francine: will they realize? carlos: i'm sorry? francine: will they realize? carlos: i don't know.will realize when the price goes up. you can say consumers will pay the price, but as long as the price is low, nobody will react. when the price goes up, they will say, oh, what is happening? you raise costs and at the end of the day costs will be passed to consumers, and that is what will happen. francine: talk to me about batteries and electric cars, how much progress will we make in five years? carlos: already i can tell you the first batteries -- we were the pioneers for the mass market for electric cars. it is going very fast. for the next four to five years, what you can expect is a reduction of between 25% to 35% on the cost of batteries. using the present technology, obviously if there is a breakthrough, you can go faster than that, so i'm expecting this to go down fast. francine: is tesla your biggest threat in that sector? carlos: no. tesla is an ally. i will tell you why they are an ally. tesla started with premium cars. it decided to go with premium cars. we wanted to addr

francine?e? -- tom, francine: thank you.ns slowdown in american drilling and supply risk. president trump discussed market stability in a phone call on saturday. with us, john normand of j.p. morgan chase and janet henry of hsbc. oil could go to $100. third quarter would be the biggest concern, given supply and the sections on iran. for with that due to growth? to $100 over go the next couple of months, it is primary supply driven. supply has been robust, but there have been swing changes. in --ly driven rice supply driven rise in oil price seems to be negative for oil-producing countries. lower income people in the u.s. spend more of their money on energy and have benefited less from tax cuts, so it should be a negative for that squeeze on real wages. remember, these falling em currencies means in local currency terms, the oil price has going up by two or three times. francine: what is your take on whether we touch 200 -- touch $100? john: i think $90 is very easy to reach. , i think the u.s. could not have chosen a worse t

francine: up next, full speed ahead.arlos ghosn earned a place in the automotive hall of fame with his turnaround, but what kind of leadership does it take to affect real change? ♪ francine: carlos ghosnor knows a thing or two about leadership. he ran three struggling companies and drove them to highly touted turnarounds. due to his success at nissan, he had comic books made in his honor in japan and nabbed a place in the automotive hall of fame. in a 2011 survey, he topped barack obama in a poll in what celebrities you would want to run japan. carlos ghosn is still with us. what does it mean being a leader in 2018? carlos: the leader is the guy in charge of the company. that's it. it is very simple. there is always one person people look at and say, he is in charge. he has around him a team, a board, but there is always one person in charge of the company. francine: are you a different leader now than 20 years ago? are you more focused on sustainability, not only what the company will become, but doing better in this wo

francine: up next, full speed ahead.arlos ghosn earned a place in the automotive hall of fame with his turnaround, but what kind of leadership does it take to affect real change? ♪ francine: carlos ghosnor knows a thing or two about leadership. he ran three struggling companies and drove them to highly touted turnarounds. due to his success at nissan, he had comic books made in his honor in japan and nabbed a place in the automotive hall of fame. in a 2011 survey, he topped barack obama in a poll in what celebrities you would want to run japan. carlos ghosn is still with us. what does it mean being a leader in 2018? carlos: the leader is the guy in charge of the company. that's it. it is very simple. there is always one person people look at and say, he is in charge. he has around him a team, a board, but there is always one person in charge of the company. francine: are you a different leader now than 20 years ago? are you more focused on sustainability, not only what the company will become, but doing better in this wo

francine? francine: thank you so much.hair, jerome powell, has been talking about policy again, this time saying central banks may eventually raise interest rates to levels where they begin to restrain economic growth. >> interest levels are still accommodative but we are gradually moving to a place that they will be neutral, not that they will be restraining the economy. we may go past neutral but we are a long way from neutral at this point. francine: you just treasury yields have spiked -- u.s. treasury yields have spiked to this highest -- the highest level since 2011. the yield on the 30 year have pushed above the 3.52% mark. for more on all of the market moves we are joined by mark cudmore and -- r and live strategist -- r mliv strategist. i think yesterday there was a perfect storm for treasuries. we had jerome powell making those relatively hawkish statements. he said we are a long way from neutral and we may go past neutral. and of course we had this big surge in commodities recently driven primarily by oil, but i

