if you look at the e.m.r any other index or majority of what an that represents individual country, that is part of the emerging market, you will see this continuous downslope that has been going on all year. you will see volatility spike once we have a significant drop and again, big drops come from bottoms. not necessarily from tops. -- they come from what i like to call a towel trade. people get sick of it and throw in the towel and that indicates a bottom. have not seen that yet. that is when you see a spike in volatility. ramy: let's focus on turkey being one of the top headlines. taking a look at the lira, is at 5.9% to the dollar. gaining strength from where it the president saying ok as long as you don't threaten me. you see a chance for positivity? quint: the question is, with a release the pastor? aree are two components we forgetting. one is the sanctions in the issues we were having, but it is my understanding that a majority of this is a result of this being in prison. i believe our president ha

given this back drop of e.m.n futures to see the setup, how they may fare at the end of the session in mumbai. we're seeing futures edge lower, given the pain from the trade front, as well as themes we're seeing in the yen space. haidi: thank you so much for that. it's been a busy day already. we have another key data point due out later on friday. the latest check on the indian economy. economists are expecting that g.d.p. would have expanded 7.6% in the three months through june from a year earlier but our next guest expects growth to come in above 8%. let's go over to mumbai access bank chief economist. hy the optimism? >> so i'm a bit surprised that my peers are doing a 7.6%. i think it's just base effects. remember, in india we do this on a year and year basis. rather than the annualized quarter and quarter that most economies do. the previous quarter, the corresponding quarter of the previous year, q-2 of calendar 2017, as opposed to the q-2 of 2018. that was the quarter before the goods and services stacks

when you look at what is happening in the e.m.e and see the argentinian peso continue to decline, the rupiah at the lowest despite four hikes since may from the bank of indonesia. and then you listen to talk about how it comes down to current-account deficits. what hope do e.m. countries with those deficits have of supporting their currencies at all? ranko: it depends on the specific currency. are we talking about credible monetary policy, credible fiscal policy? are there reserves? that is additional on top of that. sayingjane is right in it is not a contagion thing were all of e.m. will enter a bear market. in places, you have very good prospects for a rally. in the case of argentina and turkey, they are dealing with currency crises the question monetary policy in turkey and argentina, fiscal policy. anna: fiscal policy must be part of it because the lesson from argentina seems to be that interest-rate hikes are necessary, but not a sufficient path in dealing with a challenged currency like the argentine peso? ranko: absolutely.

e.m. has probably higher to go in the short-term.s is all about the dollar, what is happening with buck. we have seen the indian rupee go to 70. how fundamentally does this change the -- change the way i approach the world? have the u.s. markets, and everything else. you have been in this environment where there is a tug-of-war between data on one been and for that data has coming through strongest is on the u.s. side. and then you have geopolitical data, and the way that has been expressed is through dollar strength. i think this has been a dollar strength story for the first half of the year. we are approaching the peak in that dollar story. matt: i have this really brought here, if you look at it in terms of the s&p 500 index in white, world, excluding the united states, in blue. 13. is as of august these are two indexes tracking each other. you have this massive diversion. could these be coming back together? >> i don't see them coming back together quickly. i think the worst is over for emerging markets. one of the things we hav

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

more selling in e.m.gn debt, the biggest he story for the week and one of the key things people watch when they get back after the long weekend. the brazilian tenure is up another set of basis points. caroline: contagion seems to be the watchword when it comes to the emerging markets. many feel it's time to find distinctions, but at the moment, they all get embroiled. the argentinian peso is stabilizing somewhat today as the imf said we are there to support it. all consumedupee and the indian rupee is hitting a record low. the end is an asian -- the indonesian rupee also getting hit. we didn't see stabilization in the argentinian peso today. the euro is getting a little hit on the fact that we've seen a potential negative outlook when it comes to sovereign ratings and inflation falling in that particular part of the world. dollar,e canadian because the looney, all eyes indeed as we see no deal for now. will they reach a deal next week? the dollar has been strengthening against the canadian dollar and the

the source of this year's e.m. selloff.ve the finance minister and the treasurer say he will travel to d.c. to meet with the imf on monday to give a press conference, this after overnight, we had the central bank ther e jacking up interest rates to 60%. the argentinian el centro bank pushing for more fx intervention which we know has had limited effectiveness so far. we're also looking at this overall situation, where president -- asking the imf earlier this week to speed up its payments. that triggered this latest legs of the e.m. sell off. let's get the selloff in asia. i am joined by bloomberg's global markets editor. let's get back to the trade story. you've kind of extrapolated that the deal of mexico would meet it easier start to china, you have been proven wrong by today. >> you would. seeing lot of what we're in the markets is the sense that people are conditioned to this. we're not seeing huge moves into safe haven flows, seeing a little bit of a bid for treasuries and a move into the dollar and some weakness for s

