the asian crisis, 97, 98. what that was caused by and what lessons we can learn, and what it tells us about contagion's, how this enables investors. course in the dollar, again on the up -- on the rise against the turkish lira. erdogan very defiant over the weekend. manus: let's see what was delivered. f is on the ground and will bring us the details on the finance minister. brand brothers says this is a currency come for -- crisis. it is due to policy mistakes and will take more than the central bank policy hiking rates by five basis points to save the lira. contagion personified in the gtb library.

volatility is soaring by the most since 2015. that is when china deliberately devalued the yuan. we did recover, but it took time. there are many different facets to be looked at, fx reserves, what can the central bank do because they are politically hamstrung in turkey at the moment? it depends on who you rate. the spillover into emerging markets is likely to be tech/ the index tracking the currencies related to those are at the lowest level of this year. from goldmanbate sachs when they were at their notes a contagion would be limited. the program that yousef and i did focused on the cbs spreads as being a vehicle to hedge. corporate will not be buying dollars to get in there and hedge themselves. yousef is in turkey. good morning. yousef: good morning.

a lot taking place here in a stumble and across -- in istanbul. we had the banking regulator. the first real step we saw out of the finance ministry just making bold statements. you are looking at foreign currency and lira down to 50% of the legal shareholder equity. but it tells you a story that this is not enough. it goes to underscore what you just pointed out, a bold rate hike from the central bank was what investors are looking for. perhaps the imf getting involved . not really, because the president over the weekend made it clear again that he is not seeing an imf deal anytime soon and it is not something he is considering.he also underscored that interest rates are a tool . this shows you where this government is standing on some of these key issues. we are expected to hear from the finance ministry later on in the day. according to the daily news,

they have come up with an action plan to stabilize the currency. they describe a clear attacked by a foreign player, the biggest in the global financial system, and this is a quote. making clear that turkey will not ease or convert any of the the fx deposits. but something has to give. something will need to happen on either side because at the moment, this is way too much pressure in the system. anna: indeed. we have seen some moves by the banking regulator in terms of the market. some people talking about is it capital controls by itself. what could we hear about later on today? you said that erdogan rolling out so many of the measures that the market has been talking about. at this point, it is hard to say. arguably, it will be more rhetoric. we heard from the finance minister friday trying to pinch his -- pitches vision, and

failed to commence investors. they talk about a credibility shock that needs to be viewed, not just the finance minister getting more realistic about what is really happening with this overheated, overly leveraged economy that has been holding on -- building on key credit. the central bank needs to underscore it is independent from some of the controversial statements made by the president over the last two to three months. it also needs to show that it can make impressive rate hikes when needed. that is what the mike -- the market is looking for an is not likely to see delivered. right now, the government is willing to go a step further, but whether the system can handle it, remember that turkey has a lot to lose. inflation is already double digits, and the people on the ground here are beginning to hurt as well. manus: they are indeed.

what is the latest on the u.s.-turkey relationship? from the rhetoric over the week end, was erdogan ready to capitulate yet? foref: exactly, it is rare president erdogan to writ e an independent editorial in the new york times very of another way to reach out to the u.s. government and people and the world. he talks about turkey being treated unfairly, i relationship between two nato allies that has been historic and had its ups and downs. but ultimately, it helps achieve a lot of goals in terms of global security. this is something a lot of people on the ground, is that turkey has been a key platform on geostrategic strategies in the middle east. turkey has been involved in a lot of u.s. encourages -- incursions.

there is an important base in turkey that belongs to the americans. they have a lot to lose here, but ultimately the president pointing to alternatives, saying he can reach out to russia and the east. saying he has been on the phone with several other heads of state as well, clearly muscling up that threat. he wants to put some meat and that. this is a showdown that the stakes are getting higher by the hour. anna: thank you very much. yousef gamal el-din in istanbul. we will continue to get updates throughout the program. futures.ook at there is the global conversation about what is going on in istanbul and the contagion in emerging markets. how will that play out for u.s. equity markets later today? this is the picture on the futures. some of my mliv colleagues writing about how it is amazing how resilient assets have been. here is what is going on in the u.s.. this is the expectation for the start of equity trading. could be one of those situations where the pain is felt more in

europe than the united states. we will brace ourselves to see what happens in a couple hours time. let's get the bloomberg first world news. turkey's lira has extended its life today after president erdogan showed no signs of backing down in a standoff with the u.s. the lira weekend against the dollar before paring losses after the nation's banking regulations agency stepped into swap transactions. the fact -- the south african rand has ball and sharply against the u.s. dollar. that as the selloff in the lira most other currencies. the mexican peso is also under pressure today. they may temporarily halt purchases of u.s. liquefied natural gas through -- to avoid potential tariffs amid the trade contract.

