leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. bloomberg's european headquarters in the city of london. bloomberg: is daybreak europe. anna: emerging-market stocks and currencies falling. renewed concerns over the contagion from argentina and turkey. the president awaits the u.s. market response. at $70 as investors look at the threat of a major storm on the gulf coast. italy's leaders begin discussions on the 2019 spending plans. the deputy prime minister

promises to double the deficit. ♪ manus: a very warm welcome to daybreak: europe. img reached a settlement with the dutch authorities in regards to the issues of the netherlands business. 675 millon euros. 100 million euros for disgorgement. they acknowledged the execution of customer due diligence policies to prevent economic crime at ing netherlands. there are fines, and disgorgement.

stock is down 21% on the year. u.s. securities regulator is expected not to take further action against the bank. no further action from the united states. the bank acknowledges shortcomings in its customer due diligence. let's see how it trades on the opening this morning. anna: this is the picture for asian equities. down 2/10 of a percent. labor day in the u.s. and canada yesterday, which means a lighter volume. a big focus on emerging market turmoil and whether we can see that escalate. dollar, treasury markets, fairly well contained, steady. the australian dollar weaker decision to rba

hold rates unchanged today. we saw the australian dollar moving considerably higher after that decision. higher in 2019en and 2020. that is what is moving things around. is now tradinge at 71.20 against the u.s. dollar. it dropped to a new level against the u.s. dollar. themorgan stanley coined term fragile five. india is in their in terms of vulnerability -- is in there in terms of vulnerability in the emerging markets. we will talk about how the crisis in asia emerging markets have changed and how they have not. manus: what market do you want

to be in, where someday it just doesn't trade? it is one of the biggest government bond markets in the world. have a look at the boj this morning. thing, butng is one i thought it makes for a fascinating look. the bank of japan is growing to the point of whether the assets held by the bank of japan re: quick links to the gdp of japan -- are equivalent to the gdp of japan. these are the dirtiest markets in the world. how can you really own antitrust and trade a market -- and trust and trade a markets 99% owned by a government? -- a market 99% owned by a government? gdp up by 2/10 of 1%.

seven days this year where no trade took place in this market. the rba leaving rates unchanged. that is a personification of qe at work. anna: let's talk about u.s. features. this is what the market looks like. pricing in, we are catching up in the u.s. in terms of the futures market. united states equities were close today -- closed today. let's get an update on the first word news. you.na, thank donald abruptly canceled an outing yesterday. it was to place calls on trade as he prepares to confront china and canada this week.

emerged from the white house wearing golf clothing. the press was dismissed for the day. has renewed his criticism of attorney general jeff sessions, blaming justice department indictments against two republican monikers for endangering their seats in the november election. lawmakers for endangering their seats in the november election. oil is trading around $70 a threat to u.s. production from a storm forecasted to strike the gulf coast. workers have been evacuated and two factories have been shut down at gulf of mexico sites. august rose the highest level this year. governorof england's

has a chance to put speculation about his future to rest. next what mark carney does that has been making headlines in the u.k. the british government played down reports he may stay at the bank pass to june of next year. -- past june of next year. spokesmen have declined to comment. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. you can find more on the bloomberg at tocgo. let's take a look at how markets have been in asia. twin concerns over trade tensions with china and this was snapped a deal with canada, -- post-nafta deal with canada. we are waiting to see how the markets digest these efforts from argentina to show up sentiment. these efforts coming in from the

asian session, pretty weak. the bank of japan increasing those shorter-term purchases, while reducing the number of days they are bought. tech stocks listed in korea, one of the out performers. we do have weakness across broader chinese and hong kong markets as well. staying on hold for that 25th straight meeting. the rba -- further bearishness on the aussie currency. a lot of action when it comes to stocks in the japanese decision. a soft drink and green tea manufacturer fell the most in .even years

disappointing earnings from ito en. we are looking at japanese lenders. one is down 75% year to date on this report from the nikkei it has lent $50 billion worth of loans to companies associated with the founding families. investors are trying to get clarification. the best performer on the hang seng index is a property conglomerate run by victor lee. they did a massive buyback, 1.8 billion shares. it is going down very well with hong kong investors. anna: thank you. emerging markets held losses in asian trading today. a hint for the second central bank they will raise rates and

