krishna: when we say we like e.m., it is e.m. fx and local rates, not credit spreads.e clear. jonathan: to wrap things up, a quick fire round. three questions, really short answers if you can. you know how this works. first question for you, have we seen the tights for the year in u.s. investment grade? jim: no. oksana: no. krishna: no. jonathan: have we seen the wide on a 10 year treasury versus bunds? jim: no. oksana: no. krishna: no. jonathan: have we seen the wide jonathan: world cup winner. e.m. or dm? [laughter] jim: not the united states. oksana: do i really have to? jonathan: indulge me. oksana: i will go with e.m. jonathan: there you go. krishna? krishna: i will go with e.m. jonathan: trying to ask americans about football. jim keenan, krishna memani, oksana aronov. i'm not doing that again. that does it for us from new york. we will see you next friday at 1:00 p.m. new york time. 6:00 p.m. in london. this was "bloomberg real yield." this is bloomberg tv. ♪ alix: this upcoming program was recorded earlier this week. we hope you enjoy the show. opec debates how

assets and that competition for capital from elsewhere, is e.m. a loser or can e.m.till do well here? jay: we have gone neutral on e.m. and we think this downdraft in growth is set to slow in second half of the year. but it is the tension which will make returns more challenging. the u.s. is going to continue to look more attractive over the rest of the year. if we are right and get three more hikes, we will get two-year yields over 3%. jonathan: kathy, in the united states, yields are up by 3% in the united states on a front end of a two year yield. if i say 3% on a two-year, do you say inversion? kathy: i think we get close to it. i think two more hikes this year is probably more realistic than three. you know, we are already seeing the global growth picture, it is in a turnover, and i don't see the impetus for that last rate hike at the end of the year. we are getting pretty close to the neutral rate. we have two people at the fed now -- i am assuming will be the vice chair, and williams, also in the new neutral camp. so why rush? but yes, if we get a 3% on the sh

when we say we like e.m., it is e.m. fx and local rates, not credit spreads.athan: to wrap things up, a quick three questions. you know how this works. first question, have we seen the tight of the year in u.s. investment grade? >> no. oksana:. no. jonathan: have we seen the wide on that spread? jim: no. oksana: no. jonathan: world cup winner. e.m. or dm? jim: not the united states. oksana: do i really have to? jonathan: indulge me. oksana: i will go with the e.m.. trying to ask americans about football. jim keenan, krishna memani, oksana aronov. i'm not doing that again. trying to ask americans aboutsee you next fri. this was "bloomberg real yield." this is bloomberg tv. ♪ >> i'm mark crumpton with first word news. paul manafort's request to dismiss a money-laundering charge has been rejected by a federal judge in washington. manafort is also charged with conspiracy, making false statements, obstruction of justice, and failing to register as an agent of ukraine. his bail was revoked last week and after prosecutors claimed he tried to tamper with witnesses. hi

krishna: when we say we like e.m., it is e.m. fx and local rates, not credit spreads.e clear. jonathan: to wrap things up, a quick three questions. really short answers if you can. you know how this works. first question, have we seen the tight of the year in u.s. investment grade? jim: no. oksana: no. krishna: no. jonathan: have we seen the wide bunds?year jim: no. oksana: no. krishna: no. jonathan: world cup winner. e.m. or dm? jim: not the united states. oksana: do i really have to? jonathan: indulge me. oksana: i will go with the e.m.. krishna: e.m. jonathan: trying to ask americans about football. jim keenan, krishna memani, oksana aronov. i'm not doing that again. that does it for us from new york. we will see you next friday at 1:00 p.m. new york time. this was "bloomberg real yield." this is bloomberg tv. ♪ two, down, back up! our phones are more than just phones. they're pocket-sized personal trainers. last minute gift finders. [phone voice] destination ahead. and discoverers of new places. it's the internet in your hand. that's why xfinity mobile can be inclu

