nejra: good morning from bloomberg's european headquarters. this is "bloomberg daybreak: europe. tech meltdown. lenovo and zte extend the selloff. reports china infiltrated 30 u.s. companies. markets await the u.s. jobs report. hurricane florence could make a dent. india's central bank is expected to raise rates on inflation risks and rising oil prices. brazil has to the polls on sunday.

good morning, everyone. -- 6:00 a.m. in london. tech stocks underperforming. yesterday we saw the nasdaq have its worst day since june in the u.s. session. we saw all three u.s. benchmarks lower than 1%. the nasdaq closed below 1%. we could see a rebound in today's session. banks have been outperforming with 10 year treasury yields heading higher. the msci emerging-market index has been down for days out of five this week. let's take a look at the 10 year treasury yields. we have seen that rise 13 basis points this week. -- wrong, higher on board. we are just under 3.2% on that. we saw it about that yesterday. we have seen treasury yields

rising across the curve. there it is. it has taken the dollar with it. the dollar heading for its best week in two months looking at the dollar index. we have had six days of gains. it is the best run of gains for the dollar this year. oil we have been talking about with brent above $85. it is a touch below it now. wti at 7481. oil heading for a fourth weekly gain. you have u.s. job data today to williams to and john joins us for an exclusive interview after 3:00 p.m. u.k. time. let's get a check of those asian market moves. here is juliette saly. juliette: certainly this tech selloff hurting asian stocks, which are down for a fifth session in a row. you have seen the hang seng weaker by 0.4%. the taiwan taiex is being hit the hardest.

all those apple suppliers and also tech suppliers in japan. the asx bucking the trend. higher for a third session. let's look at some of the players. asian tech stocks at a 15 month low. lenovo, one of the worst performers. jpmorgan saying you should short lenovo for six months. it has fallen the most since 2009. screen holdings in japan also a laggard. samsung is doing well. it came through with strong chip numbers. was higher by almost 2% in the early sessions. turning out to the bloomberg first word news. the u.s. senate had to a make or break procedural vote on judge brett kavanaugh as lawmakers digest an fbi investigation into allegations of sexual assault. a single copy of the report was made available with some senators grouping together to

hear a staffer read it. the white house restricted the inquiry. republicans claim the allegations of not been corroborated. >> the senate should not set a fundamentally un-american precedent here. 's right to basic fairness does not disappear just because some disagree with his judicial philosophy. juliette: china has hit back at claims by the u.s. vice president of election interfering. beijing branded the allegations of unwarranted. pence said the country was attempting to sway american coerciveinion using measures and a propaganda campaign. >> chinese security agencies have masterminded the theft of american technology, including

cutting-edge military blueprints. technologyhat stolen , the chinese communist party is turning plowshares into swords on a massive scale. saide white house has chinese cyber attacks on the u.s. validate the trump administration's emphasis on operations of its own. that is after bloomberg reported beijing had hacked american consumer networks using a microchip built by its spies. democratic lawmakers said the report shows the risk of chinese espionage. 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. this is bloomberg. >> thank you so much. let's head to sydney and speak to garfield reynolds from bloomberg's mliv team. you have a question for the viewer on the greenback.

this is the question of the day. is, will theon dollar die off was china gets back from holiday? it might sound and odd question, but bear with me. back in february, when china took a week off, the dollar back then we can the long way, only to bounce back. the decided they did not yuan to get as strong as what is implied by what the dollar is doing. since then the dollar and the eu , the dollarhe yuan has risen, the yuan has fallen. famously getting some of president trump's eye because china was seen as using a weaker yuan to help exporters. now the dollar has been on an absolute tear. there are a lot of reasons for that. one reason we think could well be that the pboc is on par with

everybody else. it has not been fixing the yuan. help to stop that the dollar peak in august. once the pboc comes back, that is going to feed across the complex and help pull down the dollar. this week's developments, does that reduce any conviction in the pboc's fx response? >> that is one of the things we are debating. if it does reduce your conviction you want to take a look at what you think of the fundamentals, i would argue they mostly .2 yuan weakness. other factorsrgue , the chinahis week hack story, u.s. yields and the rest of it, has been such a motivation for the you

want to weaken that the pboc is going to have to take control. >> bloomberg's mliv are filled reynolds -- thank you so much. our readers to know the answer to this question, but let's get the view of my to guest host. welcome, gentlemen. great to have you with us. we have just launched the mliv question of the day. let's get your answer. will the dollar rally die when china returned from holiday? >> i have some sympathy for it. economically, the forward rate you have to pay to be short .hinese yuan is like 695 anyway

