whether we look at e.m. or industrials. these are two segments of the markets that are sensitive to global growth, considered cyclical. right now, they are painting different pictures. in the waistline, we have the sectorsf the industrial . con a bottomeds relative to the s&p 500. have been grinding higher since. newstrial seem to be making and fresh lows every day. as a central bankers are telling us the dimming prospects for global growth going forward, it begs the question, was e.m. priced in too much bearishness and will industrials outperform and take the signal currently being sent by emerging markets? caroline: luke, and the entire markets team, let's bring back mike regan. year, it has, this been a year of divergence with the u.s. outperforming and some convergence for the u.s. losing its muster. it is time to go abroad once again? >> i think we have looked at emerging markets and the potential to dip back in. often the things people overlook is how big the sector composition is different from developed markets. eme

however -- >> are you bullish on asia that's really, e.m.an asia play >> i am, we are. >> i think it's south african gold company for good measure. >> there's a lot of stimulus coming out of china right now. >> the iron fist, not the velvet glove. >>> a viewer question coming in on nike. asking if the stock is a buy after the latest earnings, the desk will answer that coming up. reach out, cnbc.com/halftime or tweet us using the hashtag askhalftime. first, what's coming up on "power lunch"? >> we are tossing to each other. here's what's coming up on "power lunch." we'll break down the volatility strategies to deal with the roller coaster ride in the markets, 2019 playbooks, looking at the global hot spots that could dominate the front pages and move the markets next year and why the sell-off could be good for your tax bill next year we'll explain ahead on "power lunch. >>> selling is intensified we're seeing the dow down 412 points you add up monday's loss with today's losses, that wipes out what we gained yesterday we'll have to see what th

the survey you were talking about, a lot of people basically look at e.m.encies fell. our metrics are quite cheap, but people are nervous because the big picture is if you have had 10 years of superlow rates in the g3, hugh have extraordinary monetary accommodation, so you have massive capital flows to emerging markets. the number one question we get is which places are heavily positioned, and which places should be steer clear of? romaine: when we talk about clap -- capital flows, the returns have not lived up to some expectations that strategists have put out. given the fed meeting tomorrow, the potential that the fed slows down in the u.s., and a general easing in trade relations, does that provide more of a base case for e.m., particularly em equities? robin: yeah. generally speaking, if the fed communicates a slower pace of tightening next year, while also playing uprrow and the strengths of the u.s. economy, i think that is the goldilocks scenario. the run-up up to the meeting of 2015 andinds me december when we got the first fed hike. you might remem

if that happens it will see a runoff in e.m..olio managers have been putting on that position, and they will start the year in the red. vonnie: would you be comfortable with recommending that daniel? >> i agree with vince. it's a dangerous trade into a massive maturity ward -- war over the u.s. dollar. the debt in the u.s. market could pile up into the u.s. dollar. there were perceptions of the dollar would be low in interest rates would be low and it's a dangerous position. emerging markets have fallen are verylly, but they far away from the corrections that we have seen historically in a bear market for emerging markets. and those maturities that we in u.s. dollar debt and local currency will be refinanced at higher rates than what we are seeing. and impactsiquidity on equity important. 2018 as a revisit parenthesis, we need to go back to repeating the same trade at 2017, which showed the dollar long emerging markets, it's dangerous because we are not paying attention to the slowdown, the currency risk, and the maturity wall in

chilly season and it might be for today today if you want to say any of our other special episodes of e.m.'s from this week then you can find them on our website it's just below here the tell me to come forward slash lifestyle well be back tomorrow with more into wellness but for now thank you for watching and goodbye and as we say in gemini. coming up on the next special edition of your remarks the day on the concept of bike makes a difference in our lifestyle just playing around oh fashion german ball games are still popular over the world and getting into the groove why two business partners want you to listen to an album from cover to cover bench and more coming up tomorrow on your objects. entered the conflict zone confronting the powerful. after thirteen years in power in some damaging state election results angela merkel of thirteen is visibly waning how no from those who do find good luck will cling on to calm my guess is most gun shy playing one of the most famous and infamous politicians here in germany conflict zone. thirty minutes upon v.w. for. china nine hundred sixty six mo

