nejra: good morning from bloomberg's european headquarters. is bloomberg daybreak: europe and these are today's top stories. anna: sounding the alarm. a message for jerome powell. >> the policy is real for many countries. anna: donald trump targets high oil prices. brent crude drops below $80 a barrel. in europe, officials hold intense talks. can they strike a provisional deal by monday?

manus: welcome to the show. bonds are rising in terms of yields. it is time to buy tenure government bonds as we see them rise. the spike in volatility they say shows nervousness amongst investors. they go slightly more overweight on duration. keep an eye on the dollar index. donald trump does not like what the fed is doing. i don't like it. i think we don't have to go so fast. he says he likes low interest rates. keep an eye on the yuan. we are kissing distance of seven. the bets are mounting. $12.5 billion we will break seven.

this is the chorus line which is selling yuan. jpmorgan along with bank of america, merrill lynch. the voices of dissent are rising. anna: no voices of dissent here. let's talk about the equity markets in the asian session. just to point out in the kospi, ketchup going on in south korea. the picture in asia is a little more positive. we see msci asia up 0.25%. not a day of intense selling we saw monday. these imf warnings and these mous in treasury markets, that's the backdrop. with one eye on hurricane michael, let's keep an eye on the oil price. we will get further updates on this. holding above that $74 a barrel mark. is alreadyichael having an impact on offshore oil production. that is something we are watching for.

also very topical. will we see a deal by monday? that seems to be the talk. yesterday there was talk about whether there could be a deal. some kind of deal by monday. the times has an interesting line on the potential for rebellion. members of parliament potentially right to rebel against their leader on a brexit deal. we should also talk about south africa. we've got the finance minister, a change there. we will be speaking to the south african reserve bank governor. the central bank governor will

be joining us from the imf world bank taking place over there. that happens after 7:00 london time. juliette: it looks like the msci asia pacific index might actually rise today for the first time in eight sessions. your singapore upward momentum from the nikkei in late trade. it is hong kong and socks in india and thailand leading gains. the asx 200 up 0.25%. we are seeing korea play catch-up after being closed yesterday. taiwan is closed today. in terms of stocks, weakness from the tech players. softbank coming under pressure. journal a wall street report that softbank is in talks to take a majority stake in when work. it is up by 5% in tokyo. indian financial stocks looking strong after the state bank of india tripled its target for buying loans for some of the nonstate lenders. and then in australia, the education provider of the most in 14 years on an unsolicited takeover offer from a number of companies at australian five dollars 50 a share. a very big hop for that stock. stock.we love a pop on a

from the stock market to fixed income, they are bracing for $230 billion worth of new paper that comes to the market. our mliv question of the day today, 10 year treasury yields by the end of the year. --ve or below three points 3.25%? ask the guests a question, the idea will come through to the team. jpmorgan asset management says by bonds this morning. let's get back to juliette saly for your first word news. good morning. juliette: u.s. president donald trump has repeated his criticism that the federal reserve is moving too fast with interest rate increases. he dismissed concerns that inflation extending his run of criticism that central banks have disregarded as they push ahead with higher borrowing costs. that is not a view shared by the dallas fed president.

>> there is no question cyclical pressures, inflationary pressures are building. what i mean by cyclical, tight labor markets. the tariffs. steel, aluminum, input cost, oil prices being higher. juliette: donald trump has said he is considering goldman sachs and tina powell to replace nikki haley as investor to the u.n.. he is considering five people for the job including powell. the president did not name the other four, but said the u.s. ambassador to germany is not among them. a major u.s. telecoms company has discovered in a belated -- manipulated hardware and removed it according to documents, analysis, and other evidence. it follows a bloomberg report that details how china's intelligence services had ordered subcontractors to plant

malicious chips in supra might -- supermicro server motherboards. italy's finance minister has said the government is worried by the unacceptable bond yield spread. his admission of concern came as he appealed for calm amid a war of words between the government and european union authorities over the spending program for the coming year. he offered no signs the government will change its plans , repeating targets that have already led to the bond selloff. hurricane michael's winds are set to rise to category 4 strength before it slams into florida. residents have been asked to evacuate. system,-moving weather which could cause $15 billion in gulf ofas already cut mexico oil production by 40% and natural gas output by 28%.

