francine: emerging markets take a breather, e.m. stays alive after a bear market, investors say more pain is on the way. offensive, opening the door for tariffs on $200 billion more on chinese imports. the topic has its worst week since march. hot, analysts predict another month of strong gains, but how long can employers sustain the pace of hiring?

good morning, welcome to "bloomberg surveillance." i am francine lacqua here live at the forum in italy. we will be speaking to the biggest names in business, finance, and central banking. former pboc governor, and coming up we have the chairman of j.p. morgan international. the first, nejra cehic. nejra: as you outlined in the headlines, a lot to focus on in the markets. it is u.s. jobs day. $200e waiting for that billion of tariffs on china, and what is happening in emerging markets. dropping into a bear market. up -- asiay makes seems to have been, we see

weakness on msci index. was in the green, but steady now after three days of declines. also in emerging markets, we are seeing a pause in declines. little bit ofs, a rebound, up 0.3%. the dollar very much in focus. for now, let's get first word news in new york with taylor riggs. >> the deadline has passed for comment on tariffs of 200 billion dollars of chinese imports. some of the countries retailers made a last-minute push to persuade president trump not to do the tariffs. president trump in montana said he would strike a good deal for farmers. president trump: we are cracking down on unfair trade practices

emanating from china. america is tired of getting ripped off. a great dealto get for our farmers and ranchers and factory workers. we are giving our workers and businesses a level playing field. election presidential campaign has been jolted after the leading candidate was stabbed. the attack on the controversial former army officer, through what had been a greater state of turmoil. the lawmakers condition has stabilized, and brazilian traders are betting the incident can propel him to the presidency. atar's minister has helped push the gdp growth to the fastest pace. he made comments in an exclusive interview with bloomberg. >> i can tell you today, the blockade, by our

neighbor, it is behind us. fact, doing excellent, in from an economic point of view, it is a blessing. >> global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. thank you so much. emerging-market stocks are stabilizing after seven days of losses. that after they slipped into a bear market, dropping 20% from a january 26 high. investors are warning of more short-term pain ahead. a further drop of 10% is likely. is the worst to come? ,e are joined by jacob frenkel chairman, jpmorgan chase bank.

as always, thank you for giving us your time. i think when you look at emerging markets and the route we saw, should that influence the fed and other central banks to actually hold tight and watch what is happening in emerging markets before hiking rates? jacob: we will watch very well what is going on, but i must say the primary objective of the various central banks in the industrial world will make sure their economies are stable and growing, and in fact, this is the best way they contribute to the emerging markets. one of the dangers in emerging , andts is capital flows probably not always ready to deal with these flows in appropriate ways. scenarios,re are two turkey and italy, they will be

contagious, and the rest will be like a domino effect. in theld leverage it opposite way, and say, why are things so bad today in turkey? in is there a problem brazil? why are the problems in other places? primarily, it is domestically created. it is irresponsible policies. it thisonce we look at way, we have an agenda how emerging markets should imitate other emerging markets that is different from that. i think emerging markets are not a monolithic group, and they should strengthen their domestic institutions. francine: when you look at what the fed 10 do next, hiking rates, should they be the central bank to the world? or should they focus on the u.s. economy? this is a dollar strength story

hurting emerging markets. the u.s. is the most important central bank of the world, and therefore they are very careful, prudent, and responsible. should the u.s. continue in raising rates? the answer is absolutely yes. the reason is we have not seen such a performance in the u.s. for many years. we may come to a later, but i can say the u.s. economy is sufficiently strong and robust to justify the next move on rates. francine: today is also u.s. jobs day and we will see if the strength holds. if you look at the fed cycle, there is a concern that a tax cut effect in the u.s. drops off a cliff in a couple of years. do you wary that the u.s. economy can suddenly turn? jacob: the u.s. economy will turn, but it will not be suddenly. it is important what happens

between now and then. the recovery has been a long time in the making, and it is very robust. the job market is extreme a positive. inflation even reaches the objective of the fed, and therefore, yes, we are at a low interest rate relative to where we should be. by the same token, when interest rates rise, of course it will create some negating affect. but the fed needs to prepare ammunition for the next turnaround. at the present time, interest rates are too low to enable it, to deal with the next crisis even when it comes. that is why it will be prudent to raise interest rates. francine: should the fed worry about an inverted yield curve? and do what they can to stop it from happening? jacob: everything in their power

is not the right thing to do. what the fed should do is do everything in their power to achieve its objective. the yield curve is not an objective for the fed. the yield curve is a manifestation of the state of the economy, but the fed operates on the short run. it will affect the long run to expectations, and that is why the steady as you go approach, and the transparency is so important. that is the way the fed can broadcast the long run into the short-term. francine: in the past, every time you predicted a recession, and inverted yield curve, it has been accurate of an impending slowdown. will this time be different? and i am anot sure, sure i would call it a recession, but i am confident that the current performance of economic growth is not going to

sustain itself with the current fundamentals. we have an issue of long-term tation, and long-term deck will come back to haunt us. on the supply side, the reaction in the corporate tax rates, the repatriation of the oil investment, the deregulation, those will have long-term positive effects. , thanke: jacob frenkel you so much. he stays with us. we are talking about trade, and i will also ask him about the central bank, and fed independence. llance."h "survei we have many guests. we will continue the conversation with jacob frenkel. coming up, we also have the pboc former governor. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ." i am francine lacqua here on the river banks in italy. let's get back to our conversation. the u.s.-china trade war, maybe about this step back a gear. that leaves the way for donald trump to add more than $200 billion on chinese imports. what does this mean for the rest of the markets? reports that the u.s. president could set his sights on japan next. how should investors be positioning themselves?

jacob frenkel from j.p. morgan is still with us. dr. frenkel, we were talking before about emerging markets, and the risk that poses to the fed. if there is one thing fed and market participants should remember, since we are coming up to the 10 year anniversary of lehman brothers, what should we ask ourselves of how we can prevent the next financial crisis? jacob: in the modern capitalist economy, it is always and has been the financial sector. it was the financial sector that was fragile, and that caused the economic crisis. lessons,ne of the main watch for the financial sector, make sure supervisors and regulators are focusing on the right thing, and promptly. we have learned that capital in

the banks must be higher. we have learned that liquidity must be watchful. we have learned that leverage should not be overextended. we have learned that problems need to be solved when they are small rather than waiting for them to be too large. i believe the financial sector today is much stronger than it was before. concerned that the next crisis is around the corner in the financial sector, but we should watch for it, especially as there is now a move to deregulate. it has to be done in a wide way. francine: the next financial crisis comes from borrowing, this was at the center of the last financial crisis. is there a danger we are over regulating something and will be blindsided? jacob: i think we have still

debt,everage, government private sector debt is very significant. in some parts of the world, like china, debt is the most dangerous area, so i think that is an important point, and i believe the bank of international sentiment -- francine: you were a brinker -- banker, do you worry about fed independence? jacob: we need to understand the logic of central banking independence, it danced -- advanced economies and emerging economies have recognized these institutions. the political sector is very much motivated by short-term considerations. institutionave an

in charge to look into the medium and long-term. targets to achieve in the medium-term. that is what central bank independence is. it is not independent of government in general. that says, weg want to help the government achieve its long-term goals, but we recognize the government might be tempted to deviate in the short-term because of political gain, and we will not deviate from our medium-term strategy. so, if there is a recession in the u.s. and president trump is still the president, is there a danger he politicizes jay powell and says the recession -- jacob: the blame game is always going to be -- the real issue is

jay powell and the fed, are they going to follow their plan?-term i am confident they will, because the fed has a long-standing history and reputation, the strongest currency of the central bank is its ability. -- it's credibility. i am not worried about the fed deviating or being politicized. thatworried somewhat people and politicians are starting to gang up instead of fixing their own hole. washington and the fed, washington in the congress, and the implementation. francine: jacob frenkel, thank you so much for joining us. that was the chairman, jpmorgan chase bank. let's get straight to the

bloomberg business flash in new york city, here is taylor riggs. taylor: british airways is ,nvestigating credit details the airline says payments were breached by hackers between august 21 in september 5. the stolen data does not include travel or passport details. apologized and says it is contacting customers. a future away from alibaba. into anany that turned e-commerce juggernaut, and in an exclusive interview, they are dedicating more of the private fortune to philanthropy and the creation of the foundation focused on education. that follows in the footsteps of the billionaire bill gates. >> the first technology , now we are in the

