e.m. local currency debt, buy or sell? oksana: definitely not buy. joe: e.m. buy selectively. matt: sell. lisa: 2020, the fed is hiking or lowering? oksana: hiking. joe: down. matt: lowering. lisa: 10-year treasuries? buy or sell? oksana: sell. joe: buy. matt: sell. lisa: thanks to oksana aronov, joe higgins, matt toms. from new york, that does it for us. see you next friday. this is bloomberg real yield. ♪ >> you are watching the best of bloomberg>> daybreak middle east. mitigating man ron impact on oil prices. the u.s. says it could become the world's top producer next year. , but theera for turkey choice of finance minister riles the market. >> the ceo of one of the country's retail giants tells us a smaller market is the new normal. ♪ >>

e.m. local currency debt, buy or sell? oksana: definitely not buy. joe: e.m. buy selectively. matt: sell. lisa: 2020, the fed is hiking or lowering? oksana: hiking. joe: down. matt: lowering. lisa: 10-year treasuries? buy or sell? oksana: sell. joe: buy. matt: sell. lisa: thanks to oksana aronov, joe higgins, matt toms. from new york, that does it for us. see you next friday. this is bloomberg real yield. ♪ 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. carol: welcome to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. carol: coming up in this week's issue, a question. can the republican party survive a trade war? jason: we also look at the conflicting relati

e.m., local currency debt, buy or sell? oksana: definitely not by. e.m. fx down 6%, by selectively.att: sell. lisa: 2020, the fed is hiking or lowering? oksana: hiking. joe: down. matt: lowering. lisa: 10-year treasuries? oksana: sell. >> sell. >> sell. thanks to oksana aronov, joe higgins, matt toms. from new york, that does it for us. see you next friday. this is bloomberg real yield. ♪ 2, down. back up. our phones are more than just phones. they're pocket-sized personal trainers. [ upbeat music playing ] last-minute gift finders. [ phone chimes ] [ car horn honks ] [ navigation voice ] destination ahead. and discoverers of new places. it's the internet in your hand. that's why xfinity mobile can be included with xfinity internet. which could save you hundreds of dollars a year. it's a new kind of network designed to save you money. click, call or visit a store today. streaming "must see tv" lhas never been easier. paying for things is a breeze. and getting into new places is even simpler. with xfinity mobile saving money is effortless too. it's the only network that combines amer

the headwinds are still there for e.m.. that being said, any positive news, you will see technical rebound in terms of the e.m. space. pockets of opportunity are arising, but more the fixed income as opposed to equities. the asianf high-yield, for example, some of the chinese property names have been got hidden hard. -- hit hard. we are still positive on u.s. equities, given what the macro environment is looking like. aboutd: to that point, renminbi weakness -- i am going to drag this out from my gtb library. it shows how the authorities have tried to push swift payments to get the internationalization of the renminbi out there. yuan areve risen -- of in blue. we had a peek in 2011 of nearly 3% in global payments from china in the rmb. we have seen this depreciation in the white line of the yuan as uncertainty. are you worried about the ramifications, broader ramifications of yuan weakness in this part of the world? what if it exports deflation into the region? general,i think in what we are seeing is some volatility in the

wendy you seem., a moment where we start to get back into e.m.?u, which is a much bigger picture sort of you, --still bullish -- view, which is a much bigger picture is still bullish. fly at this moment in time if you look at something like that ratios --.eloped -- are risk appetite index has gone into its panic zone. it is actually at the lowest level since 2011-2012 and the sovereign -- crisis. this underperformance of emerging markets is now extremely stretched. it is probably at the area where you think it starts to reverse. the question, and the real sort of thing we want to focus on is does that reversed because e.m. recovers strongly? that is the big question and the big thing we need to get right here right now. you can argue we are set to see some yen recovery --e.m. recovery. i think this is very interesting how these levels will tie up with where we are on the dollar, on the shanghai composite. guy: fantastic. david is going to stay with us. , head of technical suisse. at credit you had a big upside miss on the inflation data coming thr

