e.m. china. we saw the fed backup an e.m. route. we saw the fed backup off the back of what happened in china. is the federal reserve more or less sensitive to that than they were a year ago. >> i think you're seeing them exit, quan tave rising sthrirmente we haven't seen before. they're setting the precedence. so i think there is a very -- very good deal of sensitivity. keep in mind they're reducing their balance sheet at the same time. that's obviously something they're weighing into. >> i had a conversation with week with an investor who said that typically real rates of the fed get to about 1.5. that would suggest the rate needs to get to 3, 3.5%. are we going to get normal rates at 3.5 of the consideration r concern. they'll probably do two or three next year. but i think we're facing a significant slowdown in both fiscal stimulus and by the end of 2019 or 2020. >> i can the federal reserve on a real race basis gets rates to where they once were? >> it defends where they once were. the trend higher for rates is going to be meth

high-yield or e.m. credit? adding risk? george? >> e.m. credit. >> mike?ing to be an outliar. lisa? e.m. credit. jonathan: there we go. after the big debate, i thought about the potential of a hidden 10 year yield hitting 4% sometime soon, what do we see first? what do we see first, 4% or 2%? 4% or 2%, what do we see first. on a 10 year treasury yield? four or two? george? george: 2%, i would guess. jonathan: lisa? lisa: two percent. jonathan: mike? mike: that is a widespread. i guess i'll go with 2%. jonathan: well, we are back in the middle now at it's great to three. have you with me on the program. thank you to all of our guests. from new it for me york, but does it for us. we will see you next week on friday at 1 p.m. new york time, 6 p.m. in london. ♪ 6 p.m. in london. ♪ scarlet: i'm scarlet fu. this is "bloomberg etf iq," where we focus on the assets, risks, and rewards offered by exchange traded funds. emerging market debt has been going down, down, down the last three weeks, so what opportunities does that create for the opportunistic investor? th

do you look at pockets of e.m.ypically you think there might be value, and then you look at the situation as to whether it has credibility and then you back away? >> yeah, i mean, there's no doubt central bank credibility and central bank policy plays a key part in emerging markets. you look at brazil right now, lisa mentioned brazil. we also like it. you have a reform-minded central bank. the paths for rates have been lower. they've gotten to inflation that a it's the lowest that they witnessed for at least 20, 25 years. you have to evaluate not only the macro factors with respect to the economy, but central bank policy is crucial. dollar-denominated or local? >> depends where you are. i think the case for local currency is, from our standpoint right now, the most compelling because we think that the real yields when compared to real yields in developed markets really stands out. that's where most of our incremental money is going right now. jonathan: george, what about you? >> our bench is dollar-based, but i agr

in 2008, e.m. economies were overheating. this time around emerging negative output gap around 2.5%. the second point is although real rates are slightly lower, when you look at inflation for e.m. back then they had overheating economies, average inflation close to 8%. is arounde inflation 3%. stronger starting point. and external debt growing is a natural progression as economies mature. you have corporate's who did not have access to external markets that can access those. looking at that number is slightly alarmist. emerging markets can weather this. the responses are credible. you had is ill not cutting -- brazil not cutting. take a slightly different take. this is different for emerging markets. jonathan: great to have you with us. still ahead, the final spread, featuring fomc minutes including jay powell. this is bloomberg real yield. ♪ on a thin: it is time for the spread. we have brexit negotiations continue. south korean president mine meeting with president trump. fomc minutes and the bank of england's mark carney,

argentina is a specific case when it comes to e.m.almost brings us back to the brady bond days. think there has been a stronger dollar high rate in the u.s.. the argentina story is specific to argentina. jonathan: there is an idiosyncratic reason, where there is some string that aligns these two things, it is central bank credibility. there almost is none. you see that in turkey and in argentina. is that the similarity? has a prettyey loose monetary situation and fiscal condition that isn't construct of. -- constructive. both of those things -- you are going to get a little old-fashioned e.m. central bank and fiscal credibility issues converging at the same time. >> more broadly, the story for e.m. the last year and half has been to get longer yen and pay -- play the currency risk because the dollar will get weaker. the dollar move has made people more uncomfortable than they were relative to a month ago. is there a reason to be uncomfortable in e.m. longs? priya: the dollar is in structural decline mode. hase is a diversion that come