-- conflict. under the plan, the company would move cargo to other countries or swap u.s. shipments with other nations in east asia to avoid paying additional tariffs. they could not immediately comment. global news 24 hours a day on air and tictoc on twitter, and powered by 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . the contingency is blowing through the asia, sending stocks down for a second session. you can see it in emerging markets. andsee the taiex, indonesian stocks coming up in significant pressure. and we have been watching what is happening in the currency markets as well. bank and then asia stepping into the stabilizer and we are hearing from traders in india that state banks are stepping into stabilize the rupee.

having a look at stocks, it is mostly negative. chinese developers coming through with some big losses in the mainland and hong kong. they are trying to sell speculation as mortgage rate reductions. still under pressure in sydney. they did say the u.s. tariffs on steel have boosted its four-year profit, but we are seeing it come through. indian banks under pressure. their lenders have posted a third straight quarterly loss. amidst this contingency, you have the u.s. china trade war and earnings season on top of that. a lot to digest. manus: thank you very much. is our guest. peter, the consensus seems to be this is a vote of no confidence in the administration with the lashing the lira is taking. what does it take? what does it take to restore

credibility? as you say, it is probably 25% interest rates. the problem with being friendless. i don't have a good inspiration. it seems to be normal causing of inflation, and eventually you will get some kind of breakdown. i don't see why this is any different. there is not anything particularly exciting in the context of the current crisis. but it will normally end up in this place, and he can lash out and shout and say things to other people, but ultimately the strategic partnership with the u.s. and the strong relationship with europe still matters. anna: we will see where that heads. i have a chart that shows cbs, just many brilliant charts that illustrate the scale of what we are seeing.

this is insurance against government default in turkey at levels we have not seen since 2009, although not quite topping those levels interestingly. the scales are aligning somewhere. over the weekend, lots of comparisons with indonesia. others writing about comparisons to the indian crisis. obviously things are different. there are not so many fx pegs we are talking about. the lira can respond and has in spectacular fashion. is there any place you look to for lessons from history that teaches us about what goes on here? the interest rates will have to go up. there is nothing new, i am sad to say. the peg in the asians crisis caused a separate issue. it is substantially poor than a used to be, which is a shame. there is nothing you can do unless the americans do something that says we are friends again, and it doesn't

look like that is coming through soon.e standard procedure is raise your interest rates and discussions with the imf will come around at some point. anna: even though he rolled that out. peter: they always have to. i have refused to accept the honor. it is not as though you have any choice in the end. railing is not going to help you. banks, be aware of the peripheral issues. there is a billion in debt out there. there is the contagion. manus: we will get into those contagion issues in just a moment in terms of europe. it is good you flag up th because the spokesman says the u.s. is in danger of losing turkey. this is the bigger geopolitical story. this is volatility at its highest levels since the start of this year. if the political or geopolitical wrangling escalates, is this

where the money will go to? will it be to the yen you will look as the natural first stop of haven? peter: it will be interesting to see how sovereign bonds that are much hated by everybody because of global growth, it looks like the yen, sovereign bonds treasuries in particular. i know i have suggested maybe now is the time to start working -- start looking at gold. it will be the classic free trade. the world doesn't end, but the margin is getting worse. geopolitically, trump is a fair trade not free trade, guy. -- kind of guy. this is one of the implications of that. if you do not play nice with me, i will shout at you. it seems to be that we are seeing that play out now. anna: he was returning on friday with certain measures on steel. interestingly, gold is actually down this morning, down to

tencent -- down 0.2%. you made the comment that stability in a certain markets, that is a topic. will you flee from the marginal or the peripheral into the core. anna: we will do that. peter toogood stays with us. coming up, there are stories we are also covering. the saudi wealth fund is said to be interested in elon musk's plan, but cut the sec scrutiny impact the electric car company? this is bloomberg. ♪

>> that is really a question of at what point do we see a coordinated policy response from the authorities. it doesn't have to be only monetary policy. i think it has to be a combination of monetary policy, fiscal policy, and foreign policy. which banks have exposure to turkey? explain what the euro is selling off as many as some of the nonrelated ema currencies. that will be the interesting thing to watch. manus: that is the very latest this week of analysts reacting from the lira's slide as turkey's crisis deepens. let's reflect on the global markets. as aee the equity, as well slaughter taking place on the left-hand side. indonesia has intervened, as the rupee hit a -- the riviera hit a

3 -- the rupiah hit a three-year low. when it comes to: see -- to currency, this is where you see a white knuckle ride. the rand absolutely got pasted. it dropped as much as 10% at one juncture in opening trade. we managed to rally somewhat john the back of that. likewise with the ruble. everyone trying to benchmark the reaction. money flowing into the yen and the havens of choice. anna? anna: let's have a little more reflection of what is going with the lira. they are trimming their losses as the central bank in turkey boosts liquidity. we just showed a lira chart to give an idea of what is going on. just at the top of this hour, we have announcements -- after the top of the hour, but this hour, announcements from the central bank. a list of measures they say will support proper functioning of the markets.