to be short costs you. that, they manage currency on a trade weighted basis. as mliv -- your correspondent said, basically china is a current account surplus currency. it is not like other emerging-market currencies that are in the doghouse. the turkish lira in particular. there is a deal to be done because part of the ultimate china-u.s. deal will be comments about the currency. china can't afford to have a very weak currency. the u.s. definitively does not want to see one. i have no sympathy for it. >> will the dollar rallied i when china comes back from -- will the dollar rally die when china comes back from holiday? , does thestion is news flow continue to be dollar

positive? probably yes, near-term. over the last few days, quite a lot has been priced into the market. if there is no news, the dollar rally will stall with a sway -- with a slight chance the chinese currency may clawback a little bit of its losses. dollar fundamentals are strong. in the absence of news to feed it further, we should have more stability. nejra: that is the dollar side. we have the offshore you when -- yuan this week. is that going to test the pboc's patience? >> i do not put too much influence on the psychologically important threshold and the like. the overall development of the chinese currency has been somewhat weak. this is probably something the chinese authorities would like a very orderly process, if at all.

i would not be surprised if they send a little signal that are now, and return to it. is china's seemingly insatiable thirst for oil. yesterday the question of the day was about rising oil prices and whether they would impact developed market equities. does this chart tell us the oil price is going to stay supported even though we have had four weeks of gains? this.ike to focus on the narrative tends to be about the supply side and iran. that is a factor. but what often is missed is long-term intensity of emerging-market economies, especially china, to oil, and strong demand in the acceleration of demand in china. same story in india. the u.s. economy has struck a fairly oil intensive economy.

there is a good demand side story as well. we have oil correlated at the portfolio. augmente oil does not much further. it is turning into something painful for western economies. nejra: even though we are not that close to $100. >> relative to where we were, this is costing us. 0.2% economic growth in the oil importing world, which i do not like too much. i remember the times when so many people were talking about peak oil. my best guess is the current price is higher than fundamentals do suggest it should be in the long run. it should come down somewhat. that is a forecast over the balance of next year. it is not a forecast now. at the moment, with especially the u.s. economy, we have seen china's demand stall. it is possible oil stays where it is or goes up slightly with

its own momentum. nejra: would you be preferring to get exposure to oil through futures or through equities? >> it tends to be through equities or correlating markets. we own it, for example, shell in terms of direct holdings. very highly correlated with oil, that is how we are playing it. futures can be a tricky gain -- game. losing money from -- even if you get the direction right. we tend to be a more correlated out rate -- asset rather than the outright. nejra: you said you are looking for price to go down next year. if we get to $100 are we likely to stay there? >> no. $100, would got to that be more harmful to the global economy? or do we need to go for $120? that would probably mean

for the oil importing western economies, the economies i look at most closely, we would have to cut our forecast for next year by 0.2% if we settle their. if we briefly get there, who cares? but if we settle there, that would be a modest break on real income growth. you would have less money to spend on other things than petrol. it would probably not be a drag for the u.s.. the u.s. is a big oil producer, not just consumer. for the big net consumers it would be a modest threat. nejra: berenberg and koontz stay with us. let us know your thoughts on the question of the day. will the dollar rally died when china comes back from holiday? coming up, u.s. jobs data is out today. how much impact will hurricane florence have made on job creation? he cut low joins us

after 2:30 p.m. u.k. time. joins us after 2:30 p.m. u.k. time. ♪

>> the story reminds people or tells people for the first time that hardware risk is real. the risk is always been there. but real manifestations beyond the hype or the fear that gets generated, those manifestations are very important. this will spark new dialogue. >> this is the fundamental problem. this mitch -- mismatch of systems. the chinese can exploit systems for geopolitical gain where it in the u.s. we cannot. >> it would not make any sense for china, for the snippets of information they would get from some of these companies, to basically jeopardize their whole global supply chain upon which the entire chinese economic

miracle of the last 40 years has been based. that would make no sense. that does not mean it hasn't happened. it is not a national program to do that. it is a matter of a lot of countries looking for additional data. it is about how you are able to collect data and use it to your own benefit. the concerns we have had during the national defense authorization act this year, we placed some guidelines with regard to which companies we would do business with that were from china because of some of the concerns being expressed. >> it is really about national security and technology. you broke a very interesting story that, in my mind, is where the u.s. government is focused. >> the science board for the department of defense made it very clear that over the next 10 years, defensive capabilities alone are not going to be enough. we're going to need to have deterrence to slow down the cyber interference that is occurring. nejra: some of our guests

reacting to the story of how china used a tiny chip in a hack that infiltrated u.s. companies. you can read the full story in this year's edition of bloomberg businessweek. lenovo slumped the most in almost a decade, down 23%. zte tumbled as much as 14% in hong kong. the nasdaq sides were stays in june, down almost 2% -- saw its worst day since june, down almost 2%. juliette: samsung electronics has posted record profits on resilient sales of memory chips. beating estimates. the results could alleviate pessimism on the demand for memory chips even though there is doubt whether customers will continue buying next year. the head of denmark's financial supervisory authority says danske bank needs to hold more

