♪ anna: yellen's inflation. inflation is says ticking up soon, keeping plans to raise rates gradually. >> my thumbs as these will not persist. i expect inflation to move higher next year. most of my colleagues agree. iraq since forces. catalina told to clarify its independence austrians tilt the eu's political balance to the right. manus: breaking the stalemate.

theresa may makes a visit to brussels today to personally intervene in negotiations. ♪ anna: a very warm welcome to "bloomberg daybreak: europe." it just is going up. we gotten a bit frisky. welcome back. anna: and is willing to do with me. it is the world's biggest cryptocurrency. we crashed it through a thousand bucks in 2013. 56 day from two to three. six days from 3000 to 4000.

the only thing that impeded bitcoin was the possibility that the chinese might crackdown on cryptocurrencies in september. good they go for it again? i love jv dimon. he said he would never talk about again. anna: how long did that last. they will pay the price according to the near post. understated. if goldman sachs can be undecided, so can i. people were skeptical with paper money replaced gold. here's earlier on the asian equity session. asian markets taking a leave from the inflation talk to the united states. sevenghest since 2000 and -- 2007. just how structural is the inflation environment and united states? yellen says her best guess is it

will accelerate. asld you interpret that vaguely hawkish from yellen? some of that is pushing up the dollar, it seems. some have more inflation to worry about than others. with some of his more hawkish talk, the flattening of the curve. or these to some sort of inversion. manus: the dollar is a little bit higher this morning. janet yellen's best guess about inflation, but the cpi data disappointed on friday. the dollar lost 6/10 of 1% last week. it's that for weeks of gains. only the data can possibly save the dollar. brent up another 1%. we saw it up 1.6% in last week sessions. iraqi soldiers trying to take the oil feeds -- fields.

that violence, certainly something we are watching this week. up over 1%. let's get your first news. juliet. austria's 31-year-old foreign minister has declared victory, setting him up to become europe's youngest leader. the winner would shift the country's politics to the right after a campaign built on a hard-line stance on it immigration and islam. for thepave the way eurosceptic freedom party to enter government. the u.k. prime minister has to brussels today to intervene and deadlocked brexit negotiations. dignitarieser with ahead of the european summit. talks are at an impasse over how much the u.k. will pay to leave the eu.

these britainy of crashing out of the block without a deal. i leader has until 10 a.m. local time to declare whether or not he called for independence last week. mattering on what he says, the prime minister may try to seize control. meanwhile, spain's biggest banks have agreed not to recognize catalonia if it declares independence area -- independence. the governor of the people's bank of china warns that his country's companies have taken on too much debt. this happening of a seminar in washington. problem is the corporate taxes too high. rates, that service rates you is still reasonable.

-- ratio is still reasonable. iraqi soldiers have moved on oil fields in kurdish territories. word national local news service as an seven iraqi militiamen have been killed. riding --ave been rising since the kurdish independence referendum. global news 24 hours a day. powered by more than 2700 journalists and analysts in over 120 countries. you can find more stories on the bloomberg app, top . it was a lackluster move. asian markets looking pretty good. the regional index as a whole it senior high. with a fairly strong lead on chinese pbi. the 300 there is fairly flat. we have been watching grey halt

motor as it resumed trade following talks with bmw. up 6.2%. in hong kong it did back a little. the deal may not be that profitable if they only operate in electric vehicles. hong kong exchanges rising in hong kong. a pitch to planning end the city's tax on equities trading to ease access to high-frequency traders. kobe steel fluctuating. it did have a five year low in early trade. coming back a little. the falsification scandal deepening in japan. it may affect as many as 500 companies worldwide. manus, anna. juliette saly there in singapore on the latest in the markets. predicted that inflation won't stay low for much longer as they plan to move ahead with plans to tighten monastery policy.