big reserves, discount rates used against lira transactions get lenders the flexibility in collateral management through this regulation if continued valued banks --. it goes on.there are measures they are announcing . they say they will take all necessary measures. fx limits will be raised from about $50 billion. things are moving, and it seems to be -- will it be a short-term impact on the lira or will it be sustained? here is the bloomberg business flash. you.tte: thank saudi arabia's sovereign wealth funds is in talks for a significant investment in tesla as part of elon musk's plan to go private. the investment fund built up its stake in the electric carmaker almost 5% in previous weeks. bloomberg understands it is taking it private. they did not respond to a request for comments, and tesla declined to comment. softbank which has been touted as a potential source of capital

for a buyout of tesla is not planning on the dissipating in such a deal. according to bloomberg sources, they say that japanese conglomerate which held talks with elon musk last year about a potential investment is not interested in re-visiting a deal. that is your bloomberg business flash. anna: thanks very much, juliette saly and singapore. emerging-market currencies seeing the pain from the meltdown. the rand was down by more than 9% at one point. the mexican peso slumped and the lira continued its slump. let's broaden the conversation away from turkey specifically. isrochina -- peter toogood still with us. i have a chart that shows that speculative bullish dollar positions we see at the moment. there are a number of voices saying the dollar has done the best of its games. it is nearing its peak.

others saying the dollar goes higher from here. we are watching the emerging markets fallout. publish are you on the dollar? peter: it is the last place you can hide apart from the yen. any chance you get a dollar asset bubble or a u.s. dollar asset bubble, how many times have people corrected and said the dollar has reached its nadir? i was reading a newspaper from 50 years ago. sterling was three to the pound. where are we now? 128 and falling? it has been a long-term trade in some respects. it is fair trade today because people think the u.s. economy is strong. there has been a trillion dollar fiscal stimulus thanks to mr. trump. safe havens in terms of growth. i think it carries on. justurkish event is another nail in the coffin for the european self-perpetuating recovery, which i do not believe either.

it has all been very difficult. anna: king dollar lives on. manus: one of our guests yesterday said what you see is the corporate's in china and turkey rushing out to hedge their dollar exposure, hence why we see this point of money into the dollar. high anxiety. emerging-market currencies are starting to show it. do you expect to see more intervention? the indonesians have done it. is that the next market moving step? peter: it is the logical response, barring jacking up your interest rates. i think the people are protecting themselves, but i think the thing may have seen the last two or three months is people selling peripheral assets. europe, people allocated to the u.s. and you see it quite actively. there is a lot of allocation going. anna: peter, thank you. seesaws,, as the lira

what does it mean for banks in the middle east and europe? we will talk more about that in regard to the turkish crisis, and recap what the federal bank has been doing. this is bloomberg. ♪

manus: live shots of istanbul, bloomberg is on the ground. we have the latest news on the lira, which is at the central bank and them lowering the requirements by 250 paces more than 250%. the move should at 10 billion liras of liquidity. this move in the very near term on the fx side. we are seeing movement by the central bank. is that enough? that is the question that we need to ask ourselves. anna: yes, how short-term will the reprieve be, that is what we

will see. later today, opec issued its monthly oil market reports. tomorrow we get second-quarter gdp data out of germany, the netherlands and the eu as a whole. on wednesday, brazil decides whether the former president, it who is serving a lengthy prison sentence for corruption, can run in this year's election. manus: that is one of my favorite stories. talksay, the brexit resume in brussels. we round off the week with the s&p sovereign rating. guess what, turkey. much check in on the markets. these markets are a challenge. good morning. >> good morning. that is right. of red across asia. japan down more than 1%. china down one and 4%. hong kong down one and a fourth percent. we have u.s. futures in london futures pointing to a lower open.

this is due to contagion in turkey sparking wider concern across the globe. i want to take a look at what is happening right now with the lira. it dropped 10% this morning, falling to a fresh record low. it hit a number of new record lows. it has trimmed some losses. central bank boost liquidity 15 minutes ago two the markets. i am looking at what it is doing against emerging markets. in the white you have emerging markets. is the rand. they are trading against the u.s. dollar. the yellow is the lira. the rand is one of the standout em currencies to watch. it punched -- plunged the most in more than a decade. it would continue to be influenced by that lira through the sentiment channel. lirasay until the stabilizes, it will be rough for that's south african rand to stabilize as well. moving on, i want to take a look at the gmm today. .t is another sea of red

equities getting a little more stiff. indonesia, taiwan, qatar. qatar from yesterday, interesting story. we have the gulf bank under pressure, their exposure to the central market. especially the qatar national bank. the mostst banks all in more than a year. now it is pushing pressure on qatari stocks. south african rand, peso, all of these are emerging-market currencies taking a hit. in the sovereign bond, i want to look at the turkish ten-year. this was on friday's close, turkish has yet to open. yields serving 199 basis points. with all of the details we need to know. a lot of red and very bright red. let's bring you breaking news of a different nature. this is to do with korea, or the two korea. /kim will hold a moon

summit in pyongyang. south korea is moving, north koreans jim john kuhn will hold a summit by september. we watched with interest with the other summit, that was historic. we will watch with this went to see what it delivers. the korean won is weaker but it is in good company with emerging-market currencies. only down .5%. it is fairly robust and fairly theactive in the face of emerging markets selling pressure. let's get a bloomberg update. here is juliette saly in singapore. juliette: china may temporarily halt purchases of -- of natural gas through the winter to avoid potential tariffs amid the trade can't -- trade conflicts with america. would get cargo from other come -- countries and force shipments to avoid paying additional tariffs. petrochina could not immediately

