does the ecb have a role to play? to what extent do you think the situation threatens the ecb's ability to roll forward with its plan? >> at some point, that will be the problem. if it does affect the banking system, they clearly can't withdraw more liquidity. when the banking system in europe is under stress. that would be -- that just would not happen. i think at some point they have to be having discussions already. with the banks in europe to try to make sure that they -- their funding lines are open and i would assume they are reaching out to turkey to try to come up with some sort of interim solution to stabilize the situation. >> that is the problem. kathleen, do you think there is something on the radar for the ecb here that changes expected policy moves in the coming months? >> yes. i think she is exactly right.

we will have a conversation about who will lead the ecb. bloomberg. ♪ guy: 42 minutes past the hour. welcome back to my you are watching the european open. , thets that germany central banks next big employment could cast a long shadow over who will take the top job. headcations to replace the includesnking division interesting front runners. --would highlight thei in aputs philip lane position of being the economist. it will be interesting to see how this fits into -- whichever position,kes over the you have to take that country out of the running for the top job. joining us from berlin. carsten brzeski. ecb, fortment by the setting the tone of who replaces draghi. country at least the that gets the chair will not getting thence of next presidency at the ecb, that is obvious. as a companypion diversity, so that is why we focus on the story. let's look at the big picture, as far as who will run the whole --cus, it does not look like in our survey of economists, he wins out, but when it comes to what angela merkel wants to push for, that is

i think we have an ecb leadership change coming up. i don't think the ecb is seeing inflation.t is why i think bonds are cap. as much as i would like to tell points, ithe basis think it is 20, 30 basis points in bonds in treasuries, i think it could be interesting. the boj -- lisa: real yield! is actuallyoj trying to inject a little bit of volatility in the market. can it gap it at 20 basis points are can they not? if they start rising, we have a bigger global route. we're not looking for that. that is a risk factor. lisa: where is the big excitement going to be? iain: i think it could well be in the emerging markets. i think that is where we could see some volatility but also see distant -- see decent returns. onould say on the german, the court government rates, i think we could see yields push higher over the course of the back end of this year. when i look at germany, i agree. your cap at what the ecb is doing on the cash rate is not going anywhere. lisa: where will you be? michael: one trade we like is the relative yield between u.s. and germany. easier to pick relative yi

few is one of the roles the ecb can nominate itself.se, it nominated by countries, so they have candidate thrust upon them, often men. if the ecb wants to lead by example, saying we want more female leadership, then this is their chance to do so. she is onantly, if her way out now, when she is replaced, she will have to be replaced by a fellow executive board member at the ecb. they are all men, so deputy to whoever replaces sabine will probably be a man. unless you name a woman to the have two men running the place, and that does not look anna: good for the ecb. anna:what are the wider implications of this role, and turn it back to the ecb presidency. mentioned --ou nick: as you mentioned, it's very unlikely that whoever wins this top role can also win the presidency, so if a german becomes head of banking supervision, then germany can probably forget about any chance of having the presidency role. same applies for any other country. there have a connection and you can see from the short list that the ecb will publish in a couple weeks

does the ecb have a role to play? to what extent do you think the situation threatens the ecb's ability to roll forward with this plan? >> at some point, that is going to be the problem, because if it does affect the banking system, they cannot withdraw more liquidity when the banking system in europe is under stress. that would not happen. at some point, they have to be having discussions with the banks in europe to make sure those funding lines are open and i would assume they're reaching out to turkey to come up with some sort of interim solution to stabilize the situation. jonathan: if they accept or want the help. kathleen, do you think there is something on the radar for the ecb that changes expected policy moves in the coming months? >> there is communication going on through backdoor channels. it is not so much the european banks, but it is the lending to the corporations in turkey. when you think about these sovereigns, their largest importer is bulgaria. bulgaria exports about 5% of their gdp to turkey. with