third revolution. war wee is a war, the should fight is against pretty, disease, and environment. we should do it together. ylor: deutsche bank is tried to reassure customers in new york that it is ready to handle their business. bloomberg has learned it invited a select group of investors to meet and mingle with a half-dozen of its senior .xecutives, including cfo while it is not unusual for banks to hold high-level meetings with the clientele, deutsche bank is under pressure to defend its business. is hiring acarmaker designer behind rolls-royce cars. rolls earlier this

year. used byortant brand elite chinese government officials is rolling out more models including a midsized sedan. twitter has permanently suspended conspiracy theorist alex jones, and the account for rs website. twitter did not specify the content that led to the decision, but said it related to abusive behavior. apple, youtube also purged related to alex jones. that is your bluebird business flash. francine? francine: thank you, taylor. we are back on the river banks. is a lot of discussion about the substance of what italian reforms can look like. and italy inside of europe in general. i am pleased to be joined by the

executive of m rossetti. -- ambrosetti. valerio: thank you for inviting me. francine: i imagine you will talk about emerging markets, china, but there is angst on budget reform. are they going to be conciliatory with europe or are they itching for a fight? valerio: that is a very good question, and with all investors, we have a number of foreign investors here. guessre waiting, and my is they will be reasonable and we are in line with expectations. the largest weight will not be above 2.5%, my personal guess. i put my credibility on the table now, saying that. and also, i can say we have the feeling a lot of progress is

made in terms of being more open and flexible with investors, entrepreneurs, and markets. take for example the largest deal manufacturer in europe in the south of italy, just two hours ago, the minister sorted that out with an agreement. it solves the problem for over 10,000 employees. it is huge progress in the direction of sending the message that they will continue doing business in the country. francine: we talk about the need for a stable government, and the promises may be done during the campaign trail were not coming to fruition to attract foreign investment. are you confident you will be in a better place five months from

now? valerio: yes, all of those problems are postponed to eventually the next year. it has happened to many other governments, how many politicians make promises that likely change or drastically change when they went into place. one example is cyprus. they were here for a few years ago announcing a disruption of europe. what happened in the end is they implemented a solution where greece did what europe expected greece to do. i think the positive signs are under the eyes of everybody. thepect there will not be full implementation apple speed of all electoral promises. speedlementation at full

of all electoral promises. francine: we are speaking to the former the boc governor later. how is that seen in italy? this is an economy of manufacturing caught in the crossfire. valerio: that will have a much greater impact. in a number of papers already, thaneal worry is economics the short-term policies of the government. we are in the top five global countries of italy with trade balance above $100 billion. we are the second largest manufacturer in europe after germany. --have to dabble lot ifsuffer a

international global trade will be stopped or slowed down. that would be a concern, but again, we are an optimist. we need to profess optimism, and whatever president trump is shouting now against trade, tariffs, etc., may be sorted out soon. francine: valerio de molli, thank you very much. he is the ceo, the european house ambrosetti. coming up, we have huge interviews. we will be speaking to the former pboc chairman. we also have an exclusive interview with alibaba chairman jack ma. this is bloomberg. ♪

francine: welcome back. it is a pretty beautiful day parade we have great interviews coming up.

let's get to bloomberg first word news and new york. earlier, some of the ies and retailers made a last-minute push to get donald trump to reverses course. >> we are cracking down on unfair trade practices emanating from china. america is tired of getting ripped off. we're going to get a great deal for our farmers and ranchers and factory workers. we are giving our workers and businesses a level playing field. taylor: emerging-market stocks have fallen into a fair market. that is the index has dropped by more than 20% since its january

26 high. rising u.s. interest rates as well as american protectionism. contagion concern has come into the floor in recent weeks as the most vulnerable developing economies fell into crisis. presidential election campaign has been jolted after the leading candidate was stabbed during a street rally. the attack through what had the raceeen -- threw into a state of turmoil. brazilian traders are betting the incident could help propel him to the presidency. japan's international airport and osaka bay has partially reopened. a typhoon partially flooded the runways. also ripped a

tinker from its moorings and flung it into a bridge that connects the airport with the mainland. 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. i'm taylor riggs. this is bloomberg. francine: in under 20 years, jack ma's career has escalated to one of the world's most recognized corporate leaders and china's richest man. he is now dedicating more of his time to philanthropy. he spoke exclusively to tom mackenzie about his vision for the future. i do a lot of things on education because i think it is so critical for the future. environment, these are two things i focus a lot. there is no one thing that is the most important. most important is everybody to accept it.

tom: to what extent do you think your identity has been shaped and forged by your first job, which is as an english teacher. jack: people do like me to talk a lot because i speak and a lot of forums. do is, ithing i can learn so much from alibaba, i think it is my responsibility to share. whether people like it or don't like it, agree or disagree, it's ok. the thing is, you have to share because society gives me so much resources, so much experience, you shouldn't waste it. share with others. jack: do you miss teaching? tom: do you miss teaching? jack: i do very much.

i think someday very soon i will go back to teach, back to education. this is something i have more confidence, i think i can do much better than be the alibaba ceo. tom: that would be something. why i create all these things have been preparing for 10 years. this is something i want to devote most of my time when i retire. tom: when could that be? jack: very soon you will know that. tom: this will be you stepping away from your role with a focus on education? would you look at the bill gates model of giving away most of your wealth? jack: i think there are a lot of things i can learn from bill gates. i can never be as rich as bill

gates, but one thing i can do better than him, i can retire earlier than him. i can do something that is from education field. i can be unique, different, and something and my jack ma's mind. i will learn from bill gates, warren buffett, a lot of great philanthropists in the world, but i want to do something using my own way. thecine: that was jack ma, executive chairman and founder of alibaba. at the foreigne or the great and good show up for three days, politicians, chief executives, academics. years, themost executive of roubini associates. he joins ussk him, here for the next 20 minutes. we will talk about emerging

markets, italy and some of the risks for cryptocurrencies. my first question to you is on the market. are they going to see more of this contagion spread to other markets or are we going to see the selloff continue? >> what has happened in emerging markets is that u.s. policies have rising rates in the fiscal stimulus is creating stronger dollar, lower dollar price of commodities. all of those factors are negative for emerging markets. that is also in brazil, south africa, india. there has been contagion because investors have moved out of emerging markets.

now, even some of the dedicated investors have suffered large losses, they are also selling of better credit. i imagine things are going to get worse for emerging markets. francine: how much more of a correction can we expect? 10%, 15%? nouriel: on the one side, u.s. policies are going to continue negative. on the other side, i would say we have not seen policy responses of individual countries. turkey has to do monetary credit and there adjustment are not likely to have political constraints. i think that markets are going to react depending on the policies, but then there is this broader --

francine: how much to you worry about the trade war escalating between the u.s. and china? nouriel: i worry because this is not just about trade. in my view, this is something broader that is going to be long-term, not just about trading goods or imbalance. the u.s. has essentially decided to challenge the rise of china. francine: what does that mean for federal reserve policy? do they need to stay put? if they hike mark, dollar goes up -- more, dollar goes up. response is ambiguous. it increases inflation versus output.

if inflation goes higher, it should be tightening faster and sooner. i think the reaction from the fed it depends on what the inflation expectation is. essentially look through it and ignore it. francine: wendy you expect emerging markets to stabilize? -- when do you expect emerging markets to stabilize? i think investors are going to be discriminating on one side by selecting different credits and looking at individual policies. what the u.s. is doing is implying there is a gradual -- the dollar goes higher, the trade risk is there. at least for now, 6-12 months. francine: do you worry about the italian economy and the advice this could have on you as a

whole? nouriel: this new government promised the moon. they panichave seen, and say we didn't mean it when we said we wanted to reach the 3% deficit. they have an essential problem. on one side, they have promised a lot. i think eventually the market is going to put pressure on them. that might be semi-acceptable to the eu. instead, they try to push them toward 3% of gdp, there will likely be a problem. francine: are you telling me you are expecting spreads to widen before it gets better? nouriel: it depends on what is going to be the proposal. if it is close to the one of

this year, spreads are really high. instead, they might go to new elections, there's a confrontation with the market and spreads can go above 300 again. limit of what is the percentage to deficit that will freak out the market? say at thewould deficit were to go significantly above 2% of gdp, the markets are going to get very nervous. francine: where do you see euro? nouriel: that depends on what happens to the dollar. the dollar should becoming stronger and the european economy softer. the fed keeps on hiking, but the signal from jackson hole has been slightly dovish. them i put a limit to the upper pressure on the dollar, and stabilization in the euro to

u.s. dollar. francine: thank you so much. nouriel will be back with us. we will talk to him about trade and the chinese economy. i really want to get his thoughts on the collapse and what this means from the lessons learned from the financial crisis. more on that next. this is bloomberg. ♪

francine: that was some of our reporting from back in september 2008 in the aftermath of the collapse of lehman brothers. we have a full slate of interviews coming up for the 10th anniversary of the lehman collapse. we will be speaking with the former executives of the ecb, bank of england, and many others. look for those next week. let's stay with the financial crisis. we're back with nouriel who joins us at the forum.