comment. is. president donald trump "truly a racist and a con when it comes to diversity. that is according to former white house aide omaroassa. she wrote a tell all book about the first year of trump's administration and said she wrote a -- has a secret tape of her firing. the comments drew him or puke the white house as administration moves aggressively to counterclaims it made in the book. spacecraftunched a that aims to fly closer to the sun than any mission in history. the solar probe lifted off from cape canaveral at the start of a mission to touch the edge of the sun. inwill reach solar orbit november and make 24 close approaches to the sun over the next seven years. president ronald trump has again

taken to twitter to criticize the company who wants was a truly american icon. harley davidson's boycott of the company has made -- abroad. he said many should boycott harley davidson. andr companies are coming our direction, including highly competitive spirit a really bad move. u.s. will soon have a level playing field or better. for hours a day powered by more than 2700 journalists and analysts in more than 120 countries. much. thank you very we have this breaking news coming through on turkey. we have a little bit of news from the central bank. theirre lowering requirement for the lira and the dollar liability. turkey is an economic war according to president erdogan. urging his country not to panic as the lira breached the big

level. it triggered a global contagion. we have been talking about it since 5:00 a.m. london. we brought in chief economist for bloomberg. good to see you this morning. this is the first of a con -- of concrete evidence that the .entral bank can and will act they have added liquidity. is this enough? 6.7,urkish lira trades at so we have come back from the very initial lows. is this enough? ofthis additional injection local currency liquidity appears to be stabilized in the lira within a day. it is not enough to stop the crisis. i think more set of measures are needed, in terms of monetary policy, higher rate, lower spending. in terms of capital control, perhaps the imf. this is something more that is needed. morning to you.

what kind of measures could policymakers do to sustain them the freefall. a rule out the imf and higher interest rates in the talk of capital control. how people talking about you need 1000 basis points of interest rates. some people say only capital controls and even that will not helped other businesses that boat in other currencies. typically they do go into currency crisis. the currency crisis is full of stories about countries that went into currency crisis. the typical response that you go with these episodes is that you have a tightening of fiscal policies. you have higher interest rates. you probably have foreign country denominated debt and the involvement of the imf. and some form of capital control. that is some combination of these policies we will see in turkey with the freefall of the

lira. manus: the one thing which could happen is this dollars shortage has got an implication in terms of banks and in terms of their funding, their ability to refund banks and corporate's. we will not know about that until later in the year. this story just does not stop here. this is about refinancing in dollar terms for corporate and it is quite big. ziad: absolutely. the level of appreciation is significant. we will see the full impact on that in inflation. we will see the full impact on their foreign currency debt. we might see some form of that systems of the banking and what happens in terms of capitalization and asset quality. we have yet to see the fallout from the lira depreciation. ziad, chief middle east economist for bloomberg economics, bringing us the

latest on turkey. staying with turkey and the lira crisis and reverberating through banks, it has cut stop prices for lenders. no directittle to exposure to the crisis on the economies. investors are worrying about contagion taking through the financial system. let's talk about that. we talked about this a little bit on friday. we saw weakness in particular banks on friday. we got a nice graphic that shows the level of exposure of assets, unicredit and for others, whether to turkey or russia. what is the nature of your concern about european banks? a seoul tradehave base purely upon attacking bit lira and turkish assets. individual banks are going to be exposed. there isthat restructuring and there will be. there is billions of dollars in debt for turkish corporate.

you will get the fiscal response, monetary response and restructuring, whether they like it or not because they have no choice. the banks do account for this. this is what they do. they account for some of these problems. that is why they have capital. anna: it doesn't sound systemic? peter: it is not big enough to be systemic. of those wonderful things where everything is going well and everyone is happy, and slowly little things go off one by one. this is another example. manus: it is good to hear that it is not systemic. i suppose that is one of the things -- one or two notes came back and said we will reflect back and we will read this. what does it do to monetary policy? the probability of a hike in september for the fed, that is pretty much a shoe in, then you look at the other probabilities. we are looking at december and that is dropping. we are coming back to almost a

coin toss, excuse me, mike alliteration has murdered me this morning. -- theydon't need this just don't need this headache at the moment, do they? peter: i don't think the u.s. will be concerned than -- concerned by this. it is at full capacity. you could argue the demand pressure -- most of the developed world is saying we are right up there in terms of loot -- in terms of utilization and capacity. it will continue to go up. s&p goes down that is a different debate. at the moment it seems to be rock solid. the only thing that will move the central bank in the u.s. will be asset price depreciation as opposed to appreciation. back we said it had come and come off low because of those measures taken by the central bank. we wondered how long they would last. now we see the dollar is up 8%

