nejra: good morning from bloomberg's european headquarters. live in the studio, this is "bloomberg daybreak: europe." nejra: onwards and upwards. the federal reserve raises rates. pres. trump: basically i'm a low interest rates person. manus: an exclusive to bloomberg. emmanuel macron says he would welcome the u.k. back to the eu with open arms. >> are very special relationship for france and the u.k. italy tested. the city dell ceo says eu debt

is his biggest worry. >> i would say is there a question we are more concerned about, it is a crisis in continental europe where because of the nature of the euro and the inability of countries to print their own currency, there can be a crisis which is too big for government as we think of it to solve. that is frightening. manus: welcome to the show. president trump making a lot of comments. we just heard the reaction to the fed. the was president accused beijing of interfering with 2018 midterm elections in retaliation for the bilateral trade war. >> earlier today and just now

you made allegations against the chinese government. you suggest the chinese are meddling in -- pres. trump: that's what i hear. >> what evidence do you have? pres. trump: i cannot tell you now, but it did not come out of nowhere. they have actually admitted they are going after farmers. nejra: bloomberg's senior international editor jodi schneider joins us from hong kong. good to see you. president trump had a lot to say in his news conference. how did china respond? doesn't have implications for the trade war? saidesident trump president xi in china is no longer his friend after president trump made the comment about china meddling in the 2018 election. three days earlier there had been an advertising supplement in the largest newspaper in iowa

basically criticizing the trade war's. iowa is the place where they grow soybeans. those have been affected by tariffs. on -- another point president made, he criticized the fed, led by the chairman he nominated, basically saying they keep raising interest rates and he does not like that. he also defended brett kavanaugh, the supreme court nominee who will testify tomorrow along with an accuser, a woman who accuses him of sexual misconduct three decades ago. he is standing by that, the democrats have been engaging in a con job to discredit judge kavanaugh. it was a wide whingeing -- wide ranging press conference, went around the world and domestic politics as well. nejra: thank you so much. now let's go around the world

with the markets. if you are just waking up you might know the u.s. session closed early yesterday. most action happened in the last 20 minutes of trading. the msci asia-pacific index was lower earlier. we are around the flat line. a mixed picture below the surface. the markets are all about the fed. the dot plot not changing for 2019. we see the twos and tends flattening. yesterday's session hit 22 basis points. morgan stanley says traders are mispricing the fed at both ends of the curve. we are seeing oil of more than 1%. brent crude is above $82 a barrel after we hear from the u.s. government that they are not looking to tap the strategic petroleum reserve. we get strengthen crude oil despite the fact we have allies -- a rise in inventories. manus: more about that shortly. a couple of lines coming through

on italy. you saw the btp's yesterday. it is all about the budget. hasitalian government postponed the meeting over the 2019 budget plan according to the press report. the league is said to join five-star in seeking a 2.4% deficit. two markets for you on the italian. in thee to be around 1990's to understand who alan greenspan was. the question and the market will debate this is how much of a maestro is jay powell. he has decided to go for the eighth rate hike in this cycle since 2015. look at the backdrop to which he has done it. these are the financial conditions, stocks, bonds, and money markets. you're looking at financial conditions being the latest and most accommodative since 2007. they are raising rates, but they are doing it into the backdrop

of easy money. where is the neutral rate? that is the question. the equity markets managed to resurrect themselves. nejra: a little bit. we are flat on s&p and dow futures. nothing too exciting happening. we have an exciting interview to look forward to. manus: we're going to talk about markets, about the recent changes in this institution. sergio ermotti will join me. 7:00 a.m. 7:15 a.m., i should say. let's get your bloomberg first word news. the u.s. federal reserve has raised interest rates for the third time this year and singled that more hikes will come. jerome powell's of the american economy is a, but acknowledged that challenges remain -- jerome powell said the american economy

is strong, but acknowledged that challenges remain. property prices skyrocketing. a london-based bank boosted its best lending rate just hours after the hong kong monetary authority raised its benchmark interest rates by 25 basis points in line with the fed. u.s. supreme court nominee brett kavanaugh has been accused of the most lurid sexual misconduct yet as senate republicans press ahead with lance to hold a hearing. part accuser says he was of efforts to get girls intoxicated so that boys could have sex with them. kavanaugh rejected the claim as ridiculous. at the same time, president trump dismissed the allegations as a big, fat con job. south africa's president has said his administration will pursue plans to redistribute land to the country's black majority. in an close of interview, cyril

ramaphosa said he is considering whether a constitutional amendment is necessary to make it easier to -- property without compensation. >> what we are looking to do is balance that equation and make sure the land in our country is shared by all south africans who lived there. that is an inclusive process that seeks to have an outcome that will lead to social cohesion, that will remove the threat and the risk of instability, so we are managing risk. juliette: in the u.k., an investigative journalist organization says it has identified one of the alleged hitman said to have targeted sergei skripal. he is wanted in connection with the nerve agent, understood to be a decorated colonel in