-- e.m. has turned a corner? to say that, you have to be picking and choosing your battles in the em space at the moment. as you said, it has been quite a volatile time for emerging markets the past month. there are some tentative positive signs starting to come through. the u.s. and china are talking about trade again, which is a positive issue. we expect more china stimulus to be coming through as well. i think those are the important things investors will need to be watching from an emerging market perspective, particularly as we tried in navigate between now and the end of the year. yvonne: what is key for you to determine whether asian currencies have seen the worst of it? you mentioned about king dollar inht now, there is a wrapup chinese stimulus to keep asian currencies supported. jonathan: that's right. i think the key now is a number of factors. we need to see the china stimulus coming through. that will put a floor under china nominal growth and in turn have a positive spillover affect for the rest of

those are the three components that drive e.m. higher. rafael: today, -- e.m.t dollar-based the deals are somewhere around 6.75% some of local yields are 6.8%. you've got good growth in emerging markets and relatively low inflation, so the real yield remains high relative to they develop market. emerging markets is a. fundamentally attractive asset right now the problem is when riskiness comes in from all of the trade talk. if that starts to slow down or if the worst-case scenario does not happen, then that is actually bullish. so people case or the bear case is not happen, that could be in an emerging market. fan of thenitely a space. we think there are some idiosyncratic factors going on right now. we do not view this as a systematic problem across the u.s. we are relatively upbeat on it. david: jim caron morgan stanley, investment management, will be staying with us. coming up, first quarter results this morning and the other company stories that you need to know about today. that is coming up next, and this is bloomberg. ♪ omberg. ♪ kailey: this is "bloombe

this is jpmorgan's e.m. fx chart. can you bring the attention -- tension in e.m. fx and e.m.crisis? catherine: i think what is interesting about the e.m. is that there is a lot of heterogeneity in the markets. they're all being powered by the same brush. investors who are careful about looking for the nuggets are going to find some really good opportunities. the countries that i've been disciplined, even in latin america, the neighborhood looks dicey, but there are really good, disciplined countries there. nejra: i want to save another chart as well. you just mentioned opportunities, i'm not saying this is one, but this is a favorite chart of hillary chart. the argentine spread over treasuries climbing to the highest since the election. what i want to ask is whether the global market see -- policymakers are in a strong position to withstand any of these issues like an argentina. the key isi think that some countries are being particularly attacked by the financial markets. they have avenues for assistance. there are other ones that could use some domestic policies in order to

could this be the start of a new episode for e.m.? it has not been a good year, but we have been around for 20 years. i would not call this a horrible year to start with. throughout 2017, there have been so many discussions come -- relating to geopolitical risk. 2018 is we seeing in are getting into action so what markets have been telling us, of course, investors might be worried about the implications ,n companies and corporate's but what we are seeing when we are observing this very closely and monitoring these companies we invest in two, so far there has been little impact and when we are listening to the people who are telling us about e.m. guidance, they are not really worried, either. we do not think this is basically the case where you have to price in a real big issues in terms of major slowdowns. opportunity for investors to enter or reenter emerging markets. sophie: the balance of risk, there is some optimism to be had around the em space and companies aren't necessarily being hit as hard as they can be from trade concerns,

refers to desk e.m. refers to cut -- e.m. refers to countries in a certain situation. alix: the equities are holding up much better than the e.m. fx. if you compare the u.s. dollar versus emerging markets, you will see the disparity and you see as the dollar continues to depreciate, emerging markets continue to decline. it is likely to continue. while there will be spots to buy, it will be this trend that will most likely continue until november. this continues into the midterm elections. this is a sounding board that trump has been banging on and it is working. vincentchel evans and cignarella. you can check out the charts. .st go at gtv coming up, more on the risk off they with investors rattled by trade fairs at the end of the month. we will discuss with evan brown. this is bloomberg. ♪ alix: this is bloomberg daybreak. i'm kailey leinz. coca-cola is expanding the hot chicks business by buying a global brand. cook is acquiring for $5.1 billion. that is the biggest acquisition in eight years. both coke and pepsi have been seeking alternatives while the market and