warnings and watches have been issued as far north as the carolinas. 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. this is bloomberg. anna: thank you very much. the imf is warning that investors are under -- underestimating the risk of a financial stock. there is complacency about the possibility of a sharp tightening of economic conditions. joining us now is the chief economist and -- for america and europe at standard chartered. good to have you with us. i was reminded of a key anniversary. 10 euros ago on monday we saw central banks globally coming together to give a big shot in the arm with a big interest-rate cut during the financial crisis. a fascinating reminder as we sit here and wonder whether higher interest rates are going to cause trauma for financial markets.

quite the imf has been warning about this for some time. if we go back to the april report, we had similar warnings about the risks of central banks risksning to quickly, the that financial conditions could become adverse for markets and economies, and also generally stretchedout the nature of some assets. i think this is what we have had again. the warning about overvaluation of assets, particularly in the u.s., a repeat of this morning about central bank tightening and the risks to financial stability in general for the global economy. having said that, there were measured warnings. they recognize that at the same time, interest rates are low for emerging markets. fundamentals are --

anna: manus? manus: good morning to you. this is a chart we have used several times. i want to type back to what jpmorgan are saying. the worst-performing one is the performance in china and the eurozone. jpmorgan asset management says global growth is going to slow. it will not take much to bring about a recession. a spike in oil. would you agree? are we one step away from a real economic reversal? >> i certainly agree with those three risks to the global economy. tightening policy, higher energy prices, trade wars, of course, do present a threat in particular at the moment. a slowdown seeing is

in chinese activity. beijing taking action to make sure that some of the impact from slower trade is being offset by stronger infrastructure spending. fiscal stimulus. have cut the required reserve ratio. we expect further cuts to ensure liquidity. from the chinese perspective we are confident is going to be around 6% this year. that is not bad at all. large blockhe other in the global economy, europe also going at an above trend pace. i would not be calling for global recession anytime soon. anna: what kind of landing or going to get in the united states? i ask because we have this mliv question of the day. the question is whether we are going to end above or below 3.25% on u.s. 10 years. it is interesting to ask this in

the context of where we have seen yields going. we will show you the question and put up this chart that shows u.s. yields breaking through key levels. the market seems to be rethinking where we are going on treasuries. >> our view is that 3.25% is around the peak. willink 10 year yields struggle to get substantially higher than 3.25%. by the end of the year, we are 2019,ing looking ahead to markets may well be anticipating sustained fed rate hiking. we expect four rate hikes by the fed in 2019. if markets are starting to take that on board, that suggests the long end of the yield curve will be holding around current levels. there is a lovely piece by robert burgess. he writes great stuff, he is one of our opinion column writers.

he says the one missing ingredient is inflation. realized inflation and inflation expectations are the big missing piece of the ingredient. pce fromad a drop in 2.2%. is it as nascent as the data would look? or are we building toward an inflationary spiral in 2019? >> the headline data suggests that inflation is not a problem at the moment. what we are seeing in surveys and behind-the-scenes are rising great pressures. that is where we need to pay attention. higher energy prices do feed through the high headline inflation. core inflation, it is what is happening on the ground to wages. the fed has pointed to higher wage awards at the margins. even though the and if i being rb pointed to nf

shortages of labor and the low level of rates, at a certain point wages are going to be adjusted up. we do not think there is going to be a sudden jolt in inflation , but certainly enough for the fed to feel the need to continue to raise rates. we expect 3.5% by the end of next year. anna: the fed talking overnight in asia saying low u.s. -- echoing that goldilocks theme. thank you, chief economist for americas and europe at standard chartered. she stays with us. coming up, trade of the decade. emerging-market equities space their worst year since 2011. why one firm thinks emerging markets are -- later on we are going to

get the south african reserve chair in his first interview of the day. that is at 7:00 a.m. u.k. time.