playthe ecb have a role to turkey the ecb -- threatens the ecb's credibility. >> at some point, that is going to be the problem. withdraw morean't liquidity with the banking system in europe. that would not happen. at some point, they have to have discussions. to try to make sure that the funding lines are open and i would assume they were reaching out to turkey to try to come up with some sort of solution to at least stabilize the situation. problem, do you think there is something on the ecb that changes expected policy in the coming months? >> yes, i think kathy is exactly right. there is communication going on through backdoor channels. it is the lending to the corporations in turkey. when you think about the sovereign, their largest bulgaria.s the bulgaria exports about 5% of e.g. be to turkey. with bulgaria being at risk to --key, the ecb has a trichet tremendous amount of incentive to provide some liquidity. >> let's talk about what this means. i keep getting told every time we break up and emerging-market will just spillover remain contained. is today different? have things c

a newspaper report suggested that the ecb is keeping an eye on the spanish bank. second-biggest in spank. the ecb would be concerned according to the report to ask exposure to the turkish bank that it has a stake at and the issue goes back to president erdogan, who clearly feels strongly about not hiking rates. that has been reflected in tensions and the fx market, the concern is it might take a hit to bbva. concerned about unicredit and bnp. two, down and back up. our phones are more than just phones. they are pocket sized personal trainers... last minute gift finders... siri: 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 hunreds of dollars a year. plus get $150 when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. matt: we are minutes away from the european market open. we do have turkish stocks already. take a look at istanbul. right now, it is looking like a drop of 1.4%.

it will be the ecb, and when ecb says, we might be done for this cycle, we may get a little taperinge, but not on rate hikes, but who knows? at that point, the euro is going down, and it is dollar positive. mark: actually, for now the dollar is good, the once it does in fact the u.s. market in what the fed is doing, the u.s. market and credit markets are safe haven for the money out of the rest of the world. you get volatility there and the fed starts to relent, that is when it will be a dollar negative event. what he should do now is start again exposure, japanese yen -- what he should do now is start yen exposure. you can say the same for the euro. surface. large account they might bring money back home when positioning is short euros, that will make the euro-dollar finally rise. there could be other complications, growth may start increasing, the eurozone could be at risk, but money will come back into the german euro. it sovereignme of bonds could be whitening at the time. matt: when you see that inflection point happening? right now you see continued dollar strength, euro weakne

there is a game of thrones underway at the ecb.rm ends next november and we are getting clues over who is in the running for the job. joining us is nicolas comfort. of the banking supervisor, whoever it is, he or she, we might be able to gauge who the next ecb president is. let's start with who the might -- who might the next banking supervisor be, which is clearly one of the top jobs. nicholas: i would say it is more a question of who doesn't get .he job of the presidency let's face it, in europe there is a delicate balance between countries. the bankuntry gets job, it is hard to imagine that same country getting the presidency as well. if you had a german top banking supervisor, imagine how the italians and other countries would be annoyed if they got the presidency. it kind of rules out your country by moving for the smaller job, and maybe your country will be keeping that power dry and focusing on the bigger job. who gets it? there is a lot of qualified candidates. -- shannonlready doherty -- there are the italians. ngeloni rea

clear,: the ecb is very i think it will do what is necessary.r time, i think the euro is resilient. , withnever worried portugal, ireland, greece, i was never concerned because history is very important. , and ihas a rich history think we will do what is ever necessary in the end. >> switching focus to the u.k. and the inevitable question on brexit. it seems like a deadline to come to an agreement has been pushed back, and there are risks for a hard out for the u.k. if there is no deal. you must have gamed through and game planned on this. we were ready to present plans. there will be a reasonable outcome which is in everybody's interest. guy: that was the credit suisse speakingane thiam exclusively to bloomberg's tom mackenzie in beijing. interesting what he had to say about what is happening with the market reaction to out of europe. this talk about the stock stories we need to focus on now. coffeead is selling its to coca-cola. sage down by 8%. up next, the bank of finland's governor, olli rehn, an exclusive interview with matt miller. this i