>> my best guess is the soft ratings will not persist and the ongoing strengthening of labor markets, i expect inflation to move higher next year and most of my colleagues agree. in our latest economic projections, my colleagues and i project inflation to move higher next year and to reach 2%. let's discuss this. allen higgins, chief investment officer at coutts & company joins us this morning. the best guess of janet yellen is probably to be taken seriously. how on the money is she? her best guess is consumer prices will accelerate after a. of softness. -- after a period of softness. compare the u.s.

to other countries i think she has a reason to say best guess because of wages. it's a slow cycle. unlike for europe, japan, or the u.k.. wage bubble in the u.s.. he's in new york, is a? goldman sachs. he was instrumental in introducing the financial instruments. with credit spreads so tight, the dollar week, stock market side, financial conditions are very loose right now. but they'reependent also somewhat market dependent. these market conditions are very loose. , iember, tidings coming won't say for sure. manus was saying the famous bloomberg wirp up to 70 air 80%.

inse to percent before me december. -- close to 100% before we hit december. manus: if inflation is coming is it the right time to buy bonds. do you believe inflation will reassert itself, justifiably so, to buy protection in bond markets. alan: don't buy inflation protected bonds. they are terrible securities. they are 90% rate risk. only 10% inflation protection. there is an inflation rate embedded, a breakeven rate, embedded in that. your performance is not different from bonds to the extent that inflation is a little different. they are very high duration. long inflation linked. a dangerous security. of a what he expected

curve, then? the state of the curve. we're looking at the risk radar earlier. are we looking at a curve that means the treasury yield spread trading at its narrowest? are we heading for an version? -- in version? alan: this is the one to watch. the other classic is choose and tens. sevenof the last recessions have been flat. 30 can sometimes traded bit special. it's frightening. but the good news is it still 90 base points. flat, it will be a very important indicator to be much more cautious on the global economy. manus: there were voices, of course. barclays.

look at some of the comments. jes staley says, the benign conditions reminded of 2006. larry summers is talked about the fear, the lack of fear itself. would you concur? do you echo summers? do you feel any sense of reminiscing of 2006? alan: it was ok for a couple of years. 2006 was a little bit early to get out of markets. 2007 got a bit hairy. 09 was the real bear market. the stock about volatility. if you look at volatility and if you do some work on volatility, what should you do? the models will tell you should buy risk. you should buy equity. i know it sounds perverse.

maths, he goes from 10 to 20. it's much more dangerous at 10. the last two years of a bull market, the returns are very strong. return is about 30% from the s&p 500. it's very dangerous getting out to early. that's a grass there. you want to get out of risk assets if you see a recession. what's the spread in the bond market for clues about me top out? manus: how far away would be a recession? a recessionsee within 12 months. you have a strong goal economy. is thek of recession murdering of the economy. the fed overdoing it. that's classic u.s. recession. anna: thank you very much. alan stays with us. manus: if you're going to work,

you can tune in on bloomberg radio. ony're looking at the impact the crude market of the iraqi soldiers moving to seize oil fields. anna: as the sun rises over cap catalonia, -- catalonia, we will look at the strategy defendants. theresa may this brussels. all that to come on bloomberg.

♪ good morning anybody. from london. sixasia-pacific is up by tenths of a percent. we have a strong equity market. no worry for those concerned about higher rates it seems. his we come up this week. marcotte repair support the u.k.'s treasury committee. givesesent over in china the opening speech at the 19th, is congress. let's go to bloomberg business flash with jillian sally. the aerospace business

may sell some units, from -- that those familiar with the montreal-based company. said airbus is among the suitors with one saying that by --nier -- by barnier bombardier is open to other countries -- companies. is -- banks are waiting for a no deal scenario that does not allow banks to easily connect business across the continent. steel has set the fake quality controls on his products now affect as many as 500 companies worldwide. steelmakerrd-largest last 41% last week, wiping out $120 billion in market value.

data on the strength and her ability of metal used in cars, trains, and planes. that is your bloomberg business flash. thanks so much, juliette. the clocks are ticking loudly in catalonia. regional president has until 9 a.m. u.k. time to tell the spanish government whether he did indeed declarative in his last week. manus: if he says yes or ignores the deadline, the spanish prime minister may start the process to use -- to seize control of the rebel in menstruation. any indication yet of what catalonia will do? basically has three hours to go to as this question. it's a simple yes or no answer. did you declare a republic or did you not. cap media are close to government. yesterday, they reported that the president is going to ignore give ad will instead

number of reasons of why the referendum was valid and why he thinks the press for independent should go on again. this is something that madrid will interpret as a yes and put a motion article out. how is this affecting the cap 11 economy? we've heard declarations of moving headquarters. they came quick. a week or so ago. what's happening on the ground? where now actually hearing comments from officials in madrid like the economy minister who warned over the weekend, look, this is a powerhouse economy but intentions were to continue we see the effect in the overall spanish economy. he warned that the spanish economy was meant to update the market next year and they didn't

because the budget was pulled because the number of votes. we might have to revise that. especially the 2.6% growth. they were morse was it of the weekend. .e could see a big decline potentially recession. it's been a muslim of that i have tensions in catalonia which could play out in the wider economy. a month ofn almost tensions in catalonia which could play out in the wider economy. the outcome could be binary. it are you go -- depends are you go. it has consequences, electoral consequences, in taking catalonia towards another referendum. is that correct? >> that's correct and that's one of the big questions.

