welcome to bloomberg markets, the european open. i am anna edwards alongside that miller in berlin. -- matt miller in berlin. >> asian stocks drifted higher. treasuries retreated. edged lower.d oil european stocks start trading in 30 minutes time. >> treasury yields down from a seven-year high after donald

trump repeats his view the fed does not need to hike so quickly. the selloff continues. oil drops from a four-year peak as the u.s. president attacks rising prices. -- fourry hurricane hurricane approaches florida. brexit talks zero in on a fix. u.s. threatens to a $2 trillionfrom marketplace. >> less than half an hour away from european cash trade. let's take a look at where futures are going. no change on dax futures. at treasuries. the three-day chart.

a flat line because of the celebration of christopher columbus, discovering our great continent. touching a seven-year high. giving up some of the what do you see? >> you are controversial. the function that shows the moves in the marketplace. korean, caution. picture, a slight move to the upside. chinese stocks rallying. currency market, the pound is higher. it surged on reports of a deal as early as monday. reportsmind, there is

suggest changes in the labor side. the south african rand in focus for us because of the change in the finance minister. let's switch things up. the italian bond yields story, very much at the heart of things. higher.r yield going india and south africa featured on this radar. conflicting the forces pointing the oil forces around. president trump complaining about hyatt oil prices. hoping to sustain some strength in the oil prices. impact in the an gulf of mexico. let's talk about what is going on. stocks, shaking off some of the recent trade related malaise. some of those markets recovered into the close. yield on treasuries may be

helping. came back down from a seven-year high. imf has warned investors may be ignoring the risk conditions could tighten sharply. new york fed president john will you him's said the central bank pays close attention to how the policy moves impact the rest of the world. developmentsnal affect the u.s. economy and our policy engine -- actions affect the rest of the world. devote efforts to monitoring developments around the world to understand how our actions affect the global economy. >> that was the new york fed president speaking at the meetings in bali, indonesia. the bank was criticized as well.

singapore, the bloomberg strategist. let me get you to weigh in on this. the fed pays attention to things going on around the world. they ared of the day, only making policy for the u.s., right? they only care about what is happening in the rest of the world. that weighs on the u.s. economy. that kills a lot of the consumer-based goods. affects the dynamics of the u.s. economy. i don't think there are suddenly going to worry because there is trouble in indonesia. i wouldn't get too worried by this. i don't think we are going to see changes because of this. >> moving on to another subject.

the fed, i know you want to talk about the question of the day. by comments from italy. one of the deputy prime minister's, speaking about the budget, saying it will not change. sure theng he is spread will not reach 400. believe italy is one of the biggest risks for s at the moment. this is an unprecedented debt situation. we have never had a country with such a large debt pile. it is completely unique. at the moment, while it is theoretically a rescue of a situation, their deficit is not too crazy. it is too large of a debt market. the eu and italy, conveying positivity. showing coordination to make it sustainable.

whate moment, that is not we are getting to read italian bond situation remains critical. there is a severe risk of this spirals out of control. would know whether we are entering a debt crisis or italy has backtracked a bit. >> i want to get to the question of the day. aspect of your blog, you put out each day one question and then you collate the answers you get from the biggest figures in the market. tenuredtion is, will treasury yields finish above or below 3.25%? the best thing you put on your blog was to quote line overachieved in the actual chart you used, dancing on the ceiling. cpi and blue. the treasury yield in white,

coming off a little bit. what kind of answers have you gotten? >> this view, very polarized. one of the things that is very emotional. there are people that come in. bears,ople are permanent isvinced the equity market only just around the corner from collapsing. you have this polarized market. are the most emotional. from my point of view, if you had asked me this question 2-3 weeks ago, i would have been adamant treasury yields have been below 3.25%. inflation actually moderated in august. there has been a change in the last couple of weeks.