what is the ecb? as such, it does not exist.unch of individuals collectively come up with a decision on a regular basis. not all those individuals have the same views. we have fairly strong comments in the last week or so. from that perspective, i think the back and forth between the hawks and the doves on the governing council will come back at some point. -- data doesn't worry to it warranted, but if we have a stabilization of 2% in headline, the remainder of the year may see some rebound in the underlying macro picture. i would be surprised if the hawks don't try to reopen the debate of what the semantic definition of summer of 2019 is. there is too little priced in to though iean front-end, don't see why the ecb should changing stance at all. at the was in riga meeting and clearly through the summer of 2019 means until the end of the summer. just in case anyone has questions about that. they can't raise rates until then. line, big picture look at equities in a european point of view, there doesn't seem to be a lot of impetus

we have talked about the ecb.ven't touched on brexit and since the last time you were on the program, the outlook has gotten a lot worse. chance of asaid the no deal brexit are uncomfortably high. it is probably less than a 50% that liam fox named in his interview sunday. what do you think about the possibility of a no deal brexit and how much is that weighing on the pound? part of theirst question in terms of what i am thinking about and no deal, i think it is unlikely. so hard no majority for brexit in the british parliament between europe -- the conservatives. i think you've got to look at liam fox's comments in context and what these brexit ultras are trying to do is change the eu's negotiating stance and that is unlikely, a hard brexit. you will ultimately get a deal, but the deal the eu gives the u.k. and not the one negotiated. the eu are negotiated from extreme weakness. you will not that the deal you would otherwise like. regarding sterling, there is no question it is weighing on cable. you have gone from

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 happening on the other side of the pond. equities falling across the board and the u.s. all indices in the red, as the two not like the economic crisis in turkey. they are concerned about that spreading. the s&p 500 raised weekly advance as president trump -- on tariffs on turkish steel and aluminum imports. geopolitical tensions in the u.s. and others setting the tone for the u.s. markets. geopolitics also weighing on the semiconductor sector. you can see them. the index falling 2.2 or .1% toda

the ecb today announced its squad for the third test which gets under way on saturday against india.ben stokes is not in it the ecb says it will decide on his availability after the outcome of this trial. whatever the outcome of events here at bristol crown court, the independent disciplinary commission of the ecb must also have a hearing to decide if there should bea a hearing to decide if there should be a cricketing punishment for stokes and hayles after what happened on the 25th of september last year. nine american golfers here — eight of them have now cemented their places in the us ryder cup team after yesterday's pga championship. one of them hasn't. do you know which one hasn't? we have some good ones here. dustin johnson standing next to patrick reid. tiger woods. woods came second yesterday. it was a thrilling final day with tiger, wearing red and back to his best — that he is not in the team. but he didn't win. brooks koepka held off all challengers to win by two shots — his second major title this season. brooks is in the team. so, will the captain pick him as a wild car

>> the question -- the only way to answer it is what is the ecb and bank of japan is going to do it's no surprise that you've had mixed performance and we talked about it on the show because you don't have every global, central

so the ecb has a role to play, but it's a different course.taly would have to apply for help, and i can't see this government doing in theory it's there, not in practice >> thank you very much. >> thank you >>> coming up, stay tuned to find out why the ongoing mueller investigation may not dent the republicans in the upcoming midterm elections. happy anniversary dinner, darlin'. can this much love be cleaned by a little bit of dawn ultra? oh yeah one bottle has the grease cleaning power of three bottles of this other liquid. a drop of dawn and grease is gone. olay regenerist wipes out the competition; hydrating better than $100, $200 even $400 creams. with our b3 complex, beautiful skin doesn't have to cost a fortune. olay. >>> welcome to "street signs." i'm willem marx. nafta renegotiated u.s. and mexico strike a trade deal, the attention now turns to canada as president trump looks to replace the long-term agreement. >> one way or another we have a deal with canada either a tariff on cars or a negotiated deal. frankly a tariff on cars is a m