capital, not just to be prepared for potential fines, but to protect it from market fallout caused by damage to his reputation amid a money-laundering scandal. >> i think that it is premature to speculate. .learly there is an issue that is one of the issues why we have increased the requirement. so that the bank is capable of handling these things financially. >> elon musk has insulted the security and exchange commission days after battling a fraud lawsuit, and heralding a deal that allows them to remain tesla ceo. in a tweet referring to the sec as short seller in richmond commission, he wrote sarcastically the regulator was doing incredible work.

, he settlement he reached would be barred as serving as chairman for three years as a result of romantic posts about taking test -- problematic posts about taking tesla private. nike and yeh sports have sportsed concerns -- ea have expressed concerns about the football players conduct. not judge himould on the assault claim. ronaldohas denied -- has denied the accusation. nejra: thank you. let's look at what you should be watching today. a rate decision due from the reserve bank of india. the winner of this year's nobel peace prize is announced in oslo. and we get payroll data out of the u.s. at 1:30 a.m. london

time. the chief economist at berenberg is still with us. is the jobs data and wage growth data today going to show us that perhaps inflation could still be the missing piece of the puzzle of all the various things that push 10 year yields up? >> we have been looking for so long for inflation to go up. we have been watching signs of it. it is a gradual process. whatever the data reveals today, we should not read very much into it. first, we have the florence. world gotnuary, the excited about what seemed to be an unexpected acceleration in u.s. earnings. the next month it was revised away. i would not react very much to whatever the data are today. uptrend is intact, but whatever the data show, i would only react to a quarterly average rather than the precise

data. wages should be going up. laboris underutilized still in the u.s.. the participation rate is rising. that suggests even with a strong economy, we should not get a sudden acceleration of wage growth bad enough to scare markets for long. >> does that mean it is too early to put the curve -- on? >> when you get a central bank tightening, the trend is flattening. we had a brief steepening. generally you should look for flattening. a point i would add on inflation, i agree it is a very gradual increase. , it islook at globally quite hard to generate inflation. there is a message there. japan raises rates for a long time, the ecb, negative rates, still hard to generate inflation.

there is something going on globally. globalization. word.ation, to use a new that's why it is hard to generate inflation. nejra: the 10 year yield, yesterday we saw it go above 3.2%. yield.-- the 30 year jeffrey gunn block -- a gun the gundlach said it is a game changer. >> treasuries can suck in capital. there was a bond issue, that was 27 billion in supply. a lot of fund managers sell treasuries. natural setting that is maybe the story of this particular week. it reflects a strong u.s. economy. no real inflation.

market will come to terms with that ultimately. >> yields at this level, a risk to growth given where growth is? >> this is where they should be rather than a risk to growth. the rising yield seems to reflect better expectations for the u.s. economy and the fed acknowledging that. the effects would likely be a strong earnings situation for companies selling to the u.s., including of course u.s. companies. this rise in yields, because it is backed by the fundamental, should not be bad for equities. >> ok. the chief economist at ehrenberg and cio of currents stay with us. tv can watch the show using as well as the video stream. you can follow charts and functions and message us. using the iv function. up next, how should regulators

respond to the my laundering -- money-laundering scandal engulfing denmark's biggest bank? our interview next. this is bloomberg. ♪

nejra: today we are asking for your view on our mliv question of the day. will the dollar

chinese cyber attacks on the u.s. validate the trump administration's emphasis on offensive cyber operations of its own after bloomberg reported beijing hacked american computer networks using a microchip built by -- separately, democratic lawmakers said the report -- u.k. starting salaries grew at the fastest pace in more than three years as britain's impending exit from the european union made it harder for employers to find enough qualified candidates. according to a report by ihs market and the employment consideration, job vacancies for permanent and vacancies -- permanent and temporary positions rose. demand for nursing and medical care professional rose the most.

