♪ francine: asian and emerging markets rebound. the dollar extends its drop. carney sounds the alarm. the bank of england governor is set to one a no deal brexit could lead to rate hikes. hurricane florence hits. the u.s. prepares for widespread destruction on the carolina coast. we look at the impact, from oil to livestock. ♪ good morning, everyone and welcome to "bloomberg surveillance." these are your markets. we see a little bit of a lift to the stoxx 600, getting some

0.15%. i am looking at the dollar index. it's about trade and some of the positioning in the global markets, and that goes back to trade. i will show turkish lira later on. with everything going on in the central bank they are trying to show their independence. russia's central bank coming out with its rate decision a little later on. after mark carney is said to have talked about the implications of a hard brexit from the eu, the pound not moving that much. bank spun off its asset management unit earlier this year. keep it right here on "bloomberg surveillance." we will be speaking to the chief executive of investec and we will ask him about the spinoff and what clients are asking of

them as well. let's get straight to the bloomberg first word news with taylor riggs in new york city. taylor: hurricane florence has hit the north carolina coast. the full effects of the storm are yet to come. sustained hurricane force winds and torrential rain have crashed into waterfront towns, as florence is said to make landfall later today. more than 1000 flights have been canceled and duke energy says 3 million people could lose power. it's estimated that the total bill for damage could reach $20 billion. at the same time, the philippines has placed its main island on storm alert after a super typhoon hits land. schools and businesses have closed. the storm is forecast to pack maximum winds of the equivalent of 100 sustained -- 100 miles per hour with gusts as strongest

207 miles per hour. china's state media has adjusted that that country -- has suggested that the current trade war may not come to a resolution anytime soon. the newspaper says washington is still taking a tough attitude. bank of england governor mark carney has told senior government ministers that a no deal brexit would probably see interest rates rise rather than follow. he told those president that going without an agreement would lead to a fall in the pound and higher tariffs, pushing inflation higher. he said that would make it harder for --. russia that warned it may follow through on sanctions over the construction

of a major gas pipeline with germany. donald in july slammed what he called german dependence on russian energy. -- our bring you parks exclusive interview with the u.s. deputy energy secretary. top senate judiciary democrat dianne feinstein has notified the fbi about unspecified information she received about u.s. supreme court nominee brett kavanaugh. of fbi included as part kavanaugh's background file, under standard procedures. a white house spokesperson said kavanaugh has been that it repeatedly and contended -- vetted repeatedly and contended that feinstein's information was to undermine the nominee. global news 24 hours a day, powered by more than 2700 journalists and analysts in more

than 120 countries. i am taylor riggs. this is bloomberg. francine: let's focus on emerging markets and the msci emerging markets index is pushing higher after action from turkey's central bank set off a substantial rally yesterday. this comes as a has undergone its fourth slump since 2014. individual countries of from argentina to turkey have their own challenges. the fed has also played a key role in triggering the stress as it looks to move away from emerging monetary policy. what next for the secretary? ,oining me now is bhanu baweja deputy head of global macro strategy at ubs limited. how should i look at emerging markets today? yesterday we had the turkish central bank trying to show their independence. will it work? near-termhink for the things should get a little bit better.

draghi is saying he is still going straight ahead with normalization. china's total social financing number a little bit better than expected. ughtink the kind of wro we have seen in em in the last few months, i think we get a small buying opportunity. -- the em selloff this year does not have to do with an incremental change in em fundamentals. it has to do with a change in the overall global backdrop, primarily the u.s. suspect is the bigger one, because in all of investors p.m.m. investors minds, -- -- e.m. investors minds --.

there will be relief and the impact has already begun. i think it will be much smaller than we have seen in previous iterations. now the real challenges for emerging markets begin. francine: if the dollar spikes up, do we see back to a selloff? do we need to see another catalyst. bhanu: we need to separate the dollar call between euro-dollar dollar emerging markets. dollar emerging markets i think over the next two years will continue to go higher. in order of preference, euro, dollar, and em. francine: what happens in the emerging markets to warrant another selloff? is it that china is worse than expected, or does it come from that policy? bhanu: weaker than expected growth in china, which i don't think will be the case for quarter four.

commodity prices coming under a little bit of pressure again, so iron ore, copper, and oil. and the technology sector. technologyd market comes under pressure, i think that will put pressure on emerging markets. francine: we had turkey, south africa with tweets from the president, but actually there was nothing fundamental. we had a pretty wide contagion. bhanu: that's one idiosyncrasy too many, right? all of this cannot be idiosyncratic. if i could done this down slightly from one second. emerging markets derived the bulk of their cash flow from china and the cost of their equity is driven by the u.s. the guy who drives are equity is now normalizing rates and the

guy who drives are cash flow is now weakening. this is why your fundamentals are just been scrutinized more carefully. fundamentals are the same in argentina and turkey. francine: what are you seeing china doing from now? bhanu: i think china will ease policy, but that degree of easing is going to be about one third of your last easing, and will be of a completely different texture. last time it was housing, which has tremendous modifier affects. this time it's infrastructure, which really helps china. the sensitivity of our earnings in emerging markets and developed markets globally to what china spent is much higher when that spent is on housing rather than infrastructure. this time it's on infrastructure. what a trade war does is it makes your external balances a little bit tired. stimulateime china

you had a current account surplus of 3%. your cushion has gone to zero. every emerging market has to make a choice between external stability and being able to stimulate their economy. china has never had to make that choice. i think that's changing for china now. francine: thank you so much. bhanu baweja from ubs investment bank stays with us. make sure to get your questions and by going on the tv on the bloomberg terminal, hitting the ask the guest a question button. it is just underneath the video screen. i know many of you will want to get more thoughts on comments from bhanu baweja. the incoming goldman sachs team handpicks his team. plus, we will talk the strength of the banking system and lehman's 10 years on with the chief executive of bnp paribas.

this is bloomberg. ♪

♪ francine: economics, finance, politics, this is "bloomberg surveillance." i'm francine lacqua here in london. hurricane florence is threatening to unleash widespread destruction as it hits the carolina coast. wind and rain have hit waterfront towns, causing floods , which could produce a debbie 11 foot search. hundreds of thousands of people have been evacuated and farmers have rushed to save crops and livestock ahead of the storm. for more on the economic impact

on hurricane florence we will bring in our executive energy -- editor for energy and commodities. it is much more than oil, because it also impacts farmers, livestock. what will be at the forefront of people's minds? >> in terms of the economic impact, yes, we are obviously clearly concerned with retail side, we care about the infrastructure side, but beyond the obvious risk to human health ,hat is the 11 foot storm surge the thing to really watch for is on the agricultural side. crops thatt turkey are enormous number one state is north carolina, but the thing to watch out for is the pig population. north carolina alone has something like 10 million pigs. each pig is producing well over a gallon of when you are each day.- manure each

francine: so are they taking precautions? what can you tell us about how they have been handling this? precedents on how to handle this? >> they can bring the flocks inside, china strengthen the building, but there is really -- try and strengthen the building, that there is very little you can do. francine: he will be watching this closely. let's get straight to the bloomberg business flash in new york city, here's taylor riggs. taylor: goldman sachs group investment bankers are completing a takeover of their own firm. three of the most important roles will now be held by executives. among them, john waldron will be the firm's next president and

chief operating officer, the second-most powerful position in the bank. investec plans to spin off investment management business. the plan to separately traded investec asset management in london with a secondary listing on the johannesburg stock exchange follows similar steps by insurer old mutual. us for aneo joins exclusive interview at 11:30 a.m. u.k. time has said it was spend more than $150 million in canada to support driverless car research. speaking to bloomberg, he also says the company has to demonstrate its path to profitability in what he sees as the multitrillion dollar industry. wenow in urban environments think that we can build out a host of services that essentially replace all of these

various use cases of the car. this is ultimately a $6 trillion industry we are going after. taylor: that's your bloomberg business flash. francine? francine: now let's go back to the emerging markets. turkish lira is continuing its gains after the country's central bank defied president erdogan by announcing a huge rate hike. the 625 basis point rise helped to restore some investor confidence and policymakers independence, but will those gains best in policymaker -- in policymaker's independence, but will the gains be short-lived? we talked about the wider emr. first to turkey -- markets em markets -- em markets. first to turkey. bhanu: for 2018 i think they are done.