they gave them to warnings is weak. if he said yes, i declared a republic, you'll be given three more days to rectify his behavior. is hoping.t madrid they don't have to apply article 155. remember, we have reported that the routes there is tension, especially the more radical side. they're hoping by thursday, the platform will implode. if he gets a hint that that will happen. they could call a regional decides or if he can -- to go forward, the central government would take over the region and article 155 does dispenser the regional government. they could set a deadline for any regional election. -- a lot of that points to another regional election in catalonia. anna: thank you.

allen in his back. allen, the development you seen , it is a binary jetty for you? to be ane of a setback buying opportunity but look somewhat contained. it reminds is scotland. it's got a 50-50 chance. it doesn't seem to be a clear mandate either side. somesides have indicated softness. in terms of bonds, it's hard to find any value in euros 16. 10 years spain at 160 versus germany, a little bit of value there. we have some spanish government bond risk. for the general euro area, just like all markets, we need a bigger setback. a bigger setback.

european equities in a relative sense have done quite well, relative to spain. there has been a recent underperformance in spain. europese is to happen in for you? we're coming into earning season. what you need to see from the earnings cycle to convince you to take more europe? alan: we are already overweight. to take more, you are right to focus on earnings. we have had years and years from -- of non-earnings delivery. u.s. earnings have got enough to slightly soft start. if we sell real good beats in the euro, that could encourage us to put some more money it. but were already in the market. --a: can anything the ucb the ecb have to say change your position?

terms of the investable nature of europe, the ecb is the biggest story. there talking about that inflation will soon pick up, but are urine kenexa door? -- are you hurrying of for the exit door? they are so far behind. even if they did nothing they be doing 12 billion a month of reinvestment only. clearly, it's some kind of tapering of the markets. deductibility fine with that. we are still in negative rates. pursuing crazy land. we are well away from tightening policy. an, thank you very much. you will stay with us. anna: up next, a shift to the right. , what does this

mean for austria and its european partners? the temperature of the right if you are in politics, will talk more about that and austria will become back. ♪ who knew that phones would start doing everything?

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in japan, 2:38 p.m. in the afternoon. the shopping first house there. the currency is slack. janet yellen. desperately seeking inflation. johnson. good morning. the ftse is indicating fair values. the .3.ound we have seen a rally in oil. that will be a factor. not.er it's transitory or

he thinks it certainly is. at the dollar. generally it stronger this morning. the australian dollar two dollars trading a little more strongly this morning. some advantage in two. these in section of the nikkei. it was up around 6/10 of 1% this morning. this is the vix. they continue to rally. and of vix is going down and down and down. net positioning, another record. that is what is so you what is happiness market. 3%, on the move, 2%, downside, you will see some real action this. these solutions out to be covered. market is not the set up for a gap lower on the spx. the 31-year-old people's

party foreign minister sebastian kurtz has claimed victory as oscars next chancellor. countries put the nationalist freedom party within second-place. manus: while the right has been before,the government this show they should to the right. matt miller joins us now. matt, what would the result in austria mean for the rest of the european parliament's? >> for starters, it should be terribly anti-e.u.. party, thewing freedom party and austria, has been anti-e.u. in the past area it's against immigration in the euro area and for throwing out the peripheral mediterranean nations but they change tack before this election in order to

gain ground. , electedebastian kurtz pretty overwhelmingly austria, has said he will not form a coalition with anyone who was , thest the idea of europe freedom party has to conform to his ideas of europe or he could form a coalition with his current coalition partner, which are the social democrats. germany, talking about politics, let's happen -- discuss what is happened recently. merkel's party suffering a defeat. one of the implications for merkel, for vw, for that part of germany? this election is much more important for investors in the short term. slew ofre we have a upgrades for volkswagen based on

the fact that it was expected a pro business when in lower saxony. lower saxony owns a 20% stake of volkswagen and that would've been positive for letting executives make changes they wanted to and help them in their fight with unions were very powerfully represented. that didn't happen. we got the social democrats when he clearly in lowell exit a. -- lower saxony. the near term, that's lower for vw shares. merkel is trying to form a coalition. this roster of some clout. she is going to have less bargaining power when it comes to forming his coalition. she wanted to wait until after the elections to start coalition talks so we would see where the chips live for the cdu and they got a little -- a really big defeat in lower saxony. it's going to be harder to put together this should make a coalition going forward. manus: thank you very much.

