Brazil Election: Bolsonaro Pushes Lula to Brink as Markets Set to Rally

>> LIVE FROM BRUSSELS, THIS IS BLOOMBERG DAYBREAK: EUROPE." AND STEPHEN CARROLL WITH YOUR TOP STORIES. THE EURO SLUMPS TO A 17 MONTH LOW AS CONCERNS GROW OVER POLITICAL AND FISCAL RISKS, BUT GLOBAL STOCKS POWER AHEAD AS U.S. JOBS DATA LANDS IN THE GOLDILOCKS ZONE, USING BETS ON FED RATE HIKES. YEMEN'S SAUDI BACK MILITARY IT LAUNCHES A FULL-SCALE OPERATION TO PUSH HOUTHI FIGHTERS AWAY FROM THE RED SEA COAST. PLUS, LULA LOSES IN BRAZIL. BOBBIO BAR BOLSONARO SURGES TO A LEAD. A VERY GOOD MORNING TO YOU. LET'S CHECK IN ON THE KEY MARKET NEWS WE ARE WATCHING FOR YOU. WE HAVE A QUIETER DAY WITH CHINESE AND SOUTH KOREAN MARKETS CLOSED. BUT THE NIKKEI MOVING AHEAD, POWERED BY TECH SECT MEANT -- TAX SENTIMENT. NASDAQ FUTURES LOOKING PRETTY FLAT AFTER THE RECORD FINISH FOR THAT INDEX ON FRIDAY. IF WE TAKE A LOOK AT THE OTHER ASSETS, OIL PRICES TRADING A LITTLE BIT LOWER AFTER WE HAD NEWS OF SAUDI ARABIA CUTTING PRICES FOR SAUDI ARABIA. SOME OF THOSE HEADLINES WE ARE HEARING FROM YEMEN. EUROPE THE KEY FOCUS FOR MARGINS AS WE GO INTO THIS MONDAY MORNING. THE SHARP DROP, THE LOWEST SINCE MAY 2025. WE HAVE SEEN A MODEST EASING OF YIELDS FOR U.S. TREASURIES. THE 10 YEAR YIELDS GOING TODAY AT 5.26 FOR YOU THIS MORNING. THE KEY RISK EVENTS FOR THIS WEEK, WE GET THE MINUTES ON WEDNESDAY FROM THE FED, THURSDAY FROM THE ECB. INSIGHTS INTO THEIR RATE HIKES. WHAT WILL THAT TELL US ABOUT WHERE CENTRAL BANKS ARE GOING NEXT? THAT IS ALL TO COME. LET'S GET YOU SET UP FOR THE DAY AHEAD. A REPRIEVE FOR BOND MARKETS AFTER FRIDAY'S U.S. JOBS REPORT CAME AND COOLER THAN EXPECTED. BUT THE EURO IS STARTING THE WEEK AT A 17 MONTH LOW. LET'S BRING AN MARK CRANFIELD FOR MORE ON THIS. TALK US THROUGH WHAT IS DRIVING THE WEAKNESS IN THE EURO TODAY. MARK: VERY UNUSUAL SITUATION IN ASIA ON MONDAY MORNING. EURO IS USUALLY ON THE SIDELINES. NOT A MAJOR ASSET CLASS. THE EURO IS GETTING SLAMMED, AND IT IS NOT JUST AGAINST THE EURO. IT IS AGAINST THE YEN, SWISS FRANC, THE POUND. THAT IS A BIG WARNING SIGNAL THAT PEOPLE ARE GETTING OUT OF THE EURO AND EURO ASSETS, WHICH SETS UP A PRETTY DIFFICULT DAY FOR THE EUROPEAN BOND MARKET TODAY ONCE THE CASH MARKETS OPEN. THERE IS A LITTLE BIT OF WEAKNESS IN THE FRENCH BOND FUTURES BUT VOLUMES ARE LOW. BOND FUTURES GETTING A BIT. THAT SUGGESTS THE SPREAD BETWEEN FRANCE AND GERMANY WILL WIDEN. THAT IS WHAT PEOPLE WILL BE WATCHING PRETTY CLOSELY. IT IS DEFINITELY A SIGN THAT PEOPLE ARE VERY ANGST HE, VERY NERVOUS ABOUT WHAT IS GOING ON. THE POLITICAL RISK IS SPREADING ACROSS THE CONTINENT. IT IS NOT JUST FRANCE. PEOPLE PLAYING VERY DEFENSIVE. BIG MOVE IN A EURO-YEN, WHICH IS CAUSING SPECULATION THAT EUROPE IS REPATRIATING BACK TO JAPAN. JAPAN WAS THOUGHT TO BE ONE OF THE LARGEST HOLDERS OF FRENCH BONDS. MORE RISK TO THE MARKET. WHICHEVER WAY YOU LOOK, IT IS SHAPING UP TO BE A VERY NEGATIVE DAY FOR EUROPEAN ASSETS. BY THE TIME CASH EQUITY TRADING GETS GOING, IT WILL PROBABLY SPILL ACROSS THE MARKETS. BUT EVERYTHING FOR THE MOMENT IS FOCUSED ON THE FOREIGN EXCHANGE SPACE. STEPHEN: WE ARE WATCHING TO SEE IF THE EURO WILL REACH THAT 11 0.65 LOW. LOOKING AT THAT PICTURE FOR THE FEDERAL RESERVE AFTER THE JOB REPORT, THE RATE BEING DIALED BACK AFTER THAT. WILL WEDNESDAY'S MINUTES HELP CHART THE PATH AHEAD FOR THE FED? MARK: TO SOME EXTENT, IT IS A LITTLE BACKWARD LOOKING. SINCE THAT HAPPENED, THERE UP AND FED SPEAKERS, A JOBS REPORT SOFTER THAN EXPECTED. A LOT MORE DEPENDS ON THE CPI REPORT NEXT WEEK IN TERMS OF WHAT IT MEANS FOR THE UPCOMING FED MEETINGS. THE MINUTES MAY GIVE US A LITTLE MORE DETAIL, BUT WE ARE HEARING MORE MIXED SIGNALS FROM THE FED SPEAKERS THE NEXT FEW DAYS. THERE WILL BE MORE OF THOSE COMING UP TODAY AS WELL. TRADERS ARE INTERESTED IN WHAT THEY HAVE TO SAY LOOKING AT THAT DATA. THE SITUATION FOR NOW IS NOBODY REALLY EXPECTS OCTOBER TO BE LIVE IN TERMS OF A FED RATE HIKE, BUT DECEMBER IS VERY MUCH ON THE CARDS. THE MINUTES PROBABLY ARE NOT GOING TO GIVE US TOO MUCH GUIDANCE FROM THAT POINT OF VIEW. THERE COULD BE SOME INSIGHT OR SITUATION IN WHICH TRADERS WILL BE INTERESTED. BUT WHAT THAT INFLATION REPORT WILL LOOK LIKE, THAT IS THE SWING FACTOR. THAT