>> from bloomberg's headquarters in london, i nejra cehic. manus: i'm manus cranny in dubai. these are today's top stories. nejra: donald trump threatens tariffs on chinese imports, morning he's ready to go. chinese stocks continue their slide. investors await key banking decisions from turkey and russia this week. populist deadlock. stockholm says there is no path for a government to be formed. ♪

nejra: good morning everyone i will come to daybreak europe. 6:00 a.m. in london. let's take a look at what is happening on the markets. eight day of declines, the worst losing streak since the end of 2017. the msci asia-pacific is lower. on the cusp of a bear market. a bit of a risk off with the risk of a trade war escalating, president trump threatening to put tariffs on an additional $267 billion of chinese goods in addition that $200 billion markets were expecting. digesting jobs data friday. and the wage print better than expected, 2.9% average hourly earnings. the dollar holding onto strengths and we are seeing pressure on emerging-market

equities in this session. keeping an eye on the curve because 10 year yields rose on friday and is holding on to the gains. the two-year yield hitting the highest since 2008, above 2.7%. 23 basis points. the five 30's on friday dropped below 28 basis points. other central banks in focus this week, as well. the ecb, boe, as well as turkey and russia. manus: it will be a big week for the central banks. coming through on the chemical side, huge move. we know what is going on with sabic and aramco, but what confirmationre is stake --having a 29% 24.99% stake. the regulatory approvals will be received for celtic -- sabic.

that will play into the biggest strategy at play in terms of this very sabic doing aramco putting it on hold because they are focusing on the giant deal that they want to do. aramco canceling their ipo according to sources, saying they want to focus on the sabbath move, the sabic purchase. that's the key deal for them. lastabic purchasing the 24.99% from clariont. welcome toa warm nara kh. this is -- nejra cehic. this is her inaugural debut. warm welcome to you. we're going to fly with the show. last time we had doubled their indicator flashing red. the panic euphoria model coming out, really hitting a peak we haven't seen for a number of years.

today, i bring you the macro guys going soft on research. 20 day correlation hedge between the s&p and macro research. it is flashing a glorious color of red. this is a correlation. it has not been this negative in two years. there is an inverse relationship between this move and the msci index and dollar index. last week it was bull and bear -- by the way, panic and euphoria it never happens on daybreak. take it away with futures. nejra: fantastic chart. september has not been great for stocks so far, down five days out of six after hitting the record. we saw you was indices close lower on friday. if we look at futures, struggling in direction, edging in positive territory. the trade tensions are weighing on markets at the moment. all this week, would bring you special coverage, marking 10 years since the financial crisis

and the collapse of lehman brothers. we speak with two former deputy brothers, plus adair turner, former chair of the financial authority will join surveillance. all interviews not to be missed. let's get to bloomberg first word news with juliette saly in singapore. juliette: sweden may face weeks or months of political gridlock after an inconclusive election left scandinavia's it is economy without a clear candidate to form a government. orther the social democrat the opposition alliance won enough votes to form a majority government. this was democrats party, a fifth of the vote, looks to hold the balance of power. japan's economy grew at a faster pace in the second quarter than first estimated. the readings for gdp growth was a revised up to 3%, bidding forecast that a stronger business investment boosted

momentum. welcome news for shinzo abe and the boj after a contraction in the first quarter. in the u.k., boris johnson has launched what many see as a bid for power,: the prime minister's brexit strategy a humiliation. he savaged theresa may's policy of keeping britain tied to trade rules after brexit. in an exclusive interview with bloomberg, the budget chief gave an update of those divorce talks. >> negotiations are ongoing. the new chief negotiator of the active, andly pleasant. expectation is that we have a good chance to come to a smart brexit. juliette: china's chances of escaping the trade conflict with the u.s. with only minor damage

are looking less likely, after president donald trump double down on his threats to impose higher tariffs on the nations goods, saying his ready to tax all imports on short notice. while economist see the impact as limited, people's bank of china governor warned the effect on economic confidence may be larger. italy's deputy prime ministers said economic growth comes first as his government makes budget decisions, but speaking at the forum, matteo savini moved to reassurance that the populace administration will keep spending limits within -- grow will do all we can to to make italians pay less taxes, to provide more jobs, sticking to international agreements. clearly, growth comes first and the right to work, the right to pension and health. we will try to provide everything. we have five years of -- ahead

of us, not five months. we will carry everything out and do it well. juliette: global news, 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . another session of losses in asia, making it the eighth in a row, longest losing streak of this year, since december of last year. you are seeing upside in japanese stocks, higher for the first time in eight sessions, along with those in australia, although australia looking like it will close a touch higher. korea looking good. a lot of witness is in the hang seng market, close to bear market territory. we are watching what is happening in india with the rupee pushing past 17 to the dollar, a new record low. let's move to the stocks we are watching on chip stocks, very

much in's focus. a lot of the weakness. this stock, global wafers, getting downgrades friday, sitting shares off a 10%. tencent rose friday after they bought shares for the first time since april,. 2014 you are seeing it under pressure again. this is a fun story. nissen foods is a sponsor of naomi osaka and they are saying they might start to put her image on the ramin instant numeral cup. instant noodlen cup. they might get a boost on that. donald is threatening to ramp up his tariffs war on china. he's ready to impose levies on all chinese imports on sort notice -- short notice. jodi, great to have you with us as always.