have yet to shore up investor confidence. there could be a tax on exporters. >> to cover what is missing during the transition, we will ask those who have more capacity to contribute. i am referring to exporters in argentina. manus: that is the argentinian president, waiting for markets to open. julian, great to have you with us this morning. the challenge for turkey in the central bank, stupendous out of the hatch next week. -- hat next week. times as many of the world inflation rates. what do they need to do next week to convince you they have

contained a crisis? the markets now has the expectation they will raise when telling the fed a number of times they will not pursue that policy. there could be further pressure on the currency. we will need to wait and see. we have talked about this in the past. is fundamental issue with whether you not -- or not you believe there is a crisis causing the problem the emerging markets are facing. that will not be solved in short order. anna: you focus on the dollar side of the emerging market crisis, the development side. i want to focus on some of the emerging markets vulnerabilities.

the textbook recipe for any emerging market crisis includes misallocation of capital, economic trophy projects, financial speculation, then you have a week taking sector, -- sector, and there is a long list of all these vulnerabilities. are we facing any emerging market crisis in turkey, or hues aroundc turkey and argentina? should concentrate on countries that rely on the kindness of strangers for economies to function. south africa to a lesser degree. india, not particularly. like indonesia. they can turn to other friends

china, which has affected the asian imf. that's me -- that may be a bailout of countries within the asian circle. turkey and south africa to a certain degree. russia comes in on the sidelines. that is much more dependent on the price of oil. manus: the south african comment -- i was looking at the extra. you pay to hold -- extra p remium you pay to hold debt over the treasury. you were looking at 3.36% extra for south africa. is south africa the next shoe to drop in this em story? julian: there is a distinct

possibility. the positives in the south african economy are the new president. the market believes this political regime can deliver better than the last one. if there was pressure on commodity prices, we will get investors somewhat unsettled. that piece i was talking each nation has different sources of unhappiness. julian stays with us. we are goingg up, to bring you exclusive coverage from the gulf of mexico finance conference. top guests include peter oppenheimer. on thehael marsh

european market open. and a little later in the morning, the chief european economist at goldman sachs. enjoy. coming up, a golf nationbuilding bigger banks in response to the -- gulf nation building bigger banks in response to the oil crisis. crude at a four-year high. how likely is this to be sustained? this is bloomberg. ♪

anna: good morning. khis is "bloomberg: daybrea europe." is to 18 in the afternoon in japan.

let's get a bloomberg business flash. up-ice expect -- the expectation is that u.s. sanction violations will be settled in the coming weeks. ending the code -- probe is a key step for the socgen ceo. giantss. based drug companies will have to duplicate regulatory efforts. politico -- trial management and other preventative measures will be changed.

bonds have been sold in a dutch auction which ended on august 31. a german lender had offered to .ay the bonds at 45% face value a deutsche bank official declined to comment on the tender offer. competition to manage the money ofasia's virginie army millionaires has pushed the need for wealth managers to the highest in over a decade -- bourgeoning-- army of millionaires has pushed the need for wealth managers to the highest in over a decade. that is your bloomberg business flash. manus: what does life beyond oil look like?

entering another bank merger in its latest attempt to stay competitive in the era of low oil prices. three banks are in talks to combine as an institution. the lady who broke the story with the scoop -- she joins us now. well done on the scoop. give me the logic behind this. abu dhabi is getting this mojo. >> the markets are way over banks. we have so many banks serving the small population of 9 million people. in saudi arabia, 33 million people have 28 banks. and need are all small to compete globally to create bigger companies.

seen abu dhabi go on this drive since 2014. sovereign wealth funds and tech companies and are looking to create certainties wherever they can, not just in banks. anna: 50 banks, quite the number. how is this structure going to work? >> it will always be challenging with merging banks. this should bes more successful than other mergers, because of a common structure of ownership. if the major shareholder in all of these three banks want to merge, they will find a way.

other elements of the structure may have to be created. you have conventional banks -- they are thinking about how to0 deal with them. manus: how long is it going to take to put this together? faab is the other major deal that was broken in terms of the banking market. how long will it take to put this together? zainab: from what our sources told us, a deal would be announced as soon as this month. theynies came out and said are in the early stages. we don't have an indication of until how long this is a done deal. anna: thank you so much.