this is about italy and the constraints on the ecb.o draghi? >> most of europe warrants higher interest rates. has decided they want to raise rates at some point. in many ways, the sooner the better. italy has thrown a spanner in the works. they don't want primary surpluses. this tragedy on the motor race -- motorways does ram home that point that there is a case for primaryt to run services and spend money. that raises the issue of how do you normalize or begin a normalization process out of europe. countries would welcome that, but obviously not italy. tom: i go back to one of the waslines of the year which the ecb coming out and saying we will not raise interest rates forever, essentially. how unorthodox was that? that was an original theory, theme, execution. >> it was very unorthodox. we have measures of ecb compared to fed in terms of whether short-term rates are relative to what the economy demands. the fed is 100 basis points ahead of the game, the ecb is 100 basis points behind the game. they have to figure out how to insulate

vonnie: what about the ecb more broadly?'re looking at a period now where we are getting into tightening around the world. ken ecb and the economies withstand this? think they will withstand the tightening because , first of all, the fed is going. slowly. the ecb will go very slowly and end qe by the end of the year start raising rates nine months later, but again, the pace will be very, very slow. i think, all the central banks want to do, whether we are talking about the fed, the ecb, any other central bank in the developed markets today, all they want to do is normalize. normalize is taking the short-term rate to neutral levels. we are lesss, yes, easy than before, but we are not tightening or trying to slow the economy down. to the extent that the central banks have a good idea where this neutral level -- with a neutral levels are, it will not be difficult at all. that is good news for the developed world, and good news for emerging markets. in the past, emerging markets as a whole got into trouble when central banks and

the backstop is the ecb. the ecb should step in for bond yields. that is the dynamic. bond yields are going up and measures are taken. wonder when the leaders would go ahead with that. lisa: thank you for your perspective. the top of the hour. punished by investors even at the outpaced p are chairs at one point today fallen the most in a year. around 5.2%. >> yes. they were down about 8.4%. have to look at sales, they have a chart of that. i want our viewers to look at this. he will see what part of the problem is. i wantthe next quarter of the forecast, this is the company basically on the brink back in 2013. they have quite a turnaround. times are still going to be good but we will not grow quite at the rate we used to. >> you see the forecast not living up to expectations. >> and that is part of it. the ceo gets a lot of credit hear the stock has done well. up about 20% prior year to date. think about this. it is a company, the last national electronics chain we have here. he would have thought by now it would have gone the way of a block luster. good jobs done a tr

francine: where do you see the pivot point for the ecb? or four years out. they are indicating the first rate hike cannot be until next summer. we have to get to the end of the asset purchases and the reinvestment is 15 billion a month. that is continuing. we are looking at three or four years down the line. that will be consistent with the ecb being four years behind the fed, which is exactly where they are in the cycle. what will the world look like in four years time? i have no idea. and may not be one where everything is booming. the ecb may have missed the chance to normalize the summer. -- cycle. michael: i think there is a lot of disinflationary forces central banks are reckoning with. you have italy, which is going to be a problem for the ecb, reducing their balance sheet. the other factor, getting back to tom's volatility question, is gradualism. the of what they're going to be doing with the prospect of normalizing, that gradual as tends togradual rising be there and stay there. you are wondering when we are going to get this mas

this is due to that ecb report in the financial times, reporting ecb is concerned about their exposurethere risk is that these borrowers may not be hedged against the lira weakness and begin to default on a foreign. speaking to this program last week. he was famous for his calls during the financial crisis. he made another call regarding turkey at these banks. there is turkey, which everybody knows about. ,his is not a systemic problem but there are two banks in europe who have a large exposure , bda and unicredit. i'm sure those two. >> they are certainly exposed. 88 just owns half of the turkish bank and an italian banks owns 40% of the turkish bank. you can see the moves, they are all down more than 3% and have been under pressure since the market opened. francine: thanks so much. markets and ior thought is during the financial crisis, if you talk about worst-case scenario, the market could have a ripple effect. how does this work? lucy: markets have already been shifting slightly more risk-averse. we have seen that in the ways the sectors are performing. we have had a run in these