russian intelligence given the countries highest award by vladimir putin. 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 . here in asia, markets mixed. tending to the lower side in late trade. the fed hike very much priced in. we are awaiting interest-rate decisions from the bank of the philippines and bank indonesia. most of the major markets now tracking lower. hang seng off by 0.4%. hsbc has lifted its lending break in hong kong. we have of the stocks been watching, indian consumer stocks getting a boost after investors are viewing a government move to raise import taxes as beneficial to companies bottom lines. you have seen health care stock in hong kong suspended trade. before pairing to

that 27% drop. that has liked a billion dollars off the company's market cap on the back of it anonymous report coming through from a research group on chinese state media. in singapore you are seeing telcos fall. this is on a takeover offer from one of the rivals coming through. rising the most since 2009. manus: thank you very much. let's get back to our top story. jerome powell gave an upbeat assessment of the economy. >> our economy is strong. growth is running at a healthy clip. unemployment is low. the number of people working is rising steadily. wages are up. inflation is low and stable. all of these are good signs. that is not to say everything is perfect. the benefits of a strong economy have not reached all americans. manus: that was jerome powell.

cio fort host is the international fixed income, j.p. morgan asset management. they have raised the eighth time. , started the show with this the financial conditions easiest since 2008. i get the sense this is a fed who could be doing more aggressive hiking the market currently anticipates. >> absolutely correct. the key when you look at the economy is look at financial conditions. interest rates are one component. the other is the dollar and the equity market. when you look at financial conditions, they are still loose. the fed can be a lot more aggressive than markets are currently anticipating. morgan stanley reinforcing their recommendation for a flattening u.s. yield curve, saying the market is mispricing the fed at both ends of the curve. are we going to see more flattening? >> probably not.

probably the opposite. the big driver of the back end of the curve is inflation. inflation is likely to go up for two reasons. you heard jay powell. growth is on fire. that is inflationary. the other, oil prices. when you think of the impact of oil prices, they lead straight into higher inflation. that pushes 10 year yields much higher. manus: we will hear more. if trump has anything to do with it, it might be -- if we're going to see a turnaround in the curve, take us through that. where did tens go to? rise, we a december certainly get a number -- another couple in march and june next year. the pivot point is the 10 year

past. years, noook at 10 reason it can't be 3.5% by the end of this year. nejra: given what you have said, the markets might be underpricing how fast and how many rate hikes we get, should we be reading more into the removal of accommodative being suggested in the commentary and jay powell's press conference? >> absolutely. accommodative was a way of doing forward guidance. that was the part of the fed statement this time. effectively they have dropped this idea of forward guidance. saying rates are going to be low for a long. of time -- a long period of time. it means the fed our data dependent and data is good. nejra: why does it matter they dropped it when they are not agreed on where neutral is? >> let's see where neutral is. there is a whole academic debate. i think it makes them very figure dependent. you could argue they have been very slow in raising rates

giving -- given the strength of the economy. can i circle back to the point you made, which is 3.5% by the end of the year? i think the bloomberg print team should be printing that. you also talk about inflation. the personal consumption expectation for 2019, they have shaved it back to 2.1. is the fed underestimating the inflation trajectory? that is being reduced to what you are saying. >> it is, that is core inflation. manus: that is what they look at. >> it is nonsense. you think of us walking us consumers in an economy, we are affected by headline inflation. the average american is impacted by -- the reality is that a fair bit higher. nejra: let's bring one more person to the conversation and hear from the citadel ceo. >> the economy is running hot right now.

the trump policies, whether deregulation or tax reform, certainly pushing corporate termsa to go, go, go in of new plant and equipment, hiring people and so on. months another 18 to 24 minimum in this cycle just on the bath -- just on the back of the adrenaline rush. nejra: should the fed be taking more advantage of the fact that we have 18 to 24 months minimum in the cycle? >> very much so. if you think of how long the fed will be raising rates, the risk is they do more, not less in the cycle. manus: the other thing i wanted to ask you about is the differentials in treasuries to bunds. in the dollar to other currencies. the euro-dollar is dropping. 0.2% on the italian budget news. the trajectory for the differential in terms of bund

treasury, that's right want to call. >> that is at an all-time wide. the risk is the ecb are more assertive. that differential should start to narrow as the market starts to price in ecb rate hikes. the market is not pricing until this time next year. manus: thanks very much. cio for international fixed income. take a look at the bottom of your screen. euro-dollar dropping. this goes back to the discussion over the italian budget. down she goes, 0.2%. the dollar is a stronger this morning. we are dropping as much on the italian budget news that the league could go with five-star with regard to a deficit. offa: btp shrugged yesterday. we will see how they move on the market opens. i will leave you, i am

off on the tube to catch up with this man, sergio ermotti. a slight change in personnel at the bank. nejra: coming up, emmanuel macron says he would welcome britain back if voters change their mind. we will bring you that exclusive interview. this is bloomberg. ♪