i, am i incorre about asian e.m. as being e.m.?re technology companies that are comparable with those that are being generated as the united states. there are many different ways of looking at it. are we looking at emergis globa? edmund: would you think of e.m. equitiesclasses, are very china dominated. look across the sovereign bonds. creditross the corporate . the corporate credit universe is very different. you are buying very different universes. on the one hand, with pm equities, you are buying much more innovation. -- em equities, you are b much more innovation. -- not comparable to seeinglsewhere.change we nto chinese technology.ut it is a different universe/ . tal matt: what do you think about the 10-year gilts -- yields in yellow, the dollar in blue? how does that play with emerging markets. a lot of them hold with dollar denominated debt. does higher oil prices are difficult fope with arese higher oil prices difficult for them to cope withe .orrelation between e.m> equities and oil has been positive, not negative. countri

e.m. >> 100%. >> the reason is the expected return is higher but the voltailty is you have to understand that these things perform in streaks it's very difficult to know in advance when that will start >> it's such a joke to say price to book in emerging markets because who knows what their book is. their accounting standards are subpar relative to our gap standards. >> you're making this so hard. >> didn't we get the perfect reminder this week - >> it's the price of book of ge. >> i don't own ge, but i have -- >> it's in the dow >> you're making this so hard. >> we have to have the audio person intervene >> i don't look at charts and say, oh, this drawing looks great. i have to buy it bottom up fundamental. >> i think what josh said that's most important so you're trading snapchat on bottom-up fundamentals >> hold on i think what josh said that is most important for clients is that a diversified portfolio, no matter how you slice it, has to have some different things in it to allow you to

jay: we have done neutral on -- gone neutral on e.m.t is the tension which will make returns more challenging. the u.s. is going to continue to look more attractive, if we are right and get three more hikes, we will get two-year yields over 3%. jonathan: kathy, yield up a 3% in the united states on a front end of a two year yield. if i say 3% on a two-year, do you say inversion? kathy: i think we get close to it. i think two more hikes this year is probably more realistic than three. we are seeing global growth, it's going to turnover, i don't see the impetus for that last rate hike at the end of the year. we are getting close to the neutral rate. we have two people at the fed now to i am assuming will be the vice chair, and williams, also in the new neutral camp. why rush? yes, if we get a 3% on the short end, we would be pretty close to inverting. jonathan: they were to competing -- to competing -- two competing forces in play, the intuitive idea that when the federal reserve goes into a hiking cycle, the curve inverts, that is what h

. >> when people make the comparison to 2013 and say the e.m.s better place, but we are missing the point there other vulnerabilities, not just external anything but in places like brazil, public debt is a huge issue. >> the emerging markets appears to be contained to argentina and perhaps turkey. this is happening in a period of strong growth globally. if it is going to happen, it is a good time to happen. it's when institutions can best respond. >> this is an asset class where crossover money overwhelms the dedicated money. when crossover money decides to exit, which is what is happening these days, then most countries are impacted. >> i hear talk about the crisis in emerging markets and it is nonsense. it depends on what the dollar is doing, but there are some stories that are weak. at this point, they should be avoided. jonathan: with that, we have a full house. joining me is andrew chorlton, kathy jones, and jay berry, head of u.s. government bond strategy at jpmorgan. it is great to have you. kathy, this feels like a broader asset class st

the central bank of e.m. is in a world of pain, asking the fed for help.nd the ecb refusing to be held hostage and planning to discuss the end of qe. we begin with a big issue, emerging markets asking the fed for help. >> the fed is always clear they are making policy for america. but even if you do consider the rest of the world, you are not making policy to bail out countries that are running their economies badly. >> the fed is guided mostly by u.s. factors and it would take a massive global crisis to change the fed's behavior.

bank yesterday, this is not a great set up for e.m.\ julie: 10 at -- e.m. china traders coming today, and not only to the trade rhetoric, but the headline we got that the trump administration wants to examine an additional 200 billion dollars of chinese goods for terrorists. we are seeing some reaction in the markets already. you see the drop in the u.s. dollar versus the yen, a pretty sharp one. what are we likely to see in chinese trading as a result of this? i think that kind of move we saw in the yen was a bit of strength that speaks to this idea of an incremental risk these escalation of tensions between the u.s. and china ramp-up. in the past way for hours and indeed from when the news broke first late friday, we have seen moves lower in commodities both soft and hard, and equities have been under pressure as well. .hat is what we will be seeing hong kong equity futures and mainland chinese equity futures both pointing lower this morning as we are seeing with the strengthening of the yen. it's putting pressure back on risk assets at this point. i supp

