anna: good morning from london. manus: this is "bloomberg daybreak: europe." these are today's top stories. north american trade talks are making progress that can assess a huge amount of work justin trudeau valves to protect his dairy industry. the u.k. tells the european union must compromise its opposition to theresa may's plan or risk and no deal brexit. and a stronger europe, the french and german finance minister say the e.u. needs independent financial tools to steer clear of u.s. sanctions and pledge progress but the end

of the year. manus: a warm welcome to daybreak. we've got a little bit of breaking news. malaysian energy company net income doubled, they plan to by 50%. state dividend ringgit. billion in terms of capital investment, a couple of other lines coming through. 2018 capital investment will be 19.8 billion, that's down a little bit of course it's all nett containing capex, income up from high point 18 billion just over year ago. the big blockbuster headline is all about that.

company so you would actually have it stock price. it is about the boost in the dividend. prices, thoseil are the top lines. dividends role in. anna: good morning, let's have a look at the risk radar. the picture in asia a little wobbly and shaky overnight. no great loss in the overall picture but there have been some early gains that were lost. the market a little nervous about president trump linking global trade and geopolitics ticks -- g and politics. that's something the market is focused on. .reasuries pretty steady one thing that is not steady is the new zealand dollar, the kiwi down by .9%. negative news those around the

australian dollar and the new zealand dollar, but the bit weaker this morning. sticking with the kiwi, business confidence hitting a 10 year low. but taken a hit as result. out as trade tensions play with those currencies. let's look at what happened on we did seenian peso, a big gain in the dollar, up by 8% against the argentinian currency yesterday because the president they're asking the imf to speed up the disbursement of payments of that credit line they had been promised. i was taken in by one of the lines by one of our colleagues who said he has essentially broken one of the first rules, don't let them see you sweat. this is what happened to the currency. manus: don't sweat the small

stuff and click when the phone. are you brave enough to buy chinese stocks? we quite like china, there's an opportunity, when jpmorgan says yes, you want to do it, because of the differential. the s&p rocking out those records for four days in a row. you had china underperforming, so the gap is about 10%. can you close that gap? meet and marry the global stock rally that you've got? jpmorgan says yes, you should want to get involved. the target on the msci, china for them is 95. growth is not as bad as we all seem to be going on about. manufacturing investment has held up. to that extent the best case

scenario will begin to look at the chinese markets as an opportunity. can you imagine the uncoiled spring that we've got if there is progress in november after the midterms in regard to china-u.s.? how are those s&p futures looking? the s&p futures, suggesting a little bit of a wobble at the start of trade but not by much. shares on that debtor tech data, all about moving things higher in the united states. upuick word on what's coming awe will be joined by chairman and ceo just after 7:00 london time.

with brexitto do and global trade. and sustainability of the chinese business, which are colleagues want to know about. that's get the bloomberg first word news update from juliette saly. tall trump has accused china of undermining u.s. efforts to pressure north korea into giving up its nuclear weapons, indicating his trade war with beijing is starting to exacerbate geopolitical tensions. tripresident called off a for mike pompeo thing there has not been enough talks and he would probably return after u.s. trade disputes with china were resolved. >> i don't like to call it a and our country's doing very well but china is having a very tough time. i think china makes it much more difficult in terms of our

relationship with north korea. u.k. government has told the european union it was compromise on its opposition to theresa may's plans are risk a note deal brexit. anyite minimal evidence of bond the frozen brexit negotiations. at the same time, the france finance minister said britain cannot have its cake and eat it as it quits the e.u.. but everyone has to be aware that you cannot be in and out. you cannot be out of the haveean continent and also all the advantages of being a full member of the european union. you do not have the same position and rights and advantages as the other ministers.

donald trump's former campaign manager paul manafort is seekingo -- motor more time to decide whether to retry metaphor on 10 counts, facing a deadline yesterday to make a decision, he said his team didn't have enough information to make that call because manafort's lawyers have not filed their posttrial motions. the judge did not immediately rule on the request. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. find more stories on the bloomberg at top . a mixed movement coming through in asian markets but a lot coming through from the csi 300 for a third session and that's weighing on the overall benchmark index which started the day's traded in positive territory but is slightly weaker now. a little bit of rally come through in aussie stocks despite

the fall in the aussie dollar and the nikkei does holding its head above water there. let's have a look at some of the stocks we are watching. the big story is the deal and australia to create an $8 billion company. telecom shares are hired by overall telco the sector in asia is the biggest drag today. downgrades weighing on the overall sector there. we were talking to be samsonite ceo earlier and they say the chineser is impacting consumer sentiment. they're expecting a little bit of slowdown in chinese sales growth of their luggage but the shares still doing well after their results were up by 4.4%. anna: thank you, juliette saly. we've got a headline that says in tn diffuse a claim by