president trump ramping up the rhetoric but we are still looking only at threats, aren't? we? jodi: that's right. right now they are just threats. he said he would impose tariffs on all chinese products on short notice, that he was willing to do that. but he getting come out with some specifics. how much, when. we thought he might announce phases on how he's going to impose this next round of tariffs. there have already been to other rounds of $36 billion and then $60 billion more in august -- $16 billion more in august. we don't know where this is going and there is uncertainty. there are no talks scheduled between the parties. there were low-level talks in washington between some chinese negotiators that met with the treasury department officials. those seemed to end with no

visible progress. right now, it just continues to be a war of words. manus: the war of fact is that there is a record trade surface between the united states and china. that's not going to help the situation. there's something much more disconcerting. by the overall export growth is beginning to fade. data is not going to help between president xi and donald trump, is it? it's certainly not. it echoes the u.s. position on why they are so concerned about trade with china. this record trade surplus with the u.s., at the same time, is overall export growth slowing. this is not helping china's position, china's economy. we started seeing take some hits on this. u.s. economy doesn't seem to be taking many hits, but certain

sectors are, such as soybeans. manus: i'ts all about the soybeans. jodi,. thank you very much joining us, is the fund manager at mnc investments. thanks for joining us. does this just run on until we get past them in terms? that's what people are saying to me. agree or disagree? guest: i think the evidence from trump is that this could run on for a long time. there's a much more interesting dimension if someone stands back from it. we can't say what particular changes he might make. but the unintended consequence that's positive is the chinese are preemptively moving to support the domestic economy. the irony of all these things are unintended consequences. one unintended consequence, chinese economy deteriorates. unlikely that the

chinese won't guarantee their domestic economy is strong. the surprise to people may be recession risk in china deteriorates because of this. nejra: is trump also underestimating china's desire to focus on its homegrown markets, and markets other than the u.s.? eric: absolutely. the deepest irony is america is tackling a trade surplus when the chinese are trying to rebalance their economy. first of all, frankly, the chinese have got global leadership in lots of areas of technology. the idea of getting international rules and ip agreed, they would be pushing on an open door. when it comes to dependence on exports, chinese want to rebalance in favor of domestic growth. manus: interesting you say they are stabilizing the one and

subsidize the tariff hits. they are trying to bolster the domestic story. china needs a soft landing. that's the consensus. look at this. this is asian stocks, msci asia-pacific book value to the s&p 500. we're looking at the biggest discount since 2002. given everything you just said, does that build the case for picking up value in asia stocks? eric: i think so, absolutely. you've got fascinating developments. people are talking glibly about the prices of global assets and tightening of monetary policy. what people are a not -- ignoring is that chinese are looking at fiscal policy. you've got evidence now they're starting to ease on the climb downs of the shadow banking

systems. it looks like they are easing fiscal policy. asian stocks have been tarred with fears over trade. some sectors slowing. that looks like it's starting to reverse. a lot of them within the bracket of emerging markets, whatever that means. i'm seeing a lot of value in stocks outside the note states. nejra: the big story about the trade war escalating has been u.s. equities outperforming the rest of the world. you could call it the america first trade. the longer that continues, is it the case you was equities become more vulnerable? eric: logically, yes. the s&p hasn't really raised it, so u.s. stocks has just gone up. what's interesting, global earnings have been good, but global stocks have gone down. you've got cheaper equity markets. you had a d rating in terms of valuations. case is inmpelling

u.s. equities now. manus: thank you very much, calling it like it is. eric monaghan is our guest host -- lonergan is our guest host. coming up, stacking up to the another roller coaster week. make keyd turkey decisions. nejra: we'll be speaking to paul tucker from the bank of england. 10:30be joining us at london time. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. 6:19 in london. not doing much right now. for us inaly is busy singapore with a bloomberg business flash. juliette: hi nejra. willba confirmed jack ma step down as chairman a year from today. daniel chang will succeed him. in an exclusive interview last week, ma told bloomberg about his plans for the future. isi don't think any problem solving what will happen. i have full confidence in my team, and full confidence in our structure, which a lot of investors don't like. hong kong don't like, new york don't like, so perfect. it's the system, i think is the contribution that i and my team build to this world.