for 2019, i think they will not do much in the early part of the year as well. i think they have done their job and it's made for a very good economic test yesterday. the -- economic -- yesterday. the central bank has gotten ahead of the curve. the economy will slow down and that's exactly what you need. you need the economy to slow down, the current account to go down, and that makes things ok. francine: the current president will be fine with that? bhanu: we will get a clue on that in the near term when they come up with an economic plan. we really need to see significant consolidation out here. if we don't get that i'm afraid turkey will come under pressure again and then the central bank will have to move again. i think monetary policy will have to lift the rubbish of the rest of the economy. we need to do prioritize growth and prioritize stability.

i'm not sure that outside of the central bank every policymaker in turkey understands that, but the central bank has more than done its job. francine: do the markets understand that? bhanu: i think the markets will play this from the long side in the very near term. the central bank has done something that not the most hawkish interpreter expected. the question is whether we see the fiscal policy also responding. francine: let's go back to china. this is basically whether china stimulates inside domestically through infrastructure or like in the past, they also helped the rest of the world. is the market aware of the choice that china now has? bhanu: i don't think the market is completely aware. we have not seen capitulation in em. the only asset class where volatility is high in emerging markets is fx. in emerging markets

is a slow burn and investors are not used to that. it is a very binary asset classes stories the and right now it's not behaving like that. it's a slow burn, which is much more problematic. this is why people are saying, i cannot do with this, i'm just going to go along the s&p -- go longer the s&p -- long the s&p. i don't think the market is aware or it's fully priced that china's slowdown is here to stay. they don't have the willingness and ability to stimulate 7%. sectorlook at the breakup of the market, it screams lack of liquidity rather than tariffs. it's about what china has been doing for some time domestically rather than what the u.s. is imposing. tariffs have yet to be priced

into markets overall. china's domestic market is pricing in the liquidity downside. if you believe there is a liquidity upside coming, this will be doubly played in china not in the broader emerging markets. asked someone i about the trade war, he said he's not concerned economically, he's concerned about people freaking out in china and selling off the stock market. bhanu: what we have to worry about in china in the medium-term is the housing market. that is the collateral behind china's credit boom. with china, when china goes into trouble is going to be the latter. if the housing market comes under pressure that's when you really worry about china. i think tactically it's time to play from the long side, not the

short side. francine: thank you so much. bhanu baweja from ubs stays with us. mark carney told senior government ministers yesterday that a no deal brexit would probably see interest rates rise. he also warned that a no deal divorce could see house prices fall over 35% while mortgage rates increased. a spokesman from the bank of england declined to comment. let's bring in the european news director for bloomberg news. and bhanu baweja from ubs is still here. first of all, what have we learned? this is the bank of england talking about contentious plans. this is basically worst-case scenario. >> absolutely. today he is delivering this stark warning. the most eye-catching thing is that a third of house prices. the comment about interest rates interesting.

he said this last week to the treasury select committee and pointed out that in a no deal scenario the interest rates would have to go up to try to counter inflation with a huge fault in the pound -- fall in the pound. the bank was able to step in with some stimulus in the aftermath of 2016. they are saying that can't happen this time and they are going to have to endure increasing interest rates, which would cause a lot more problems. i think it's important to step back a little bit and see what the narrative of the last couple of weeks has been. that has been a much, really ressionble prog towards getting a deal. we hear about a special summit happening in november, so yes, it's striking to hear this sort of strong language to mean from the bank of england, but the muted music -- mood music seems to be that a no deal is becoming unlikely. also from the

department that delivered the stark message. news for thed cabinet. do you think this makes them reassess their probabilities of chquers, for instance? do you think this makes them smell the coffee? argument, there is high likelihood that all of that dispute gets deferred until after withdrawal next year. you are two things remaining to get a deal, an agreement about north ireland, and some sort of wording about what the future relationship should be. we are hearing now that probably there will be some sort of fudge in that case that gets us past march 29 of next year, which secures the transition agreement. all of those discussions in the big debate get deferred into the

2019.tion period of the cabinet is by no means united about this. there will be huge fights to come, but it's the sense now that it's not going to stand in the way of a deal next march. francine: how much of a nightmare is it to set policy for the u.k.? even the rates, the rainfall that we saw immediately after the vote was heavily criticized? -- criticized. bhanu: it will be very difficult. the kind of comfort we have seen recently from real wages i think is transitional. saving grace are low, economic confidence is declining, and time is diminishing. i hope we get the transition deal sooner than later. the closer march 29 gets come the bigger the hitch to consumer confidence. that will mean that the sterling suffers even more as a result of that. the only part of the curve that

you really want to get on is the long end of the curve, but more broadly for the economy, it obvious he spells a serious problem. francine: thank you both for joining us, david merritt and bhanu baweja from ubs investment bank will be staying with us. we continue our coverage of the financial crisis a decade on. we will speak to angela knight. get your questions in for hurt by using tv on the terminal. head to ask the guest a question, and then i ask in a couple of minutes. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." goldman sachs investment bankers are completing a takeover of

their own firms. three of her most important roles will be held by executives. last night, david solomon john the second most inerful position in the bank a surprise move, solomon dispatched the current cfo. we will keep an eye on goldman sachs and any changes their. -- anyet straight changes there. let's get straight to bloomberg first word news. taylor: hurricane florence has hit the north carolina coast. andained hurricane winds heavy rains have hit coastal towns. more than 1000 flights have been canceled and duke energy says 3

million people could lose power. estimated damage could reach $20 billion. the philippines have placed to their main island thunderstorm alert between a typhoon hits the northern province. closed.and buses have the storm is forecasted to winds of 170 miles per hour. chinese estate media has warned the nation should expect a quick resolution of its trade dispute with the u.s. as there have been no signs of president donald trump has changed his thinking. an editorial says while it is good to talk, china should be aware that there may not be a deal anytime soon. the newspaper said washington is still taking a tough attitude. governor mark carney has told

senior officials in no deal brexit could see interest rates rise. carney told those present that crashing out without an agreement would lead to a fall in towns and higher tariffs, pushing inflation higher. they said he suggested it would make it harder to cut borrowing costs to support the economy. the u.s. has warned russia it may followthrough unsanctioned threats over the construction of a major natural gas pipeline to germany. the energy secretary comments were slammed when he called germany dependent on russian energy. 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: thank you so much,

taylor. all week, we have been covering the collapse of lehman brothers 10 years along. lehman at the time and walks us through what he remembers from september 2008. i'm a macro strategist at bloomberg. 10 years ago, i was an em trader at lehman brothers in london. by late 2007, it became clear we were heading towards some sort of financial crisis. i was naive enough to think that lehman brothers was the safest bank. i think i was brainwashed a little bit, my first full-time job out of university, and i really enjoyed it. the atmosphere was really good. in the summer of 2008, they became this idea that the reality was different to a management or possibly presenting to us. the situation was much more

dire. 12th, i was flying to budapest for a work conference. there were other junior salespeople and traders there from lehman brothers. i remember assuring them on saturday night, it is fine. the worst-case scenario is that we get taken over by bank of america. there was no idea that monday we have no employer and no option and no way out. on sunday, i flew from budapest to istanbul. i remember we arrive in and i lehmanthe tv screens, brothers to file for bankruptcy in the morning. i turned on my blackberry in shock. i get all of these messages from people in new york going, it has been great working with you, see you on the other side. leaving lehman brothers wasn't my choice. i really thought there was no chance it would be allowed to fold.

i never got back into the lehman brothers office again after september 12. it was a colleague who had to bring my box of my collection to me. i never got to do that. history rhymes, it doesn't repeat. regulators are too focused on that. will be get another financial crisis? probably. what has happened is people didn't believe a crash could come. it's like the great depression and the 1929 crash. people got so excited of the roaring 20's. as long as humans dominate the financial system and markets, which they still do, i think we will get financial crises. francine: that was a very on bloomberg strategist and former mark. brothers trader,

we are just getting breaking news out of president erdogan of turkey. he is speaking at the moment. he says the political reasons lie behind the lira's decline. president erdogan seems to be on the attack saying that the u.s. decisions became pre-decisions for an attack on his economy. the lira decline proves that the economic assassination attempt is still alive in turkey. we will get back to that in just a second. first, let's go back to the financial crisis that didn't begin and end with lehman brothers. rock collapsed a year before the demise of lehman brothers. 10 years after the crisis, how safe are banks and financial markets?