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that should give the e.m. markets breathing room. going into e.m., and finding those opportunities which are largely going to be in asia, where growth is still strong. look at countries like india, where growth is very attractive. and also in china we have areas like tech that has been beaten down doctormatically. likely -- doctormatically -- dramatically. likely to benefit, david: talk about beaten down dramatically, look at the financials, they did not have a good december, 2018 at all. if the fed takes the food off the accelerator what does it do for financials? kristina: not great for financials. alix: can it it get worse? kristina: there are very sentimentally strong financial. it can could meantime to sniff around for long-term opportunities. but banks in particular probably are going to stay under pressure given my scenario for the fed for 2019. alix: what does that mean for u.s. equities? the fed take their foot off the accelerator. selling u.s. equities? kristina: you don't need to sell u.s. equities, but you should probably

>> e.m., the important thing is what happens to the dollar.to see clear trends in growth coming through. in terms of motion points for the u.s. economy, it is inflation. we think it will feed into inflation, hourly earnings. that happens because of the opec meeting. that has been breaking lower this week. we need to see how that plays out as well. generally, i would say if you look at bond yields where they are, it does not make sense, when you have an economy as strong as it is, unemployment so low, average earnings ok. it does not make sense for yields to be this slow. i think there is upside risks to bond yields, and that is where markets should be focusing. alix: thank you both. krueger of princeton university sticking with me. let's recap what happened. we had a miss on the jobs number, coming in 155,000. hourly earnings miss on a month-to-month basis. average work week also fell by about 0.1. the market reacting. dollar weaker. yields dropping. equity futures starting to push higher as if the bad news is the news right now in markets. th

it was the best-performing e.m. currency the last two weeks of november.l follow that market closely into the open. speaking of australia, gmm weekly. on the back of the move into treasury markets, 2.53%, below 2.5% on the aussie 10-year takes you back to december of 2017. global yields are continuing to push lower in most areas. the 30 year down. yvonne: president trump talking about auto tariffs and that tweet that caused a lot of leavingn overnight, them to scramble to explain the trade deal he struck with china to reduce tariffs on cars. rishaad: it doesn't exist on paper and hasn't been confirmed by beijing. let's get somewhere near the bottom of this. , what dorch analyst you make of all this? think not very reliable and no official statement from the chinese government and if it is wouldn'trican cars benefit from this reduced tariffs. rishaad: we are talking about 40%. cars, but american other countries are 15% the first of july, so american cars are suffering in september and august, potentially. of cars have significant -- reduced significantly, 2

that is what we saw with e.m. this year. we have had valuations come back to better levels.ain dynamics are improving in terms of china shifting away from the u.s. and maybe benefiting some of the e.m. countries -- you could see how that could play out as well. but over all trade tensions have not been great. but still i think that is where it could be a game changer next year. paul: we have a reasonably interesting central-bank decision coming out of the emerging markets today, expected to hold at 6.5%, so what are you looking for in terms of inflation? laura: clearly, they have been given a shield from the oil move. that is where going forward india has its own set of problems. and i think that a lot of investors are skeptical about getting back in, because of that. right now, this has been helping a huge importer of oil, it has helped, but we will see after opec. the more sort of deep-rooted issues might come home to roost. paul: laura fitzsimmons at jpmorgan australia, thank you for joining us. we have plenty more to come. this is bloomberg. ♪ paul: this is "daybreak asi