i put in renminbi to give francine happy. francine: i am always happy. from our sources at treasury in the u.s., they manipulativenot its currency. we will see what steve mnuchin has to say. from chinae ratdata seems to be bouying markets after a tumultuous week. we spoke to the iea. tom: it will be interesting to see brexit with sterling. where are we in the correction market? we are nowhere near bear market. we are nowhere near the correction of february. for the same level of angst, you can do this on a log chart, 2015 angst and 2016 angst. that is where we are now. we have not seen a bear market in ages. francine: we have not seen one in ages. that is something to keep an eye on. the italian bond market is kind of always in a bear market. i love this chart. thank you to hillary clark. we are also looking at technical levels. let's talk more about the markets in the week that was in the week that will be next week. let's bring in gene frieda, pimco global strategist. when you look at the market correction, was it overdue? does that mean we will see a

francine? francine: thank you, taylor.zil's presidential race goes to round two. -- main character candidate to just short of the majority of votes. a former army captain who pledge to rid the nation of corruption will face the workers party on october 28. how will the markets react? both for sticking around. give me a sense of whether it's a done deal, and will markets rally because they are expecting reform? there'say first of all, a sense now that the election is his to lose because of the strong showing. but it's not a done deal. we lori had some of the other candidates, such as the far left candidate, throw his support behind the other one. you do have consolidation now, a lot to see. with regards to market reaction, the anticipation the knee-jerk reaction is going to be positive for risk assets cousins less of a need to hike rates. people are less worried about the brazilian riau. still a lot of questions in the air. one of them, over the next few weeks, will boss narrow sound even more populous? almost left wing, so

francine: this is "bloomberg." ♪ francine: this is bloomberg surveillance.from london and new york. brazil heads to the polls on sunday to elect a new president. candidatesading disliked by many voters, there is risks -- there are risks that a divided congress will struggle to implement policies. we joined by bp or chief. what do the latest -- by our bureau chief. what do the latest polls suggest? it is the far right candidate that is ahead. >> that is it. we got a fresh bowl that sowed aropoll that showed bolsano was ahead. we will go into a runoff at the end of the month. francine: how does whoever wins actually fix the economy? >> they have different solutions for that. privatro once to do ization. he does not talk too much about the economy. the other candidate wants to boost government spending. tom: how will the turnout be? is the public engaged or is this a vote of the elites and the rising middle class? voting turnout is higher than in the u.s. because voting is mandatory. you can vote blank. people usually go. the votes, the undecided, have come dow

francine. francine: thanks, taylor. let's take it off with italy. they have opened higher for the they time in nearly a week report that italy's government will plan to cut its deficit after eu pressure. according to the country's draft budget plan will see the budget produced by 2021. as recently as yesterday, the prime minister indicated they would stay at 2.4%. joining us now is our rome bureau chief. markets are more positive than yesterday. of a believing this a budget scoop -- are they believing this budget scoop? in the long run, this may be too little, too late. we don't even know if it is true. secondly, the numbers are still high if you consider italy's highest debt and tendency for low growth. even with these numbers, the debt may rise. at some point, the markets may realize that and it will not be good news. and the thing that is disturbing everyone is that we still do not have these fiscal targets. it has been several days. and we are afraid they just cannot get the numbers square. we do not know what the g

francine.mp's passing responsibility to congress to respond to the killing of jamal khashoggi, adding that he wants a bipartisan recommendation. congress is not back in session, however, until after november 6. but the president criticized saudi arabia's conflicting accounts. >> this cover-up is one of the worst in the history of coverups. it is simple. bad deal, should not have been shot of -- thought of. somebody messed up. they have the worst cover up ever. it should have stopped at the deal, whoever thought of that idea is in big trouble. and they should be. that was donald trump speaking to the oval office. is yousef,us now bloomberg daybreak: americas tanker. -- anchor. what code will mohammad bin salman want to strike? yousef: it will be interesting to see what we get. there is caution from the u.s. side, but you have the u.s. president take the lead. you heard the speech, but if you had any doubts they were trying to pile on pressure, we heard e who saidkish aid that been someone has bl