and people in the future will love it. can make the company last long. juliette: cbs has confirmed the departure of ceo les moonves after fresh allegations of sexual harassment. the company named joseph amlo as women ceo after six more came forward with inappropriate behavior or assault, with claims going back decades. moonves has denied any wrongdoing. leonardo says atr, which it co-owns with airbus, is in talks with alternative buyers for the -- which it can no longer deliver due to sanctions. the ceo doesn't expect meaningful impact from sanctions by the u.s. to punish the regime, given the reallocation. >> we have already delivered the 12 aircraft and we are working very hard to reallocate the

remaining eight. >> are you in talks -- are you confident you are going to sign a deal by the end of the year? >> we are working very hard on that. we will finalize the allocation. juliette: and that is your bloomberg business flash. manus, nejra. nejra: thanks so much, juliette saly in singapore. holdu and u.s. trade chief talks today in brussels after we get excluded trade warnings from president trump over the weekend. tomorrow, the presidents of russia and china meet at the forum. manus: and nejra, wednesday of course, i can see nejra at the front doors as apple unveils

latest iphone, apple watch. ecb, and the triggers central bank making the decisions. -- turkey central bank making the decisions. you just returned from russia. >> is is the time to say i've had the same iphone for three years? i've just come back from moscow and one thing that we've heard, not an moscow, in sochi, a rate hike could be discussed. let's discuss policy decisions from around the world. stronger than expected u.s. data. a bit of repricing around expectations of fed rate hikes while implied volatility for em currencies climbing to its highest levels since 2016. eric lonergan is still with us. let's start with the fed, since we did get the jobs data friday. should the markets start repricing for higher rates growth from here -- wake you

growth for -- wage growth from your? eric: the most interesting thing globally is that we're getting phenomenal economic outcomes, particularly in labor markets and growth terms. we're not getting material wage pressure. you're starting to see it pick up, but nothing concerning. if you look on the inflation front, does nothing for the fed to worry about. the interesting thing, at some juncture, one assumes wages will move. how long have we been saying that for? we'll wait and see. manus: that's like waiting for godot there. we got russia, turkey. this is the personification of risk for russia. we're looking at the first hike the bonds busting a move above 9%. are you filled with fear and dread in russia?

for opportunity when you look at this kind of bond market explosion? eric: definitely opportunity from my perspective. what's interesting is if you stand back from the noise, the areart -- economic outcomes the same. you've got an awful lot of fear around the trade noise and about fed tightening. you look at russia, this is all amplified in american markets. in russia, they have external assets, foreign reserves. it simply is not a classic emerging-market. to some extent, it is tarred with the same brush. d.c. weakness in the exchange rate and russian stocks, which are also quite cheap. there is a lot of opportunity if you look at higher-quality banks in russia equities, even in the dollar bonds. nejra: in the discussions in moscow, that came up a lot,

russia was tarred by the same brush as the em. looking at the rest of em and turkey, how much does the central bank have to hike to meet never mind exceed expectations? it's interesting because there are two groups, classic em, current account deficits dollar liability, and really we are talking primarily about turkey and argentina, in fact. what's interesting is that they're pursuing different policies. causere ang to recession. turkey has tightened, 30% carry in the fx. but they haven't followed the policy response. we shall see. this happened during the asian crisis. it isn't a foregone conclusion what the results will be. manus: you're right there.

quick line on rish more, new ceo. the current coo is stepping up. lambert. this is bloomberg. ♪

9:30 and downtown dubai, 1:30 in new york. futures at the bottom of your screen. you see a peak of green. we lost the latter part of last week. the market was concerned about trade, what might happen. google alllix, falling the most in 24 weeks. we have the smallest amount of gains this morning. let's check in on those markets. dani burger joins us. dani: trade certainly in focus here. we're looking at a mixed picture this morning.

some gains over here in japan, up .2%. kospi headed up toward .2%. some of the biggest losses are in china, which is done more than 1%. this comes after donald trump signaled his ready to put tariffs on virtually all chinese goods. another market under pressure, hang seng down over 1%, one of the weakest so far today. i want to take you into my terminal to show you what the hang seng has been doing. since this january high, it's fallen nearly 20%. it's on the verge of bear market territory. this bottom dotted red line, when it hits that it's red market territory. last week it was em that headed into the decline. keep an eye on the hang seng for that market. i want to show you the worst performing currency of the year in asia. that's the indian rupee. it keeps hitting new lows against the dollar. today is no exception. look over here.