xhat should you do when e.m. f is being weak? buy in the carry. e.m. fx is about carry.rrent account deficit country. e.m. local debt and fx is attractive across the board. guy: the fed is not backing off. that tells me the pain trade is still there. fx has coped with fed tightening. look at the mexican peso, that has come back strongly. it is not widespread. can the chinese yuan hold? the u.s. does not want a materially weaker chianese -- chinese yuan. they cannot risk a chronically weak situation. that is the situation with turkey. you think the thing that data -- deals will be done to stabilize the situation. matt: where should the deals be valued to please both parties? : the turkish lira is selling off ridiculously high nominal rates and reasonably high real rates. why is it selling off current account deficit? china has a current account surplus. that is not the only factor. one extreme is switzerland. these currencies should go up over time. that is balanced with the huge debt buildup we have seen in china. what they are engineering in china is stability on a trad

china has been, at least up until recently, one of the best performing e.m. indexes, e.m. markets.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 markets is

tying into that, it will provide a little bit of a boost for e.m. currencies. not just e.m.rencies, but e.m. assets as well. commodities, it's no coincidence that commodities have slumped recently, kind of just after yuan slumped as well. i think there are a lot of things that can really turn around if the yuan gets a bit of a boost. it might finally see chinese equities get a base. they are really struggling to get a base. i think there long-term fundamentally, there is a bullish story there. there is no sign of them bottoming out just yet. a yuan base might provide the bottom in chinese equities. matt: i think that's really -- i think those stories are closely connected. looks like the pboc is taking some volatility out of the yuan ahead of these talks. that's what the markets are happy about. talk to me, from your view, how much power does the pboc have to adjust volatility in its currency, or even the level. mark: i think it has got a lot of power. just what are the costs, the side effects? it slowly wants to open up its market and move to a more floating-rate. it's a ce

it is not just owning e.m.. you have to be doing your homework and understanding the risk to certain countries where the policy is just not sustainable. >> where would you go? >> many in the frontiers a, middle eastern countries that have benefited from oil. war, not invented by trade certain countries in africa. the emerging market is a big set of countries. there can be opportunities in other areas. >> thank you so much. coming up, the new galaxy note nine isn't the only thing samsung announced. they have a deal with a major music streaming service. all the details coming up, next. julie: time for the bloomberg business flash. capitalareholder talking -- taking on carl icahn. he supports the acquisition of express grip. glenn who said the company is paying a cheap price for the pharmacy benefits manager. spending $1.1 billion to keep price -- key place with the biggest oil producer in the basin. they expected them to put more cash towards a share buyback and dividends. the ceo called the performance of bill gr

we are watching e.m.eight right now in lira, but there's a couple other stories, including indian rupee having a tough go of it. nejra cehic, what is trending? nejra: let's check on what's trending across the bloomberg universe. victoria's secret is getting worst according to an analyst from jeffries saying that two tops were not in style and leopard print pajamas where fashion miss. the u.k. and eu have dropped october as of deadline to reach the brexit deal. they now want to reach a deal by november at the latest. the most read story on the bloomberg terminal in third is ceo troubles tweeting, aston martin announcing shares in london, and trump warns tech giants that search results are rigged. let's also do the bloomberg first word news with taylor riggs in new york. taylor: it's a sign that negotiators in the u k and the european union have struggled with brexit talks. they dropped october as a deadline and hope to finalize talks by the middle of november. there's a greater chance that will not be a de

allocated portfolio versus all this e.m. stress?trength into 2015 and 2016 slowed the u.s. economy down somewhat. we are not very epic is fiscal stimulus so it's not showing up. be a periodgoing to of a steepening yield curve and a big dollar rally. this is still a growth environment and a flattening yield curve environment in the united states. francine: this goes back to turkey and geopolitical risk. we saw situation escalate between canada and saudi arabia that move canadian dollar in 24 hours. we saw sanctions on russia and what that did to russian ruble. how do you price in geopolitical risk? having ans clearly effect on emerging-market currencies and we called this a little bit of e.m. contagion. it's more of a problem for the european banking system than specifically some of the other emerging-market currencies. geopolitical risk has always been with us and has been for a long time. it's escalating but the fundamentals of the global economy are still quite good and inflation in most parts of the world is not significant. we a

