we start with the rising us dollar. as been gaining in strength against currencies around the world on the prospect of more rises in us interest rates. and that has been piling the pressure on emerging economies from india to turkey to argentina. let's show you the details... this is the dollar index, a measure of the greenback versus a basket of currencies. it's up around 5% since the end of january. and over 2.5%just in the last month. it's bad news for emerging economies. they borrow in us dollars so, when the dollar rises, so do their debts and interest payments. that has helped put emerging market stocks and currencies under pressure. turkey and india are among those hit, as the dollar has surged against both the lira and the rupee this year. the turkish lira has lost over 20%. the reserve bank of india was forced to raise interest rates on wednesday, for the first time in more than 4 years. india imports most of its oil, which is made even more expensive by the falling rupee, pushing up inflation. last month turkey

he gets down toward for to the dollar. one central-bank try to deal with the situation other central banks have a different approach. all of these central banks holding a very difficult line. to get in not wanting the way of their own growth story. james: it is a very fine line for them. they are trying their best. they are china to find the financial stability floor. the primary mandate. the problem is if you got economic fundamentals, look over us as well. we got elections in all of these countries coming up. a level of uncertainty is very difficult to battle against. it is going to take quite a lot. i don't think this is going to be -- chart's take you to this that shows you asian currencies have been a little more resilient. this carries through if you look at equities. i showed the effects here. seeing losses but nonetheless, you get the point. is this to do with different reaction functions to the dollar? or is it away about the -- the economy is set up? james: a lot of these countries got stronger current account bal

you can see me salivating in this part of my mouth and the dollar is on the move. start getting risk off, that is when i start worrying. if we start seeing dollar-yen 1.05, then irds start getting worried. dollar is the bellwether whether this is risk off for the continuation of of the dollar move. equity markets are getting hammered on a daily basis. we were at a bear market yesterday. stagnant at 1.3% again today. is the chinese done, or do we get more? id: at the end of the day, you have to make a political call, and that is difficult. we've are going to puree big announcement this friday, and now there is not. you tell me. i don't think we need to get it couldn'tre, but settle back to 640. we hear yields are going to 3.5%. you hear 2.8%. there is something going on here. the currency is more volatile than it used to be. flow, anda two-way now that we are getting two-way flow, everyone is like, why are we getting this? why am i not being told what the hier and low youed it will go thought. that is just the fx market and the currency coming into a more arena becau

we start with the rising us dollar. een gaining in strength against currencies around the world on the prospect of more rises in us interest rates. and that has been piling the pressure on emerging economies, from india to turkey to argentina. let's show you the details. this is the dollar index, a measure of the greenback versus a basket of currencies. it's up around 5% since the end of january, and over 2.5% just in the last month alone. it's bad news for emerging economies. why? they borrow in us dollars, so when the dollar rises, so do their debts and interest payments. that has all helped put emerging market stocks and currencies under pressure. turkey and india are among those hit, as the dollar has surged against both the lira and the rupee this year. the turkish lira has lost over 20%. there are, you can see what it has been doing, the turkish lira. the reserve bank of india was forced to raise interest rates on wednesday for the first time in more than four years. india imports most of its oil, which is made eve

we are range bound on the futures at the moment. euro-dollarthe euro that little bit higher again as next week will have a live conversation around the timing of the ending of the qe program. we look forward to that with interest. than the group ceo michael spencer will be joining the bloomberg team. it's his first interview after agreeing to the company takeover by cme group. perhaps brexit will get a mention, perhaps gender equality as well. juliette: donald trump is set to meet shinzo abe next week. the white house wants kim jong-un to commit to a timetable or to surrender his country's's nuclear arsenal at the meeting. however, north korea has publicly gristle that -- at armytence to agree to this -- to disarming. advisor,ump's economic larry kudlow said trump will meet with justin trudeau and emmanuel macron. joined germany to one donald trump it will not sign a joint statement at the g-7 this week. emmanuel macron has signaled that tariffs and the paris climate accord must be agreed to before he signs an agreement. the u.k. prime minister

i would be bearish on currencies like the canadian dollar. the u.s. o gain ground. manus: anna and i started the those puffedbout up on the borders. a trade surplus with canada and the deficit with mexico. to that end, do we think that we e gointo see more interventions from central banks to defend themselves against this volatility? reporter: i think it depends -- guest: i think it depends on how you define intervention. we are not going to e a rus of central banks in the market actively trying to influence the level of their currency through open market transactions. i think that, i am large, most countries would be with a wker currency at this point. the downside of currency weakness is so low with countries actually wanting to be somewhat higher inflation and no evidence that currency moves are destabilizing domestic asset markets. on the margin, that will see -- we will see easier policy across the globe. a lot of authorities will continue to verbally intervene. that is something that central banks have been more active at it -- in recent quarters