anna: good morning, everybody from london. it is 6:18 here in london. 1:18 in the morning if you are in new york. futures suggest it will be flat at the start of the trading day. they look flat for the u.s. session. let's get a bloomberg business flash. lvmh is concerned that chinese demand for high-end -- dior like the hour makeup remains strong. previous --

ago, he was shorting chinese currency. now he is long on copy drinkers revealing a stick of 1.8 in starbucks. the largestina is growth opportunity, which could help shares double in the next three years. fiat chrysler is nearing a deal to sell its high-tech cars parts unit after the japanese firm raised its bid. bloomberg has learned cal sonic, owned by kkr, have reached a tentative agreement on price. are said to be negotiating a valuation of five-and-a-half billion euros. aftbank is in talks to take majority stake in wework as the

startup raises additional capital. the japanese conglomerate is likely to invest several billion dollars on top of the $4.4 billion softbank and its vision fund put in last year. vision fund chief said wework was seeking to raise more funds. that is your bloomberg business flash. manus: thank you very much. emerging-market equities are flashing the buy signal according to research affiliates , a sub advisor of the money managers including pimco. was made backhat in february 2016, that called emerging markets the trade of the decade. the advice proved pressey and. stocks -- proved prescie nt.stocks surged 80%. that is a heck of a call coming

through from research associates -- research affiliates in terms of emerging markets. i want to get a sense from you in terms of what the indonesian central banker has been telling jerome powell at the meeting, which is you need to be mindful that a spillover of your policies is real for many countries. do you think the messages from the indonesians and others will be heard at the feds table? >> i think policy -- fed policy is very much targeted on what is happening in the u.s. economy. , that gradual tightening, we do not think that's going to change. for emerging markets, the risk is if there were to be a sudden acceleration in fed tightening, if the fed were -- found itself behind the curve, we do not

think that is the case. we think there is going to be a clear flagging of further tightening policy. facingerging markets are a lot of challenges from high energy prices. they are not energy exporters. they're concerned about trade wars as well. some of our work has suggested asian countries could see beneficiaries of the trade spat between the u.s. and china. it is not all negative. anna: other countries could benefit in the context of trade tensions in the technology tensions we have been reporting. where stands to benefit? india was doing very well. there was optimism around structural reform in india. it looks as if the markets are not quite so optimistic there. what is the story with india for you? >> the india story is a tough

one. it is a twin deficit country. we have seen the rupee down by 8% since the start of the year. a big decline in the value of their currency. i think our focus now is on what happens with state and regional elections later in the year. markets perhaps are not paying enough attention to those risks. tothink the rupee is likely stay under pressure over the next couple months as a result of that. the economic fundamentals, we continue to see strong growth. the corporate sector is relatively invested. prices don't help the deficit problem either. manus: they certainly don't. hold those thoughts, because we have been thoughts from the imf world meeting in bali. >> the u.s. policy needs to be

mindful the spillover effects of their policy is real for many countries. having the meeting in indonesia in bali, i hope jerome powell, europe, china, japan, will be aware that you are here in a country which is doing all the right things and yet we have to be very vigilant with the global environment changing very fast. calldo not think this is a for excessive concern provided countries manage the policies well, especially in this part of the world. there is no question. this is going to be a volatile journey. it is going to be with us another 12 to 18 months. >> in today's highly connected economy, international developments affect the u.s. economy and policy actions

affect the rest of the world. therefore we devote considerable effort to monitoring in the analysis and developers around the world to understand how our actions affect global economy and indirectly feedback into our economy. >> the effect in terms of confidence of the global mechanism of how a dispute should be settled is really huge. we are facing a situation in on a a country cannot rely mechanism other than -- when you have a dispute. that is a huge cost for the global economy. isglobal growth this year lower than last year, probably another shade lower next year.

i think what is interesting is the underlying resilience of the global economy. you are not seeing major collapses in growth in any part of the world. emerging economies are slowing from last year. slower growth in and of itself coming from a high bid is not cause for concern. >> financial balances continue to build up. the new system remains untested. risks to financial stability have increased. risks in the medium-term remain elevated. while there are reasons for optimism, this is no time for complacency. anna: some of the voices coming to us from ali -- bali. the fed's williams acknowledging the role the fed has on monitoring the impact of its policies on emerging markets and how that feedback loop works. very topical.

up next, european politics. don't miss our interview with citigroup's level political analyst, joining the european open team at 8:30 p.m. u.k. time.

manus: a live shot of london, waiting for the sun to rise. it is the pound you want to keep an eye on. we are just touching slightly higher levels. we have the journal article yesterday afternoon staying -- saying a deal could be close at hand followed by 30 to 40 labor mps could be posed to defy jeremy corbyn and endorse a deal to prevent no deal brexit. soft brexit rising. those are your markets, let's take a deeper dive on what's going on.