angela, great to see you after so many years. did we learn anything from lehman's or is there a danger we have learned what they taught us but we are not going to foresee the next crisis? angela: there are two questions there. have we learned? yes we have. we have learned from northern rock, too. it is right to say that the crisis started the year before. it was the lehman's collapse that froze the global financial system. there were real problems right the way through the northern rock failure in the start of 2008. money markets were all over the place. ventions taking place all over the u.s. which meantong list that many of the markets were looking at this cliff edge, which seem to be coming closer

and closer. all of it really triggered by the u.s. subprime. the u.s. subprime market and loss of confidence in that was a huge issue. francine: we didn't understand the interconnectetivity. why didn't we see it at the time? angela: i don't know. certainly in the industry, and financial markets, there were a few who knew that there was a problem coming on. i remember in the summer of 2008, everybody came back from holiday and seem to feel that they were waiting. it was as if we were operating in three different universes. q halve the hole of the regulatory system, and all of that centralized -- you have the whole of the regulatory system, and you have the industry saying we are having trouble funding ourselves.

the assumption that with the various arrangements in place, somebody would do something. up until that point, somebody had done something. stuff had happened. freddie mac, frannie mae. the assumption was that something happened. i think the very fact that thean's let that go, assumption was that would be nasty, but we would handle it, not that everything would come to a halt. francine: what is the most significant consequence? >> i think it is always said that we are prepared for the last crisis, not for the next one. i think we are building that equilibria once again. in china, we are building that equilibrium once again. i don't think we are prepared for that. it is not going to act of the same way.

if the u.s. financial system goes under distress, the entire world goes under distress simultaneously. i china goes under trouble, don't think we have learned enough from that. developed markets have already reduced their leverage. i wante: let me ask you, to get some of those other comments from president erdogan in. president erdogan saying the central bank has made a very high rate increase. the president saying he will foresee the results of this independence, and saying his patience is up to a point on central banks. i know we are jumping around, but this is breaking news. will he cracked down on the central bank? bhanu: this is not helpful because the central bank did the right thing. this undermines what the central

bank has done. this is not helpful at all and i don't think it is correct. there is a little bit of a risk premium because of the relationship of the u.s. getting worse. turkish lira used to trade at one against the dollar. this is not because of the u.s. pastor being arrested. there has been a significant decline. i think this is very unhelpful. angela: i do agree that we have done so many things to prevent the last crisis happening again, and a lot of that has been across the western world. i was speaking very recently with an individual, absolutely was instrumental in at least deciding what some of the policy we are operating in the west ability has been influenced today. i said to him, what you think is going to happen? he said we will have another crisis.

i said what is going to trigger it? he said something we have put in place to prevent from the last crisis happening again will be the trigger to the next. francine: regulation? angela: i had to think about that. that are a lot of issues have stemmed from the last crisis and that changes that have been made, low interest rates, which has resulted or has resulted in the huge diverge between politicians, politics and the people. the more you have that divergence of politicians from the people, the more you get political instability as new parties, different parties, extreme parties fill up the space. what do i think are the critical issues? the fact is that stable, or stability in a political system seems to be something that we don't really see. you have been mentioning turkey,

but turkey is not the only country that feels it is being dumbed down by what i call western policies thafor want of a better word. if you get political stability, stability, political instability, you get financial instability. borrowers didn't get penalized. francine: thank you so much. bhanu stays with us. we are getting live pictures of president erdogan addressing his speech. we will have plenty more on that. he is saying he has had enough. he has had it up to a point on central banks and rates.

his comments means that the currency is now reversing. lira reversing gains as mr. erdogan commenting on the currency's decline. turkish lira to the dollar, 6.1051. we also need to talk about hurricane florence. we had our briefing about how farmers are trying to protect the livestock. we worry about human life. at the moment, florence is about to make landfall in north carolina. that should be momentarily. we will keep a close eye on that. busy day. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." we are just getting some live

pictures of president erdogan speaking. he is saying the new public hires will be at the level. you're talking about the bureaucracy after talking about central bank. this is what he said moments ago. he is following developments of the central bank and says we will wait and see. he also says that financial firms survival depends on real sector survival. the real headline with him saying his patience was up on central banks and rates. we will see the result of this independence. this is on the back of what the central bank did yesterday. from ubsh us, bhanu investment bank. i'm unclear about how this will play out. does the president have the authority to shut down the central bank or would that be suicide? bhanu: for the president, it

wouldn't be suicide. yes, he does have the authority to shut down the central bank. heroicit emphasizes how yesterday's central bank actions were. this is not helpful in that you are already compromising with the central bank has done. typically, you get policy when fiscal and policymakers all act in concert. less than 24 hours after the central bank has done -- the first time they have gotten ahead of the market, i think this really dilutes the impact. you don't know whether the central bank will completely have to reverse. the emphasis on real sector betrays an emphasis on growth and a lack of understanding of long-term growth. the problem is that you are prioritizing short-term growth. you are willing to sacrifice everything at the behest of growth.

that is what makes it very difficult for them to control the lira in these circumstances. you do have to take a bet on whether the president will understand this in the future. bhanu: if this has not made the president understand the problems of turkey, i believe it is very difficult that he will necessarily change his mind anytime soon. the currency has blown up. interest rates have increased by a factor of two. now, the real estate sector is going to come under pressure. i think he needs to understand that in order to survive long-term, you need to take this hit. it doesn'tcomments, look like policymakers in turkey completely understand them. francine: let's go back to a mishmash of lehman 10 years on. could the next crisis come from china? bhanu: i think that is the biggest this equilibrium -- dis

-equilibrium in the world right now. the linkages are not as strong. jpmorgan, citibank do not have the same degree as they used to. china has certainly increased leverage. when we say corporate sector, it is financials. as we know from portugal and italy and europe, when you say financials, you're basically saying the state. that big question is what is the wherewithal of the chinese state to continue to write checks? right now, they can do that. can we go to 200%? no, because the one leverage changing is external balance in china. the current account is changing and that is reducing the space for the chinese authorities to be able to do that. you will need to see the collateral value decline for us to see a crisis out there. it will be a very different crisis from the lehman crisis.

the current fx reserves and house prices will tell us about the next crisis. this is not a matter of months. today, the housing market is in equilibrium. i think this is a matter of years. i think this is about 2-3 years away. the probabilities will change if fx reserves begin to move in china. that is not happening today. francine: thank you so much. taylor: goldman sachs group investment bankers are completing a takeover of their own firm. three of the most important roles will now beheld held by executives who rose through the overhauling the top of the company that has been a wall street powerhouse for years. investec plans to spin off its investment business after there little synergy and the

wealth management division. the plan to trade in london was a secondary listing on the johannesburg stock exchange, it follows a similar step by the insurer, old mutual. for an cielo joins us exclusive interview at 11:30 a.m. u.k. time. havebezos and his wife launched a $2 billion find to help homeless families and create a network of nonprofit preschools in low income communities. he says the fund will use the same principles that have driven amazon. in an exclusive interview, he also warned it was dangerous for politicians to attack the media. mistake for any elected official, in my opinion, i don't think this is a very out there opinion, to attack media and journalists.

is an essential component of our democracy. taylor: that is the bloomberg business flash. much.ne: thank you very in the summer, bitcoin hit its peak price. it is not trading down more than 60% against the u.s. dollar. how are bit care miners -- bitcoin miners doing? the company's share price has fallen 18% since its ipo in early january. jonathan, welcome to the program. demand for bitcoin miners has suffered in the routes from crypto. the answer is that we are still in the early stages of the market. most of our customers are early adopters. i don't think it has gone

mass-market, and i think there is a misconception around what crypto watching is. most people don't understand it. the early adopters believe, there is a sense of belief still there. from a mass potential, i think we are yet to come. francine: when does that come? jonathan:ng: i've -- i think it comes with people start to understand what crypto and blockchain is. it is a reaction to what happened 10 years ago, which is that centralized control of ledgers has downside. in the mortgage crisis, banks and governments. in lending, the sense is that you have a sense or toll in censorship. ofcoin is a good example centralized resistance. francine: does it need to be regulated in the meantime? i think investment

into it needs to be regulated which is why we chose the route of the london stock exchange. i think people need to understand what they are getting into, as you would in any investment. francine: london has aggressively pitched itself to be the place where emerging-market companies list. should they do the same with crypto? jonathan; i think they have. yes. francine: and no you don't necessarily look at crypto, but i don't know whether or not it has the locations for the kind of economics you look at. bhanu: at this moment, crypto has not become big enough to challenge fiat money in any of the places i look at. it is interesting but it has had an impact through all of the miners that get together for demand for memory and tech. clearly, unlike europe, e.m. has