that's been very correlated with the 10 year benchmark yield. you can see right over here, they start to become really correlated. analysts say this is putting pressure on inflation and the worst is yet to come because these are moving together. nejra, manus? nejra: that deficit widening to the most in five years, affecting the rupee. let's get bloomberg first word news with juliette saly in singapore. juliette: thank you. in the u.k., boris johnson has launched what many see as a new bid for power,: the prime minister's exit strategy a humiliation. in the mail sunday morning, he savaged theresa may's policy as keeping britain tied to eu trade rules after brexit. in an interview with bloomberg, the eu's budget chief gave an assessment of divorce talks with britain. ongoing.gotiations are

the new chief negotiator of the ..k. is really active so our expectation is we have a good chance to come to a smart brexit. juliette: china's chances of escaping the trade complex with the u.s. with only minor damage are looking less likely, this after president donald trump doubled down on his threats to impose higher tariffs on the nation's goods, saying his ready to tax them all on short notice. while some see it as limited, former people's bank of china's governor warns the effect on economic confidence may be larger. in washington, the chairwoman of the republican national committee used two appearances to set low expectations for her party in november's midterm elections, less than 60 days away.

nationd cbs's face the republicans have a 50-50 chance of retaining control of the house. a bleak assessment from one of the parties to leaders. italy's populist government won't reach new budget rules. bruno le maire made the comments at the form. will just an act. i've had a lot of discussions. he's aware of the important decisions taken for the next interim budget. i'm confident that all the areian political leaders aware of the responsibility. juliette: global news, 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra, manus? nejra: juliette saly in singapore, thank you so much.

sweden may face weeks of gridlock after inconclusive election results, leaving the biggest scandinavian economy without a clear candidate for government. joining us is marcus. great to see you this morning. just start by talking us through the results. the populace didn't do quite as well as expected, did they? guest: no, they didn't. and it's a little bit chilly in stockholm this morning, but it's nothing against the chill we might see in the building right behind me in the weeks to come, this as the various parties try to cobble together some sort of coalition, some sort of stable majority government. that is going to be a very difficult task. let me just talk you through some of the election takes. it's a mixture of red and green parties. they have 144 seats. the center-right coalition, or the opposition, have 143 seats

in parliament. you need 175 to get a stable majority, so both sides are far from that. that means gridlock in the next few weeks or so. the sweden democrats, anti-immigration party, populists, fared a little bit worse than what some were forecasting. still, they have 62 seats in parliament and that makes them kingmakers. i was speaking to the group leader in parliament, the group leader of the sweden democrats in parliament yesterday. he was talking about the red lines, what he wanted in order to back, or at least not block a future government. let's listen in. there mustline is, be stricter border control and more responsible migration policies.

that's torn the parties apart. the cost has been monstrous. immigration being a red line for the swedish democrats. the problem for them, none of the other sites, the traditional coalitions, are ready to speak to the sweden democrats. this is where we enter semantics. will they let a government through, or will they really insist on getting their policies through, for some sort of recognition for the turnout that they've got in yesterday's vote? very: certainly, markus, good morning to you. this certainly adds to the populace surge in europe. this is one of the worst performing currency's out there in the g10 space. but also, euro. i'm looking, a little more strength in the euro. do think politics seeps into the swedish krona trade? what is the driver for sek?

markus: it doesn't seem to be feeding it to the swedish krona trade this morning, it essentially being stable against the euro and the dollar. we saw a slightly different reaction yesterday when the exit poll suggested -- for the sweden democrats. to some extent, the swedish krona seems to be hinging on popular support. the sweden democrats, part of their platform is to leave the european union, something that has worried traders and strategists. but their support and not coming in as strong as expected. the krona is fairly flat this morning, which means the riksbank will be the next stop on the phone is right. when will they hike interest rates? manus: when will they hike interest rates and what happens with the ecb? markus, we look forward to

continued coverage throughout the day. covering the election. eric lonergan is our guest host. he's still with us. populism, to rise and the repercussion, is never more manifest than in itanly. is it noise or is there a value proposition in any drawdown and italian stocks? points.ll, there's two the populism is an noise because it's a trend and phenomenon that isn't going to go away. but i don't think it's altering the relevant asset prices. i don't think what we're seeing the assetng wha prices. italy is no exception. i think it is highly unlikely the italians are going to threaten the fiscal rules.