ultimately, it's that connection to the fed and the ecb that matters. caroline: should the market have braced itself earlier for this? we know that steve wiseman, famed in "the big short," has been shorting bbva and others. has the market been caught off guard and complacent? jurrien: they were down 18% a few month ago back in late june and the s&p is back to its old highest from january. there is a significant gap between the u.s. markets and the emerging markets. a lot of that is justified. we are seeing it already manifest itself. european banks are way off their highs that were set earlier this year. that spread between the s&p any emerging markets is very significant. because has been unique we have had this earnings boom happening compliments of the tax cuts among other things, but earnings for the second quarter are growing at 23% year-over-year, whereas the rest of the world, they are growing but slowing dramatically from 20% six month ago to maybe 9% or 10% today. it is already in the markets. you cannot see it in the s&p because the s&p has ha

ecb or the u.s. fed?alling. >> you're saying inflation is a threat >> yes we'll get the cpi this morning they're still tame numbers, even if you look at the core cpi, it's running at 2.3% a year ago that number was 1.7 wage number, same story. still tame, but they're up the private sector eci wage number is at its fastest rate since 2008 tame numbers, but starting to move up. unemployment looks like it's trending down. obviously the fed is trying to slow down employment growth. we're getting 2200,000 a month n unemployment, and unemployment keeps falling. >> what about trade? >> it depends where this escala escalates, if retaliation leads to retaliation and more retaliation. we're hearing more worries about it in the ism worths, but the data is still quite strong is there any hard data impact from the trade fears so far? a lot of talk. >> at this point the numbers have held up quite well. even yesterday's jobless claim number, the lowest since 1969. >> are we overfocused on it? >> no, this can become a bi

ecb tolready asked the intervene.le this report is not confirmed, what is crucial here is the budget flow, which is coming next month. the government is nervous on which could be the reaction of the investor on the budget. they may or may not break the union,, but the european this is gathering a lot of attention. alix: indeed. if you want your bond yields to go down, maybe you should deal with your budget. tommaso, thank you. with us, mark howard. this is the italian-spanish 10 year spread here. 150 six basis points. we haven't seen this since 2011, 2012. anxietyere has been building around italy. these concerns ebb and flow. it is a new government coalition . how they present their budget next month and how they incorporate recent events such as the bread collapsed -- such as the bridge collapse. on top of that are new rules that narrow the buyer base. that is a double whammy. the market, it is one of the few sovereigns trading at a 52-week wide. spot in the region. people are concerned post turkey the next push may

and as we move into 2019, with the possibility of an ecb rate hike, and the u.s.ulls back on more rate hikes, you will see the correction happen. i think the direction of travel is downward for the dollar going into 2019. alix: will it be a broader europe story, or is it regional, because the turkish exposure for example, that is a france, italy and spain story, not really reflected in the bonds of the peripherals. alex: i will get more excited about the european banks. the removal of the negative deposit rate will be removing the earnings pressure that has been placed on european financials. now, i do not have a particular problem about the state of european financials, htey have increased -- they have increased capital, i do not mind sitting on the debt of european banks right now, they're just not the most profitable industries there. right now i hope the debt, and 2019 i might hold equity. jason: since we have you here and we have been talking about turkey, i have to ask about the u.s. we talked about evans getting a little bit more hawkish, how do you feel ab

. >> these are your headlines from london the ecb is looking at exposure to turkey. >>> the turkish lira tests fresh lows against the dollar. a route to t in the currency iso spreading to the bond market. >>> moscow will consider economic war if proposed u.s. sanctions target banks or currency access. >>> and nova sooe novozymes trae bottom of the stoxx 600. the ceo said the forces at play are not what he expected >> we had a satisfactory first quarter. the mix of factors pulling on our business are slightly different than what is expected. we have weakness in household care, but the balance of that is we reiterate our guidance. >>> the oil market cooled down recently with a slowdown in the second quarter i'm happy to say we're joined by neil atkinson from the iea i have to ask you this, there seems to be a major push and pull factor when it comes to geopolitics. you have new sanctions against iran looking to take effect, either have already done or about to in november what's that going to do to the oil price do you think >> at the moment things are cooling down a bit because certainly