is driving all commodity markets higher. that is providing a chance for an inflation spike. this can go a little further. to me, that is in play. we could be higher. >> let's get your thoughts on what is going on with the pound. yesterday, talk of a deal by monday. rebels on the labor bench. the government plan for brexit. one your colleagues making the point, a labor boost is not the same as a eu deal. the> the support from labour party does provide some support on the home front. it is the negotiations that are more important.

it doesn't matter if there is no deal to agree to. it is a response that is much more important. this is quite a critical date. signifyignals we get whether we are likely to get a deal. we are going to get a clear sign in the next 48 hours there will or this istion deal getting careless and we are getting chances of a no deal brexit. is we are heading toward a deal. that is why we have this upward momentum in sterling. >> thank you. bloomberg and live strategist. on theorget to join in question of the day. are they going to go above three

point 25% or below by the end of the year? you can just write into the blogs. give them your answer. they may use it see could become world famous. let's go to first word news. we go to juliette saly. donald trump has said he is considering deana powell to replace nikki haley. he told reporters he is considering five people for the job including powell. the u.s.dent said ambassador to germany is not among them. the imf has warned investors may be ignoring the risks the financial conditions could sharpen tightly. risksn said short-term have increased quite modestly while interest rates remain low by historical standards and

financial conditions are still supporting growth. a major u.s. telecom company has discovered manipulated hardware and a super micro computer -- supermicro computer and its network. it follows a bloomberg businessweek report that detailed how the chinese intelligence services ordered subcontractors to plant malicious chips over a two-year time, ending in 2015. a former personal assistant has killed himself on the afternoon he was to plead guilty. the new york city police said he jumped from his room on the 33rd aroundn east 76th street two: 30 p.m.. that is when he was scheduled to plead guilty to intersect

transportation of stolen property in connection with the theft. news, powered by more than 37 journalists and analysts. this is bloomberg. >> thank you. the price is right. after rejecting an offer last month as too low, could we see a deal? this is bloomberg.

good morning, everybody. we are 14 minutes away from the cash equities trade this morning. in hong kong, tencent suffering its longest losing streak since its ipo. following -- falling below 290 hong kong dollars. let's do the bloomberg business flash with juliette saly. ackman was shorting china's currency. now he is going long on coffee drinkers. revealing a stake of about 1.1% it isrbucks, he thinks the single largest growth opportunity which could help the underperforming shares double.

take ak in talks to majority stake in we work. according to bloomberg sources, is japanese conglomerate likely to invest several billion dollars on top of the money softbank put in last year. in june, the vision fund chief wework was seeking to raise more funds. the amazon cloud competing division has signed new deals worth a combined $1 billion. the contracts are worth $500 million over five years. representactions existing partnerships. all three come it is declined to comment. that is your bloomberg business flash. anna: thank you very much. manus: you can take this.

i think it is only fitting. ok, this is my fold, i appreciate that. nearing a sale. thatwould have said better. the two parties have reached a tentative agreement on price and may announce a deal this month. joining us now, the senior reporter in milan. you can say it better than i can. what is the latest, what do we know about this deal? we know a deal might be closed. they are discussing the final details of the sale which will be quite iconic. they will mark the first decision by the ceo. related to m&a.

they started when fiat was a spinoff. now they are going to the sale. it is a big check. that means they can increase their cash position by about 5 billion euros. this will eventually open the way to a dividend. it is a test for the leadership of the new ceo. announced asbe early as six months. me, it is a bit of a sad affair. their clocks. i feel like it is a nostalgic

thing, i want to see it in italian hands. let's talk about the more important story. chrysler is still as bmw. those french guys, the eu looking at even tougher emissions rules. there is some real trouble brewing on the emissions front. absolutely. themarket was shocked with big fall in europe after the rules. now they are considering reducing emissions by 35%.

if a mission, the rules would be tougher, that means every carmaker must speed up production. this means massive investments, new networks. a real change of the auto industry. have been considering a vespa. prg oh says they will sell them. agio says they will sell vespa's. these are fascinating discussions and we could go on forever. bloomberg's senior reporter in milan. minutes away from the open. we are going to look at the stocks to watch.