matt will be back later on. is set to tell to brussels today to intervene in the deadlocked negotiations with the european union. this is a day after details emerged across party talks to prevent her from leaving the eu without an agreement. for inflation, wages, and retail sales all out this week. the stock.uk. is still with us. how investable is the u.k. at the moment for you? break it down. the sterling is undervalued and we think there of a transitional deal very shortly. you talk about that later. 100, thet the ftse ftse 100 are international companies. going to perform in line in general. as positive.

stocks, we think the u.k. economy is performing ok. bonds? no. there's no value in bonds and they are very high duration. , both inflation linked and nominal. manus: that's a good up some of where you want to be. why are you so convinced is going to be a transition? and i have the biggest a couple of times. it's all about negotiation. you have to frighten the horses. they say there's no way they would vote for no deal. why are you so convinced is going to be transition deal agreed? alan: game theory should be easy, right? the year getting two more years of money. what's wrong with that? u.k., as we know and most of us

agree, there's not enough time. so the u.k. desperately needs it. and the eu needs the money. times,ve been here many whether it be greece crisis, last-minute, some kind of agreement, so eu does have a history of agreement the last minute. anna: eu might not like the situation. using this is going to be noise? there's going to be some noise at the side. the majority want the deal. it makes sense because is not of it's going to be tough to get the final bill. -- the eued the money need the money. the other aspect, the french, italians, need a strong economy.

the dots, the big exporters into the u.k., they need a stronger us economy as well. the u.k. economy close to them. manus: that's perhaps what theresa may is banking on. the other consideration, of the imf and world bank meetings. unemployment is at a four decade low. he is reinforcing his rhetoric. how far away are you? this is the european market. this is the british market. it's virtually shoo-in in november. he really runs a big risk if he doesn't. he better do it. that impedes all that's in because him? a reliable boyfriend. -- unreliable boyfriend.

25 points panic cut been taken away, make sense. it would have to be really we do really week data this week. it would be a big surprise. he must be frustrated about being called on unreliable boyfriend. i'll be the cast. how that all adds up into picture for november. on the policy extent, it's difficult but not impossible to draw a line between what's happening and another early election. we had five years between the that's between them. them.ween said there's an excellent threat to the u.k. economy. germany is not happy with that. i want to be existential threat.

the you concern politically about what a shift to the left in u.k. politics would do? invest ability of the u.k.? alan: potentially. let's break it down. the ftse 100 is very international. 80% of revenue outside the u.k.. most of these companies could be anywhere. we saw that with hsbc. going to hong kong, for example. it's hard to see a scenario. wheretake a scenario sterling dies. it's hard to see the ftse 100 companies not performing well in that environment. but there are elements that will be concerned. commercial property. you can imagine they will be very concerned. andon't know how pragmatic maybe somewhat more business orientated that government may be. you have to price at a risk

premium. manus: you talk about invest ability in the u.k.. your clients are going to be key in this. london housing prices are falling. the most since 2000. house not given succor to the london property market as thought. in commercial, we see two huge buildings in the city. i don't know the proper names. you will see them. salty chinese buyers. very good prices. why? because it is supported by yield. you have a combination of the weaker currency supported by foreign have to 5% yield. by a 4.525% yield. two 5% yield. they request.

you can continue to bloomberg radio. it is likely your mobile device. talk about the fed's outlook on rising inflation. anna: it's a surprise the outside. we went to beijing. as yellen sees inflation picking up, we will talk global economy. this is bloomberg.