>> investing in post-brexit britain will give you -- you will access financial services and be the envy of the world. some of the best universities in

the world. strong institutions. a sound approach to public finance. a consistent and dependable approach to high standards and intelligent regulation. nejra: that was theresa may speaking about a post-brexit u.k. at the bloomberg global business forum in new york. said he wouldn welcome the u.k. back to the eu should it decide to stay in a second referendum. ofi do respect the choice the british voters. i do not want to engender debate about the second referendum. i am respectful. i did regret the boat for the rest of europe and are very special relationship for france and the u.k. i think in the short-term what we have to do is have a discussion following the lines

of the existing referendum with a backstop for ireland and to into the nextway phases by respecting the european union. >> reform within europe, you have been a voice for a liberal europe. an open europe. an integrated europe. you have people in hungry, in italy, less integration, less liberal. how do you take that battle for europe? >> by recognizing the fear. they are playing with the fear. i do not believe in the globalization without any protection for workers. -- ouron't think we can

weakness and the deep needs of our people by closing borders and resorting to nationalism. i think this is a big mistake. the old to vote against the creed you believe in. does that worry you? >> no. when you think of brexit, the decision you are making, is valid. -- those oldause borders, it is good for you to leave. everything right after they did not want to implement. when you look at the reality, it costs a lot. it is more complicated than initially. it is when you are a retired

person, when you are beyond 60, obviously you want to live a quiet life. obviously you deserve it. but you think about euro and children. -- your own children. i do not believe in such a separation. >> when you were here last year, your opinion polls work skyhigh. now they are lower. does that give you worries? >> no, i do not have any midterm elections. that was emmanuel macron at the one planet summit in new york. let's talk brexit with the cio for international fixed income at jp morgan asset management. are we going to see any progress in negotiations before the conference? >> when you look at the history of any negotiation with europe, the reality is these things go to the wire. ultimately, you are looking probably at something, it is not

january before we get something more concrete. theresa may has got to get through the tory party conference, these other things. the reality is it goes to the wire. nejra: jpmorgan has turned bullish on guilt. that 10-year gilts yield risen to the highest since february. why the bullishness? >> it is the brexit insurance policy. also if you think in terms of where the surprise can come from central banks is much more -- other central banks are doing the heavy lifting in terms of the fed. the other central bank that could be more assertive is the ecb. nejra: how does that feed through into euro sterling? >> sterling is the tricky one. sterling is your ultimate brexit lightning rod. the reality is sterling has been remarkably stable. if you look at eurosterling, it starts out very roughly despite

the political noise. it will stay there until the end of the year. nejra: you said we could expect steepening in the yield curve in the u.s.. how are you positioning around the gilt curve? is at the front end? what is your thinking? >> have not got many positions in the gilt curve. ultimately, guilt may rally a little. it will be backend driven. we're talking basis points. it is unlikely to have a big news in the short run. >> will be uncertainty play out much more in cable? is that what you are expecting rather than any big moves for volatility? >> it should do. when you look at cable, there is no reason it could not be 135, something like that, on more positive brexit news. that is -- has absolutely been the lightning rod and continues to be. nejra: cable is the lightning rod.

for international fixed income a jpmorgan stays with us. the prime minister of the netherlands has told bloomberg a u.k. and eu have four to six weeks to bring it back together in negotiations. he also says mainstream politicians should not be afraid of populists. >> how are things going? >> we had a difficult week last week. somehow we are going to go for the next. the european union and theresa may, we have another gauge. we have to bring it back together. >> did the new leader humiliate theresa may? >> we did not. everyone on the european side wants a strong relationship with the united kingdom after brexit.

have a relationship with 65 million people in the u.k. the position of having to bring together those positions. the netherlands is a key liberal ally. protection.no real they do work together. this important france and germany work together for european nations. [inaudible] where also bowling relationships asian countries, the baltics, with ireland. each of these partners is important to us so that our interests are not just in the axis. we have our own allies. >> i hear the netherlands is the

country most prepared to do with brexit. is that true? -- to deal with brexit? is that true? >> i do not know. it takes time to find the right people to train them. not everything will be ready by the end of march. it will be ready enough to deal with a hard brexit. be as limited as possible. there will be an impact also on the economy of ireland, the coastal provinces, belgium. how much do you worry about populism? >> all politicians should be populists. the wrong side of populism are the ones were saying that everything is awful, and not coming up with answers. centerleft politicians, we

should realize that we have only one task. keeping us safe and keeping the economy going. providing suggestions and implementing them to do that. the general population will see they are delivering on key issues for the population. nejra: that was the dutch prime minister speaking to bloomberg. europe, italy's government may postpone its meeting to decide on 2019 budget targets. this is due to complications and reaching an agreement on the deficit. it comes as coalition partners seek to agree on a fiscal framework that will determine how much money they need to spend on expense promises majoring the election. addressedion was a -- at the bloomberg global business farm. is to interest of italy

be a core eurozone member and stick to the rules that are common. [inaudible] it is through europe that they can make the reforms give them a better accommodate -- economy and enhance productivity. nejra: that was the eu commissioner. from our the thoughts guest. what was interesting yesterday is that markets almost called luigi tomorrow's bluff. he is prepared to withdraw support from the budget of his demands aren't met. we saw yields move lower. now that we have heard of this potential delay to the presentation of this budget, could we see more of a reaction? >> maybe. fairlyve been verily -- volatile this year already.