francine? francine: the imf has cut its forecast for the most in two years. -- for the first time in two years. it says the economy will expand 3.7%. meanwhile, bond investors are bracing for a flood of treasury options over three days. $230 billion of government that is on offer. this has morgan stanley throws in the towel on one of the highest profile predictions for 2018, the treasury curve from the two to 30 year would flatten completely. what is next for the trade war and what does it mean for global growth? joining us for the hour, eric nielsen. thank you for coming in. you worry about the new imf projections? >> know, if anything, they are too timid for next year. 3.25 global growth compared to 3.9 is not an important difference. underestimatethey the tension in trade next year and what i think is going to be the end of the cycle for america starting next year. those numbers, not a worry. francine: how difficult is it to measure the impact of trade? eric: it is very difficult because so

tom, francine? francine: thank you so much, taylor.ional congress to appropriation of land. donald trutch said he asked the secretary of state mike pompeo to study the south african land and farm seizures. e have joined by the spokesman of land affairs. the president of the a.m.c. youth league who sathe sits on two to have most powerful bodies of national executive committee. they had agreed on some of these measures as long as it didn't hurt the economy. you can argue that debate in the south is hurting confidence. hy go ahead with the plan? >> obviously they need any policy debate in have unintended consequences but if we wanted to -- confidence or -- we could have immediately -- we are nationalizing the land from parliament but we have -- we do not want to nationalize the land. we want to use the -- the easure of exappropriation. guided by the constitution and also the legislation. it will be done properly to the rufle law. the debate is necessary. we need to have land reform which will enable all south africans to participate in th

francine: thank you so much.th us. plenty coming up as angela merkel's political partners suffer losses, will that mean for her tenure? later today, we will also speak to the microsoft ceo. this is bloomberg. ♪ francine: this is "bloomberg surveillance." angela merkel's a sister party in the dropped to a historic low in the states regional vote. projections by the party on course for its worst results since 1950. the setback raises questions about markle's ability to stay on as chancellor. is the former deputy leader of the democratic union. us.ael, thanks for joining what this a result in bavaria mean for the stability of the german government? michael: it is a disastrous result for the christian social in bavaria is called csu. even worse, with the social democrats lost even more, and are now down to 9.7, which is nothing almost and is a terrible situation for the grand coalition in germany. there seems to be discussion here on what kind of reasons we have. -- of the reasons could be one has to say it is a very

francine? francine: juliette, thank you so much.dp improved by 6.5% in china compared to 6.6% from a bloomberg survey. that has weakened after government data. the economy has faced increasing headwinds with new trade tensions and that has made the stock market pretty confident. black, us now is jeff and china economy editor. officials are trying to prop up the markets. saying it could get out of control. jeff: yep. at the head of the central bank, regulator, -- the stocks regulator, and others all try to shore up confidence. we do not know if there is any state money going in there, but it seems like a concerted effort to put us under what has been a real slump and confidence over recent months. to trade warnd insight, and there is no boost in confidence to come. ff, retail sales not too bad, construction was not too great, give us a sense of where the weakness es were. at the minute, it is a pretty stable picture. investment has slowed to a record low levels, and that is obviously a concern for growth going forward. consumers are

francine: will that change?mes more proactive in terms of technological development. you're talking about a decade story. it is not going to be a driver of the market in the near term. tom: if it is expensive, where is the most intelligent value now? sebastian: by far the cheapest sector in europe is autos. telecom looks cheap. you have got some of the financials, banks, which were overvalued, they start to be looking cheap now. tom: sebastian raedler and elsa lignos. upoil, a wonderful our set -- hour set up. edward morse will join us. we will catch up with the news out of saudi arabia. futures -282. stay with us. from london and new york, this is "bloomberg." ♪ kailey: this is bloomberg surveillance. i'm kailey leinz. let us get the business flash. the royal bank of scotland has posted stronger than expected capital earnings. wasating profit before tax 10%. it is majority owned by the u.k. government. -- it givesecutive the chief executive ammunition for buyback. valeo shares have plunged the most on record af