i don't know if you remember it. i guess it is one of those days forever scarred on your mind, when you heard about lehman. was the first sign you saw that something was wrong? itriel: i wrote about starting in 2006 and i saw it coming. i don't think lehman was the cause. i think the lesson we learned is that when you have excessive leverage, excessive risk-taking, credit bobbles, eventually that leads to excesses and the public sector and you reached a moment where you go into the crash. whether the currency crisis, or corporate debt or banking, similarities across many crisis. francine: was the most important consequence of the financial crisis? microeconomic rose has

been dynamic because they have to deleverage for a number of years. the rise of populism, backlash globalization. financial significant and economic costs. francine: you are linking the financial crisis to almost the rise of populism. what would it take for to go to another stage outside populism? think right now, we live in a country where the populist backlash is rising. it is a combination of financial, economic, social factors. we see those in emerging markets. we have strong man like putin

in russia, maduro in venezuela. is to make challenge sure that trade globalization and all of these factors leading to benefits for everybody as opposed to the top 10%. francine: how do you do that? is that realization from financial markets, attacks from politicians? how will this end up? were talking about anti-globalization 10 months ago. that hasn't really happens. trade,: they are seeking imigration, capital flows, think this is not the first place policy. something is going to be hurting the markets over time. you need to invest in the future, human capital, education, infrastructure, to give an alternative to the anti-populist establishment.

francine: where will the next crisis come from? : we're in a tenure recovery right now. i think this year and next year growth is going to be fine. i think something happening will be in 2020. u.s. growth is closer to 3% because the fed is going to hike rates until 3.5%. you'll have trade wars, eveniction on migration, ecb and doj will start to normalize. asset prices are overvalued. private equity, public equity, -- expecting there will be a slowdown of growth in 2020. think the first point in time where we could see a risk of another economic slow globally is in 2020.

francine: you're talking about the u.s., but couldn't come from china? -- could it come from china? on one side, the u.s. is a source of reason, on the other side, we know the debt and leverage of china is excessive. sources and pressure on the global economy are the u.s. on one side, china on the other, also slowdown in europe. know, there are many emerging market economies that have their own fundamental ddm. it is not just a u.s. story. there are a variety of parts of the world that can lead to solid growth in 2020. francine: solid growth or global recession? nouriel: that depends on the severity of what happens. 2020, asay that by

perfect storm in terms of things going wrong in the u.s. and china in emerging markets and parts of europe may lead to a significant tightening financial condition that may stall economic growth. if the u.s. grows 1% in 2020 in an election year, trump is attacking the fed, he is going to go berserk when growth is only 1%. francine: does that mean you're seeing bubbles in the market at the moment? nouriel: public equities are expensive, especially in the united states. private equities are expensive. credit is very expensive, especially high-yield given the leverage of the corporate sector. government bonds are still very low, and so on and so on. across the world, certainly valuations are expected. if you're going to have economic shocks, it may come from liquidity as fed and doj and boe

start to normalize, you could see the deflation of these. that is going to start to happen, i would say next year. francine: last time you are on, we talked about cryptocurrencies. where are we now? nouriel: bitcoin has lost 70% of its value. the other top 10 have lost 90%. the rest of the 2000 cryptocurrencies have lost between 95% and 99% of their value. right now, it is a crypto carmageddon. i have been saying that 99% of the cryptocurrencies are at zero. francine: will anything be left? nouriel: i don't think much is going to be left. some people say that maybe bitcoin is going to be left. francine: thank you so much. el is the chairman

executive of roubini associates. i will be here throughout the day for more exclusive interviews. nejra: fantastic coverage. qatar's economy minister has described the embargo of the three neighbors as a blessing. >> i can't tell you today that qatarbargo or blockade on by our neighbor from economists point of view is behind us. we are doing excellent. in fact, from an economist's point of view, it is a blessing. met our we reached or growth target, which was 1.6%. our total export increased by 19%. total trade was increased by

16%. total surplus increase by 48%. thatorld bank will expect qatar will be the highest growth in the region, 2.8% or 2.9%. 2022.il growths a huge opportunity. matt: the drop we have seen an emerging markets assets has been a huge story 4s. has that affected your portfolio? the drop in emerging-market assets? when you look at emerging-market equities, currencies, the problems from argentina to seeey to indonesia, do you kleinsose falls under

and prices, opportunities to go in and pick up asset to feel are undervalued? >> we're looking at some of asia. especially in i think the fundamental of their economy is quite strong. the cycle of going up and down is always what will happen in the economy. when the economies -- we believe in the fundamentals, companies, we will step in because this will be a great opportunity to step in. for example, southeast asia is a huge opportunity now. we're looking at that. qatar's economy minister speaking to matt miller. markets.ck in on the yesterday, we saw emerging-market equities drop into a bear market.

we are seeing a bit of stabilization, even gains in em equities today. that said, we have seen losses in the asian session. declines,e days of the stoxx 600 is steady now. of course, trade wars weighing on investors minds. we are looking ahead to u.s. jobs day. ahead of that, the bloomberg dollar index weaker for a third day. we are seeing a bit of a recovery in crude, although we are seeing wti heading for a weekly loss. "bloomberg surveillance." continues in the next hour. this is bloomberg. ♪

nejra: emerging markets take a breather.

investors say more pain is on the way. trump's asia offensive, washington's midnight deadline passes. itstopics of japan has worse week since march. hot, it is u.s. jobs day and analysts predict another day of strong gains. how long can employers sustain this pace of hiring? this is "bloomberg surveillance." i'm scarlet fu in new york for tom keene. francine, you say chernobyl y -- basically you are at lake cuomo. clooney, george apparently sold his house. before we can see, it is right behind me. ins is the event behin

september that all of the italians come to. we will try and figure out exactly what the italian politicians are reaching for a fight or no. it will be interesting to get the pboc governor's take on china and the trade war. president trump got some last-minute pressure not to impose tariffs on $200 billion products. some of america's most prominent tech companies and retailers are urging the president to hold off. members of the public had until yesterday to comment on the matter. the president could announce the tariffs as soon as today, and china has vowed to retaliate. it is unlikely there will be a deal on nafta this week. that is according to the canadian government official says the talks with the u.s. in washington have seemed upbeat. the canadian foreign minister has pushed back questions on any

deadline. over in brazil, the leading candidate in the presidential race is now in stable condition after a near fatal stabbing. he was attacked during a street rally. police say the attacker told him he had been sent by god to kill the candidate. brazil's elections our next month. for reynolds is being remembered for his box office hits in the 70's and his string of high-profile romances. he has died of cardiac arrest in florida. he was 82. 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. i'm taylor riggs. this is bloomberg. scarlet: i will pick it up from

here. let's get a data check because if you look at what is happening in europe, he for today, the stoxx 600 fell, making it a fourth day of loss. nevertheless, the euro turned higher versus the dollar, versus the yen. we are keeping a very close eye on emerging markets. you are seeing again their of .4%. u.s. indicating a lower open for now. let's also keep an eye on the yen because the wall street journal reporting that donald trump may turn his sights to trade as his next target. bloomberg says that jobs day has been mostly u.s. dollar negative every month this year except for february. he also points out that the 10 year yield rose. we are getting a job support out of canada as well.

the bloomberg team reporting that a nafta deal does not look likely this week. robert lighthizer will not be working through the weekend. just as a check, or you are not seeing very much move there, down below $68 a barrel. earlier this week, a rose past $71. i thought it would be appropriate to take a look at the european stocks. i pulled up a chart of the stoxx 600 index. it is a white line here. after a solid 2017, european stocks have lost some momentum in 2018. the bluedown even as line shows estimated earnings per share have climbed to post crisis highs. the reason for this, multifold growth perhaps. region's economy was slow

every year through 2022. you have the expected end of ecb's quantitative easing, concern over traded developments. a lot of questions here for investors to sift through as they at one point saw stocks.ives from u.s. bailey, they are not finding in europe right now . -- clearly, they are not finding it in europe right now. francine: let's go back to our top story. president trump could announced plans for tariffs on $200 billion of chinese goods. tom, are we going to see full on it retaliation from china and the u.s. pushes ahead? certainly, there is no indication from the chinese they will be any official change in stance. they have outlined their plans to retaliate by hitting $60 billion worth of u.s. goods with tariffs.