nigeria's central bank over $8.1 billion in refunds. banks toad ordered for return more than $8 billion. story, andigeria's ongoing situation regarding to the dealings in nigeria. this is the latest call from the central bank for this big refund . our top story, back to that, euros president donald trump says talks with canada to overhaul the was american free trade agreement are going well, expressing optimism that the two countries could reach a deal this week. are negotiating with him right now. they want to be part of the deal. and i thinkl friday

we are on track. we will see what happens, but in any event, things are working out very well. meanwhile, justin trudeau has said his government's trying to reach agreement with the u.s. this week but added that canada want sacrifices goal of getting the right deal. it's all that in mind, let's go to tokyo now. you thisod to see morning. the midnight oil is burning in washington with canada seated at the table, fully engaged, and the noises seem to be good in regard to compromise. how close are we, what are the main issues being hashed out now? >> as you pointed out, the two sides are trying to get a deal done by the deadline or friday. the main points in focus our the dairy industry, u.s. dairy produces has said they are toing sales in canada

domestic producers because of canadian government policy. point, andticking this is really a crucial point, is how to resolve future trade disputes. currently under nafta, they have byitration panels that are national that have been set up. the united states wants to get rid of these and canada is adamant they have to remain. prime minister trudeau has said this is a redline. to give you some historical awayective, canada walked 30 years ago from a free-trade agreement with the united states about these very same panel. the u.s. ended up conceding, so you can certainly expect this to

canada will dig its heels into. anna: thank you for that. to balance out with what you just told us, what is at stake in terms of the talks in it they don't go well? we've heard some industry groups calling for the need to maintain a multilateral trade deal rather than just having bilateral between the united states and mexico. >> that's right. doneey do not get a deal by friday, president trump is that he will go to congress and say the deal with mexico will replace nafta. that may just be a negotiating tactic because the two countries do about $525 billion worth of trade annually. of the important points to bear in mind is that the supply chains of both countries are very tightly interlinked. to give you one example, companies in detroit and windsor, ontario, are completely intertwined with carmaking and car parts. if he did see some kind of breakdown in nafta or at nafta were to be scrapped, it would

quickly involve the courts and congress in the united states and you could expect a lot of resistance at you alluded to among the business community. much, bret,you very with the latest trade headlines. peter, great to see you this morning. thanks for joining us. let's talk about what this means for your world. talk about canada's willingness to negotiate, that seems to be eight positive, but then there's the point about the antidumping panels they previously been prepared to walk out of deals around. we've seen risk appetite being tainted by this story. continue, weks don't have to get an agreement by tomorrow, but if they continue to be around the table

discussing the trilateral deal, it's likely the positive sentiment continues. is, aret i would make more structural basis, i would expect the bond investors are likely to view this as an opportunity because what it actually means is that a lot of the data in the u.s. in particular, which has surprised on the growth side, is caused by temporary factors. we've got the impact of the tax plan which has boosted the data. we've had the threat of tariffs which has brought forward a lot of economic activity. if we're in the next phase of president trump actually being supportive of global trade, then we can assume that a lot of be factors do indeed washout and you don't get the inflationary impulse. you.: good morning to

this is a reflection of the five-year breakevens and also the fed measure of inflation. are we underestimating the inflation impulse? peter: i don't think so. i think that the inflation impulse, if trump is going to be positive entrée going forward, i think the inflation side has probably peaked. i think the only likely to see inflation being reassessed to the upside if we get a more dovish outlook from the fed, if they moved to position greenspan, alan where they signaled that they're looking to allow inflation in target, to run above

meeting the long-run average moves back toward the target rather than being below target. so for the time being, i would not be expecting inflation expectations to be rising in the u.s. from here. and jay powell genuflect it on productivity shifts back in the 1990's. stay with us, we've got a lot more to get through. up, the u.k. warns at the e.u. has to compromise or face a no deal brexit. talks resume tomorrow in brussels. and will speak exclusively ceo.e credit suisse you can see that interview tomorrow morning. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." the pound against the dollar fairly unmoved this morning. early lines coming through from germany. the negotiator on brexit saying we cannot speak about success regarding brexit. not entirely clear what the meaning of that is just yet but it's a day after he said he would be prepared to offer something unprecedented in terms of a new partnership with the u.k. at the e.u.. let's get the bloomberg business flash from juliette saly in singapore. juliette: four has seen it credit rating cut to one notch junk.