earnings for the luxury goods maker, this is bloomberg. loomberg.

anna: welcome back, this is bloomberg markets. the european open and it is just six minutes away. let's look at the stocks we are watching. she is in paris. from a equity team, covering

things. others connected to that story. let's come to you. what is the story? growth is theving chinese shoppers. for two accounting thirds of the growth. we had a good confirmation, throughout the third quarter, growth continues to power ahead. they beat expectations for fashion and leather goods. >> briefly, >> i am watching the automotive sector. two things happening. the government decided to put tougher emission regulations on cars. reducing co2 emissions.

have an automotive supplier downgraded. we will watch all of those, thank you very much for that. this is bloomberg. ♪ guy: less than a minute away

from the european open. let's see what is going on more broadly. this is euro-dollar, where we trade 1.15 on the nose. the oil price in focus, trump saying he wants prices lower, and hurricane michael rapidly approaching. category 4. the nikkei index is a little bit stronger, kind of treading water. they are playing catch-up. the pound, eye on searching after yesterday's

reports that we could see some brazen progress. we will see who might rebel on the brexit vote. let's have a look at the future. this is how we are positioned. we are expected to be fairly flat on these markets. let's open up and have a look at where we start the trading day. making a small move to the upside as we get trading underway. they picture, looking for more thesetary out of the imf governors are meeting over in central india. yieldswatching treasury and keeping an eye on what is going on in insurance as hurricane michael builds in momentum. does that mean the hurricane , somethingot over that could weigh on insurance companies. the ibex is moving slower and we ylds.

little bit,lding a not back up at levels we saw, certainly building momentum. we are looking to be opening a little bit weaker across european equity markets. matt, what do you see? matt: i thought hurricane season was over. take a look at the map. you will see red across the board with the exception of energy. energy seems to be doing much better. consumer discretionary is doing a little bit better, considering the news we are following. but you can see it turning red as the session goes on. health care and financials are doing the worst and you have ,aterials and consumer staples one of the big drags yesterday. what do you see as far as the individual names? anna: let's have a look at what is going on. the biggest gainer looks like

the swedish buyer, which operates a biotech company. that is the biggest gainer. that is one of the moves moving to the upside. got the energy space moving higher. one of the losers this morning, we talked about that already. elsewhere, some italian names. there.ao paulo is in so a number of italian names. i don't see any european insurers falling, but we will keep an eye on that, hurricane michael is building momentum. another stock we are watching on the move. we will get more details on that in the morning. markets opening lower this morning after asian stocks were mixed.

they actually rose into the close, but the only gains can aex and are on the slight change of the dax. treasury yields retreating from a seven-year high, and the imf has warned that investors may be ignoring the risk that financial conditions could tighten sharply. that would be interesting. joining us on set is the senior investment manager. let me start with that question. are you concerned about financial conditions tightening quickly? >> quickly, no. we will see a gradual tightening that the fed has the put in place. i don't see that we have a shock coming, but the pressure has been building for other problems. the amount of debt in the world

is massive, as you know. goingsee where the ims is , but it is not time to set them racing and worry about a shock to the markets. anna: we will bring you in before christmas if that happens. let's go through our questions of the day. they have been asking this, and we will get your view. one of the things that could, some argue, create turmoil is if we see a very speedy regrading of treasury yields. so will be 10 year finish above or below? far from all that where we are. what are your thoughts on where we go? >> they would have to close on the 31st over that? range.ecast is a 3.5, so a very good

chance we end up over 3.5 -- 3.25 basis points. little bit of inflation coming through, the wages coming through. some strong growth, it is still there. we might see some slowing at the back end of next year. year, very good chance over 3.25, 3.5 is my target. matt: how does that affect the investment world for you anna: what decisions do you make across asset classes? it pushes up yields and makes things more attractive in places like you merging it and sovereigns. the dollar stays on the strong side. but the yields are now getting attractive. and the front end of the u.s. treasury curve is going to get increasingly interesting. that could get over 3% by the end of the year.