matt: is that the case if the dollar continues to rise? people expect to raise rates another three times which should attract some money. -- amerging-market debt lot of times their debt is in dollars. rupert: if you were going to tell me that the dollar was byng to rise by 20%, definition that will be a against emerging-market economies. because of their improved current account position, are resilient to all but a very strong rise in the dollar. it is also worth noting that i don't inc. it is a given that the dollar goes up. so, we haveyear or priced in a lot more fed rate hiking and until recently, the dollar it will have a large fiscal large current account deficit and that would argue in the direction of dollar weakness. overall, i have a reasonably neutral view of the dollar. jong-un maynd kim meet. oil is rallying. and dollar and oil have been moving in tandem. which is positive if you are and oil producer right now. how segmented should i get? em baskets?buying or commodities? how do i position my portfolio? rupert: it depends on how

generate upside risk for the u.s. dollar. the second theme supportive of the u.s. dollar is escalation in trade tension. that is a major headwind to global economic activity, largely because it impacts negatively economic and investor sentiment. it will also disrupt global supply chain. all of these are headwinds to global growth and i add to that the rising financial tension in emerging markets. all of these are major headwinds to global economic activity, and it is usually an environment where the u.s. dollar can potentially do well. we come to that team about emerging markets, as well, but i want to focus on the monetary policy divergence one and you suggest we have these rates differentials playing out in the dollars favor. but the bank of england, no change expected there. wel us what happens because have central banks going in very different directions and we could see a rate hike from the u.k. sooner than the others. yeah, for the time being the interest rate normalization process that has been started by the bank of england is intact. we still expect the ban

the ecb. we stabilized on euro-dollar. esterday as a result of the dovishness from draghi. dollar strength partly fled related but the dollar heading for its best week since 2016. the yen was little weaker. no moves but what they said about efficient. s&p futures will be flat at the start of the trading day. this today, equities in the u.s. got a boost. lot of m&a speculation. nejra: we did see yields, a little bit on the 10 year treasuries. not as much as we saw in europe. treasury at 2.9% steady. what we could see from the cash market open and bonds in europe. that is happening now. judging at what we are looking at here, yesterday we saw the 10-year bund yields move six basis points to get to 43 basis points following what markets seem to interpret as a dovish taper from mario draghi. we could see that 10-year yield is down again. we really did see the peripheral yields drop. we could see that happening again judging by the futures. anna: we are some eu carbon session numbers rising. 1.3 99 million. were iners and losers

it's of a merge since the referendum that we weren't told about the forty billion dollars spill we're going to pay for nothing in return and the bill the promises made during the referendum campaign most infamously about extra money for the n.h.s. simply aren't going to be kept and what people are saying is this is too big an issue this is good decide the future of this country it's too big an issue to leave the politicians alone six hundred fifty m.p.c. westminster should decide the future of our country sixty five million office should that's why we the people have a people's march for a people's vote of voters in turkey head to the polls in a few hours for sunday's landmark elections candidates held their final rallies saturday the vote will bring constitutional changes vastly increasing the president's powers those are the headlines counting the cost is next. where are you. hello i'm sam is a band this is counting the cost and i'll just hear your weekly look at the world of business and economics this week why a stronger dollar is becoming a headache for developing market economie

if the u.s. dollar continues to strengthen, it will probably accomplish the opposite. >> in the short run. it won't have a huge impact. the problem with the u.s. deficit in a sense is that there are two ways of reducing it in the long run so in the long run, either the u.s. has to import less and the u.s. current account deficit is a function is the u.s. spending less, that's a decision based on u.s. policies and behavior in some economies the other side of that is if i want to produce more in the united states, is it effective to be going into a trade war or is it more effective to be promoting investment in plant, equipment to try to rebuild america's manufacturing base through investment, education, training these are long-term, unsexy measures, but that's how you make more to sell. >> kit juckes, good to have you on thank you very much. hope to see you again. >>> on deck, why it is game on for gamestop >>> and major changes coming to wells fargo's wealth management unit. >>> and we are all over this

is the dollar now set to strengthen fervor was a big question and certainly has been hurting emerging markets against the backdrop of a fed tightening and tighter global liquidity i think the consensus is beginning to emerge that basically the trade wars the dollar probably will end up being a winner from that i mean that's been the view over the last couple of weeks i think helped also by this sumption of weakness in euro zone and obviously europe has been a bit of downward pressure not helped by politics in in italy and then obviously ongoing at the moment for all the immigration concerns or immigration battles in europe as well but it does look like the dollar is on an appreciating trend does that mean then that debt stress for developing economies which borrowed in dollars that's more of that is now inevitable. well it means more pressure ming you know we enter the year in a goldilocks scenario for emerging markets or appeared that way with d.m. central banks tightening but moderately but the assumption was that global growth would stay pretty robust and as long as global growth s

if the dollar continues to go down, the asset class will rally. e get a stronger dollar, this would create a challenging the weaker here it emerging market stories would be under pressure once again. david: you mentioned the fundamentals, whether turkey or indonesia. to what extent are they correlated and to what extent are they idiosyncratic? you have the order one situation , different situations and argentina and brazil. are they correlated or different country by country? >> when you get hostile global condition such as a strong dollar and rising bond yields, the whole asset class comes under pressure. the reason why those countries have done poorly is they have had idiosyncratic problems. turkey has poor monetary policy. real interest rates may be better, but generally low. bad current account deficit. brazil has to two rated dramatically with the truckers strike and the uncertainty about the election. if we were to see the dollar going lower to the extent we were expecting the rest of this year, emerging markets will look good and they will c