a lot of tech. the u.s. has a lot of tech. as the prices of bitcoin have come down and fewer people are involved, that is also deflating the tech bubble in emerging markets. francine: thank you both. bhanu just makes us smarter. "bloomberg surveillance." continues in the next hour. tom keene joins me out of new york. this is bloomberg. ♪

focus.e: e.m. in

the turkish lira raises gains as president erdogan comments on central-bank policy once again. we look ahead to a russian rate decision and news conference. governorof england talks about how a note gilt brexit could lead to a 30% drop in health care. we look at the impact of hurricane florence. this is "bloomberg surveillance. i'm francine lacqua in london. tom keene is in new york. we have president erdogan still speaking. hurricane florence as well, but right now the hurricane is hurricane erdogan speaking in turkey. it will be interesting to see how lira reacts. weaker.ira reacting was that amazing when the central bank crushed mr. erdogan's words? francine: i've been trying to

track the leader of reaction currently at 6.1. it is pretty muted. let's get to bloomberg first word news. taylor: a warning just a few moments ago from the national hurricane center. hurricane florence is about to make landfall in north carolina with a life-threatening storm surge. heavy rain and flooding were taking place as florence approached the city of wilmington. the hurricane has been downgraded to a category one with winds at about 90 miles an hour. the danger comes from the storm surge which could reach 11 feet. parts of the carolinas are expected to get up to 40 inches of rain. coming up later, we will discuss florence's impact on power companies. we will speak with the duke energy president. in the philippines, the government says that more than 800,000 people may have to be evacuated before a super typhoon makes landfall. the storm is taking aim at the

country's main i went. it is forecasted -- island. it is forecasted to have winds of 170 miles an hour. near boston, more than three dozen natural gas explosions killed one person and injured at least 10. the natural gas network there is by a utility company that asked for a rate hike. an editorial says there are no signs that president trump has changed his thinking. the president tweeted he is under no pressure to make a deal with china.that has led to concern that he is not serious about a possible new round of talks. 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. m: taylor, thank you so much. a quieter market and we have seen for three days. curve flattening happening as we speak. handle.t to a 117 i put the dow in there to note that we are back above 26,000. about 500 points away from a record high. at the turkish lira in to get out front of your wisdom. francine: thank you, tom. we have quite a lot of time that we need to talk about turkish lira. they are gaining along with u.s. equity futures. i think it is prospects for u.s.-china trade talks, but also action by turkey that seem to be

fostering a positive move. what i'm concerned about is that the markets haven't fully caught on with what mr. erdogan is saying, which he is basically not only questioning central bank independence, but went as far as saying his patience is running out. tom: yesterday, we saw weaker lira. i would point out interview to interview, all pros are focused on china as the dominant em. let me look at a dominant chart right now. i haven't showed this in a while. we roll over with curve flattening, higher yields and a better economy. even more rapid flattening as well. i wanted to bring appear the recent rollover to a new bout of her flattening. -- curb flattening. francine: this is a simple chart of turkish lira over loss.

this is what we learned -- last six hours. this is what we learned from the turkish president. there are limits to his patients over central bank policies. responded to ak call for interest rate hikes. i don't know when erdogan says his patients has limits, i don't know whether that means that will remove their independence. i guess he could still do that. i'm not sure why there market is not reacting more to that. as we have been saying, comments from the turkish president have moved lira a touch. what do you make of these erdogan comments? there have been punching in the past, but these are very punchy. his patients on central bank interest rates as limits. >> good morning.

those comments may sound shocking, but at the same time they are nothing new to the market. everyone knows that president erdogan strongly opposes higher interest rates as he expressed yesterday just two hours before the central bank announced's decision. to keep in mind the comments he is made over the past half hour. mainly aimed at domestic audience. favorps saying he is in of low interest rates, but at the same time yesterday, the central bank proved it can act decisively. it passed a very important test. something also needs to be done from raising rates to focus on fiscal policies as well. francine: president erdogan

wrapping up his speech. can he remove central bank independence, or does he have the power to do that if he wanted to? >> president erdogan only a few months ago exclusively said during an interview, that he intends to take control of monetary policy. this would unsettle investors. interest rates are attractively high. bankrns about the central independence are likely to prevail if president erdogan continues to make similar comments. yet, the central bank made the right decision yesterday. tom: can an economy work with 20% interest rates? is there any experience with you or with jpmorgan emerging

markets that an economy can afford with that kind of double digit rate structure? all.not at it is way above anything that would look normal regardless of the level of inflation or growth that you would think could exist on a sustainable basis. very much like an emergency move to try and stabilize currency. certhing that ainly the central bank hopes. tom: how do they do that? big analysis of what they do and what you are forced to do. what happens when they begin to release? president erdogan there was a baby, that is a politicians do. what are we going to see when they finally give way and try to bring rates down? if anything, the government

and president erdogan can support the central bank in its efforts to bring inflation lower by boosting domestic food production. turkey imports a lot of food. there is a lot that inflation can do to support the central bank, support but not interfere in monetary policy. francine: talk to me a little bit about china. when you look at the emerging markets base, does china at some point have to make a choice as to whether to stimulate its own economy or help the rest of the world, and the markets realize it? china definitely is one of the most important driving factors of emerging markets.

what china cannot have at the same time is to maintain the relatively stable and at the same time keep stimulating the economy. something will have to give at some stage. we expect dollar yuan to resume its upside trend as china continues to stimulate its economy. yuang to keep the relatively stable is unlikely to prove possible over the midterm horizon. francine: thank you so much. bob stays with us. we will ask him about what he learned from lehman's. this is bloomberg.

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taylor: this is "bloomberg surveillance." a little more than a week ago, people were talking about way cutting nike is of the controversial new ad featuring colin kaepernick. shares have hit an all-time high. it may be months before the business impact of the ad can be measured. early data shows nike sales tracking welcome above -- well above last year. 's rocket company has signed up its first passenger for a flight around the moon. spacex says it will reveal the

person's identity monday. no word how much the ticket costs. bloomberg spoke to tim martin. andf we don't have a deal we embrace free trade like new switzerland,ralia, prices will go down in the short so we can avoid paying 600 pounds per person to the eu as a divorce gift. we can have control of our own fishing areas. i think we will be in a much stronger position on a free trade basis, which some people called no deal. taylor: that is your bloomberg business flash. francine: thank you so much. speaking with brexit. mark carney has given a stark warning that a no deal scenario could see interest and markets rise.- mortgage rates

let me take it off with you.when you look at frexit any look at worst case scenario, which is crashing out, is this like a concoction of hell for central banks because you can see inflation ramp up at a time when the u.k. consumer has no savings? >> i think it really depends on what kind of brexit outcome we get. in your scenario, things could complement -- complicate quite a bit. brexit has an impact on the supply side of the economy. when potential growth slows, the impact could be inflationary. that is why they are in the process of a gradual no deal of interest rates. it is not necessarily obvious

the same monetary course will happen. francine: how much time do you spend trying to figure out the politics? bob: i try to figure out a lot of those things. i think he has an unsolvable riddle. if sterling drops off quite a bit, he has to raise interest rates and that will be bad for the housing market and the rest of the economy. what else is he supposed to do? tom: what are the incentives that europe has to drive forward this debate or discussion, or do they just maintain to all that is going on within the u.k.? is ane: i think there element of incentive. the european agenda is much more complex than that. there are deadlines approaching. i think they could move to the next phase. it is possible that given the complexities of the many aspects that need to be addressed, our

call is for the pair economy to slow in the second half of the year. timeline,dea of a what is your timeline to when brexit actually happens? there is possibility that some preliminary agreement may happen later in the year, in the fourth quarter. again, it is not necessarily obvious that happens. if not, they will come pretty close to the no report deadline early next year. francine: it seems there is a national obsession with brexit. does the rest of the world care about it? at first, when the brexit vote happens, we thought it could force this region into a recession. do you see a lasting effects even if we have a difficult brexit? bob: no. it is strange how brexit has faded from the focus of a lot of global investors. i think a lot of investors are

looking at europe. europe is in a pretty good spot right now. it could take a hard line on brexit and focus on negotiating some sort of trade agreement with the u.s. if that falls through in the u.s. and china get in a trade war, why not renegotiate a trade agreement with china? europe has a lot of options ahead of itself. francine: thank you so much. bob and daniele stay with us. we will ask them what they want to do with the asset management. that will be an interesting conversation. this is bloomberg. ♪

around the outlet can still be assessed as broadly balanced. at the same time, risks relating to rising protectionism, vulnerabilities in emerging markets and financial markets mobility have gained more prominence recently. tom: mario draghi talking yesterday. he had comments on turkey as well that were very carefully worded. let us look at the central bank.