european union financial regulators are stepping up plans to avert a market meltdown. the european central banks head of supervision says -- set an assuring tone yesterday when she said the ecb is ready to help ensure a smooth brexit. she is not alone. the chairman of the european securities and market authority has called on brussels to guarantee banks do not lose access to london's clearinghouses. president says he is not certain he is fit for office, signaling a readiness to step down if he has a serious illness. the 73-year-old says he is waiting for the results of medical tests after a recent hospital visit. he has admitted suffering digestive tract problems, migraine and spinal issues, and smoking-related illness. 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. this is bloomberg. nejra: thank you so much. just got to bring you a headline crossing the bloomberg at the moment. mario draghi has met with italy's president has discussed the budget. this after we got the government 2019.5% gdp forecast. that was higher than consensus. for 2019, is 2.4% down a little for 2020 and 2021. those figures lower than originally reported. a bit of a concession to investors. the 10-year btp yield rose, closing on a 333 handle. for now, let's talk about the fallout of danske bank. denmark's largest bank has been rocked by allegations that $235 billion in suspicious transactions pass through its

estonian unit. danske bank has become the target of criminal investigations, but according to the director general of the danish supervisory authority, danske bank is not the only bank plagued by money laundering issues. yesterday, i asked with the fallout might be. >> the bank is very solid. is exceptionally well managed and other areas. massivenot see any changes in relation to retail or customers. obviously there will be some. danske bank is not the only bank around that has had issues with money laundering. nejra: that brings me to my next question. our europe's money-laundering problems bigger than just danske bank? we have up to our standards significantly over the last couple of years.

my money-laundering problems refer to danish banks in general. -- two on the basis of reports to the pearly's -- the police, but these events go back in time. before 2016. been upped.s have we have a strategy for lifting our work on money laundering. obviously things can always come about. i do not have expectations issues like the one we experienced before 2016 will reappear. nejra: but would you like to see european authorities turn this into a bigger examination of the gaps in the system that seem to allow systemic abuses of money-laundering rules?

willing tolways cooperate with other authorities in relation to how we conduct our work on anti-money-laundering. them to initiate that. the aba to look into this in relation to us and estonia. last year we were the subject of -- that investigation examination has led us to ourificantly more in upping standards. we are in the middle of that program. nejra: what would you do differently now given what you know about this scandal? >> i think as a supervisory authority, you always feel in

denmark, the u.s., the u.k., rely on the replies from the bank. i think the big issue here in this case was we did not get adequate information, partly because there were problems within the bank. the bank did not get the right information from the estonian branch. i think that is the key issues that we addressed. now we have asked the bank that -- signs off on the information to have provided to us and if the information is not correct, it will have more severe consequence. that was the director general of danish supervisory authority. you can watch the full interview next friday. we just mentioned mario draghi has met with italy's president

and discuss the budget. is italy being too optimistic about its future? the government's controversial budget plans are resting on an economic outlook rosier than other forecasts. the populist coalition said it expects next year's gdp to rise by 1%. a figure higher than growth target estimates. the cio of goods and the -- economist the chief at berenberg are still with us. >> we own where we can the short end of the italian market. the prospect of italy devolving, -- thew -- default thing prospect of italy defaulting is very low. in the short run. then you talk about dependency. which means the volatility. ,he two and three year bonds

how can you get the yield to 5% on btp's? hedge them back into dollars. hedging the short end of italy back into dollars. it is very very attractive. of course there is risk there. how much worse can the news get? let's see what mario draghi has to say. we just think that is a good investment. worse can theh news get over the next two years? i can see why you might take that risk. but you have made some parallels between italy and greece. does adams view concern you? >> it is great there are investors who trust italy. italy needs those investors. indeed, the risk that italy would default and leave the euro is very small.

unlike in spain where the risk is absolutely zero four as much as you can say, the tail risk does exist. it isly i would say almost a separate asset class relative to other european countries. it looks extremely unlikely the question could ever come up. in italy we are probably heading for an interesting confrontation between the italian government in the other italian institutions. the president, the constitutional court. that could be noisy. we are headed for some confrontation between the italian government and the eu. i heard yesterday the budget is based on growth assumptions which simply do not make sense. interesting will be -- and some volatility about italy. nejra: why do the growth assumptions not make sense?

authorities have taken a simple view. growth would be roughly 1%. hence it will be significantly better. with their own behavior, they have created noise. they have contributed to rising yields and uncertainty. the higher yields, the higher borrowing costs, and uncertainty will prevent from growth responding to fiscal stimulus. they are spending money on stimulus which will not show up in any gain in economic growth. the budget assumptions are probably faulty. nejra: i like your commentary around the two year yield, alan. are you hedging the euro around italy? >> almost any bond investment, you need to hedge the currency. i mentioned hedging it back into dollars. why? it becomes a currency play.

there are some strengths of italy. household debt. there is a lot of government debt. is evend debt i think lower than germany as a percentage of gdp. it is very low. there is that savings. and primary surplus. italy looks much more favorable than france. i'm not saying everything is wonderful. you need to be compensated for this event that could happen, which is close to a zero probability in spain and even greece. , two and half to three years, you are compensated. nejra: thank you. the cio of currents and this -- and the chief economist at berenberg stay with us. we will discuss the latest on the brazilian elections.