high-yield or e.m. credit? george? george e.m. credit. :jonathan: mike?el: i'm going to be an outlier. i wish you would have said e.m. local. i am going to take high-yield. jonathan: there we go. after the big debate, i thought i would pose the following question. what do we see first? what do we see first, 4% or 2%? 4% or 2%, what do we see first. on a 10-year treasury yield. 4% or 2%. george? george: 2%, i would guess. jonathan: lisa? lisa: i would say two. jonathan: mike? michael that's a wide spread. : i guess i'll go with 2%. atathan: where in the middle three. i thought i would ask the question. guys, it's great to have you with me on the program. george from the west fargo investment, lisa and michael. that does it for us. from new york, we will see you next week. ♪ scarlet: i'm scarlet fu. this is "bloomberg etf iq." ♪ emerging-market debt going down. what opportunities does that create for the opportunistic investor?

is that the biggest risk for e.m. right now?ng markets, but one we think should be taken with a certain amount of poise. we shouldn't forget that the fed responds to surprises to activity and inflation at a different frequency than market. six year, you had five to successive negative downward surprises and that didn't put the fed off from three to four tightening path that it had. surprisesd upside and i don't think the fed will overreact. i think they will continue their gradual pace they have laid out. it is a risk, but i don't think at this juncture, the highest risk i would flag for emerging markets. ceo ofanny roman, the pimco says he doesn't see a bear market in bonds. what do you expect rates to do and how does that affect your e.m. investments? andrew perry, head of sustainable investing at hermes investment management --kamakshya: our year target is -- 325. we expect rates to go up, but we expect the rate to slow relative to the past few weeks, which has been a rapid pace of yield increase. what i would say from emergi

e.m. feels like it will be a tough place to operate. be converging on making this trade tougher. youew: historically, when saw those moves, you said i don't want to be in e.m. when you look across the board, it is better than it was from a valuation point of view. you had the taper tantrum of 2013, the valuations were stretched. we won't say there aren't potential issues in argentina and turkey, there are issues taking place in those countries, but we are more constructive around e.m. despite the comments you made in the backdrop because e.m. growth is still doing well and we think investors are underinvested. you have seen big flows into e.m., we haven't seen those in three or four years. if anything, money has come out in aggregate. we aren't as concerned about e.m. it doesn't mean we are complacent in risks. they are present, but we are more constructive around e.m. on the debt and equity side. guy: i've got a chart, foreign holdings in indonesian bonds. marketong time, the love this story carried the indonesian government seemed to

e.m. should be ok. consistenthe most features of late cycle pre-recession u.s.conomy is a rally in the u.s. dollar that catches everyone by surprise. i am not saying that we are seeing the start of that but that it be one more example of these indicators here signaling late cycle economic activity and is pretty awful for e.m. worrying cross asset with the exception of maybe credit. this seems to be a lot in equities. not in credit. why are we seeing investors gripped by late cycle fears? >> if you look at the high-yield credit spread ratio, what happened in february made a record low. it moved up a lot in credit spreads did not. some of that was specific to the vix etf blowing up. that ratio is quite low. when you look at ig credit spreads and high-yield credit spreads, think about the violence we are seeing in the s&p 500, what is being shown is that we are not that late cycle. there is a bunch of regime change with tech stocks which is keeping that elevated. i am looking at credit spreads as a better read on the economy in essence be in the vix racing. s&p and

e.m.ty, likes of which we haven't seen in a while. scarlet: you wonder how much of that will go into the rest of the world. this is a global deep dive much lisa: and there are still jitters everywhere. so go figure. scarlet: maybe it takes everyone coming back from a holiday so reassess. the nasdaq is firmer but the dow and s&p 500 getting ready to close lower on this friday. from new york, this is bloomberg. ♪ scarlet: u.s. stocks closed mixed to end the week. crude oil takes his biggest fall. for julia chatterley. we want to welcome you to closing bell coverage. we begin with market minutes, u.s. stocks ended the day with a mixed note. the nasdaq giving back quite a bit of its gains. 1/10 of 1%. while the dow% and s&p have an underwater work most of the day. you can see it reflected in the sector write-down. the biggest decliners were energy stocks. that oil price. one of the most interesting aspects. scarlet: one of the reasons the names are holding up could be foot locker. improvement