PROBABLY TELLS US MORE ABOUT WHETHER WE GET ONE MORE RATE HIKE BEFORE THE END OF THE YEAR AND WHETHER THERE IS A CHANCE FOR RATE HIKES EARLY 2027. STEPHEN: AND THE NEXT DECISION FEELS LIKE A POTENTIALLY LONG WAY AWAY. MARK CRANFIELD, THANK YOU VERY MUCH. I WANT TO BRING YOU SOME BREAKING NEWS. SCHNEIDER IS TO ACQUIRE PTC, THE SOFTWARE ENGINEERING DEVELOPER BASED IN THE U.S.. AT $ 205 A SHARE. WE ARE LOOKING AT A VALUE OF $23.7 BILLION FOR PTC UNDER THIS DEAL AS WELL. THAT IS THE LATEST ACQUISITION NEWS FROM'S SCHNEIDER THIS MORNING. VERY INTERESTING FROM THE AI INFRASTRUCTURE POINT OF VIEW AS WELL. STOCKS IN ASIA ARE GAINING TODAY, BOOSTED BY A RALLY IN TECH SHARES. LET'S GET AN UPDATE FROM WINNIE HSU IN HONG KONG. GOOD MORNING. WINNIE: WE ARE SEEING ASIAN STOCKS PRETTY POSITIVE TODAY, GIVEN INVESTORS ARE WALKING BACK THEIR BETS FOR THE FEDERAL RESERVE'S RATE HIKES AFTER SOFTER NUMBERS FROM THE U.S. JOBS DATA. WHEN IT COMES TO THE GAINS IN ASIA, WE ARE SEEING THE TECH HEAVY GAUGES IN JAPAN, TAIWAN UP BY MORE THAN 2%, WITH SOUTH KOREA ON HOLIDAY. WHEN IT COMES TO TAIWANESE MARKET, WE ARE WATCHING OUT FOR THAT 50,000 KEY LEVEL AS TAIWANESE STOCKS CONTINUE TO REFRESH RECORD HIGHS. TODAY, IT IS BEING SUPPORTED BY GAINS IN TSMC, WHICH IS UP 3%. ALSO COMING AS ELON MUSK CONFIRMED TSMC IS IN DISCUSSION WITH TERAFAB IN TERMS OF POTENTIAL COLLABORATION. YOU ARE SEEING STOCKS, ALSO A RECORD HIGH AND HAVING ITS BEST DAY IN ABOUT TWO MONTHS. FLIP THE BOARD, WE TAKE A LOOK AT THE WEAKNESS IN THE REGION, WHICH IS IN SHARES IN HONG KONG. DUE TO THE LACK OF SUPPORT WITH THE SOUTHBOUND FLOW BECAUSE MAINLAND CHINA IS ON A HOLIDAY. SPEAKING OF HOLIDAYS, WE ARE SEEING SUBDUED NUMBERS WHEN IT COMES TO SPENDING AND TRAVEL DURING THE GOLDEN WEEK IN CHINA, AND THAT IS PERHAPS WHY WE ARE SEEING THE RENEE GOOD -- RELATED NAMES, QUITE A BIT OF A DRAG. EV SHARES AND FOCUSED AND UNDER SOME PRESSURE TODAY AFTER MEDIA REPORTS SAYING THE U.K. IS PREPARING FOR TARIFFS ON CHINESE EV'S. FLIP THE BOARD, WE TAKE A LOOK AT AN INTERESTING NAME, AN ETF IN JAPAN, REALLY STRONG TODAY, UP ABOUT 12%. THAT IS TRACKING BRAZILIAN STOCKS. THIS IS COMING AFTER WHAT WE SAW , HOW BOLSONARO TOOK THE LEAD, A VERY SURPRISE LEAD IN BRAZIL. WE ARE EXPECTING A STRONG RALLY WHEN IT COMES TO THE BRAZILIAN MARKET OPEN IN BOTH CURRENCIES AND STOCKS, GIVEN HE IS SEEN AS PRETTY MARKET FRIENDLY AND SUPPORTIVE OF THE FISCAL ADJUSTMENTS. BACK TO YOU, STEPHEN. STEPHEN: THANK YOU VERY MUCH. YEMEN'S MILITARY HAS LAUNCHED A FULL-SCALE OPERATION TO RECAPTURE AREAS UNDER HOUTHI CONTROL. THE WAR PITCHES MANY TRIPS BACK BY SAUDI ARABIA AGAINST HOUTHI FORCES BACKED BY IRAN. IT FOLLOWS AN ESCALATION IN FIGHTING SINCE EARLY SEPTEMBER. THE HOUTHIS CAPTURED STRATEGIC AREAS IN YEMEN'S WEST COAST. LET'S BRING ABEER ABU OMAR FOR MORE. WHY HAS THE DECISION TO STEP UP THE BATTLE AGAINST THE HOUTHIS BEEN TAKEN NOW? ABEER: GOOD MORNING. YOU JUST ALLUDED TO PARTS OF IT. THE HOUTHIS SINCE EARLY SEPTEMBER HAVE BEEN ENGAGED IN THIS PARALLEL WAR THAT IS HAPPENING IN THE MIDST OF THE WIDER WAR BETWEEN THE U.S. AND IRAN. THEY HAVE SEIZED ASSETS THROUGH THE RED SEA. A CRUCIAL WATERWAY SAUDI ARABIA HAS BEEN RESORTING TO IN THE INSTANCE OF THE STRAIT OF HORMUZ BEING SHUTTERED. THE HOUTHIS HAVE MADE PROGRESS. THE GOAL OF THIS OPERATION THAT IS MEANT TO START IN COMING WEEKS IS TO REVERSE THE GAINS THAT THE HOUTHIS HAVE LED IN THE WATERWAY. THIS IS WHAT WE UNDERSTAND. WE DON'T KNOW HOW THE OPERATION WILL TAKE PLACE BUT WE UNDERSTAND IT WILL TAKE HOLD OVER THE COMING FEW WEEKS BY THE SAUDI LED COALITION IN YEMEN. THE BIG QUESTION IS WHETHER THIS WILL BE SUCCESSFUL. THE HOUTHIS AND THE SAUDI LED COALITION HAVE BEEN ENGAGED IN A WAR FOR A GOOD PART OF THE LAST DECADE OR SO. WE ARE OF COURSE MONITORING WHETHER THEIR ATTEMPTS TO BRING BACK THESE ASSETS AND FIGHT THE HOUTHIS ARE INDEED GOING TO REAP SOME SUCCESS. THAT REMAINS TO BE SEEN. THIS IS A DANGEROUS THING HAPPENING IN THE REGION BECAUSE IT IS A PARALLEL FIGHTING THAT IS HAPPENING WHILE THE WAR BETWEEN IRAN AND THE UNITED STATES IS STILL TAKING PLACE. WE'VE HEARD FROM IRANIAN OFFICIALS THAT THEY ARE WILLING TO GO BACK TO DIPLOMACY, BUT ALSO WILLING TO FIGHT. FROM