their e.m. benchmark was up 1.5. >> but what about 6-30. >> at 6-30, they were down 8%, and their benchmark was down 8% as well. so for the year, they're down 14, but their benchmark is down 8. >> i know -- to me, i don't have a problem with the short-term performance, that it's that you've got to look at over the long-terms, their recovery, and what do you expect out of the stock selection that they have, and does that deliver long-term? so if they're going to be in chief sectors that you think long-term that'll recover, then that's a good place to be. they can't time that. >> emphasize enough their attributes from the way that they're structures, the way they invest, the nature of the portfolio, it's a great fit for us. >> so let me -- how much are they down as of 6-30? >> 14. >> and the bench is down how much? >> 7. >> and that's due to the location and the stock selection? >> that's correct. specifically because of some of the stock names in the philippines and india. >> we believe in this t

shares,ntioned, e.m. they have fallen the most its 2015 this quarter.u see this finding any respite for those folks in the em space or as a strategist, which you provide -- advice folks to get out and go summer else? james: to put it in perspective, e.m. as a whole is doing healthy economically, especially em asia. there are signs of slowing down in china, but e.m. is still healthy as a unit. think over the last two years, e.m. economies have improved in terms of fundamentals. with that in mind, i think you are going to get more uncertainty. it's still too early to tell em equities as yet. stay invested, but i think we still have a few more weeks and months to come to see where we get in terms of the bottoming out of the markets. i think the big uncertainty is the u.s. china trade tensions. unless we get clarity there, it's very difficult to take aggressive bets now. yvonne: judging what we saw on friday, it seems like it was a sea change when it came's to sentiment. without risk assets across the board. what changed? trade tensions, we haven't seen too

we will talk about that e.m. action.seniormore investment manager at aberdeen standard investments. he will stick with us. up next we will bring you the stocks on the move so far this morning. we will discuss. this is bloomberg. ♪ ♪ matt: welcome back to "bloomberg markets: european open." we are more than 10 minutes into the trading day now and we see -- low as you can make out from this, gains across the continent. here in london it looks like we have given up some of those gains on the ftse. it has come down just a little bit, but the rest of the continent is looking solid. the iberian peninsula kind of mixed with portugal down, but spain is up 0.4%, germany up 0.4%. let's take a look at some of the other things you should be watching today. ryanair pilots will go on strike ahead of a walkout by cabin staff on wednesday and thursday. there is an interest rate decision out of turkey. we will discuss that in just a moment because this is one that i think is decidedly more interesting than the typical turkish central ban

china has been, at least up until recently, one of the best performing e.m. indexes, e.m. markets. they haven't invested in south korea, which represents 16% of the index. and it's not because there aren't good investment opportunities. remember cartica is an active investor, and the ability to apply activism or the ability to apply engagement with management in china or korea has been limited. cartica is starting to do some things here, but their exposure's relative to their benchmarks are quite different. small cap companies, no i.t., no china. i think we made these points pretty well to the board last time, so you asked that how have they done, how has their security selection been in the various countries that they invest? . what we show, this is a little bit of a complicated chart, the gray bars here show the expected return, cartica's expected return in each of the countries, and that's simply cartica's weight multiplied by the term of the benchmark. in the blue however it's cartica's actual results in those companies. cartica's selection, if you will, across these seven mark

the spellgive the fed back into e.m. from higher u.s. interest rates, from weaker e.m. prices. -esque fed, we were used to looking at it as a risk. now that may not be the case. i think the logic will prevail. the fed understands their role in global markets, and that's if things were to intensify from the em front. that could put up break on fred tightening. anna: this is around services in the u.s. economy. given the concerns the fed has around trade or emerging markets, maybe they are right to focus on the sunny skies rather than the clouds. this is the strength we're seeing coming through on the manufacturing index. this is nearly 90% of the u.s. economy. trump likes to focus on the manufacturing story, and that's what we're talking about today. 90% of this economy is services and with got the best increase in some four months. doesn't sound like an economy consumers are nervous. viraj: not at all. and that's what the fed is looking at the now. they have to look at the data in front of them. it doesn't suggest there is trade war uncertainty, but we've seen similar e