for turkish lira. peter: lowering reserves does very little. easing liquidity, but so what. banks have melt bigger debts than they had before two weeks ago. it will not help. anna: enabling them to lend more? peter: the banks can lend more, so. anna: we were talking about contagion, you mention europe could be the place that is troubled more than the united states. this is the correlation you don't want to see. this is the correlation between the euro and the lira. there was something of friday that was very much at the heart. how the eurout is going to perform during a trade war. , challenges from trump to the globalization, now we have pressure on the euro. how week does the single currency get? peter: that is all going away

now. the euro won't respond to domestics and exports. that is where the growth comes from. global growth is cresting and china is slowing. that has significant implications for the euro area. that is why the u.s. is busy stimulating and that -- and europe is taking monetary policy back the other way. with theat is peter group cio. reminder, if you are a bloomberg user, you can interact with the charts using bit gtv go function. anna,n interact with myself and anne-marie. you can run whatever analyst six -- analytics you wish you saw. this is bloomberg. ♪

is 6:40 eight in london, 9:48 in dubai that takes in istanbul. you're looking at the lira at the bottom. it has been if eviscerated. we were dropping 12.5%. we rallied back 10 billion worth of liras. what comes next? could it be higher rates from the central bank? we are waiting to see the local fx shops open. they will open in just under 12 minutes in istanbul and the rest and turkey. a potential escalation point. there is a shortage of dollars. where -- will bilby any kind of

rest, or are they shopping -- will there be any kind of rest, or are they shopping? will it last? anna: it depends on what you are earning. let's talk about what is trending across the bloomberg universe. let's see the other stories. on tictoc they are talking climate change. his climate change coming for your champagne? warmer nights are pushing maturity earlier and are bringing new diseases. then you go to bloomberg.com and you have a subject close to many people's hearts. you have highest prices for the fifth month in a row. that is the longest losing streak since the financial crisis. terminal,he bloomberg they reckon the dollar rally may have further to go. we talked about that this morning. saudi southern wealth fund is send -- said to be -- to take

tesla private. continues with fears of contagion for other markets. find out more now on your bloomberg terminal. let's talk about tesla and saudi southern fun. they are looking into funding the buyout for a private tesla. any built a stake shy of 5%, investment that allowed the world's biggest crude producer to hedge against oil. there is an investor lawsuit over the company share price jump. joining us now is bloomberg's chief north asia correspondence. what is the latest -- correspondent. what is the latest? you can see why it makes sense, the logic debit -- logic of it. lot of sense. but again, against the backdrop of that tweet heard round the world on august 7 when elon musk

said he was thinking about taking tesla private. what we haveparked already seen as a couple of potential lawsuits and an investigation. i will talk about that in just a second. as far as the saudi's and the public investment fund taking stake. this is something we are hearing from sources. they were discussing that with sources even before they tweet on august 7. the all ready have close to a 5% stake. they would like to take more. they could see it as a hedge against oil. for tesla, they need capital if they will do this by out. when he tweeted it would be $420 a share buyout, that would value the company at $82 billion. he needs to raise a lot of money and have cornerstone investors. societies were talking to elon musk, this was before the august 7 tweet. in terms of other interested parties, softbank was a name

being thrown around. is it official, do they have no interest, do they not want to be part of it? stephen: this was just the case of connecting the dots. we know that the chairman of softbank and elon musk, last year, had talked about a potential deal. they walked away from that because of various differences. we are hearing from other he is notat interested on revisiting such an investment. he has all ready made other investments in technology in the auto space, including 2.25 billion dollars in driving units. as well as uber, also china's company. it doesn't look like that is in the cards for tesla. stephen engle, our bloomberg chief north asia correspondent. peter toogood is our guest this morning. simple question, would you lend

elon musk the money to take the company private? it has never made a profit and is supposed to do that next year. how hard will it be to raise this money? stephen: i would not lend him -- lend him auld not penny. all these cars are coming out with electric cars. they have better cars. they have been doing this for substantially longer than tesla. it makes no sense whatsoever to do anything if you are a car company. anna: this is about the fact that the advantage will be lost? peter: the way he is behaving, he is responding erratically. nothing more, nothing less. the saudi conversation goes on. i was them.bmw if why would you buy tesla? it has no network. they cannot get it car service because there is no tesla

dealership. it is insane. i think the behavior is unbelievably erratic. i know he hates us financial scribblers, but main car companies are about to move in. just what does softbank do, buys the g.m. version. -- what does softbank do, buys the g.m. version. manus: why do you think they have built a stake of 5% and would be interested? this would suit their mandate to do a deal like this? peter: it would. the diversification is logic. huge investors in all search of energy -- all sorts of energy. is doingnow what tesla that anyone else is not seeing. they are going to be roadkill once the main car companies, which are now doing this, which

jaguar has the x three, the bmw, they are going to flat in textile a. why would you buy a tesla if you could buy an electric bmw? really? anna: what dictates whether it should be a private company? the behavior of the ceo? peter: clearly. he comes to market and raises money on individuals and takes a profit. good luck, take it private. thes not just buying out company. he has to service it. i do not understand it at all. everything is about the new world and the new exciting and shiny things. are -- are we all losing our minds? anna: i am so glad we found time to talk to you about this this morning. manus: absolutely. would not lend them a dime and we have all gone a bit bonkers. what a better way to finish off.