PRESIDENT TRUMP'S SITE, WE HAVE HEARD MORE OF THE SAME. HE CAN SAY THAT IRAN IS ON BED -- IN BAD SHAPE, THE WAR MIGHT END AND IT MIGHT NOT. YOU'RE GETTING SOME OF THE RHETORIC WE HAVE BEEN HEARING FOR THE PAST SEVEN MONTHS. DIFFERENT PARTS OF THE REGION, SO IT IS NOT LOOKING LIKE IT IS VERY POSITIVE IN THE MIDDLE EAST. STEPHEN: MEANWHILE, U.S. BOMBERS HAVE BEEN REDEPLOYED FROM AN AIRBASE IN THE U.K. THAT WAS THE CENTER OF A TERROR PLOT. WHAT DOES THAT MEAN FOR U.S. OPERATIONS IN IRAN? ABEER: THIS IS A DIFFERENT THING THAT ALSO WIDENS THE PARAMETERS -- PARAMETERS OF THE WAR. LET'S TALK ABOUT WHAT HAPPENS. THE U.S. OFFICIALS SAYING THE WITHDRAWAL FROM THE U.S. SPACE -- FROM THE U.K. BASE HAPPENED IN A SWIFT AND URGENT MOTION, SUGGESTING HOW DIRE THE SITUATION IS. THE DEFENSE SECRETARY IN THE UNITED KINGDOM DID MENTION THAT THE ATTACK OR ATTEMPTED ATTACK WAS LINKED TO IRAN. WHAT IS MOST CONCERNING IS YOU ARE SEEING THESE TERRORIST ATTACKS OR ATTEMPTED TERRORIST ATTACKS EMERGE IN DIFFERENT PARTS OF THE WORLD. THE FLY DUBAI INCIDENT THAT HAPPENED LAST WEEK IS ANOTHER THING WE ARE KEEPING AN EYE ON. THE UAE PROSECUTOR DID SAY, AND THIS CAME OUT, THAT THE INCIDENT WAS POSSIBLY A PLANNED TERRORIST ATTACK OR PLOT THAT WAS MADE BY THE COPILOT. BUT SIGNS OF DANGER ALL ACROSS. IT REMAINS TO BE SEEN WHAT THE U.S. DOES WITH IT. THERE ARE SIGNS THAT THE U.S. MIGHT GO BACK TO A FULL-SCALE INTERVENTION IN IRAN. ALL CLEAR FOR THE TIME BEING. STEPHEN: WE WILL WATCH TO SEE HOW THOSE STORIES DEVELOP. ABEER ABU OMAR, THANK YOU. STILL AHEAD, BOND MARKET VOLATILITY IGNITES. WE WILL DISCUSS THAT WITH OUR GUEST AT 6:30, 7:30 IN BRUSSELS. FIRST, SCHNEIDER ELECTRIC'S BIGGEST EVER DEAL. DETAILS ON TODAY'S BREAKING NEWS NEXT. THIS IS BLOOMBERG. ♪ STEPHEN: WELCOME BACK TO "BLOOMBERG DAYBREAK: EUROPE." WE WANT TO TAKE YOU LIVE TO TOKYO WHERE WE ARE WATCHING THE SPEECH BY THE JAPANESE PRIME MINISTER IN THE OPENING SESSION OF PARLIAMENT. TAKAICHI TALKING ABOUT DRAWING UP A FIVE YEAR INVESTMENT PLAN BY THE END OF THIS YEAR FOR THE JAPANESE ECONOMY. THEY AIM TO BOOST CONFIDENCE WITH A DIRECT APPROACH. A SANAE TAKAICHI SAYING THE GOVERNMENT WILL RESPOND NIMBLY IF THE ECONOMY OR MARKETS MOVE UNEXPECTEDLY. SHE IS MAKING THAT ADDRESS AFTER WE HAVE SEEN THOSE MOVES, THE VOLATILITY ON GLOBAL BOND MARKETS. THE JAPANESE YEN RELATIVELY STABLE AGAINST THE U.S. DOLLAR THIS MORNING AS THE JAPANESE PRIME MINISTER IS SPEAKING. LET'S RETURN TO THE BREAKING M&A NEWS. SCHNEIDER ELECTRIC IS TO ACQUIRE U.S.-BASED ENGINEERING SOFTWARE DEVELOPER PTC FOR MORE THAN $22 BILLION. LET'S BRING IN OUR REPORTER FOR MORE ON THIS STORY. WHAT DO WE KNOW ABOUT THE TRANSACTION? MANUEL: A LARGE TRANSACTION TAKING PLACE THIS MONDAY. WE HAVE SEEN A LOT OF CONSOLIDATION, COUNTRIES LIKE SCHNEIDER ELECTRIC HAVE BEEN VERY INQUISITIVE. THE SHARES OF THE FRENCH GROUP HAVE PERFORMED REALLY WELL AND THEY HAVE A LOT OF POWER TO CONTINUE TO GROW AND BUILD UP THEIR BUSINESS. IN THIS CASE, ACQUIRING THE SOFTWARE BUSINESS AS THEY DEVELOP A LARGE SOFTWARE SOLUTION. IT IS A DEAL THAT MAKES SENSE WITHIN SCHNEIDER ELECTRIC'S MISSION TO DIVERSIFY. IN THE HIGHER ADDED VALUE PARTS, WE WILL SEE THE MARKET REACTION VERY SOON. IT IS A DEAL THAT MAKES SENSE WITHIN SCHNEIDER ELECTRIC'S STRATEGY. STEPHEN: AS YOU MENTION, THIS IS THE LARGEST DEAL TO DATE FOR SCHNEIDER ELECTRIC. WHAT DOES THAT TELL US ABOUT THE PROSPECT FOR FURTHER ACQUISITIONS BY THE COMPANY, GIVEN THAT WE KNOW THEY HAVE BEEN ON THE WATCH? MANUEL: YES. IT HAS BEEN A VERY INQUISITIVE GROUP. WE HAVE BEEN FOLLOWING THEM OVER THE YEARS. OBVIOUSLY WHEN THEY EMBARK ON THESE VERY TRANSFORMATIONAL TRANSACTIONS, THE RISKS ARE HIGH AS WELL. WHO KNOWS WHETHER THEY HAVE TO DIVEST ANY SMALL UNITS WITH REGULATORS. BUT THE HARDEST PART WILL REMAIN AND INTEGRATING THE TWO BUSINESSES AND MAKING IT WORK. OBVIOUSLY THEY ARE PAYING A PREMIUM FOR THE TAKEOVER, EVEN THOUGH THE U.S. TARGET WAS NOT PERFORMING VERY WELL SO FAR THIS YEAR. STILL, THE DEAL MAKES STRATEGIC SENSE, BUT NOW THE WORK BEGINS WHEN IT COMES TO INTEGRATING THE TWO BUSINESSES. WHEN IT COMES TO MORE POTENTIAL NEWS, THEY WILL NEED SOME TIME TO DIGEST THESE REALLY LARGE M&A TRANSACTIONS. BUT THEY WILL CONTINUE TO BE