francine: saudi scandal. the c.i.a. director set to travel to turkey to probe the death of jamal khashoggi. the selloff is back. asian stocks sink. europe follows. bank of america calls time on china's equity rallies. shares fall to a 2009 low. well, good morning, everyone. good afternoon in you're in asia. this is bloomberg "surveillance." i'm francine lacqua in london. these are your markets. you can see the stoxx 600 down 1.1%. a little bit of discouragement because the rally in china coming to an end. we're seeing a demand for havens. dollar-yen at 1232. let's take a look at shares. a u.s. court finds a company liable for roundup's link to cancer. down from 7.3%. the interview of the day. bloomberg television has an exclusive interview with the prime minister of itly around 2:00 p.m. this afternoon london time. we'll talk budget and the future of the country. now let's get the bloomberg news. hi. >> hey, francine. theresa may says the brexit deal is 95% complete and has to speculators. the vast jeter of issues have

francine: thank you.alarabia said khashoggi was murdered by a rogue operation for killing that's part in international outcry. adel al-jubeir told fox news that the crown prince was not behind the killing. >> obviously, a tremendous mistake was made and compounded by it was trying to be cover up. unacceptable. we want to make sure those responsible are punished and we have procedures in place to prevent it from happening again. francine: political leaders have been responding. >> i feel certain that the crown prince was involved and that is why we cannot continue to have relations with him. i think he has to be replaced, frankly. i do not think sanctions go far enough. we need to look at arms sales. it is not about this journal is being killed but the war in yemen. imagine that if orders would have been carried out without the crown prince. in altering event for the u.s. and saudi arabia and we should suspend military sales and security assistance and polson on any directly involved. for a survey for more

francine. francine: i want to ask kevin about saudi arabia.d of the cia today. she alleges she listened to the audio tape in the consulate. alsos, and steven mnuchin meeting with saudi officials. there is no question the president has taken a more aggressive tone against the , saying the explanation is not good enough and this should not have happened, the killing of jamal khashoggi. the president striking a different tone. meanwhile, he is facing pressure from the republican senate to do that. age of thes magnitsky act, it allows the u.s. to continue with the asiness deals it has as well sanctions for individuals found responsible for the surrenders incident. tom: thank you so much. the nypd is investigating a suspicious package in lower manhattan, according to cnn. they had to leave their offices yesterday. these images from franklin street downtown. this is a developing story. you wonder how many more of these we may see today. we will come back with gary shilling, a bloomberg opinion columnist, and cameron as we look at market dynamics. th

francine? francine: thank you so much, taylor. theresa may is preparing to make a significant new brexit offer to the european union in an attempt to all open the door -- to open the door to a deal. divorce talks are stuck on the question of how to avoid the need for police and customs checks on the border between the u.k. and ireland, but the british side now sees it has to reaching an agreement. brexit secretary said the comments were speculation. partyck to the tory conference. anna edwards is there. anna: i'm very pleased to say i'm joined by arlene foster at the conservative party conference. let's get straight to the main order of business. is your party willing to accept ,ny checks across the north sea even if they are across a regulatory nature? >> no, it has been very clear all along that that has been our one red line that we cannot have either a customs border on the irish sea or regulatory border because that would make a separate from the rest of the united kingdom and that does not work from a constitutional perspect

francine: the u.s. treasury avoids labeling china a currency manipulator and chinese stocks continue falling. debate, showing majorities favor going beyond neutral. trade tensions are cited as a considerable downside risk. and theresa may is set to consider a longer brexit transition, but eu leaders decided not to call a november summit. we are live in brussels. ♪ hello everyone and welcome. these are your markets. we are seeing the stoxx 600 gaining some 0.6%, a lot of focus on china. things putins, some in place by the u.s. administration to make sure there are less chinese goods coming into the u.s.. looking at the 10 year yield after we heard the fed could go means neutral, what that is that investors are trying to figure out exactly how many hikes we will get here. the u.s. 10 year yield is 3.21. all eyes on brussels and theresa may with the possible extension. at can see the pound dollar 1.3 113. coming up, we have a good lineup of guests. we will speak to paul donovan from eds. and later on, we a