lubin here about e.m. writes and whether they are high enough. taken over the questions. i like that. we have viewer questions coming for mr. bloom. keep them coming. if there is a sign the yield curve is inverting, does that mean an impending economic slowdown? >> for emerging economies, sometimes it is the case that emerging-market as if prices do best.- as set prices do the dollar weakens, and that tends to push capital toward emerging markets. we are seeing that because the dollar is strengthening that is sucking capital from e.m. one tends toat think it is u.s. interest rates that matter when it comes to pushing capital toward markets or away. it is only since the dollar has been strengthening a couple weeks ago that in assets have started to -- e.m. assets have started to weaken. we have seen u.s. rates go up while capital is eroding from the market. measure oft some u.s. monetary conditions matter, but at the moment it happens to be the dollar that is the actual measure of u.s. monetary conditions that matters. >> how fortunate for david b

>> this means there is more room for the e.m. trade to fall further.an opinion on whether it should or well. -- should or will. the selling has been exclusive to the hedge fund crowd. you can see this in the data. i have positioning data for es, emmi futures. these are real money investors in the blue. the white are hedge funds. they have quite the diversion they typically don't have. this is the widest spread between the two groups and stated going back to 2010. there is a difference of opinion and whose opinion matters is not necessarily important. there is more selling to be done if there is weakness. line?s there a what should we watch out for? >> the hedge fund crowd has been more finnicky. we have seen popular trades over and over gets hit. volatility comes up and they need to reduce. it is likely real money investors will follow closely behind because one seems to track the other. it will have to be a sustained weakness in em. it doesn't mean a broad selloff, but a few more days and weeks is enough to get this crowd going. att: when we talk real

e.m. futures are higher, indicative of that. on the in on the terminal, 109.61, recovering some ground when it fell the most since february. the dollar-yen will be capped by the 20 day moving average around 109.85. the players that want to take big positions before the key am. data, jobs and i david: there are lots of risks, and lots of reasons to be hopeful. talking about spain and italy. yvonne: how much political risk is being factored into the euro, some say look at e.m. currency. sophie: when you look at how it tracks over the course of the year, look at its performance just this morning. traders, they are tallying situations as a plus, given the rejection of the eurosceptic as finance minister in italy. there have been fresh elections, and the five-star movement may want to impeach the president, adding more to the scene, then you have movies on friday saying they put italy on a ratings potential review for a downgrade. i get a better sense of who will hold positions in italy's government. the euro could be under pressure.

guy: e.m. is already moving. as turkish lira down 1.74% we speak. japanese selling, a 5.4 number now. we are awaiting the arrival of the next interest rate decision .rom turkey this is accelerating at this point. what is next? mark: i think it starts moving to other currencies. what we saw this morning was this rapid move that took out retail stocks, which is taking out one of the magnets for turkey. stopsh weakness will not overall until the central bank comes in. they are no -- showing no signs. we have more turkish lira week this but in the short term today, it is directionless. it can selloff rapidly, but have rapid rallies in the short term. is grandight see next weakness, one of the world's most volatile currencies. it has poor growth and inflation data set to rocket higher. with its currency weakening and commodity strengthening, oil prices, the rand is also in trouble. it has a current account deficit. how big an effect will that be -- you have a rum opposer ramap countering that -- osa effect, how much does that in fact -- insulate south af

abigail: perhaps a boost in the near term for e.m. take a look at it or that illustrates what you are talking about. mike: this is a key thing at the bottom, the shorts. the greatest amount of net in five's and and ten's. pushing the prices down. inverse on the chart, 3%. i look at that and i think, prove it. this is a long-term trend with a yields going down, prices going up. they levels you want to prove it, that is where strategy would be a call spread. in this case a simple call, where the risk is limited to what you pay, but upside is unlimited to how high the market could go. abigail: take a look at that, the simple call, not just a call spread. a nice way of visually taking a look at this. walk the viewers through the trade strategy. mike: keep it simple. let's take a look at the limited risk. a fews case, 120 call months out on the treasury bond futures. up,if the market goes certainly you can see the upside is limited, we are using $130, that is pretty far, but you can see where you have the protection of risk if yields decli