that brings the total of u.s. goods hit to $110 billion. that is well on its way to two being all of the u.s. exports. we should also expect that the chinese will pretty closely collaborate their rollout and phasing in of their tariffs and retaliatory measures to what we see from the u.s.. we have also heard from the chinese they said they are going to be putting in place measures to make sure the sectors they think will be impacted. a more pressing concern is what kind of impact it is already going to have. we have seen a tick down in export orders and many fracturing pmi. that is a concern for china's policymakers. no indication that they are prepared to acquiesce to president trump at this stage. francine: who will be hurt the most? is a specific industry groups? is that u.s. companies that will be significantly hurt, or

chinese companies, or is it tit-for-tat? at this stage, it is really the chinese exporters feeling the pinch. in one province, with an economy larger than mexico, we have seen u.s. orders drop. we have seen the manufacturing pmi move to contraction for three straight months. in terms of the u.s. firms operating here, what we are hearing from the business groups is that they are facing some headwinds in terms of their applications and bidding for certain jobs and certain deals. it is not an official top-down campaign from the chinese to exclude u.s. businesses at this stage. further down the line, that is a concern. there are a number of different players in this.i spoke to a leading about u.s. companies and foreign companies. he says deals are drying up and there is concern policymakers

and policies will not be enough. other analysts say we should expect additional measures from chinese policymakers. scarlet: you also spoke with jack ma, the founder and executive chairman of alibaba about what he is focused on right now. let's take a listen. the first technology revolution close to world war i, second close to world war ii, now we have third technology revolution. we should not have a work, but if we have one, it should fight against poverty, disease, environment. scarlet: tell us a little bit more about what he is doing to address these issues. i asked him whether he thought his philanthropic

efforts could be a way to bridge the divide between the u.s. and china. i think one of the top lines that came out of this interview with him outlining his plan for retirement, saying he is been working for 10 years to ensure his company is ready to run without him. he is the executive chairman. he steps down as the ceo in 2013.he is clearly ready to retire . he says he is ready to focus on inspiration -- education. he didn't give us a timeframe, but you did say it's not far away. also, the role of gender and importance of gender equality in his business. alibaba employs more women than men. i think it was the outlining of his retirement plans and potential implications for that. he says the company is ready for him to step away and focus on his philanthropic efforts. stuff.: good

let's bring back david riley. he joins us now from london. good to speak with you. we were just a speaking with tom about what beijing and washington are dealing with in terms of these different tariffs. the tycoons in china, such as alibaba jack ma continue to proceed as usual. is it business as usual as we wait to see if the white house will go forward with the next round of sanctions? david: i don't think it is business as usual for investors because i don't think the market has really fully priced the billion ofof $200 chinese goods being subject to either a 10% or potential 25% tariff. i find that surprising because i feel it has been very well signaled by president trump on the white house. issues around trade, the messaging has been very consistent, and the white house

has pretty much done as it said it was going to do. i think it is a meaningful escalation of trade tensions between china and the u.s. i think it does have china emons both in and growth and potentially building some price pressures within u.s. economy that clearly is very strong. francine: what is priced into the market? we are now hearing the trade war could be with japan. africa.k, it was south are the markets on edge because of it or is nothing priced in? david: it is difficult to say how much is priced in, but i do investors speaking to and looking at some of the price moves we are seeing within asia, ite generally, i don't think is fully baked in the cake that

we are going to get the $200 million at 25%. i think we will see some reaction, potentially in the s&p 500, which is a big call to make because almost nothing seems to be able to put a dent into the s&p 500. i think there is a concern as well that part of that complacency is that this is just about u.s. and china. global trade war risks have diminished. view.dly have shared that that being said, it does concern me when we start bringing into the debate of potential u.s.-japan, and also whether autos are off the table completely as well. i do think this is going to be an ongoing headwind for risk assets globally. francine: david, thank you. we will ask him about italy.

we have great exclusive interview throughout the day. this is bloomberg. ♪

taylor blank -- taylor: this is "bloomberg surveillance." the largest shareholder in deutsche bank is getting out. it is part of a chinese government demand that hna focus on its airline business. the sale would add to pressure and deutsche bank, whose is shares are down 39% this year.

british airways has been rocked by a data breach. shares of the parent company iag fell by the most in seven months after the airline revealed that hackers made off with credit card data from 380,000 transactions. the cyber break-in lasted for more than two weeks. that is your bloomberg business flash. francine: thank you so much, taylor. cellini has adopted a softer tone this week. enricog us now is a who served as prime minister -- .eputy prime minister of italy as always, a great honor to speak to you. you were in charge of italy and a pretty difficult time.

does this time feel different? investors are worried, should they be more worried or less? enrico: -- little box is there and i think mario draghi showed that it is effective. that is the first big answer. it is true that there is another difference of five or 10 years ago. the difference is that there is less support to the european project. but thethe toolbox, european institutions have to manage very carefully this toolbox. it is a mixed feeling. thecine: deeply markets, spread that people talk about between an italian 10 year yields and german bonds will keep his government in check

from preventing it from doing some of the promises that they offered in the campaign? the spread is always very important because it is not money, real it is money with consequences, life of people. i am sure the spread, like all the other budget and financial indicators plays a role. it already played a role. we have not to forget that the very beginning of the life of this government, in the days of the formation of the government, the spread played a role. the key point is that the government is between two sides. the two sides are at the legitimacy, i didn't vote for this government, but i admit that this government is completely legitimate. and this government has the support of the majority of the italian people today on the one

hand, and the rule of law on the other hand. within the rule of law, there are the european rules that italy accepted, negotiated, voted, and these european rules are part of this rule of law. francine: but you can always reject them. enrico: you have to decide to do it. you have to decide in an open way, and we are not there. i'm sure that we will never be there. scarlet: i want to go back to what you were saying about how the italians have less support for the european project. what are they less enamored of? where do they still see value in the european union, and what does this mean for the current government in terms of how they actually follow through and execute on policy? isico: the european union

leaving a moment that is very complicated because of the lack of political support in many countries, the race of populism and other countries. next year will be in our quake. likely to is very predict a political earthquake because they will see a european parliament completely changed. no more the stable parliament of the last few years. a very fragmented one. very, and this european, fragmented and full of worries new scenario next year, i think this link and the position and role that italy can play within the european situation is part of the discussion. this is why, i think the government has to be very careful in managing european affairs because they are in a

period, in a year at the end of this year, next year and reach. italy has to be there to influence decisions. italy can't be marginal and these discussions because we can't accept that everything will be decided by french and germans with italians marginalized. the next period of european decisions will affect and will influence italy. italy has to be there and be convinced of their ideas and continuity with a strong european engagement. scarlet: i hear what you are saying. what does that mean for other countries? for instance, spain, who says they will stick to the budget rules? enrico: other countries are today in the european discussion, finding all our new equilibrium. it is clear that something is changing at the european level.

the last equilibrium around the funding -- founding countries is no more there. france and germany, there is good intent, but for the rest of europe, there are new tensions between east and west. there are many worries for the swedish elections. it is clear that what happened in the last years, and migrant flows, it was a big earthquake for the political european landscape. the reason why i say italy is a part of this earthquake, but not the only earthquake. all the european landscape is changing. francine: are investors going to be very worried? how much can and do they need to be worried before we really find

out what is in this budget flaw? is this the first real crucial point of if we know if this government is going to fight europe or not? enrico: until now, the government was very tough just on migrants, a very popular issue in the country and with very poor people, against very poor people. now, the discussion about the -- economic issues are very important. wait and see.at, that means, until now, we don't know what is the aim of this budget law. big gap between words and fax on many issues -- facts on many issues. the government is very vocal, but we don't know which kind of

facts will follow this vocal approach. budgets, we have to wait for the facts, and then we will, the facts. francine: do you think that euro acceptance, currency euro acceptance will be a part of the election campaign? strongly believe that italy will not have elections if i amr because familiar with our political i was political system for today's situation, does not allow us to accept early elections soon because there is a majority in parliament, so there is no reason to have the solution of parliament this government has the support of the parliament, of the people, so they have to show what they want to do. there is no reason to elections. the next elections would be the european elections.