they appreciate during those periods and e.m. markets outperform e.m.at period of growth driven rate rises. we think the bank drop over the next 12 to 18 or even 36 months remains very positive. valuations are attractive. internal and external balances have improved. global growth is picking up. the e.m. growth premium is widening. internal and external balances have improved. that environment is attractive. 17.75. that is a rate hike for the turkish central bank. we want to take a look at the immediate reaction, it is a stronger lira. in the intraday you can see that dropping like a stone for the dollar. the question going forward for the rest of the session is will this be enough. banks hiken central rates, but then at the same time it does not sustain. >> especially true in turkey. as david pointed out, how are no one reacts to this will be key to sustain this lira bounce. shoutedpaign speech, he -- he sounded like he believes in the independence of the central bank. >> it is not just turkey we are dealing with. take a look at what is happened to bra

david: where are you in e.m. and how much do you allocate?appening, would you change your relative allocation with e.m. versus developed markets, u.s.? it is not like that all markets are a safe haven either. it is a challenging question. acid,as a higher beta higher risk premiums, investors have gotten bullish. i did a roadshow in march of this year, and it was uniform the degree to positivity around emerging markets. scaling back some of those exposures is prudent but not a wholesale cut. what youstening to say, maybe it is time to be more defensive, the e.m. play by and large is high risk, high return. in this environment where you don't know where things are going, maybe you scale back. do you go for more liquidity? mark: it depends on your time horizon, whether liquidity means that much to you. it is better than 10 years ago so i would not say it is greatly disadvantaged. but the point you want to focus on is the volatility of the underlying asset. there areent nontraditional investors in any asset class and they pull out, they pull out

haidi: we had headwinds for e.m.'side of things intensified, due to the rising dollar and rates, is the momentum going against emerging market currencies to scary right now to be opportunistic? jonathan: i don't think -- : there certainly are issues when it comes to places like argentina, but when you carve out asia from an e.m. point of view, relatively speaking, the macro environment is quite sound and attractive. of course, when a move away from china and look at philippines, they are technically in bear markets. look at where philippines has been trading in the past few years, ce close to 18 or 19 times, investors should not be surprised, they should expect to see for volatility going into the end of the year. ramy: human nature forces us to blame someone. i am looking for someone to blame. do i points to donald trump for the trade tensions? jay powell?me what is the real reason we are seeing this? catherine: i will take it one step further, should we start blaming europe? something has to give in this environment

now you have the dollar strength on the fragile e.m. economy.rkey a lot of emp economies were not as fragile as they used to be -- e.m. economies are not as fragile as they used to be, but there is this question of the u.s. continuing to hike faster than other economies. to what extent does that put pressure on capital flows? vonne: if you want to take a look at this chart, it shows the china ppi prices. very contingent on what this means for other economies. will this be a concern for what to come to asian economies still reliant on the chinese economy? hanna: i don't: think china's growth is really slowing down. in april.ent data pmi data was actually quite encouraging. i think the science and signals are signaling a sharp slowdown. but we do see risks and they tightening -- and a tightening funding conditions, which is why i think there has bene a relaxation. -- been a relaxation. there has been the fine tuning of policies. but the growth in china -- >> will still be an anchor. thank you. we have more, including the preview of the australian

one, when i speak about weakness in e.m., it is important to differentiate the performance within the e.m. community. what we are seeing from a japan perspective is in line with global markets, which is stronger than the overall e.m. story. there are country spific drags like turkey and argentina, etc. the outlook for them has been significantly more positive than the aem conversation overall. -- the e.m. conversation overall. the second point, china's data has been slightly weaker, with the chinese government putting into place a rational regime in terms of lending, a rational regime in terms of oversight of the financial industry. as a result, you are seeing loan growth slow. that is a healthy sign. a lot of it has been written regarding bond defaults. it is still at an incredibly low level relative to the country. second it's a positive step,. we are starting to deal with the bad debt in a realistic way. coming together to strengthen the longer-term story in china which results in short-term slowing of loan and sets the s