not guilty and straight back into the hat squad but will the ecb punish ben stokes board that bristol? also coming up we have the latest news from the european parents swimming —— para swimming championships in dublin. good evening. there'll be no more champions league football for celtic this season the scottish champions fell in the third qualifying round away at a ek athens. it was one all after the first leg in glasgow last week. brendan rogers side lost 2—1 this evening in the greek capital and they have dropped into the playoffs now for the europa league group stage. thick reports. the champions league is about money and prestige. failure to reach the group stage we see celtic miss out on more than £10 million. the funds needed to attract and retain players. manager brendan rodgers would have diedrich in his defence, but the u nsettled diedrich in his defence, but the unsettled belgians that he's not yet 100% operational. neither were his team—mates. caught ball watching as roderigo made the top result to carter with six minutes gone. rangers could bring in have all failed to be

still well below what the ecb would like.enoughu.s., will it be to change their process in raising rates? no, but to continue with the culture of raising rates. nejra: henrietta pacquement stays with us. taking a bigger bite of the apple, warren buffett has already a large stake in the company. why he thinks the text giant is underpriced. anna: and we will have more from our exclusive interview with thiam. he gives us his take on global trade tensions. this is bloomberg. ♪ president trump: they create standards that make it impossible because they have that's, like with medical equipment, they created a new standard. not that doesn't standards are higher, they are different. so our companies cannot get the medical equipment in europe. the big medical equipment. you have to change your ways because the european union, it is almost as bad as china, just smaller. with president trump speaking in a next was of it interview with editor-in-chief -- speaking in an interview with our editor-in-chief, document tariffs. i have a fact c

jonathan: the ecb has not finished qe, yet we have concerns about ept.t: one of the focused areas will be through the summer commitment on interest rates. how can we talk about raising interest rates or even ending qe when you have these things happening in europe? people will give italy the benefit of the doubt for now. clearly spreads have widened, but next year it will be very interesting will be talk about ecb policy, how that will that is the situation. jonathan: the reports coming from germany that chancellor angela merkel is pushing for the top spot of the european commission to be filled with a german. i'm sure there are some bulls happy with the situation. matt hornbach, great to have you with us. subadra rajappa and rob waldner. a market check for you. let's bring that up for you. 10-year yields down by four basis points. two-year grinding higher by a single basis point. coming up, a fresh china data on the global trade war. this is bloomberg. ♪ jonathan: i am jonathan ferro. this is "bloomberg real yield." i want to get you up to speed on what

the top of ther ecb is more fraught than we thought.his is bloomberg. ♪ nejra: economics, finance, politics. this is "bloomberg surveillance." i am nejra cehic in london. what is trending across the universe? tictoc, ---- according to a morgan stanley economist. on bloomberg.com, scott morrison australia's 30th prime minister and the sixth in 11 years after malcolm turnbull lost control of the ruling liberal party. theof those stories on bloomberg terminal. powell at jackson hole. citigroup sees the rest year in a decade for its asia equity unit and trump gets the fire sessions after the elections. for now, let's get the first word news. -- in australia, scott morrison has been sworn in after ruling liberal lawmakers voted to oust malcolm turnbull. earlier, he said he will consider appointments to his cabinet over the weekend as the government attempts to boost its flagging poll numbers ahead of an election due by may. >> today, our team needs to look after the events of this week and how that is impacted on them. they are going back to

the got the ecb minutes 30 minutes ago, and the ecb is saying we have done a good job communicating with which is interesting. we were both struck by the fact that italy not mentioned in the minutes, even though that is a risk factor that many investors are watching. we continue to watch the south african rand, which is falling again this morning versus the u.s. dollar. the latest leg downward prompted by a tweet from president trump, who basically raised concerns that land repatriation in country is a reaction to apartheid. this is been an ongoing debate and south africa. now the president inserted himself into it, asking mike pompeo to look into it. and the 2-year after the minutes not much from the fed, changed, a tiny bit of selling, 2.6%. david: now a look at what is going on outside the business world. china have u.s. and imposed new tariffs on each other's goods just as they resume trade talks. taxes are being levied on $16 billion of products. u.s. is targeting chinese motorcycles and roller cars. puttingtaliated by duties on american coal, medical instruments, and cars. meanwhil