annmarie hordern is with us. good morning. >> a bit of a mixed picture this morning in asia. we have china down as well as the kospi back from holiday and south korea, down 0.8%. on the bright side, japan higher , rising after four days of losses. the msci asia-pacific index is higher led by energy, health care, financials. on the downside we have telecoms and materials falling a bit lower. as you said, futures pointing to a slightly lower start. in the treasury market, looking at the 10 year yield everyone is talking about, what is happening on a long-term basis, it could be breaking through a trend line that has not been breached in more than 30 years. redcan see that in this first top trend line. on the short term, the 10 year yield flipped from its seven-year high, trading below 3.25%.

the u.s.ave in focused government plans to sell $23 billion worth of notes today. we cannot forget donald trump taking aim at the fed is saying they are moving too fast with rate increases. i was looking at this yesterday and wants to bring it up again. michael looks like it's going to be making landfall today in florida. inhave the gulf of mexico terms of oil production cutting 40%. natural gas, they have cut that out that by 28%. wti trading above $74 on these concerns. saying yesterday entering a red energy market. today i will be speaking to -- speaking about demand concerns in the oil market. absolutely. thank you very much. there is a link between commodities and the treasury market. we take you to our mliv question of the day.

that is the market live blog. will the 10 year treasury yield and the year above or below 3.25%? a simple one to ask. let us know your thoughts. hit the ask the guest the question button. that sends a direct message to the steam -- the team that put this program together. u.s. president donald trump hazard. his criticism that the federal reserve is moving too fast with interest rate increases. he also dismissed concerns about , his criticism that central bankers have disregarded as they push ahead with higher borrowing causes -- costs. that is not a view shared by robert kaplan. donald trump has said he is considering goldman sachs group deana powell to replace his ambassador to the u.n.. he is considering five people

for the job including powell. the president did not name the other four but said the u.s. ambassador to germany is not among them. >> there is no question cyclical pressures, inflationary pressures, we believe our building. what i mean by cyclical, tight labor market. the tariffs. steel, aluminum, oil prices. a major u.s. telecoms company has discovered manipulated hardware from a super micro computer in its accordingd removed it to a security expert, who provided documents and other evidence of the discovery. it follows a bloomberg businessweek report that details how china's intelligence service ordered subcontractors to place malicious chips in supermicro server motherboards. italy's finance minister has said the government is worried by the, quote, on acceptable

bond yield spread. the admission of concern came as he appealed for calm amid a war of words between the government and european union authorities over the spending program for the coming year. he offered no sign the government will change its plans , refuting the targets that have already led to the bond selloff. a former personal assistant to the goldman sachs ceo has killed himself on the afternoon he was to plead guilty to stealing more than $1 million in wine from his former boss. theumped from his room on 33rd floor of the carlyle hotel on east 76th street around 2:30 p.m. local time yesterday. it was the exact time he was scheduled to plead guilty in federal court in manhattan to interstate transportation of stolen property in connection with that. -- in connection with theft. this is bloomberg.

let's take a look at what you should be watching for the day ahead. denmark's justice and business ministers are going to attend a parliamentary committee meeting on the danske bank money-laundering scandal. that story has been brutal on the stock price. >> indeed. and it goes wider, bringing in the sector as a whole. u.k.'s theresa may faces her first prime minister's questions since the conservative party conference. there could be labor rebels about to rebel against their leader and back her plan. manus: with those lines yesterday afternoon, how close could a potential deal be? everything inrate terms of soft brexit. we are going to get michelle barnier, he's going to present

the draft political later on. let's turn our attention to the ongoing war of words between the european union and the italian governments. the finance minister has said he wants constructive discussions with the eu over the country's plan for its 2019 budget. anna: he admitted he is worried by the unacceptable -- on acceptable bond yield spread, which yesterday was near the widest in five years. officials have said italy's situation is vulnerable and talks can prove difficult. the chief economist for americas and europe is still with us from standard chartered. you have been wrestling with this difficult matter. i've a chart that shows the italian yield premium over bonds -- bunds. you can see what the market is worried about. this is a concern attached to italy in your mind. there seems to be a view on getting from a few guests that

something that stays in italy. >> it is very much an italian issue. i think it will stay so. it is focused on the italian budget. italy proposing a budget deficit of 2.4% of gdp, three times what was earlier agreed with the previous administration. the question is, what is italian debt going to be declining? it has stabilized in recent years. anna: there is not quite the contingency there is with other european crises. maybe the banking looks different. >> last time when we saw peripheral debt spreads widening out, we had the great crisis and that greece would go crashing out of the euro. that they would default on debt. that contagion spread to italy,