ON THE LOOKOUT FOR POTENTIAL ACQUISITIONS AS THEY TRY TO GROW THE BUSINESS. STEPHEN: AND ANOTHER DEAL YOU HAVE BEEN WATCHING FOR US THIS MORNING, NIPPON PAINT TO ACQUIRE AKZO NOBEL'S BUSINESS. MANUEL: WHAT A SUPER EXCITING SAGA WE HAVE BEEN WATCHING CLOSELY WITH AKZO NOBEL, THE DUTCH CHEMICALS GROUP. OBVIOUSLY THEY HAVE BEEN ON THEIR OWN AND A BIG BUSINESS OUT OF THE U.S., BUT THEMSELVES A TAKEOVER TARGET. THEY RECEIVED AN APPROACH EARLIER THIS YEAR FROM NIPPON PAINT ITSELF. THEY HAVE BEEN TRYING TO SEPARATE FROM THE PAINT BUSINESS AND THEY JUST GOT THIS DEAL ACROSS THE LINE. THE BUYER WAS NIPPON PAINT, WHICH IS THE BIGGEST JAPANESE PAINT MAKER. DEFINITELY AN INTERESTING TRANSACTION GIVEN THE PREVIOUS INTEREST BETWEEN THE TWO. IT ALSO HIGHLIGHTS THE GROWING TREND WITHIN INDUSTRIALS GLOBALLY, BUT ALSO THE RISE OF M&A TRANSACTIONS IN SOUTHEAST ASIA AS WELL. STEPHEN: MENLO BY CORY, THANK YOU FOR BRING -- MANUEL BAIGORRI, THANK YOU FOR BRINGING US THOSE STORIES. ANOTHER STORY WE ARE FOLLOWING. TESLA SOME PAULO -- INTESA SAO SANPAOLO HAS WON AN OFFER WITH A 17.6% STAKE IN MONTE DEI PASCHI. COMING UP, TROUBLE FOR THE NEW RANGE ROVER. CHINESE AUTO STOCKS UNDER PRESSURE ON REPORT THAT THE U.K. COULD BE SET TO IMPOSE IMPORT LEVELS ON EV'S. THAT'S NEXT. THIS IS BLOOMBERG. ♪ STEPHEN: WELCOME BACK TO "BLOOMBERG DAYBREAK: EUROPE." THE TIMES NEWSPAPER IS REPORTING THE U.K. IS PREPARING TO IMPOSE IMPORT LEVIES ON CHINESE ELECTRIC VEHICLES. THE MOVE WOULD MEET A KEY DEMAND FROM THE EUROPEAN UNION. FOR MORE, LET'S BRING IN DANNY LEE IN HONG KONG FOR US. IF THIS PROVES TO BE THE CASE, HOW BIG OF A BLOW COULD IT BE FOR CHINESE EV MAKERS? DANNY: GOOD MORNING. THE U.K. HAS BEEN A FAST A DOCTOR OF CHINESE EV'S. YOU SEE IN THE LATEST INDUSTRY NUMBERS IN SEPTEMBER, THE CHINESE BRANDS HAVE CAPTURED ROUGHLY A 25% SHARE OF ALL NEW CAR REGISTRATIONS. YOU SEE THE LIKES OF BYD. THEY HAVE A 6% SHARE. AND EVEN CHERRY ARE CLOSER TO 7%. YOU CAN SEE THE MOMENTUM WHICH CHINESE BRANDS HAVE BEEN MAKING AND THE INWARDS -- INROADS THEY HAVE BEEN MAKING. WHEN YOU LOOK AT THAT CONTRIBUTION , I THINK THERE IS GOING TO BE A QUESTION OF WHAT THESE POTENTIAL POLICIES AROUND IMPORT DUTIES THE U.K. MIGHT ROLLOUT. BUT WHEN YOU LOOK AT THE REACTION IN MORNING TRADE IN HONG KONG, SOME OF THE BIGGEST CHINESE BRANDS WERE DOWN. BUT AS WE ARE IN LUNCHTIME SESSION, THE SHARES ARE IN POSITIVE TERRITORY. STEPHEN: TALK US THROUGH THE BACKGROUND. WE KNOW IT IS A DEBATE THAT HAS BEEN ONGOING. WHAT HAS BRITISH OFFICIALS CONCERNED OR MOTIVATED TO POTENTIALLY IMPOSE THESE KINDS OF TARIFFS? DANNY: THE U.K. IS STUCK BETWEEN A ROCK AND A HARD PLACE BETWEEN BRUSSELS AND BEIJING. WHAT THEY ARE WEIGHING UP IS RETALIATION FROM CHINA, BUT ALSO THE RISK OF LOSING KEY ACCESS TO SOMETHING THAT THE EU IS DEVELOPING. IF THIS MADE IN EUROPE INITIATIVE WHERE THEY WILL PRIORITIZE MARKET ECONOMIES OF GOODS ANSWER IS WITHIN THE EU, GIVEN THIS ONGOING AND GROWING TRADE PROTECTIONISM. OF COURSE, INDUSTRIES RANGING FROM TECH TO THE GREEN INDUSTRY. THIS IS THE UK'S ATTEMPT TO TRY TO MEET SOME OF THE KEY DEMANDS. AND PARTICULARLY WHAT TO DO TO MAKE SURE IT HAS THE BEST INTEREST FOR ITS INDUSTRIES AND ACCESS TO OTHER TRADING PARTNERS. STEPHEN: IT IS A BIG CHALLENGE FOR THOSE EUROPEAN CARMAKERS, WHICH HAS LED TO THE EU TAKING THESE ACTIONS AS WELL. WE HAVE THE TRADE COMMISSIONER GOING TO CHINA LATER THIS WEEK. THIS IS ONE OF THE IMPORTANT ISSUES IN THE EU-CHINA TRADE RELATIONSHIP, TOO. ANNA: ABSOLUTE -- DANNY: ABSOLUTELY. WHEN YOU LOOK AT THE DECISIONS THE U.K. IS MAKING, A SMALLER IMPACT WILL IMPACT JAGUAR LAND ROVER. BUT IT SEES THE RISK OF THAT OUTWEIGHED BY TAKING SOME MEASURES TO ENSURE IT CAN HAVE ACCESS TO MARKETS LIKE EUROPE AND A GREATER WAY. BUT THE DEVIL WILL BE IN THE DETAIL. IT MAY BE HYBRIDS AND GO FURTHER THAN THE EU HAS ON CHINESE INPUTS. THERE'S A LOT OF DEVIL IN THE DETAILS AND IT REMAINS TO BE SEEN WHAT HAPPENS. HOPEFULLY WE WILL SEE MORE DETAILS IN THE WEEKS TO COME. GUY: WE WILL -- STEPHEN: WE WILL BE WATCHING WITH INTEREST. THANK YOU FOR BRINGING US UP-TO-DATE FROM HONG KONG. NOW TO OTHER TOP STORIES WE ARE FOLLOWING, RUSSIA SAYS IT WILL STEP UP ATTACKS ON UKRAINIAN INFRASTRUCTURE. THE WARNING