later, bill gross joins us at 4:00 p.m. u.k. time. this is bloomberg. ♪

>> i am very proud of my team. we have an election coming up. i think what we need to remember sunday,the election on it is not the end or the beginning for brazil. i see it as the normalization of politics. nejra: that was the santander chairman speaking to us earlier

this week. brazil heads to the polls this sunday to elect a new president, markets hoping the winner can fix the stagnant economy. with two leading candidates intensely disliked, the risk of a divided congress, we spoke to the president. democracy isthis consolidated. following the election, people will enjoy a lot of peace and greater ease of mind. nejra: let's go to sao paulo. bloomberg's bureau chief has more on the contenders. >> brazil is days away from an election split between two candidates that have opposing views on how to fix the economy. the front runner is a former army captain known for his controversial statements on minorities. his main opponent took over as the candidate for the workers party after the former president

was barred from running due to a corruption conviction. one camp wants to jumpstart the economy by boosting government spending. investors to the conservative as a better bet to push through with the fiscal reforms brazil needs to fix it accounts. the main source of that trust is his choice of economic advisor, who thousand to push through with wide-ranging privatization and other liberal measures. civilians vote on sunday. ,f nobody gets more than 50% the top to go into a runoff round on october 28. bloomberg's sao paulo bureau chief. staying with emerging markets, it is decision day for india with the country's central bank expected to hike rates. markets are pricing in a 25 basis point increase.

inflation risks and rising oil prices are outweighing worries of a credit crunch. joining us now is bloomberg's senior correspondent in mumbai. great to have you with us. just tell us whether this rate rise today is locked in. >> pretty much. make no mistake, the r.b.i. is facing a tough task. in terms of the liquidity crunch and this shadow banks, a lot of nervousness in the credit markets. the currencies are hitting all-time lows almost every day. rates, fed has raised which means there are outflows from emerging markets. , it isdline inflation under the mandate of 4% for the r.b.i. right now. given thato rosy rising oil prices, along with the weakening rupee is expected to feed into inflation.

analysts are expecting at least 50 basis points rise in headline inflation. muchmakes it pretty interesting going into this meeting. nejra: what will also be interesting is the outlook. are they likely to give a more hawkish outlook rather than the neutral stance we have had so far? >> absolutely. no change in the stands makes no sense. they will have to raise rates again given the inflation outlook. ast means neutral policy well as raising rates makes no sense. -- wenk of india is also a duty rate cut by the

government yesterday which means the budget will probably be under pressure during that time policy,l's bank titans policy, it is -- for investors looking at india. nejra: the chief economist at berenberg and cio at kuntz are still with us. >> we have heard how you are positive on equities. what about indian equities? >> they have not dropped enough. they are a bit like the u.s. of emerging markets. they are on expensive valuations. justified because earnings growth has been strong. it is a bit of an expensive market for us. we talked earlier about oil.

the oil impact on india is negative. it needs to be cheaper for us. nejra: are central banks like india in emerging markets that are hiking rates putting themselves at too much risk in terms of growth? >> they are putting their economies at terms of -- at risk. what they should be trying to do rout in currency. they should not go against an orderly devaluation. , --hey do it gradually turkey had to send a strong signal. and may have to again. nejra: and belated. >> but for the settled economies such as india with no acute problems, they should be only carefully going against devaluation, not aggressively. nejra: what a hawkish stance be the wrong move if they do raise rates?

>> my advice would be don't sound too hawkish. you will also need your domestic economy. is not bad for an economy that has a bit of a beingm with oil imports expensive, weighing on domestic growth. you should have an offsetting domestic stimulus against that. nejra: allen, how do you look at brazil? would you be looking at bonds? would you be avoiding it altogether? >> we are in bonds. we are like on em equity. exposure, local, which has been painful this year. we are less direct investment in brazil. on a look through basis we are long. brazil is similar to the mexico situation. a lot of fears, and the reality of am low has been quite

favorable. brazil, we have two elections. then a runoff. in general we are positive, but not directly. on a look through basis by owning emerging-market local debt funds. nejra: the cio of coutts and berenberg.tor at we will be continuing the conversation on bloomberg radio. thank you to both our posts. -- our guest hosts. --orts beijing hacked system we have a headline coming through from hkc. lenovo saying supermicro is not a supplier. you can read the full story in

this week's edition of bloomberg businessweek. when you are traveling to work, tune in to bloomberg radio live on your device. this is bloomberg. ♪

>> from the city of london. i am nejra cehic. this is bloomberg daybreak: europe. extendg shares of lenovo the selloff. beijing hits back at the trump administration after a bloomberg report said china infiltrated almost 30 u.s. companies. yields on the 10 year near there seven years highs as the u.s. awaits the u.s. jobs report. the hurricane could get the data. india's central bank to raise rates on oil prices and brazil heads to the polls sunday.