depreciated 3% this month against the dollar, but sean taylor at deutsche asset management says this move may look big, but when you look at the year to date loss come at that has not been as sharp as it could be given the currency has held up well compared to other currencies. haidi: thank you for that. we will get more on the yuan. joining us now is the cohead of asia rates and fx strategy at bank of america merrill lynch. i want to look at this price action and dollar-yuan in one week alone. which is less dramatic when you look at offshore yuan. the biggest decline since the 2015 devaluation. how do you play this? is it a safe bet to go long dollar or cny. you are quite right. the market seems to go from feast to famine, and famine to feast on sentiment. we have been forecasting dollar china to end at 6.6 in the second quarter and into the year at 6.8. a short position on afford basis. ais is an argument about required adjustment in the currency. the premise for this is a couple of things. we have seen some moderation in china data. we feel that chinese officials have tried to pull

weakness versus the euro. 1.1667 for the dollar/euro 110.12 for the dollar/yen. >>ning us is simon, and you focus on currencies, was we're seeing out of opec, the decision making getting the oil output increase, how does that affect things in your world >> assuming there is going to be a deal of some kind, which is still an issue because we have to talk about that statement, we still got to say okay, from a direct perspective, from the negotiate sieve side it will hit those oil producers. it will be negative for the ruble, canadian dollar the flip side is you can make a strong argument that it will be positive for high oil importers. turkey actually. those are places where currency has been under consistent pressure kun k one key issue is the higher oil imporlt imports. it is also important for turkey because it takes inflationary pressures out of the system globally, that takes pressure off u.s. yields. that's a slightly weaker dollar. >> a lot of people have been talking about how the correlation between the dollar and oil has been breaking down why do you think t

but the dollar appreciates. e euro will actually come under the most pressure if you look at the german balance of payments -- havens. the dollar has weakened a little bit today because of the yen. i think long-term this is essentially a dollar bullish story. anna: and other bullish story -- a dollar bullish story. what is different now? you had this cooperative, everybody is going in the same kind of direction, global growth and nice -- synchronized. that has switched to a story where europe is in trouble, you have potential trade wars. where coming off of this very high base. the dollar strength that we see now i believe will be driven by different factors than the ones that have driven in the weakness -- driven the weakness in the euro, and the strength in the dollar. anna: what worries you this year? are you preoccupied by what is going on it german politics, but what is going on in bitcoin? i think trade is first and foremost now. this is an unpredictable scenario where we assume a deal will be done, but the

risinger currencies are against the dollar. 've got the japanese 10 year and the italian 10 year up 10 basis points. let's get to the big story which happened after the close last night. the news that msci including saudi arabia and argentina -- highlighting the move in the saudi arabian benchmark. today's decision and investors are pricing it in. you are seeing an outperformance , the white line versus the emerging market index. 13% increasese of in anticipation of the decision by the msci. could boost the index tracker fund, pumping money into the likes of argentina and saudi arabia. the chief executive of the saudi we couldd boss said see flows of $40 billion in the coming year. it wasn't just the bank of england, it was about the msmb keeping rates low. they say could lead to an appreciation once again. as i was talking about italy, taking a peek at the yield spread between italy and germany an, a bit of a widening today. lawmakers from the coalition are raising issues about the populist left government. 90 minutes into the

as we see the dollar strength, opec will be meeting next week. tions and russia would be teaming up. keeping them from escalating any further. is there a need to do that anymore? i think not. i think if the dollar will continue to be hired there will be continued pressure on oil. what happens to oil will depend critically on the dollar and the growth rate on the world. if we slow down overall in the second half, that also could keep a ceiling on oil and other commodity prices. julia: brilliant to chat with you as always. trump up, will president pardon michael milken? we will see if the junk bond king will get his record wiped clean. this is bloomberg. ♪ >> i'm mark crumpton with first word news. china is detailing its plans to retaliate against u.s. tariffs. the country announced at the levy tariffs on a range of american farm goods, autos, and seafood. china will slap a 25% penalty on $50 billion worth of u.s. imports. they take effect july 6. president trump has responded on twitter to the jailing of his former campaign and a -- former campaign

the dollar move makes a lot of mentality, we have seen a stronger dollar on a broad base. ly the renminbi losing against the dollar, it is other currencies. we are seeing weakness against the dollar because of the fact that the outlook for the chinese economy has deteriorated. it is because of the trade disputes between the u.s. and china that has escalated. nervous andestors they pull a lot of chinese markets. this is causing you want chinese, but not the enforcement trying to weaken the yuan. anna: what is the next stage of this story? parts of asia, their currencies, the countries that rely on china for demand. do we see that contagion of the week yuan spreading? -- weak yuan spreading? on how the dispute between the u.s. and china evolves. whether this will scale down or escalate further. there is a good chance that they will implement further import i think this will strengthen the dollar further. further import tariffs should be inflationary in the u.s., particularly in the u.s. economy that is running at full capacity. this should strengthen the dollar further on a b