e.m. is still the standout with the dollar weaker. the dollar as well given some of these inflation concerns. up, the philippines are after being the first among for thebanks hiking first time and indonesia is seeing a bit of relief there. they deserve it after the route we have seen at 1.5% when it comes to jci. currencies looking mixed and, in general, it is raw dollar strength. that is fueling things and that yuan is upn won -- about a third a 1%. offshore yen, sees a little bit of weakness here today. markets are calming down and we see deals across the board heading lower end following what we saw with the tenure failing to stick to 2% or 3%. in the china market, this could be the spotlight. this market has been bogged down by the u.s. china trade tensions despite the data has looked pretty good. if you look at the pmi data, inflation is tepid there. the csieing gains with 300 up. the hang seng is up 2.3%. if you look at the movers, in asia, hong kong seems to be a bit of a standout, bust a for look at things on genting singapore

classese e.m. shaky now that the dollar is rising and we could see more rate hikes from the u.s. fed. the risk premium has jumped to the highest level in 16 months. look at what happened in 2015 when china devalue the yuan. that is one percentage point more. we could reach those levels. investors have raised short positions to a 14 month high. in bond has lost $1 billion market capitalization so far this year. a wonderful story from a bloomberg reporter, she says ratesion from higher u.s. is entering emerging markets via least and you and spots them talking about turkey and spots,na -- immune talking about turkey and argentina. is worth find this wonderful chart. vonnie: wonderful. presentation. i am a sucker for going beneath data, and i think matthew has come up with something interesting as we hit rate. the matt gets the job. -- crown. >> thank you. this is bloomberg. ♪ ♪ mark: live from london, i am mark barton. vonnie: and i am vonnie. this is the european close on bloomberg markets. advi

on e.m. bloomberg, this is the one-month performance of emerging-market currencies versus the dollar. only the philippine peso is the only currency that is up. the argentine peso, the ruble, the real. you are at a record low for the lira as well, as for the argentine peso. -- is idiosyncratic factors? the market gets comfortable selling dollars when global sink a nice growth becomes a thing. everything is looking stable, and growth is chugging along globally. owning at is couple wide variety of emerging markets. when yields come back into focus as they rise, the dollar moves higher. then people look at the local fundamental story and to say i don't want to be involved in turkey. i'm watching out for the mexican elections. i have to be careful in this place or that place. you have to pick and choose. you might end up with asia as being more stable in these cycles, the many cycles, then we have seen in the last which will take the brunt of the pain. or turkey, which always takes the brunt of th

do think that is important for what they do to the e.m.?hael: those who have not maintainedd and have fiscal discipline absolutely agree. stress not the first test emerging markets have had since the global market. we have had depreciation market change on and off worst them we have today, and we have not had a crisis. an if.that answers with that raises the question, are we shining a spotlight toward normalization on e.m. to say you are in good shape? is that what we are seeing with argentina and places like that? michael: argentina is an important example of when a policy mistake occurs and the central bank was loose, will it be corrected? in a case of argentina, they have reversed the mistake and will get back on track. there are other countries that are more vulnerable, like turkey that has had repeated errors am -- and have not corrected. it will be important to differentiate countries that are caught up in market swings. alix: would you buy argentina now? michael: it is a long-term buy. the government and the people have rejected a po

if we are going to see contagion or if it is more isolated incidences in e.m.ntals. director of is the fx at ubs wealth management in singapore. there are two schools of thoughts. who think wee aren't just getting a repeat of taper tantrum, but more in line with the severity of the asian financial crisis and others say these are very isolated e.m.ences, so look at each by their characteristics and fundamentals. what do you think? i think your last statement is probably the correct one. ubs, we acknowledge that we are in the mid to late cycle of this broader business cycle we have been in. when we look at emerging markets , the couple of fundamentals i think people need to focus on is the fact that growth is still doing very well, particularly we have seen china, even in the numbers weter gdp have seen coming out of europe and japan, we have seen some e.m. economies holding up very well and the second thing would be that earnings growth is still very strong. in asia in particular, we see low double-digit earnings growth around the 10, 11% this year and guidance