because whatever someone things of their politics, they're not stupid and everybody is focused on the spread in italy. you're going to get very reassuring broad fiscal objectors. what is much will likely, they'll hope growth will be surprise and that gives them leeway to deliver on tax cuts and spending increases. but they're not going to threaten the deficit. i'm seeing value in italian banks, and more general european banks. nejra: if i take you to the spread, which we just mentioned, and ask whether we will see politicians answer to the lord of the spread, georges 64 basis points. is this an opportunity now or will you be waiting for widening? eric: it's an opportunity now and it's starting to behave. italian bonds have rallied during this recent leg of volatility aversion, or risk aversion, because they got hit her earlier around election

time. still the case in the absolute level of yields is low. high spread. i would go for the equity. manus: let's talk about the equity. big shout out to the queen of chance. chart.t have an italian european banks and credit risks. there is a high correlation here. the question you have proposed is they are not out. a time banks over french banks, is there going to be a big m&a play? we've got a whole host of voices, one of those is the voice of deutsche bank ceo. what's the play for banks? eric: i think eurozone banks are attractive. two reasons. they been degraded significantly.

you are getting banks with a low multiples. the other very important point people haven't focused on, the real story in interest rates has been a decline in expectations. you look at your i bore futures and you go forward one or two years, you have 50 basis points reduction. the profitability of the european banking sector is closely ranked -- linked to interest. that's why you've seen poor performance. if you look at surprise indicators, data is starting to stabilize and improve again. i wouldn't be surprised if we see better data out of europe. nejra: wonderful to have you with us. thank you so much, eric lon ergan. he will be continuing the conversation on bloomberg radio with our colleagues. coming up, we'll be talking about the results of sweden's election.

someone will be joining us 9:30 london time. eric, atalking about sign spreads will decrease once investors realize the real situation in the country and he's glad they will abide by eu rules. he spoke to francine lacqua on the sidelines in italy. declarations the of the prime minister, of the deputy prime ministers, and especially of the economy that we, that have said -- the real attitudes of the government. accept european movementd continue a

towards reduction of the debt. because we have already got stabilization, and now we will move to a reduction. so we will have seen immediately every action of the market. be i think that there will further reductions. so you don't expected to be within the rules of the eu? t, at thect also deb end, the market and the rate of interest, the italian pays for that will be more reasonable if you consider that italy is a strong economy. ingis the second manufactur country in the european union. it is the first country in the world for net export surplus.

handled capital and interest obligations for the public debt of italy. so it is unreasonable that we pay such a high rate of interest. and it when investors will realize what is the real situation, i think that the threat will decrease. was the chairman basically saying the spreads are not going to blow out from here, with our very own francine lacqua. hoping to have a backup like that. if you are a bloomberg user, you can interact with everything we do on this show. gtv is your destination. you can access the charts featured on bloomberg tv.

you can say the charts for future reference. build your own gtd. nejra: we might have juicy charts because this is the 10th anniversary of the collapse of lehman brothers. what risks remain and when could we see the next crisis? what could lead to the next crisis? we discuss that next. this is bloomberg. ♪

>> they thought the u.s. government was going to step in. that was the worst case outcome. we hadn't expected it. it was clear that the confidence in the banking

system was waxing and waning, and only a serious recapitalization of the banking system, in the united kingdom and the u.s., would resolve the problem. >> when i realized how much debt $70in the market, trillion-$90 trillion, that's what started to worry me. >> he realized things were much more interconnected than you thought they were, and that what seemed to be small markets can have much bigger fx than you thought. >> i remember saying to a good friend of mine, i'm down on paper, 100 million quit today. beings, we always say this time is different. history tells us that's not the case. >> if you look at the banking system, there's more capital today, but there are lessons we must press forward and what vulnerabilities are in the economy today. nejra: those were some of the

highlights of some of the interviews marking our highlights of 10 years of the collapse of lehman brothers. high-profile executives and policymakers, including former ceo's of barclays and deutsche bank, former president of the ecb, and former governor of the bank of england. i'll more stable now than 10 years ago, and where are the risks? cynic report says there are four main areas of worry. he's the main director and he joins us now. -- stephen at kind bridge kind bridge investments is with us. sony, you acknowledged the banks have approved -- improved since lehman. problem, weiggest are definitely going to have a shot. be it a trade war or intrinsic from the financial system. but this time around, we have far less monetary policy space to react. on average, they have 30%

higher, so much less countercyclical space. most of all, international corporation is much more fragile than it was in 2009, when gordon brown called the famous g20 for fiscal stimulus. the political center is between 10-30 percentage points. and the fringe is going. the political space available to rescue any bank, should one fail, is far less today. that means we are less prepared for the next financial crash, whatever the source will be. try toof course, we will find what will knock us over. sony, you also one on debt. you make a clear point our debt load is heavier than it was, $63 trillion of sovereign debt. now $63 trillion of outstanding sovereign debt.