i want to look at the ecb and all that is going on. daniele is with us as well from morgan stanley. let me go to you. did you change any of you from morgan stanley? frankly, it seems to me like mr. draghi and others are coming toward the morgan stanley view. daniele: that is right. , my sense isecb use the central bank will this reinvestment policy quite effectively with some sort of operation twist to eventually suppressed long-term interest rates. other is to promise they will not hike for quite a while, the first and only rate hike we expect for next year is in october. that will still leave the key policy rate for the whole of

2019. tom: in thinking and reading for coming off of mark carney and ecb is what these guys do. they have a plan and they have a message. the idea is great, we want to raise rates, but, but but. is chairman powell going to join mario draghi with the but, but, but of 2019? bob: we think so. first, for the ecb, get out of our markets. 1%.rates from -.4% to we can absorb it. this is ridiculous. if you look at the fed, the fed has done the right thing. they have been raising rates for two when a half years. if you go back to the fourth quarter of 2015 and looked at were growth and inflation were then versus today, it was much lower.

racing rates from ridiculous levels to something that looks normal, may actually be somewhat healthy for the economy because it is positive for the banking system and it doesn't penalize savers. i think there are a lot of investors and the market that are fed up with the ecb. as for the fed, when you get to the middle of next year, they will have raised rates for 2.5 years.they will have gone from zero to 3%. that seems to be a reasonable place to pause. that seems to have restored to the fedeal yield funds rate. the economy looks great. why not wait and see if the other central banks can catch up? tom: very good. we will continue. let me give you the hurricane update. what you need to know his

less wind, but it is stalled. olan has been brilliant on this. we are thrilled he will join us later today. this is a diffused, stable hurricane.the summary is simple. more rain sitting on the carolinas. please stay with us. up, on duke energy and their carolinas, duke is a small school in carolina. it is adjacent to chapel hill. i'm in trouble for saying that. duke energy, david fountain later today. 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. morning. bloomberg surveillance, francine lacqua in london. i'm tom keene. let's get to taylor riggs. hurricane florence is on

the verge of tearing into the carolina coast. florence is about to make landfall in wilmington, north carolina. top winds are at 90 miles per hour. it is the life-threatening storm surge which has authorities worried. they wall of water could reach 11 feet high. the wall of rain will cause flooding throughout the carolinas. coming up, we will discuss florence's impact on power companies. we will speak with duke energy president david fountain. that is that a: 10 new york time. -- at a: 10 new york time. a typhoon is that to make landfall in the philippines. this storm has a maximum wind of 173 miles per hour and it may hit hong kong sunday. mark carney has warned a no deal brexit would lead to a interest

rate increase. he joined the cabinet meeting yesterday to outline the planning for a turbulent exit from the european union. leaving without an agreement would lead to a fall in the pound and higher tariffs. the richest person in the world says it is dangerous to vilify the news media. clearly criticize president trump, without naming him, and a chat with david rubenstein in washington. >> it is a mistake for any opinion,fficial, in my to attack media and journalists. i believe it is an essential component of our democracy. you can watch all of that interview with jeff bezos next week on the david rubenstein show at 9:00 p.m. on bloomberg tv.

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. goldman sachs investment bankers are completing a takeover of their own firm. three of the most important roles will be held by executives. last night, the incoming chief executive john solomon named john waldron to be the next president and chief operating officer. another rising executive, stephen sure was tapped to be chief officer. we will see whether those changes mean anything for the bank. this is an extraordinary

moment for finance and banking. bloomberg finance is with us off of london desk. my essay of the year was by david brooks of the new york times. he talked about the smooth guys and the nerds and that is what is going on. guys, i love what the wall street journal said that the set one goldman sachs. why is david solomon and the others, the smooth guys? david: first of all, i am not .ure i do not know if you've been following his dj career in the hamptons. is interesting if you look at the history of john waldron, our

reporters dug up gossip on him. called him a stereotypical investment banker, a consummate salesman, and an effective advocate. francine: good morning. thed blankfein spending last 10 years talking about the financial crisis, what does david solomon want to talk about? keith: probably, not that much about trading if you put this assembly of executives together. lloyd blankfein came up as the gold salesman. it was a trading powerhouse in 2009, 2010. that kind of business is not as profitable as it was during that high water mark. dealmakingion is the that consecutive -- that consumer businesses which stephen sherr had been running

are the future. the next phaseis for growth for goldman sachs? the sherrely, division. there was some gossip that he and david solomon do not get along. it has been so successful, what he has been doing, he had to be rewarded. tom: thank you so much. talking about these smooth guys and the nerds. coming up later today, you know the lehman chat. coming up, the cantor fitzgerald president. 11:00 hour this morning. stay with us worldwide, it is "bloomberg surveillance." ♪

tom: good morning everyone. francine lacqua in london. jph her is robert michael of asset management. united states the economy. we have got to get ready in 12 days for a fed meeting. just a few on interest rates. there is so much noise. turkey this, indian that, where is the tenure yield -- 10 year yield? can you own bonds today for price higher, yield lower? bob: i do not think you can.

there is more room to the upside on the fed funds rate and we are think they're headed another 100 basis points. they're going to ramp up the balance sheet runoff. you'll got the ecb cutting its balance sheet expansion. all of those things have created a lot of buying in the long end of the market and they're going to dissipate as we roll into next year. there you go. we appreciate it. wet i find fascinating is are grinding up but inflation is coming up with it. do you see expansion of the inflation-adjusted yield or do we have stasis? think that has got to be some of the frustration of that and of other central banks where they have been trying to restore real yield to the market.

all they have done is compensate for the increase in inflationary pressures. once they exit the support of the market and quantitative ease converts to quantitative tightening, the long and start to price and more realistic market exploitations. -- expectations. francine: what would that be? the ecb backs out of the market at the start of next see the fullt to impact of a repricing of government bonds. francine: that would bring unintended consequences for emerging markets? bob: i think emerging markets are the ones of that of gone through the painful repricing. it was crowded at the start of the year. it made sense. there is going to be a lot of economic activity out of the u.s. with tax reform and the spending bill and the markets

were going to be the supplier to a lot of them and tariffs have change that. what is being priced in on how much stimulus china to keep the economy where it is now? bob: the markets are pretty that chinad except is doing the kinds of things investors want to see rather than attempt to escalate the tariffs and create a trade war, they are trying to compensate by reducing the pace of deleveraging, by injecting liquidity into the system. for the pro-investor right now, where is the sophisticated spread trade? where is the pro-right now? bob: i will tell you, european

high yields are looking good right now. it generally trades at a credit spread 100 basis points wider than the u.s. high-yield market or 100 basis points through the u.s. high-yield market. there are some reasons for it. the u.s. has been strong. there have been concerns about brexit and italy but corporate's in europe looks strong to us. they are benefiting from a weaker currency, earnings are looking good. it is a shorter duration, higher-quality yield market than the u.s. market. the opportunity is there. tom: what is the issuance, what are corporations doing, what is the action of cfos now? bob: in the u.s., the action had

been to ramp up issuance. they have a lot of financial flexibility. they were looking to buy back shares, raise dividends, by each each other. we are on pace for a record issuance of this year. that seems to of cold as companies have a lot of free cash flow at their disposal. with the benefits of tax reform, that is going to go away. what happens when those taper in 2019? not the benefits do entirely taper away. reductionjoying a 14% in tax rates for the foreseeable future until tax law changes again and that is one of the struggles in corporate america, trying to figure out what to do with that.

they have got a lot of choices. in the meantime, we do not mind extending credit because they look strong. francine: what makes you worry in the currency markets? we saw a lot of volatility. is this going to continue? bob: i do not think so. there has been optimism built into the dollar and we are approaching a point where we should see the growth and interest rate divergence start to cool a bit. we talked the fed may be pausing raising rates nine months from now just as the ecb begins to raise rates and that will be telegraphed to the market. inncine: what does that mean terms of currencies you like? scalingis time to start out of the dollar and the currency market that has been hit the most is the emerging markets.