the broader trend, it is likely to be narrower spreads. what markets are really focused on is exactly what that deficit number is going to be. the devil there will be in the details. nejra: what number will satisfy markets, if there is a specific number? , it has to be under 3%. current deficit is -4.6. who knows? something like that seems to be the kind of number that is likely to succeed. nejra: about 2% would not necessarily rattle markets? >> this a european context here as well. i look at the latest french deficit, -2.8%. granted, it has less definitely. 3% is clearly the absolute ceiling. it probably depends on the makeup of that number as well as the absolute number. of the btbve a chart

bund sprint. it is what we like to look at again and again. to 200?see this going >> absolutely. when you look at only, there's a lot that's very rife with the italian economy. it is growing again. the deficit will be under 3%. a country with a surplus. a lot is going right for italy, given the yield. nejra: this is one of the things, one of the risk points of the market towards the end of the year. once this gets settled and not, where does the focus turned to in europe? >> the ecb. by then it will have stopped quantitative easing. the market focus will be when the ecb can raise rates and the big risk is they pull forward

that rate increase. nejra: is that a realistic risk? >> absolutely. if you look at the underlying project three -- trajectory, absolutely. it's inappropriate. it set for an emergency. europe is not in an emergency. it needs higher rates. nejra: wednesday we heard from draghi, was he trying to work -- one markets about this? >> markets should listen to central bankers, who are very data dependent. the cio of international fixed income at jpmorgan asset management stays with us. let's check in on foreign markets. >> good morning. the fed was the story dominating the markets. a third time, signaling they are ready to do another at the end of the year. u.s.y not be aiding the dollar as we saw initially spiking.

spread of the 10-year bund and treasury. while that is widening, we have the euro strengthening. we should see the u.s. dollar strengthening, that means more investor demand and higher prices for the local currency. we are not seeing that in this trend. moving on, i want a look at what is happening with the spr. the united states strategic petroleum reserve. rick perry said he will not tap those funds. this means more concerns about supply in the market as a lead-in to those iranian sanctions in november. this could mean higher prices. we are seeing brent above $82 per barrel. as ceo sees a case of $100 oil. take a listen. >> with all that is happening in the world today, there is a lot of development. supply, disruption of

supply. iran exiting the market. venezuela, libya. side, i think today you have strong support for oil remainsut the demand quite high. >> speaking exclusively to bloomberg in new york yesterday. his case for $100 oil. nejra: we will bring you more from our interview with him throughout the show. for now, let's get the bloomberg business flash. the u.s. federal reserve has raised interest rates for the third time this year. signaling that more hikes will come. jerome powell says the american economy is strong but it knowledge is that challenges remain. >> our economy is strong. growth is running at a healthy

clip. an appointment is low. the number of people working is rising steadily. which is a rep. inflation is low and stable. all of these are very good signs. that's not to say that everything is perfect. the benefits of this strong economy have not reached all americans. executive has weighed into the debate about how it handles the companies advise. taking aim at whatsapp co-founder as low class. he left facebook almost a year ago and told forbes magazine it was because of conflicts with mark zuckerberg. david markets has said the relationship with founders are empowering and offer unprecedented attack me. -- autonomy. argentina has won a promise of .xtra class -- cash it is a record bailout to help the company -- country pull out of recession.

will also deliver more of that cash up front in return. the president has pledged to excel or it budget cuts and stop burning through foreign currency reserves to defend the peso. plan the core of the new is a system aimed at strengthening our position and having a sustainable, appropriately funded project. policy focusedry on reducing inflation and without intervention. >> that is your bloomberg business flash. nejra: thank you so much. turning to another emerging market, iran had gains after south african president said it had weekend against the dollar. he told bloomberg he wants the currency to support his economic goals.

[inaudible] it went both ways. [inaudible] we want the rand to be well-balanced. hard toorking very reposition our economy, to transform our economy, to make our economy more attractive to investors. we are going to be holding an investment contest in october. [inaudible]

a lot of investors are coming to that conference. alibaba is coming. many other investors. we want the investment community to come to the conference because we are looking at it as an important event in the economic trajectory of our country. >> i respect the fact that you say, it is market forces moving the rand. is it fair value at the moment or undervalued? >> [inaudible] >> this because of what? emerging market contagion? >> because of emerging market contagion. [inaudible] we are susceptible to that. we are an open economy. the rand is one of the most traded currencies in the world. nejra: that was the south african president speaking to

bloomberg. it was at the bloomberg global business forum in new york. banks of asian central get an immediate opportunity to react to the fed rate hike. philippines announcing rate decisions. ,he most hawkish central banks today's choice is less about whether to raise interest rates than by how much. for international fixed income at jpmorgan asset management is still with us. is that the case, but it is about how much it is being raised? >> very much so. part of that is because of the currency angle. a lot of emerging markets absolutely don't want currency depreciation because it is very inflationary. a lot of those policies are linked effectively to what the fed does. nejra: he's become currencies. i have a chart showing the kerry come back. i don't want to make too much of the fact because we have rebounded 2% after a drop of