economy, does that extend to the dollar >> if the initial impact is one of higher inflation then it could potentially be a lower dollar but in the longer term, if it undermines people's faith in the story for the u.s. economy and the faith in the u.s. economy it could be a different picture in the short term i think it says -- it would be a stronger than a weaker currency. >> so far the green back has been pretty resilient as far as the tariff discussions have been cop -- concerned but had that repercussions across the entire world especially on the emerging markets context as well. how do you think about the short term trajectory of the dollar, irrespective of what's happening on the tariff side >> that's one of the really fascinating stories in the last 24 hours it display into the dollar it is obviously that talk about the ecb pulling away from qe1. what does that mean for the dollar it means there are less investors there, which in turn should push yields higher. so it's very noticeable to me today you are pushing 295, 296 on the ten year. where's that going to play it will play out i

i think the fed is dollars supportive. re hiking rates and that is also dollar-supportive. but trey tariffs -- but trade tariffs are dollar negative. central banks become hawkish and we saw an element of that with the ecb, but not to the extent goinghe doj or u.k. dollar negative, so the market is really divided on the market. i think we will remain firm on the dollar. right, thank you so much, brad. we are moments away from the press conference starting at mario draghi takes the podium. here is where we are in the market. a really fascinating session has developed in the market. u.s. equities are on the outside. the dow jones up by three basis points. european stocks moving is a positive territory. the dax is also positive up by .3%. it feels like the dovish taper has had the markets excited. and that translates is a buying in the bond market and selling in the euro. take a look at the other asset classes and you can what i am talking about. 117euro dollar is now at and reversing. expecting this to be a more dovish press c

that gives the u.s. dollarnd on that basis you get more people shifting into the u.s. dollar. you add in the trade friction, that uncertainty and all in all it is painting a picture where people will start to move out of emerging-market currency. you can see funds are flowing out of the equity markets and when they move out, they will move from the currency. the short-term outlook for asian currencies is not that great. rishaad: why is it? ,s the dollar strength issues something which has taken a lot of peo surprise, the length of the dollar on is upward trajectory, how much of that is a surpris? what are the projections for its demise as well? mark: i think part of the innaround is the fact that the early part of the year, some of the policies from the trump administration were just seen as being outright negative for the united states, but even so the federal reserve has stuck to its plan and decided the u.s. economca withstand this friction. the economy is doing well and unemployment will go lower. so on tha

we saw treasuries rally, the dollar on the rise.eing some moderate gains across the board in asia. of 1%.futures up 6/10 areng a look at what we covering ahead, the bank of japan's policy meeting today. of course no change expected, but there could be a change of tone from kuroda when it comes to his exit strategy on qe. as the world cup kicks off in brewershow tv makers to are cashing in. this is bloomberg. ♪ 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. asianare from bloomberg's headquarters. i am yvonne man. welcome to "daybreak asia." stocks set for games at the friday open after strength in u.s. tech and media and a dovish supplies from the ecb. fo

the aussie dollar falling below 74 -- $.74 u.s.. chinese markets will continue to be the bellwether for sentiment across the region. the shanghai composite down 20% just five months, $1.8 trillion wiped out that market. we've been technically oversold for just about a week that it doesn't look like it's leading up. jp morgan saying there could be more pain to come because the fundamentals are just so vulnerable right now. on, also seeing losses of .3%. watching the chinese currency as for weakness we haven't seen it about four months. quite a bit of concern when it comes to looking at that gauge of stability and whether china will be using this as a weapon in the trade war. that's get more on the trade war , president trump seems to beat out and back a little bit when it comes to the way that chinese investments will be reviewltimately restricted. is this the steven mnuchin preferred version? how does that work? >> this is finally deals through a process which is a body made up of representatives from cabinet departments like defense

the e.u. says it's also identified another four billion dollars in u.s. products for further tariffs if the world trade organization court where it's lodged a complaint against the us rules in the e.u.'s favor the european union is pitifully steering clear of the expression trade war largely over fears about where these tit for tat measures could end up instead the e.u. is referring to it as a rebalancing measure still this is about making as much noise as possible about sending a symbolic message to the white house by targeting some of america's most iconic brands donald trump said he's now considering introducing twenty percent tariffs on european cars but analysts say anything further measures against the e.u. could harm the u.s. produces in the long run. it's not fans it's smart enough not to go too far he knows very well that if you start the tradable the american pharmacy voted him will be up in arms when they see where we can call isn't selling as well globally as it was before. but damage may already have been done the use now looking for alternati

the u.s. dollar climbed against the canadian dollar. like theit looks president may be getting ready to do something with a nafta. this was throwing their toys out. alix: how old are you guys right now? ofhael: you saw the photo angela merkel staring him down. all reporters is inside of the meeting, it was not pretty. men are tryings to defend themselves for it justin trudeau did not said before. the president trying to deflect attention away from his own reforms. -- his own performance. the other six cultures said we believe justin trudeau. you worked on trying to price in political risk and that do not work. you have to price it out. what to do you do as an investor? vince: the biggest losers will be em. the countries not represented. any time you see this kind of political risk, money flows out of the risk economies which are the emerging markets as opposed to 10 yearsgo where they had nice, big surpluses. there is either the potential and not a lot of backing. seeill be interesting to what we see continued pressure on countries like