francine: welcome to bloomberg surveillance, i am francine lacqua in london. it is a big markets day. we did see a big selloff in the u.s., and onto asia. this is what we are thing on the stoxx 600 in europe. , there is not a catalyst, but earnings came in shy. chief executives were warning about the trade war, so there is a justness out there. the tech stocks took a beating. the dax is down 3%. the ftse is one of the biggest losers. there is political concern out there. the market could go into a bear market. week was closed, we saw a lot of volatility. 5.2% lower. we are trying to figure out what prompted the selloff, but it does seem that equities are shifting on the impact of trade, and sentiment is turning sour. we will get back to your markets area first the first word news. >> yesterday's rout on wall street was a correction, and not a reflection of a systemic issue according to the president. fresh concern about the trade war with china, and a selloff sparked. americans may not be able to deliver the runaway growth. chief christine lagarde says the wor

francine. francine: thanks, taylor.he imf has warned that investors may be ignoring the risk that financial conditions could tighten sharply. at its annual meeting, the fund said short-term risks to global financial instability have increased modestly while interest rates remain low and financial conditions are still supporting growth. how concerned should investors be? joining us now are our guests for the hour. thank you both for joining us. it seems like there is nothing new here. it is the risk we have been talking about a lot, it is just interesting. they also talk about stock valuations. >> it was an interesting addition. we think that valuations are in line with long-run averages, the u.s. slightly above. we are not too concerned as long as you are still getting earnings growth. but yes, as you say, these are not new risks. these are things people have been considering for some time. but as we continue, it will not go away. it is something we will keep talking about. francine: and it depends on how you manage the

francine: damage control. saudi arabia is reportedly preparing an explanation for the disappearance of the journalist. macronpresident emmanuel is announcing his fresh government. we are live in paris. earnings season gets into full sling. morgan stanley and goldman sachs will release figures this morning. good morning, everyone. welcome to "bloomberg surveillance." i'm francine lacqua in london. these are your markets. nothing huge, but a little bit of a bounce back when it comes to european stocks. overall, there is a little bit of a mixed picture when it comes to global stocks. asia was dancing around without any clear direction. i guess investors are now waiting for the latest corporate earnings to figure out what is next in the markets. pound is what i'm looking at. 1.3183. there is quite a lot of talk about brexit. the deal could be delayed to a december meeting. also looking at crude oil. -- 71.26t 71.20 6 am currently. saudi arabia is looking into the disappearance of a washington post journalist. we a

francine: thank you so much.xclusive conversation with the nigerian minister of state. that is at 5:30 a.m. in new york. we will be talking to him about oil prices, opec and demand across the world. this is bloomberg. ♪ kailey: this is "bloomberg surveillance." hsbc shares have surged after the bank show progress. 16%,t a pretax profit rose beating analysts estimates. its jobs reported figure is moving in the right direction, indicating the lender has managed to increase revenue faster than costs in the quarter. the ceo says the results are encouraging and show potential for revenue growth. francine: thank you so much. we are just getting breaking news out of germany. angela merkel will not run for the new head term. this is according to -- she will not be putting herself up for party leadership at the party convention. we are trying to get this confirmed or not. i understand the term to be december. we need to look into it a little bit deeper. this could change the face of politics in germany and europe. rupert:

francine -- is hurt badly. where do you think you will see it foirst. >> developing countries, india. the fiscal deficit of india has doubled. current indian domestic prices are equal to $100 in terms of rupees. they lose a lot of value. francine: are you satisfied with how saudi arabia and its allies are handling this? >> we are losing production from venezuela big time. and iranian exports are going down. and the demand is still strong. we really need more oil. what saudi arabia did is an excellent move. but we need more oil to come to markets, to comfort the markets, especially in the fourth quarter this year. time now for stock of the hour. snap, trading at a record low. the social media company is running out of cash. taylor: there was an analyst report coming out saying they are expecting a $1.5 billion loss. they are looking at a loss of 700 feet he million dollars. they do have some -- $715 million. they do have some significant work to do. there is cash left on the balance sheet. it has been declining