i think our perspective on e.m.to a certain extent by china, we don't think china is going to have a hard landing. china is a real motor of growth for emerging markets, both in the commodities trade and elsewhere. the twins of china and america, growing rapidly are going to be good for em anna: thanks so much for your thoughts. rick stays with us here on daybreak europe. up next, oil slams losses as the trump administration considers higher import tariffs on chinese goods. we will also bring you our of aview with the ceo steelmaker. this is bloomberg. ♪ anna: good morning, everybody. this is "bloomberg daybreak: europe." 6:30 here in london. 2:30 in the afternoon over in tokyo. on thereut bond yields for you because we have heard from the boj over the last couple of years. trying to get a little more market determination of interest rates in japan, rather than yield control by the central bank. let's get to the earnings season once again. this is the chipmaker in germany. third-quarter adjusted eps, comes in at 0.24

e.m. is sense of touch sensitive to global trade. the key here is the u.s. dollar. it has been appreciating since april and we still think it is undervalued by about 10%. andou look at growth interest rate differentials between the u.s. and the rest of the world, it tells us we will see more father -- further dollar appreciation. more andsitioned for asset class. julie: i have a great chart that looks at emerging-market corporate spreads versus high-yield. it is sort of a proxy for sentiment here on these two asset classes. all of this said, is there anywhere within e.m. that you think will be more resistant? you are getting broadly defensive, but there are a lot of different countries included in emerging markets. is there any place you think is more defensive within emerging markets? paul: there are some emerging markets that we like. we see value in some of the local currency markets, particularly places like mexico were the central bank has regained a lot of credibility in hiking interest rates aggressively over the last few years. real policy rates in mexico ar

a time of turmoil within the beer business and e.m. as well.io and elsa lignos of rbc capital markets. let me bring up this chart, if i could. the mathematics is gorgeous, a beautiful break in extremely well contained, well-managed trend, near two standard deviations. weaker, weaker, weaker huge a persistent chinese yuan. is it a fixed currency managed by the government or is there any sense of floating to renminbi? elsa: there are clearly market forces trying to push dollar china higher. no one would assume it is a floating currency. there is government intervention and management. it will be used as a tool and what will be a u.s.-china trade war. francine: if we see a currency war, what is the bottom? cristian: they could be used. we do not think it will be used. we do not think it has been used as a tool so far. the fact that it shows incredible stability, depends on the fact that it is now managed against a basket of currencies, rather than against the dollar. the dollar remains the main currency in that basket. stability against the dollar

not just turkey specifically but in that broader e.m. space. after, that you really just get down into some of the banks. some of the european banks and only really two of the u.s. banks, citigroup and bank of america. beyond that, most of the risk is really going to be found really in the european side, rather than on the u.s. side. much more on the financial side than it is on the tech side. selina: crawford, real quick. it's all negative, sad news today, but is there any buying opportunity in all of this? >> just to be clear, we don't do buy, sell, hold recommendations. what you're going see is that looking into this market, the telcos will be protected. if you're the government of turkey, having telco exposure, having people not be confident in those telcos, that's not a long-term strategy. what you see erdogan talking about is we need to bring back confidence -- confidence. we need to get people confident so that people will realize that in the long term, turkey will survive the crisis that it's going through right now. which means that yo

we think of course this year a lot has been driven negatively, especially on e.m. with regard to all the trade talks and hence also a little bit to the u.s. dollar. we saw a lot of outflows to emerging markets currency into u.s. dollar with rising interest rates which is from our perspective quite a normal move i have to say. but now we think the dollar move has -- i wouldn't say fading out. but it has maybe reached the kind of peak we have been forecasting. so hence we would expect a small appreciation down the road. but definitely not in the same pace like what we have seen now. hence, that should be more positive for emerging markets and in particular asia which we are the most positive on. david: very quickly here you like asia credit. why? >> we think the spreads are quite attractive now with some of the widening we have seen. so hence we are recommending clients to get into this space. david: all right. and on that positive note, we have to live it. tann of deutsche bank wealth management. shay pacific c.i.o. and we're watching a lot of things ahead of the op

one is against e.m..ith sustained geopolitical uncertainty, the dollar could do well but against major currencies like the euro and the yen, we think the cyclical dynamics may have peaked and we are looking for tactical opportunities to reenter short dollar against that. what makes you think the dollar has peaked? because the trade war can't be sustained? the u.s. what when? -- the u.s. won't win? one is that the currencies that have been hit will recover against the dollar escalate in -- things and if they do the euro and yen will become safe havens. in particular, our convention it -- our conviction is really on the yen. that's where we see the value in any paradigm going forward. anna: it moved by .2% stronger for the end this morning. if that's your view on the dollar and you think the trade story will take the dollar, of course the fed is hiking. that is from the fed typically quite dovish but now veering to the hawkish side lately. talking about how they might need to increase interest rates to comb