he knows e.m.'s the worst performing region.hinks there could be conciliatory moves from china. risk remains in ef asian stocks, but there is a big upside. that is a bit -- more action next on daybreak asia. this is bloomberg. ♪ ♪ haida: welcome to "daybreak: asia." a mixed start to the week. tensions threatening the global economy. steve mnuchin sees no chance of a currency board. it is just past 7:00 p.m. on this sunday. raising the heat on china raising tariffs on imported could -- goods. shinzo abe says the u.s. should saysn the tpp and

e.m.'s are still rightly or wrongly perceived as a single bucket. flown out of the as a result of the dollar. there is a number of big investors that have kind of said now is the time. this is a once in a cycle opportunity. would you agree with that? greg: when we think about e.m., a big area is that we're looking at it from a credit perspective. when you look at where it valuations are, we think it is quite attractive. a big part of the selloff has been driven by the fact that the federal reserve continues to raise interest rates. high dollar rates have become more attractive. e.m. suffered because of that. credit has cheapened up quite a bit. we are looking at where it stands from a historical basis. we think fundamentals also look pretty attractive there as well. when you think about funding these over the short-term, their thinking 6-12 months or so. we do think emerging market credit at this point has value. it has been driven heavily by momentum. are you concerned about a rising u.s. dollar? exactly great for emerging countries that have a tim

so maybe e.m. should not be so bad, there is probably value in some of these currencies, but it is hard to put those traits on right now -- trades on right now. but in the second half of the year, if the dollar is looking a little bit softer, then e.m. could be a better story. scarlet: what talk about how this is a short trading week, but the u.s. there will be less the volume and it will extend to other markets. so across the board, over the summer, is there less reason to read too much into fx trade, because there are not as many participants? dan: that is a fair question. a lot of times in port things happen over the summer when you think about the jackson hole conferences, over the last couple of years they have been decisive, and to the whole financial crisis in 2007 got going in the summer to message cannot assume that anything that happens in the summer is make-believe, it could be important and set us up for where we are after labor day. what happens in summer could determine with the secon

if the dollar was not very strong, i think e.m. would be very strong.trump's tweets change the direction of the dollar? ben: essentially no. scarlet: the president has tweeted about what he thinks the uld do.shol some have suggested that jay powell will not respond to that by caving. he might be more stead fact in making sure that he raises interest rate. do you see that risk playing out? ben: the fed is going to deliver another four more hikes. gdp.e about to get 4% the economy is in very rude health. reasonable people would argue that policy needs to be tightened. that fact that policy is being tightened in the u.s. and not tightened anywhere else in the world -- or it's going to be anytime soon -- that is where the dollar frankness is coming from. julie: the question about small overweight.you are given how optimistic you sound, it is surprising to me. ben: i think small caps is good. the only surprise is it's taken so long for them to outperform. u.s. economy growing well above -- will continue to do so into next year. they are much more domestic. w

as long as the overall e.m.t could remain under pressure, but i think underlying fundamentals are probably much more sorr solid than what markets are indicating right now. yvonne: divya, we will leave it there. divya devesh joining us. thank you. this is "bloomberg asia." ♪ ramy: all right, a quick check of the latest business flash headlines. welcoming a deal with indonesia gold and copper mine. while a knowledge in the agreement is not perfect, frequent look for the majority control -- freeport is looking for a majority control of gasberg, 51%. yvonne: apple is expanding its green credentials with a $300 million fund to promote clean energy and china. it is wanting to raise a percentage of green power in its supply chain. apple wants to fund projects producing one gigawatt of renewable energy in china and up to four gigabytes worldwide by 2020. ramy: shares in must company and jumped more than 5% on thursday, pushing the market value over the market reliance is the second indian giant to pass $100 billion. it