citing the erosion of force global business position as a turnaround plan that could cost more than $10 billion in the next three happened five years. vodafone hutchison australia has said it will merge with a local broadband provider in attempt to better challenge market leader telstra. some $3.5 billion u.s. of net the will begin teed by offshore giants. samsonite international says the trade war between the u.s. and -- saying they play into slower sales group and its second-biggest market in another sign of the fallout from the tit-for-tat care of. seconda move into the half, think we will be in the

high single-digit range for china. i do see consumers feeling some of the impacts. tonk it has some impact consumer confidence and sentiment. and that is your bloomberg business flash. manus: juliette, thank you very much. when it comes to brexit, the u.k. government has told the e.u. it has to compromise or risk ending up with a no deal. the pound rallied to the highest level in three weeks yesterday despite minimal evidence of any progress on the divorce negotiations. -- saying a no deal brexit is one part of the e.u.'s plan that we must be prepared for any and all options on brexit. peter chadwell has been

listening to these comments. anderday was about possibly a president for the u.k.. we saw the pound rally. saying it could prompt the bank of england to get a little bit more aggressive. if they strike a deal that goes through, and i'm projecting into the weeds here, how much more aggressive do you think the bank of england could be next year? that whatl, i think the market is underpricing is the possibility that the bank of england could go with the next hike as soon as february of next year. i think what would give the bank , moreland more ability intent to move rates of quickly would be as long as they didn't

risk.y clear brexit i think that's something that movingeave the curve toward a flattening. that is the big thing that we like care. really surprised at how little is priced into the sterling rates curve, the money market strength in u.k. rates because the bank of england has made their reaction really quite clear. , you so if you see a deal think the bank of england could move as early as february. deal, what kind of demand is that the 24 gilt? one person's haven may not be another persons haven. i got it chart that shows low volatility at the moment versus pre-brexit highs. what about the gilt market?

peter: i think you've touched on the dynamics that are really important. if you think the front end of the curve is the most clear expression of demand for sterling and the currency, while the long end of the currency is where you have that quality demand as more of a rates component, then i think that is clear. lack of demand for sterling because the currency would be on the downside, could push front end yields higher. it could actually push the curve flatter. peter thank you so much, with the latest news on sterling. underpricing the bank of england. will hear from the finance ministers of germany and france.

is the european voice coalescing in response to donald trump's white house policies on trade and beyond? this is bloomberg. ♪

manus: it's a lot shot of berlin. this is "bloomberg daybreak: europe." what a beautiful sight of the brandenburg gate there. relationship was in syncopation up until may or the start of august but the euro has traded higher of its own pollution. yesterday it was about a unique proposition being offered on brexit. today he's saying a solution is possible to avoid a hard border with northern ireland and saying

the market must be preserved and protected. no deal brexit is one part of the e.u. strategy, but that's progress around the border in northern ireland. french giant -- first half operating income comes in well above estimates. the revenue number also be the estimate. interesting to see if they say anything about the telecom space, how they are doing in terms of gaining or losing mobile clients. on the m&a front, back in july they said they were ready to seize any opportunity as they rise. construction in an economy that has been doing pretty well last ahead to the 2024

olympic games as well. a lot in the conversation concerning their outlook. let's look at what's coming up in what we should be watching out for today. trade ministers are gathering in singapore. anna, the new four ministers will discuss the middle east-transatlantic relations, the iran nuclear deal, and north korea. anna: interesting in that context what europe can do to protect itself from u.s. sanctions and german chancellor angela merkel takes in a visit to africa in the same week we saw theresa may on african soil. let's check out the latest market action here in london. that fresh record from the united states seems to be falling flat in asia. the s&p 500 closing above 2900.

we do have japan and australia slightly up, but how long remains to be seen. the have been fluctuating throughout the trading day. hong kong down .9%. seemed to be way down as , astrade disputes continue donald trump is calling up china for having weaker discussions with north korea. i want to look at what is happening with china against world stock. here we have the msci china index versus the blue world index. is saying the recovery for china may be sin. index willmsci china have a 14% jump from yesterday's clothes, saying economic growth is not as bad as investors have priced in, worries about the weaker you want as the central

bank continues to stabilize the currency. i have to look at the argentine peso today. these are the one-day percentage changes to it you can see the record lunch we had yesterday and a similar drop back in may of this year. both of these drops are the most we have seen since the currency free floated in december 2015. asking to speed up and it's a show it had enough cash on hand for the budget. it was meant to reinsurer -- reassure investors but you can see it clearly took a backlash. manus: a splendid job there on the peso. with the best case and eric the let's get to juliette saly with the first word news. good day in singapore. juliette: yes president donald