francine: can a new finance minister fix south africa?inance minister appointed a former governor as finance minister. he takes over two weeks before a budget update and faces tough challenges ahead, including convincing the government -- but the government canned -- >> with him coming in, you have people who are involved in framing the macro economic architecture of the democratic south africa and not only that, when he was at the central bank, -- at at the inflation the forefront of the inflation targeting in south africa. >> as central bank chief, do you have any concern that the finance minister would -- you assume that he, too, is a firm supporter of central bank independence in south africa? >> i did not have to make that assumption. he is an advocate of central bank independence. david justice brett kavanaugh : will hear his first case in the united states supreme court today. give us a sense of what we should expect. what would be different, as -- because certainly, justice kavanagh got here in a different way. greg very much so.

francine: the biggest selloff since february rolled through to the u.s. through asia and europe, benchmarks seeing declines of 3%. the shanghai composite closed near a four-year low, china equities looking to fall into a bear market. mark: this is very equity focused. there has been contagion to other assets, particularly fx and rates a little bit today as the equity route is extended, but no big panic. it is very concentrated in one asset class, but the pain is really intense across equities. >> all the sectors in europe are down today and it shows how broad this rout is, because you see the bond proxies, the insurers, the financial services down and that makes sense given the rise in bond yields, but you also have cyclical sectors like technology also down following the global selloff in tech. there is no sign of safe harbor at least in european equities. >> the s&p 500 falling for a sixth day, the longest losing streak under trump's presidency. dow jones off by two percentage points. every industry group in the red, but tech did somewhat outperform. we

francine: what is your strategy in the u.s.?: our strategy in the u.s., i said when i arrived it would take us three years. and it has been three years since the team has been in place. i am very proud in terms of what the team has done in terms of regulatory compliance. may i say this is not just about doing what regulars want us to do, it is our own standards. how we want to manage the business. this year, the u.s. -- it is not one of our best performing businesses. profits were up 54% year on year in june. our consumer lender is at 18% r.o.e. our bank, if we normalize for capital, is 7.8% return on equity. remember, we bring the scale of the group to our u.s. business as we build these global platforms. caroline: now coming up on "bloomberg best," former u.s. treasury secretary hank paulson says he is not in favor of escalating a trade war with china. larry kudlow says the trump administration may have no choice. and three fed presidents tell us how fast they think the fomc should be moving to hike interest rates. >> i am ope

she was talking with francine lacqua. siemens down 2.85%. about the main markets finish.e able to show you ftse and the banks. it was the cat that came under the most pressure today. it has lately been outperform them because the luxury sector has been doing reasonably well. and terms of the other functionalities worth paying attention to, we have seen outsized moves in terms of the volume generated. what we have seen his volume trading -- we get benchmarking coming through. we will show you that tomorrow. let's look at the european markets in more detail. cacftse, the dax, and the closing down by .7%. that is a look at the european markets. : we have they doubt up .4%. intel is at its highest in my than a month. we have other stocks up my than 1% as well. the nasdaq has been strong for a few days. 95.43 is decent. the 10-year yield is down to 3.05. that is money coming into treasuries from abroad. and crude oil futures, 75.29 is not a bad price for a barrel of wti. let's see currencies impacted by the real trade. is a currency that is not performing that badly today. it

francine: the u.s. treasury has stopped short of calling china currency manipulator. despite the confession, the yuan remains on the administration's watch list. it fell to its lowest level since january 2017 after the release of the report. the trade war has turned to mail. president trump plans to pull out of the treaty to gives companies discounted shipping rights and packages sent to american consumers. what has been the response from the treasury department report? >> the report basically stopped just short of labeling china a currency manipulator and said it did not meet the requirements to be called a manipulator, but it was not a favorable report otherwise and said the u.s. was going to be keeping a particular eye on the currency. david: the british prime minister may raise the possibility of extending the brexit transition period to avoid an impasse with her european counterparts. >> what has emerged is the option to extend the implementation could be a further solution to this issue of a backstop in northern ireland. >> how much progress has been made? maria