even the rate market reaction to e.m. has changed. earlier on, a was being viewed as idiosyncratic.he markets are saying, maybe the fed can't hike that much. is saying thist is more than argentina or turkey, this is systemic. this has the potential of slowing the fed hiking cycle. lisa: this is contagion, problematic. i want to get your thoughts. you said you see opportunities and need to dig in there. and do fundamental research. what are you doing with your portfolio? are you buying mexican bonds and bonds of other places? if so, corporate debt, severance, what are you doing? iain: we are looking for the areas we liked her we like areas like mexico. we have been adding areas like that in the portfolio we have yields up a high of the year. obviously it has rallied a lot since nafta talks. it seems to have stabilized. attractive yield of their. if you look at time gary and yield curve, it is very steep. those yields should be anchored somewhat to what the ecb is doing. coming ecb ised going to take its time. they are not raising rates anytime soon. thismeans there will be zero inter

. >> 63% say it is time to buy e.m. time to go long emerging markets.are globally allocated that is what the map is going to tell you. i don't know. we had a lot of false starts in that direction. that is why i think the dollar has been so important. >> active management looked like it was going to start off the year to your point in value. >> manager stocks have been very weak. people feel like it is just disruptive, cost pressure. asset values are up and are doing okay. >>> we are watching the hand rail ustr. today is the deadline for trade negotiations with canada. we did get a rare comment. the negotiations between the u.s. and canada are ongoing. there have been noonssns cceio by canada on agriculture. watch that when squawk on the street comes back. fight security threats 60 times faster with ai that sees threats coming. the ibm cloud. the cloud for smarter business. adults are just kids with much, much better toys. introducing the 2018 c-class sedan, coupe and cabriolet. the thrills keep getting better. lease the c300 sedan for $399 a month at yo

that means investors in e.m.s probably don't need to take widespread and immediate action to reduce their position. nejra: you just mentioned the fed and your overweight 10 year u.s. treasury's. is that decision based on the fed or something else? year this has been a wild where, at the beginning of the year some people were saying 10 years are going straight to 6%. i think we took the under on that and thought that we would get closer to a flatter yield curve. typically, the tenure tends to rise at the beginning of a fifth heightening cycle. the rise from their comes at a slower pace. that is one of the things we were looking at. allocation, and a balanced portfolio or any portfolio, there is that rim for to be unbalanced instability in terms of the market is scared. they have continue to play that role. for us, we think the 10-year can continue to go, they yield can continue to go higher in a gradual way as the u.s. economy continues to recover. we don't think it is going to be a dramatic move the way that some

amidst the pain we are seeing in e.m. contagion, it is correctly priced.his year, emerging markets have underperformed relative to develop markets. coming into the year valuations were stretched in emerging markets. if you think of years and years of monetary stimulus, which had been stoking asset prices, a valuations were across of asset prices and that has been a stretch. the market is less complacent than a has-been in the last couple of years. it is starting to scrutinize asset prices much more than before. there always was a risk that these types of negative news events coming out of -- even if it was one individual country, it was likely to way more on equity prices this year. anna: im not sure which one is more likely. we get political repression went to the united states or erdogan backs down in the face of financial pressure and we see capital controls and other measures reversely ruled out. even if we got one of them, that would not fix the problem in turkey, would it? even if we see the united states given turkey an easier ride, that does not ch

that will limit the extent -- the e.m. stress.ion will cause people to get more bearish more quickly. here's what we have been since april. the less couple of weeks have shown negative mentum convergence. this is a temporary warning sign in the short run. with all of the selling going on overseas, however, we do not see any evidence of that happening yet in the s&p. 2800 is a bigger line in the sand and 2750. 2750 we get down near 100 -- near 2750 -- abigail: let's look at the shanghai composite. mark: it is pretty amazing. beingjanuary, the u.s. s&p here has moved straight higher since the april lows. europe has been a much different story. maynything, europe he did and over the last couple of weeks moved straight down starting in the latter part of july. the chart below is the shanghai composite. that had peaked in may and has had a big run as well. you see a big spread and emergence. this does not mean the u.s. has to fall. and join the others it is important to note this is where we are. back in these days, things were normal.