joe: e.m. fx down 6%, buy selectively. matt: sell.ome 2020, will the fed is hiking or lowering? oksana: hiking. joe: down. matt: lowering. lisa: 10-year treasuries? buy or sell? oksana: sell. joe: buy. matt: sell. lisa: wow. really interesting divergence there. thanks to oksana aronov, joe higgins, matt toms. from new york, that does it for us. we will see you next friday. yield."bloomberg "real ♪ alix: metals meltdown. industrial metals in the eye of the storm. the great oil slide. more oil supply from saudi arabia or confusion? "i care about soybeans." aboutent trump tweets soybean farmers as prices continue to fall. ♪ i'm alix steel and welcome to bloomberg "commodities edge," 30 minutes focused on companies, their physical assets, and trading. i want to kick it off with spot

yesterday we saw e.m. currencies rally the most in quite a few months.s one of the better performers. so much so that we actually saw it move through its 50 day moving average, then we had erdogan sworn in, naming his son-in-law as the economy chief, kenn we saw the lira wea 3.5%.% -- weaken it has been an interesting 24 hours for the turkish lira. we see cable decline again today. i know you have shown a chart elsewhere in the show showing hedge funds having the biggest short position this year, but i wanted to take a look at the risk. here we are looking at one year risk reversals in the options market. it is the biggest skew in 2018 when you look at the one week. if you look further out at the one-month, it is the biggest skew since february of 2018. certainly a bearish skew when it comes to the options market and the cable. gold holding onto the gains from what we saw yesterday. a little bit of a divergence between u.s. and european -- or u.k. investors. etc, this is the blue bar chart, it has reached its highest since 2011. has beenholdings index co

he doesn't have that advantage because e.m. has weakened.at does my portfolio look like right now? i'm a medium-term risk taker. what am i looking at? focus,e longer-term given the re-prices we've seen, emerging-market valuations look relatively attractive. they probably look more so now, but you have to weather the storm. it probablyut, doesn't matter taking the risk in that corner of the market. even with the volatility we are seeing, the valleys are there. for the next couple of months, you have to raise your waiting to cash. you have to be invested in equities. the returns from fixed income aren't going to be very good either. the longer-term focus guys can take a more agnostic view on what is going on day to day. guy: tim, stick around. head of microstrategy at emea. it was underperforming. the ibex is pretty much even. you have a ftse outperforming, still down 1%. 1.3%.x all down about the ftse mid is down 1.6%. underperforming sectors, chemicals, industrial performances. the banks are under pressure. the banks did not have a good star

think some underlying trackers in the macro index, which included the dollar, the chinese yuan and e.m flow proxies, could deteriorate a bit further. with that being said, the downside seems a bit limited here, maybe 5% or 6%. the level on the bottom would be about 5800 on copper. i know it seems draconian, but i think that is probably where the maximum pain lies. alix: did you blame the selloff on traders or is or something else you are noticing? do you think overhanging the market? andrew: obviously the recent re-acceleration has certainly been driven by trade, but we actually see a surplus and our supply and demand model this year of about 150,000 tons. that counters the consensus, but certainly next year, the markets really tighten up a bit. we have about a 50,000 or 80,000 ton deficit. there is certainly upside risk or downside risks that are upside for price and in fact the transition is going to be a big swing factor. alix: let's go to aluminum. same question. have we bottomed? andrew: aluminum is interesting because, it is the metals where you're already cutting into the cost c

as someone managing e.m.re you looking at more on the asia becauseis ex- of the trade story? diana: exactly. we think the impact for tariffs will be disproportionately heavy on asia. we are steering clear of the region until we get more clarity on where the trade tensions are going. we like latin america. a lot of value has been created. plus, we are getting past the election cycle. we had columbia, and mexico had the elections. brazil is getting closer to the point, but markets have enough premium. jonathan: local dollar? -- local or dollar denominated? diana: local, but very select. so pick your spots. jonathan: china has had its problems. policy mistakes and central banks struggling to regain credibility. brazil also having a bit of a stumble as well. why latin america for you guys at the moment? bob: i think there are a number of things. when i think about being a crossover investor in emerging markets, diana is right. i need a big bottle of antacid to get in and invest. but there are attractive things ab