with the ecb is concerned, they are in a dilemma.ading the way it is against the u.s. dollar, it is a great opportunity to come out with a solid policy and stop qe by the end of the year. that will not hurt them with regards to the currency. with regards to exposure to turkey, you have to take a second look at that because of the fact that, if there is impact within the european banks, and there is a potential that lending could be affected, therefore potentially slow down the economy in 2019. there are some decisions ecb will have to come up with by the end of this year. they will give an inkling of that at jackson hole. already thatoo bad something needs to be changed in terms of what is happening with turkey, or is this still a wait and see mode? how bad does it need to get before folks at the fed and ecb says, listen, we have to do something now? dovin: i think they need to something right now. i do not think they can afford to wait due to the fact that this is an opportune time for turkey and the u.s. does not seem to be ending.

ecb that for political reasons is having to stop purchases.ou take on that tie in risk at this level? francine: let's remind yourselves, the coalition is not exactly stable. they disagree on what they don't like, but they don't really agree on what they want to do together. kallum pickering of berenberg, james athey of aberdeen asset management will stay with us. this is bloomberg. ♪ ♪ tom: good morning. "bloomberg surveilllance." thrilled you are with us this morning. we need to chat on brexit. francine, bring us up to speed. francine: we had mr. liam fox, secretary of state for international trade giving a speech in central london, saying the u.k. is falling short of its full export potential. he believes brexit is a chance to embrace opportunity in this new global trade story. at the same time, we have some u.k. and eu representatives meeting in brussels. let's get back to kallum pickering and james athey. we have a number of calls from banks saying we will see a cheaper pound and some saying it will be 1.40. this depends on brexit. kallum:

rates, and the ecb -- growth slows in the u.s., the fed cuts rates.ave a single currency zone when you've got extraordinary stimulus? the euro area has stuck together through hefty crises. fall or no means not herbal next downturn. to the- not vulnerable next downturn. it is a concern. is going to be maxed out so we need fiscal policy. francine: tune in on monday, we will do that. christian schulz and anthony crescenzi. hostst, lisa abramowicz bloomberg radio. ♪ 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. streaming must see tv has never been easier. paying for things is a breeze. and getting into new places is even simpler. with xfinity mobile, saving money is effortles

to ecb, please, sir, by more -- buy more. welcome.lish accent, but i don't know if you are ready. there are 3.5 people trading. things, stocks at 52-week highs. maybe there are some cracks in the weakness. david: it is on a tear. alix: we are losing a little.

plus the ecb -- the fed is obviously further along in the tightening cycle, where the boj and ecb are just really getting into -- extracting themselves from it. just as we saw -- i'm not saying it's a repeat of '07 or '08, but everyone ran to the dollar it's happening again the dollar index is really just in the middle of this multi-year range. it's against em that the strength is more pronounced. >> china is a big issue. incrementally they're the most important driver of growth if china had a hard landing, that would have a profound effect on the u.s. economy, which is doing well. even 3%, low 3s is great >> is anybody hearing the view that the pull back in the em world is a worthy buying opportunity? >> people will argue that. i don't believe that to be the case >> i think yes in some countries. china on this pull back is attractive india. >> why >> the shanghai composite is down 50% from its 2007 peak. that market has done absolutely nothing. i grant the problems they're facing in terms of debt, transitioning to a more service based economy. tariffs. over the next couple of years,

so for the ecb, it is reasonable news. same thing for the inflation data.e strength we see in inflation coming through in energy prices, the ecb had been telegraphing that. not a ton that was unexpected. >> turkey trading sharply to the downside this morning, and european stocks exploding. this follows what happened in the united states. yesterday, washington following through on threats to impose sanctions. this after the detention of an american pastor. >> the lira is hitting a record low against the dollar. istanbul is down, and the worry of investors is that this is the first step, and there will be more sanctions to come. what the u.s. wants is for the u.s. pastor to be released, but ankara is refusing to do so. what more is there to come? investors are already concert -- already concerned about the central banks independence, and they are not doing enough to rein in inflation. now they have sanctions as well. >> the u.s. treasury has unveiled its latest refunding plan, with a total of $78 billion in sales. the move is sending the 10 year treasury yiel