still we this from e.m.'ralia's market in focus, getting a little boost on the change of leadership. currencies, that has been driving sentiment today in asia. the aussie dollar in focus. it had quite a fall ahead of the leadership vote, but there has been a relief rebound and analyst are scrambling because there had been many calls the 70% --could bolster fall. moving onaland dollar kathleen hays' comments the new zealand reserve bank governor. he said there could be further rate cuts coming through. it is higher after tracking lower, and we have been watching the movie began. the u.s. dollar is a touch higher against the japanese yen. falling to the dollar for a fourth session. anna: juliette saly in singapore. symposium gets underway in jackson hole, wyoming. investors are looking to jay powell's maiden speech later today. there will be more attention after president trump's criticism of the rate rises and that has dominated conversation with guests at the event. >> trade is an issue for the world to be co

." >> they're down to desperation e.me.hey have toto right a report ad they don't have a single piece of evidence. >> reporter: the president's personal lawyer rudy giuliani is still negotiating terms of an interview between the president d.d special counsel. >> i'm not going to be rushed into having him testify so that repets trapped into perjury. en reporter: he fears the epesident's testimony could be s ed against him. >> truth isn't truth! donald trump says i didn't talk about flynn with comey. jumey says you did talk about it. so tell me what the truth is! now, who do you think mueller is going to select? one of his best friends, comey, or the president? >> reporter: president trump's dismissal of comey lead to the special counsel probe. sn't mr. trump's decision to revoke the security clearance of former c.i.a. director john ndennan could also lead to legal problems. nt and if it means going to court, i will do that. >> reporter: brennan is exploring legal options, because he believes the president's intent is to sile

portfolios,onal they take risk in e.m.ve a lot more conviction in china's long run than we do and say let's -- then we do in let's say turkey. the allocations are little more specific than they would have been even a year ago. but that whole portfolio together and there may be overlays where you want to take risk. brazil looks like mexico did before the election. candidatethe leftist one and the markets that were covered. when you take a look at the currency, as we get it was in impeached the president, oil fell through $30, and here it is at the same level. lisa: steven wieting citigroup private banking chief investment strategist, thank you for being with us. lisa: breaking news. lululemon -- caroline: breaking news, lululemon is reporting numbers and their beating analyst estimates -- and they are beating analyst estimates. you looking at the full-year outlook and earnings per share were 3.45 to 3.53. we're seeing a third-quarter net revenue of 720 million to 730 million. well above estimates. we are up five percentage

s, not as much. , the biggestms drop in e.m. currency on friday since the brexit vote in 2016.c closely. have a look at currencies. at euro-yen and celery and as a factor of risk aversion. -- and dollar-yen as a factor of risk aversion. it is hard to imagine the scale of this graph. that is 550 all the way to seven. we actually broke seven early. we are trading at 653. have a look at the spread right now. in a lot of ways it is not very liquid out there. quite a blow in spreads. one last thing before i go. is your function on the currency. at 12 month forwards. 834 on the lira's. if they don't really come out be in bigr, we could trouble. they need a massive rate hike is what a lot of people are saying. a lot of things to follow here. ramy: thank you very much. checking the markets before the asia-pacific open. meanwhile, the people's bank of china has said it will not use the yen as a weapon in worsening trade relations. it also ruled out strong economic stimulus. our china correspondent is watching from beijing. is this a change in guidance? >> i think this is a central bank

we think that should ultimately be supported for e.m. assets.t will extend further than we expect. look at e.m. assets, leaving aside the currencies. look at the equity markets and em dollar bonds. we are seeing more optimism coming off what has been a difficult first half. that is one indication that the dollar may be that much closer to potentially stopping to strengthen further. that is the most important thing for em assets. speak, we are we seeing the turkish lira rising 1.3% after thinking to that record low. earlier, itpeaking is hard to see a consistent upside for turkish assets. manpreet gill, standard chartered head of ficc investment strategy from singapore. bloomberg users can interact with the charts we have shown using gtv . you can browse charts featured on bloomberg tv to catch up on key analysis and save them for future reference. this is bloomberg. ♪ ramy: quick check of the business flash headlines. this is the stock to watch after second-quarter earnings smashed expectations, operating profit $550 million through june, fa