growth quicker, then asia does really well, and e.m. and cyclicals, but it is not happening.he margin, asia slower, so there is a series of events here. haidi: some calls, given that hasn't materialized? chad: contrarian? we like to fan. it gives me cyclical value, and japan does do well on growth, and we think japan is [indiscernible] haidi: [indiscernible] chad: i think so. haidi: great to have you with us. the wall street fund manager here in sydney. you can interact with the charts shown on the gtv. you can browse recent charts featured on bloomberg tv, catch up on key analysis and save them for future reference. this is bloomberg. ♪ this is bloomberg. ♪ i am haidi lun in sydney. yvonne: i am yvonne man, you are watching daybreak australia. quick check of the business flash headlines, qualcomm reporting a meeting of regulators this week in a bid to win clearance for a $44 billion pursuit of an xp. they will talk to authorities in beijing before wilbur ross arrives for trade negotiations next week. qualcomm is cautiously optimistic the merger will gain approval. haidi: som

you can see that over here, hedge funds started the selloff e.m.money investors held steadfast. in fact, real money investors are here at the end, on the blue line. this is the most bullish they have been on record. and this spread out here, this 2010e biggest spread since at least. this is as far back as the data goes. they both can't be right. so far, e.m. is rallying. it looks like real money has the win at this moment. this is that btv 1318. the tubeame in on today, which gives danny a bit of a bonus point. it is equal and fair, what do you have? to do withe has argentina. we have not had much to do with argentina, but we have talked a little bit about emerging markets. out, yesterday, we saw the 100 year bond plummets, back up to 8%, a level we have not seen for a while because the ims is clearly being asked to help out with a credit line. we saw the current fluctuate quite substantially, and many people are saying do not emerge -- do not worry about emerging markets, but argentina might be an exception. you can see that chart on the bloomberg

some of the e.m. economies and energy stocks. could benefit in that environment. betty: would you say that u.s.-china trade and way the wind blows will be a dominant theme for investors? that it is mostly where it will taked where markets will direction from over the next few days and weeks? james: at least in the short term. the u.s.-china reduction in this friction is actually driving markets to a certain extent. it creates a relief rally for asian assets. factor has once this gone, you have to look at the fundamentals and i think the fundamentals will be the earnings of the companies. betty: james cheo, thank you so much. don't forget our interactive tv function. tv . you can watch us live and dive into any of the functions we talk about and you can become part of the conversation by sending us conversations through the shows. check it out on tv . this is bloomberg. ♪ ♪ betty: bloomberg users can interact with the chart you see and youberg television can catch up on recent analysis and change them for recent analysis.

e.m. central-bank credibility very much in question. the central bank governor and president erdogan. treasury yields breaking out to new highs. >> short-term, yields are going higher on a 10 year treasury. inflation is making a comeback in the u.s.. we will see positive surprises on inflation. it is seems inevitable with oil prices. yields have a doubled in a year-and-a-half. that traden is -- is over and how much capacity is it to move higher if we look at 3.25% on a 30 year? tois the room for yields move higher for inflation expectations that creep into the markets more? absolutely. is it out of control? i don't think so. up three fed goes times, that is 75 basis points, you have to ask yourself if the 10-year is going to go up that much over that time frame. if it doesn't come out will have an inverted yield curve this year or early in 2019. i do think it is crunch time for those. jonathan: joining me in new york is luke hickmore, senior investment manager at aberdeen. joe higgins, managing investment at tiaa-cref. diana amoa, portf

when interest rates go up, e.m. gets hurt. >> they get hurt more when the dollar goes sglup. >> do you think the dollar won't keep climbing? >> we think rates will keep climbing we think the dollar, the bounce here is probably overdone. if you look at the budget deafsudea deficit that tends to go hand in glove. >> why wouldn't i want to take a really secure 3% here versus some wacky place in the world -- >> yeah, my mom told me to avoid wacky places as well we wouldn't go there there are certain countries that have terrible governance profiles if you look at turkeyy in particul particular it seems like argentina are still in the imf's good graces that's a part of the world where active management can add value. >> thanks to you >>> we want to note in terms of the market action we saw the nasdaq try to go positive moments ago. we're at the flat line right now. it's something we're watching. >>> coming up, kroger taking another swing at walmart and amazon in the grocery wars. >>> netflix stock keeps going up its marke

oil really cuts quite differently across e.m.a lot of emerging markets where there are significant -- they are significant commodity and oil producers. caveat in malaysia is that the new government has talked about resuming oil -- domestic oil price subsidies, so that could be a factor mitigating the benefit of higher oil prices to the economy. but elsewhere in asia, you generally have a lot of oil importers. higher oil prices over the past couple of months have been very unhelpful for asia. the very recent relief we've seen is certainly welcome for a lot of the region. rishaad: andrew, we will talk about china next. who is best positioned in your view at the moment to weather any storms coming up ahead? andrew: if we continue to see higher interest rates, you would certainly expect see the current account surplus countries, korea, taiwan, thailand, so forth -- these economies generally tend to outperform in an environment where rates are moving higher. but these economies also are very sensitive to the global growth cycle, and w