10%. we are seeing a little bit of a rebound. income,world of fixed where are you looking for opportunities in emerging markets? >> emerging markets are categorically in the by zone now. if you look at the fundamentals, they are very strong in terms of the growth rate. is too far. boom lockets have overshot there. for countries we look at, brazil, mexico, south africa, turkey, indonesia. it's the whole raft of emerging markets. nejra: you mentioned india. i want to ask about this. there is commentary saying it may look like a tantrum that india's in matter shape than in 2013. is it? >> when you look at underlying growth in the economy, it is very robust. clearly currency weakness has been an issue this year. when you strip that away, india looks a very good story.

nejra: how much are you thinking that there is opportunity and emerging markets is to do with the dollar? i feel like we may be over do a little bit the dollar correlation. in dollar has been unchanged a bit of a ban since the end of june. has it peaked? >> probably, yes. if you think of euro-dollar by the end of the year, the euro was probably stronger. the beauty with emerging markets this year, they have had their currencies weaker in their bonds are weaker. look at a country like turkey. you have double-digit bond deals. you have the same in brazil. you have barely -- fairly pronounced bond weakness. it is a nice double when me for investors. nejra: makes sense. when you were looking at the bonds, are you looking at dollar bonds? local currency? does it depend on the country? >> it depends on the country but

generally, local currency. there the bonds have been beaten this year. in terms of the moves there. so much to theu cio for international fixed income at jpmorgan asset management. it has been great catching up with you. he will be continuing the conversation with us on bloomberg radio. are a bloomberg customer, you can watch the show using tv as well as video stream. you can follow all of our charts and functions. you can messages directly using the id function. there's even a little box you can click on to ask the guest a question. what a great interviews from the global business forum tomorrow. we'll bring you are k-swiss of interview with mark carney. -- our exclusive interview with mark carney. this is bloomberg. ♪

>> despite the rally, the market is actually pricing in a little more risk. >> where was going with it, it is an example of something that can change people sentiment and

behavior in a way that can have a second or third derivative effect on how people deploy capital and how it affects markets. nejra: that was the ceo of credit suisse. and theof blackrock incoming ceo of goldman sachs. despite these worries about cyberattacks, interest in new innovation is at a high point among finance heavyweights, even with a rout in digital currencies this year. there is interest in the underlying technology blockchain. that is what is used for buying and recording transactions, at a heart of the number of these digital coins. david solomon told bloomberg it was something he was very interested in. joining us now is block one ceo. pleasure to have you with us. thank you so much for joining us. you finish the world's biggest sale of cryptocurrency tokens for about $4 billion back in may. what are you planning to do with that money that you raised?

>> if you look at how token networks were distributed in the past, it was by burning electricity in order to create tokens. the thesis was to take that to creatermally used tokens endeavor to back to the developers that are spawning the next generation of innovation. ,e announced a $1 billion fund investing that with partners throughout the world into the hands of developers so we can see what comes from that type of capital innovation. nejra: in terms of how you are actually going to use the money raised so far, you have a roadmap that you are sharing with investors? >> yes. we showed the first billion dollars of capital. the primary book is designed to used as investment into developers building on the application itself. the first commitment of one billion is what we have made public. we haven't limit aren't -- limited our involvement. in terms of investors, bloomberg has reported that you are winning funding from --

>> we can confirm that. we did a strategic round a couple months ago. this technology is really a platform that allows us to start to disrupt some of the large centralized technology platforms today. these are leaders in that space. will become more apparent. nejra: when are you planning to release that information? >> at the end of this year or early next. nejra: that is a positive thing. thank you for sharing with us. we have seen reports of resignations from block ones earlier executives. they started their run project. who has left the company? >> there is always turning. none of our quarantine has left. none of the people who have been building the technology since the beginning. we encourage those people whoever to the us in the past to become part of the community.

signe it as a positive that they are continuing to foster the ecosystem. nejra: are you looking to hire more people? >> those spots were filled before they were dismissed -- let go from the company. nejra: got it. and does that mean for eos the strategy around that? >> no change to the company. we continue to bolster our team. we brought in the former chief financial officer for the calm while bank of australia as well as a new suite that is building on a global management team. nejra: we were talking earlier but you confirm that you got funding from jihad will. i want to ask what your thoughts ipo.bout big-name >> that is one route we could take in the distant future. we are still in the early stages of developing our business.

they are an investor in bit one. their business is different to ours. they manufacture hardware. there located in hong kong and that shows the gravity that gravity -- that hong kong is pulling. a lot of same ideologies is blockchain itself. we are big supporters of the project but very different biggest models. nejra: with your company as well, how much do you have conversations with the big global banks in terms of integrating blockchain into the already established international financial system? >> we are still in the stage of doing a lot of awareness with these financial institutions. our new group president was from commonwealthh -- bank. we have a lot of expertise in the organization and how it can relay over into core banking software. inot of the banks are still the early stages of understanding how they can maximize this technology. nejra: quick question.