they would be both at the italian level, the european level. a big referendum on the future of european integration. i think the next european elections will be very critical and crucial moment for all of us. francine: thank you so much for joining us on "bloomberg surveillance." that was the former prime minister of italy. coming up, we will be joined by another former minister. that is coming up in about half an hour from now. later on, i'm also looking forward to the former governor of the pboc, the people's bank of china. i want to ask him about stimulus, some of the dangers when it comes to debt and deleveraging of the economy. scarlet: this comes as china reported fx declines in august was some sort of capital control still in place and china still not directly interfering with the yuan.

we will see how this whole thing plays out when it comes to tariffs. the white house could make an announcement any minute. we will also get koppelman from david riley -- comments from david riley. coming up next is the eurasia group president and founder. we will get his take on what is happening in washington. from new york, from italy, this is "bloomberg surveillance." ♪

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scarlet: hard to believe but it has been 10 years since the collapse of lehman brothers the next week, we're taking a look at life after lehman with a full slate of interviews. speaking to ceos, the former president of the ecb and others. watch for all of this throughout next week. i'm scarlet fu in new york filling in for tom keene with francine lacqua in italy. let's get you to first word news with taylor riggs. has been cleared for a president trump to announce tear son $200 billion worth of chinese products. a public comment ended yesterday.

america's best-known tech companies and retailers have urged the president to reverse course. if theuld be hurt president imposes tariffs. president trump said he would like to shut down the u.s. government to force congress to fund a wall along the mexican border that he will not do it before november elections. foxnews hent told does not want anything that could hurt republican's chances. a computer programmer has been charged in connection with the massive hack in sony in 2014. one official called the scope of the cybercrime staggering. that 15 month embargo of qatar may have helped its economy, that is according to its economy minister. >> i can tell you today that the

blockade by our neighbor from an economic point of view is behind us. we are doing excellent. from an economic point of view, it is a blessing. up 19% sincets are the boycott began. a coalition led by saudi arabia cut its ties with qatar. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." francine: thank you so much. the trump administration could announce tariffs on another $200 billion worth of chinese imports. with the spoke president last week and he shows no signs of backing down.

us now is ian bremmer, eurasia group president and founder and still with us in london is david riley. welcome. and the look at trade escalation of these tensions, are we talking about a trade war. is it going to get worse before it gets better? the u.s. china relationship is different than u.s. europe, different than u.s. canada mexico. it is linked to other issues. u.s. policy on taiwan and then under trump, u.s. under north korea. not heading in the direction north korea wants to be. chinese, trump is blaming them for making it harder for him to get a deal. trump arers around much more willing to be hawkish

on china on trade, until actual property, on technology. they're not looking to get in the ecd done -- get an easy deal done. everyone outside of trump has been saying you need to work a deal. before midterms, all you're going to see his escalation. francine: if you go into the midterms without a deal but chest beating, this is unfair, this will play out well with the voters. reason they want nafta is because they want to show that being tough on trade does not mean they can get things done. if you can get a deal done with the mexicans and canadians it gives you more room to say i'm going to be tough with these countries that are ripping our faces off and china is enemy number one on this. aligns the united states

more with european allies, it aligns trump more with corporate , with american technology players, none of omar having an easy time now in this chinese -- none of whom are having an easy time now in this chinese technological environment. heard hims you talking about china, you cannot avoid companies with exposure to china. in terms of investment, how do you view china? it is an interesting debate the extent to which china is emerging. it is not a developed market economy. to echo the comments from ian bremmer, we have to look at this u.s.-china trade tension as part of a bigger story which

is a situation where we have seen the central gravity for the global economy shifting east not only to china but to india and asia. some of the tension now is something which is about the rules of engagement and the of asia relative to the traditional west. over the medium-term term, that has profound implications that investors need to think about. how we are investing, we have exposure to china credit. the economy is holding up reasonably well. they having gauged in policy easing as well. moment, china assets are holding but they are under increasing pressure from the u.s. on trade.

scarlet: the president has picked up on the yuan weakening. i have got a chart showing how china's fx reserves did weaken. how critical do you think that is for the progression of these even at as preliminary stage, for china to show it is not going to let its currency weakened? an important issue you have raised. part of a policy adjustment to the imposition of tariffs is to allow your currency in the bilateral exchange rate to weaken. i do think chinese authorities allowed the weakening we saw specifically in response to tariffs from the u.s.

right now, they are drawing a -- the the second impart couldn part because they be accused of currency manipulation and you could have a broader range of sanctions taken by the u.s.. they want to maintain stability in their currency. i think it is likely to weaken further from today. is the leadership of china strong enough to comply with u.s. demands without looking week? ian: yes, there is no question. the president is recalibrating his approach to the united states. they did see trump as an opportunity where he did not

care about his allies. he was providing space for the up influence,k build institutions, take a leadership role and they thought they could buy off trump. turned out they cannot buy off trump. it is harder to engage with the europeans. the europeans have a lot of the same problems with the chinese. actingseeing xi jinping more flexibly towards the united states, not just on currency but also on iran. they arese are saying going to buy less oil from the government. see more thano one billion barrels per day taken off of production. we also saw the president xi jinping had a planned, historic summit in pyongyang with kim jong-un. they canceled it and said they were going to send their number

three. all of these are messages to the trump administration they do not want a war with the united states. the u.s. is more powerful than china. francine: what do we understand with u.s. foreign-policy, every opinion piece, with every person resisting trump, does he become belligerent with his allies to show he is strong? there are wildcards for trump on foreign-policy. i do think the potential for trump to wag the dog as he gets besieged, as he starts feeling overwhelmed, he sees there is no when he can trust. it is his family, that is it. let's keep in mind on most issues, the united states is not

turkey. the ability of the president is dramatically constrained. that is whether or not you're talking about getting a deal done with the north koreans, a , it is the judiciary, the journalists, the people you have appointed. there are issues were the people around trump agree with trump's impulses. he is surrounded by hardliners. byna, he is surrounded people that think china is a problem. anthose issues, where unrestrained trump is likely to on, i think those are places where you could see things getting dangerous and china is one of those. francine: ian bremmer, just getting started.

we have david riley of bluebay asset management. up, from new york, from italy, this is bloomberg. ♪

scarlet: i'm scarlet fu in new york with francine lacqua in italy. tom keene has the day off. has been laying the groundwork for a future away from alibaba, the company which made him china's richest man. he outlined plans to educate more of his time and fortune to philanthropy with the creation of a foundation focused on

education, following in the footsteps of bill gates. >> what are the most pressing issues that philanthropists should be focusing on now? >> i do a lot on education. i think education is critical for the future. education, environment, these are things i focus on. there is no one thing that is the most important. the most important is everybody do something. >> to what extent do you think your identity has been forged by your first job, which is as an english teacher? >> people do not like me to talk a lot because i speak in all the forums because i am a teacher. the only thing i can do is share. alibaba, so much from from the journey. it is my responsibility to share, whether people like it or not, agree or disagree, it is

ok. you have to share because society give us, give me so much resources, so much experience, you should not wasted. share with others. maybe it is a professional disease, teaching. >> would you like to be back in the classroom? >> i miss it. i came to the business field in an accident. i started doing it. i think someday i will go back to teaching. this is something i have more confidence i can do better than being ceo. >> that would be something. prepared awhy i foundation, rural area teachers, headmasters, all these things i have been preparing for. this is something i wanted to devote most of my time when i retire.