bright -- broke that story around m&a in the banking sector in the middle east. brent crude reached a four-year high, $80 a barrel. can sustain we these levels in the next few years. i have a chart that shows opec offset up production to what we are going to lose from iran on the international markets after the united states imposes sanctions. our assumption is we stay where we are. that 70-80 dollar range looks sensible. things,roader scope of oil prices and commodities soft

and what we are worried about. china, and whether demand would -- - slacken. we are looking at the oil prices around this level, unless we have some geopolitical event that would cause this to spike. we seek economies growing as we do next year. -- see economies growing as we do next year. manus: you mentioned your view on the dollar and dollar liquidity. it looks like we may be nearing the near term. this is the bloomberg commodity index. there is this underperformance in commodities. to what extent do you think we will see a stronger dollar, trade wars, etc. in this

commodity complex? it is on the china-u.s. tariff war. regime taking a more aggressive attitude towards china trade than i would suspect. i would say that is going to be the key in q4, and whether or -- there willbe be any agreement between u.s. and china over trade. julian is staying with us. up next, more about europe. how far will italy push the european union's 3% debt limit? the finance minister is pushing back in recent days, a great

iuote from selfie me -- salvin talking about the lords of the spread. we will see what they make of the italian government's plans. this is bloomberg. ♪

manus: it is 1:30 p.m. in the morning in new york. markets return from the narrowest bandwidth in 50 years. you are hearing various news agencies talk about the nationalization of the variety , coming fromnies the current administration. the bank of england governor

faces questions from u.k. lawmakers -- will he talk about his intentions next year? could he extend his tenure? anna: that could be a focus of questions. he is supposed to be talking about inflation reform. back in thegress is united states. nominee, brettrt kavanaugh, testifying on capitol hill. manus: and the argentine he and treasury minister -- argentina's treasury minister will review what they need to do to save the pay stub. let's go to annmarie hordern for the market check. annam a mixed day in asiaarie:. -- annamarie: a mixed day in asia.

concerns about the u.s. and china, the story. currency, an interesting story. the rupiah, down again today. losses hitting the lowest level since 1998. the central bank has been trying to introduce some measures, to shield losses. bonds are almost up 40%. the australian dollar is up 2/10 of a percent. it fell earlier. central bank is saying the economy grew more than it expected. inflation picking up next year. i want to look at the argentina paystub after macri spoke yesterday. it is bringing dollar-denominated bonds along with it. we have argentinian denominated

bonds in the white end and the peso in the blue. todayrdict will really be depending on how the currency and bonds react when the united states opens. macri and the economy minister spoke. this is the chart i know you and in a love so much. much. anna love so this is the italian 10 year versus the german ten-year. this is the whitest we have seen in about five years in the spread. meeting inl be earnest to discuss the budget in 2019. investors want to know how far the government will push the european union what it -- budget rule.

anna: thank you. let's get a bloomberg first word news update. donald trump abruptly canceled an outing yesterday. it was to place calls on trade. he prepares to confront both china and canada this week. emerged from the white house wearing golf clothing, but his trip was canceled. u.s. markets are to reopen after the labor day holiday. investors will give a thumbs up or thumbs down to the argentinian president's approach to saving the economy. payments will be requested from a $50 billion credit line. >> we are seeing the technical details that will be ready in a matter of days.

ofs will allow clear enough what ever doubts exist regarding our finances in 2019. >> the bank of england governor puta chance to's but -- to speculation about his future to rest. it is what mark carney does next to that is making headlines in the u.k.. he may stay at the bank past june of next year. a spokesman declined to comment. a tropical cyclone has made west of the country, the strongest to come onshore in 25 years. flights and trains have been canceled. companies are forced to temporarily change their plans. power has been lost to more than 350,000 homes and offices. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries.

anna: a's political leaders begin to discuss the 2019 budget leadersaly's political begin to discuss the 2019 budget in earnest, discussing how far they will push the european union budget rules. bond yields may fall after investors see the plan. joining us now is our western european economy editor. thank you for joining us. how do you expect any immediate decisions? everybody is back from their beach vacations. they are getting down to business. there will be this meeting of the league. i don't think we expect any great decisions. there is a lot of talking to be done.