what will it take to reverse the route that we have seen in cryptocurrency this year? >> what you saw last year was a lot of interest in a very short. of time -- short amount of time. that happens with any new technology. it's just a matter of going back to the drawing board or continuing to push forward the and -- the innovation. will fall in line accordingly. nejra: thank you so much. >> thank you so much for having me. nejra: great to have you with us. let's take a quick check of the markets. you read from the fed raising the dot plot unchanged for 2019. the curve flattened in yesterday's session. we see a little bit of seeping. just short of a 23 handle. wti jumping up more than 1%. wti above 72. you see brent above $82 per barrel.

we heard from the u.s. government that there are not plans to actually cap the strategic petroleum fund. this is one issue that could put a downward effect. euro a little weaker. 11695. there could be a delay to italy presenting its budget plans. let's check in on what's trending across the bloomberg universe. spacex has signed it second japanese client. this time the payload will be -- they have signed up for launches in 2020 and 2021 saying they share the vision of enabling humans live in space. french president emmanuel macron says he would welcome britain back if voters decided to stay in the eu but it's not up to him to decide. our most read stories on the , the fed terminal

hikes rates and signals more to come. it will continue the conversation about banks. dennis is headed there now. ♪

this isood morning, bloomberg daybreak: europe and these are today's top stories. on and upwards. the federal reserve raises rates. president trump slams the move. >> they just raised interest rates because we are doing so well, i am not happy because of i know it will be a question. i'm not happy about that. says hemmanuel macron would welcome the u.k. back to the eu with open arms. vote for theet the rest of europe and for our very special relationship. for france and the u.k. so, for sure.

seville -- sue dell's ceo says debt is his big worry as budget plans.its >> the crisis is a continental europe where because of the nature of the euro and the inability of countries to print their own currency, there can be a crisis which is too big for government as we think of it. to solve. and that is frightening. good morning. it is 7:01 a.m. in london and we have aching news from germany in terms of consumer confidence. 10.6 is what we are looking at, higher than what the survey expected at 10.5 and higher than the previous readings so that is

what we are seeing in terms of eco-data out of germany. let's get to the corporate news and h&m. third quarter pretax coming in at 3.0 one billion swedish chroma -- krona. the estimate was for 3.2 so that is a miss on the call. you want to focus on the headlines coming through. this is an important thing to 15 .2%. 15.2% so up the estimate was a rise of [indiscernible] the third quarter pretax number was a bit of a miss. store sales impacted by logistics problems and they lead to 400 million swedish krona, extraordinary cost. online sales increased by more than 30% in the third quarter. h&m saying that the positive

market situation for external factors in the fourth quarter. saying coming through more indications that we are on the right track so h&m trying to give a positive message to the markets, will the markets listen when markets open in an hour? let's take a look at how futures are looking. we saw the u.s. session close lower and that was down to the final 20 minutes of trade. in u.s. features that we look at earlier, pointing higher, a different picture in europe am a the ftse, cac, and dax futures trending higher by .3 of 1%. we could see a weaker open. the bond market in focus because we heard that there could be a delay to the presentation of that budget plan. yesterday what was interesting offe saw bcps shrug comments as we take a look at how the bond futures are looking. the 10 year treasury yields steady in this session, we are

on a 304 handle. interesting because we saw it flatten yesterday after the fed but it steepened in this session. you can see money moving into -- bondt futures futures. you could see the yield moving lower them a unchanged on a 304 handle and perhaps we might see a bit of a bit of our reaction in btp in terms of the btp 10 year yield moving higher. we could see some spreads widening on the btb bund spreads . perhaps given the latest developments this morning which we can talk about more now because italy has its budget meeting. kevin costello joins us from rome. how significant will this be for the markets given the btp market shrugged off the comments from luigi demaio yesterday? kevin: this is important, the government had been expected to meet to approve the budget

targets. any delay in that approval would unnerve the markets and make things more complicated for the italian government. what could it mean for the finance ministers position? seeking ay have been 2019 deficit of 1.6%. maybe he will go higher but this is complicated because the five-star movement is pushing for a wider deficit of 2.4% and it appears that coalition partner the league may be joining that position. we could get this delay but for how long, i were talking about something being presented tomorrow, next week? kevin: the reports we're seeing this morning do not even say, they are saying today's meeting might be postponed. they are not saying when it could happen or what could happen so there is a lot of

uncertainty and the news media reports are pointing to a lot of uncertainty as to what is happening right now. much tohank you so bloomberg's kevin costello for that update in rome where you can see that reaction and btp futures. we have the bond markets opening up right now, i can tell you. while we are waiting for them to get going properly but btp yields moved higher when the cash markets get going properly. the ubs ceo joins us for an exclusive interview in the next few minutes. we cannot wait for that. manus cranny off to do that this morning. let's get the bloomberg first word news with juliette saly in singapore. the european union has started exploring what emergency measures it may need to take in the case of a no deal brexit. bloomberg has learned that during a closed-door meeting yesterday in brussels, methodist discussed the steps to block make a should negotiations