versus e.m. citi's view is a mildly appreciating dollar is not -- significant dollar gains on a trade-weighted basis. if investors have a different view, that it is going to appreciate or slide meaningfully, you kind of know where you want to be in terms of the u.s. relative to the rest of the world. given your thoughts that we are going to see volatility and so on, what about rotation? if you are putting money to work , do you look for this, at which point you buy? you have to preserve your capital or your gains. tobias: you start nibbling in here. cinnamon indicators suggest that are than 90% -- sentiment indicators suggest better than 90% market gain. within the market, we prefer value over growth. if you want to stay growth, look at pharma and biotech. duringnd to do better volatility. areas like financials, energy, capital goods, you want to take advantage of the weakness we have seen develop. this goes into a bit of a cyclicals versus defensives posture. people have hidden out in utilities

and stocks in international and e.m. markets look like they represent pretty descend investment values. the way to escape, the governments around the world said i'll back that and guarantee that and i'm good for that. they printed trillions and trillions of trillions of dollars, how are they going to pay that back. you see these gap ups in the rise of debt and in the next crisis, with interest rates at low levels, which is the traditional first lever that tral banks use to reduce the impact of a recession, is that going to have enough impact to escape trouble if the markets fall a lot further. it might not. the second lever then is to print money. and you see here we've already done a ton of that. so central banks and governments around the world will be in a pickle. the three -- between letting as asset values find their low, governments are not going to let that happen. it will be too painful for the human k the other alternatives is going to be they will print a ton of money. i think that's the solution. this is looki

>> not in the long-term, but in short-term, e.m. is down so much for the year and the u.s.s catching up to it. romaine: strong dollars. as was the story for most of the year. the dollar has weakened a little bit or flatlined a little bit. as we get into 2019 and the trade picture changes or progresses to some degree, is that story over? do we get to a point with currency differential with the u.s. and the rest of the world narrowing? srinivas: what drives the dollar, if you look at its and involved in the 2011, and the big rally in 2014, what drives the dollar fundamentally is the growth between the u.s. and the rest of the world. a short-term it can be anything. that picture remains intact. if you look at the latest quarter, the gap between the u.s. and the rest of the world widened. there is nothing that will change that picture. caroline: what are the major selloffs we have -- one of the major selloffs we have seen is an oil. where's that relationship between the dollar and oil, and do we see one supporting another at some point? srinivas: the dollar and oil relationship

a lot of noise out of italy but also the european market is more exposed to what goes on in the e.m. it's a little bit more difficult to just judge it straight to where we are in the cycle. i would agree with you, these valuations are in europe. >> with europe, how do you see the risk/reward in the investment space versus the high yield space. >> i think it's skewed to the investment grade space it doesn't mean that we are overly bearish i think what you've seen is the investment grade credit has been hurt more by some of the technical flows. more by the additional correlation of rates and where we're at right now i think there's no particular need to be going down in quality given the type of valuations that you see, particularly the longer end of the credit the other thing about the market is that the spread is not really storied here so an investment grade credit trades below par and i think that's a really important point. >> what do you think about long-term buyers as well bottom line, you want to stay higher up the credit spectrum than lower down. the credit yield hasn't been a

♪o-w-i-e e.m♪ forget about vacuuming for weeks. dirt disposal empties the roomba bin for you. so dirt is off your hands. if it's not from irobot, it's not a roomba. ( ♪ ) >> jimmy: you know our next guest from "swingers" from "office space," and now as a dead man named jon in "a million little things." the winter finale airs tomorrow night on abc. please welcome ron livingston. [ cheers and applause ] >> jimmy: how you doing? good. >> jimmy: very good to see you. i hope you take this as a compliment. you look like a star from another era. you come out and i feel like you could, you know, like elvis or something like that. >> i was born in another era. >> jimmy: yeah. >> so, yeah, i'll take that as a compliment. >> jimmy: you should take it as a compliment. >> thanks, jimmy. >> jimmy: how's everything? >> good. >> jimmy: your character, as i mentioned, is dead on the show. >> yeah. >> jimmy: that must be freeing in a way because you know they can't kill you off. >> no, yeah, they started that way. >> jimmy: yeah. >> and yeah, it's -