for a lot of good reasons. it feels a lot of crossover into that tourists market have been washed out of the market now. we have seen traditional structural players reduce their exposure. there is some extraction to the high-yield in currencies. maybe it is a bit early but there are other currencies, like the mexican peso, which looks stable if nafta proceeds. francine: if china is getting worse and they have to stimulate money that in the the past has helped emerging markets with is gone, does that bring a fresh correction? more balanced a economy then everyone gives them credit for. they are not early a manufacturing and export oriented economy where, if they

turn in word, that has an impact more broadly on trade. what you will see is china remain healthy, trying to target -six .5% gdp growth. tom: thank you so much. you can do you what to make things better. you are part of global wall street and you've got terminals. what to do with the graphs? you go to gtv and you conceal our brilliant 2-10 spread. you can pull it over to your screen. do not leave your office without it. stay with us. away. york, the rains ebb this is "bloomberg." ♪

>> this is bloomberg

surveillance. i'm taylor riggs. attorney general jeff sessions has expanded a meeting later this month to discuss complaints against social media companies such as google and facebook. originally, only republican state attorney general's were invited but democrats complained. republicans have accused social media of suppressing conservative voices. it is the end of an era at volkswagen. it is ending worldwide production of its beetle. the last one will roll off the assembly line in mexico next july. demand for the beetle and car's have fallen. last year, bw delivered only 15,000 beatles. global warming is causing problems for farmers who grow coffee for starbucks. emily chang spoke with the ceo, kevin johnson. >> what we're hearing from farmers is, with global warming,

is it as created the manifestation of coffee rust, a disease that gets on the leaves of copy trees. we have worked to create a hybrid rust specific coffee tree that we give to farmers and we work with farmers to develop best practices on how to get the best quality and the best yield. >> that is your bloomberg business brass -- flash. francine: thanks so much. we have been covering the collapse of the lehman brothers. one of our writers worked at lehman at the time. he walks us through what he remembers. >> ima macro strategist at bloomberg. 10 years ago, i was a trader at lehman brothers in london. by late 2007, it became clear we

were heading toward some sort of financial crisis. thinknaive enough to lehman brothers was one of the safer banks. searched a full-time job out of the university and i enjoyed it. the atmosphere was good. in the summer of 2008, there started to become this idea that the reality was different to what management were presenting and the situation was dire. on friday the 12th, i was flying to budapest for a work conference. there were other jr. salespeople and traders there and i remember assuring them, it is fine. thatorst-case scenario is we get taken over by bank of america. monday,s no idea that we have no employer and no way out. on sunday, i flew to istanbul and we arrive in and i saw the

tv screens of that lehman brothers had filed for bankruptcy. i turned on my blackberry and i had got all of these messages from new york, going, it has been great working with you. i think i've just lost my job. leaving was not my choice. i thought there was no chance it would be allowed to fold and after that, i became more cynical about the financial system. i never got back into the office again after september 12. it was a colleague who had to bring a box of my collections out for me. i never got to do that. history does not repeat. do i think we are to get another bank going down? no, regulators are too focused on that. will we get another financial crisis? yes.

people did not believe another crisis could come. it is like in 1929 and people did not understand the downside. as long as humans dominates a theycial system, which still do, we will get financial crisis. cudmore: that was marc recounting his experiences working at lehman brothers. life after lehman brothers continues this weekend. bob michael at jp asset management is still with us. at the time, we could have seen the vulnerabilities in the market better. peoplere any now that are ignoring that we should worry about? bob: it is not in the banking system. the banks have been forced to build up reserves and capital bases and invest them in government bonds. ked by a considerable

margin. you have to look at where is that extension of credit growing and what we have seen is growth in private credit, private financing of all sorts. the bank lending and the bank financing that existed precrisis has migrated into private markets. you have to keep an eye on that. francine: do you worry about shadow banking? bob: to some extent. i'm not sure that is the issue this time. tom: thank you so much. greatly appreciate that. a great perspective to get us going on friday with this gap between the united states markets and what we are seeing elsewhere. equity shakeups at deutsche bank. nothing new there. a bunch of other changes that we

will jump into in a bit. it does not end at deutsche bank, does it? francine: it does not. withg up next, we speak jean-yves fillion on b.n.p. paribas, he will have a few things to say about the lehman crisis. tom: looking forward to that. the hurricane we're looking at. we are down to a category 1. wilmington -- of off wilmington, north carolina. it is stable, which means flooding and rain. this is "bloomberg." ♪

francine: -- tom: this morning, quiet markets. 12 days until a fed rate

increase. this hour, we consider chairman powell alone and the affect of higher rates on american and he you banking. -- e.u. banking. mr. at one busy hugging babies. can avert just mr. erdogan busy hugging babies. mr. of busy hugging babies. hurricane florence will drench the carolinas. this is bloomberg surveillance. in new york, i'm tom keene. in london, francine lacqua. i'm studying up for the fed but i'm getting over what we saw from mr. draghi yesterday. he tried to manage the message forward. francine: he did. he gave a stark warning to , you need to respect those budget rules.

there are three things going on in my region. is is the ecb, the second president erdogan of turkey saying his patience on central banking has limits. ado not know if that is message. governor carney warning that rates may rise up we get a hard brexit. tom: we go with our first word news. hurricanearting with florence, on the verge of tearing into the carolina coast. the hurricane center says florence is about to make landfall in wilmington, north carolina. the storm has been downgraded to a category 1 with top winds are at 90 miles per hour. it is the life-threatening storm surge which has authorities worried. the wall of water could reach 11 feet high. up to 40 inches of rain will cause flooding throughout the carolinas. coming up, we will discuss florence's impact on power companies. we will speak with duke energy

president david fountain. that is at 8:10 new york time. in the philippines, the government said more than 800,000 people may have to be evacuated when a super typhoon makes landfall. the storm is taking aim at the country's main island. it is forecast to reach maximum of 173 miles per hour. hong kong is bracing for the storm sunday. near boston, more than three dozen natural gas explosions killed one person and injured at least 10. the explosions damaged homes in andover and north andover, massachusetts. the natural gas network is operated by newsource. last spring, the utility asked for a rate hike to replace aging infrastructure. in china, state media has warned against expecting a quick resolution to that trade dispute with the u.s.

the president tweeted he is under no pressure to make a deal with china and that has led to concern he is not serious about a new round of talks. 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." tom: thanks so much. bonds, currencies, commodities, interesting nuances. basiscurve, down to a 20 point. , 116, 170. the vic showing a better equity tone, 1.19. the yen weaker, the euro stronger. ganker off of the erdo comments. the turkish lira stronger. up, ane: equity futures

lot of the trade talk will focus on whether we get some kind of scaling back or resolution. yesterday, we had positive sentiment because of turkey's action to support its currency. we still have the positive moves but i wonder whether the dogan willrom er weaken that. we have been speaking with key figures all week about the historic lehman meltdown and today, we spoke about how vulnerable we are now compared to a decade ago. >> thanks today are safer than they were then. today are safer than they were them. we need to put in place a system in which banks have to provide security and advance. we do not have a european

deposit insurance team which would be an important element of a banking unit. >> when banks are selling at half of their book value or less , that is telling you something about the health of those institutions. inn we do not recognize that assessing their soundness, i think we make a serious mistake. in debt crisis will not just be debt, it will be pension obligations, unfunded obligations. >> we are doing a better job of monitoring but we have a much bigger play into the commercial banking sector. >> a lot has been done to reinforce resilience but that does not suggest that if we had , we would notck have confusion. issue was how can

we be sure we never again have to put public money into banks or other institutions? tom: you heard there this week from jean-claude trichet. if you are in paris, you have to send someone to america. sent jean-yves fillion will. . he commanded the bnp paribas flagship in america. we are thrilled to have you here. much to talk about in the hour. what was the lesson you learned from lehman brothers? jean-yves: it is a pleasure to

be here. not allt lesson was crises are predictable. world got caught by surprise even though signals were there. the second dimension we learned was i do not think we had assessed the inter-conductivity -- interconnectivity between countries in the world. they are interconnected. believe the world today is so different than 10 years ago. the banking industry specifically, is more capitalize, more liquid. i think the steps here in the united states have provided improvements as well as all the work having been done around

resolution planning. i am saying it is a different governance. tom: set this up for american audiences. france, with a huge european platform, but a early vision to asia as well. lehman was opportunistic and trying to get up front. your bank is the opposite. banks worry that in other , we are seeing too much opportunistic tone that could get them into trouble? jean-yves: it is an excellent point. aboutnot only about size, business model, it is about risk management and risk appetite. the banking industry as a whole has made progress. as it relates to bnp paribas,