some say that is already a factual fact. toogood is our guest host bringing substance about the debate. have been reflecting. the lira has recovered and is still under pressure. the rand was where the bloodbath came, down 10%. the biggest one-day move in nearly 10 years. ithas been ripped free -- has been reprieved. will there be more of that to come? that is the question for emerging markets. liquidity,ave added 10 billion euros worth of liquidity to the market. will there be pressure on the streets physically changing currency? that is a question we ask ourselves as we look at these equity markets. anna: we have been tracking what the central bank has been doing. turkish central banks announcing are telling, they us that is maybe the move that needs to happen.

anyways, that is what we have heard so far. the market braces to see what we get later on from the finance ministry. we will be live in istanbul with the latest on turkey as the lira sides once again. this is bloomberg. ♪ retail.

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which could save you 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. manus: good morning from dubai, this is "bloomberg daybreak: europe." anna: these are today's top stories. anna: -- continues tora spiral, a moment of reprieve, the president shows no sign of backing down in his standoff with trump. we are live in istanbul. down, southdes africans ran tumbles as much as 9%. the bank of indonesia said it will intervene to stabilize the rupiah and bond. in the development, the euro is under pressure as hiking concerns over banks with exposure to turkey.

anna: good morning, this is "bloomberg daybreak: europe." we will be covering the turkey for story for you. we are live in istanbul with yousef. dramatic day. don't be disc guided by the dramatic backdrop. the story is moving quickly. the central bank of turkey has tipped in, but not with the rate hike that investors would've hoped for. ins government is digging their heels deep, they are holding the lines, but how much further and how much time do they still have? a reaction we are seeing in turkish assets tells a very gloomy story. manus: i will pick it up from

here. a wild ride.had it really has been white knuckle in terms of currency, in terms of lira and ruble and rupiah, they are whole on a whole new window volatility. we spoke about the -- and unique credit, and we spoke about the european exposure to turkey. $130 billion worth of lending. hell -- they all have exposures to turkey. there has been a demolition. will the additional 10 billion of liquidity be enough to stymie the rot? be atnks are going to real focus for us. we are showing you the currencies of the bottom of the screen. money is going to the yen, euro is under pressure. all of this is much more disconcerting to the european central bank here that is up -- that is according to peter

toogood. the risk radar. anna: let's pick up on what we have seen in the asian equity session. that really picks up on what we saw in asia, down by 1.6%. it is in negative territory despite what we seeing in the central bank. risk aversion is really on. the dollar at its highest in more than one year. been forced to currency counters are worried there. that is interesting. how this will be translated to other emerging markets and how investors will take what they see in turkey and use it to question other financial markets , question other markets. let's talk about currency market moves we have seen. this is the dollar moving higher against the south african rand. it was down by 9% today but now it is down by 3.5%.

the dollar is on the move higher against the turkish lira. when we saw the central bank in turkey cutting reserve requirements, that was not enough to stem the downward pressure on the currency in turkey. we are back to selling the lira. that is a matter here on the turkish side of things. manus: how do you benchmark whether a route is contained? yearld say go to 10 government bond futures in the united states of america. these are the ten-year bonds. they are barely unchanged. you will see movement. i'vef the ironies i -- noticed was that the gilt market outperform the country peers in germany. italy is a whole other story. there is no huge movement. this week we will get the retail sales figures in the u.s. the bond market has been in the tightest monthly range of the year. you will see short data paper come to the market. $51 billion worth. $45 billion worth of six-month.

you are seeing barely a nudge o.a.t..likewise on the you are seeing a little bit of movement into the bond market, but it certainly is not at contagion panic levels. one considered to say that, despite this it wish ration, really off -- despite this, it is really off the currency. the turkish lira is -- as this country's central bank announces a list of measures that will support financial stability and proper functions of markets. russian foreign ministry is to visit turkey today for his turkish counterpart. over the weekend, president petrochina pagenaud it -- has nont erdogan intention of backing down. you are going to sacrifice

your relationship with 80 million people for a pastor with ties to terrorism. we will do as the law dictates. you cannot make turkey bow down by ordering us around. the south african rand has fallen sharply against the u.s. dollar. othereads to emerging-market currencies. the russian ruble and mexican peso are also under pressure today. south and north korea have reportedly agreed to hold a summit between their leaders by september. citing a joint statement from high-level court says the meeting will take place in pyongyang. that comes as washington and pyongyang appear to be accusing each other of jogging their feet in implementing what was agreed at the historic singapore summit in june. temporarily halt purchases of spot u.s. liquefied natural gas car goes through the winter to avoid potential tariffs amidst the trade

conflict in america. bloomberg understands that the company would -- with other companies -- countries or swap shipments to avoid paying additional tariffs. of the state unit on china metro-rural -- china petroleum would not comment. by 2700g powered journalists and analysts in more than 120 countries. sellingasia, widespread particularly in these emerging markets feeling very much of the brunt from what you are seeing in turkey. japan down by 2%. a stronger yen impacting there. india stocks off by extensive 1%. implied volatility, but it is in the currency market as well. we have seen the bank of indonesia intervening to stabilize the rupiah. as have a look at other currencies we are watching in the region and globally. the indian rupee slumped to a