it's not e.m. specific but a killer e.m.s can go a number of different ways for e.m. which way they want? they need a weaker dollar. >> correct. tom: who affects a recent dollar? >> we would explain it in shift and risk appetite. we've had disappointments in growth outside of the u.s. while there is much more comfort with the u.s. growth due to the fiscal stimulus and some of these geopolitical tensions we've been discussing around trade might be contributing to a stronger dollar. so we need to have more comfort with the growth picture and in that sense the dollar would come back down which would be very positive for merging markets. francine: what struck us when we started coming in the newsroom very early this morning were the comments by ben bernanke saying the market faces a wile e. coyotee moment and the fiscal stimulus came at the wrong time and you catch the end of it when you just could have a potential downturn. gabriela: let's say our expectation is around 3% growth this year. that's temporary. we don't expect that

mark: what about e.m. central banks. are they modeling? certainly think some emerging markets like mexico are looking at nafta negotiations very carefully. i think elsewhere, the risks are more diffused. certainly, in a ago they have more hawkish ahead of the fed, simply because of the massive risk. could trump go bilateral when it comes to nafta? forward, is that viable? lupin: when it comes to trump, we cannot rule anything out. near-term,very having a nafta agreements before the mexican election seems much less likely than we thought. mark: how are you feeling about china versus the united states? china may be will spend more on u.s. imports is the latest figure. be progressing, but mid-june is the deadline to get to some sort of agreement. how do you foresee that china u.s. a dialogue, and is it going to blowout? is all athink that sideshow, but politically important. all ourchina buys stuff, it's not like they're sitting there with loads of capacity. if we are selling more to china, it just means we are selling less somewhere else. yo

>> across e.m.re a number of countries saying to the fed, we need more communication about where you are going. this week, indonesian and indian central bankers said think of us when you are moving forward because it is affecting our currencies. we have seen argentina, mexico, brazil, all of those currencies take a hit. >> you have this backdrop of the central banks around the world taking the punch bowl away. a lot of people looking to see how this will impact on some of the weaker emerging markets. what we saw a few weeks ago in argentina played out again in turkey. we saw the big selloff in the real in brazil and now we are seeing the same kind of phenomenon kicking in in south africa. this is about the fed and the possibility of the ecb next week will announce the first stages of the steps to removing stimulus. ♪ >> the president keeps coming back about drug prices. how is that affecting the industry? >> that is absolutely right. we had another tweet from the president this morning, amongst the

i think e.m.'s are cheap, they look very attractive.e do have to assess whether in a sense the technical issues start to affect the fundamentals. forou look at flow of funds e.m. related stocks, they are not great right now. i would probably like to see where those go a little bit before we start wading into heavily but they are attractive valuations out there. ramy: as our asia-pacific viewers start to wake appear, i want to bring in this bloomberg terminal chart. we are looking at the shanghai composite, logging it second-biggest drop of 2018 on your more than three point -- 3.8%. in your note, you said that if it holds support around 3000, it should be ok, but if it breaks below that level, it would be tough, your words. 2907.e now at your thoughts? it a couple to give more days to see if it's a short-term blip. maybe china announces some easing. the shanghai composite has been more affected by some of the tightening the last couple of years. this would be a natural time for it to start to breakout. by the saints open, if it stays be

we have been seeing a trend into the dollar from e.m. for quite a long time.nna: is the dollar positive or negative in the trade spat? jane: this morning it is negative, but it depends what you're looking at. the yen is going to be positive because it is a safe haven. if you think about world growth and if that is going to slow, that is also going to weigh in on e.m.. anna: we will talk more about that shortly. . thank you very much morning.s with us this coming up on the program, we are going to bring you our exclusive conversation with former u.s. treasury secretary larry summers from the forum in sentra. later this morning, ecb president mario draghi delivers a speech in sentra. will we get more hints about the central bank's policy? he moved markets last week. you can see that live on bloomberg at 9:00 a.m. london time. this is bloomberg. ♪ anna: welcome back everybody, this is "bloomberg daybreak: europe." it is 1:19 in the afternoon in singapore. asia-pacific under pressure. you see the shanghai composite down by 3.1%. this market playing catch-up becaus