we have a little more than three weeks before the budget targets have to be fixed. there is a lot more to come. manus: the devil is going to be in the details. like there is a disconnect between the finance minister and the populist leaders? minister hasnance had a very steady line, he wants to live within e.u. rules. the leaders of the populist parties have gone around with a lot of luster -- bluster. whether the sides will come together within the next three weeks remains to be seen. anna: we have been fascinated by this line from salvini, talking about his economic reforms will answer the laws of the spread. using that language, talking about spreads in bull markets is

not something you he or politicians do often. -- you hear politicians do often. kevin: this has been dominating the news media here, what will happen with the italian debt and the markets. vini uses a lot of campaign bluster, but he will find the markets can be pretty cruel and unforgiving places. much, arek you very western europe economy editor -- our western europe economy editor joining us. we have that chart with the spread of italy versus germany, the 10-year spread yield. the finance minister is saying the spread is too wide. poised to see this contract or widen? >> i think it will widen a

little further. iniew the last few weeks italian politics rather like an opera. we are in act i of a three act opera. it will play out across the next three months. it will affect the bond market. anna: a three act opera. anus: we talk a lot about the bond markets. from darling to dog. italy went from one of the best-performing markets in europe to diving 7%. undernks have been pressure, which has shifted their rating. question,o answer the do you want to pick up the banks on this battering they have had? how do you look at the italian equity story, as opposed to

bonds? in terms of the reality, what is their value? value, there might be but i do not want to buy it. it is a value trap. it would require further reform to take lace within the banking sector. the turkish debt crisis is a tod indication of the extent which the nonperforming loans in a number of italian banks need to be reckoned -- written down. it would only take one small external crisis outside of italy to become very worried about the senate banking system again. anna: the government is giving investors a lot to think about, as well as in the united states. do you see president trump engaging with china around the talking table once again? when talking about nafta, he

said, now is not the time to talk to china, but the market wants to see them talk. julian: it does indeed. china and the united states need to both be winners in this. he would needp, to come away from discussions as a winner in china over trade, and china as well. this could be around autos and property. we will have to see, but i am not hopeful in the short-term. manus: there is a wonderful article this morning that talks about the new normal in the library. that is japanese manufacturing, and german expectations. they are bullish on a new trajectory. area, the lowest in two

years. the global trade tensions are really beginning to dent manufacturer's confidence. everybody is saying, do not worry too much they will do a deal. this could take more equity risk into europe and china. =--- than china. the data that is coming out of europe has not been particularly helpful in european equities. this would favor japan and the united states over europe. anna: why would you put money elsewhere when you look at the gap in growth rates in the developed markets? a lot of money is going back into the united states to make

the most of the rate hikes in the rest of the developed markets. julian: we have reined in slightly our position. we are more neutral. we like domestic-based u.s. companies over international companies, and the dollar strength is not helpful there. are stealing away from cyclicals, in a more general sense. we are slightly raining and -- reigning in our mission. , you got a touch of "america first." if you are a bloomberg user, you can interact with the charts and the show in gtv .

everything that we have used this morning. coming up, will mark carney stay as the bank of england governor, past his planned departure date of june of next year? that is the question he will be asked this afternoon. for that conversation and more, we are joined by the peterson institute's international economics president in an exclusive conversation. this is bloomberg. ♪ ♪

manus: let's get to a bloomberg business flash. ing has agreed to pay a

fine of 675 million euros regarding a criminal investigation by a dutch prosecutor into corrupt practices. the dutch prosecutor acknowledged serious shortcomings in customer policies -- in due diligence of customer policies. it has started to take measures against a number of former employees,- senior including drying bonuses. -- drawing bonsues. -- bonuses. drug giants says the cost of the brexit split will be $100 million. these costs include licensing to other countries, changing trial

procedures, and other preventative measures. u.s. investigations into sanction violations are expected to be settled within the coming weeks. point 2 billion euros has already been set aside to settle the investigation -- 1.2 billion euros has already been set aside to settle the investigation. abu dhabi is considering a second-based merger to stay competitive in the era of lower oil prices. three banks are in talks to combine with an institution -- into an institution with $110 billion worth of assets. bank is looking to buy $60 billion of noble group's dollar bonds following a tender