we have a stabilization in chinese growth in 2019 and actually within the e.m.n america where we see a pickup in growth. francine: coming up next, we speak to the governor of riksbank. they raised rates for the first time in seven years. this is bloomberg. ♪ ♪ >> taking a hike, the fed raises rates despite pressure. an aggressive rate have signaled for 29 king. more dovishness flaunted from the fed. european equities sink. again,k shares fall, facing growing pressure over privacy protection. hello everyone. this is "bloomberg surveillance." for tomin new york keene. go to the markets, then political news with president trump and brexit. fed making a policy mistake is that the question of the day. francine: and markets are down. let's get straight to the first word news. bombshell a potential , the north korean regime saying it will never unilaterally give up its nuclear arsenal and less the u.s. withdraws its threat first. accusing the u.s. of distorting the agreement between the sides. u.s. senator's passing a bill that would keep agencies open in the first ste

maybe even at 8:57 e.m., and clinton would show up when he did. he said it clearly bothered clinton that he was always keeping bush waiting so one day at about 8:55 a.m., he came downstairs excitedly like he wa going to beat bush into the car into the limousine taking them around the bush, not knowing this, not doing this on purpose had gotten to the car at 8:50 a.m. he said the look of disappointment on his face when he looked in the car and though he beat me again. one thing that bush very much respected because they were traveling around in a presidentialid jet was the deference that bill clinton showed him and that clinton, bush was considerably older, always insisted that george h w bush have the presidential cabi and sleep in the presidential bed and clinton would find the couch on air force one or sleep on the floor. he always paid respect and you know, went to great pains to make sure that bush 41 was comfortable. >> as we watch this treasure trove of memories we have. all these pictures. you see there the banner from the kuwaiti people an

substantial that's one to watch at the same time it's draw it up in move out of the way to put instabilities e.m.'s to sumatra in singapore with the heavy rain now certainly further south in indonesia. sponsored by these. beautiful. women. in the. challenge. living in the. system. and watching al-jazeera a reminder of our top stories this hour the u.s. defense secretary. at the end of february he said. he was more closely aligned to it comes a day after mr was withdrawing u.s. forces from syria. thousands of kurds in northern syria against the decision they want clear assurances from the u.s. led coalition after threats from the turkish president. to attack in the region. and the presidential election in the democratic republic of congo has been delayed until december the first. the president of the electoral commission said violence and logistical issues meant to stop could not be ready in time. now the u.s. has charged two chinese nationals of involvement in a massive hacking campaign the justice department's of the suspects on the to the chinese government passing away now from washington. at

you can see weakness in e.m.'s and the china market down.ay, down around .02%. we have a policy meeting and china, and a number of central banks in the region. the bank of japan, thailand, and indonesia meeting. let's look at some of the fx moves in asia. you've seen upside coming through in the on sure you on, a pboc official saying seven to the dollar, the line in the sand we should be ignoring, they say it's actually important. gained .01%. in the indian rupee, we've heard he reckons he should go short the rupee and long the indonesian rupee are. it's different because it's falling against the dollar, the worst performing currency. that weighed on the overall jakarta index, as well. nejra: juliette saly in singapore, thank you. breaking headlines from as as a, saying -- sse, saying the deal with energy is not proceeding. they option includes a standalone demerger and listing. it says other options for energy services should be considered. and it's work two separate the services is to continue. thatally, sse determined it isn't in the best

nejra: when we talk about e.m., we always talk about dollar, dollar, dollar.ncies that are sensitive to euro weakness, and that leads you to pick certain em currencies over others. tell us a bit about that, your preferred em currencies for getting the most alpha, bearing that in mind? on themy colleague ethics strategy side, we looked at the g10 currencies. and you can block them in terms of characteristics. some trade for the risk environment, some that trade oil. obviously, some that trade for your dollar. those currencies in the european space, generally, when you have got declining euro-dollar, they tend to underperform in the em world. currencies like that. back to view, linking what your same with regard to euro-dollar, we have got euro-dollar going to a new low in q1 next year. they will not be the place to play the emerging-market recovery, but there might be some places in latin america, for example. manus: thank you, very much, chris turner, sharing your thoughts with us, head of ethics strategy -- fx strategy at ing. all ofmp-xi trade lasted 24 hour