is pressingtalks -- optimism the two countries could reach a deal this week. earlier canadian prime minister justin trudeau said his government is trying to meet the same deadlines. is fourame time, ministers did note that the talks are progressing well. >> i feel that both parties are coming to this stage of the negotiations with a lot of goodwill. certainly that is what canada is bringing to the table. we understand each other's positions very well. the imf has said it will continue argentina's request to speed up its credit line is the government seeks to restore investor confidence. they came about nine actors -- nine hours after president macquarie surprises nation must saying his country needed the

money to demonstrated had enough cash on hand to bump its 2019 budget without going further into debt. the peso plunged to a record low. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thank you, juliette saly in singapore. trade tensions have been at key talking point. caught up with the finance ministers of germany and france and ask what they are doing to avoid u.s. sanctions. were fighting for an independent iraq. that countries will be able to make trades with whatever country they have decided to choose. that is exactly what we wanted to build. it is difficult than it will take time, but thinking about new solutions, at the end,

hand-in-hand, france and germany, we will build a stronger euro, an independent one, one will be up to phase through the difficult times we are facing now. thece and germany and all member states, when we're together, we are stronger and we are independent. we have learned together that it's necessary to work together. we've learned that we would not be successful if we stood alone but we are working together. reasons whyof the we've had some success with the united states. i think this should be the course for the future as well, a democratic and united europe which is working together is the and we have to follow to be a

sovereign continent that is able our democracy, our ways of living and what we think is necessary. manus: our reporter in paris joins us, talk us through what independentbout e.u. financing. it's very difficult and would take a lot of time. it's all about finding some way to get around u.s. sanctions on iran. changes, there is not a huge amount the europeans can do to avoid sanctions. they've spoken about different things, there was talk that european central banks could set of special accounts but european banks wanted nothing to do with it.

to risk that.ant it's a very long slog. anna: there are suggestions of what could be done but no sense of how big the ambition in europe could be. it've touched on some of that has to do with the dominance of the dollar. greg: whether your trading in commodities like oil or it's alll aircraft, denominated in dollars. that's not going to change. financing,le of u.s. a transaction will have to go through some sort of u.s. bank or the new york fed if you're dealing in dollars. these companies have many more operations in the u.s. than they do in iran. year may be the

equivalent what they sport to the u.s. in a week or two. the companies are not interested in taking the risk. overnight ordain things to get around u.s. sanctions on iran. update come for the the latest on that question independent financing. that conference is taking place in paris. peter stays with us. let's talk about some of these things in europe. italy, and hear , we can see it spiking upward like it did in 2011. that just shows the extent of concern and divergence around the periphery. peter: essentially we have two different markets. the italian market has just

become completely isolated and disconnected from even the other peripherals in the euro area. can also look on the italian sovereign curve and see similar dislocations materialize. i think it is all a function of foreign investors having abandoned the market, moved to an underweight position. bethe potential for there to a short covering rally is actually quite strong. key that we really may not be able to continue with the valuation, these level of spreads over the medium term. we just had a few lines

come through from fitch, adding to the conversation we're having. saying the euro exit is highly unlikely. essay reforms in italy are increasingly difficult. thatrday we had a story they would speak to the ecb and ask for help. that has been denied. one thing that is for sure is as muchly is not having of a correlation with the euro as it used to. the correlation has broken down. is that a good thing for the rest of the periphery? the rest of the european bond complex? rallying,the euro is it becomes a bit less helpful for the real economy in the euro area.

that if the mean euro is more in favor with investors, it could help to drag prices. that dislocations that is just materialized could reconvert, could eliminate as a result with the euro continuing to rally and for the fx-based investors looking to buy european assets that have a positive yield. one of the things that has happened was this italian crisis has reemerged, the german bond yields are extremely low. if there's more upside for european assets it could well it back to european radar. some of my colleagues at

bloomberg economics talking about the headline inflation number remaining pretty constant. reactingme people quite positively about consumer lending data. outlook andconsumer the outlook for inflation for you in the eurozone? peter: i agree that consumption is solid. ecbcredit data that the gets out has been very supportive. i am of the view that the inflation outlook for the euro area is looking the best it has time,or a very long certainly since the start of quantitative easing. for the first time in a number of years, i'm actually thinking that monetary dynamics in the euro area are so strong that what is expected of ecb monetary policy is to dovish now.