we liked e.m. currencies at the beginning of the year.ng to maybe run out of marginal political risks, pricing in e.m. have the elections out of the way. turkey out of the way. no deterioration in sentiment. maybe a few more multilateral issues to deal with further down the line. absolutely focused on the dollar side of it. in terms of relative value, there may be opportunities in e.m. we like the credit risk now. francine: we'll be back with geoffrey of u.b.s. private bank. and michael is in berlin for the day. we're going the talk to him about migration and probably brexit as well. when we talk about e.c.b., it is all about german strength or weakness. we'll talk to michael about that next. this is bloomberg. ♪ ♪ francine: this is bloomberg "surveillance." i'm francine lacqua in london. tom keene barbecuing. day off for independence day. let's look at what is trending across the bloomberg universe. when markets are going crazy, apparently women are more likely to keep their cool. men are four types more likely to withdraw from investmen

abroad in e.m. in europe, there is an argument to say we have low issuance right now because they can't come to market at the price they like. krishna: indeed, indeed. i think if iain likes the high-yield market, he must like the high-grade market because the contrast between the two markets in the u.s. is extraordinary. jonathan: what do you make of that right now? krishna: i think the investment grade market is driven by two things. at least the beginning of the year, rising rates, and then a whole lot of issuance basically killed that market. high-yield where issuance was relatively low, and it is not as rate sensitive, defined more equities and equities are ok, if not superlative. i think that is a good thing. but i think your point about emerging markets and tightening financial conditions and you know non-u.s. markets, that is real. and that is something the fed may not care about, but i think by 2019 will have no choice but to care about. and i think that is where the transition will take pla

the fundamentals have improved for e.m. as a whole. but certain countries are outliers.is an example. they are being disproportionally impacted. we believe the risks are idiosyncratic. i know you have not talked to much about asia. i know it is not your focus. but we get a lot of central --ks tilting to the hottest hawkish side. is there a risk of a policy error, given that financial conditions are tightening to quickly? a lot of the central banks are forced to move to stem the flow we are seeing in currencies. currency has an impact on monetary policy. there is room to withstand a tighter monetary policy in many of these countries. central banks in emd you think every to maneuver? had aariety of them have good situation with respect to being able to tighten monetary policy. brazil has had the ability to ease. rates are looking attractive. ramy: on the side of the world, in mexico, they just had their election. the peso has been strengthening after a low. aboutors are concerned the presidents promises. 9% stronger over the past three weeks. >> we were expecting the team

otherwise, we take selected risk, we find value in e.m. hard currency. vonnie: yes.ark: we are overweighted in investment grade europe. we are overweighted in investment grade europe. vonnie: vincent, generali investments, giving us the lowdown. we're looking at pictures of president trump and emmanuel macron meeting and walking at the nato summit. they are giving each other some sort of a high five there, not sure quite what that was, this is following a meeting with angela merkel, which was a little warmer than at breakfast this morning, in which trump attacked germany in front of many of the nato members. tusk sticking up for nato members at that breakfast. mark: they had a bit of the history, on the lighter notes of handshakes. merkel did meet trump as well earlier. on the surface, when the cameras were left in, it seems to have gone ok. the highlight of today was that breakfast with stoltenberg, the head of nato, when trump ripped into nato, for its reliance on energy, energy needs with russia. that has set the tone. there is a warm handshake between the french

worse, chinaets gets worse, e.m. gets worse, and then it is a knock on effect. we're not there yet, are we? neil: we are not. i think the chinese have been smart in the way they have played this dispute with the u.s. they have served warning that if things do get worse in terms of an escalation of the trade war, which then goes on to damage the global economy, i think investors are certainly alert to that scenario, watch out. we can let the currency go. the americans will say how far do you want to go with this because there is only a limit to how much you could put tariffs on u.s. imports. i think that is a dangerous route for the americans. welly, the real risk is that capsize the global economic recovery, downturn in world trade policy, which would hurt many exporting companies. .- countries the markets have responded with the chinese authorities have said. scarlet: it is quite the statement. you mentioned the trade surplus. no matter how the u.s. chinese tit-for-tat plays up and think there is some level the chinese surplus will have to all that they are for