>> when could that be? >> very soon you will know that. >> this would be you stepping away from your role to focus on the jack ma foundation with a focus on education? would you look at the bill gates model of giving away your wealth? >> there are a lot of things i can learn from bill gates. years ago, people said bill gates, i said i could never be as rich. one thing i could do better is retire earlier. i can do something that is from education field, unique, different and something in my mind. i will learn from bill gates, warren buffett, philanthropists. i want to do something using my own way. scarlet: that was jack ma speaking with tom mackenzie. let's stay with the developing

world and turn to brazil. electiondential campaign has been jolted after the leading candidate was stabbed during a's treat rally. jair bolsonaro underwent surgery to contain internal bleeding. his condition has stabilized. if you look at how brazilian markets reacted, stocks extended gains, analysts suggesting it could boost sympathy and voter intentions. with us right now is ian bremmer davidvid bremmer -- and riley. is this a theme or there will be --pathy votes to a candidate where there will be sympathy -- to a candidate candidate? if it had been fatal, i

do not think the sympathy vote would be useful. this is an antiestablishment election. there is outrage with corruption , with cases going on for years and extended themselves to the impeachment of a president, indictments and the jailing of a former president. sinaro was the law and an in thedidate, trumpi way he speaks and the kind of , outside thes traditional norms of politician. we thought there was a good chance he was going to win before these unfortunate episode.

he is going to make it into a second round, assuming his health is fine and we have not seen any polls but i would be surprised if his numbers do not go up significantly on the back of this attack. we should mention his top adviser is fairly appealing when it comes to the market. i want to stay with political risk. you have elections coming up in brazil and midterm elections in the united states. talk about the poll numbers, whether we can trust them in the lead up to the november polls. david: you can trust midterm polls better than presidential polls because not as many people turn out and you do not get the wildcard voters. you do not get people more untraditional. you may know be able to capture

as easily in a traditional survey. trump's approval ratings have been consistent in the year and a half since he has been inaugurated. supportness of trump's in being committed to him has since you have had this drumbeat of more defensiveness from trump from the books, from the anonymous op-ed. the fact that trump does not seem to want to be responsible for the midterms and is talking not, rigging implies he is even with the relatives he is doing, he is not doing as much to ensure people turn out. if you are making a bet, you're betting democratic momentum in the house of representatives.

if you are a republican, do you think president trump mishandled the john mccain funeral? are a republican, you are unhappy about the budget which feels like a democratic budget which blows out the deficit. it is harder to reconcile with what republicans stand for. you might be concerned about undermined the fbi and law and order. on most other things, trump is doing what you want, tax reduction on the corporate side but also for wealthy americans, on regulatory rollbacks, on the fed appointees, on the judicial side which has been aggressive, and on immigration. domestically, trump is aligned with the republican agenda. do you worry about

central bank independence? could see a situation where the fed gets dragged and politically. president says, it is your fault. what does that mean? tweetsdo not worry about and the fact he has managed a couple of tweets and one statement about fed independence , i do not think it is something he pays attention to. if you look at the books, you do not see him saying here is what i think they need to do it the dollar. you hear him saying a lot about the deficit and other countries and trade deals, saying a lot about north korea and immigration, about race. you do not see him talking about the dollar. i would be surprised if ifermining fed independence, erdogan and trump, on terms of the greatest damage

erdogan has done to turkey has been undermining the independence of the central bank. i want to pick up on the point and bring back david riley. when you look at the issue of central bank independence and presuming the fed continues with its plans to normalize policy, what does that mean in terms of questions of whether trump will's depth in and -- will step in and sway powell? david: i do share the view that the fed is a strong enough institution to resist the pressure applied by the tweet coming from the white house. i do think for the question of emerging markets, the reason why we have seen the volatility in emerging market assets is

because we are in a fed hiking do have awe tightening of global liquidity. do have a tightening of global liquidity. emerging markets are having to adjust. i do not think what we're seeing crisis but it is a repricing of emerging-market assets outside of argentina. what argentina and turkey have highlighted is that if you have non-credible central banks and lows control of inflation expectations, there is no floor tear currency and you get yourself into a difficult place. to your currency and you get yourself into a difficult place. you own a lot of italian debt. are you selling it off? no.d:

we do think we are going to a volatility into the run-up around the budget. the rhetoric that has been coming out has moderated somewhat. to be at whatms level under 3% of gdp the target should be. when the market was pricing 280, they were close to pricing in too much systemic risk. francine: thank you. we speak to the former ecb, the former pboc governor and coming up, the former prime minister of italy. this is "bloomberg." ♪

francine: emerging markets take

a breather, ems a stabilized. why more pain is on the way. trump asia offensive, washington's midday deadline passes, opening the door for tariffs on chinese imports. u.s. president could set his sights on japan next. u.s. jobs day. analysts predict strong gains but how long can employers sustain the pace of hiring? good morning, everyone. i am francine lacqua here in italy. in new york, scarlet fu in for tom keene. we talk politics. i am looking forward to our interview with the former prime minister of italy. we will talk trade and u.s. politics. discussingu'll be china trade issues especially with the former central bank governor of china on cap.

-- on tap. i'm looking forward to speaking to him and also the former ecb vice president. let's get to the bloomberg first word news. here's taylor riggs. taylor: president trump got some last-minute pressure not to impose tariffs on $200 billion of chinese products. some of america's most prominent tech companies and retailers are urging the president to hold up. members of the public had until yesterday to comment. the president could announce tariffs as soon as today and china has vowed to retaliate. it is unlikely there will be a deal on nafta this week. that is according to a canadian government official. canada's foreign minister has pushed back against questions of any deadline. the trump administration has warned it is willing to sign a trade deal that only includes mexico.

in brazil, the leading candidate in the presidential race is in stable condition after a near fatal stabbing. right-wing lawmaker jair bolsonaro was attacked during a street rally. the attacker told them he has been sent by god. brazil's elections are next month. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." scarlet: let's get you set up for today's job stay in the u.s. a european stock market down for the fourth day. export data, emerging markets stocks holding their seven-day decline, none of that helping futures because it is going to depend what happens at a: 30 a.m. we're looking at the 10 year yield. 10 year yield moving higher.

job stay in canada. -- jobs day in canada. by .1%.rude up i it will be the average hourly earnings, the wage gaining, seen holding at 2.7% year-over-year. a could suggest some investors are preparing for a bigger increase as they load up on protection against the pickup in inflation. you can see the influence into the ishares etf pulling in $280 million on wednesday, the most since 2016 and we saw a net inflows wednesday as well. we will be preparing and previewing the jobs report with carl riccadonna later on. francine: we will.

salvini is winning the control for italy's populist coalition. one thing people are worried about is the budget. he has adopted a softer tone this week after spooking investors that they will flout the budget limits. today, mr. trieste sans the government plans to stick with says the. trea government plans to stick with the euro. -- when you look at the budget law, what does this government need to do to show its investors that they are serious? >> i think something is clear.

we do not have an economic crisis in italy. growth are on the right track. have ishave, what we do a crisis of confidence in the international market. did not decide anything until now but the crisis of confidence is there. facterstand this simple pressed of the government to slow down a bit on their fantastic promises. continue on is to the path that we followed in the to rebuild our growth, jobs, exports, without creating more debt and a crisis of

confidence in the international financial markets. francine: how can they do that without breaking all the promises they did during the campaign? paolo: there is no way. they have to decide. hopeful, i would not say confident, that they will decide the right thing. the right thing is to recognize that what you promised in your fake and now, you have to continue in a realistic and progressive policy. will they do this? i think they have a serious political risk for them to have a disappointment on their

electoral basis. will they not do this, they have a worse risk because it is a risk of a crisis of confidence in the business community, workers, consumers, and financial markets. this is too dangerous for such a country such as italy. francine: do believe the government and salvini care about the spread? paolo: i think he cares. i think he tried to give the impression that they could make it without caring. the problem is not with the spread. the problem is confidence in the financial markets. i hope they are understanding and the minister of finance is struggling for this and i'm hopeful he will win the struggle.

understanding you cannot play games with the financial stability of our countries. problems sixial and we hadnot 60 four or five years to go out of this. francine: do you worry about the vulnerability of italian banks and if the budget comes in with italy flaunting the roles, is there a danger the finance minister resigns? that would be a substantial risk. were in a dangerous situation two or three years ago , not the banks, some banks. our government was able to manage this crisis. we put on the banks less public andy than other countries

less public money then the u.s. made 10 years ago and the banks , loans are reduced but if you have a general doubt on the confidence of the market, the banks could be with problems. points of spread creates problems for the banks. francine: how vulnerable is italy? it seems to be caught in the crosshairs of the u.s.-china war because this is export driven but historically, italy has ties to developing markets. of much will that impact

italian reform and growth? paolo: the situation of our exports is positive, sunshine, i would say. several areas of the world that are slowingiculties down their difficulties. the eurozone, our main economic partner for exports, is in good shape. the american economy excepts italian products positively. we had some difficulties with russia but even these difficulties are slowing down. , in 2017, our historical and of surplusts in our exports. after germany, we are the stronger european country on industrial exports and i think

we will keep this position. need a goode climate in the economic environment and we need the confidence of entrepreneurs, of our business community. this is what the government is putting at risk, the confidence of italians. francine: i remember you working on getting italians back to the country. it is there a danger italians it leave the country or does brexit help? paolo: many of them are coming back to italy, our universities are more international than they were. talkingore frequently about italian studying abroad