good morning, welcome to daybreak: europe. 7:00 a.m. in london and data coming through from germany. this is august factory orders and producer price index. factory orders month on month coming in at 2%. the survey was for 0.8%, better than expected. in the ppi, month on month, the number is up 0.3%, a little better than the survey of 2%. ppi, also beating 3.1% versus the survey of 2.9%. that is the german data coming through. not seeing a lot of reaction in euro. quite a bit of euro weakness this week. on a 115 handle. let's look at the futures. we did see a selloff yesterday in the u.s. session. nasdaqtech stocks,

having its worst day since june. we have seen asia take a hit into today's session. in terms of europe, it looks like we could bounce back a touch or see a muted session with a slight positive tilt. cap and ftse futures up, dax futures pretty much unchanged. bonds, we have the cash market open for the european bond markets. the btp-bund spread closed behind -- below the 280 handle and looking at what it might do today. we might see a touch of a widening out. he had to the gdp forecast from italy. the deficit target for 2019 stays at 2.4%, so still concerns lingering among investors. that is what you respond futures are doing, the 10 year yield below 3.2%. we went about it yesterday, we are still at the seven-year high-yield rising across the curve -- the u.s. treasury curve.

curve steepening has been the story this week. breaking news on unilever on the bloomberg, withdrawing its proposal to simplify the dual headed listing -- to cancel its nv pressured shares. the unilever board will consider next steps. it is deciding to withdraw the dual headed infrastructure restructuring. it was announced and they are deciding to withdraw it. unilever shares will be ones to watch at the open in just under an hour. asianget a check of the market reaction, the selloff in tech stocks with juliette saly in singapore. asian stocks, down over 3% over the course of a volatile week with china out of action all week. hong kong, starting to turn around in late trade, still two

hours of trade to go but we know the text selloff has hurt asian stocks, particularly in taiwan. the nikkei closing weaker by .8%. hong kong looks to turn positive as we speak and the asx 200, closing higher. it has been about the tech stocks, lenovo in particular, driving down in reaction to the report of beijing's hacking of american networks. lenovo down by 24%, the most since 2009. samsung, doing ok in korea, its third-quarter numbers topping estimates, ironically, on strong memory chip sales. we are awaiting a rate decision from the bank of india. you have the rupee at record lows, a lot of analysts expecting the central bank there could turn a little bit more hawkish. now, let's check in on the first word news.

the u.s. senate heads to a make or break procedural vote on judge brett kavanaugh later as lawmakers digest an fbi investigation into allegations of sexual assault. a single copy was made available with some senators grouping together to hear a staffer read the contents. democrats say the white house restricted being queried while republicans claimed the allegations haven't been corroborated. should not set a fundamentally un-american precedent here. right to basic's fairness does not disappear just because some disagree with his judicial philosophy. china has hit back at claims by the u.s. vice president of election interfering. beijing branded mike pence's allegations as unwarranted accusations that slandered china. speaking in washington, he said the country was attempting to sway american public opinion

using tariffs, collective measures, and a propaganda campaign. kindest security agencies have masterminded the wholesale theft of american technology. including cutting-edge military blueprints, and using that the chineseology, communist party is turning plowshares into swords on a massive scale. juliette: the u.k. starting salaries grow at the fastest pace in more than 3-d -- three years as breads it made it harder -- brexit made it harder for employers to find qualified candidates. by theng to a report recruitment and employment confederation, job vacancies for permanent and temporary positions rose during the month. -- demand for medical professionals rose the most. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more this is countries

bloomberg. juliette saly in singapore, thank you so much. let's talk u.s. jobs, and investors will be watching for the u.s. payrolls report today. the estimate is at 185,000 jobs added to the economy in the month of september. bond selloff a partly triggered by services and manufacturing data, underscoring the strength of the american economy propelled treasury-year-olds -- treasury yields to highs. our next guest, thank you for joining us. like everyone, you will be aware of the yields jumping across the u.s. curve. one question i have been wondering, why we had such a steep rise in yields this week? is it going to last? >> i think it is tied to something we would joke is federal open mouth policy. was supposed to be open

market committee, the fed chairman came out and said two things. he said we are far from neutral and we willicy rate go beyond neutral in the cycle. that was a new information for the market. that is, i think, the primary thing that led to the jump in yields. most of the jump in yields has been in that yield component. only 20% has been tied to inflation. it is a growth and policy story. nejra: a lot of people have told me markets are underpricing the risk of a more hawkish fed, but you think the fed will pause when it gets to 2.5%? jim: that is correct. int is if growth slows down 2019. if the fed raises rates four times next year, it has got to be in an environment of better growth. if we have steepness in the yield curve, which they have engineered to some degree over the last week, that will be an environment that will allow them to do that, but our base case is