i think there is a risk we get a hawkish correction. maybe they could be in for repricing. more to come. africa's largest wireless operator said it is strongly refuting allegations by the nigerian central bank that it illegally expatriated dividends amounting to $8.1 billion. lonnie, good to see you. these allegations first came back in 2016 when it was investigated. subsequentlye dismissed. i suppose the question is what is fresh and new in regard to this story?

have a little bit of a problem with getting through to our reporter on the ground there. but refuting the claim that $8.1 billion was expatriated from the country. we will get back to lonnie in just a moment. host get back to our guest . peter, if we talk about emerging markets in general, there is a host of factors at play. there'sguest said nothing else to be considered except the strength of the dollar. that ultimately is the biggest risk. would you agree in terms of the flow you are seeing their? peter: i agree that it's all

about the dollar strength. this is where the argument .ecomes tautological the dollar strength is probably unsustainable. it's more downward pressure on the m currencies and riskier asset classes for cisco this likely to have a negative implication on u.s. financial conditions. is logical extension of this that fed monetary policy is likely to go into pools. i'm calling into question whether or not they will be hiking in december and even in early 2019. persists the pressure and it really does come down to the dollar because of the positive rates. manus: that depends whether you believe the central bank in the united states is resuming its global mandate rather than an

america first mandate. peter stays with us. more to come in a moment. let's get the business flash with juliette saly inner singapore studio. adding to problems including a restructuring plan that would take years to complete, moody's downgraded the outlookwith a negative siding the erosion of ford's global business position in a turnaround plan that could cost $3 billion in the next three happened five years. samsonite international said the trade were between the u.s. and dampening sentiment among chinese consumers. world's top luggage maker said it plans to slow sales growth in another side of the fallout from the tit-for-tat tariffs.

the think we will be in high single-digit rate for china. i do see consumers feeling some think itpacts and i has some impact to consumer confidence or sentiment. juliette: credit suisse having second thoughts about doing business with the owner of the national inquirer, which is at the center of a scandal involving hush money payments to women who had affairs with donald trump. playing to help refinance about 421 -- $420 of debt. declined toves comment. that is your bloomberg business flash. anna: thanks very much, juliette saly in singapore. south korea could be home to the city, a 720 we

dollars project that looks to .ring unlimited bandwidth there will be no escape. manus: none at all. keep ties withto the uk's close as possible after the chiefcording to investigator. we've been break in those headlines this morning on german saying a possible deal is possible. a little bit of shift in the mood this morning. third place, qantas said the 20 hour flight is coming and bunks.have a gym and

closing in on a market cap, and trump blames china forestalled talks with north korea. let's talk about what's going on in emerging markets. the argentinian peso plunged more than 7% to a record low after president macquarie appealed to the imf to sponsor cash as part of the $50 billion credit line. raise concerns into argentina and turkey, reminding investors of the fragile landscape for this developing world. good to see you again this morning. markets are not signaling confidence on turkey or argentina, even after all these rate increases.

one isolated problem is one thing, you're building up to two or three. there's not much confidence out there at the moment, is there? >> no. the reason is pretty much what they are doing rather than what they are saying. those turkey -- turkey and argentina are trying to signal confidence to investors by talking a lot. macquarie has tried to gain confidence by asking for imap money but consumers want to see action to tackled the fiscal deficit and that is not forthcoming. is undermining the confidence, basically. ,nna: even in a strong economy a lot of investors making a valid point that you cannot talk about emerging markets in one basket. even a strong economy like india has seen its currency falter new record low.

what is the em contagion story? bit but has suffered a i would not call it a contagion. india is not fundamentally linked to the problems of turkey or argentina. economy withrong reforms in progress. it's a near unanimous reputation . they are hesitating on the political front. the sentiment is pretty much driven by the strong dollar, so it's difficult to look at the currency and say it is a contagion fallout from turkey and argentina. the correlation on one side and emerging markets on the other side is actually very low. onus: a great round up there

emerging markets in london. ther, we talked about dollar. my question is, the spillover in the bond market, if you have a , thatnk on junk bonds seems to go into u.s. treasury's .ather than gilt is that the flow that you saw, and do you expect more bit? -- do you expect more of it? wasr: the demand for bunds not an allocation into european assets, it was more about a flight to quality within european assets. so i would agree, by extension,

itshe fed continues with monetary policy where they are taking advantage of good data it willng into it, prove to be problematic for the global economy. ,e come back to that question is the fed going to look more at the global picture or and you need to focus on the domestic? and where do you get nervous about sovereign debt in the emerging market world? i have a chart that shows moody's deficit as a percentage of gdp. call at the ones you're concerned about her tell us what separates it? if you look between