collapse. french president emmanuel macron said he would welcome the u.k. back to the eu. he spoke exclusively to john micklethwait at the bloomberg global business forum in new york. >> if the british were to remain, what you have us back? >> sure. >> even though you are trying to re all these bankers, your take us back. >> it is about history, not about having domestic interests. juliette: south africa's president said his administration will pursue plans to redistribute land to the country's black majority. interview, hee also said that he is still considering whether constitutional amendments are necessary to make it easier to expropriate property without compensation. iswe are seeking to do now

to balance that equation and make sure that the land and our country is shared by all south africans who live in it and that is an inclusive process. that seeks to have an outcome that will lead to social cohesion, that will remove the threat and the risk of instability, so we are managing risk. juliette: global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . fairly negative in asian markets, things were looking brighter in the session but below the key markets in the red, hong kong has raised its lending rate out to the fed and hsbc raced its lending rate for the first time in 12 years, hong kong banks lift following the fed. closing lower but south korea

bright spot after a couple of sessions of gains, up i .4 of 1%. let's have a look at some of the other market moves in the region. it is not just about the fed. we had a central bank decision from the new zealand central bank and the governor suggesting they could -- there could be a cut on the table. the kiwi is down against the dollar by .41%. we are awaiting decisions from bank indonesia. both currencies slightly higher against the dollar. we are expecting a quarter-point rate hike from bank indonesia to 5.7%, half of percentage point from the philippine central bank that would take their rate to 4.5%. mark cudmore was saying that is an interesting one to watch than the fed which was widely priced in. nejra: more interesting than the fed. to my juliettech saly in singapore.

great work. let's get to our top story and the fed has raised rates for a third time. givend jerome powell has an upbeat assessment. >> our economy is strong, growth is running at a healthy clip, unemployment is low, the number of people working is rising .teadily, and wages are up inflation is low and stable. all of these are very good sides -- signs. that is not to say everything is perfect. the benefits of a strong economy have not reached all americans. nejra: that was fed chair jerome powell. joining us is the director of global equities at m and g, great heavy with us. thanks for joining us. i was interesting and the u.s. equity market reaction because in the last 20 minutes of trading, the s&p 500 turned lower and closed lower, futures are flat, they were higher earlier but not anymore. why do you think we saw that selloff in u.s. equities given what we heard from the fed chairman?

randy: he confirmed that with afternversation and q&a the market. people need to appreciate that the cost of holding equities will be more and you are putting more risk into the market. nejra: do you think that equity markets are perhaps preparing for what could become a restrictive policy from the fed? there is discussion of where neutral is but equity markets are thinking about that now. moore cap -- more cash will be withdrawn from the system. we have seen a boom in equity markets. they are getting ready to appreciate will be the new normal. investors,markets investors and general, investors , are they underpricing the risk that the fed could hike more than what they are pricing at the moment? deep; i think he is

making sure that the market is aligned. nejra: no surprises at all. for example the removal of accommodative from the statement, we should not read too much into that because the disagreement in the fed is to wear neutral is, as an equity investor, do you read anything much to accommodate of being removed? dodeep: the reason he said not pay attention to this and as he keeps saying, the fed is ready to move in case the market turns or there is a shock to the system like there has been in the past. he talked of the congress taking away some of the fed's powers which he was not happy with. he wants to make sure that if and when another crisis comes, the fed is prepared. it can not have -- if rise into a supportive market he has more tools in his arsenal. nejra: how would you be

investing in u.s. equities if at all? the u.s. market is more on the expect -- expensive and but you can find pockets and areas that are cheap so you have to be disciplined when you look at the u.s. rather than looking at the broad index. our guests stays with us. said -- total's ceo spoke to francine lacqua. a lot of supportive element for the price of oil. iran, the to supply, market, venezuela, libya, and even on the opec side i would say [indiscernible] so i think today you have strong

support for oil price. and demand remains high. i announced that in june. even the oil industry because when prices are too high then you open the door to competitors and competition and the demand will fall again. i am not [indiscernible] but that is a fact. francine: will opec and opec allies make up for the production? russia andies on they are ready to increase production. [inaudible] which is not there. they push the prediction -- production up. maybe [indiscernible] so i think this, the market is discovering that

margins are not so high and pushing the price up. francine: is in saudi arabia saying they have enough barrels to make up for lost production? patrick: you have to mobilize, in our industry you do not push a button and oil flows, [indiscernible] thefor the time being market is increasing, price is increasing. francine: you have made acquisitions in oil and investors are buying lng. patrick: we have [indiscernible] a growingl gas is market. they want to increase the share from 16% to 15%. gas will have to come from somewhere. [indiscernible]

central asia or russia but also lng so for us it is a big push. i am happy to be [indiscernible] 10% of market share. we do pay value to shareholders. francine: if you were due -- to do acquisitions, what would you target? patrick: we just acquired a big company recently. the vision we have is to position the company on the growing market and when you look at the future [indiscernible] electricity growth is incredible, it is more than 2% per year. and what we want to develop in our business [indiscernible] noble -- ordurant renewables when and marketing, down to zero residential

customers. we applied to a company and we are 4 million customers in france and belgium. created morere we than the company, [indiscernible] total's ceowas speaking to francine lacqua. what -- would hundred dollar oil be bad for majors? wouldp: the cash flow rise but the shock is bad for the global economy which is that for the oil majors. what you want is small, gradual rises. there are two points of oil rising that quickly, you are getting unconventional supply from the u.s. which is something they do not want and every time oil has moved to 100 in the past it has been followed i ever session for the global economy which means it falls quickly.