record low. that was two hours ago. the worst performer in asia. there has been a little bit of talk that some of the state profits.e dropped into down the intense of 1% against the dollar. the yen rising against the dollar on safe haven. you have the british pound failing steady. it was on track and it has been fluctuating. that is matching its longest streak since the break. juliette saly in singapore. let's turn to our top story, the turkish lira really soaring this morning. even as a central bank steps in to extend the currency. over the weekend, president accuses the united states and others as waging war on it. joining us from istanbul, bloomberg's yousef. we just heard from the turkish central bank in the last hour. ,hey were all about the rrr

maybe focusing in the wrong place right now. ultimately, the -- what the market was looking for was an interest rate hike. it is such a politically charged market. you get a sense that the central bank was skirting the asia. they are saying they take all measures necessary to preserve financial stability. gives you a little bit of flex in terms of collateral management. deposito raise the fx limit. final note that banks are going to be allowed to borrow in one month maturities in addition to the current one week instrument that are available to them. if you see them move on and interest day, the market initially rallying or we find some of those losses. you know what, it goes down from 6.4 and you are back down to seven against the u.s. dollar. the central bank has not moved on interest rates and that was one of the key interests for

global investors looking. any textbook way of response -- resolving this could be much more dramatic over the coming hours and days. , the local fx street the ordinary men and women in turkey who exchange their many. we have seen the central bank act that a high level. what can we expect next? they talked about a 1000 point rate hike. what do we think will happen next? the markets mostly says that it is better than no move, even if it is not an interest rate hike or it you look at the currency change rate -- hike. you look at the currency change rate. i have had time to talk to investors here and people on the ground. what we are seeing in reaction to these unfolding developments, hedges secure any value if you

hold lira and try to lock in the value it has by buying goods and services. that is what we saw. streets are busy in downtown easton ball for sunday afternoon. a particular theory applies to people who have currency. they have a lot of money for their bureaus. the risk is that this -- for their lira. this will translate into higher inflation. overly left -- be an overly leveraged economy. this is what the markets are looking for and they have not gotten it yet. anna: any sense of how this plays out from here in terms of, are we expecting to hear from the finance ministry, we have heard from the central bank, rrr and others around currency. any sense of what lies ahead today? any items on the agenda? any press conferences already arranged? yousef: we have been receiving reports that the finance minister may announce an action

plan to the daily newspaper. it would involve a plan to stabilize the currency. the same article says the finance minister and excluded the possibility of any forcible conversion from it existing fx deposits -- from existing fx deposits. nothing of the kind of bold language that you would expect to hear, given the current condition of markets, we understand the finance minister has been on the phone with a lot of bilateral, trying to see were else he can raise capital from. right now, stakes are higher and the fight is on the line. anna: yousef for us in turkey. senior economist at vanguard asset services. good morning. very good to have you with us. where do you look for guidance into how big this gets, how quickly, what we need to hear from the leadership? i have a chart of one month implied volatility. it is very weak and the central

bank takes some action. the market looks through it quickly and we are weak again. the turkish lira down another three point 4% against the u.s. dollar this morning. where do you look to get your sense of perspective? and look attep back the overall picture. turkey is still a relatively small country and a small market. although there are some linkages through trade and financial markets, i do not think the situation is bad enough, or the country is large enough to worry about a global problem. i think there will be some contagion to banks within europe . that asset margin does hurt growth. also, the financial market volatility potentially that the falling stock herds confidence. overall, the global picture is still strong. thelook at the u.s. in second quarter running with growth over 4% on the back of fiscal stimulus. the global picture is still strong. good morning to you.

put the equity market into context. you very clearly say, we will reflect back and say this is one of those reflective moments when it was isolated. if we look at the library, this is what took place on stocks. this is the msci turkey etf. the biggest drop since 2008. we wrote a story on thursday at thee dude, which is brokerage, buying stocks on friday. amidst the pain we are seeing in e.m. contagion, it is correctly priced. alexis: this year, emerging markets have underperformed relative to develop markets. coming into the year valuations were stretched in emerging markets. if you think of years and years of monetary stimulus, which had been stoking asset prices, a valuations were across of asset prices and that has been a stretch. the market is less complacent than a has-been in the last

couple of years. it is starting to scrutinize asset prices much more than before. there always was a risk that these types of negative news events coming out of -- even if it was one individual country, it was likely to way more on equity prices this year. anna: im not sure which one is more likely. we get political repression went to the united states or erdogan backs down in the face of financial pressure and we see capital controls and other measures reversely ruled out. even if we got one of them, that would not fix the problem in turkey, would it? even if we see the united states given turkey an easier ride, that does not change the fact that he has unconventional views about monetary policy. government may be forced to do a u-turn. we may see rising interest rates to prevent the currency from completely collapsing. that pressure may come in the end. we have had this broader picture, which i had -- i think