$7 trillion more than we had 10 years ago. debt naturally rises when you discount the cost of money. but we are in a worse position, debt wise? sony: i think the sensitivity of the outstanding debt wrote, took normalization means yes, many people, governments and companies that look sound, when interest rates are 1-2%, they were not look so healthy once interest rates normalize. the housing market across the board looks healthier on paper, but is not very robust against rising interest rates. nejra: the fact we keep talking about the next financial crisis makes me think risk is restrained and a way that it wasn't in the run-up to 2007. does that mean the financial crisis could get put off longer

than you might otherwise expect? guest: the aftermath is that systemic risk has declined materially. the cause of the crisis at the epicenter was in the banking sector around mortgages. what you seen is regulatory pronouncements and changes that have taken place, while the risk is not really disappeared, the systemic risk has diminished considerably. the real concern is not about the banking sector, but what will be the next causation of the next crisis, which may not be financial in nature. and what is the catalyst for causing that and what are the mechanisms to deal with such a matter? because as noted, there will be another price, just a matter of severity and cause and aftermath. manus: very good day to you, manus in dubai. very simple question, inflation targeting. that's what they came up with. we stick to it.

it hasn't really worked on a global level, has it? steven: no, it hasn't and in some respect, it's misguided. there's an artificial market targeted at the 2% level. there has to be recognition that inflation expectations and what inflation signals is very different today than what it was 10-15 years ago overall. and different paces of economic growth, demographics, really rendered this homogeneous 2% target to be relatively over got it. -- over guided. i think central banks realized it as a goal, but not something they should seek to target as much as they have historically. nejra: what will cause the next crisis? sony: i think it's increasingly likely the trigger will be political rather than financial,

but the aftermaths will go through the financial system and trigger a recession. nejra: steven? manus? manus: please, go ahead. steven: i was going to follow up on the comment, and one of the follow-ups was the polarization within the populace. it wasn't the direct cause of the polarization that has taken place, but it really added to it because you have conditions in place. the financial crisis really created a greater wealth gap because the monetary policy actions that took place to stabilize the economy's resulted in asset inflation, and that benefited the top wealthier portion of the populace. and the recovery, which was very slow, was slow among the less educated and it was within that component of the labor markets. manus: steve, hold those thoughts.

you're going to stay with us a little more. sony, thank you so much for your thoughts this morning. more to come on the markets, waking up to new threats on tariffs in china. ♪ xfinity mobile is a new wireless network

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manus: good morning from dubai. this is "bloomberg daybreak: europe." >> these are today's top stories. u.s. president donald trump threatened tariffs on all chinese imports, warning he is ready to go. chinese stocks continue their slide as the dollar strengthens. investors await key decisions from the ecb, boe, and turkey. and russia this week, populist deadlock, inconclusive elections in stockholm. the nationalist party, positioned as kingmakers with no clear pass for government --

vernment.ath for go welcome to daybreak europe. this is the state of play on our equity markets. is can see the london market just eking out the smallest of gains. a pretty big no caps on jpmorgan. they say most of the -- note out from j.p. morgan. they see most of mining looks cheap. there is a 20% probability in their view. miners -- oil is also on the march higher. unchangedmes back to sub-12,000. european futures just a little bit lower. you got the asian markets

playing catch-up with strong job numbers, but an media complement on the other side. you have this threat of tariffs on half $1 trillion of chinese goods coming into the united states. that is a new risk paradigm for the market today. art of the deal, that is one thing. it could turn into reality. it does seem to be threats of escalation weighing on asian equity markets. the hang seng on the cusp of a bear market. we can is in chinese markets as well. in chinese markets as well. the longest stretch of declines since the end of 2017 for asian equities. that value their? he says perhaps there is. the dollar is holding onto gains

from friday. better than expected u.s. job spreads. wage gains pushing the u.s. treasury higher. , ever look at the spread so slight deepening -- steepening on the two/10. also on the five 30's, which dropped below 28 basis points. manus: a little bit of breaking news on the bloomberg terminal. this is the engineering company. you think of all the engineering companies in the world, they have a read line. a number ofking at different options. we thought they were looking at different options. they will disclose further announcements when it is appropriate. they're in talks with apollo and pain -- bain.

think about rpc, which is a major packaging company. they have just released their press release. as we get more we will bring that to you. initial discussion, this is where you want to look. btp's going slightly better. the finance minister in italy making all the right signs in terms of compliance. basically, mn g7 he likes italy, he likes the equity side. whether this spread is said to narrow, a lot of hurdles to jump before we get the final definition of what the italian budget will be. u.s. bond traders, we picked up the 2.95 on friday, that was on wages data. he saw this selloff in the bond market.

you then have this trade threat, this new salvo from trump. when you have essentially is a cheapening of the bond market. $73 billion worth of paper will come to the market this year. 30 year bonds are going to come. the market is cheapened up. pips.are up by two -- pips. juliette saly with the first word news. weekste: sweden may face of political gridlock after an inconclusive election left scandinavia's biggest economy without a clear candidate to form a government. ,he social democrat coalition nor the opposition alliance, one enough votes to form majority government. now looks setarty to tip the balance of power. boris johnson has launched what many see as a new bid for power, calling the prime minister's brexit strategy of humiliation.