-year yield, flight to safety for dollar-yen as well. higher versus the u.s. dollar. nting out gold, if we are looking at further save haven assets, lower by .4%. always an interesting one. ofde also giving back some the gains from yesterday. questions swirling over what opec and russia can achieve in terms of increased output. sterling as well trading at a seven-month low relative to the u.s. dollar, a defeat for to reason they and the house of lords. it looks like parliament will get a meaningful vote on brexit. vote. another meaningful didn't they have one last week? find out what's going on outside the business world. for that, we turn to emma chandra. the trade dispute between the two largest economies is escalating. china has got to retaliate after president trump written terrace on another $250 billion in import. move extremed the blackmail. the chinese benchmark stock index fell 4% and u.s. futures are lower. on capitol hill, lawmakers from both parties are calling on the trump administration to end the separation of families caught trying to enter the country

stability in the u.s. dollarthe more we see the interest rates being priced adequately in the currency market, that will stabilize attitudes towards china. are we near the bottom? kerry: unfortunately, until we see this trade conflict start to or havestart to wane some alleviation, there will be negative sentiment toward chinese equities. that might bubble over the northern summit. i think it is an early call we are at the bottom. things become self-fulfilling in terms of sentiment. even if we don't get trade war, investors start to work on the basis that we do, you see corporate spending fall and a move away from risk assets. where is the money going? as we bring up this particular graph, having a look at this, this is suggesting -- this track the s&p 500 and it seems to be seeing a lot of inflows. are we going to be developed markets and primary that of the destination? kerry: i think the money is still chasing the earnings growth. we are seeing economic growth come through. we have a strong case for a global e

the canadian dollar is stronger. use of the tariff talk and there may be additional sanctions -- not sanctions that additional tariffs on canada. -- not sanctions but additional tariffs on canada. brexit and what a day and what a week next wethf ritish pt between jeremy corbyn and theresa may. this is a plan for jeremy corbyn to stay in the using the markets. >> this government has delivered morethe northern rails. -- van northern rails. the government's white paper is delayed, its customs proposals have been canceled, it has ripped up its own timetable, just like our shambles private railways. >> they voted for a referendum. they voted for article 50 and since then, they have tried to frustrate the brexit voters. mark: our brexit editor is here. labour wantsm to remain in the single market and they will table the amendment, 12 tories ifferent bill. how does theresa may get out of this? that is on my mind this afternoon. >> that is the question. good news for theresa may, it is true the labour party has come in favor

is the dollar now set to strengthen fervor was a big question and certainly has been hurting emerging markets against the backdrop of a fed tightening and tighter global liquidity i think the consensus is beginning to emerge that basically the trade wars the dollar probably will end up being a winner from that i mean that's been the view over the last couple of weeks i think helped also by this sumption of weakness in euro zone and of the euro has been a bit of downward pressure not helped by politics in in italy and then obviously ongoing in the moments where all the immigration concerns or immigration battles in europe as well but it does look like the dollar is on an appreciating trend does that mean then that debt stress for developing economies which borrowed in dollars that's more of that is now inevitable. well it means more pressure i mean we you know we enter the year in a goldilocks scenario for emerging markets or appeared that way with d.m. central banks tightening but moderately but the assumption was that global growth would stay pretty robust and as long as global growt

s role in the world and diminishes the role of the dollar. i don't see it so much as solution is policies as unilateralist policies, but then you have to think about what's the alternative? i always thought they would be to do was in which the dollar could be replaced. one, there was a compelling alternative. i don't think china is a compelling alternative. the euro is not a compelling alternative. dollar to be the used like this. i think we could be moving in that direction, but we are not there yet. if you are china, you want to punish the u.s. for the trade sanctions, you sell treasuries. that is self defeating. what would you do with that money? i do not think right now there is an alternative to the dollar. when there is, i think people will jump at it. people want an alternative. joe: in theory, it would strengthen the yuan, which donald trump would love. >> yes exactly. we have to think through how china will retaliate. there's a lot of companies that depend on activity in china, and the other thing that some people are talking about is