growth will slow so they will not be able to raise rates four times next year. nejra: they won't be able to four times next year, and that means what for the yield curve? jim: we think the yield curve will be pretty flat. in that environment, investors are going to start to view we won't see the level of rate increases that they had been and there will be concern about a slowing economy which will lead to people buying on the longer end. we would see a relatively flat curve into 2019. nejra: i will jump in one second with a correct for something we showed on screen earlier in terms of unilever. what it should say is unilever withdraws its proposal to simplify the dual structure. this is the story we had breaking at the top of the hour. unilever abandoning its plans to consolidate its headquarters in the netherlands, saying it will maintain a second base in did u.k.. this after mounting opposition

from british-based investors. the company saying in a statement, "we recognize the proposal has not received support from a significant group of shareholders, and therefore, consider it appropriate to withdraw." let's get back to the conversation with jim mcdonald at northern trust. expect more yield curve flattening. the inflation story, i am guessing you don't believe inflation is about to break out in any way, as we look to wage growth data in the u.s.? jim: the history of wage gains in the developed market, they only get embedded when productivity is good. ,e could have higher wage gains but they will not be inflationary because they only happened during a period a greater productivity. thelast big wage cycles in u.s. also happened alongside rising profit margins, which meant companies were able to pay the higher wage gains and that did not prove to be a problem

for the market. nejra: so how would you be investing in bonds at the moment, then? are there certain parts of the curve you are looking at? are you staying away from the u.s. bond market? jim: no, so we are a believer that you want to have your bond investments in the market where you have the liabilities that you are needing over the years. we think u.s. bonds look fine over the next few years. we have put money into that market in 2018. you are not paid to take a lot of duration here so there is no reason to be a hero on the longer end of the curve but focusing on the high-yield market, that is our favorite sector within fixed income where we think we have the potential of the 6% return in a little bit robust market, a little higher ability, that should look attractive. nejra: high-yield, interesting. we have seen with the treasury yields rising as well, but corporate spreads moving out a little bit but we will talk more about that with jim mcdonald,

chief investment strategist at northern trust. he stays with us. you can interact with the charts using gtv . tv to charts used on catch up with analysis and save charts for future reference. coming up, a blockbuster jobs day lineup on bloomberg television. 2:30 p.m. london, larry kudlow joins us after the jobs report mother later, michael mckee sits down with a new york federal reserve president john williams for an exclusive interview. at four clock p.m. london, bill gross gives the -- his take on the bond market. this is bloomberg. ♪

nejra: today, we're asking for your view on our mliv question of the day. will the dollar rallied i when

china returns -- rally die when china returns from holiday? now, let's turn to get letter and its abandoned plan to consolidate its headquarters in the netherlands, saying it would maintain a second base in britain after mounting opposition from u.k.-based investors. but speak to our and stirred him -- and stirred him bureau chief -- ansterdam euro chief. has the decision come as a surprise? >> it was clear that the investors opposing this decision march, made itm clear that the u.k. based investors were unhappy with this proposal. in that sense, i would not call it an uber surprise but a blow to the ceo, who campaigned with

his former employer. he worked over a decade to get the company to move to rotterdam. it is a shock in the netherlands. shock and youf a could say a bit of an embarrassment for unilever's ceo. what else will he need to focus on from here to as wage investors -- assuage investors? joost: i know one of the major complaints was not just the fact it was proposed, but the way the company communicated this to shareholders in london, mostly london. my guess would be mr. pohlman and his cfo will need to get back to the investor community to explain the rationale behind the decision and go back to life they even decided to propose this in march. nejra: exactly. why the about-face? we know why, but still. thank you so much.

let's check what is trending across the bloomberg universe. a lottery craze in the philippines as people line up for a shot at winning the $60 million jackpot. bloomberg.com, chinese spies allegedly infiltrated almost 30 top u.s. companies by installing a tiny microchip on hardware used in their servers. amazon and apple are said to have been affected. combined nete, the worth of the 500 richest people in the world fell the most in six months yesterday. in second place, donald trump's trade war in china is making brazil's farming great again and the top story, elon musk mocks the fcc calling it a short seller enrichment program. with more on tesla, editor and bloomberg news. great to have you with us. what is the risk for elon musk in mocking the sec -- fcc in this way? >> there are several players of

risk. there is a personal risk in that the penalty could be reinstated. as part of the settlement, the penalty was reduced come he got to keep his seat at ceo. originally, they have sucked to ban him from being the ceo of a listed company. they settled that out that the settlement has yet to be approved so they could withdraw that and it is something you have to think there thinking about doing. as a regulator, they have to have the respect of the companies they are regulating and this indicates they are not getting that from him. at the same time, i am not clear on whether he has broken any laws or directly. that, there are plenty of risks for the company and the relationships the company -- company has not with just shareholders but suppliers and everyone down the chain who have to believe that elon musk can continue to lead this company in

some way other than by tweeting out more and more outrageous. nejra: yeah, i mean you could say it is only inviting the fcc to rethink the settlement, but also, i am wondering whether this is going to make it much tougher to attract independent directors to join the board? dave: exactly. this company has a lot of needs. they need relationships. they can't just beheaded by captain musk and his magic tweet machine. he has been successful in the past that creating a reality distortion field so that a product like an electric car can attract a lot of attention and become one of the biggest carmakers -- upstart carmakers ever in the history of man. thatis possible to do with kind of thing, but now he has to take the company forward and show real leadership and some kind of capability to make friends rather than just make enemies.