some of thenges dynamics around things like investment-grade credit. youou are getting 3%, are going to go chase credit at a 4%? i think people will be asking those questions. anna: tell me what you are doing in particular, banks looking interesting. how do you link together these higher yields? >> the lowest part of the capital stack. it is the most equity like instrument we can find. it actually protects us a bit from those rising yields. you have got 6% or 7%. anna: so you prefer buying stocks? >> absolutely. that has been the case since that market opened up. but at the moment, we are at event risk. people are caught up in turkey and have concerns.

and they have a really strong capital base. spain is doing well. i think that makes 81 bb eight very interesting. so are you finding opportunities where others have priced in two much risk? >> absolutely. that is a clear sign of volatility performing. we have talked about how managers love volatility. just looking at those stocks, when they get really cheap, and we are keeping a close eye at the moment with all of the money laundering in estonia. the potential outcomes could be interesting. down, down has been $.70 on the euro. and that is an interesting level. anna: danske bank. but if the u.s. authorities are

probing, is that something upon which your decision will depend? and how much impact that has on their business model. >> to be clear, we are there already, it is just if we have more. but it does the that exactly. but our analysis of how much pain they can take built in quite a lot of pain before he start threatening things like a coupon. that seems a long way off. matt: you will stick with us, we have a lot more to talk about. an exciting market today. luke will help guide us through them. up next, we bring you the stocks on the move including rolls-royce. this is fascinating. the u.s. is threatening to block great britain from a 46 nation public procurement agreement as a result of brexit. we talk about that next. this is bloomberg. ♪

anna: welcome back, we are 11 minutes into your trading day. let's get your top stock stories. anna marie has been picking through some of the biggest stories. let's start with rolls-royce, one of the companies that may lose access to the 46 nation public procurement agreement, shutting

them out of a $2 trillion marketplace. because officials say the u.s. is threatening to block them. they have been told their application is outdated. lvmh to the downside, the biggest loser along with caring. we have not seen luxury this , we did have third-quarter organic sales up 10%. one analyst saying it is a reassuring set of results. china is where people are watching. be holdingseems to for louis vuitton handbags and the your makeup -- dior makeup. we have seen brent higher, but it was upgraded. anna, matt. matt: thank you very much.

can a new finance minister save south africa? the rand again the most in two weeks after a new central bank governor was appointed as the finance minister. weeks before awo budget update and faces steep challenges, including convincing investors that the government can't curve debt and root out -- can curb debt and root out corruption. in baliat a meeting about whether the appointment will be enough to reassure investors. in, you are coming getting a minister who was in creating the macroeconomic architecture of south africa. and not from only where we were in the central bank, he was in the front lines of formulating

the inflation targeting regime. >> now that he is in this -- seat, whate impact can you have? >> where we are sitting, we are responsible for monetary policy and the constitution of the republic says that we must conduct monetary policy independently. but there will be regular consultation with the south african reserve bank and the finance minister. we have somebody who has run the central bank for 10 years and three months and we are looking forward to it. >> this has been an issue lately, central bank independence. and i have to say, the united states has the same thing. they meet often, so it is, to have a relationship -- common to

have a relationship. but are you concerned that the finance minister -- you assume that he is also a set -- firm supporter. >> i do not have to make that assumption. he is an advocate. and i would expect him to continue on that trend and to defend and protect the independence of the south african bank. that was the south african reserve bank governor speaking to bloomberg at the imf meeting in bali. emerging-market equities are flashing a by sign. that is according to research affiliates and divisors to money managers, including pimco, which is diving up productions it made back in 2016 went called emerging markets the trade of the decade.