david, checking the markets. u.s. dollart full day, rising on the fed tone, up about .5%. in oure, let's bring strategist in singapore. what is next for the dollar? >> i think there is more downside. thisove set the end of session will continue for the next few days, probably into the next week. ere are couple of factors. the fed and how the market reacted. just as david was debating, where is the neutral rate? we are on the latter half of this hiking cycle. means rate hikes are less kely to be supportive of the dollar from here. i also think the trade situation is evolving in terms of impact on the dollar. they're either going to rip up global trade, that would see a dollar rally. or if it perceived to give the last couple and the of months, trade negotiations ve trum is pushing people away from doing trade with the u.s. that is going to be a long-term dollar negative. this means the dollar will continue to fall in the days ahead. saw: earlier today, we also -- with the fed, those arguments make sense. you talked about trad

the dollar is the reserve currency.u look at the flow of funds data,, $4 trillion worth of dollar-denominated debt. the fact the fed is putting rates up, what are we seeing? rate rise.s anyone out there, a non-us government or company last taken on dollar debt has to face the int that they owed money dollars which is appreciating. you have seen the crocs that have appeared in turn key, and indonesia. india, the central bank governor complained. it is the classic phenomenon where monetary conditions tighten because the dollar is unique, conditions tighten elsewhere in the world. lower making are the dollar debt more attractive. they tighten elsewhere in the world. that is where the fed is thought of as the world's central bank. the question becomes should the fed-- how much of the taking part of the rest of the world given gps is accelerating? we are not yet at the point where the fed needs to look at the rest of the world and how their actions are rebounding. there is an analog where you had emerging-market crises start

the cynical ones that if you want a weaker u.s. dollarred to the economy, but that is too simplistic. the trade wars are unpredictable, and a bigger problem 1-3 years out of the decisions now, but i don't think persistent u.s. dollar strength is what they are looking for, but that is what will eventuate. fortunately, the fed reserve is so independent and so well-drilled that a higher-interest-rate scenario will be the driver of maintaining u.s. dollar strength. again, the trade war in itself is a weaker u.s. dollar all things being equal, and that push-pull effect, but the reserve in the momentum of the us economy and earnings -- george, very quickly, msci asia inclusions, where are you without? are you buying into that because you are tracking it? >> yes. as the pension investor, yes, we are buying into that. increasingly important. george, always a pleasure. remember bloomberg users can interact with the charts on gtv up on key analysis and save charts for your future reference. this is bloomberg. ♪ . this is bloomberg. ♪ haidi: this is

breath of life being injected into the u.s. dollar overnight with the bloomberg dollar index at an 11 month high. take a look at this chart that shows net yen positions. there, but ifor you look at these rate differentials, the policy divergence, would you assume a weaker yen over the next few months? >> it is possible in the short-term if the u.s. is likely to hike two times. the differential will also widen significantly, so the yen should we can in the near term, but of , becausew much weaker of the and there will be a natural buyer of the yen. most of them will buy yen when yen gets above 1.11-1.13. in the near term, the interest differential and the policy diversions will drive it against euro and yen. haidi: how much does the moredity story, importantly the oil story, feed into japanese inflation or lack there of? yeah, opec will have a meeting this month later, and we expect they will have some may be announced an increase in production, right? oil demand is quite strong. if opec increases production, we see the oil price in a

but gold and the dollar are the sinceegatively correlated the financial crisis. f we do see some dollar softness come through, that could mean gold gets a lift. >> thank you very much. important context around these market moves here at a huge week for the global economy, including tomorrow, brexit legislation returns to the house of commons where lawmakers will vote on a number of amendments recommended by the house of lords. the u.s. federal reserve is forecast to raise rates on wednesday. we will look with interest at what they have a say. the next day, the is expected to discuss the end of its asset purchases. the bond buying program, what will they say about the timing of all of that? and we round up the week with announcements from we will see the russian president meeting with the south indian leadip as well. let's put the week into context. i've got this chart, which shows how inflation in many parts of the developed markets, i suppose, is not running above target. the bank of england has a bit of a headache, driven by very specific factors that we know ve

and that bucks the trend that we saw in the last couple sessions where the dollar of course has been gaining ground. what we're seeing is there are little moves, but one of the biggest movers today has been that of euro-dollar coming off a tad to the tune ever when a quarter of a percentage point. that is the picture.of when a quarter of a percentage point. that is the picture. you can see that momentum has picked up a little bit foot is i mib trading almost 200 points higher. xetra dax, all eyes on that as well already up hoalf a percentage point, but a tricky week for european markets >> and here in the uk, supermarket stocks are rather mixed after new numbers from kantar show major u.s. firms have lost to foreign rivals. sales at sainsbury's fell while all its british rivals actually increased. we're joined now by a senior analyst of food retail aldi, little, they have changed the figurative landscape for retail in the uk, but the physical landscape one of the drivers for growth has been more floor space. does that have to stop at some point point? >> yes, you're right they are ad

the lira is rising against the u.s. dollar this morning. nly got one stock in negative territory on the turkish market this morning. 7-9%stocks are up, kind of this morning. the banks trading strongly, as well. turkish airlines treading strongly. it seems to be a knee-jerk reaction to get long stocks. it's going to be interesting to see once we start seeing the reality of what the is active residency -- executive presidency actually delivers. what have we got in terms of the european markets more broadly? to point outwant that i was talking to phoenix kaelin earlier this morning from socgen and although she looks primarily at the fixed income side, she is not bullish over the medium or longer-term the lira or turkish stocks. there are some people out there seeing this as an opportunity to sell. take a look at european stocks more broadly. this is the world map w m go on your bloomberg terminal. you can see european stocks are down from italy around the iberian peninsula up through france, the u.k., and into the netherlands and germany. they