emerging-market traders shifting focus to the boj, and volatility bets taking up with e.m.on the rise. implied volatility on em currencies, that has served its highest level in the year according to j.p. morgan. volatility has been vaporized for g7 forex. this month we are seeing the whitest divergence between the two measures since 2011. ramy: in japan, we are at the halfway mark for earnings, what are the highlights? sophie: given concerns around trade tensions, we are keeping an eye on the outlook for companies from japan. we had komatsu with a bumper report despite trade concerns and we had an eye on bank earnings, estimates kicking that off. a focus given the rally we have seen related to the jgb market. tdk due to report. keep an eye on the tech space after what intel endured. the chip tech could be pushed out. we will see look at health electric. interested forecast, plus the company seeing deals to buy out alpine electronics has received regulatory approval. some of the highlights on the earnings radar when it comes to japan. today we have data, japanese retail sale

that is when we started becoming more positive on e.m.. trouble was sentiment. that has become more depressed. we need that catalyst. perhaps we will see it in the second half. we remain positive on emerging markets, especially equities. rather than just a few weeks or a few months. we are going to be hearing from jerome powell. he talked little about monetary policy. it is more about regulation. what do you expect? think the outlook over the next 12 months does imply a rate hike every quarter. another four rate hikes on a 12 month basis. important thing for emerging markets is not looking at the fed, interest rates in the u.s., it is looking at the economic differential between emerging markets and the united states. for the first half of the year the u.s. looks like it is moving ahead. thatis set to wayne -- should help emerging-market performance. 4 you talk about asia. is the emerging market a safe haven? >> it will include china, taiwan, india. it is not a china exclusive story. it is part of the asia domestic demand story that it is appealing to us. it is

and then, finally, wanted to mention e.m., because we have seen a rally in the fx today.ou look at the emerging markets, the fx index, that has actually risen from the october 2017 low in the session, i have highlighted the lira. and this is crossing its 50 day moving average for the first time since february. nera, 19 minutes into the trading day in the u.s. and we have a look at the u.s. markets. >> the same rally in the u.s. the dow, s&p 500 and nasdaq are all sharply higher. on pace forthan 1%, its best day in more than a month. the investors not caring about the trade war that started last week between the u.s. and china. one trader told me because there was no surprises, we are buying the news. typically you buy the rumor's, but here is a bit of the opposite consented they have had weeks and months of volatility. they are buying the debt -- dip. take a look at the s&p 500, lots of green. seven sectors higher and on the bottom we have the more sensitive sectors trading lower, that is because of the 10 year yield being higher. haven bonds selling off in confirming the

given the inflow of capital we have seen into e.m.n the past few years, they are more stable and they were 10 or 20 years ago. talking about emerging markets, we have to talk about what is happening with the fed s.d rate hike you raised what you were expecting for this year and next year. jose: when the teacher gives you today -- the answer to the quiz, it is easy to get it right. the fed says they move more aggressively and assertively. the chief economist thinks that is what we are going to do. pace,s at a very moderate because don't forget, you still have a lot of slack in the .conomy on the employment side as we see the economy perform well, we saw the unemployment rate rise 2/10 of a percentage point last month. that was a sign of strength. people were entering the labor force. you don't reenter it with a job, that is the problem. ramy: thank you so much for your analysis. the washington post says twitter's rate of suspensions has doubled since october and it suspended over 70 million accounts of may -- in may and june. it cites

crucial week ahead for e.m..till ahead this hour, we are going to take a look at how currency markets in that emerging markets space will fare in the second half. a senior fx economist joins us. we are talking, trade because of all the implications. claire joins us from washington to give us her take on what is happening there and what to expect. this is bloomberg. ♪ ct. this is bloomberg. ♪ david: welcome back, you are watching "bloomberg markets: asia." i'm david english here in hong kong. bmw is the latest company to urge the u.s. not to impose tar -- tariffs. even as the white house trade advisor says these concerns are smoke and mirrors. gm told donald trump and the government that it could shrink u.s. operations and even cut jobs if tariffs are broadly implied to reported -- imported vehicles. those comments submitted to the congress say imported terrorists could lead to a smaller gm. let's pivot and have a look at korean carmakers. they are saying that import duties would be devastated. hurt american worke