factors that were headwinds in the second and third quarter, the china's slowdown, credit tightening, e.mfx, they are starting to reverse. is 5% upside in price and 8% total return with dividends, but our s&p target is 2750. you see why we are underweight u.s. equities which we expect to be range bound. they will suffer from high valuations. the fact that credit spreads are likely to continue to widen. so we think this is a significant turning point in global macro that will drive fund allocation further into em. david: i need to ask you about hardware, dram. that place into korea, where a quarter of the index has skin in the game. 40% of earnings come from one product. how are you approaching that issue? are you looking at dram prices as a guide as to whether the market has bottomed? had korea as an underweight until two weeks ago. we put it back to neutral. it hit .9 price book, a trough valuation, but we have not upgraded the memory dram sector. itselfk the dram price will froth until the second quarter, so we don't expect the korean or taiwan market to lead. we think brazil, china, an

this dovish hike this week and pauses for much of next year is it going to be a much better year for e.me kind of trade deal at the start of next year? vishnu: yes. it would certainly by time. my suspicion is it would provide some reprieve, especially if it is a dovish hike and we have to follow through with some sort of trade deal. i think what markets will continue to struggle with is perceived any of the trade friction, we are already on a slowdown. near-term, as long as dollar funding conditions are tight, the other big risk for us is the funding cost in asia, especially debt, debtolls over may have a similar effect. trade deals are really going to provide a lot of relief. i don't think that is an out of the woods situation for asia. central banks will have to be on their guard. i think keep macro protection measures in place to ensure capital volatility is not excessive. always appreciate your time. remember, bloomberg users can interact with all the charts we brought up using gtv go on the bloomberg. to browse recent charts, catch up on key analysis, and save them for future refere

>> if you look at 2006, the end of the cycle we had very strong global growth am especially led by e.mive to risk assets, so the dollar could be week. now the reason the markets have been wobbly is we are having challenges with the backdrop of china, the divergence story very different from the mid-2000 2000s.you have -- risk assets haven't done well. part of the recent dollar isn't very bigger each hiking cycle depends on the economic situation. the asianes it mean central banks take a pause? >> look at the inflation dynamics and growth dynamic. china is a main central bank where already the pboc has been delinking from the fed earlier. that will persist. but the rest of the story, we are at the tail end of the hiking cycle. yvonne: is it too quick to reprice a dovish fed? next year will be big for the ecb. they are set to raise hikes -- hike rates. net-net am aware does that leave things? difference between the policy rate and the balance. we haven't really changed our view. we expect mobile central-bank balance to be shrinking with the ecb. on the policy rate, the situation varies a

view if you want to get into small caps, e.m., what does that mean for the fed?dy can forecast. we are more often wrong than right. having said that, the operative 2 hikes is probably the likelihood next year. at roughly 2.5% today with 2% inflation rate, the real cost of borrowing, inflation-adjusted cost of borrowing is still quite low, such that a company's return on capital is still positive relative to cost in capital. i do not think the fed is deserving of this criticism. i don't think the fed should be pausing at all. they should still be raising interest rates slowly. the cost of capital is not prohibitive for business or the consumer. alix: on that point, what are individual equities that can thrive in that environment and or be insulated from that environment? david: three quick ideas. commodity prices are likely to dupontxt year, dow splitting into three companies held an investor day in the last month. growth rates look favorable. pricing is favorable. a spin out from the hilton hotel division, this is the hilton on 6th avenue, the big one in chicago,