♪ this is bloomberg daybreak: europe. let's get a bloomberg business flash. juliette: thanks. r is seeking an

investor for its aerospace business. it is looking for disposal of assets including its regional jet unit. airbus is among the suitors. person says the company is also open to partnerships with other aerospace companies. top executives at goldman sachs and jpmorgan are bracing for a hard brexit. they are moving forward with the most pessimistic contingency plans. meanwhile, the head of jpmorgan's investment bank is headed -- is ready for a no deal scenario. kobe steel has said the fake quality controls on its products off excess many as 500 companies worldwide. japan's third-largest steelmaker collapse 45% last week, wiping out $1.4 billion last week.

saudi arabia is continuing to lay in the international portion initial public offering of its state oil company until 2019. these weres been under review for the ipo etc. -- ipo, expected to be the largest in history. -- that isould be your bloomberg business flash. thank you very much. oil is trading higher after iraqi soldiers seized oil fields in the northern city. anna: the region has emerged as a potential flashpoint between the government in baghdad and the semiautonomous current regional government. -- kurd regional

government. we've heard of violent clashes around oil. absolutely. we are getting reports of casualties. parts have been captured. certain infrastructure. is in response to the independence by the artist on regional government. an regionaludist government. barrels a day is the amount of oil coming from the kurdish area. this would have an immediate global impact. /3rd of the oil in those areas is produced by foreign investors. we had some conversations with analysts in abu dhabi and they

to the disruption pipeline could result in a two to three dollar gain in oil prices per barrel. thank you very much on the very latest on the oil story. you also have top . you have live streaming. you have everything. slowing down the right-hand side. you can ask the guests a question. you can rewind tv as well if you want to listen to something you missed area let's talk about china. prices rebounded. let's bring in our china correspondent mackenzie. good morning. can these gate prices be

sustained? >> the view from here seems to be no. there's a big event kicks off this week in beijing. there will be a renewed focus on deleveraging. what will -- what this will do is suck out some of the stimulus. 7%s led to this nearly increase year on year. it didn't surprise most of the economists. that did surprise most of the economists. fewho, they were one of the call this number and said it's unlikely to continue. there have been constant capacity. there have been a tick up in some prices. they think this broad stimulus will be drawn back.

we also have the consumer price index coming in in line with expectations. 1.6% increase. they are likely to see improved profits and paid out there that's a bit more quickly. we constantly talk about deleveraging in process -- in china. what is that mean to you? is interesting to hear from the governor of the pboc. it's the first time in a while we've been pushing on the need for reforms. he says there does need to be rendered focus. he says that is to be an increased focus on fiscal policy. too much capacity around local government borrowing. gdp may go up to around 7%.

the imf would say this is coming from the increased credit. they are paying a price for this. interesting to hear his speculation on that gdp number. anna: thank you very much. give further details as this week unfolds. -- we will get further details as this week unfolds. alan higgins is still with us. to open up the financial sector in china but also how we need less financial leverage big conversations happening in china. what are your thoughts on china? currency? alan: the fact of the currency has gone up this year is quite remarkable. it is one of the biggest surprises of the year. they manage the situation really well. the flow'sd to stem

despite buying these huge buildings in london. the number one concern is corporate debt. .he pboc see it they see the same charts we do. they want to stabilize the situation. they want to avoid a financial crisis. you struggled when you set how much more europe you want to take on. 50 stock index more than doubled the s&p's performance. how much more china with you like to take on board? you have things trading at 2.10 points -- 2.10 times earnings. probably would invest anymore in china. looking to take some profits. yes, it's a relatively depressed multiple but as we know, they

keep them really cheap. chinese banks are on a hugely yield -- huge yield. is, unlike when i started my career in japan window and saw it coming, everyone can see a financial crisis in china coming. the major chinese banks are 6, 7 times, so they like everyone is aware of it. the story in the rock and the kurdish story is one part of it. the opec conversation is another. do we stay around here on oil prices? up or down? alan: no is predicting oil goes up. we underestimate demand from china. close eye on oil demand in china and it is still very strong. i know we are moving towards

,lectric cars and will have one but oil demand is strong in emerging markets. especially china and india. you have the odd geopolitical event that pumps it up today. but the reason we are trading at where we are fundamentally comes from there. rwanda, we spared gettinge -- expense this chart for you. talk about rwanda. 2023 maturity? i'm president of the current between -- president of the predicting. the cricket of team. i'm going to the stadium and doing charity work. you take the simple things.

simple things are important. know -- look how low the yields are. 5.7%. making tremendous progress. you are looking at the emerging market rally there. anna: it's not just about the cricket, it's also about the bond market. alan: i will do some work out there. who knows. there might be some rwanda bonds and portfolios. a fund that invests in the mexican peso and the russian ruble. we have been somewhat cautious on the dollar and it's come back a bit. it's not all about rates. is more to currency than just rates. manus: good luck in rwanda. has been our guest

for the past hour. the chief investment officer at coutts & company. that the thought is interest rates -- inflation rates will rise. ♪ is this a phone?