policyged theresa may's as keeping britain closely tied to the eu trade rules after brexit. meanwhile in an exclusive interview with bloomberg, the u.k. budget chief gave an optimistic assessment of talks with britain. >> negotiations are ongoing. negotiator is really active, constructive. our expectation is to come to a smart -- brexit deal. juliette: only minor damage to the economy looking less likely after president donald trump on friday doubles down on his threat to impose higher tariffs on chinese goods, saying he is ready to tax all goods at short notice. economists see the immediate impact as limited, but the pbocg form -- the former

chair says the effect on china may be larger. >> people may become nervous. nobody really knows. suddenly there is a trade war. their manner in --ms of stock market juliette: italy's deputy prime minister says economic growth comes first. settiing at the ambro forum, he moved to reassure investors. >> we will do all we can to grow to make italians pay less taxes to provide more jobs, sticking to our international agreements, clearly growth comes first and the right to work, the right to a pension, we will try to

provide everything. we have five years ahead of us. not five months. we will carry everything out and do it well. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . another session of losses in asia. it is the eighth in a row. that is the longest losing streak of the year and the longest losing streak since december of last year. china coming under pressure since the imposition of -- or threat of further tariffs. the csi 300 down by 1.3%. japan hasn't snapped its losing streak, the nikkei closing higher by 0.3%. u.s. jobs data outweighing trade concerns. australia closing fairly flat. still seeing weakness in e.m.'s. let's have a look at some of the factors dictating trade in asia.

you see weakness coming through in tech stocks. taipei down byn 10%. it is the victim of several broker downgrades. we are watching the breakdown on the yield on the indian benchmark note after it went to its highest level on friday. the worst is still to come for indian bonds. we have heard from the indonesian finance minister saying economic uncertainties will remain until 2019 for indonesia as you see the u.s. start to raise rates and the impact of the traits that -- trade spat. manus: the blame game rhetoric rises. markets, donald trump is threatening to ramp up his tariff war with china. just as beijing reports a record trade surplus with the u.s.. the president on friday said he is ready to impose levies on all

chinese imports saying, "at short notice." jodi schneider, our senior international editor. the latest salvo from trump, doing in comic -- in china? bewe expected there could $200 billion in tariffs announced on friday. we thought it might be in phases. instead the were more threatening words saying tariffs could come on all chinese imports, whatever is left. they could come with very short notice, but no specifics, no details, no list of products. no indications of timing. hadhe heels of that, we this report come out that showed ,hat record trade surplus

chinese record trade surplus with the u.s.. at the same time, the export growth is slowing. it has started to show affect on china. the economic threats are starting to show. we are not seeing a lot of across the u.s. yet. there could be political applications with the midterm elections coming. that has been a lot of pushback by companies, by retail leaders, in u.s. congress, on more tariffs, saying the pain has not yet come to the u.s., but it could. there could be political pain as well. thank you so much to our senior international editor, jodi schneider. us.hen alpine is still with thanks for hanging around. an environment with trade war's looming and the prospect of global central banks

tightening, where are you looking for opportunities? >> volatility creates opportunities across fixed income. generally speaking we are in an environment where absent escalation of the trade war, that shifts the tone from optimism to positive growth toward heading into a global recession. fixed income markets are not poised to perform well over the next few years. process unfolds in the eu as well as japan, fixed income returns. the opportunities are really more about defensive positioning and choosing within asset classes rather than broadbase attractiveness of fixed income overall. there is a component within fixed income the has always been there that acts as your insurance or shocks stabilizer in the event we do achieve some type of unintended consequence of the trade war becoming a full-blown and uncontrolled factor.

the thing people don't focus on enough is while the primary focus is on the direct impact between the u.s. and china, where engaged in a global supply chain. it has repercussions that within a fragile em environment that has got to spill over into an isolated incident into more about contagion situation. that debate about contagion, whether it is 1997, whether it is turkey and argentina have the ability to replicate those moments, is a debate. i want to pivot to data and the bond market, specifically your word -- world. there is a lovely line that on traders were burned by the payroll and wage growth numbers. maybe salvation for the auction this week. have you been pricked into consciousness over this spike in wages? is this making you wary on the longer end of the curve?

longer and concerns regarding the curve is less about inflationary spike ups, but really the long-term trend of normalization and supply /demand imbalances as we build up a much larger budget deficit on some fiscal policies that have been enacted overall. the wage data has been one of the first strong proofs we have had in sometime. we need consistency over a period of time rather than potential distortions or short-term trends. there is absolutely no doubt that at the lower levels as we see the full employment play out, we are starting to hear from our corporate management that they are starting that pressure with respect to the wage cost pressures. manus: we will keep an eye on those, it is a full week for the head. steven oh, pinebridge

investments, thank you very much for being with us. next we are live in stockholm during the latest on election gridlock. nejra: coming up we will be speaking about the swedish election with the countries warmer finance minister. he will be joining us. this is bloomberg. ♪