e.m. central-bank credibility very much in question.ust who is turkey process central bank governor? -- who is turkey's central bank governors macro the central bank governor, or president erdogan. treasury yields breaking out to new highs. >> short-term, yields are going higher on a 10 year treasury. inflation is making a comeback in the u.s.. we will see positive surprises on inflation. it is seems inevitable with oil prices. 3.25% is the first stop. >> 10 year yields have a doubled -- effectively doubled in a year-and-a-half. the question is -- is that trade over and how much capacity is it to move higher if we look at 3.25% on a 30 year? that is going to be a big level. is there room for yields to move a little bit higher for , inflation expectations that creep into the markets more? absolutely. is it out of control? i don't think so. >> if the fed goes up three times for the rest of this year that is 75 basis points, , you have to ask yourself if the 10-year is going to go up that much over that time frame. if it doesn't come out w

katie: on e.m., major pullback in absolute and relative terms.k at cages like eem, relative to broader market or developed global, you can see oversold condition within a long-term uptrend. also signs of short-term downside exhaustion within the pullback. at a minimum, we see a relief rally in relative terms in em. does it mean a lower high after that but we should assume the uptrend is intact. david: katie stockton of fairlead strategies. thank you for being with us. more retail earnings coming up. jcpenney's result is next. also ahead, the future of cybersecurity. securing u.s. infrastructure from cyberattacks. live from new york, this is bloomberg. ♪ . . . alix: this is "bloomberg daybreak." i am alix steel. check where markets are heading. to me, the interesting story is what is going on in europe, particularly in italy. up early in the day, now reversed, now down .3%, the ftse. continuing to undersell pressure, the yield of up percent, moving higher by about six races is despite some -- six basis points despite some earlier about selling. hi

hornby: e.m. credit. ms. mcmahon: i wish he would have said in local, i'm going to take high-yield.er the big debate through the last year about a 10 year treasury yield on the potential of it hitting 4% anytime you, i thought i would pose the following question -- 10 year treasury yield, what do we see first? 4% or 2%? what do we see first on a 10 year treasury yield? 4% or 2%? mr. rusnak: 2%. ms. hornby: 2%. mr. buchanan: that's a widespread. i guess i will go with 2%. jonathan: we're right in the middle with three. it's great to have you with us on the program. george rusnak from wells fargo, lisa hornby from schroeder and buchanan from western asset management. that doesn't for me -- that does it for me. we'll see you next week. ♪ mark: i'm mark crumpton with first word news. saysean union policy chief the block is determined to make sure the iran nuclear agreement is respected, despite president trump's decision to pull the u.s. out. speaking in florence today, he called for calm and dialogue on all sides. today,eems that screaming and shouting, insulting and bullying systemati

and e.m. central-bank credibility very much in question.o is turkey's central bank governor -- the governor himself, or president erdogan? we begin with a break -- big issues treasury yields breaking , out to new highs. >> short-term, yields are goin

>> em has done well in the last two years, but in the last seven or eight, e.m. this is an asset class that works much better over the longer term. moments like this, when they are under pressure, are probably in my opinion that are buying opportunities than selling opportunities. much boththank you so for joining us, james donald of lazard asset management and greg .alliere of horizon investments stay tuned later today. the latest episodes of "leaders " we talkat," -- lacqua about spain and renewable energy. he is in spain and in europe overall considered to be one of the best chief executives because the share price has been going so well over five years. that is 7:30 p.m. in london today. this is bloomberg. ♪ taylor: this is bloomberg "surveillance." let's get the bloomberg business flash. the world's largest beer maker posted earnings that the estimates. anheuser-busch had strong demand in europe and mexico. they are ramping up for their marketing campaign for the world cup, the most-watched sporting event. boeing and airbus are the big losers after president