deficits, that's probably the best formula here. if you look for an economy that has problems on the structural side where the incumbent government is not doing what the market would want, that's the best let isolating this. i guess what i'm saying is that the emerging market date of like it's still going to have some problems, focusing on the week looking currencies. , think the point was well made country like india that is in a really strong position should not be having this contagion weaker countries such as argentina and turkey which are not making the reforms the market would want to see. manus: peter, thank you so much. sharing his thoughts on the bond markets. there are some headlines coming through from one of the chief says there as he

could be a solution in the north of ireland. in the next 30 minutes, alexander will give us his latest on the state of play. ♪

bennis: good morning from dubai. the city ofive from london. these are today's top stories. talks as american trade are making progress. canada says a huge amount of work remains as justin trudeau tries to protect the dairy industry. fork in the road. the u.k. tells the eu it must compromise in its opposition to theresa may's plan or risk and no brexit deal. the blockator says may have a solution to the irish order problem. a strong europe. the french and german finance ministers say the eu needs

independent financial tools to steer clear of u.s. sanctions. pledging progress by the end of the year. manus: welcome to daybreak europe, we are lightening up on the futures this morning. forad this huge surge record in the s&p 500. we have paused for a moment. asia hits the pause button. we are waiting to see what more news from canada and the u.s.. there may be a solution to the hard order in the north of ireland, talking about an unprecedented proposition for the u.k. we will be in focus, they are concerned -- confirming that anl get -- we will get

inflation outlook from germany and spain. in terms of crude, a little bit of a turnaround but the futures are lightening up slightly. anna: let's tell you about what is going on in the risk radar. the futures are lightening up and this is what they are picking up, a drop of .25 of 1% on the asian equity session. markets interested in the way that president trump has linked the trade conversations between china and the u.s. he is making that link praises his relationship to the leaders of north korea and china. steady,ar pretty treasuries pretty steady. something that is not steady is the new zealand dollar. we are weaker on the kiwi and the aussie. pointing to similar developments. business confidence dropping in new zealand hitting a 10 year low. the problem is second quarter business investment coming in below estimates. we're watching those currencies

with that in mind. i saw something good on the mliv log this morning. the peso inbout argentina. this is yesterday's close. the u.s. dollar making gains of a percent against the argentine peso in yesterday's session. as we saw president mccree asking the imf to speed things up, make the payments more quickly. they have the credit line set up and revealing how much the pressure is taking its toll over there in argentina and the markets responded accordingly. if you have an issue in turkey you have an explosion of an issue in argentina, they are trying to contain it. you will do for these emerging seeets, but if you begin to a domino effect and others explode, you may have more risk.

where will the money flow? it went quite strong. the five-year paper versus 30 year paper, the spread there is the lowest on record. we had a conversation with mizuho. talking about the italian bond market. liquidities not there am a we have seen record amounts of open interest in btp which is the government bonds. rise to thelt swaps highest since 2013. they may not be that much liquidity and people have taken btp. out of the they do not want to be caught in the eye of a storm. the kennedy -- liquidity seems to be one of the by words. juliette saly has your first word news. good day. juliette: donald trump has

accused china of undermining u.s. efforts to pressure north korea into giving up its nuclear weapons including -- including -- indicating the trade war is exacerbating geopolitical tensions. he the trip to north korea by secretary of state month -- mike pompeo seeing there has not been aimed progress in talks at denuclearizing the korean peninsula and he would return after disputes with china were resolved. the u.k. government has told the eu that it must compromise on its opposition to prime minister theresa may's plans or risk in no deal brexit. even so, the pound rallied to its highest level in three weeks yesterday despite minimal evidence of any dying in the brexit negotiations. the finance minister france said britain could not have its cake and eat it as it quits the eu. clicks everyone has also to be aware that you cannot be in a doubt. , out of thee out

european continent and also benefiting of the advantage's of the european union. if you are out, you do not have , the sameosition rights and the same advantages of the other member states. juliette: the imf had said it will request -- consider the request for a got -- foray credit line as the government seeks to restore confidence. surprising the nation that -- by saying the country needed to have enough cash on hand to fund the budget without going further into debt. the peso plunged to a record low. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

you can find more stories on the bloomberg at top . struggling a bit for direction in the asian markets and the weakness you have seen on the csi 300 and china down for a third session, weighing on the overall benchmark index which has snapped its four sessions of the third timer in five sessions. fairly flat on the us trillion market on the close. we had the australian dollar coming under some weakness and coming from adia high. tpg telecom, aat massive deal coming through with them and vodafone hutchison. i mentioned the weakness in the aussie dollar on that fallen capex and you have ij markets saying it could fall to 71.6 cents. where watching the strengthen the dollar against the indian rupee.