is been affecting e.m., which had rising rates putting pressure on. that has not helped either. debt,a problem of growing which also has hurt the economy and that will take years to pay down. companies there have become more and more indebted, given interest rate have been so low. that cannot be fixed overnight either. manus: very quickly. we are seeing trump administer quite aggressive policies to russia.o turkey, and to some people would say aggressive , some people would say america first and it is the new era of policy. do you think markets are sufficiently pricing the dislocation coming from the white house in terms of volatility? alexis: i think the market is scrutinizing the situation much more so that what we have seen in recent years. i think it is very difficult to price. there have been some tariffs in

posed on steel and aluminum globally. on chinese imports into the u.s., and the threat of even further tariffs. the market is pricing in the potential for an escalation. guesstricky because, i the probability of whether it will happen or get worse. i think the market is caring about this more than in recent years that we have seen the market be much more complacent. anna: gone are the days of complacency. alexis gray. on a day like today will we see -- like today when we see outside moves, moves that are outside the normal range, this is a really interesting place to go. we see argentina on the move. indonesia and turkey feature high on equity indices because of the crisis in turkey, but we see the indonesian story gaining momentum. central-bank forced to intervene

there. wipe the read across has been made from turkey into indonesia. see what just have to the additional policy response is. said 10 billion dollars worth of liquidity has been added, but what is the most credible policy. ? quick line on buyer. it is expected to open lower this morning as monsanto loses $289 million on a trial over claims that round up week killer causes cancer. brexit risk and the pound, next. this is bloomberg. ♪

anna: good morning, this is "bloomberg daybreak: europe." of theis still the focus

events this morning. 7:21 in london. featurecks, 50 suggesting we will be weaker at the start of trade. down 1.6%.-pacific a lot of things to talk about for emerging markets in asia and into the european banking sector. will the be more of that to come? we have the u.s. 10 year yield at 2.87. just like friday. we have money going into bonds. the resilience of g10 assets is beenhing that they have talking about. s&p features with that in mind down by 3/10 of a percent. businessto bloomberg's flash with juliette saly in singapore. juliette: saudi arabia's sovereign world fun is in talks about a significant investment in tesla as part of elon musk's plan to go public. the private investment fund has built stake in the electric carmaker to almost 5% in recent weeks. bloomberg understands it is

exploring how it can be involved in taking a private. the private investment fund did not respond to comment and tesla declined to comment. has been touted as a potential source of capital for a buyout of tesla is not planning to participate in such a deal of according to bloomberg sources. they say the japanese conglomerate that held talks with elon musk about investments is not interested in revisiting such a plan. softbank the client to comment. -- declined to comment. twoanto has been hit with hundred $89 million in damages in the first trial over claims that its round up weed killer causes cancer. john, a former school grounds keeper is dying from cancer. the trial was an important tip to evidence against monsanto and will serve as a temperate for litigating thousands of claims. monsanto says it will appeal. that was your bloomberg flash.

to brexit and the negotiations resume in brussels. the eu is saying it wants to make september a decisive month on the divorce talks. theresa may favors a late deadline. what is the outlook? the senior economist at vanguard asset services is still with us. s, when we look at the data, it was a nice boost late last week. this is about taking tell risks, it weis no brexit deal or understand theresa may is set to plan a cabinet meeting on that very subject and wants to put it firmly on the table. risk for you at vanguard, challenge the leadership, that could go on. are they now becoming much more real? alexis: i think they are becoming real because we are

coming towards the end of the negotiation window. to leave therying eu in march of next year. there is not too much time left. you would hope we would come to some agreement. the deal that the u.k. is looking for at the moment still eu some issues, which the will not accept handling between the border of ireland and northern ireland. i think the risk of one of these scenarios is a crash out no deal at all, or it will end up in another election, perhaps to even 40%. that is a material tail risk. anna: we talk about the uncertainty leading to higher percentages to those tail risks. what do you see in the underlying data? the sun seems to have gone to our ahead in the second quarter of 2018. that benefit some parts of the economy, not others? alexis: that is compact. -- correct. it was perhaps posted by the

edding.ather, celebrations of whether that momentum will continue into the back half of the year remains to be seen. we have seen a gradual drag on the economy from uncertainty that has not pushed the u.k. into recession, but has led the u.k. to underperformance peers. the economy needs a pathway and an understanding of what will happen over the next couple of years so companies can make decisions about hiring and investments. anna: senior economist at vanguard. you can listen on bloomberg radio. it is about the turkish lira. you have to say there was some reprieve. we saw liquidity being added. what is next? is it rate hikes, is it controls, capital controls?

the asian rupee has intervene. -- listen to bloomberg daybreak on our radio show. the show continues with the team in london. this is bloomberg. ♪

>> monday morning and good morning. welcome to bloomberg markets. the europeanrom headquarters here in london. i am guy johnson alongside matt miller in berlin. >> we are glad to have you back but markets across asia are deep in the red and traders keep their attention on turkey. the cash trade is less than 30 minutes away. guy: turkey turmoil.