spain, portugal, ireland, as we know. it isime around, i think the very early stages and the european central bank in the has that program it could launch. manus: one thing which caught my eye is in terms of the german growth story. it seems to be coming under a little bit of pressure. the number of imports dropping into negative territory. when you look at europe from the chief economist hat, what wealth is deliverable? i will find the chart. >> we are expecting growth around 1.5% to 2% for the euro area. that is above trend. loweredingly, the imf its forecast for german growth. germany was one of the biggest

downgrades of growth for this year from the imf. that does reflect the impact of trade wars. domestic demand is still strong. investment is growing. unemployment is low. consumers are spending. we do not have particularly extended concerns over the outlook for germany or the rest of the region. we think growth is going to stay at the trend pace this year, next year, the year after. policy is accommodated from the fiscal side. anna: let's talk about brexit. we saw the pound on the move. reports about what could be possible by monday. saying there are voices and monday saying something could be -- voicesf my monday in brussels saying something could be possible by monday. are you very focused on the near-term and what kind of deal we get? or are you thinking it's

something comes soon, it will kick the can? >> we are looking minute by minute, hour by hour, week by week, year by year. the implications are very significant for the u.k. economy for years to come. but we are finding that we are getting developments in hour-by-hour. the key is what about the backstop? it does look as though there is a breakthrough on this question of the irish backstop. there may be coming together of the eu and the u.k. government side. that is important in terms of allowing a deal to be done between brussels and westminster. the big hurdle is, will the deal get through the u.k. parliaments? that vote will come at the end of this year, early next year. mpsre hearing from labor

may be willing to support the government on this. we know within the government the numbers may not add up. manus: isn't that the whole point? even if we get a backstop and we get a pro forma agreement, the risk is the u.k. parliament deal and picks the then we are back in two higher tail risks -- the back into higher tail risks. >> if that happens we are in no man's land. there is talk of new leadership for the conservative party. there is talk of a new election. that would take us into unknown territory. getting the deal through parliament is what counts. we think a deal can be done between the eu and the u.k. governments. we are not sure about the number of mps that are going to be supporting that deal when it comes to a vote. anna: rebels in all directions.

thank you. chief economist for americas and europe at standard chartered. let's turn our attention to a european corporate making news. for says chinese demand handbags and makeup remains strong, extending the luxury industry boom. the company's sales grew 10% in the third quarter in line with , despite aecasts tough base from which to compare. let's talk now to bloomberg's luxury reporter in paris. very good to have you with us. lvmh sells more of the world's oldest brands. how are they still growing by double digits? isn't it phenomenal they have managed to tap into these ongoing scenes of growth? china.ly is the chinese market has been growing fast for luxury brands. it is already accounting for one third of sales.

about two thirds of growth. even though you have had talk about a trade war between china and the u.s. concerning luxury that could slow down consumer spending as well as a weaker yen, a weaker chinese yuan, excuse me, the demand has proven to be resilient all year from china. manus: let's talk about the standouts. it was in the fashion division. when you look at the segments of -- within lvmh relative to the watches, the booze department, it is 36% of their overall revenue. talk me through how they managed to deliver that. >> the fashion and leather goods division this year was the first time to have integrated christian dior couture. christian dior is the oldest brand that the chairman owns.

he has owned that since long before he took control of lvmh. he always owned it through a separate holding company. this is the first quarter since lvmh page $6 billion to acquire it. christian dior has been growing fast this quarter. they day successful launch for their handbag. it is a really iconic back from the early 2000's. they brought it back this year after being several years off the market. they did a big instagram campaign to make sure everybody knew about it. anna: thank you very much for the analysis. we will keep an eye on this as it starts trading today. on the program, oil is above $74 a barrel on concerns hurricane michael may exacerbate a supply crunch. manus: a little bit later on we are going to bring you this interview at 3:30 u.k. time.