the rupee at a record low against the dollar, higher crude prices and the selloff in em currencies weighing into that move. manus and anna. manus: thank you very much, we will see with the central bank of india has to say to the u.s. donald trump has said talks with canada to overhaul the north american free trade it -- agreement are going well, expressing optimism that the countries could reach a deal this week. president trump: we are negotiating with them right now, they want to be part of the hill, we gave still friday and we are on track to my we will see what happens. things are working out very well. manus: the canadian prime minister justin trudeau's has said his government is trying to reach an agreement but he added that canada will not sacrifice its goal of getting "the right deal." nil in get to our international editor. jodi schneider joins us in

regard to the latest action nations on the deal. the late-night oil is burning in washington. what are the hurdles being bashed out? : the canadians are there, they are negotiating that they want to make sure that their main issues which are how dairy products are traded and that is a big part of canada's economy and they are concerned about there is a clause in the language in that nafta bill that gives them, allows for panels to resolve disputes on anti-dumping charges and disputes. they want to make sure that remains in their and that is something the u.s. has sought to water down in the negotiations so far and in the agreement with mexico. canada has made it clear, we heard from their foreign minister and the premised are saying they will not get a deal that is not right for canada. the u.s. would like to announce

the deal to the u.s. congress, president trump would like to have that happen on friday, the end of this week which is soon. someone will have to blink here because canada says they need this, the u.s. says we want a deal. it would be harder for the u.s. to market to sell to the congress and country a deal just with mexico

>> leaving the trade story there and talking about what manus is mentioning around china. we have seen the strengthen your numbers in china. people trying to work out how sustainable that is as manus was suggesting. we have seen them and bust in

china before. i we going to see something like that again or is this time different? guest: during the bust times we to reverse the underlying fundamentals. there is the emerging middle class and no doubt it is growing. we currently are targeting close to 300 million consumers in china and by 2027, we will be ,argeting double that number 600 million consumers. every year, you have an additional 6 million households that earn more than $4000 a month. the consumer dynamics are there in china. you can have some volatility, long-term vision for china is singlee between high digit growth and low double-digit growth. that does not mean there will be volatility. there will be upset and downs but the dynamics are there. one of the things the

market is fixated in on in terms spane members is your versus profitability. will there be an expansion, would you cap it, what is your thinking for 2019 in terms of promo spans? alexandre: we have invested and in spite of that we have delivered margin improvement, bottom line and these investments are for the long-term growth of our business principally driven by markets such as china because of the dynamics i just explained or markets like india where the legal drinking age population increases every year on average by 20 million people. this requires investment and that is for the long-term growth

-- pernode regard ricard. we talked about this in the past, the drink's industry seems to be getting on with this may be quicker than the tobacco industry, is this a fad, is this --ething you arc considering you are considering if you have plans around it? theandre: we are monitoring situation and making analysis. it is too early to say, here is the question. is the legalization of cannabis going to have an impact on premieres -- premiums for consumption and there is no evidence to show that. you have been quieter than normal in terms of doing deals. i going to be more active in 2019?

a clear roadmap when it comes down to m&a which is an active management of our portfolio, acquiring targeted strategic products we believe have a good fit with our portfolio while at the same time disposing of brands we do not believe are fit for our organization and strategy. that depends on the opportunities and on the right price, if i may say so. we may have some dynamic here in terms of m&a and dynamic years -- list dynamic years because price expectations may not be what they -- what we want them to be. what do you want to see from governments on either side of the channel? we would like to see

visibility. the center would be the better. i was mentioning earlier, we are an origin space business. includingto the world to the eu and as soon as we know what is going to happen, we will adapt ourselves but as an international business, we are for free trade. square off on that. we understand your free trade, you are a big investor in the u.k. tonier said he is prepared offer britain an unprecedented partnership. are you lobbying the french government to come up with an unprecedented partnership? are you being vocal at governmental level on brexit? politics are politics and political negotiations,

there are many complexities and twists but whether it is our british friends here in the industry or the european union players and the french players, we are all seen, we are up for free trade and that is as far as we can go. that is the message that you are passing on. thank you for joining us on set in london. the chairman and ceo of pernod ricard. in the session in asia. and linking conversations to the north korean peninsula. futures looking for some 1%.side down by .3 of we are fairly flat, s&p futures show little bit of weakness. let's get to juliette saly in singapore with a business flash. juliette: forward has -- ford has seen its credit rating