the dollar is stronger against the yen as well. in terms of opec, the story this morning, ministers are meeting to discuss potential increased production russia and saudi arabia are spearheading efforts to raise output levels. iran has provided stiff resistance an opec delegate told reuters not all members are likely to support boosting production. crude is trading higher amid this uncertainty steve sedgwick is readying himself to speak to some of the world's most powerful oil ministers. look at him there at the front of the line. we'll cross live to steve when those doors are opened the iranian oil minister met with the saudi oil minister this morning ahead of that opec announcement that's an important conversation that we will try to bring you. we'll tell you what was decided between those two men when we can. >>> in china, the president denounced protectionism and populism amid the looming trade war with the united states president xi talked about the perceived benefits of the belt and road initiative and saying china's door to

neil, when you look at the dollar strength, how much does the price of oil actually move the dollar? es from the same place, right? i don't like reasoning from our price change. the dollar is going up because the u.s. economy is getting stronger relative to the rest of the world, and oil prices are up, more recently i think because of certain supply-related concerns. but generally speaking, the global economy is in a much healthier place than a couple of years ago, and that improvement is what's driven oil prices higher. so it's important not to reason from a price change. francine: ok, what if the trade war or trade tensions actually ends up with china selling treasuries? a, what's the possibility of that, and does that mean a significant repricing in treasuries? neil: no, i don't buy into that. i mean, they've been moving away from dollar-denominated currencies for years. so we've had quantitative tightening for a long time now, and that hasn't been the primary drer of why yields have gone up. yields have gone up primarily because real yields have been going up, and they've been goi

the yen and dollar are stronger. s murderers and thieves and so much else, many fears of the separated families. this is bloomberg surveillance. tom keene in new york, guy johnson in london in for -- in for francine lacqua. we see it in the market reaction last night. the latest turn, ratcheting higher on the trade story. storye seen the risk spreading out from equities into other asset classes. commodities under pressure. it is going to be interesting to see, whether or not the market kind of takes it another notch. europe is stabilizing. tom: some good conversation to -- vincentsight and reinhart will join us and kevin cirilli as well. right now, your "first word news." sebastian: the trade dispute between the world's largest economies is getting worse. china vows to retaliate as president trump threatens tariff s on another $200 billion of chinese imports. the u.s. is not targeting goods finished in china, produced in south korea, and taiwan. u.s. futures are lower. theresa may mr. tour -- faces another vote on bre

. >> but you are still bullish despite the move that we've seen in the dollar. now it is up 5% just in this quarter trading at the highs that we haven't seen since july of last year >> again, we have people coming in from overseas looking to buy treasuries when we get up to a 3% yield on the ten year basically arbitraging what is going on in europe we are also seeing that people find there is a lot more value in the united states still especially with the tax reforms going forward. and we still have financial engineering now version two that is taking place where companies are buying stock not with going to the credit markets, but using the money that they are repay the tree eighting. and that is helping the small cap stocks >> so the dollar going up froops go perhaps for good reasons what does it tell you where to position stocks, in the leadership, in the big growth stocks still or is it time to maybe look for some laggards >> i think one of the things, we have to look at the pricing on stocks a lot of stocks are way up there, have not had many stock splits ove

usually, the pboc on the affects the dollar cmy. of the other currencies as close to market price, so i would not look at basket. fe ago,: couple of minutes that was said that the currency can is a weapon in terms of -- you could use it if you are trying to battle currency depreciation with another country, but that is not the case here. what can beijing do? if you look at the levels of threatened, they cannot retaliate with more tariffs on more goods, because it is just not the nature of that trading relationship. what do you think they could actually do? iris:. they could do a few things first quotas. they are actually stronger than tariffs come at a off the number imported.o be they could impose quotas on u.s. goods being imported to china. and other thing they could do with unexpected for a long time, is that they could do something similar to what they have done otte department store in china, administrative measures pinpointing some u.s. companies operating in china, not only on the retail level, but they can also doin do it on

investor and the dollar gets too strong, investing in non-dollar assets will not be ideal. the u.s. nd we are running big fiscal deficits and likely to run big trade deficits. to me that portends weaker currency, good times for emerging markets, a trade war could disrupt that, but that is not our base case. tom: thank you. much more to come. look for a replay of our conversation with lloyd blankfein, and david solomon of goldman sachs as well in beijing. up up another important set of conversations with mario draghi, powell, kuroda. this will be really timely. the markets churning higher today. in washington with the news as well. this is bloomberg. ♪ this is bloomberg. ♪ 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