if you are traveling to work, tune in on to bloomberg radio live on your mobile device. ♪

anna: good morning, everybody. this is "bloomberg daybreak: europe." let's look at what is trending. washington post columnist is feared to be dead after his mysterious disappearance in turkey. he was last seen heading into .he saudi consulate in istanbul had to twitter to find out more. we asked the crown prince about that some days ago. manus: we understand donald

trump's next big conversation. we moved to new evidence of the supermicro hardware in the network of a major telecommunications company. that was back in august according to a security export -- expert working for the company. anna: the china hack story lives on. donald trump says he is considering goldman's dina powell to replace nikki haley. amazon web services, the cloud computing division, has signed combined $1rth a million. also on the bloomberg terminal, uber is sending out investors on a bond sale after it attacked the leverage loan market.

you can find those stories and more across all of our platforms from tictoc to the website to the terminal. manus: we are global. let's talk about the oil market. it is trading at the moment on brent we are at nearly $85. wti at almost $75. there are concerns the united states may exacerbate the supply crunch. production down in the gulf of mexico by 40%. higher prices could put the world economy at risk. who better to divine the oil market? it is michael tan, oil and gas commodities strategist. great to have you on the set in london. heard the oil markets are entering a red zone. should they? will they? good morning.

>> thank you for having me. we agree with that. the term he used was red zone. i think exactly that in the sense that when you are fundamentally speaking, the oil market is at the tightest point we have seen. the market is going to need more barrels to come online. unfortunately, when you look at opec, there is only so much left in the tank they can bring online in terms of spare capacity. when you look at producers like the u.s., you have bottlenecks. they cannot bring that much more online to save the day in the grand scheme of things. at the same time, what you have seen as demand continues to be resilient despite higher oil prices. we continue to draw down inventories in a big way. this is happening at a very inopportune time given that iranian sanctions are kicking in and venezuela continues the downward spiral. we think in terms of prices the

risk is high from this point on. anna: the risk as we go higher as these supply constraints continue. what about the iran story? president clinton was saying to trump -- president putin was saying to trump, look in the mirror. is there any sense in the oil community something changes that? >> it is a bit of a self-inflicted wound with president trump. the reason being he put these sanctions on. prices are higher, not making him happy. the key thing is there have been suggestions that there may be some waivers given to some countries. i think the correct term there is significant reduction exemptions. the key thing is that does not signal a major change in policy in anyway when you look at how iran is playing out here. we are still three or four weeks

ahead of the november 4 deadline for sanctions. you have seen significant reductions from europe, south korea, japan. india is doing a large amount. china is starting to reduce imports as well of iranian crude. the bottom line is president trump's policies on iran are extremely stringent, more crippling than they were under the obama administration. well: i think that is flagged in the market. we seem to have stepped back a bit from the 2 billion barrels everybody thought. you say iran and venezuela are getting the headlines, but we should be looking at libya and iraq. first of all, the numbers as far as you know it. >> earlier this summer, iran was exporting as much as 2.2, 2.3 million barrels a day. we think that comes down to 800,000 barrels a day or potentially lower depending on

how china looks. the major thing here is not so much where exports ultimately go , but what else could potentially break given how tight this market is. when you look at countries like , thoseiraq, nigeria countries are on a wild winning streak right now. any point in time you can see their production go down by several hundred thousand barrels a day because a foreclosure in libya, attacking oil fields and pipelines in nigeria, over the past couple weeks we have seen demonstrations in iraq. they have been on a winning streak in the sense that they have been able to increase production. about 750,000 barrels a day. we believe that to be unsustainable. anna: what about the demand story from here? market going to be destroyed by prices getting too

high, or by trade tensions finally finding their way into the data, into consumers minds? >> trade tensions are something to be concerned about. in terms of how high can oil prices go, the question i have been asking is, are oil prices actually high, or just higher than they have been recently? i think the answer is it depends the you ask. if you are major importing country and your currency has devalued relative to the u.s. dollar, of course you are paying materially higher amounts more than perhaps we have ever seen. india is a perfect example. to be clear we have not seen demand destruction globally. manus: thank you for sharing your thoughts this morning. what goes on in the oil market, the shortages and bottlenecks. michael tran. let's leave the viewers with a quick look at the mliv question

of the day. will ten-year treasuries and the 3.25%?ove or below this is bloomberg. ♪

good morning. >> i am anna edwards. these are the top stories today. alarm time to sound the in bali. a blunt message for jay powell. policy, -- many manus: president trump targets will races, -- oil prices, saying they are too high. u officials hold intense