and less frequent of studying all over the world. i am not afraid of this. the afraid of the fact that quality we need in our society to be competitive and to face the technological revolution, depends on the fact the europe political stability and a government that has a realistic approach. with a populist approach, we put at risk all this. francine: do you see early elections in italy? could you see a scenario where the currency take center stage on the campaign? not at the moment. both political parties of the

government are supporting a , a climate in europe where each country has fingerr powers and he is pointed to the neighbors and accelerating trade controversies , border controversies, migration controversies. i believe this is crazy. should, ifns possible, cancel this risk because europe ran this risk and we cannot repeat the experience of what we called the last century. we begin talking of trade, of borders of religion, of

and we do not know where we and. francine: would you say within the next two years, it is make or break for the european union? is there a danger the union breaks apart? risk five oris a six years ago. i would have said there is such a risk. now, the risk is dead. i'm confident in the next aretions, the forces that strengthening and not weakening the union will prevail. it will be a real fight. european elections are normally elections nobody participates. you are dealing with national issues and not european. this time, for the first time, we will have a european

challenge, a real challenge and we have to win. goes back to the populace being better as speaking to the population and the voters. how do moderate politicians reconnect and speak in plain italian to voters? paolo: we have to stress the fact they europe can change, can do better. europe, you cancel our social model. you cancel our liberal model, freedom of press, autonomy of the judiciary. the role europe has to play to keep peace in the world. the issues in the values are so relevant that i think we will win. i am sure we will. francine: thank you so much for joining us. coming up, conversations with

the former pboc governor, the former ecb vice president. greatcommerce -- scarlet: conversation there. another conversation this morning is what happens with the u.s. and china. president trump could announce plans to impose tariffs on chinese goods. bring in our washington correspondent, kevin cirilli. we talk about how this could happen at any minute. the presence a he is going to follow through. does -- the president saying he is going to follow through. how does this unfold? the president is in montana this morning after that rally last night. he has been critical of the chinese. $200 billion worth of tariffs

anticipated to go into effect. out businessdrew groups. this is a host of different industries. tariffslion worth of totaling more than $506 billion worth of tariffs in the chinese. -- against the chinese. scarlet: you mentioned industries, including technologies. companies and retailers made a last-minute effort to rally the president. he is standing firm. what would make the president take a turn and change his tune? kevin: we do not know. i have asked republicans, to trade groups, what do you think it will take? all of them have come up short. they are not sure what the goal

is from president trump's perspective to wrap up the trade negotiating -- negotiation where there is a clear piece of legislation and there is a conclusion of debate. they do not know where it is going to end. scarlet: what is the latest on negotiations between the u.s. and canada? we are hearing it is not going to happen. kevin: it is continuing to drag out and the president is continuing to double down his tough talk against canadians. scarlet: thank you so much. coming up on bloomberg markets the open, larry kudlow, the u.s. economic council director will be appearing at 9:30 a.m. joining us in the newark office is vincent cignarella -- new

york office is vincent cignarella. we were just talking about tariffs. markets?is price into is it? vincent: i do not think so. one of the things is the pboc has been setting the currency ,tronger in the last few weeks in anticipation of the tariffs. the pboc is comfortable letting abovean to appreciate seven -- depreciate above seven. scarlet: we did get china fx , august reserves declined. capital control in play. willing to change is fixing. in terms ofether

whether this will sway the administration. vincent: that is a good question. been anreserves have enigma. we do not know how many reserves are committed to domestic projects. when we see three touring dollars of reserves, this is a big -- $3 trillion of reserves, we do not know how many are committed. you have trade data from china coming out this weekend. whether or not trump will wait until monday to see what the data is, it could wait into monday. it would make his position stronger if trade figures looked worse. does china retaliate? are u.s. companies ready for it? china will retaliate,

no question. they will let the currency depreciate. they do not have enough goods that they can tax to compensate. they're going to make it difficult for u.s. companies to do business in china. what that means, a lot of them have made decisions to build up inventory ahead of time. if this were to persist for a long time, supply chains would be interrupted. do you think it will last for a long time? will this escalate? offard reports a good shave .4% off world growth. vincent: that is what i am hearing. there is no telling how long this could go. i do not see the president backing off until after the midterm elections.

if the house were to shift democratic, that might put more pressure on the president to alleviate the situation. we are going to be into this through november and then we shall see what the politics changes. scarlet: it has not played into the em turmoil story we have been tracking. it is a function of turkey, of tariffna, where is this issue looms larger in the background. as you look at em currencies, they have come up a bit. it seems like they have stabilized after selling. where are we in the process? vincent: i think this is a relief rally. as you mentioned, it is a good point, china is the big

emerging-market. they play in every field. if tariffs come to bear, it is going to impair global growth, mess with the entire global trade situation. emerging markets will take it on the chin. you're going to see a stronger dollar and if you overlay the trade weighted gains in the dollar against the emerging-market equity index, you will see this disparity. emerging-market equities down 20%. if that persists, we are going to see a spread of risk through other parts of the world and other countries. francine: we will look for that. and theyalking to ubs said when you look at emerging-market currencies, the u.s. dollar is key. if the dollar falls, that will help em currencies and establish a base. is there something we are

missing? vincent: it is a big part of it. trade is a major part. a lot of foreign governments, have borrowed in dollars. -- dollarrelle are continues to get stronger, debt gets steeper. it is one of the interesting things, i would love to see what the italians are contemplating doing. i would caution them to not do that. as the dollar get stronger, debt rises and it makes it more difficult to fund domestically. if it does persist and it looks like it will, it is going to continue to pressure e.m. francine: this is a nightmare for the fed. the more they hike, the more it hurts emerging markets. the more emerging markets go down, the more it hurts the economy.

should they be central banker to the world? vincent: they are aware of the situation. is concentrating on itestic economy and if continues going the way it will, they do not have much of a choice but to continue on gradual hikes. the concern is that the u.s. economy falters and they do not have the tools to combat that the way they did in 2008. they need to get to neutral and beyond to lower rates. they need to get the interest so if theigh enough economy should go into a recession, they can lower rate to combat that. we are looking at $22 trillion worth of fiscal debt. the fed needs to put themselves in a position where they can respond. -- that that is eight

is an important point. aside from cutting rates, what other tools does the fed have? vincent: they can continue to inflate the balance sheet but they have not done enough to bring that back to normal to respond in that way. i would have liked to see them be more aggressive in that. scarlet: he is sticking with us. coming up, we have interviews with the former pboc governor as well as bitter consent seal -- vitor constancio. this is "bloomberg." ♪ this isn't just any moving day.

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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. on the go and want to rent a movie? showtime. or buy the hottest shows. even here? we've got you covered. now they are all yours. to take on the go. on any screen. bingo! alright! and watch whatever you buy. wherever you are. head to xfinity.com/stream to start watching. simple to rent, easy to buy, awesome to go. >> this is a defining moment. >> lehman brothers, which was allowed to fail. >> the firm which survived

railroad bankruptcies. >> this was no act of god. >> the great depression. >> companies of that are formed the foundation are shrinking and disappearing overnight. >> we have an unprecedented crisis in our system. >> lehman brothers filed for chapter 11 in bankruptcy court today. was a glimpse of our reporting in september, 2008 in the aftermath of the collapse of lehman brothers and the start of the financial crisis. we have a slate of interviews coming up. we are speaking with former ceos of barclays, deutsche bank, the former governor of the bank of england, along with others. watch out for those conversations throughout next week. i'm scarlet fu in new york with francine lacqua in italy. tom keene has the day off. let's get you to first word news. the way has been cleared

for president trump to announce tariffs on $200 billion worth of chinese products. a public comment ended yesterday. some of the best-known tech companies and retailers have urged the president to reverse course. they could be hurt if the u.s. imposes tariffs and if china carries out its threat to retaliate. president trump said he would like to shut down the u.s. president to force the congress to fund a wall along the mexican border but he will not do it before november. the present told foxnews he does not want to do anything that could hurt republican chances. american investigators discovered north korean hackers blamed for high-profile attacks through their email trails. the justice department has accused a programmer and his employer in the 2014 attack on sony last year. one official called the scope staggering and offensive.