we will dive into some specifics in a moment. emerging markets, trade of the decade? >> from a debt perspective, they tend to be pretty volatile. if you hold them for a decade, you will be pretty happy. you will go through a volatile ride in the meantime. it is still one of the highest yielding asset classes for the quality that you get. , 6.7 or 7%,t today for some decent quality sovereign paper, that is good value. matt: people are concerned. the hedging costs seem to be a bigger concern for the equities rather than the debt. how do you deal with that? firm, we dot of the have local currency debt. that tends to be in funds which are based in those countries.

we have got big operations in china and singapore, all of which are looking at local currency debt. you do have a hedging costs problem. they take the fx risk as well. as you say, it is a hard currency decision and hedging the dollar is cheap. specifically around emerging markets, you have gone longer lira. why do you have an appetite for that? >> the lira has been beaten up. me, a lovely things that drove the lira down are starting to pass. you have got the trial on friday, so that they can get release from house arrest. that is what caused the sanctions from the united states in the first place. they are starting to realize what they need to do to control the rampant inflation. perhaps not the best policy to do it, to persuade policy to cut

prices from now until the end of the year is a strange policy, but they are starting to get what they need. levelthink it is at an on -- odd level. matt: it is interesting that that was the start of it all. the start of the real catastrophe for the lira. are you concerned that to show be a kishobe could concern? >> yeah, that has started to go on. a strange situation. not something i have in-depth knowledge of but it is not really a turkish from. for turkey, the relationship with your is considerably more important. anna: thank you very much. luke stays with us.

let's check out what is going on in the markets. european equity markets, they are pretty flat. the ftse 100 is down. the big markets are down. the stoxx 600 is quite flat. are ofhe biggest fall the majors, down by 3/10 of 1%. we talk more about that when we come back. this is bloomberg. ♪

matt: welcome back, this is the european open. the $74 ading above barrel on concerns that hurricane michael will exacerbate a supply crunch. the weather system is set to make landfall in florida today. you can see from this function i , and by the way, you can work on it with the this is hurricane michael, a category four storm. see these other storms, leslie, nadine, and sergio. meanwhile, the iea has warned that rising prices may put the world economy at risk. the international energy agency. still with us is our guest. i want to get your take on oil.

wti is $75 a barrel. we are looking at $84 in change for brent. how does that change your world? >> we like it in general. we could go a little higher. we like the pipeline in the u.s., the pipelines in australia. we like some of the oil services as well. from an inflation perspective, there is clear linkage. yes it has made slow growth, but it is not now. and in the meantime, the u.s. 10 year has been following brent quite closely. we use your gtd function quite a lot in the morning. and we have been discussing this chart all week. anna: excellent, let's bring it up in. g tv is the function to go to. talk us through what you see here about the interconnection between the two.

oil prices going higher, has a inflationary impact. given that yields are going as high as 3.5%, does that suggest there is an upside? i don't think we will be looking at 1.10 or 1.2, but maybe into the 90's. or into the late 80's on brent and early 80's for wti, quite easily. the supply crunch is high and demand is still strong. going into the winter months, seasonally, the driving season kicks off. and fuel use will go up across the country. matt: what is your view on copper? there has been so much concern about the chinese economy, especially domestically, and get copper is on the run. >> it is certainly correct this year. we are close to 20% off.

it has rallied a bit. i think copper is an interesting metal. we think there is a chance for a continued recovery, but it does depend on china stabilizing its economy. we have seen a second triple arc up from china in these past few days. i think that could just stave off further declines. the type of growth clearly matters. but belt and road will also soak up an awful lot. i think the future for copper is pretty good. i think we could get to a balanced supply and demand pattern by the middle of next year. anna: long on glencore, why that way? >> partly because it is cheap. it corrected a viciously when copper went down so badly. people wereber, getting very worried around $200. that was a key level.