talks. can they strike a provisional deal on brexit? anna: good morning. 7:00 in london. let's look at what the futures are telling us about the trading day ahead. that lies ahead in europe. looks like a mixed picture. dax, a little touch lower. broadly positive that not a great pop. chinese stocks recovering a little bit. playing catch-up due to a previous holiday. a lot of markets to digest. .ngoing warnings about markets watching the debt auctions. the rise in treasury yields. in the oil market to take

account of as well. the national hurricane center has recategorized hurricane category four, extremely dangerous. it has been having an impact on oil prices. those's check in on bond markets. u.s. bonds for you. bund, trying to make up their mind which direction to go. there seeing talk about unexpected bowl -- unacceptable level. havingdizzy highs, ramifications around europe. we are just, we just got a

headline on hurricane michael. we can pick that up three dangerous category 4 bank. there is the breaking news. ramifications on the oil market. we have heard that. extremelyte dangerous dangerous category 4 buying hurricane. from the bond markets, let's get to juliette solly standing by. >> we have seen the asia-pacific index higher for the first time in days. nikkeiaustralia, the closing higher. the cost become a underperforming. playing catch-up today. china, under pressure. drop monday.

not a kind week for chinese investors. looking at the currency market. yen holdingn the on. study at the moment against the greenback. a hundred 13. that is due to investors piling into safe havens. so many risks including what is happening in italy. philippines coming through today. narrowing from july. the peso, a touch higher. there does seem to be a winner. the thai baht outperforming asian currencies. we have seen a little bit of resurgence coming through. >> thank you very much. juliette saly in singapore.

3.1% is where we trade right now. a nice time to remind you of the question of the day. will 10 year yields and above or below? let us know your thoughts. if you want to get in touch with the team, tv is the function. hit on the button. that is a way to get a message through to us. >> thank you. to the first word news. president trump has repeated his criticism the federal reserve is with interestt rate increases. he dismissed concerns about inflation, continuing his run of criticism. by the not a view shared dallas fed president. questionis no inflationary pressures we

believe our building. a tight labor market. tariffs. steel, aluminum. oil prices being higher. >> he is considering dana powell. he is considering five people for the job including powell. not name the did others but said the ambassador to germany is not among them. a major u.s. telecom company has hardwared manipulated and removed it in august. that is according to a security expert who provided documents, analysis, and more. a businessweek report that details how china's intelligence service ordered the planting of melissa's -- malicious chips.

in the u.s., the national hurricane center has said a dangerousbecome category 4 bank hurricane. residents had been urged to evacuate near panama city. the system, which could cause --age, has cut gulf of oil gulf oil production. have beenhes issued as far north as the carolinas. a former personal assistant to sachs ceo -- goldman has killed himself on the afternoon he was to plead lt in stealing rare wine. new york city police say he jumped from his room on the 33rd floor on east 76th street. that was the exact time he was scheduled to plead guilty in a toeral court in manhattan

interstate transportation of stolen property in connection with the theft. global news, 24 hours a day. powered by more than 2700 journalists and analysts. >> thank you very much. the latest global financial report. there is complained to see. meanwhile, president trump has restated his criticism of the fed, saying the central bank is moving too fast. great to have you with us. the imf warned we are ignoring risks and are complacent.

i put it to you we probably are laittle bit blasé fair -- sez faire. >> we have a relentless pull in one direction. political drag. markets are assuming the pull in that first instance. factors arend interesting. a trade war is called a war for a reason. are about to structure of the value. that is a relentless fact. the words china comes to mind. the other thing, though word , the danger of

inequality. that is being overlooked at our peril. apart from anything else, it is creating an environment where anything can happen. >> not being ignored by voters, it is seeming. we are asking whether treasury yields will be above or below 2.5%. i have this chart showing yields breaking through two key levels. this chart goes back to the 1980's. it begs the question whether this will be an uptake in yields. the endless march of technology generally makes yields lower. or is this something else we are seeing. area,s is definitely an because of the world order and the risks that come with it, we

are seeing that tightening. perhaps yields are being pushed up so there's something to give back. are seeing now is perhaps a revision of that. depletion of dollar ,iquidity, the effects on that worrying people on the scale they have not seen. generation a -- a new generation have not seen this. this could be a slightly different pattern. >> how bad could the storm become? could it turn into a hurricane? greenspan, bond markets of 1994? different, the southeast asian crisis, the