offer. a dutch auction ended on august 31. the german lender offered to pay 45% of baseball you for -- face value for bonds due within the next four years. competition to manage the money of asia's burgeoning army of millionaires has a set pay hikes for investors the highest in over a decade. they are getting increases of 30% or more in hong kong and singapore. over 2000 millionaires have been minted every day in this region. manus: thank you. let's get you a quick check on the markets. asian equity markets are played this morning. there is -- prickly this mor ning.there

is not enough news coming through on the betrayed side -- on the trade side. asian equities are down for the fourth day. --e shanghai cop as it 00 composite said, in tehe long-term on the chinese markets -- it would be more on a longer term view. keep an eye on all of these auto stocks as well. they will be very important. his carney is going to have chance to put speculation about his future as the bank of england governor to rest when he faces lawmakers. he is in talks if you will go beyond his planned departure date of june of next year. that is according to reports from the bbc. joining us is the president of the peterson institute and a former member of the bank of

england. good to see you this morning. prevarication over mark carney's future. would it be good if we had continuity? >> thank you. the issue is not actually about mark carney. there is always this tendency to think any individual policymakers are replaceable. ifcain said,hn greenspan died, sanders would prop them up to make sure we didn't have a problem. op-edrnanke wrote an targetshat inflation are about depersonalizing monetary policy, not making it about one individual.

any reasonable candidate would be just as good. anna: if it were all about inflation targeting, your point is well made. what about the challenges of navigating brexit? right.are absolutely brexit presents a unique challenge for the u.k. economy. committee.about the there are people at the fx -- fsa and pra. if it is all about one individual, that should not be the point. trying to stay honest about the economic effects of brexit, which are bad. but they are trying not to be political. it is better to talk about one

individual negotiating their bank ors, than a committee position. manus: we have a chart here for you, regarding productivity. we're looking at how tough it could be if we had a hard rex it. the -- a hard brexit. in your estimation, how much more damage would be to come if we had to this hard no deal? adam: there is a lot more damage. it is a great chart and underlines the difficulties in the u.k. right now. brexit.rted before i still think people underestimate that even if there is a soft brexit, it will still

have a shock to the system for supply in the u.k. anna: you have spoken against brexit many times. but there is a view that the positives overdid the negatives ahead of the vote. we haven't seen a recession. for people who voted for brexit, maybe that would be the only thing that would have made them change tehirheir minds. leavingtil this starts unemployed in the streets and racing consumer prices, people will not change their minds. us who were characterized as project fear were not saying immediate recession so much as, this will make things worse. manus: i want to spring to the

upside we get a -- the upside. we get a deal and leave and there is a in shift -- new paradigm shift created. would you expect more accelerated action from the bank of england next year if that was the case? adam: the bank has been clear. governor carney was very judicious after the initial vote, saying we are not going to guarantee which way the bank will go. if it is a negative supply shock, the best thing for the bank to do is not change policy at all. you have to let see -- what people see the reality. -- let people see the reality. on the other hand, if there is panic, if people suddenly freaked out, it goes both ways. , youtina, a selloff

raise rates, if it is hurting the economy, you cut raise. anna: a nice place to live that conversation. more from adam shortly. this is bloomberg. ♪

manus: good morning from dubai. this is bloomberg daybreak europe. cap: these are today's stories. manus: em stocks and currencies fall amid renewed concerns about contagion. president macri awaits the u.s. response. oil rebounds. the bti holds at $70 as investors weigh the threat of a major market storm on the gulf coast and rising opec output. budget business. italy's leaders begin discussions on their 2019 spending plans after the deputy prime minister promised to

almost double the deficit. "-- how will the "lord of the spread" react? warm welcome to "bloomberg : europe." there was a lot of prevarication about which direction we would go. we get spanish unemployment. rising ever so slightly in london. more pain to come in brexit. the dax is up by 14 pips at the moment. some of the manufacturing indices are rolling over. inflation is out there as one of the big issues. a little bit of breaking news

from our own region down here. it is, we have a confirmation, , wead a scoop last night are seeing you and be climbing of itsdhabi at the start three-way merger talks. moving markets down here. you have a little bit of wpp, the world's biggest advertising company. anna: where watching the advertising agencies here. this is the world's number one advertising agency. the growth will be similar to the first half. that will be seen as reassuring. well the fact they have beaten estimates be reassuring as well? 7.4 9 billion pounds against an estimate of 0.1 billion.