>> i think it is a very serious situation. we do not know how it's going to play out this week. one of the most storied firms on wall street is now gone. >> we have had historic day on wall street. brothers, a firm which survived railroad bankruptcies and the great depression and the collapse of long-term capital management a decade ago filed for chapter 11 protection today. a new world order on wall

street emerges and investors digest seismic changes. regulators take control of fannie mae and freddie mac. bank of america open to stores to merrill lynch and lehman brothers goes bankrupt. >> they must be tired. that hearing started at 9:30 this morning. that was the democratic head of the senate banking committee wrapping up after questioning ben bernanke. the bailout plan for the banks is being discussed. >> big losses on equities. the dow is down 700 points. well down through that 10,000 level we first came up through in 1999. >> this comes on the heels of a global stampede on equities. the dow jones stoxx 600 index

had its biggest. -- thecredit crisis widens and -- has a spread around the world. manus: voices post-lehman collapse. matt miller and myself. that was back from 2008. to mark the 10th anniversary we have the interviews you don't want to miss. policymakers and the former ceo of deutsche bank, in the former governor of the bank of england. he had his own very particular issues to deal with. let's get the juliette saly with the business flash. alibaba has confirmed cofounder jack ma will step down

to focus on philanthropy. the current chief executive will succeed him. ma toldk, m -- bloomberg about his plans. bloomberg has learned a company is working with -- on a potential sale. it is the latest attempt by the chinese conglomerate to reduce its debt pile. of the10th anniversary collapse of lehman brothers approaches, the man who was leading deutsche bank at the time has warned european lenders need to merge. he told bloomberg the continents are in the face of donald trump's america first policies. marketptocurrency bear has plumbed new lows led by a rivalng bitcoin's biggest ethereum.

there are concerns that a broader adoption of digital assets will take longer than some anticipated. that was underscored after the sec temporarily suspended trading in to cast securities linked to cryptocurrencies and ethereum's cofounder told bloomberg days of explosive growth in blockchain have likely come and gone. that is your bloomberg business flash. manus: thank you very much. back to sweden. gridlock asitical we have an inconclusive election result leaving the economy without a clear candidate to form a government. is ang us from stockholm danske bank market strategist. thank. thank you for joining us. will the currency come under more pressure the worst-performing e.g. turn --

g10 currencies until last week. >> there is a high risk of that, obviously. part of it can be explained by the upcoming election and how the uncertainty following it. there are other elements. definitely holding down the krona for a while. nejra: does that mean you would be selling any strength in the krona? it is a strengthening in today's session. >> to be honest with you i think it is a very volatile path ahead. taking a trading stance on day-to-day outcomes is going to be difficult. as politicians prevaricate over who they will or will not do deals with, how

do you look at the broader equity markets in sweden at the moment? >> it is important to note this is fundamentally a strong economy. fundamentals.ying i think it can run on autopilot for some time. it awaits the formation of a new government. i think the main aspect on the financial market is going to be the exchange rate. less of an impact on equity markets. there are other factors playing into the equity markets. could lendeek krona support to some of the cyclical investors. nejra: what does this mean for the outlook for the bank? >> this is a political

complication. on actual economic policy, the differences are not that big. the riksbank i assume would be really affected in their decision-making if there was a major change being made to fiscal policy in the near-term. but i do not think that is the case. i think the riksbank will continue with a long-term idea of trying to normalize monetary policy, at least start cautiously while they await inflation to rise. the impact on the riksbank is going to be limited. nejra: thank you so much to the danske bank markets strategist in stockholm as we keep up with the swedish election. coming up, we will be talking about the results of the swedish general election. anders borg will be joining us

just half past nine london time. manus: a little bit of news on the ecb. we have the russian federal bank, the bank of england, this is not the latvian central bank. you have handing over voting race to the deputy in a statement from the latvian central bank. and that has any implications in terms of the timing of the european central bank, that will be one to consider. let us see how the week goes. board, neare you on nejra. nejra: thanks for making it such an easy start. that is it for bloomberg markets. "the european open" is up next. the open for european equity markets. this is bloomberg. ♪

>> good morning, welcome to bloomberg markets, the european open. i'm anna edwards alongside matt miller in berlin. .att: welcome equities lower in china and hong , a bearenchmark index market. european futures are pointing to a mixed open. cash trade is less than 30 minutes away. anna: u.s. president donald