fundamental structure of very much mores, settled than it was then. we have a greater strength in depth across the economies. they are going to be more resilient than before. is anestion is, what acceptable return. we are picking up 7.5% income. is that an acceptable risk? feelnk it is beginning to like quite an attractive return. looking at the opportunities it might throw. you are keen on certain emerging-market assets, credits. there is a geopolitical

sideswipe that has allowed a lot to be accounted for. this is very interesting and well structured. attractive income. >> on the corporate side? >> even on the sovereign side. terrific capital inflows into africa. will structured economies 8% or 9%. they are progressing strongly. this could give you a lot of ammunition. when we see that whiplash effect. are still going to receive your 9% income. we could be approaching as theseng times

valuations have and abated most of the bad news. >> when you talk about opportunity, the brazilian riel onas been -- the the turn. there are people saying, if there is a constructive change, this would rewrite the market? do you have any proclivity for brazil? environmentsee an with a capitalist friendly structure, we have seen argentina receive positive support. people are looking for any excuse to be supported -- supportive of emerging markets. opportunities,re

people are open-minded, yes. >> thank you so much. let's tell you a little more about hurricane michael. it has become a dangerous category 4 bank hurricane. winds, sustained increasing to 130 miles per hour. we are showing you the function on the bloomberg. you can use that to see the trajectory. >> we are going to be live in to -- this is bloomberg. ♪

->> i got to the point where i said, i have been successful but none of this is mine. anna: this is bloomberg

daybreak: europe. south africa, can a new finance minister save south africa? minister takes over before a budget update. he faces challenges ahead including convincing investors he can root out corruption and debt. with an hays is there guest to has a lot to say on this subject. >> it is nice to see you. there is so much to talk about. not only a new finance minister but all the important questions on the table this week.

welcome. let's start with a new finance minister. many are wondering what you think about the turmoils, someone you know fairly well. bit.w the rand rally a will this convince investors south africa is on a better track? what you have seen with the currency, the weakness you saw in the rand last week and this week had to do with the finance minister. didn't have anything to do with the capability of the finance

and minister to do his job. you have a minister involved in framing the macroeconomic architecture. not only where we are sitting. of theat the forefront inflation targeting regime. what impact do you think he can have. >> he is a minister in economics. for monetarysible policy. the constitution of the republic says we might conduct this independently. a consultation between the south african bank and the finance

minister. -- has run the central bank for 10 years. and three months. forward to this. >> this has been a bit of an issue. united states, the same thing. the head of the children -- reserve meet often. as a central bank chief, do you have any concern the finance you assume he -- is a firm supporter? he is an advocate of central bank independence. i would expect him to continue on that trend. the independence. more importantly, when he takes office, he commits

to abide and respect and protect the constitution of the republic of south africa. enshrined in the constitution. i have been in the south african government. i have not encountered a president,here the past or present, a minister of toance, has ever attempted impact this. we have not had politicians in with africa interfering the independence of the reserve bank. i cannot think of any politicians who would want to become exceptions to that rule. emerging-market turmoil, one

of the big issues discussed over and over again this week. the people see when say the federal reserve has to be more cognizant of how it's actions affect other countries, especially emerging markets? embarks on fed quantitive easing, the same issues came to us. of the effectsd of your actions, so much so, the guidance is their of thehe policies advanced economies. account. they take understand, they are the federal reserve of the nine states. think -- but from

where we are, what we are seeing playing out is what we had expected would play out. we expected that. there will be a repricing. especially in emerging markets. realignment of the exchange rate. we saw was this could be taking place at a time when you were establishing trade tensions that complicates the whole picture. >> what does this mean for the rand? i know you had a dovish member. inflation, what is that going to mean? >> i don't know how you arrived

at that number. you will not be able to figure that one out. is this change in sentiment globally affects capital flows. they have slowed down. you have seen the flows reversing. the question here is what is the policy reaction. it is a very clear one. our view is we are an inflation target and we will react to the depreciation of the currency. inher than to the movement the currency. >> thank you so much for joining us. hope we will see you again.

going to send it back to manus and anna. keep it right here. >> great interviews.

welcome to bloomberg markets, the european open. i am anna edwards alongside that miller in berlin. -- matt miller in berlin. >> asian stocks drifted higher. treasuries retreated. edged lower.d oil european stocks start trading in 30 minutes time. >> treasury