what has worked well is diversification, in terms of geographical diversification, europe, a european leader but diversification as well in terms of product mix and activity. i go to our platform here in the united states, it is diversified. wholesale.ail, we have 2.5 million clients. we do lending, consumer finance. wholesale is based in new york where it -- new york. we have 16,000 people. tom: i did not know that. francine: talk to me about whether the french bank differ to the american spirit do you speak to your customer

differently? 16,000 people in the united states, this is a larger location for the bank after france. in terms of speaking to clients , one of our different selling factors here is we can serve clients domestically as well as any other banks in the product suites we have. when it comes to outside the united states, this is where we can add more contributions to the client base here. to your point, based in london, you see that, we have been active in taking european

clients into the u.s. market, leveraging our distribution capabilities, particularly in the united states and the ability to raise u.s. capitol euro on the other side of the atlantic while the transatlantic flow and dynamic have been active. francine: how will finance change over the next 10 years? is it digitalization? is it the way we work or is it the way banks lend to each other? jean-yves: looking forward? francine: in the next 10 years, how will finance change? jean-yves: i love the question. i feel one year is long-term. here isre of banking around serving clients. it is around other dimensions

that we do not speak enough. the first dimension is , artificial intelligence. done,eve technology, if a is going to provide a safer world to serve clients more efficiently. it is happening but this is part of the future. there is another dimension which is connected to what you do here at bloomberg, sustainability. the banking industry has a real role to play in this field to support the planet and the future of the planet better and to be closer to client value. tom: i was in paris with plan seen for the paris agreement -- with francine for the paris agreement and the owner of bloomberg was part of that agreement.

does the agreement still stand even if president trump says no? jean-yves: i believe the agreement stands more than ever. days, there is going to be a sustainability week. michael bloomberg is going to be active. my ceo will be in new york. you love statistics and metrics. if you look at the world today, you have over $22 trillion of savings in the u.s. every year. to reach the united nations, you trillion to $7 trillion a year to reach the goal. paribas, has been one of the first global financial institutions to commit to provide over $10 billion of

financing link to sustainability by 2025. tom: lots to talk about. we are going to come back. westin in conversation with a gentleman from massachusetts, john kerry, the former secretary of state. stay with us. this is "bloomberg." ♪

taylor: this is bloomberg surveillance. i'm taylor riggs.

ago,tle more than a week people were talking about boycotting nike because of that ad featuring colin kaepernick. shares have hit an all-time high and it may be months before the business impact of the ad can be measured. early data showed nike sales tracking above last year. it is one giant leap for commercializing space travel. elon musk's rocket company has signed up its first passenger for a flight around the moon. spacex will reveal the identity on monday. musk did post an emoji of a japanese flag. no word how much the ticket costs. former vice president outboard says sustainability is not just good for the planet, it is good for business. revolution is the largest investing opportunity and the

set of business opportunities in history. and, you canweek watch all of bloomberg businessweek debriefed, a ore,ersation with al g saturday, september 22 on bloomberg tv. the founder of british pub operator jd weatherspoon says he would rather have a no deal brexit. bloomberg spoke to tim martin. andf we do not have a deal we embrace free trade like new zealand, australia, switzerland and prices will go down in the shops. we can avoid paying 600 pounds per person to the e.u. as a divorce gift. we can have control of our fishing areas. i think we will be in a stronger position on a free trade basis, which some people call a no deal. that is your bloomberg business flash. tom: very good. a headline right now on florence. a category one

storm, with the wind coming down. there is substantial rain and enough wind to buffett power lines. 300,000 people losing power. a little bit of the friday morning angst across the carolinas. francine: according to other media outlets, 200,000 people are without power currently in north carolina. we will keep an i on what is happening. has raked gains after president erdogan resumed his criticism of the central bank. the comments came a day after it announced its biggest rate hike of its role. hour, a russian rate decision. they forecast no policy change. ,ith us now is nick bennenbroek wells fargo securities. with us still is jean-yves fillion of bnp paribas.

talk to me about turkey. what do you make of the comments this morning? mean he has limits of patients that he is going to revoke their independence -- of patience that he is going to revoke their independence, right? nick: the question is, how long can the central bank continue to maintain low interest rates and what other policies will be prime minister implement? that is the concern. goodinterest rates are not for the economy in general and how involved will be prime minister get? you can have growth but if growth means the market is not confident anymore, you are going to be worse off.

will the president get it? nick: there seems to be issues over the policy. they sanctions between the u.s. and turkey -- the sanctions between the u.s. and turkey and there have always been not market friendly types of policies. for the current account deficit and the need for continued financing, we would say the lira continues to weaken. fx: you took a trophy for market guessing. i need to make some money into october. where is the opportunity in this? the opportunity is looking at currencies of the likes of the brazilian real and the south african rand.

the trouble currencies are argentina. high interest rate so they are difficult to sell, costly to short. if you look at currencies like south africa and brazil, the interest rates are lower. they are easier to short while we have trade tensions and you have elections coming up. there is potential for the downside in the near term. tom: fx is critical to your operation. within this, there is foreign-exchange, is a hedging function for businesses. a lot of our viewers to not realize it is not about the speculation. it is about businesses getting through transactions. are those upset by all of this em upset? is more conventional hedging difficult to do now?

hedging is client facing and client driven. if you see with the geopolitical but around thee world, the bank has been more active in entering into dialogues with clients, being one of the largest derivative houses in the world. cross hedging protection. volatility is heightened. i think we do not spend enough time on this and we are always talking about, where can ? make big figures on yen part of it is businesses trying not to lose money. francine: it is a good point. should we worry about liquidity in the markets? nick: i do not think so. if there was any worry about liquidity, it was dollars

liquidity. if you're looking at the other major central banks, they have large central bank balance sheets. the adjustment we are seeing from the federal reserve is gradual. i believe the concerns we are seeing in emerging markets are related to trade tensions, u.s.-china, the federal reserve adjustment is not helpful but it is not going to be the cause of a collapse across emerging markets. francine: do you worry about the way the markets function? is that a legacy of what we saw with lehman brothers? it is a legacy of what happened 10 years ago. the way markets are functioning today, it is more regulated, more controlled. the pace and speed at which information has been conveyed varies as well and we are with

more reliable data. tom: do you look at reliable data when you anticipate remnimbi? follow the statistics. there are varying opinions on the quality of those data but they give us a guide and some numbers out today, new figures for the month are stronger. other banks can do their own analyses and indicators. what is your euro call? the next 3-6for months but over time, stronger. so you can stay another 33 years in america. jean-yves: i look forward to a. we have a similar view.

-- forward to it. we have a similar view. the dollar is strong because of the economy here. the ecb is still providing stimulus but if things keep going the same way, they might taper off. the geopolitical risk we just mentioned, if it will fade out, the euro might strengthen. tom: francine? francine: we will come back and speak to the chief executive of investec. he is stephen: saif, the chief executive of the group -- stephen koseff, the chief executive of the group. this is "bloomberg." ♪ xfinity mobile is a new wireless network

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included with your internet. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. francine: this is "bloomberg surveillance." shares in investec jumping as much as 13% after the firm announced plans to spin off its

asset management business. a review founder was little synergy between the divisions. joining us now is the chief executive officer, mr. stephen koseff. why is now a good time to do this? just, i step down on the first of october. our designate came in on the first of april. we had looked at a number of strategic alternatives over the past year and the board decided this was the alternative that made the most sense. the asset management business has a different base to the wealth manager. we believe, we built this business from 1991.