ceo as named yesterday mark the ceo.acing he has been running the business since april alongside andrew scott. he joined in 1989. he is a continuity candidate but we have spoken to a number of executives and they have offered that he is the executive with the right experience to rejuvenate this business. all of that in the mix. let's get to the risk radar and check for we are. we are in a holding pattern because without the u.s. -- the msci pacific unchanged. will we see the u.s. administration press the button on extra tariffs on chinese

imports? we have the estonian dollar, you saw the movement on back of no change. we put in the indian rupee. that is touching another a new low. a reminder of the emerging-market payment is part of the story this week. more liquidity come back into the market. bond futures are low so this -- bailing on their short positions on the treasury market. we are waiting for a print to come through. bid and theities bond market slightly better off a big supply coming through in the european market. 16 billion will come to the market. good day. thank you. argentina's president has a tense day ahead of him as u.s. markets to reopen after the

labor day holiday. that is what investors give their thumbs-up or down to the proposal to save the economy from crisis. the country's treasury minister meets with christine lagarde to request faster payments from a $50 billion credit line. >> we're seeing the technical details that will be ready in a matter of days and this will allow to clear up whatever doubts exist regarding our financing in 2019. oil is trading at 70 bucks a. -- a barrel. gulforecast has struck the coast as well as uprising crude output. mrs. tropical storm gordon approaching the louisiana and mississippi coastlines. countries andpec process the highest level this year. japan, a typhoon has made

landfall in the west of the country. it is the strongest to come offshore in 25 years and it picks up speed as it bears down on the nations second-largest population center. flights in trenton been canceled thanower cuts to more 350,000 homes and offices. 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. on the trade battlefront, president trump is preparing to confront china and canada this week. threatening to leave canada out of a trade deal negotiated with mexico but without support at home, he lacks leverage to force canada to accept his terms. still with us to get some thoughts, adam posted -- adam

poston. let's talk about trade and how fast -- far through the trade war do you think we are, does it ever have an endpoint knowing what we know about president trump? adam: he has an endpoint but it is a long way off. the canadians and the americans will make some kind of deal unlikely deal with the mexicans. it is tariffs and and a partial unwinding of nafta. it is a bad thing. it will not escalate. my concern is morris -- more u.s.-china. the trade war will continue and the president is going to put on the 200 plusn billion of goods and the chinese will keep retaliating. ,e are in for six months a year sometimes politicians and voters have to feel the pain before they change their minds. manus: the other salvo sent by trump was the threat that he may

withdraw from the of you cheer being abused. that is 11% of world trade. napa, weeen him rip up have seen him rip up the climate agreement, we have seen him rip up a lot of agreements. empty threat or a real risk? adam: real risk. we felt that trump meant it and everything since then has borne it out. trade representative has said -- it is a terrible idea. and having non-enforceable, nonbinding dispute settlement and it is part of this general worldview that trump and his administration has that the u.s. loses by constraining itself in any way and it gains by doing

bilateral bullying. that is why he tried to interpret the deal in mexico as it was. going to fail. anna: it is not going to create jobs. >> what it does is make the complexerican auto uncompetitive. you will get a brief lip which would be nice for the election of parts production moving back into the us but it will be small and there is no future investment in the u.s.-north american auto market. thing, it is 11% world trade, it would be terrible if the u.s. dropped out. trade is more resilient than a lot of other things because the rest of the world will continue including china and europe to act as though the wto is still in charge and benefit from that. it is a terrible thing if trump pulls out but this is not like

the league of nations in the 1920's that if the u.s. is not there it falls apart. anna: can you talk about the pain that has to be seen by those who propose policies that you think are not going to work to show they do not work and where is that going to be felt i president trump? farmersstood that some will be supported by the federal government to ease some of their pain, where will it hurt trumps base, that might be the lip that takes us back. adam: what is going to happen is the average american household, the working poor and the middle class are going to feel it. estimates ifitute you get this kind of deal enough to the average price of new cars is going to go up between 10% and 20%. that is meaningful. if we have the trade tariffs and i consider it a war with china, consumer goods, a vast amount of which are electronics and toys and close, a vast amount that

are bought for christmas will go up. the fact of the enormous budget blowout that congress put through means you will not see mass unemployment so it will take a while. people will feel the pit -- the pinch. their real purpose in -- purpose thing -- purchasing power will go down. manus: given the concerns that you have about china and that is rhetoric has focused in the past seven minutes, canned that or should that be taken on board i the fomc? adam: it should be taken on .oard by the fomc if the chair and the fomc are sticking to the fed's mandate, i do not think they will have to react very much. it is possible they will muchive again eight to 12 and now but not before the two hikes this year and probably not

before the march hike next year. basically because of the enormous fiscal stimulus from the ridiculous budget deficit and because the u.s. and china are the two world economies that are largely closed and very big. it is going to be bad for us long-term and reduce consumer choice but it will not be a major affect on inflation and not a major effect on growth short-term. politically for the good of the u.s. i wish it was a bigger hurt in the shorter term so you could bad trade policy, bad outcome but it is irresponsible to say that. u.s. is big and there is a lot of other stuff going on. anna: what about the emerging markets story could throw the fed off course? saide past the fed [indiscernible]

is there anything about what you see in emerging markets that make you worry in that regard? adam: i do not think so. worry about the human beings and the stability there, yes but that is the -- not the fed's job. point you do need to worry about is the interaction about emerging-market jitters and trade issues. china like the u.s. is going to hurt long-term, hurt a little bit short term but china like the u.s.'s big enclosed and has policy options. what i am worried about our number of the countries around china that are focused on part of the supply chain and also japan. both are getting hit from the u.s.-china problem and the mexico auto problem. the potential for the trade war problems worsedm places like indonesia israel. -- is real. give me your outlook for

world growth and inflation and given the cacophony of events we just discussed. adam: you travel seven yards forward after you hit the brakes. the u.s. and the world economy are going to do ok through most of 2019. not as well as it would have without the problems, certainly not as well as it would have without the trade problems. where momentum will carry us forward. so we go back to anna's questions and your questions about the politics, when duke people joined it up if it is going to be another six or 12 months of good growth before we anna: the effects. -- before we see the effect. thingthis is the

nowadays. an integrated world economy offers huge advantages for households and jobs. everything cuts both ways. very few countries are, as he exporters. strong dollar in some ways helps them. but then you are borrowing -- are borrowing dollars you get a problem. everything goes back and forth. economistsy what call general equilibrium. usually there is feedback effect. the issue with the trade and emerging markets for countries like argentina or self-inflicted ones like u.s. trade policy or brexit is that they are unremittingly bad. it might not be the largest thing going on but there is no positive equilibrium feedback. there is no upside to these events. waiting --uarie is president mccree is waiting. from what you have seen is

argentina containable, is turkey containable? i mean if you lira this cake, i put it to you that there are a variety of issues which are building but what you see from argentina is this enough in terms of what mccree -- proposing?- macri is committed ins an active preemptive way to getting on board with the imf, getting short-term funding but second that he is using it to do some measures of structural and fiscal reform. he came in wanting to do that. bad events around him in his country but on most of his neighbors made it harder to do that. he is ripe to use the -- right to use the crisis to reform and

that is why it will succeed. for startingou your day with us. adam posen. a bloomberg business flash. ing has agreed to pay a fine of 675 million euros to investigationnal into issues including money laundering and corrupt practices. the dutch bank acknowledged serious short comings in due diligence policies to prevent financial economic crime and a dutch unit. to lender said it started take measures against a number of former senior employees including withdrawing onus is and suspension of duties. dhabi commercial bank and union national bank shares have surged by the daily limit after starting talks for a three-way merger. a dcb said it is in the

.xploratory investigations the potential tie up would corporation, the fifth-largest bank with $110 billion in assets. said.s. based drug giant the cost of dealing with the split will reach $100 million. the uk's looming rupture with the eu threatens a group of borders that are open and force companies to duplicate regulatory efforts. that is your bloomberg business flash. manus: thank you. equities continue to defy the rest of the world with the s&p posting another monthly rise in august. had you get the best value out of these markets?

peter oppenheimer joins us from the banks leverage finance conference in london. always great to have you with us. we have the tightest trading bandwidth, that is the destination as well as your conference. the tightest band with since 1967. what does it take to make a break the u.s. market of were down, what is the linchpin to move this bandwidth, the calmest since 1967? peter: it has been extra ordinary and we need to look at the factors that have driven that and what are likely to change those driving factors themselves. much of it comes from the tremendous policy support that we see not only in the u.s. but in other countries as well since the financial crisis that is becoming -- beginning to come to an end. u.s. interest rates will rise more than the market is

expecting over the next year and that will have a down turning affect area the other real ander of the bull market particularly in the u.s. has been the tremendous success of technology in that has been genuinely driven by powerful earnings growth story. that is something we still see as fairly sustainable. such a bigogy is part of the u.s. market and still doing very well. we will be one of the positive supports that will prevent this trend from breaking. breaking. anna: why are you more optimistic than consensus and how long do you see that tech rally lasting? not think this is a tech rally, this is a secular

trend of transformation in the technology sector and in other industries which are seeing disruption from the use of adoptingy or technology to change business models. we do not expect efforts to grow the way they have in the last several years and technology has moved apart from the rest of the market even in the u.s. as well as in other parts of the world. i think technology is likely to remain the dominant driver of the bull market over the remainder of this cycle. albeit at a slower rate. i would say that in general we although equities continue to uptrend because we expect the global economy to continue to grow over the next couple of years. we do believe that profit growth will slow and the overall returns will slow but the upward secular trend will remain

intact. manus: we had a conversation with adam pozen. his rhetoric is -- and tone was concerned. trade wars and the risk there up. where are you in assessing that risk, are the markets priced for $200 billion worth of extra tariffs coming at the end of the week? peter: there is no doubt that the tariffs and the potential for an escalation of trade tensions is one of the key risks because ultimately, it is one of the major risks to the global economy. if you look at the direction direct effects of the proposed tariff increases on global gdp, it looks on most trade models to be relatively modest. those do not take account of all

the second round effects, the impact on confidence and therefore on investment decisions. it has second and third round effects that could be more damaging and if we look at gover history, the thoughts of -- that have are brought down margins, we should not forget corporate margins are at an all-time record high. some of the things that brought those down and reduced profit share has been trade wars, rising regulation increasing tariffs alongside an economic downturn. the has to be one of the biggest threats and certainly is one of the most important factors impacting sentiment and keeping .isk him higher if you look at the growth numbers we're seeing an economic captivity and profit. anna: another risk factor could be the developing news flow from

emerging markets. textbookoking at a crisis and what does that do to your strategy? i would be more optimistic. tradesee the risk of conflicts escalating and becoming a much bigger drag on global growth and profit relative to our central expectation. are clearly and the focus right now partly because they are linked to the issue of tariffs and central trade wars. but also because of the specific problems we're seeing in the countries that are experiencing tremendous pressure. we do think that emerging markets as a broad asset class are more robust than they have been in other times of emerging market crises, there is less risk of systemic contagion from one country to another.

if we look back at the last time when we had major emerging market concerns when the dollar was rising and u.s. interest rates were expected to rise in 2015 and 16, you had a eager external imbalances in many emerging economies than is the case today. from that perspective while concerns, theific broader risk to emerging markets may well be overpriced in markets right now. can i pivot to italy in terms of contagion risk? italian-german spread and reforms will enter. or we under pricing overpricing contagion risk from italy, the european equity story, risk from italy to you? clearly ann this is

area where the risks could escalate depending on what the decisions are around the budget. is veryet arithmetic sensitive to changes in interest rates and the interest rates and spreads are driven by sentiment about policies and the sustainability of debt levels. i think ultimately that we will that budget agreement maintains stability in debt to gdp but it is not a done deal that will be the case and over the time when we know what will happen we would expect further volatility in italian spreads. of thaterability spilling over into other markets. anna: thank you for your time. peter oppenheimer from goldman sachs.

we will bring you more exclusive coverage from the goldman sachs leverage conference your out the morning to stay tuned.

guy: welcome to the european open. i am guy johnson. my cohost matt miller is out today. what are we talking about? a mixed session in asia among kents -- continuing concerns. stocks are reopening after the labor day holiday. the cash trade less than 30 minutes away. guy: an emerging crisis, argentina's