next, e.m. is under siege.y and brazil step up efforts to protect their currencies as emerging markets face their biggest testing years. this is bloomberg. ♪ years. in retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. nejra: dollar yen dead flat. haven't really moved that much over this week. we could see more movement for the safe haven next week with quite a bit of event risk coming up. the dollar heading for its first weekly loss since mid-april. dollar yen unchanged. we did see a bigger move in the 10 year treasury move yesterday. that again steady today. steady and fixed income markets. we get breaking news. passenger numbers fall

a you look at e.m.ch , orble as it was back then even a few years ago. fundamentals are much stronger. the philippines has been having its own set of problems, but it is not typical of what we are seeing elsewhere. which is why i think that the case for investors putting their that into asia, -- i think trade spat could way further on markets. that is my concern. but i think the markets still are attractive. kathleen: we were speaking with morgan stanley, they had a much more bearish view, saying that if you look at earnings and valuations, they have deteriorated in the last couple of mons. we are talking 30% earnings growth in 2017. yvonne: things look like they could be heading in the other direction now. how supportive of the earnings story is that to you? vasu: yes, of course, 30% in earnings growth, that is over here we had 2018, the growth is decent, still in the low teens in terms of growth. we are not seeing growth falling off a cliff yet. asian markets have pulled back significantly, some are i

e.m. is still a long-term positive story for us. valuations on the fixed income side in the equity side, i think there is that growth story that exist there that does not exist other places. david: it is picking and choosing. brian: it is an area where we think active management makes a big difference. if you can figure out what regions will be more impacted by the trade deficit or governments that have a better handle on what is going on, the community area to overweight in the portfolio. if you're just indiscriminately buying, you might get things that do poorly. alix: like what? brian: what works for asia, we can be more defensive than the index within asia. china looks intriguing. it is being added to these benchmarks. we still like latin america. the valuations have to come good at some point. we think the brazilian reality the argentinian peso got crushed, but we think those are positives. we are less overweight in venezuela and turkey. david: what about asia that is not china, indonesia or india? brian: we are positive on ind

so we come to this position more positive on e.m. we see investors looking very closely at china and india, other markets around asia where they see a strong domestic economy and companies that can benefit from that it's a close parallel to what we've seen in the u.s., where we've seen people move away from large caps nd continuing to ask about the small-cap markets. >> what would you pick as being relatively shielded from. impact of whatever happens in paris? >> there's certainly a nuance to it based market by market but anything from an emerging markets that's more consumer focused and more loam markets focused. some of the burgeoning internet companies or payment companies in india are some of the most interesting to us and actually some of the most interesting regardless of what's going on in the u.s. because of their extreme growth potential. >> sheila patel with us. coming up, her views on investment strategy as nevisors face geopolitical risks from other things. >> and an exclusive interview with john lowered. how protectionis

think we still need to have a decent selloff that is what we so far haven't seen we've seen pockets of e.m. selling really big time, but other pockets, other current cit, relatively benign. we neted a general washout i'd say that probably will come at some point in the second half of the year when we reach the peak in treasuries and the dollar as well >> that election in turkey still fresh in the mind of a lot of currency traders and if you look into a crystal ball, when does the lira become a buying opportunity >> the buying opportunity for the lira is not because of the lira, it is only because of the dollar if you have an environment where people are saying we've overdone the dollar story, yields won't go anywhere on the year end and the short he saend will move hir and let's go long e.m. then you can buy the lira. i would however stress that is a tack cal b tactical buying tur ining oppor. >> and i want to ask you about came m commodities. do you think the threats to the business models are real at the moment >> i don't think so. from a tactical perspective, we are still quite bullish

there is a potential for e.m. pressures. e.m.rencies are being used as a proxy for trade war issues. which one is getting hit the hardest? developmentrecent is a change in the pattern we have seen over the last couple of months. we have sort of a weak external imbalance. the most in turkey, south africa, brazil, especially. there is a sort of a center of gravity for the big exports presented to china. we sought much less weakness there. the chinese currency has capital controls. this is through these economies that are leveraged by their exports into china. this doesn't mean any currency weakness at the moment. there is a number of buckets within the frame we need to think about. >> when i look at what is happening, what is happening in how badnd south africa, could it get for the five -- fragile five? >> this includes indonesia. external exposures are already correct. there is a potential powder keg. >> clearly, the fed hikes and future path of hikes has a lot to do with what we are seeing struggling in emerging markets. you thi