to weaken in with the divergences, we have already touched on e.m.ral popping while others are hiking. we have an out of consensus view on that one. around the second quarter of 2019. they are quite conscious about negative interest and the fact that it is making the financial system not so much effective. inclined to believe the boj will move in may 2019. shery: disappointing expectations slowing down a lot from the previous quarter. more negative numbers coming out of japan. is this something that we should be concerned about? >> third-quarter numbers have been influenced by multiple natural mishaps. we have to wait a few more months to see whether there is a trend or is it is the effect of whatever happened during those months with the weather conditions. we think japan is ok. there will be improvement in growth in the first quarter. we think something similar is happening in europe where production has been affected because of emission standards. shery: thank you so much. sophie kamaruddin joining the conversation as well. plenty more to come on

in 2020, we would expect stabilization in e.m. markets. em marketsbetween and domestic economies. the peak of growth has passed, the u.s. is very different across the -- at some point, the u.s. will stop decelerating. the dollar will stop appreciating. investors will look more carefully out what's going on in the country -- on a country by country basis. paul: if i can focus on the u.s. for a moment. what has been happening there is driven by fiscal policy. what does this mean for the fed? reserve, weederal believe it will hike rates in december. what about the first half of 2019? it is clear that the u.s. economy will decelerate. having said that, it's not a recession. the yield curve is not a good indicator of what's going on in the united states. at the end of the day, given the recent tightening in financial conditions in the united states, the fed will probably be more careful than it was in 2018. it will slow the pace at which it hikes rates. less are tilted towards rate hikes than expected. markets have started to realize that we were getting closer to the end of the tighte

you have the net effects from the trade war being felt, all these rate hikes from e.m.that keep the dollar big? thisumi: well, i think year, 2018, the fed hiked four times. the fed hikes probably twice next year. so, the strength of the dollar may continue, but the balance of power will shift away from the dollar. will see other currencies to buy against the dollar. arecentral banks, which preparing for these rate hikes. kathleen: the thing is if you look at the euro, there is no rate hike coming until probably into well into 2019. it is not seem to be a big move there. boj will not do anything. if we look at other countries, the asian currencies are going to get a break if the fed slows down and their central banks are pressured to do anything. that says this list of currencies that will not have these pressures will have a chance to stabilize and even move higher? thefumi: i think in 2019, asian currencies, most of them were oversold. partly because of the strength of the u.s. dollar and the weakness of that particular country. but into next year i think the domestic

to slow down, you will see gdp growth decelerate within the european economies, and of course with e.m seeing a deceleration. you put on quantitative tightening and leadership here in the united states, it seems to be unpredictable when it comes to not only foreign policy but with the federal reserve, which gives investors this level of chill where they will compress multiples regardless of what the back drop in 2020 will be. >> what's interesting to me is that steve mnuchin was busy yesterday because he got called with the ceos of big banks, asking if they had enough market liquidity, and they had to put out a statement. what you make of that? they have to be worried that market volatility and the selloff we have seen would go there. >> right, and that's the say did anyone figure out the problem. we will see what the initial market reaction is, but for the treasury secretary, a chance to check in with the big banks, the policy really is a factor in china will be able to short people. and then there's the shutdown and the combination of the president's trade policies, the questions abo

and that is why, especially on the bond side, we have already the dipping our tool into e.m. in some equity markets as well. yvonne: you mentioned the 2-5 diverting, i am guessing if the fed hikes two more times next year, pretty soon that 2-10 spread is going to narrow even further, if not invert. do you think that is a likely event next year that? -- then? >> look, it is possible next year. but, you know, we are still distance away from that. and what is interesting is despite a lot of the moves we have seen, we have not seen that inverted. this time we saw it move in the opposite direction as the long-term yields came down. at the end of the day, that is one binary indicator. to send a signal, you have to actually invert, so until that happens we should focus on other factors. and if it does invert, it does not tell us whether to expect the u.s. recession in three months or three years and that is a big difference. it is about the curve for us, looking at corporate margins, whether we see them continue to hold, and whether we see lead economic indicators turned on more sha