we manage 109 billion pounds today. we felt it was time to let it fly. francine: i just need to bring everyone up to date with breaking news from the russian central bank. it has raised its key rate to 7.25%. i think it is moving on the back. it is an emerging market story, a turkey story. overall, scale is important in .hese kinds of businesses how big are you expecting the asset management to be and will it be through acquisitions? stephen: they have never made acquisitions. the story has been organic. we made one or two small acquisitions in early days. a separate listing will give them an opportunity to play as a

consolidator if appropriate. up to now, that business has been built organically. tom: what is interesting is the crisis in hand on fees. you sought out of fidelity. and are bringing in richards out of london to straighten out fidelity international. are you setting up your asset management division for sale? no, we are listing it and de-merging it. with your new ceo, are you going to have a shift in the passive-active management mix? no, active management is an active manager. s. does not do passive francine: do you expect more

consolidation and what will the asset management need? change, i am sure this there will be some form of consolidation. once it is listed independently, it will look at opportunities that suit its strategy. been anally, it has organic story. francine: what worries you about the de-merger? is there one thing you will keep in mind to make sure it is as smooth as possible? stephen: we have a group to run. and to make sure our people are motivated and are focusing on clients. why i will stay in a role in the group to assist. it is a more technical process. all the regulatory approvals,

compliance approvals. it is a technical process. it is not dependent on market conditions. we are not raising capital. francine: thank you so much. he is the investec chief executive officer. an important day, shares are rising 12%. in the last couple of minutes, we heard from the bank of russia it was going to raise interest rates. unexpected by most economists. one of 42 economists predicted the basis point increases. one other one forecast 50 basis point increase. 67.9986.ee it at of: i took a snapshot dollar-ruble. four days in a row of ruble

strength. we have got nick bennenbroek here. we do not have the move we saw yesterday from turkey. we look at the move which has been hurricane florence. we are thrilled to bring you our bloomberg meteorologists rob carolan. what is the distinctive feature of florence in the last six hours? western eyewall is affecting the wilmington, north carolina area. they had a gust of 91 miles per hour. it is making landfall east of the wilmington area. a linzie: intake beach, which is a barrier island -- atlantic beach, which is a bear island, has had over 22 inches of rain and a storm surge of 10 feet has inundated a city. they are trying to rescue people

trapped by rising floodwaters. tom: as a hurricane hits land, it goes right or left. which way is it going to go? is washington threatened? what is threatened is myrtle beach. it is going to be affected by high pressure. is going to nudge the is goingm off to the west-southwest, moving slowly, five to six miles per hour. it is going to put down about 25 to 30 inches of rain throughout eastern north carolina. forward to speaking with you on bloomberg radio. up as well, on the commercial aspect of this hurricane, david fountain of duke energy. we have got much more to talk onut with jean-yves fillion

of bnp paribas. also with us is nick bennenbroek. , it is a frontier economy, to you it is a right?ty of economy, nick: the fact that you've got oil prices up is helpful to the russian economy. tom: with bnp paribas, other moscowave done more, is a place where it wants to project or do you just look to asia? has-yves: i think the bank tried to position itself strategically in europe. france, belgium, italy we own some of the largest banks

there. we have continued to run a business model diversified across the region's and the americas happens to be one of them. francine: very quickly, when you look at the way the u.s. economy is performing, is there anything that worries you? we talk about the fiscal stimulus coming in late cycle. from the indicators you are seeing, is it going to be smooth? stronges: this is still and we're looking at it from a inflation. the question is, have we gone through a full cycle? , ifhe meantime, i believe we look back 10 years ago, thelators are in charge, fed is hiking regularly and

systematically which provides control. is trying tohis figure out what to do with em currencies. -- do youyour model change or model or is it business as usual as you try to frame opportunities? nick: to some extent, it is business as usual. the major currencies are still quite calm. tom: is that normal? nick: by recent standards. what is unusual is the volatility in the emerging world compared to the calm in the developed world. do we change our strategy? that is difficult because it depends on these trade tensions. it does not seem as if the u.s.-canada in terms of nafta

will be resolved for quite some time. u.s.-china trade tensions keep going up and up. we've got to come back and talk with jean-yves fillion on about banking. nick bennenbroek from wells fargo. let me look at ruble, a stronger through 68.ing russia surprises, raise rates. stay with us, worldwide. this is "bloomberg." ♪

carney,francine: mark the governor of the bank of england addressing the irish central bank. this comes on the back of explosive comments that he said yesterday. he was saying that if there was , that out out of the e.u. would lead to prices crashing by 35%. today, in a speech where he is focusing on the work in dublin, he used it to underscore his message that the central bank be prepared for all scenarios. while much of the speech focusing on structural changes in the irish economy prompted by changes in the workforce, he is talking about brexit and the

fact that brexit will present a more immediate challenge but they are prepared. for our terminal users, do not forget you can follow all of mark carney's speech, just press . liv tom: if you care about global banking and you understand the divergence between e.u. banking and u.s. banking. this is the conversation of the day. nick bennenbroek joins us and f bnpyves fillion o paribas. i do not think anybody understands this translation of banking like you. you are not lost in translation.

banks help dominate global banking as the american banks dominate now? jean-yves: i believe they can. we have differences in terms of landscape. europe, u.s.. countries andl 27 and to have ad more unified framework has taken some years. at times, mirroring what the fed has done here. european banking, u.s. banking, , themarket in the u.s. funding to corporate's is only 20%. in europe, it is the other way around, the funding is coming

from the bank, 80%. ,s europe works on trading more i believe it will have the other banking sector. tom: you have spent real time working on the cultural niceties of mergers in banks. is that the impediment to a better european bank, is mergers cannot happen because of culture? jean-yves: culture is a factor. it is broader than this. successful mergers are not only link to culture. their link to the rationale behind the client strategy -- they are linked to the rational behind the client strategy and their linked to reflecting on for any institution in terms of geographical distribution.

francine: why do we have so many banks across the world? world is: across the one thing. across europe, we have a significant number of countries they are. is not the only dimension the matters. aspect buton is one if it becomes too big to be managed, it does not have by you going forward. -- have value going for. our is successful with model is we have been opportunistic and client centered in significant moves we have made over the last few years. on motto has been based organic force and around client services and how can we be

complementary and a large u.s. firms in this country. -- and enlarge u.s. firms in this country. we drive for this lehman conversation, we look forward as well. -- board this lehman conversation, we look forward as well. weekend, the former ceo of lehman. look for that this weekend.

tom: bloomberg surveillance, international today. francine lacqua and tom keene. let's go to kevin cirilli, with us after the democratic primaries. there is no election in new york state. will it be president cuomo? kevin: this is framed as the resistance candidate against cynthia next and. -- cynthia nixon. he had a solid margin of victory. this was a win for him.

times" called the issue of him blasting her for support of israel was sleazy. it got dirty at the end but he defeated her. francine: what is the level of angst about how they will deal with hurricane florence? will that determine the popularity of the president as we go into the midterms? then: if this hurricane wax thelinas -- whacks carolinas, would there be an appetite to have more funds allocated to the emergency fund? she said, yes. we typically see there is some divide within the republican party to have more funds for disasters. this is a huge task for president trump aired -- test for president trump. can he usher this in?

massive challenge for this administration to make sure this goes seamless. tom: thank you so much. we look forward to a link they are conversation come monday. -- to a lengthier conversation come monday. fillion.s jean-yves let us look at the single best chart, the allegheny -- the agony of france. this is logged per capita gdp in france and the miracle of the 70's through 2000. france get back onto the growth trajectory and compete with germany? jean-yves: i have been living most of my life in the united states.

thank you for connecting me with my home country. i believe that france, in terms of the economy, is on the right track. a lot of things are happening there in terms of reforming and getting into the new age. the critical point you mentioned and it is related to france and eurozone, the strong relationship between france and germany is critical. i think it is taking place and it is going to be required to continue to push expansion and economic health over there. tom: i would suggest france's developing quality products but they need a productivity boost. you see productivity a touch more anglo in the future? jean-yves: france has

strengthened. in the space of electronic fixation, automation infrastructure, it is a country that has always been well advanced and has kept its edge. i do see it happening and i believe we can be optimistic here. you just caught my attention saying automation. how automated do think the financial sector will be? -- do you think the financial sector will be? jean-yves: it is happening. the keye of developments you have seen in the banking industry. faster service to clients, more reliability. it is connected to what the ,egulators want and eventually it is going to provide a safer,

more secure processing systems. tom: thank you so much. francine and i look forward to our remote with you about the fourth week of july, this year. we can figure out how to do that. we need francine to look at this hurricane. 300,000 now without power. forget about the hysteria of category 3, category 4, category 5. all you need to know is most damage in hurricanes is water and this is the hurricane of water. one town already with 20 inches of rain. good morning. ♪

alix: carney's warning. mark raises the boe will hike

rates on a note brexit deal. turkey raises rates along with russia, giving the ruble some much-needed help. florence, the worst is yet to come. hurricane florence downgraded to category 1, the landfall is imminent. david: welcome to bloomberg daybreak. we have hurricane florence hitting about cape fear in the southern part of north carolina. it has not made landfall yet. once it drop more rain hits land. millions of people without power. we are speaking with the president of duke energy coming up. we will see how they are dealing