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>> the fed chair tells the central bankers that she sees cap plansking up and on track to raise gradually. >> i inspect the inflation to go higher. on the oil fields. independentg the physician. >> mayday.

the minister makes it a snap visit to brussels for the negotiations. >> welcome. it is our morning show. cranny.us >> let's get a look at the futures and where we expect those to open. asia is pretty positive with the equity markets going higher and people are not so worried about the rate hikes into the future. they are picking up on the positive tone and running with it. >> the government declared independence and steps back from

the brink. aboutould mark carney say the equities? you are talking about a record 10 years of highs and you are looking at rhetoric from janet thisn and you are seeing up half of 1%. this is obviously hoping the story there. >> that is something with the dollar against the currencies. imminentlightly more problem and this is the conversation on the yield curve and what that spread looks like. does this lead to the flattening curve? we will talk about that the seller.

rack and these are according tohere news agencies and it is a compilation and there could be a squeeze on that with the rebalancing and it gets closer. >> there are a lot of politics to talk about today with this theyine that exists and will clarify the position. have lots of work from catalonia and a busy agenda. data andsion inflation the politics of consideration

this week. issue. is a global >> standing up to become the youngest leader. a hard-line stance on migration and islam. >> the u.k. prime minister adds to brussels today in the brexit negotiations. dinner may will have with a president ahead of the european summit. this is the talks over how much they will pay when it comes to the eu. president will tell the

government why he declared independence. the prime minister star the process during the coming weeks. meanwhile, the newspaper says that the biggest banks have agreed to not recognize catalonia, if they declare independence. >> the people's bank of china has warned that they are taking on too much debt. there was a panel discussion in washington held in conjunction with the international monetary fund. is themajor problem culprit and there are some lower interest rate. -- n the northern city,

the local news surface says that at least seven were killed and tensions have been rising since the referendum last month back independence. crude prices and futures rose on the news. some of the worst weather conditions to hit the country in 50 years will endanger lives. there are extreme conditions. the nation extended a warning nation-wide. some of the strongest stuff at 30 kilometers an hour. global news card in 120 countries. you can find more stories on the bloomberg app.

>> 1996 is higher and you have hong kong having a strong showing today. cap stocks andll it is up and the oil prices helped there. in terms of the rebound with a five-year low, 500 companies have been affected by the falsification scandal. and itre rises in china may not be that profitable and they say they are light on details. and is a tech player rising -- hashe top central bank predicted inflation will not stay low for much longer.

they will to push ahead with the monetary policy. >> and international banking seminar. >> my guess is that this will not persist and, with the strengthening of the labor markets, i expect the inflation to go higher and most of my colleagues agreed. our latest economic projections project inflation to move higher and to reach 2%. welcome to the show. it is great to have you with us. i don't know whether to applaud janet yellen and to say "well done." or, whether i should worry that this is the situation where the leading lady in banking is going.

>> the inflation has been a surprise and there are structural factors with inflation more than anybody thought of stop we shared janet yellen's view and this keeps a very positive scenario for global equity markets. you have global growth and economies are delivering above-trend growth. you look at the split between developing markets and it is sustainable. positive.emely >> we have heard that this is a contrast with all of these other things in washington. we are not too worried. saying the things are goingnd stocks keep

higher, despite political nervousness. many voices are being raised and people are saying, hang on a second. why do things look so relaxed out there. theolatility is low and year has been market with rising volatility. you start to see the central banks on a tightening path that we think will play out in a modest fashion and volatility will rise. we don't see this as a negative. looked at this earlier and we have not seen a big move in equity markets. we have not seen more than 2%. this could cause quite the squeeze on the low volatility

situation. is there a preparedness for you? how do you look at the volatility conundrum? >> the rise in volatility is not a negative. catalyst that we think will be positive and our presence has been outside of the u.s.. ucb stronger growth in the emerging markets and europe. so, we have been looking for the volatility and we think the opportunities will present themselves. >> you are not worried about political disappointment. there is a lot of expectations built-in. gains andmade the

they are not predicated on tax cuts. >> specifically with regards to the u.s., it was strong and there was the earnings growth on trump was optimism policies out of marcus -- markets. this will likely be a modest positive for earnings and something we would view positively. >> thank you very much. we have a couple of stories that we are watching. the median network reports that the militia is in the kurdish issue andthe iraq