CAME THE SAME DAY RUSSIAN FORCES STRUCK A BRIDGE ACROSS THE DNIEPER RIVER IN KYIV. IT FOLLOWS A VALVE FROM VOLODYMYR ZELENSKYY TO INCREASE STRIKES AGAINST RUSSIAN OIL REFINERIES. BLOOMBERG HAS LEARNED THE COPILOT ACCUSED OF TRYING TO SEIZE CONTROL OF A FLY DUBAI FLIGHT PREVIOUSLY FLEW FOR OMAN AIR AND WAS DISMISSED FOR ENGAGING IN WHAT WERE CONSIDERED RADICAL VIEWS. UAE INVESTIGATORS SAY HE ATTACKED THE CAPTAIN ON THE FLIGHT TO TEL AVIV WITH A CRASH ACTS, A TOOL STORED IN THE COCKPIT FOR EMERGENCIES. TAKING A QUICK LOOK AT THE MOVES ON MARKETS. THE DROP IN THE EURO WEIGHING ON EUROPEAN STOCK FUTURES. EVEN MANAGED TO ERASE THE GAINS ON THE NASDAQ, WHICH IS RECORD HIGH ON FRIDAY. BUT IN ASIA, EVEN THOUGH WE HAVE CHINESE AND SOUTH KOREAN MARKETS CLOSED, JAPANESE SHARES ARE LEADING AHEAD. THAT NIKKEI UP OVER 2% IN TRADING THIS MORNING. COMING UP NEXT, VOLATILITY IN THE BOND MARKETS USES AFTER A DRAMATIC SELLOFF. WE WILL DISCUSS THE OUTLOOK NEXT. STAY WITH US. THIS IS BLOOMBERG. ♪ STEPHEN: LIVE FROM BRUSSELS THIS IS BLOOMBERG DAYBREAK: EUROPE. I'M STEPHEN CARROLL WITH YOUR TOP STORIES. THE EURO SLUMPS TO A 17 MONTH LOW AS CONCERNS GROW OVER POLITICAL AND FISCAL RISKS WITH GLOBAL STOCKS POWERING AHEAD AS U.S. JOBS DATA LANDS ON THE GOLDILOCKS ZONE, EASING BETS ON FED RATE HIKES. YEMEN'S SAUDI BACKED MILITARY LAUNCHES A FULL-SCALE OPERATION TO PUSH WHO THE FIGHTERS AWAY FROM THE STRATEGIC RED SEA COAST. PLUS LULA LOSES IN BRAZIL. FLUFFY A BOLSONARO SURGES TO A SURPRISE LEAD, MAKING HIM THE FAVORITE TO BEAT THE INCUMBENT IN THE NEXT AND FINAL ROUND OF THE PRESIDENTIAL ELECTION. ON THE MARKETS THIS MORNING WE DO HAVE SOME TECH OPTIMISM HELPING LIFT A QUIETER SESSION IN ASIA. EUROPEAN STOCK FUTURES BEING HIT BY THE WEAKER EURO NOW DIPPING INTO THE RED AND NASDAQ FUTURES ALSO ERASING EARLIER GAINS AS WE HAVE SEEN MARKET SENTIMENT TURN. TAKING A LOOK AT THOSE OTHER ASSETS. OIL PRICES ARE DOWN SLIGHTLY, A PRICE CUT FROM SAUDI ARABIA HELPING OUTWEIGH SOME OF THOSE HEADLINES WE HAVE HAD OUT OF YEMEN. BUT THE DROP OF EURO IS CONTINUING. WE ARE WATCHING OF COURSE TREASURY YIELDS AFTER FRIDAY'S JOBS REPORT AS WELL. THINGS PRETTY STABLE TODAY AS WE ARE LOOKING AT THE 10 YEAR YIELD AT FIVE POINT 27%. FRIDAY'S SOFTER JOBS REPORT DID HELP EASE SOME OF THE PRESSURE ON U.S. TREASURIES AS TRADERS CUT BETS ON A RATE HIKE FROM THE FED THIS MONTH BUT THE SHARP DROP IN THE EURO THIS MORNING IS A REMINDER OF CONTINUING INVESTOR CONCERNS OVER FRANCE AND NOW POTENTIALLY SPAIN AS WELL. LET'S DISCUSS WITH TANVI KANCHAN . GREAT TO HAVE YOU WITH US THIS MORNING. I'M JUST WONDERING WHAT YOU'RE READING IS OF THE DROP WE ARE SEEING IN THE EURO THIS MORNING. IS THIS IN ADDITION, AND ACCENTUATION OF LAST WEEK'S STRESS OR IS THIS THE NEW HEADLINES FROM SPAIN ALSO HAVING AN EFFECT? >> THANK YOU SO MUCH FOR HAVING ME HERE. I THINK A LOT HAS HAPPENED. ONE THING ABOUT THE BOND MARKET ALTHOUGH IT DOES NOT SCREAM AS LOUD AS EQUITY MARKET BUT WHEN THE BOND MARKET SPEAKS I THINK EVERYBODY PAUSES AND TAKES NOTICE AND THAT'S WHAT WE ARE SEEING IN THE U.S. TREASURY YIELD WITH THE FED GOING AHEAD WITH A RATE HIKE WITH A MUTED JOB REPORT IT IS VERY CLEARLY ENERGY DRIVEN AND THAT AFFECT HAS CASCADING IN DIFFERENT MARKETS AS WELL. SO RIGHT NOW YOU HAVE THREE MAJOR MARKETS THAT RATE HIKES AND YOU ARE LOOKING AT TWO MARKETS TO FOLLOW THROUGH. I BELIEVE THIS KIND OF BROADER VOLATILE RATE MARKET IS SOMETHING WE WILL KIND OF HAVE TO SEE IN THE WEEKS TO COME. MAINLY ON THE BACKS OF RISING ENERGY PRICES. STEPHEN: LET'S TALK ABOUT YOUR OUTLOOK FOR THE FED. WE HAVE TRADERS PARING BACK EXPECTATIONS FOR OCTOBER STILL PRICING A HIKE IN DECEMBER. DOES THAT LOOK RIGHT TO YOU GIVEN WHERE WE ARE IN THE ENERGY MARKETS? >> I THINK THE JOB REPORT EASED OUT THE OCTOBER CONSENSUS AND THAT WAS AGAIN A MAJOR INDICATOR TO SEE HOW AND WHAT THE FED WOULD SEE. ONE THING THE FED HAS BEEN CLEAR ON THAT THIS IS MORE IN TERMS OF CAUTIOUS APPROACH MAINLY ON THE BACKS OF THREE INDICATORS. ENERGY IS SOMETHING EVERYONE IS SORT OF PAUSING AND SEEING HOW AND WHAT IT DEVELOPS INTO EVEN THOUGH RIGHT NOW SAUDI ARABIA HAS SAID IT GOT THE MAJORITY OF ITS OUTFLOW PROPERLY DONE. YOU HAVE G7 SAYING THEY WILL HAVE FURTHER