shery: showing how e.m.tocks have turned pocius positive and higher against the -- positive and higher. the correlation on the green in the second panel. some concern or actually some optimism that a weaker dollar could turbo charge the strength that we're seeing in emerging markets kwlampletse call for the dollar? markets. what markets. what do you expect for the dollar? >> we've a lot of weak innocence currencies in emerging markets in the last 2 1/2 years. having said that, we don't know if the market's going to be strong, the dollar's going to be stronger or weaker about. we just don't think that's going to be a headwind for emerging earnings. gnggoing back to the valuations, 10 1/2 times earnings, with 20% earnings growth, that's very compelling. you don't need to do -- to have the currencies do much. shery: we have seen the offshore yuan rally on that trade truce. at the same time you have potential more easing coming from china policy support. will that send the yuan lower or could we see a bit of a r

when we are looking at e.m. , they are pretty uninspiring for next year.look at the year ahead, what are the three main topics you're looking for? that we havest is got to get used to a world where global growth is going to give up that weaker than what we have been used to. to around 3.6% next year, that is a bit of a slowdown. the second thing we have to be aware of is what is happening to the monetary policy backdrop. there is a lot of focus on rates at the moment. let's not forget what is happening in qb space. 2019 will be the first time in nearly a decade that central banks are withdrawing money from the global economy. francine: we focus so much on the fed maybe not tightening more. a function ofalso the fact that central bankers have a bit more confidence in the strength of the global economy right now. things recently would suggest that we err on the side of caution in the short-term. ultimately, central bankers will continue this path of centralization. that is a reflection of the confidence that the recovery is sustainable. francine: buyer bewar

i think the biggest impact this is going to have is it is probably a modest boost for the e.m.where oil is now. markets, it will drive more divergence between the oil consuming and oil-producing countries. nejra: is that why you are long? andrew: that is one reason. i think the view that the dollar will weaken last yea -- next em. i think would also help you have a lot of these markets that have repriced quite a bit. it will be completely smooth sailing, that we do think the outlook is pretty good. with upgraded em and our year ahead outlook after downgrading the u.s. equity market. nejra: earlier, i talked about yuki inflation. what is your outlook for inflation? andrew: i think it is going to be challenging for central banks. headline inflation will come down. core inflation probably won't. i think it will remain pretty stubborn in the eurozone and u.k.. it to continue to rise. in the u.s., it to continue to be at the fed's target. i think that will make it hard for central banks to be as dovish as markets would like them to be. nejra: great chat. andrew stays with us. coming

for more on brexit, we are pleased to be welcoming in westminster e.m. blackford.hank you for joining us. where do we go from here? a government in crisis. it seems a long time ago that the government lost three votes in one day. unprecedented. this is a government they cannot get legislation through. they does -- they do not have the support of parliament. francine: what is the ideal deal given where the e.u. is? stay in the union. people were not told the truth. no such thing as a good brexit. in any analysis, people are going to lose their jobs. they prime minister has the responsibility of looking after the economic interests of citizens. her deal does not have support. no deal does not have support. we need to go back to the drawing board. francine: we cannot have a referendum. every time you do not like you have an out -- every time you do not like the outcome of the referendum, you have a vote. ian: scotland voted to remain. when we had our own independent referendum the rights of our citizens would be respected. respect,talked about we have not been listene

♪ david: let's bring back ayaz ebrahim, we are talking e.m.' recovery might continue into next year? ayaz: absolutely, if you look at valuations today, it is trading at 1.5 times book. historically, it is only an extreme financial crisis time where it is traded lower. if you look at historically, when you are trading at 1.5 times book, your probability of making double-digit returns over the next 12 months are very high. now, our view -- there are two things out there that we will need to see how they pan out. one is the u.s. dollar. high.ew is now very we are starting to see some of that in the last few weeks. we have seen a reversal in emerging-market currency. we see the u.s. dollar start to stabilize or soften, that is positive for asian equity markets. your cost of servicing debt and all that stuff comes down. rishaad: let's not forget, the other one is the fed. if they will be more cautious, that has good implications for emerging markets. that will be key too. ayaz: absolutely. the other thing is the whole trade issue. that is what the a