they do not want to be in that situation again. nejra: thank you so much. if you are the ceo of ubs or -- there are two things on your mind this morning. how markets are positioned after the fed raised rates and the future of your investment bank especially after the person heading it left to run santander. if you are manus, you're happy to be standing by for insight on both the subjects. good morning again, take it away. good day to you, good to talk to you again. we are in london. the ceo of ubs, great to see you. the eighth rate hike in this cycle, every anchor must be waking up and higher rates. guest: we do expect another hike for december, another three hikes for 2019. their plansxecuting

and the economy is sustaining this policy so i do think we will continue to see some hikes in the future. manus: what do you make of trump's comment having of bit of a [indiscernible] look historically speaking an intervention to influence central bankers is creating a counterproductive outcome. doubt, under pressure, the fed or the ecb in the past or any central bank [indiscernible] to the contrary of the pressure. monetary policy should be a matter of the central bank. i spoke with david solomon yesterday and he said once the fed gets going, this is reminiscent, when they get

going, they could do an awful lot more aggressive than we are pricing. yes or no? sergio: i do agree create if you go back to the beginning of last year, it was clear to me that the central banks were starting to alert the markets to the idea that they may become less predictable. and one day or the other, central banks will need to become less predictable. in the last few years we were used to them guiding the markets and in the future, it may be that. we will see a little bit of that. manus: only caught up with the markets you said there would be a 15 said -- percent correction. how close are we to the investor turning on this market as a moment? u.s.,: you look at the you could argue that we are reaching all-time highs, if you look at asia you look at what happened the second quarter and what happened in the second

quarter in hong kong and china. markets were down 20%. i think we see this symmetry's betweenent in the us the u.s. and asia which is indicative of the state of the world. manus: we caught up with your chairman, he used the word caution. what word would do used to describe client activity? sergio: it is clear to me that i have been there two times and i even worse situation than what i saw in 2015. ongoing restructuring and questioning but and a pattern where it is positive for the future. is it will continue to grow but in a less predictable way. -- asia will continue to grow. when youan feel it talk to clients. manus: it is palpable.

reflected in market valuation. you look at the chinese market and the hong kong market, they are pricing at attractive levels. what does that mean for you and the investment bank? sergio, for us, for me, of are sorry regret, we to see him leaving. he was crucial in helping us execute our strategy and develop the strategy for the investment bank index acute strategy but on the other hand, we are glad and isud that one of our team an important on role. in essence, what it means for us, we have continued to operate with the same focus and strategy and discipline we have been doing in the last six or seven

years. are you all in and committed to the bank going forward, what do you want to say to the bank today? sergio: i am focused to continue to make sure we execute on our plans and we have a strong team, and the executive board and the rest of the organization. i am committed to lead the bank into the next frontier. manus: in terms of shareholders, have they backed your double-header at the ib? what you say to the criticism? sergio: that is the usual criticism when the market seems not to know people with new appointments. there were comments on myself for andrea, anyone who got

appointed for the first time, i am convinced we have a solid and stronger choices for our leadership in the investment bank and in general. the bank has a lot of talents and we will make sure that they get the right exposure. manus: you have done a lot, we have done a lot of sit-down's and you have done share backed by a -- finally. -- share buybacks finally. -- or is it ado dividend play? just a no, we are not dividend play or a share buyback. it is clear that if you look at the business we are in and wealth management and asset expectng in general, we wealth management and businesses gdp in thece the

next five to 10 years. we are well positioned for growth in asia and the u.s. and we can extract more value from our franchise. with you onl not be october 25 but this is the time to give a top line of what this announcement might look like. the growthing on proposition for the market. sergio: we will not come out with any strategic goals, we will explain better how we achieve our plans. we are going to show and communicate any aspect that is critical to get investors to our story.stand i will do it with my team, we will have a full-day session and convinced -- i am convinced this will bring conviction to the right place. we have a good starting position, from where to go to the next level.

our stock is highly valued compared not only to our european peers but to our american peers. we have a good starting position and good potential. next: we will wait for the piece of the growth structure from the bank but markets and the departure of orchel. carry-on, business as usual at ubs. sergiothank you, ermotti speaking with manus cranny. >> the report over 13 minutes away. theres are lower and italy, cabinet meeting timing is to be decided, that is what we hear from an undersecretary as we heard the meeting on the budget could be delayed. higher and the

bund spreads blows out and the euro is moving lower. bloomberg markets: the european open is next. lots of rate interviews from the global business forum. we will bring our exclusive interview with mark carney. this is bloomberg. ♪

anna: welcome to bloomberg markets, the european open. we are they from our headquarters in london. the cash trade is less than 30 minutes away. ♪ anna: the future is bright, the fed raises rates and hints at more to come but president trump slams the decision. interestust raised rates because we are doing so well, i am not doing about -- not happy about that. anna: open arms. french