FLUSHED IN TERMS OF SUPPLY CONSTRAINED AS WELL. ONE OF THE MAJOR THINGS THE FED LOOKS THAT OTHER THAN CORE CPI WHICH IS 2.4% IS ACE. ONE OF THE INDICATORS OR THE MAIN FACTOR THAT IS CAUSING AN INFLATIONARY PRESSURE IS A RISE IN ENERGY. AIRLINES UP AT ALMOST 23%. THE FACT THAT THE FED DOES NOT WANT TO HAVE THAT CASCADE DOWN TO WAGES AND SERVICES AND YOU ARE HAVING HOUSEHOLDS BECAUSE A MANAGER HEDGE TO ENSURE IT DOES NOT JUST SORT OF PASS-THROUGH, THAT HAS SORT OF PUSHED THE CONSENSUS FROM OCTOBER TO DECEMBER. EVEN FOR THE MONTH OF DECEMBER THE RATE HIKES ARE MAJORLY TO ENSURE THAT YOU DON'T HAVE A HEIGHTENED ENERGY PRICE. EVEN THE GOVERNMENT BORROWING FISCAL CONSOLIDATION SO THERE ARE MAJOR FACTORS THAT WILL GO INTO AND WE ARE ALSO GOING TO HAVE THE MINUTES OF THE MEETING AND THAT IS GOING TO ADD MORE. STEPHEN: THE MOVES IN ENERGY MARKETS HAVE BEEN INTERESTING BECAUSE WE HAVE HAD A REASONABLY MODERATE REACTION BUT ALSO THE SAUDI PRICE COST WE HAD ANNOUNCED THIS MORNING, ANOTHER FIVE DOLLARS LOWER. COULD REALLY NOTHING MOVE THOSE ENERGY MARKETS NOW WITHOUT THERE BEING SIGNIFICANT PROGRESS IN THE MIDDLE EAST? >> I BELIEVE THE TALKS HAVE BEEN ON SINCE QUITE A LONG TIME. IT HAS BEEN MONTHS AND MONTHS OF TALKS. YOU SAW A CRUDE WTO JUMP FROM $60 AN OUNCE TO 100, 110. SO UNLESS AND UNTIL THERE IS ANY KIND OF SUBSTANTIAL TALKS WITH CONTINUED EFFORTS TO ENSURE THE SUPPLY CONSTRAINED IS COMPLETELY CUT OFF, I DON'T BELIEVE THE MARKETS ARE GOING TO COMPLETELY PRICE AND THE FACT THAT THE ENTIRE ENERGY CONSTRAINT HAS BEEN DISSOLVED. UNTIL THEN ALSO SEEING A HUGE AMOUNT OF MARGINAL PRESSURE. EVEN THOUGH THERE ARE TALKS OF THE G7 EASING OUT THE SUPPLY, THE COST OF THAT HAS ALSO BEEN MARGINALLY INCREASED. YOU WILL SEE A HIGHER LEVEL OF PREMIUM ON THE COAST OF THIS EXCESSIVE SUPPLY THAT IS GOING TO COME IN. THAT ALSO ADDS TO A CERTAIN LEVEL OF CONSOLIDATION THAT WILL FURTHER ADD PRESSURE TO THE BOND YIELDS. SO YOUR ENERGY CRISIS OR SUPPLY WILL HAVE A CERTAIN AMOUNT OF FLOW. I DON'T BELIEVE IT'S GOING TO JUST JUMP DOWN TO THE EARLIER LEVELS OF $70 A BARREL. STEPHEN: IS THIS OUR NEW NORMAL NOW? WE ARE LOOKING AT YIELDS OF 10 YEAR TREASURIES AT 5.25" PERCENT. >> THIS IS A TWO DECADE HIGH WE ARE SEEING THESE KINDS OF NUMBERS. EVEN THE ENTIRE AI DRIVEN RALLY HAS NOT BEEN ABLE TO KEEP THE YIELDS UNDER CHECK AND THAT IS SOMETHING HAPPENING ON THE BACKS OF THREE MAJOR FACTORS. ENERGY THAT'S PLAYING A MAJOR ROLE IN TERMS OF CENTRAL BANKS TAKE ME WHOLE. WE HAVE GONE FROM RATE CUTS TO AN ENTIRE INFLECTION FOR RATE HIKES. YOU HAVE GOVERNMENT BORROWING THAT HAS INCREASED TO 40 TRILLION AND IT KEEPS MARGINALLY INCREASING SO THAT ALSO ADDS PRESSURE ON THE LONGER END OF THE INCOME. YOU ALSO HAVE CONSOLIDATION. WHILE WE DON'T SEE THE 10 YEAR COMING DRASTICALLY DOWN, THERE ARE STILL OTHER WAVES IN TERMS OF PRESSURE BUILDING UP ON THE HIGHER WAVE. STEPHEN: WE WILL MONITOR THAT WITH INTEREST. 10 THEY CAN PLAN, THE -- TANVI KANCHAN, THANK YOU FOR JOINING US. ONE OF THE BIGGEST INVESTORS AND AI IN THE WORLD SAYS HE'S WORRIED ABOUT SAFETY RISKS AS MACHINES QUICKLY GAIN MORE ABILITIES. SPEAKING AT A TECH FORUM, HE REPEATED HIS PROJECTION THAT AI WILL ACCOUNT FOR AT LEAST 20% OF GLOBAL GDP BY 2040. HE'S: FOR GLOBAL COOPERATION ON AI GUARDRAILS, SAYING THE TECHNOLOGY CAN BE DANGEROUS IN THE WRONG HANDS. >> I DON'T -- I THINK WE DON'T HAVE ANY MORE LUXURY OF HAVING HUMAN FIGHT AGAINST HUMAN. THERE WILL BE A BIGGER ISSUE OF HUMAN AGAINST SUPER INTELLIGENCE. IF THE SUPER INTELLIGENCE BECOMES SO SMART AND IF THE BAD USAGE BY BAD HUMANS USE THE WRONG USAGE, THIS CAN BECOME SUPER DANGEROUS. STEPHEN: BRAZIL'S PRESIDENTIAL ELECTION WILL BE DECIDED IN A RUNOFF VOTE IN THREE WEEKS TIME AFTER FLOW VIDEO BOLSONARO -- FLAVIO BOLSONARO SAYS HE WANTS TO BUILD A GOVERNMENT INSPIRED BY HIS FATHER. >> I'M VERY HAPPY WITH THE RESULT WE JUST SAW. ALMOST 56 MILLION BRAZILIANS VOTING FOR ME. BRAZIL ONCE CHANGE. THAT'S WHERE I TAKE FROM TODAY. BRAZIL ONCE CHANGE. STEPHEN: HOW MUCH OF A SURPRISE FOR THESE RESULTS? >> A SURPRISE NO DOUBT. GOING IN THE RESULTS WERE ABSOLUTELY NECK AND NECK AND THE WAY IT WAS EXPECTED TO UNRAVEL WAS THAT BOLSONARO WAS EXPECTED TO TAKE AN EARLY LEAD IN THE SOUTH AND