. >> the chairman speaking to francine lacqua. that was a huge surprise a couple of weeks ago or so. the markets reacted to it. everyone thought they were there to do an m&a. >> he said many times what he now wants is basically she laid out three people at the home with different focuses. the spin it probably focused on digital. it -- strength has to do with motivating a team, possibly doing deals, but they have a lot to get through before they can do m&a. latin america maybe, but what it -- trying to explain to me, they could grow organically, and that the moment, they don't really need m&a. before now, she said, a great addition to the team. >> the strategy, what would you say about the challenges facing those countries. the argentina is very small. a lot of her eggs are basically in brazil. there is an election coming up, the first round this sunday. the matter what happens, in terms of brazilian politics, this will increase. she said remember i told you three years ago i would increase thee., that we would put bank in shape no

welcome, i am francine lacqua in london.

. ♪ francine: global stocks recover after today route. is china a currency manipulator?y department is said to think not, but steven mnuchin can take otherwise. we talk trade war, global growth, and conditions with the finance minister of new zealand. ♪ francine: welcome to bloomberg surveillance. i'm francine lacqua in london. getting news out of the iea, cutting oil demand forecast. still seeing prices

francine: are there any other countries in the world where you might exit?ow. -- not right now. we are in 10 cor markets. ewhen investors look at santander, maybe they are not understanding the amazing opportunity for growth. as of june,exico were 33% of the group net profits. spain, portugal and sent under consumers in the euro area countries, 33% of group profits. the total lending in mexico and brazil was 100 billion dollars. the total lending in the euro area was 350 billion. opportunity that we give investors in latin america is a very attractive one. manus: that was sent and there's , speakingana botin exclusively with francine lacqua. not everybody has such faith in the latin markets. mohamed el-erian says it might be too soon for investors to reallocate away from u.s. stocks into e.m.. prices,: higher oil stronger dollar, slowing growth and tightening financial conditions are not a great cocktail for most emerging markets. in the short term, be careful. this is not yet the time front anti-divergence rate. it will come, but not here. our guest,d riley

but then he turned around and with our own francine lacqua said that there is no plan to leave the euro within this government. >> they need to support and they realize that. the idea of decoupling from the euro is too much instability. it is completely unpalatable. david: they took the budget with a 2.4% deficit up to the eu, and said, thank you very much. >> it is investors pricing and a lot of risk and italy. you have to have some really strong pushback which, maybe a few ticks below that. but there's not a lot the eu seems to be able to do to enforce. this is the environment we've been in for years now. i don't imagine italy will really change the game. >> how about the u.s.? it is over 3%. but it seems to be ignored. >> we see the u.s. with expansionary and budgetary policies. this is exactly what will be hitting. you have policies driving and anothernding goal of president trump to narrow the trade deficit. alix: what do you do with italian assets right now. >> what matters for all asset prices is where the economy is going. this is clearly the bigger .river if we push through thi

♪ francine: hello everyone and welcome to bloomberg surveillance. i'm francine lacqua in london.

francine: let's turn to fed speak.o of one-on-one interviews with the head of the federal reserve regional banks said jerome powell made it clear that he is committed to a path a gradual interest rate hikes. gradual may mean different things to different people. patrick harker told michael baltimore he favors a slower pace. >> for me, my forecast right now three this year, two next year, and two the year after. some have accelerated that pace. for me, i have not seen acceleration of inflation. we still see good job numbers, so i do not think there is a rush, we do not have to rush the normalization process going back to neutral. i am open-minded. if inflation starts to accelerate between now and december, i could supported december increase. >> we have 3.7% unemployment, 200,000 people getting hired every month. what do you a compass by -- what do you accomplish by waiting? >> what do you accomplish by going sooner rather than later? there is good news in the economy, there is some risk that i worry about with the yiel