the opposite is happening in the euro-dollar. will continue to gain strength in the euro will continue to weaken? the euro will continue to weaken? grace: the factors that have pushed the dollar higher will abate. as we get confirmation of pmi's north of 54, and economic data remains robust, the euro is likely to push higher through the end of the year. y: how is this process managed? it does not want to slow the european economy. 125-130 will hurt. grace: 125 is manageable. 130 starts to get to an unhe lpful level. the ecb has to manage the fundamentals it sees. it can't be focusing on currency at the top of its agenda too much. somethingink that is that will place their overtly. -- there overtly. matt: a pleasure having you with us, grace peters. spencer joinshael us for his first broadcast interview since agreeing to the company takeover by cme group. this is bloomberg. ♪ >> trade tensions rise ahead of the g7. follow asia,ks extending their rally. the record low describes this as a family -- larry kudlow describs thies this as

dollar haven, the kiwi dollar holding at .7027. tures looking a little weaker into the futures open. it is pretty much flat looking at the aussie dollar. trade numbers for the next guidance for were the aussie goes after they had a pretty big largely positive week. look in the emerging markets story, we are still seeing these points of weakness along the em. policyicular, majory action from the turkish and brazilian bank. billionwith a second $2 fx swaps this week which did very little to support the stock market or the currency. we have a third rate hike from the turkish central bank in two months. that seems to have stemmed to some of the bleeding when it comes to the lira and turkish bond market. let's get the first word news with jenna. tech is facing a grilling in congress about links to china. the senate intelligence committee will call public hearings into tieups between facebook, google, twitter and others with chinese firms. there is a possibility of chinese vendors with documented links to the communist party having access

retail sales will be not just the major averages but the dollar, let's look at the bloomberg dollar index. we are going to see it is gaining by .5%. on the may, the bloomberg dollar index is up more than 1.5%. of course, interesting is that the yield curve across the board , yields are falling. the little bit of the opposite of what you would expect after expected hawkish than fed, but the ecb taking that dovish stance, hoping the bloomberg dollar index and influencing treasuries. let's look at media stocks. this is remarkable. today, buty fox up of the last eight days, gaining 15% on the whole. the bidding war between comcast and disney -- comcast yesterday up 4.8% right now after submitting a $65 billion bid for certain fox assets in competition with disney's $52.4 billion bid. both companies want broader content and international distribution. it will be interesting to see how it lays out. finally, let's look at the cruise line shares. we have a rally for cruise lines stocks, sparked i royal caribbean putting in a bid or taking a 67% stake in the luxury cruise liner silver sea. it cost

the main word is the dollar rises. ntries that have debt in dollars will suffer unduly. is the fed the central banker to the world? >> that has been the context for the past decades. trillion worth of inflows into the past decade. as the dollar strengthens and the fed increases interest rates, that value proposition erodes. think about this? we always talk about this on a daily basis. you say either dollars are or the fed isncy, the central bank to america. that is all its job is. phoenix: the statements from the fed have made it clear they are primarily focused on the domestic economy and not on the ripple effects they have on other markets. i think it is quite clear this will continue to be a strong external source of stress on e.m.. tom: you mentioned the philippine peso. it is just one idea of the unraveling. within your study of when e.m. becomes crisis, what is the catalyst where e.m. correlates together and becomes more than a small unraveling? phoenix: it down to e growth of em, which we have seen a to the kinde

deficit will bear on the dollar and that will be the turn that we are waiting for.s in emerging markets have improved, so we are sticking with that position. jonathan: didn't we see that affects related moved to the deficit last year? are we seeing enough of that? krishna: we were not counting on the budget deal last year. the deficit picture has certainly deteriorated. in that environment, for the dollar to strengthen meaningfully and sustain itself, i think, is unlikely. jonathan: oksana reminds me, negative and right on emerging markets. what is next? oksana: all the reasons remain for why we were negative going into 2018, the fed normalizing, all of the protectionism around the world, stronger dollar. none of these things will be constructive for e.m. at these prices particularly. when i hear, as was said, that there is still positive sentiment around e.m., i struggle to understand what kind of price appreciation you can get from a better pricing of 290 basis points over treasuries? fundamentals are strong in many parts of the market, we don't argue with that. i

it is weakening against the dollar. ve requirements for the banking sector designed to boost lending in the chinese economy. one of the things moving markets over the weekend. we focus on politics, too. you mentioned turkish elections. we've got the turkish lira 2% higher against the u.s. dollar, a little more certainty perhaps the markets had anticipated what is going into the first round of elections. this is the dollar against the lira here. just shy of 2%. two point 87 u.s. 10 year yields. in termsns of risk off of the yen activity and u.s. 10 year yields. ofhaps it is the trade story how high they can go. it increases interest in havens like the bond markets. manus: we might be 5267 kilometers apart, but you talk about bonds and yields. here's the stat of the day. yields in the u.s. treasury have been sub 3% for 20 sections in a row. that confirms the trade conversation you put on the map. the range has been around 2.76%. sub 3%. the average over the 20 sessions in the u.s. is around 2.76%. we can't get above 3%. th