THEN LULA WAS EXPECTED TO MAKE UP FOR THEM IN THE NORTHEAST WHICH IS HIS BASE. AND THAT SIMPLY DIDN'T HAPPEN. BOLSONARO SET OFF WITH A PRETTY MASSIVE LEAD AND ESSENTIALLY MAINTAINED IT. IT WAS NARROWED DOWN TO 47-45. BUT IT WOULD TAKE A MIRACLE REALLY FOR LULA TO BE ABLE TO WIN THIS IN THE RUNOFF. EVER SINCE BRAZIL BECAME A DEMOCRACY IN 1989, WHOEVER HAS WON THE FIRST ROUND CONTINUES TO WIN ON THE SECOND. REALLY THAT LEAD IS EXPECTED TO WIDEN AND I THINK WE WILL SEE WHEN THE MARKETS OPEN THAT INVESTORS AND MARKETS WILL REACT VERY POSITIVELY TO THIS NEWS. HE WAS THE INVESTOR'S FAVORITE. BOLSONARO IS EXPECTED TO MORE FISCAL DISCIPLINE AND MORE BETS THAT BRAZIL WILL GROW UNDER BOLSONARO. ALSO HE IS A MORE MODERATE FIGURE THAN HIS FATHER. AS YOU SAW FROM HIS COMMENTS HE WAS INSPIRED BY HIS FATHER, SOME OF THE INCENDIARY LANGUAGE SHE HAS USED. STEPHEN: WHAT DOES IT IN TERMS OF THE LANDSCAPE FOR BRAZILIAN POLITICS TELL A SET OF THE STRENGTH OF THIS MOVEMENT BEHIND J OR BOLSONARO WHO WAS SUCH A LARGE AND LOOMING FIGURE IN RECENT DECADES? >> WE HAVE WITH HELP THE TEMPTATION TO SAY THERE HAS BEEN A BIG RIGHT WING SWING IN THE REGION BECAUSE BRAZIL WAS THE BIGGEST HOLDOUT AND IS THE BIGGEST ECONOMY IN THE REGION BUT WITH THIS WHEN YOU REALLY SEE THE ESTABLISHMENT OF QUITE A FEW POPULIST FAR RIGHT OR CENTER-RIGHT ADMINISTRATIONS THAT NO DOUBT WILL PLEASE DONALD TRUMP, WHO OF COURSE HAS HIS DONROE DOCTRINE AND HAS MADE NO SECRET HE CONSIDERS THE REGION HIS BACKYARD. THAT'S AN EXPRESSION THAT IRRITATES MANY PEOPLE IN THE REGION FOR OBVIOUS COLONIAL CONNOTATIONS. BUT FROM THE OTHER PERSPECTIVE IT DOES MEAN THAT BOLSONARO WHO IS AN ALLY OF MILLET AND SOME OF THE OTHER CHANGES IN THE REGION, A RECENT ELECTION WIN IN COLUMBIA MEANS THE REGION IS VERY MUCH IN LOCKSTEP WITH ITS NEIGHBOR IN THE NORTH. STEPHEN: WHAT DOES IT TELL US ABOUT THE LEFT-WING MOVEMENT AND WHERE BRAZIL HAS INVOLVED AROUND ITS LEADERS AND THE LIKES OF LULA? >> LULA WILL PROBABLY HAVE TO REFLECT A FAIR BIT ABOUT HOW STUBBORN HE WAS. HE IS IN 80 YEARS OLD MAN. HE IS SET IN HIS WAYS. I THINK HE WAS BANKING ON HIS PERSONAL CONSIDERABLE CHARISMA TO PULL THIS OFF. HE ALSO SAID HE WAS NOT GOING TO RUN AGAIN AND THE FACT THAT HE DID, HE PROBABLY NEEDS TO REFLECT ON THE FACT THAT THE VOTERS HAVE GIVEN HIM A STINGING REBUKE OF HIS POLICIES. HE CAN TAKE CREDIT OBVIOUSLY FOR WHEN HE CAME TO POWER TO BRING IN MILLIONS OF BRAZILIANS OUT OF POVERTY. BUT AT THIS STAGE IN THE GAME AND I THINK THEY WERE LOOKING FOR SOMETHING MORE THAN A REHASH OF SOME OF HIS GREATEST HITS. SO THIS IS AS MUCH A VICTORY FOR FLAVIO BOLSONARO WHO WASN'T A PARTICULARLY CHARISMATIC OR INSPIRED OPPOSITION LEADER AND VERY MUCH A REBUKE OF LULA, WHO TO BE CLEAR HAS BEEN, HAS WON THREE TIMES. HE HAS DEFEATED MANY ODDS AND I WOULDN'T PUT IT PAST HIM IF ANYONE CAN PULL BACK IT'S PROBABLY HIM. BUT THERE IS VERY MUCH A SENSE THAT VOTERS ARE CALLING TIME ON HIS ADMINISTRATION AND HIS POLICIES BECAUSE TRUTH BE TOLD HE DIDN'T BRING ANYTHING NEW TO THE TABLE. STEPHEN: REAL COUNTDOWN TO THE NEXT AND FINAL ROUND OF THAT PRESIDENTIAL ELECTION IN THREE WEEKS TIME. THANK YOU. THE PARTY OF PRIME MINISTER ANDRA'S KOHLBERG'S HAS WON A RECORD NUMBER OF SEATS IN LATVIA'S PARLIAMENTARY ELECTIONS, THE BEST RECORDED BY A SINGLE PARTY SINCE THE BALTIC NATIONS REGAINED INDEPENDENCE FROM THE SOVIET UNION IN 1991. HE SAYS SUPPORT FOR UKRAINE WILL MAINTAIN A PRIORITY. SPANISH GOVERNMENT OFFICIALS ARE PREPARING FOR A POSSIBLE EARLY ELECTION AS PRIME MINISTER PEDRO SANCHEZ WHERE IS HIS NEXT MOVE. WE ARE TOLD SENIOR GOVERNMENT AND SOCIALIST PARTY OFFICIALS BACK IN EARLY BALLOT AFTER A DAMAGING PARLIAMENTARY LOSS LAST WEEK. COMING UP, WHY THE U.K.'S SUPERRICH ARE HEADING FOR THE EXIT. THAT'S NEXT. THIS IS BLOOMBERG. ♪ STEPHEN: WELCOME BACK TO BLOOMBERG DAYBREAK: EUROPE. AN EXODUS OF THE SUPERRICH FROM THE U.K. APPEARS TO BE UNDERWAY AS TAX CHANGES INTRODUCED BY THE RULING LABOUR PARTY BEGIN TO BITE. BUSINESS FIGURES WORTH BILLIONS ARE LEAVING THE COUNTRY FOR TERRITORIES LIKE MONACO, SWITZERLAND AND THE UAE. FOR MORE ON TODAY'S BIG TECH STORY WE ARE JOINED BY BEN. TELL US WHAT YOU FOUND. >> GOOD MORNING. THANK YOU FOR HAVING ME ON. THE INDEX IS