talking down your own shareholders and even short-sellers is not a good way to do that. there are a lot of risks here. suppliers also have to ask themselves, is this a company we can better long-term on? the supply chain for a carmaker is crucial and the companies that make batteries and other parts, there is a global competition, a global race going on to make electric cars very competitive. if they look at a company that is headed by someone who shows he doesn't really care how much risk they take, that may give them pause. you mentioned they need to bring on new directors. it will take a real bold person willing to take on a lot of risk that they have the ceo now that is beginning to behave this way. nejra: thank you so much, dave mccombs editor at bloomberg news. . we have a chart showing tesla's social media sentiment.

green means good, red means bad and right now, we are in the red zone. social media sentiment, not reacting too well from the tweets from elon musk. as the u.s. bull market continues to run while the rest of the roadblocks behind, the question is when will the rally and and what can we expect? with a few of those answers, jim mcdonald at northern trust, still with us. i want to talk about the investment scenario you have been calling a mild growth myopia investors have. what does that mean for how stock markets are going to perform from here? jim: we think investors that have been focusing on the duration of the expansion since the financial crisis without looking at how much actual growth has been realized are likely to view the expansion ending sooner than it will. the u.s. has had few lit of growth of about 45% compared to 75% during the 1980's and 1990's. we think the expansion will go on longer than the bears fear

and that is a constructive environment for risk-taking and the stock markets. nejra: you are saying a growth slowdown will extend the economic cycle and therefore, also the bull run in equities? jim: exactly. is too hotscenario growth that makes the fed raise rates. we have seen the fallout. good but not great growth is the best environment. nejra: in terms of global equity markets and returns, is the u.s. going to continue to outperform from here or do you see returns being better from other parts of the world? jim: it depends on your horizon. 12 month basis, we like the u.s. the best. we have our biggest overweight in that market. on a five-year basis, we think the emerging markets will deliver a 2% two per -- 2.5% premium. asia, emerging markets, latin america? jim: we think asia will have the

best growth in that time. then. -- time period. asian markets are the bulk of the publicly listed market cap in emerging markets. nejra: we have seen selloff in tech stocks. the nasdaq had the worst day since june, the selloff continuing in asia. i talked to someone yesterday who said tech -- and this is goldman's view, tech is no longer an industry. coveting is tech. in your five-year outlook, how do you figure in tech? technology will continue to expand its market share and that is the primary driver of growth. theuldn't overly analyze stronger selloff yesterday in being driven by fundamentals and the hacking and concerns around that. tech is a high data sector. it has materially outperformed this year. when the market sells off, tech

will outsell the rest of the market. nejra: heading into the u.s. jobs, you talked about you see the fed raising to 2.5 and ending there, but should investors be prepared for central banks globally to keep interest rates fairly low? risk isthink the big around inflation. none of the central banks are confident they are able to achieve their inflation targets. you have core inflation in europe under 1%, according inflation in japan at .5%. japan inflation is 20% below where they thought it would be. that is a direct hit to their ability to service debt. central banks have an interest in leading -- letting inflation improve as opposed to prematurely cutting it off. nejra: how much is the rising oil prices a risk for central banks in terms of feeding into

inflation? jim: he's more a risk to risk-taking that it is. than it is. the risk is oil price rises due that forly disruption, economic growth, bad for emerging market growth, that for risk-taking. if we knew definitively that in a year from now, oil would be 125 because of supply problems, that would not be good for markets or the economy. , chiefjim mcdonald investment economist at northern trust. are some of the tech movers from bloomberg's report that beijing has hacked america's networks using a microchip else by its size -- spies. lenovo says supermicro is not a supplier. open.european tech at the

we are just over 30 minutes away from the european equity market open. euro stoxx 50 futures pretty much flat. this is bloomberg. ♪

>> welcome to bloomberg markets, the european open. we are live from the city of london. i'm anna edwards. the cash trade is less than 30 minutes away. lenovo leads the selloff in asian tech shares following bloomberg's report on hacking. samsung beats. which team will drive european tech? yields on the 10 year have a