adding to problems including a restructuring plans that could take years to complete. it was downgraded with a negative outlook citing the erosion of the business position and the turnaround plan that could cost more than $10 billion in the next three to five years. samsonite international said the trade were between u.s. and china is [indiscernible] sentiment. that will play into slower sales group -- growth and another sign of the fallout from the tit-for-tat tariffs. >> we will be into the high single digit range for china. i do see consumers feeling some of the impact to the trade war which is hot in the news. i think that has some impact to consumer confidence and sentiment. juliette: credit suisse has second thoughts about doing business with the owner of the national inquire which is at the center of a scandal involving hush money payments to women who

had affairs with donald trump in 2016. the swiss bank was planning to help america -- american media refinance that but it made a flurry of negative headlines. representatives for credit suisse and american media declined to comment. that is your bloomberg business flash. manus: thank you. on trade and geopolitical tensions, they continue to simmer, it is a byline for every show we do. aremexican peso -- how investors positioning amid the volatility? welcome to the show, good to see you this morning. are you seeing any material shift in the etf flows in regards to the equity market as these trade tensions dissipate

in the americas but maintain with china? flows, there is a strong appetite for u.s. is thebecause of -- it most growing segment in the market. impact soot see much far on emerging markets. they are still quite resilient. to the change in the environment. mf has been under pressure but their outlook is tied to the u.s. dollar. as long as real interest rates in the u.s. remain negative or close to zero, there is little impact on the dollar, on the upside area did -- upside. i want to pick up on what you say about the dollar. i have a chart here that shows

where we have been on the dollar. the dollar falling off a little bit in recent sessions and the forecast for the dollar still thety strong amongst investment community. where do you say the dollar will head, one of my colleagues talking about seeing signs of dollar weakness when looking at other currency. is tied to outlook interest rates in the u.s. and if any of the fed is the first central bank to have the mandate, the fed chair powell is still advocating gradual increasing interest rates. as long as this remains the same, this has been priced in the market. for the dollar to rebound, this will need the fed to engineer higher real interest rates in the u.s. can i ask you about china, one of the debates we

have been having for the past hour and a half is -- we have the differential between the msci and china and the msci world. gap,could close that morgan stanley say it could 14%. by what can you tell us about the flow of money in etf's into china on this drawdown? is that a valid proposition in your opinion? china's assets, there is still an appetite for chinese assets, but they are tied to the geopolitical outlook. coming back on the [inaudible] for the north american region but it does not tell much about roundxt negotiation between the u.s. and china and i think investors are expecting more progress on this in order

to, for capital inflows to resume. anna: a quick thought on brexit. wait talked to our desk -- we talked to our guest and he said the gilt curve we could see it in for it if we got a note deal brexit -- a no deal brexit area -- brexit. what do you see in u.k. assets if we get a no deal brexit? morgane: the market is pricing in a pessimistic scenario. if there is no deal it will impact the physical -- fiscal policy and the u.k. it might create tensions in the long end. end, the bank of england might be more cautious in raising interest rates. the yield curve will remain the same or modestly steepen. there is a wonderful

piece this morning on the bloomberg that says the rally in the s&p 500 took the stairs. this is the market debt and the proposition would be that the s&p market debt is stronger than the nasdaq. how -- has this rally taken the stairs, a slow grind higher from the correction that we saw, are we running out of steam in the s&p rally for record highs day after day? do we part thought at this juncture? is certainly puzzling. we have indications from the federal reserve about an overheating economy. the stock prices are at record highs. the two keywhat are

areas that are not priced in the market is a rebound in inflation expectations in the u.s. and the second one would be a slowdown in the next quarter that will endanger highly leveraged u.s. corporate. and probably overpricing of credit risk in the u.s. anna: thank you. that will do it for this program. a quick word on what is going on on the pound. we will put up where the pound is trading at the moment. the pound against the euro, it is -- against the dollar, it is stronger but not by much. 130 is where we are. it was an unprecedented deal he would offer to the u.k., that is what helped straley -- sterling rally. he says a solution is possible to avoid a hard brexit with north island.

the this ingle market must he preserved and it must be protected. this is my weekend technically. daybreak europe, the european market open is next. this is bloomberg. ♪ [inaudible]

good morning. this is the european open. we are live from our european headquarters in london. and i am guy johnson alongside matt miller in berlin. matt: despite another fresh record for stocks, gains in asia evaporated. futures are pointing to a andtive open in europe across the pond. the cash trade is less than 30 minutes away. down under,