A RANKING OF THE WORLD'S 1000 BIGGEST FORTUNES WE TRACK OVERALL AND THEN WE HAVE A DAILY PRODUCT OF ABOUT 500 WE PUBLISH ON THE BLOOMBERG TERMINAL. WHAT WE FOUND THROUGH THAT GROUP IS A GROWING NUMBER OF BILLIONAIRES. IT'S MULTIBILLIONAIRE IS GOING. THE TOTAL REPRESENTED RUNOFF IS 100 60 BILLION. THAT INCLUDES LONGTIME REPRESENTATIVES OF LONDON'S BILLIONAIRE ELITE. THEN WE HAVE A FEW FAMILY FORTUNES AND THE HEIRS OF MULTIBILLIONAIRE FORTUNES. WE ARE GROUPING THEM ALL TOGETHER AND IT'S GIVING A SENSE OF THE TYPE OF WEALTH AND THE SIZE AND SCOPE THAT IS LEAVING LONDON. WHAT DOES THAT REALLY REPRESENT. ON THE INDEX, THAT NUMBER IS BIGGER THAN THE NUMBER OF U.K. BILLIONAIRES. THAT GIVES A REAL SENSE OF MAY BE THE U.K. IS AT A TIPPING POINT. WE HAVE REPORTED OVER THE PAST TWO YEARS TAX CHANGES DRIVING THE WEALTHY OUT. WE ARE NOW GETTING TO LEVELS WHERE THERE IS A SERIOUS POTENTIAL PROBLEM FOR BRITAIN AND SPECIFICALLY LONDON WITH ITS RELATIONSHIP WITH THE ULTRA-WEALTHY. STEPHEN: IS THIS EXIT IS LIKELY TO CONTINUE? AND WHAT'S THE BIG IMPACT REALLY ON THE U.K. ECONOMY? >> LET'S TAKE THE MOST RECENT EXAMPLE OF SOMEONE ON OUR INDEX WHO HAS LEFT THE U.K.. THE BRITISH HEDGE FUND FOUNDER. A HOMEGROWN TALENT. A KEY REASON WE ARE LOOKING TO DO THIS NOW. WE HAVE HAD ULTRA-WEALTHY INDIVIDUALS HAILING FROM OVERSEAS LEAVING THE U.K., NOW WE ARE ALSO SEEING A GROWING NUMBER OF BRITISH HOMEGROWN TALENT GROWING -- GOING. HE REPRESENTS ABOUT 30,000 AVERAGE U.K. TAXPAYERS. THAT'S WHAT HE HAS BEEN CONTRIBUTING TO THE U.K. TREASURY EVERY YEAR. THAT REPRESENTS A WHOLE TOWN. THAT REALLY GIVES A SENSE OF THESE ARE SERIOUS PLAYERS THAT ARE GOING AHEAD. WE ARE WEEKS AWAY FROM THE NEXT BUDGET. U.K. ENTREPRENEURS ARE ABSOLUTELY TERRIFIED AND VERY SENSITIVE OF FURTHER TAX CHANGES. WE HAVE HAD BIG TAX HIKES ON WEALTH BOTH FOR OVERSEAS INDIVIDUALS WHO LIVE HERE AND U.K. ENTREPRENEURS AND FAMILY BUSINESSES. WE ARE WEEKS AWAY FROM POTENTIALLY ANOTHER WAVE OF ON SETTLEMENT BEING RELEASED IN THE U.K.. EVERYONE IS WATCHING WHAT JOHN HEB IS GOING TO SAY AT THE END OF THIS MONTH, SPECIFICALLY U.K. ENTREPRENEURS WHO ARE GOING TO BE CAUGHT UP POTENTIALLY IN ANOTHER WAVE OF WEALTH FLIGHT. THAT'S THE BEST WAY TO DESCRIBE IT. STEPHEN: THANK YOU FOR BRINGING US DETAILS OF YOUR REPORTING. PLENTY MORE COMING UP. STAY WITH US. THIS IS BLOOMBERG. ♪ >> LAGER RATES HAVE SOME UPSIDES BECAUSE OF REAL RETURNS BEING SO HIGH BUT IN THE END THAT'S VERY GOOD FOR THE ECONOMY BECAUSE YOU HAVE TO LOOK AT THE WHOLE THING. THE ONLY REASON THEY WOULD GO UP IS THE ECONOMY IS SO STRONG. STEPHEN: KEVIN HASSETT, DIRECTOR OF THE U.S. NATIONAL ECONOMIC SECURITY COUNCIL. I WANT TO START TAKING A LOOK AT SOME OF THE KEY CHARTS WE ARE FOLLOWING WITH WHAT'S BEEN HAPPENING WITH THE EURO. THAT SLUMPED TO A 17 MONTH LOW THIS MORNING DROPPING AS MUCH IS 0.8% ON THE DAY. WE ARE HEADING LEVELS GOING BACK TO 2025 NOW. CONTINUING CONCERNS OVER FRANCE AND REPORTING OUT OF SPAIN ABOUT THE POTENTIAL OF OFFICIALS PREPARING FOR AN EARLY ELECTION. POLITICAL UNCERTAINTY BACK IN FOCUS. HEDGE FUND SELLING PART OF THE STORY. THE NEXT LOW THAT IT WOULD HAVE TO HIT IS A STORY TO WATCH THROUGHOUT THE DAY TODAY. THINKING MORE BROADLY ABOUT THE OUTLOOK FOR CENTRAL BANKS AFTER FRIDAY'S JOBS REPORT. WE NOW HAVE A DIFFERENCE BETWEEN WHAT INFLATION VERSUS WAGES ARE MOVING AND WE ARE SEEING REAL WAGES STILL DECLINING AND WAGE GAINS WIPED OUT BY INFLATION CONTINUING, A TREND WE HAVE SEEN SINCE APRIL OF THIS YEAR. IN TERMS OF HOW THE BOND VOLATILITY HAS BEEN AFFECTING STOCK MARKETS AS WELL, IT IS THE FINANCIAL SECTOR THAT HAS COME UNDER PRESSURE DURING THAT RATES VOLATILITY IF WE COMPARE THAT ON THE LOWER HALF OF THIS GRAPH VERSUS THE SHARES AND SOME OF THOSE FINANCIAL COMPANIES BEING TRACKED BY THESE KEY ETF'S. THIS IS SOMETHING TO THINK ABOUT GOING INTO THE EARNINGS SEASON IS WELL AND WE WILL HEAR ABOUT HOW THE RATES PICTURE HAS AFFECTED THEM GOING FORWARD AS WELL. AS REGARDS OTHER KEY RISK EVENTS, WE HAVE THE MINUTES OF THE LAST FED MEETING AND THE LAST ECB MEETING. INSIGHTS INTO WHY FEDERAL BACKERS RAISE RATES WHEN THEY DID PLUS WE HAVE THE COMMISSIONER -- BACK IN FOCUS. THE OPENING TRADE IS UP FOR YOU NEXT. THIS IS BLOOMBERG. ♪