with trade tensions escalating, e.m. will suffer. there are so many different variables. elections,idential results elections coming up. potential german issues. there's so many different things that it almost could really just trade sideways. vince lisa abramowicz and cignarella, thanks for being here. we will have more on the boston private wealth ceo. this is bloomberg. ♪ emma: a day after saying it was considering a takeover bid, france's -- will not make an offer. deal would've faced several hurdles. under u.k. rules, they cannot make another offer for six months. bmw is warning of a full backing investors in the u k if a final price a deal doesn't ensure the free flow of goods to the eu. the german automaker has plans in the u.k. amidst ongoing uncertainty of negotiation is not helpful. bmw says arrangements remained a cause for concern. the ceo said it's not considering moving production out of the country. the only train platform crash and made it difficult for shareholders to trade shares as the company made its debut. they were the lead manager and but it will a

we are seeing some impact on sentiment laying out in the dollar, e.m.ing in some of the countries, to defend their currency. but much depends on how much this blows out. weaken,ar could and the biggest reason would be that escalation is not as big. you could see another $50 billion in tariffs each from u.s. and china, but not the $200 billion figure. . you would see a tapering of growth picking up in the u.s., while the rest of the world catches up. narrow, usingare the fundamental upright pressure on the dollar. rishaad: i was just show you this chart from our library, it shows the worst month we've had for emerging-market currencies and martindale core years. is it purely --. in more than two years. these countries have individual issues. priyanka: that is a perfectly valid point, it is not surely a dollar story. it is coming at a time when the global economy is happening with challenges, including a slower china back home, which matters for us, in terms of how we think about asian e.m. fx. we are already seeing that, china is kind of -- at least from

we know that e.m.sian growth has just come off the boil a little bit, having been strong since 2016 or 2017. we also have pockets of financial timing being engineered by policymakers as well to try to offset any capital outflows that are happening. so it's still somewhat vulnerable at this point in the cycle. , how closelykly are you watching the flattening of the yield curve, and what is it telling you right now? ben: in one sense it's a pretty the rest response to a fed that going to be with moving further, we think at this point is something of a saving grace for emerging markets. where it in for a time falls around 3% that could give breathing space for e.m. to stomach these adjustments without going on and taking a breather after us if rise and they've had a rough year. you,ad: nice to talk to been jarman from jpmorgan. type in and catch up with some of the key analysis that goes with it and store the charts for future reference, should you want to. ♪ haidi: this is "bloomberg markets: asia." a qu

people make the comparison to 2013 and say the e.m. is better and is better than the 1990's, but we are missing the point that there are other factors. there are also places like brazil. >> the emerging markets appears to be contained to argentina and perhaps turkey. ofs is happening in a period strong growth globally. if it is going to happen, it is a good time to happen. >> this is where crossover money overwhelms the dedicated money very when crossover money decides to exit, which is what is happening these days, then most countries are impacted. talk about the crisis in emerging markets and it is nonsense. it depends on what the dollar is doing, but there are some that are weak. they should be avoided. that, we have a full house. joining me is andrew chorlton, berry, head and jay of u.s. security at j.p. morgan. it is great to have you. this is a broader asset class story. not a single idiosyncratic like we had a month ago. global liquidity is shrinking and we were not priced for it. high.ions were too as the fed tightens, this is

if it'slook at e.m., going to go badly wrong, it will in china.en that the chinese currency is so well behaved leaves us a little more sanguine. this is what you get compensated , spread widening. and typically, you want to look at -- during these times. it is amazing how quickly the market can go for fears and a certain narrative, when a couple of months later, where can i get that decent income? jonathan: can i tempt you in an argentine bond that matures in about 99 years? it's got a nine percent yield. argentina, no, but there's a behavioral aspect. everyone here is very good at their bond math. 100 year bond's have a duration of slightly longer than 30 year bonds because we have such long dated -- .0 year breakeven on argentina from memory, when people first went to argentina, the 10 year breakeven was -- 40. thatot to see it in context. but no, we aren't in 100 year argentina. but we could look to buy dollar debt, more likely to be a customer of the investment management industry and by a fund. jonathan: does that make sense? andrea: of cours