but e.m.'s are still pretty much off the u.s. dollar.enda, the fundamentals today, whether it is economics fundamentals or external vulnerabilities are much better, especially in asia. central banks have been rebuilding fx reserves, the current account trajectories are largely moving in the right direction. and, inflation which is one of the key variables for us, is well below 10-year averages. then you get to the external factors. the dollar has been stronger since march, april. u.s. interest rates have been moving quite a bit higher. people focus on 10-year yield but in our mind it is the increase in short-term interest rates that is the challenge for e.m. haslinda: with expectations of a weaker dollar and the second half -- eric: our view remains the dollar will reweaken in the second half of the year. there's an element of u.s. fundamentals built into that. there's largely a constructive a number.m., we feel of the economies, in asia but even around the world are still extremely healthy. there are some exceptions. argentina in turkey

e.m. central-bank credibility very much in question.ank governor and president erdogan. treasury yields breaking out to new highs. >> short-term,

we have reversed it back to looking at e.m.undamentals and em political dynamics. -- great financial crosses crisis time where the excess in liquidity for the yields meant there were indiscriminate em. emerging-market investors now have to really understand the external market and the global impact on individual em countries. and think about em more in terms of differentiated asset class rather than normalized. vonnie: lupin rahman, head of emerging markets at pimco europe. thank you for joining us. europe,p, turmoil in spain prime minister trying to play out his term even as rivals plan his ouster. this is bloomberg. ♪ vonnie: live from new york, i am vonnie quinn. mark: live from london, i am mark barton with the european close seven or so minutes away. vonnie: a special we didn't, these are -- a special weekend, this is an apple is, maryland where president trump is taking -- annapolis, maryland, where president trump is taking part in the naval academy graduation. monday, they remember all of those fallen in service. that w

mark: e.m. has had its own issues. , there hasn't been much of one.tina has its thing, turkey has had its thing. there hasn't been the contagion of all. paul: it has not been a knock on from one to the next. there have been lots of pockets of risk. looking globally, what it really has been, i like the metaphor about the dollar being a wrecking ball. nobody was expected in the dollar to come back with as much strength as it has and that has just smashed through a bunch of emerging-market currencies. if the dollar start to stabilize here and treasury yields are starting to fall so that could help things. that will give investors a lot more confidence that the courtesy -- currency moves we saw -- we've seen. let's look at arlington national cemetery in virginia, president trump participating in layingial day wreath ceremony at the tomb of the unknown soldier. this is bloomberg. ♪ mark: the chief executive of the world's largest publicly traded hedge fund firm has said recent bond default in china are a sign of regulators attempt to normalize the markets.

has done very well, but the blue line, the dollar, as we have seen it rise the past few weeks, the e.mtrade is officially in the red. this is a 2% decline for the year. -- is at mark: and what do you have, vonnie? vonnie: the thinking was going that there was it's been chilled for a massive short squeeze in viewsllar because bearish had risen to a record and treasury yields were likely to go higher. treasury bearish bets are also at a record. but you are converging right down there. that might cap any kind of topping, increase, or appreciation for the dollar. it will be an interesting dynamic between those two sets a -- those two sets of very bearish investors. title. loved dani's yllogismie jumps in s to her part. the winner is both of you. this is bloomberg. trade, only one third reserved for financial institutions. traders can now join wall street's most elite club for the price of $25 million. bloomberg reporter alex to much has this story. what club is this? $25 million? alex: the $25 million is the very minimum amount. i have uncovered 12 individuals who have or had a circle in t

the trouble continues and knee e.m.'s as the turkish lira hit a fresh all-time low.m a currency crisis to a country crisis. >> not yet. we seem to be in the midst of a currency crisis right now. the lira doctor more than 5%. that is the biggest -- dropped more than 5%. the biggest the client in a decade. central bank in a series of record lows. what is the late liquidity window and what is raising its by basis points mean in practice? bank hasrkish central been and a vein of and its rate policy and has been funding the market from that rate. the question is whether that is going to be enough and whether the reaction from markets is the probably not. the president threatening on international cars. the largest importers to the united states would be the hardest hit. >> the trade cease-fire is no more. president trump again citing national security concerns and asking treasurer wilbur ross to launch an investigation. around the world's response, it has been critical. china's trade minister has said causemposing could confusion and lead it to the breakdown of multilater

fundamentally, i think it is ok and he e.m. is still interesting place to be. what do you say to those who advise for treasuries? personally i think the 10-year above 3% is starting to look somewhat interesting. maybe it goes to 3.75%. if the market is correct and the fed hikes another four to five , three point 75% is probably a fair value. at that point, you might see some japanese life insurance companies or megabanks come in and start to look because the interest rate spread will be so big between the u.s. and other countries. but the big question is, what happens to the term premium? premium is the premium investors are supposed to get for lending over the long-term. it still is negative. with treasury going to be issuing a lot more supply and the fed starting to shrink its balance sheet, it is a big question as to what happened -- as to what will happen to the term premium. if it starts to rise, maybe there is more pressure on treasuries. three-plus percent, it is an interesting market. vonnie: thank you for the update, jurrien timmer. the bloomberg first

and e.m. central-bank credibility very much in question.l bank governor -- the governor himself, or president erdogan? we begin with a big issue, treasury yields breaking out to new highs. >> short-term, yields are going higher on a 10 year treasury. the reason is because inflation is making a comeback in

there was global growth, also within e.m. deals,ang, u.s.llar.ger none of them should be at the levels that created crisis. the dollar has not moved anywhere near $.25, the last time there was a crisis. none of them should be at the levels that createdthe markets y trump tradefears of wars. that is what is bringing them back. good value. manus: where would that biggest value be? indonesia and the philippines and this is what they would've had to contend with in terms of these moves on trade. the indonesian dollar is seeing its lowest reserves in three years. where are these opportunities for io -- for you? andrew: part of the problem with the selloff in bond deals is they have low spreads in the developing world. maybe things just got to -- tootic earlier optimistic earlier. we look at emerging markets as a huge opportunity set, by sector and individual company. transition.a huge there are lots of exciting bottoms-up you can look at on a structural growth perspective, somewhat independent of gyration s in the economy. steer ais will help you

. >> the trouble continues in the e.m. as the turkish lira hit a fresh all-time low. euro and the yen turning from a currency crisis to a country crisis. >> not yet. >> we seem to be in the midst of a currency crisis right now. the lera this morning dropped more than 5%. more than 5.5%, the biggest decline in a decade. >> turkey's central bank raised .nterest rates what is the late liquidity window and what is raising its basis points mean in practice? >> it was formed to be an emergency rate. hasturkish central bank been innovative in its rate policy, and has been funding the market from that rate. raisehey did today was the main rate that matters by 300 basis points. the question i pose is whether that will be enough? and the reaction from markets is, probably not. >> the president threatening tariffs on imported cars and trucks, citing national security concerns. the largest importers to the united states would be the hardest hit. >> looks like the trade cease-fire is no more. president trump again, citing national security concerns and instructing commerce secreta

. -- way you trade e.m. then, you have who is vulnerable to the higher oil prices.re the ones who are suffering in this environment. story. not a broad em is when the market doesn't differentiate with swings like this, and forgets the underlying growth story. guy: a lot of emerging markets -- i take your point about china -- have a lot of dollar debt. karen: we look at how they built up reserves in the past five or six years. they can support themselves light,t any capital outf much better than it was a few years ago. you have to do your homework on each country. talking puppy about emerging markets in this way will not make you any money. ly about emerging markets in this way will not make you any money. guy: the amount of denominated debt in indonesia was eye adorationthe absolute of the financial sector. now, not so much. karen you: -- karen: you have to do your homework on each individual place. guy: the dollar is a big part of all of this. karen ward, you will stay with us. up next, we will talk about the dollar. the dot plot is getting old, james bullard says.

that you need additional for the money ball as i will be look when i'm alone but hated that amount of e.m.'s all eyes will decide to be low but i'm to come forty. more cheong will be lost oh yeah cause i thought any. you walk in and promise me as no. tutorial will the all this will. last when i see it in a little gear. may not it's. nor though the only. sort of. you need to remodel in assad been a saturn and a cool. mage from. your mum plus some primitive. you were slow as to me small sadly. i will not be this and if the gods are. allowed to sell it. holly the truth name of the pit would be. nice to. put it to need to the group real ruby uno. lawsuit. which would lead to the dude the teenager with the knee of yet another nail in the edible and that's in much the best we have known but a piece of concrete i will be at our part because that easily be their plea at this cal frenzy that a child packed with emotion those don't matter shiling anneke magnets and only god knows that odious who will be on to prove the truth. of this. clearly show no bill proved. or don't erase the belief that the