in the meantime, they have changed their exposure significantly. not as exposed to the downside, but any recovery is very good. in the meantime, it is a stable credit. and yougo and do this can pick up another 30 or 40 basis points. way, if that is the way you play copper, how do you play oil? >> for us, it is about the oil services business. like the pipelines over in australia, etp in the united states. -- meg exposed to make before the takeover. there are plenty of companies on the peripheral of oil that make good margins and some a volume goes up and demand improves. forget, that is great. great.debt, that is

anna: thanks. we continue our conversation. this is bloomberg. ♪

matt: we are 30 minutes in, let's look at your top headlines. dipped from as seven-year high after donald trump repeats his view that the fed does not need to hike. bond rally in germany but the selloff in italy continues. jobs from ail four-year peaked as the u.s. president attacks rising prices. wti stabilizes just below $75 a barrel as a category four hurricane approaches. brexit talks zero in on a mean-term fix that could the u.k. stays with in the customs regime.

this as the u.s. threatens to block britain from a $2 trillion market. good morning, and welcome. i am matt miller miller in berlin alongside anna edwards in london. anna: good morning. let's look at what is going on in the stoxx 600. this tells you the biggest movers on the stoxx 600. if u.k. names dominating the list. if you reference is in there as well. let's move to the downside, we see more of a pattern. luxury is one of the patterns i want to mention. you've got these brands moving lower, all of that in connection with lvmh. point 8% weaker on of that, at first glance, look decent. our colleagues are suggesting that some of the divisions may have missed, and that was not

seen positively by markets. that might be something more of a beat or more reassuring. we talked about the stocks to watch, that stock is down by 3.4%. that seems and valves, according to my bloomberg page. let's get to first word news. >> thanks, anna. are peter hisas criticism that the federal reserve is moving too fast. he also dismissed concerns about inflation, extending his round of criticism that bankers have disregarded as they push ahead. not a view shared by the dallas fed president. >> there is no question, cyclical pressures and inflationary pressures are building. is themean by cyclical

tight labor market, the tariffs, steel, aluminum. oil prices being higher. a major u.s. telecoms company has discovered manipulated hardware from microcomputers in its network and removed it in august. that is according to security experts who provided documents, analysis, and other evidence. it follows a bloomberg businessweek that details how china's intelligence services had ordered subcontractors to plant malicious chips in circuit motherboards over a two-year period. in the united states, the hurricane center has said michael has become a dangerous category four hurricane. residents had argued been urged to evacuate before the storm picked onshore. ,he fast-moving weather system which could cause $15 billion worth of damage, has already cut

gulf of mexico oil production by 40% and natural gas output by 28%. storm warnings have now been issued for the atlantic coast, as far north as the carolinas. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna, matt. matt: thank you very much. bond'sheck in on italian and see how they are trading. we saw the 10 year italy-germany spread widen out as the italian yields went up 3.5%. we still see it at 3.6% and the 3%, so a rede than arrow on the yield, but actually, it is gaining. we do that, because when the price goes down, the yield goes up.

our guest is still with us. luke, what is your take? our strategist thinks that this is really one of the risks. pricing at this level is not pricing in italy crashing out. it is not pricing in real structural problems, but we are getting towards those levels. get toward that spread, i think then it is looking like , that011, if you remember is what we were really concerned about italy crashing out. that pressure is building. i have got one rule on italy, do not buy it. anna: we will remember your wonderful. we just got a great on china -- break on china. they have an expansion of their rules, to expand the list of

financial institutions that are too big to fail. this is back to talking. bank of china, proposing a short list of over 60 banks, insurers, and brokerages as systemically important. they will then a narrow that list down and be subject to supplementary capital requirements. it is systemically important. let's come back to you on the pickup. one rule in italy, do not buy it. that is your conclusion. looking ahead at the elections, this is interesting. . they are saying they will get more support from brussels after that. in flux,russels is there will be more populist pressure in brussels by the.