we are seeing e.m.'docs now sinking to the lowest level in currencieshile em ane india's rupee touching all-time low. that coming as china's yuan underperforming for an 11th session. and breaking news, as amanda was telling us, billionaire investor ray dalio is taking a step back from bridgewater associates. we will speak with him and about half an hour. until then, let's bring in kathy burton. kathy, we are hearing that dalio is telling clients they could go towards a partnership model. what could that look like? hase: this is something ray been working on for the past 10 years. he is stepping away slowly from the business, and there has been a few hiccups along the way. they brought in some people from the outside that did not work out, people internally have changed roles. this is the next step in that, and overtime he has been giving people more ownership in the company, the senior executives, so that will probably boost to that. expect that six when we interview him shortly he will tell us that -- -

when we look at e.m., if it's going to go badly wrong, it will go badly wrong in china.act that the chinese one -- yuan is so well behaved leaves us a little more sanguine. this is what you get compensated for in em, spread widening. typically, we are not in full crisis but typically you want to look at info during these times. it is amazing how quickly the market can go for fears and a certain narrative, when a couple of months later, where can i get that decent income? jonathan: can i tempt you in an argentine bond that matures in about 99 years? it's got a nine percent yield. would that tempt you? alan: argentina, no, but there's a behavioral aspect to 100 year bonds. everyone here is very good at their bond math. 100 year have a duration of slightly longer than 30 year bonds in the u.k. because we are so long dated. buyers were talking about 10 year breakeven on argentina. from memory, when people first went to argentina, the 10 year breakeven needed to trade at 40. it's on its way there, which is worrying. you've got to see it in that context. but no, we aren't in 1

the central bank of e.m. is in a world of pain, asking the fed for help.cb refusing to be held hostage and planning to discuss the end of qe. we begin with a big issue, emerging markets asking the fed for help. >> the fed is always clear they are making policy for america. but even if you do consider the rest of the world, you are

e.m.'s and sucking a point that is common you often want to push it not to move don't want to read and you didn't know to make. this go home or your plan i just used. as an issue will be the movie. that matches the start ups full movies it was a lead to some that can only do my point is you know he's pretty much. shit in your book and elected prime city to live it did not put an evil. compound of sins on say most infamous. suppose i got the chip in that's for submitting a poker change which when you were still is supposed. to be strong that is a part of what you see someone. sitting on a phenomenon you came six when some people can continue to game seven or not put it in the monte. words of an exercise book a for. prof some witness statements is heard on the other side of the us the accused right the international criminal court in the hague believes the document holds great strength of evidence in the case against the congolese rebel leader jumping. the i.c.c. sends his staff member jamal

basically e.m. and ee are both flat, and the flows have detected it. the white line here, which you rarely see above this one is single country etf flows. that is where you target it. investors are looking to pick their battles as the regional etf's have flattened out. where are they choosing their battles? let's look at the top five single country etf's by flows. you see here, china, $2.7 billion there, and china has been up 8% this year. 80% over the past two years. china is the superstar in terms of picking a single country etf. brazil is down this year but it was up so much in the past two years, some of this money will come out as investors figure out it is going down. saudi arabia is interesting because $231 million there, that is up 20% this year. this etf is new and all those flows are fresh. so i would be surprised to see more etf's launching to take advantage of the advantages and -- advantage of the interests in saudi arabia. and now let's take a look at the outflows by single country etf's. remember that japan train that was so easy? it is

that might be an outdated way of looking at the e.m.' you do like a couple of them, most notably india. and jim would say that is his thesis or 2050, so we can still see it work out. likeg a step back, we emerging markets a lot. we recommend that clients have up to 20% of their equity allocation invested into emerging markets, a pretty aggressive positioning. youhink that you need to -- do not want to be a touristy in emerging markets, because your vacation could end in tears. so 20% is for people willing to take a long-term perspective. if we can talk about the near-term, we think it is a good time to build a positioning for two main reasons. one, the growth premium for emerging markets is accelerating relative to developed markets, and we will have growth out of emerging markets probably around 5%, developed markets, 2.5%. backdrop for risk assets. we also have a lot of improvement in the macro. there is a lot of idiosyncratic noise from other countries, but we have reduced the debt profile over the past 10 years, and final evaluations