that 15 month embargo of qatar may have helped its economy according to the economy minister who spoke to bloomberg. >> i can tell you today that the by our, or the blockade neighbor is behind us. we are doing excellent. from an economic point of view, it is a blessing. exports are up 19% since the boycott began. a coalition led by saudi arabia severed ties with cutter. -- with qatar. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." francine: thank you. theresa may has secured the support of international allies

vladimirssessment that putin's government is responsible for nerve agents in the spy poisoning. they have threatened more sanctions against russia. crim leaders deny the accusations as the deputy prime , arkady dvorkovich joins us. i do not want to talk to you about the poisoning case. i do want to talk to you about trade. friendshipd the between president putin and president trump. how would you describe the relationship now? relationship is far from the level you would like it to be. it does not help trade and investments.

business have survived. invest money but not in the political environment. still, business is going on. level, science, research, education is ok. at a higher political level, it is not good to pave the road for new projects. francine: given what is happening with the nerve agents, these sanctions, with anything that touches foreign policy, does russia feel alone? arkady: we have relationships with the united states, not the best one with europe. have good partnerships with individual countries and companies. we have better relationships with our asian partners like

china, japan, and south korea and others. we are in the project of integration with our neighbors. some of the middle east countries as well, close partnerships and economic ties. francine: when do you think relationships with the europe, the u.k., and the u.s. will get better? arkady: it comes with trust. we try to understand each other. with time, we will start trusting each other and relationships can be improved. scarlet: i want to ask you about sanctions on pressure from the united states. -- on pressure from the united states. -- on russia from the united states.

russia is ready to buy its own debt if sanctions cause a market crash. do think that is a good thing to keep russian bonds out of foreign hands? importantthink it is for our partners and customers. for europe, russian gas is safer and cheaper. i do not think american pressure should be of key importance. other considerations are more important for european customers and political relationships. we have our ties with other markets as well and we will keep going forward. cheapers competitive, -- our -- is competitive,

cheaper. you anticipated my question. gears to shift wargames. nato and russia will be launching high and wargames. there is going to be a temp tatian to read a lot into this with china -- a temptation to read a lot into this, with china participating. what is the message russia is sending? to be strong and independent today, you have to and irofessional military think we were better off with militaryts with modern . the new one is not of danger.

it keeps the world stable. about thedo you worry perception of russia and the impact this has on the economy? it makes farm to the economy and the perception is to the same -- it makes harm the economy and the perception is not the same as reality. it is not being perceived in south western countries the same. i think we proved to the world that we are open and that our people can show hospitality and we are ready to work with each partner. francine: between the nerve gas attack in the u.k. and

allegations -- arkady: we did not see any proof. it is not perception. francine: do you think that is keeping investors away? arkady: it is not. it is keeping investors from opportunities that russia can present. those companies already working in russia continue their business. they have potential projects, success stories and they earn a lot in russia. francine: do you worry about inflation? arkady:

target, under the maximum level. the target was 4%. inflation is higher than before. it will adjust. francine: thank you so much for joining us in giving us your time. he is the former deputy prime minister of russia. coming up, our interviews with the former pboc governor and also the former ecb vice president. -- talkingking up about china and the end to some of this stimulus. this is "bloomberg." ♪

taylor: this is bloomberg surveillance. let's get the business flash. saw bank telling wall street to pay the price as part of what could be the biggest ipo ever. an company is preparing offering of its japanese wireless unit.

softbank is telling underwriters if they want a larger role, they should lend other parts of the parent company empire. daniel low reportedly will move to replace the entire board at campbell soup. the hedge fund is unconvinced by the plans to sell units. strawberry to pushing for a sale of the company. schneider josh john schnatter is accusing the pizza chain of plotting to oust him. he said the company accused him of racism to save his own job. he step down as chairman after admitting he used a racist were. poppa john -- a racist word. accusationsays the are without merit. to bloomberg at the aviation festival in london. >> is there a reset going on?

if there is a reset, it includes moving forward 3, 5, 7 years out. could it produce a healthier economy without too much domination by other players? there may be volatility. in the longer-term term, it is likely to reset. i will pick it up. day in the u.s. and investors are expecting a hiring rebound for august paving the way for a september rate increase. this comes as president trump tweeted wages rose. they should mention he tweeted that. joining us now for more is carl riccadonna. the president usually tweets. tom keene took the day off.

he is going to miss job say. what is he going -- jobs day. what is he going to miss? carl: i think he picked a good day to be off because august payrolls tend to be misleading. while the labor market is seeking, august payrolls will z ag. august tends to be the quirkiest rm payrolls.r non-fa payrolls tend to disappointed in august, comment below trend, they tend to fall short of adp results. payrolls fact, august tend to be revised up by about $50,000 -- 50,000. print at facee

value especially in light of a seemingly weak july print. people will try to connect and say the labor market is deteriorating. the reality is not as bad as what will be shown at first glance. has been other data that show the economy is doing well. the picture is one of strength. carl: the economy is on great footing. we had a strong q2 gdp number. the economy is not growing at a sustained basis. the economy is accelerating. we saw the surveys earlier this week showing robust results especially in the factory sector. the sector has a high multiplier in the economy. we saw inth manufacturing and manufacturing

payroll tells us there is solid momentum. francine: how much does the fed look at this number? the fed is keeping an eye on emerging markets but this is not going to factor in to the september decision. dry on thes september meeting statement because they will proceed regardless of the outcome of today's report, assuming a reasonable outcome. they will be watching not only the payroll trends that the average hourly earnings trend as they contemplate whether to embark on that rate hike at the december meeting. there is economic data to digest in the interim including potential signs of em meltdown percolating back into developed markets.

it is 10 years, the anniversary of the lehman brothers collapse. is there anything the fed should be looking at in the u.s. economy? is it housing, construction, something they are looking at more? carl: i think they are sensitive to unintended consequences of accommodative monetary policy. that was one factor leading up to the events of 2008. they could beious inflating another bubble or cause another distortion in the financial markets. that does not mean rush toward a less accommodative policy stance. it does provide impetus for them to continue on this gradual pace.

whether that is three or four rate hikes this year, they're happy to be in a mode where the balance sheet is winding down. closert rates are moving to neutral and that puts them in a better position to confront the next economic downturn. scarlet: carl riccadonna will stay with us. kudlow, the open, larry u.s. national economic council are at 9:30 a.m. headlines from the u.k. parliament which released a transcript from the u.k. chief negotiator, saying he is ready to simplify checks at the irish border. much of the white paper is useful and he rejected unraveling the single market. if you look at pound, sterling has jumped to session highs.

we will continue to monitor headlines and bring you further developments. italy, thisk, from is "bloomberg." ♪

scarlet: good morning. i'm scarlet fu with francine lacqua in italy. if you look at markets, futures indicating a lower open before the jobs report. it is not the jobs report people are fixated on. it is what might happen between the u.s. and china. let's bring in sara pons x -- k and still with us is carl riccadonna. the u.s. can go ahead and follow through with the threats to impose tariffs on chinese imports. when we talk to different investors, we kept hearing investors have not priced in this scenario that the u.s. will go through with it. what are you hearing?

sarah: we could either get 10% or 25%. we could be in for a 5% pullback on the s&p 500. investors camp, other do expect we are to get this but they believe we are going to get a negotiation after the fact. they are sitting tight because they believe in the long run, it is going to roll over. scarlet: they do not call this tit-for-tat for nothing. go through with these, china will reciprocate. in terms of numbers, what does this mean for the u.s. economy? carl: there is a question about what that will look like. there is talk that rather than $200ing $200 billion with billion, maybe they will match it in percentage terms.

impacting x percentage, they will do a similar share. it is smaller in terms of a price tag. that could result in a more limited retaliatory measure from the administration as the risk the 200 billion but the escalation after the fact. thank you so much. coming up, we have got larry kudlow, national economic council director. we have headlines i want to highlight. the chief negotiator says parts of the brexit white paper are useful. he has rejected the unraveling of the single market. we have seen the british pound-dollar at rex it highs --

at record highs. is interesting because yesterday we were hearing that if theresa may was sticking to this white paper it got traction in brussels. with this latest headline, it looks like some of the people we spoke with might have been right. it depends what they keep and what they throw away. interviews with the former governor of the pboc. we will ask him about china, trade war's and the former ecb buys president. this is -- vice president. this is "bloomberg." ♪

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has not accelerated and why we are in a goldilocks economy. emerging markets officially slip into a bear market as investors weigh dollar direction from jobs and trade. your move, president trump. business leaders try to convince the white house not to put new tariffs on china and the world waits for a response. day, i am to jobs david westin alongside alix steel. paulson ago today, hank went in front of the press and says we will seize fannie mae and freddie mac and eject a couple -- inject money. it became the financial crisis. alix: it was a hybridization. david -- privatization.