is that a view you can invest around? >> it puts you off even more. if we go even more populist, it could mean that italy gets away. levelearly, 2.4 is at a they will not say. it is a problem, and a bigger and bigger problem. i would like to see an election in italy before i get involved again. until that happens, i find it hard to find a level that will be there for any length of time. what is the worst that could happen? perspective,'s three and a half percent yield is pretty juicy. and you will always have brussels, berlin, frankfurt.

they will not let anything horrible happen. or 5% is not4.5 pleasant if you are already in at three. that is my issue. the trust the market had on italy is gone. people got a little bit happier with it again. we had another weekend where selby the blue things up. blew things up. very italian. but the trust we have that we can get an outcome that is investable is gone. anna: if there is a transition elections lead to populist forces, does this put other parts of europe on the radar? will we see other pressures being put in place? be, will thatto

be the path of travel? >> we will be dusting off the playbook back from what we call the pigs way that. the first letter is portugal. it has gone very quiet, they are massively supported by qe. that stops now. and if we get it is populist selections in may and they think, maybe austerity can be got back, which would be a disaster, that is a risk as well. italy is not the issue here, for sure. thanks for joining us this morning. there's so much to follow that it is great to get your take. by the way, luke is going to be joining us on the radio as well. if you want to catch more of his advice, go ahead and type in radio on your bloomberg terminal. or tune in on london radio.

of course, there are various other ways to access the content. next, we will bring you some of the stock movers this morning , including vat group, which has dropped the most since its ipo. you can see the stocks have been literally decimated. this is bloomberg. ♪

anna: welcome back. let's have a look at the movements. annamarie: luxury has been under pressure. mark claire down 5%. we have had some reassuring rates. but morgan stanley cut its luxury section to underweight from neutral from a top-down perspective. we do see that across the board. luxury group down more than 10% to break, the shares fell more than a bears drop. one analyst is saying that their decision to introduce short time work schemes confirms weakness in the semi conductor market. 7, up more than 2%. they were awarded a sizable contract, for them, sizable is somewhere between 150 million dollars and $100 million.

matt: thank you for that. looking at some of the big movers. the imf has warned that investors are underestimating the risk of a shock. finance ministers and central bankers gather in bali for the organization's annual meeting, and the imf has warned against increasel increase -- led by the u.s.. >> the confidence of global governance and global mechanisms of how a dispute should be settled is a really huge. and i do not think we can estimate that at this moment here. >> people tend to divert their trade to malaysia or two other regions. >> provider countries manage the policies they had those buffers. they should be able to ride this

out. but no question, this will be a volatile journey. it will be for another 12 or 18 months. matt: this, as bloomberg sources say the united states may block britain from a 46 nation of public pyramid act. ct.procurement packed -- pa the reason for that is not protectionism, but what the u.k. voted for, brexit joining us now is bloomberg's government editor in london. stewart, it could be argued as to why the u.s. would do this they are saying the application does not look great, but it all sounds from brexit, does it not? stewart: yes, it does. and the fact that britain's status is changing as of march. britain would argue that, having been a member of this grouping, that it is already compliant and

its change of status should not be something that prevents its participation, but obviously, those are discussions that need to happen. anna: this ties in with the brexit falling. the links between leaving and what happens to other international relationships. but in terms of brexit, give us an update on where we are. do we have to start increasingly talking less about no deal. it seemed like tail risks were rising heard -- rising. think the mood music has changed somewhat since a month ago when people were on high alert. stillwould say that it is , the officials are warning there is a lot to be done. having said that, there is a lot more optimism around the talks. sides say theyth are in an intensive phase ahead of the summit.