david: is that money on the sideline support him e.m.?uary and has come down, but it is still at the highest level since 2016, so still a lot of bearish sentiment when it comes to emerging markets. >> it is difficult to get overly constructive with emerging markets. the dollarwe thought was artificially weak at the beginning of the year. that is not positive. rate hikes are not positive. if we get a pause in fed tightening, that could be a reprieve for emerging markets. julie: do you see opportunities in certain emerging-market currencies? the peso has been one of the few currencies to outperform. you have political change, a potential nafta agreement. is that a place to look? >> we look at things in a weekly cycle within the longer-term outlook. e.m. is attractive because there is too much volatility in the market. that is good for emerging markets as an asset class where you are picking what are perceived to be better fundamentals. mexico has a huge nafta premium. you start to see constructive news, especially coming up with a handshake

e.m. equities also. of course the s&p down by the most in about seven weeks. let's get more with su keenan here in new york. sue, even some positive u.s. data couldn't stop this sea of redful >> not at all. name the commodity, it's a down day. the trade war and turkey. the only one-two punch, stocks closed off the lows but boy, they were down. 10 cent, tech stocks were the lowest. the s&p 500 again down for a fifth out of six sessions. let's go to the commodity story. the bears in control. g.t.e., copper and commodities as a whole tumbling amid the trade woes and the big movers. tesla sexilet subpoena worries the least down stock of the bunch. macy's as mentioned, getting hit hard excite the fact it beat -- despite the fact it beat earnings. ten cent off its low. and micron, the chip sector getting hit hard. a lot to do with the fact we had a lot hedge funds dumping micron. let's go back into the bloomberg real quick, g.t. effort. retail sales were jumping more than forecasts. didn't matter, stocks were in selloff mold, joining the rest of the world at a bette

countries have done their -- e.m. countries have done their homework. think thenot correlations will moderate at some point because as you mentioned, there is a good fundamental basis and a variety of countries. these currencies got under pressure, too, and investors will seek those out as an opportunity to invest, so will be a broad contagion at this point, and that will only happen if you get contagion like you saw in european bank shares. that will spill over into other markets, the broader channel of contagion. with looking at turkey and some of the other weaker currencies out there, making at those countries that have good fundamentals, my view is investors will seek those out as an opportunity to invest given the store and volatility. ramy: it seems as if the u.s. is really the ultimate safe haven play here. hop back into the bloomberg terminal. let's look at average geopolitical risk in 2018. on average, it is higher than back in 2017. how does this change the talk of where we are in the cycle? ben: i think the geopolitical risk -- you know, if y

a chart of the correlation between the lira and other e.m. onecies, which shot to year high as it looked like emerging markets would be sucked in, but it appears there is a separation. the growing view is that turkey really stands on its own in this particular crisis. oil, goal too saw continue to trade at 18 month lows, and bitcoin down 70% from the high, all in that space. su: a lot of volatility. first, oil did rebound but erased gains later in the days as focus turned to wednesday's supply data in the u.s.. a private report showed a surprise surge, bearish for price. losses, evennded though there was a slight rebound earlier in the session, as investors are seeking the dollar and yen as havens. we talked about the decline in gold, the very bearish outlook. the fac you have risingt interest rates, strong dollar, all negative for gold going forward. let's talk about bitcoin. it has dropped below the 6000 mark, down 70% from its peak. a lot of analysts say it has further to fall. that has to do in part with some global volatility, and a a lo

that is the worst e.m. currency. this is a gap between turkey and greece, when it comes to ensuring government debt. what is interesting is greece is rated four notches lower by the investor service. look at the cds, turkey is now more expensive to insure then greece. that is incredible. you have seen the difference in cds price, the cost to insure turkey's debt. it has narrowed and turkey is now more expensive to insure. the euro weakest against the dollar in a year after the report that the ecb has going concern about the exposure of some banks to turkey. bmp exposed after the turkish currency slump. it is the supervisory mechanism and has begun over the less couple of months to look close at -- last couple of months to look closely at the banks ties. it is not seen as critical yet. news, severalng suspended funds will be placed into liquidation. that is crossing the bloomberg terminal. rbf. to liquidate a we will keep an eye on that. that is breaking news crossing the bloomberg terminal. let's check on what is hap

hike interest rates properly, it would be a major step forward for turkey and we would see a wider e.m. rebound. scarlet: u.s. stocks on a broad-based selloff domineering declines around the globe, commodities as well. materials and energy stocks are the worst performers because we are seeing weakness and metals. romaine: when you look a lot of the base metals, copper and even the precious metals space in gold, you have to wonder what it is telling you about the economic picture globally, particularly in emerging markets nations and in asia and whether this will be something that is more worrisome in the u.s., as well? manus: turkey is getting some outside help. as much as $15 billion in the country. president erdogan reached the rewards of standing by its gulf ally in the diplomatic standoff with saudi arabia. $15 billion will not be a check, but a sentiment about investing and standing by your neighbor. alaa: it is a search for allies. you said they are reaping the rewards of the qatar boycott. one of the things that came from the qatari side, not the turks, the $15 billion is coming

it is really the contagion spillover into the finance and worry about e.m. markets generally. if turkey starts to build up again, that does -- does president trump impose more tariffs on turkey? we will have to wait and see. if he does, that could exacerbate the deal. that puts more pressure on the em currencies, so the central banks wait and see how this plays out. how does the dust settle? if this is it, they will be happy where they are. there might be more pressure if it does exacerbate. david, thank you for that. we will continue to watch that, we have emerging markets and fx falling in the day along with everything else in asia. that bear market for equities, as well. as well, the largest telecom country in the amid a hiting profit from restructuring costs and a continuing squeeze from intensifying competition. we will talk about the national having anrollout, impact on business. telstra ceo.n the great to have you on for us. you managed expectations that this year will be a difficult one. how bad are you bracing for its to get? >> thank you for the opportunity. there is

trade the dollar liquidity, and that emergence in rates that will continue driving the bearishness on e.m our focus is trying to work out the structural drivers within markets to find the winners and losers from a stock picking perspective so we are focused on millennial consumption. can be in the developed markets to define the market share gainers versus the losers. in the developing world, it is following the same pattern as the baby boomers. it is the same businesses that play into rising consumption, greater wealth, and the ability to tap into credit. millennial's and what they do varies across different parts of the world and trying to find which companies are dialed into that is very important. haidi: perhaps her most contrarian call? we do not really focus on contrarian. every stock we take we think is contrarian in that the rest of the market does not get the future growth and returns, so we could have that. we have a lot of businesses that are already high return businesses but we expect to be quality. the other names are the largest positions. these are different names, widely

is the nafta story helping e.m. at this point? maybe we need to rethink that thesis. sophie is here with indexes opening up. sophie: we have the regional benchmark seeing gains up .1%, but a mixed picture and we are seeing the yen gaining ground. thent to highlight kiwi-dollar back below 67 u.s. cents after the core dataset we got out of new zealand. home owning approvals fell the most in over three years. the aussie dollar, back below 73 after the miss in building data and falling home approvals. fell second quarter capex .9% on a quarterly basis but australian firms plan to spend 102 billion aussie dollar through, 2019, slightly better than forecasted. korean assets shifting gears, up one cost be -- cospi third of a percent for a 10th day in gains. bond yields are jumping ahead of the policy meeting friday. other moves in the bond space, you do have jgb yields nudging slightly higher ahead of the boj's bond buying plan for september to be released friday. it could be a matter of time before the 10 year yield of rises above the .2% level. treasury yields are keeping

on a historical basis, i like e.m., you can do very well in the emerging markets at current levels.es: gerald, you have been super hot. you have been pick and choosing the winners. you probably have the best track record for someone coming on saying get this one, don't get that one. what do we like now? >> you are very kind. i think the market splits. we have 8 weeks until the next earnings cycle. you want 8 seconds to the buzzer. the packaging corporation of america made all the cardboard by amazon and walmart. or will you go with transport. profits are in the book, contracts are solid and revenues are growing. it's the dirt in the fingernails as we head into fall. charles: president trump's approval rating holding strong after what most of said was his worst week and it's clear. the american public believes the republicans are significantly better when it comes to handling the economy. the implications for the mid-terms next. you've got a good record and liberty mutual won't hold a grudge by raising your rates over one mistake. you hear that, karen? liberty mutual doesn't hold gru

from that perspective, there's definitely risk that this could become a wider kind of e.m. crisis given the level of -- >> the list of big countries in the world, big military spenders, big populations as well, political positioning as well turkey takes a lot of those as well when you say we're going to have no normal prescription of this crisis or stabilizer coming in such as interest rates, such as the imf involvement, that worries me that this can be something bigger rather than being contained. we've seen jpmorgan amongst others downgrading a select number of european banks with exposure as well you add this to the bubbling over concerns and i wonder if this is like a straw in the camel's back so to speak. >> yeah. i guess at some point you don't start to look at the -- what started all this is of course the -- if this continues and gets worse, that's going to be the potentially big change then the market starts to look at the united states, the feds i think would quickly kind of move to the sidelines and then you could get quite a -- in terms of u.s. rates that would h