, key for oilourse h prices. >> let's talk about catalonia. president is looking for a dialogue. he has toil 9:00 and takene whether he has independence. and theesponded parliament had a mandate. the parliament had a mandate to accordingdependence, to -- speak. breaking as we dialogue withcere

the prime minister of spain. >> what will that dialogue look like? we be joined shortly to get the latest on that.

catalonian, in the capital, we have these headlines coming through and he wants discussions and dialogue and is suspendhe government to the independent mandate to pursue this dialogue. to leader defends the claim independence-defying spain. to what extent that is a statement of independence is a

call. what does it mean? >> yes indeed. the independence mandate. let's try to untangle that. hope us understand what is going on. and suspending the independence mandate because he dialogue andend the key question is how that is interpreted in madrid. this is a four-page letter he sent to madrid and the petition from the government was very clear. you need to answer with a yes or no question as to whether the they declared a republic. this createdhe has and he has repeated that he has

two conditions. one is that the police deployed here are released and the question is what madrid will do with this. they were clear what he needs to do. if he responds, they will be triggered and, if he does not come with the concrete issue, this would be triggered and you could interpret this is madrid having all of the grounds to interpret this. >> there is no immediately aggressive response here. we have this down by 10 basis points. the question for the markets is the extent to which we go to this negotiation and if this is stepping back from the brink. he is holding on and seems to

have held onto the right to claim independence and suspending that. instead of creating more ambiguity and more uncertainty to take us forward. >> i agree. was basic and he claimed to have a mandate that nobody else recognizes. i mean the central government and the european union. they interpret this as article triggered.rickled -- it looks very bleak and he probably will not be here by the end of the week. >> ok. thank you very much. a check on the markets and how the bond markets are reacting and they are watching the euro-dollar. euro was weaker and there is

some movements. >> let's put this in context. grace peters is our guest host. they said spain was undervalued. relevant --ibex relative to the stocks and to what extent can catalonia be a question on overall perspective with europe? mistake ands are to they will not derail the key story to us. marketsoking at the that underperformed and the referendum was called with

interest. it will remain for some time and should be seen as the opportunity to purchase stocks that we like. >> let me ask where you see them. you think the banking sector was a place to look. >> the european banks are what we are focused on and we think this is a real opportunity. you see the recovery in the earnings and we are also talking about the bond yields rising .ently in a positive scenario >> you have a very clear view with businesses and what are the tech-enabled businesses? the index and the

technology index is smaller and we believe that there is a tearing that emerges and the traditional businesses that can drive the expansion with more efficient operations and we are very interested across all of the sectors. >> you pull out a number of the it is the one technology you prefer. >> absolutely. this is the approach of those invested and it is a broad scheme we are interested in. >> the other big thing we are tracking is theresa may on her way to brussels and we have allen higgins and his menu board of u.k. assets and he likes to be a little but long.

you look at this game theory of brexit and what are the investors saying to you? put this in context. is underweight in many portfolios and the talent we have seen over the past year will start to erode. out,nk the trade is played but this is not to say that there are not fantastic opportunities and you see the underperformance in the markets with interesting sectors where you see support from the government, despite the negative andlines on housing prices there is a need for housing. the logistics companies into the

changing dynamics. really have to go to the areas, but there are huge opportunities. >> what about the assets? there is uncertainty in the u.k. and this is part of that. whether you do or do not get a thesition deal, what is investment with these those -- with those opportunities? , thesehe brokerage side are opportunities where we see structural tailwinds and, despite brexit, we think that this will provide ability. re you have a note in thei about performance. you like the mining? >> it has undergone structural

change and you have seen the and the changes taking place on the supply side and you saw core competencies and the sectors are very positive. >> great to have you on the program. everybody remind about the last few minutes. the leader defended the claim to independence and suspended the mandate for dialogue. they were looking for a yes or a now. they saw how the government interprets this. >> this is a sincere dialogue they want to have. markets andropean

the spanish government bond yields are fairly unmoved. right to claim independence and defying spain. retail.

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guy: good morning. monday morning. this is "bloomberg markets: european open." going to bring you the first trade of the day, the cash equity. when it opens in a half hour time. i am guy johnson. what are we watching? .atalonia's leader how will madrid and investors act to this ambiguity? it was meant to be a yes or no. the u.k. prime minister heads to brussels