werefore, perhaps on monday, will get a greater sense of what is to come. what are the remaining hurdles? can the u.k. just update and get through? or are they really focused on brexit more than this procurement program? stewart: from the u.k. side, they will feel that, although it is obviously a huge issue for who participate and sell services. but they would also argue that the u.k. itself is a big market and companies from overseas wants access to have government contracts. therefore, these are discussions that need to happen. but if they are not necessarily going to be assuming that this is a done deal. and that the discussions can

resolve. anna: thank you very much for your thoughts. it continues to rise in yesterday's session. let's have a look at our stock of the hour. for that, we go to luxury. i pulled up the lvmh dashboard. we have got that on one side, just a quick look at where we are. first off, down by 4%. just over 4%. this is interesting, because some of become enteric we had is that the numbers have been decent. lvmh is setting luxury goods standards, that was the conclusion of our colleagues. luxury shoppers, we are not finished, another headline. while these numbers, on some level, seem to be estimates or come in line with estimates, talk about sales growth or organic sales growth. the summaries are not good

enough. talk to deborah aikins, senior luxury goods analyst for bloomberg intelligence. deborah, good morning. talk us through what we have seen very how solid is this 10% organic sales growth. --? give us your thoughts on that. it is a solid throughout and highlights some of the key areas. wines and spirits, 14% growth in those categories, also perfume and cosmetics is very strong. it is standalone, the first to report, but more than double the market growth rate, so we are seeing solid and continuing. the shares fell today. is there some kind of concern out there? deborah: we had a call this

afternoon. one of the things that was not included was the regional split. it includes the specialty retail. from behind number the scenes. 22% growth of money into hong kong, 6% into singapore. there may be concerned that the chinese are not traveling, but the numbers he have are strong, so we are waiting for regional breakdown. anna: when we look across, we have got the price going lower and then some similar moves lower in the luxury space. because the luxury goods sector downgrade at morgan stanley? they have taken it from underweight from a top-down perspective. the preference of value stocks

over growth stocks at a time when the eps and sales are slowing. this is something else in the mix. deborah: what we need to take into account is 2017, some companies were extremely strong. into results season in a week and a half, it will be up against 49% growth, comparable for the gucci brand. we really need to take that into account. but the downgrades we have seen on montclair it has been one of the best performances. we know we have got the u.s.-chinese trade sanctions, but when we talk about the heritage companies, most of them produced in france or italy, ecb's is very strong and withhold our view -- that seems a very strong and we withhold our view that how this strikes millennials. matt: all right, fascinating.

montclair is still a thing. debra aikins, luxury goods analyst for bloomberg intelligence. an interesting story, and we will continue to follow that. you can follow all of the information. you can also get all of the charts that we use if you type gtb -- g tv. recent charts, catch up on key analysis and save charts for future reference. this is bloomberg. ♪

matt: welcome back, this is the european open. we are 55 minutes into the trading day. we got some interesting news on china, the country is planning a major expansion of its too big to fail rules. will increase the number of companies that it deems to be systemically important to financial institutions. the concern is that if a country is doing this, are they a girding for financial or economic downturn? finance inloomberg's china leader. what are they trying to achieve? >> it is part of the countries ongoing effort to be risk the financial system.

i'm sure you have read stories about how the desk parlay is growing. how there are systemic issues in the country, the trade war. it does not seem to be slowing down. and regulators have been focusing on the shadow banking sector primarily. but this is also a sign that they are looking at the traditional financial sector, the banks, the insurance companies. right now, our understanding is that we do not have a public list of these systemically important in two she -- institutions. at they are drawing up shortlist of at least 50 they will look at and judge. they will see which ones will be designated as cities. anna:anna: so we could see that list expand? 50 is where they start from right now. thank you very much. now, bloomberg's head of china finance in hong kong.

that is it for the european open. general willpector join us for an exclusive interview at 11:00 u.k. time. this is bloomberg. ♪

francine: the ims warns against complacency calling u.s. stock valuations stretched. brexit stopgaps, talks zero in on short-term fixes that could mean they stay within the customs regime. this, as they threaten to block britain. and china is still shopping. demand is strong, but shares fall as it's so for divison -- it's sephora lads. -- lags. ♪ francine: