guy: turkey turmoil. traders were expecting action from the authorities to stabilize the lira and it did not happen. here we are monday morning. the central bank announces it is providing extra liquidity. the lira briefly rallied but the market signaled it was much more. will the president of turkey delivered today. and contagion. the rand suffers what a crash.nk calls look for south africa to move at the european open. matt: we are less than a half-hour away from stock trading. it was a horrible day on friday. if you were long that is. it looks set to be not a great day today either. here you see futures, index future is not firing -- not falling far but if you look at the asian markets, it is a bloodbath. take a look at what is going on in treasuries. investors are running for c5 in assets. we have for example the u.s. 10 2.86%,eld coming down to 2.87%. everywhere you look, you have gains and safe haven assets like but no lovee swiss for gold. guy: hard to find a safe haven on the gmm. i changed it to p

through turkey. the turkey deal that has been signed after the 2015 huge increase in migration flows by turkey has been holding. we have seen, over the past year, the numbers of syrians traveling through turkey increasing. and growing concern within the european union that some of the fighterslamic state that are now trying to find their way back to europe through turkey may be traveling that route. they need important cooperation between the european union and turkey to make sure they stem the flow of those dangerous elements into europe. tom: you are one of the world's experts on the geopolitics of the black sea. what is the price of the president of the united states having an original agenda with turkey, versus other crisis we have seen? what is the price for turkey and the west given that russia is only distant across the black sea? price, important for everyone, turkey's pain a substantial economic price. geopolitically the west more broadly is also suffering from the crisis. turkey is a very i

crisis in turkey. the euro weakens to yet another record low as u.s. president -- on metal tariffs. turkish president erdogan responded by saying his country will not surrender to "economic hitman," urging turks to cash in their hard earned savings to the lira. >> if there is anyone who has dollars, gold, or euros under them tollows, i asking take them into the banks and exchange them with turkish lira. this is going to be the response of my nation to those who are making this move, this hostile move to our country. scarlet: joining us over the phone from istanbul is benjamin harley, bloomberg turkey bureau chief. benjamin, thank you for joining us. obviously, we will look at the financial impact here of the lira's collapse and what it means for not just the turkish market, european markets, and -- u.s. market, but i want to get a sense on the ground of how things are going in istanbul. how are people responding to erdogan encouraging them to convert their currency to the turkish lira, which is rapidly

we are very focused on turkey. we are flirting with the flatline on the dollar against the turkish lira. we have a little bit of a boost yesterday from some more of the conversation with the finance minister. although some financers remain skeptical as to the steps turkey is going to take to secure its economy. steven mnuchin and sing more measures will be taken against -- steven mnuchin saying more measures will be taken against turkey. what do you see in the bond markets? nejra: the turkey treasury yield not doing much in the markets. the yield curve is below 25 basis points. the curve hit a fresh cycle though, heading the 23 handle at one point this week. the 10 year treasury yields are steady. in terms of how european bonds might move, we have the cash opening happening right now. at the opening at least it looks like we will be fairly steady on bonds and oat's in france. let's get the first word news with juliette saly. the u.s. a treasury secretary has said washington is ready to hit turkey with more sanction

that is the challenge for turkey. columbia has the macroeconomic challenges, but they do not quite have the government that is running against economic logic. scarlet: tom, joining us from washington, thank you. we looking talking about turkey's impact on the wider markets with the ceo of huntington private bank. this is bloomberg. ♪ lisa: this is "bloomberg markets." scarlet: more insight on turkey as economic woes ripple across the markets. joining us from cincinnati is john augustine, cio of huntington bank which oversees $20 million in assets. great to speak with you. thank you for joining us. how does what we are seeing in turkey affect your approach to emerging markets? having been doing any things in terms of cutting exposure or adding to your exposure? john: we started the process in march, where we actually began to cut exposure. interestingly, it was the emerging-market bond index that started to lead us that way. we started seeing weakness in march. we do not use those for our customers. but then we start

what you do with turkey? alix: we are seeing the rush and the rest but not as much as we thought. 15%.es were up today they are negative but off the lows of the session. see a 1.10 on it i euro-dollar. the 10 year yield getting a little bit of safe haven not the type of move we saw on friday. oil state pat. david: it is a big story. the question for today is how far it will expand. now it feels like it will not expand quite as far. alix: if you find up -- if you want up having more, what do you have to sell? i do not know if we are there yet. today feels more like we want to look for opportunity. today, the media will get to meet the astronaut scheduled to travel on spacex. 2:00 this afternoon, the congressional budget office releases an update to its economic projections for the next 10 years. on thursday, brexit talks resume in brussels and over the course of the week we will get retail earnings from home depot, macy's, walmart, jcpenney, and nordstrom. we are joined today by bloombergs romaine bostick and

this is turkey, trade concerns weighing on em. what we will look for is to see if it has contagion to the u.s. or if the market remains isolated. guy: let me pick up because that's a nice chart. but i think it is in the chart that matters this week. this is the chart that matters this week. and i think that is in some ways derivative of what we are seeing in the u.s. treasury market. the sucking sound you hear is the front and the u.s. curve is having around the world. this is the chart that matters. we've got jackson hole coming up. we will hear from fed chair powell later this week and there's an extreme story we are seeing in the cftc data. positions of the treasury market absolutely massive, biggest we've ever seen, really extreme. what we are seeing is the dollar not quite as extreme but when you're high. something has got to give. you are going to see the wrecking ball of these stories swimming around the world, affecting things like what danny has been talking about with the market debt and what is happening further down th

wage income in turkey. so, the iphone x is not an affordable phone, per se. certainly not affordable in the u.s., but definitely not affordable to many in turkey. apple does not have as much distribution as they do in other places, only two apple stores across turkey. so, in the scheme of things right now, not in the long term, in the short-term it is not a big deal, but the big problem long-term is if other countries start tacking onto this and are asking apple to build things locally. emily: so, romaine, given the strength of the turkish lira in general, what is the actual purchasing power of people living in the country to even buy american electronics in general? romaine: yeah, well, it is not high. keep in mind, mark just talked about the five times of what the income is there. keep in mind that right now, an iphone x, the lowest model there, would be about 7500 lira. at today's exchange rate, that is somewhere around $1200 or $1300 u.s. pretty pricey, particularly for an economy that just really isn't

turkey is being pushed to the brink. the lira has lost about a quarter of its value against the dollar and the fallout is spreading far and wide. we have a report from is stan bum. >> it's been a dramatic few hours for turkey and the rest of the world. we heard from the turkish president earlier and he underscored what he'd pointed out on the weekend that. he doesn't see real for interest rates that the levels will go back to a ration aal level on its own and the currency is underseage from factions abroad. we saw the central -- central bank intervene early on in the day. injecting additional equity. we didn't hear anything from terms of commit from the i.m.s. and here on the ground in istanbul, it's been interesting to watch shoppers, a, those with they h lira to get what can and for those that much hard currency, they're able to lock in great deals in a lot of theeg these shops. but the question is how this is going to trickle through into inflation and what this means in the wilder standoff between the u.s. and turkey

turkey has intergrated with the west despite the rhetoric coming out of turkey. they are looking for a solution that is based on europe and ultimately the united states. europe has significant grievances and even if the pastor is released, 15-20 other americans that are being held in turkey on trumped-up charges, there are a whole lot of other challenges that turkey presents to the united states. ramy: on the other hand, turkey and the government there, they say that they are going to try to keep things afloat but not by normal means, not by rate hikes. it is just too little right now. do you think the president has a reason, an argument for this case by not going the normal way? >> the president has unorthodox views of the economy. he believes that high interest rates cause inflation. the turks are trying to deal with this problem with fiscal policies rather than monetary policies. it is hard for the president of turkey to concede that the central bank to raise interest rates to the extent that most people believe they need to be raised. the president of turkey,

the united states and turkey. no negotiations until a detained released.astor is it signals be standoff between the countries will continue as turkey's financial meltdown spreads to emerging markets. we have a reporter on the ground. the turkish ambassador in turkey requested this meeting with the u.s. officials. what can we expect from the security meeting? pointed --is is a this is a pointed reminder that turkey is fighting a standoff over policy credibility with international u.s.tors, and also the pastor being held in turkey. there were no dramatic results from this meeting. their heels deeper into the ground. while the turkish government was still taking a public position on this, the united states slapped tariffs on aluminum and steel, warning signs they are willing to go further into the conversation. for furtherential to your urination, or even a another set of sanctions -- further deterioration, or even another set of sanctions. anna: how likely will this last? yousef: nothing short of remarkable. this ha

of course, greece trays with turkey as well, just a graphic proximity -- trades with turkey as well,, just geographic proximity. francine: the you believe investors will remain a little bit shy to invest in greece for at least a couple of years? zsolt: i am afraid indeed investors will not rush to invest in greece, and one reason is the public debt problem of greece has not yet been resolved. the euro group, the group of eurozone finance ministers, agreed a number of measures basically by pushing maturities and repayment periods far to the future, but still, greece has to repay a large amounts of loans, not least of the imf, the european central bank, and also to creditors for the first bailout. greece will have to grow a lot of money in the coming years. i am afraid economic growth in greece will slow down, investors might become nervous, and insurgency will linger for quite long. francine: zsolt, thank you so much, resident scholar at brueg el, and paul donovan will stay with us. was in russia over the weekend, the first bilateral summit since 2013. they agreed to take steps to prot

what is turkey? you mentioned sanctions, geopolitics, but at the core, what is going on in turkey's credit. last year, there was a big lending -- turkey is credit. last year, that was a big lending curve and it was way out of the league of anyone else in the region. the current account deficit lived to an unsustainable -- deficit ballooned to an unsustainable limit. there many other emerging markets that are exposed to that kind of credit overhang. joe: so the mechanism we talk about here is a bunch of credit goes in, a bunch of apartments and shopping centers and malls numbersd that moves gdp but they have to import a lot of stuff like materials from the rest of the world. that causes a balance of payment deterioration. where else in the world do you and suchar conditions similar volatilities? robin: there is a lot of interesting stuff going on. take argentina in the news earlier this year, and turkey. both of them have a current account deficit widening significantly on essentially loose credit pol

turkey says there is an economic war. prosecutors expect to rest their case in the financial fraud trial of president trump's former campaign manager. a wave of primaries are on deck next week. democrats look to close in on republican held districts while the gop looks to get on the same message. turkey takes another hit. tensions with the u.s. are escalating while the euro -- lira surpasses the argentinian currency as tht

guy: turkey turmoil.

around turkey and trade, really weighing on markets. on paper.k, down it is the worst day in the month of august. selling those indexes. let's look at the move on the day for the dow. you see starting near the open, higher and then slowly -- slowly trickling lower, again its fourth down day in a row. we mentioned the russell 2000 is underperforming. we have the 2000 back below the moving average. is moving away a little bit and could see the small index. it could go bearish the for the other major averages. and the commodity index, down more than one quarter of 1%. in turn, that is laying on the materials sector. miners trading in the s&p 500 are we will see deep losses for some of the other minors. those are other shares selling off for the s&p 500. >> thank you for that. we have breaking news, the president is tweeting that agent peter fired from the fbi. longer and longer based on the fact that he was in charge of the witchhunt. hoax, no collusion, no obstruction. from trumprd it passes lawyer just this morning that he had been fired

'srket close, and turkey crisis. metals, andd oil, caused the biggest emerging market etf to plunge. su keenan has all the action. where do we begin here? su: we started the market higher , and then it was all about turkey. concerns at into trade war concerns. let's go right into the bloomberg. gtv is where you can find our library of charts. the two-year rising faster than the 10 year bonds. it is an inverted yield curve. and short, what it means generally, pain in the near-term theories the financial are being broken and that is an understatement here. doubled tariffs on turkey on friday. president erdogan signaling the finance, lashing out at the u.s. country, heme his says. the lira plunged. turkey took higher rates off the table. while it took steps to bolster its banks, analysts are wondering, was it too little, too late? the lira lost a quarter of its value, pushing down turkish assets, kicking off a selloff. let's go into the u.s. reaction. the market snapshot says it all. mentioned, that punished commodities

i dug deep into turkey. this is the tanker index, i have gone back from january and since the beginning of the year, this is down by ward he 2%. today -- by 42%. today, down by 10%, the biggest decline since 2003. the blue, the large-cap turkish lenders have fallen since then. as you know, there are issues, they of got $50 billion worth of foreign-exchange liquidity. in foreignpanies currencies, they sit on this debt pile equivalent to about 40% of yearly output. this is the fear centered on the turkish banking industry. what i thought i would do is compared to the european banking industry. the yellow line shows that, the stoxx 600 index, down by 13%. the white line is down by a mere 19%. measure, iteresting brought up the shanghai composite, the second worst-performing engine mark this year. the worst benchmark of this year in the whole world is the turkish benchmark stock index. becauseon turkish banks they are under the cost right now. tough one. is a mark, yours is timely and i like the idea that we hav

by political turmoil in turkey. for example, through refugees. is ae remind you that it domestic problem in germany in , after all, 5ere million turks that live in germany have voted for president or one in the last election -- e rdogan it is last election. you want to be seen on the side of helping. having said that, germany also has misgivings. it is a fine line you have to walk. francine: what does qatar help do for turkey? it does not replace the need for it does not replace the need for policy action to contain double-digit inflation or this massive currency debt. implementhave to capital controls? well, i think capital controls would be foolish and the more you talk about it, the whatyou get a depression you have to do is adjust the macroeconomic policy. you need to raise interest rates, show you are more prudent on the fiscal policy side. investorso convince that you are not sliding down into cronyism. certainly, the recent and central-bank appointments and the finance minister being the son-in-law, all of th

turkey? 10% inrobably less than terms of real capital controls. you might see something around the edges. full-scale capital controls like we see in other emerging markets could lead to a debt spiral for turkey. alix: what kind of downside do we still need to see in turkish assets if we don't see capital controls? ziad: the turkish bank is very creative given that they have policies against local borrowing. they will try to do everything they can sort of raising interest rates because that has a knock on effect for the economy. allies in the gulf states in china, trying to get swap lines set up to avoid capital controls or rate hikes. david: one of the things they need is foreign direct investment given the capital accounts and balance. how are they getting that investment and to what extent are they putting it at risk? portfolio flow to finance the current account deficit has been the problem over the last few years. this is the issue with capital controls. an economy that is reliant on fore

of waging an attack on turkey's economy. the latest from istanbul -- speeches defined the conversation in turkey, starting with president herder one, making it clear he -- president erdogan, making it clear he felt the u.s. was responsible for the recent turmoil, saying turkey has come under a coordinated attack and they would do anything in its power to defend themselves. as a result, he that they would be boycotting american products, shifting specifically for iphones to other alternatives and domestic options. we heard from the finance minister, who called the u.s. dollar a tool of political punishment. that shows you how the broad conversation has escalated a little notch. we will have to wait and see if the u.s. response again, either with sanctions or tariffs. we did see a recovery in turkish assets, stocks, bonds and the lira posting a bit of a rebound, but liquidity is slim, so not necessarily the best reflection of the realities of the market. the coming hours will be a test for the country as they look for sustaina

turkey, signs of more pain ahead. those remain highlighting the fragility of the economy after years of growth at all costs policy. as you can see in the chart, the yield curve inversion continues and the two year is rising faster than the 10 year notes. that is something to look at when it comes to more signs of pain ahead. haidi: thank you. we will take a look at turkey. and spreading in the longer term to the rest of the em space. theed by investor, cofounder of mobius capital. great to have you, mark. the problems facing turkey, they are fairly contained. are we starting to see a turnaround in the asian session today, a recognition of that? -- in recognition of that? >> yes, i think turkey has a small part of the index, in regard to index you are looking at. so the good news is that the etf's are not forced to sell down because of the decline in the turkish market, the lira. that is the good news. the bad news is if turkey is forced to close the exchange window, for the foreign investors, so they cannot get out, t

on turkey tariffs. we had tweets from president trump that he will be doubling tariffs on certain metals with turkey. we will keep an eye on this throughout the market reaction . julie: we are watching another volatile market situation. this having to do with tesla. directors of the company are moving ahead with their review of elon musk's bold proposal to take the electric carmaker private. cnbc reporting that directors plan to meet advisers next week and are likely to tell must to recuse himself while they consider his plan. for more, let's get to david welch. david, in the meantime, there is the sort of anti-short quest on the part of elon musk that does not seem to be succeeding. david: no, it doesn't. the shares initially gained quite a bit, but they have given all that back. it really is not driving them to the brink. it did not succeed in the first place either because the shares got as high as 300 $79, which is well short of the $420 buyout offer. the market did not see this whole thing is very

i want to focus on turkey. looking at the way they have handled the situation, what can they do to regain credibility? >> they are running out of options. they do not have credibility and looking at currency, there is fear and uncertainty. it is also an important country in terms of geography, relationships, and trade for europe in particular. at some point, a solution must be found. jonathan: kathy jones, looking at this situation, is the management of the crisis a crisis or the crisis? >> they were already fragile to begin with because of the large current account deficits. since the election, since the changes at the central bank, you have a lack of credibility compounding it. they do not have a lot of good options. they could raise interest rates, tighten fiscal policy, go to the imf. none of those are palatable. jonathan: they are not asking for help. for our u.s. audience, it is the equivalent of having jared kushner pushing out jay powell and the equivalent of having the president running the federal res

turkey is tiny. comment that fabulous on twitter saying that turkey is worth something like netflix or amazon. it is small. what does that mean for you and me? john bilton is with us from jpmorgan. i want you to explain to us mere mortals, so what? why do we care? john: good morning. you are right that calibration is ever important in looking at these issues. turkey does have domestic factors that are causing this slide. we should be concerned about contagion channels. we should put them into context. if we look at msci emerging 0.5%ts, turkey is around of emerging markets. an make upchina 50% of that. they are growing stable he. should we be concerned about emerging markets generally? a little bit, to the extent that the catalyst that brought problems that turkey is the rebound in the u.s. dollar. we have seen a rebound in the greenback. that means that last year we saw an opportunity for all emerging markets and much of the world economy to appreciate and assets to be generally supported. as we see

it exports about 5% of their gdp to turkey. with the sovereigns of poland risk toary being at turkey, the ecb has tremendous incentive to provide liquidity. jonathan: the buzz word is idiosyncratic. let's talk about what this means or broader em. i keep getting told every time i bring up emerging markets, the problem is idiosyncratic and the spillover will remain local. is today different? have things changed? >> today, you are seeing more of a broader risk off tone. that makes sense because what is most likely happening is for those funds that have exposure to em broadly, they're going to want to make sure they have enough liquidity. you go to the most liquid countries to raise that liquidity. so we are seeing selloff in local markets but i do not expect that to last. this is not the asian currency crisis. we have floating exchange rates. most countries have reduced external debt. you are seeing the weaker players selloff and that is where there will continue to be worries with the dollar rallying. i continue to believe em is

turkey has moderated a bit today. has what we have seen in the past couple of days shown that you need to be selective in em fx? >> you do need to be selective. when you have these risk on risk off markets, correlations rapidly move towards one. it is a correlation affect. people reduce risk in categories. everything you do is risk on or risk off. i would expect that type of behavior to continue as long as the volatility is high. tom: thank you for the correlation analysis. the basic goal is to move from four standard deviation down. erdogan succeed in doing that in the speech we heard moments ago? john: not at all. there has been no change in his defiant stance. tossis rate, we need to the charts at the window and talk about recovery rates. i think that is where we are. i think mr. erdogan has crossed the rubicon. it is about whether these turkish debts will see five to $.10 recovery or $.50. tom: last night in the telegraph, a blistering note, i thought it was a great lesson. he had two of our surveillance guests in

and turkey can end. or aet a compromise, complete rupture with devastating consequences for turkey's economy and america's regional strategic interests. either way, no going back to the way things work. that is pretty binary. can you give us a lay of the land and what we will be looking for in erdogan's speech. jennifer: i am sure investors will be looking for some clear signs on what the policy will be that will get the economy back on track. one thing i want to point out, this is not just something that is a problem for turkey, it is bleeding over into european banks. our columnist had a piece today that looked at what the damage there was. alix: and bahrain coming -- barring him saying, we will have a move of 600 basis points, the other option could be looking for a bailout from a imf. what are the other options in what is the reality behind the? >> one thing we have focused on is who is it that is leading the economic policy here. something that has put off investors is that erdogan replaced official

we are in talks with customers in turkey, potential turkey -- customers and developments will drive those discussions but our exposure right now easier. -- is zero. your concernssk as far as trade is concerned. i had.ee escalation it does not seem like there is any reduction in the trade concerns. what would you see on the forefront that could concern you? on the whole we are late cycle. as the oil price picks up, that is good for us, customers prop up the balance sheets, that is good for us. we still see a lot of projects, our kind of projects. likewise our maintenance contracts, multiyear contracts, we can -- 10 to be more stable, less subject to the political volatility that we are seeing in turkey and iran. those kind of things we see , our exposure in turkey is less than zero and iran we are widening down our exposure. it was not large to begin with. it will be around the end of october. the kind of businesses we are in , industrial process businesses and europe and the middle east and north america, they are stable and they continue to drive our orders and hence our strategy. are po

turkey is a nato member. if they could pull it away from nato, i am not sure they could do that, but if they were to do that, have it be part of a chinese circle of influence, maybe that would be attractive. but at least to get some ports, some facilities in turkey that they can use for their commerce, navy,so perhaps for their that would be something they would want to do. but again, they would have to pay a price, and are they going to risk a lot of money? also, most turkish trade is with the western world, so for turkey to pull away so dramatically from western europe would, i think, cause a lot of disruption for their economy, even more than they have undergone so far. yvonne: bob, always good to have you. bob hormats, joining us from new york. we have more on daybreak asia. this is bloomberg. ♪ ramy: a quick check of the latest business flash headlines. singapore's state investment firm has completed a sell down of u.s. banks, quitting holdings in goldman sachs, morgan stanley. they are distancing them

would pay turkey nothing for his release. president trump wants to know if we would be better for companies to report earnings twice a year instead of quarterly. he said today that he asked the sec to conduct a study. the president wrote it would allow flexibility and save money. some corporate leaders say reporting quarterly earnings makes companies focus too much on the short-term. the jury any paul manafort triumph has resumed deliberations near washington. they ended their first day by asking the judge the question, what is reasonable doubt. paul manafort is accused of financial and tax fraud. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. shery: thank you. coming up, from standoff to summit, why angela merkel is meeting with west mayor bruton after years of comfort -- with vladimir putin after years of confrontation. this is bloomberg. ♪ live from new york, i am shery ahn . romaine: i am

dollar paper in turkey or turkish lira paper in turkey? we have seen sharp dollar but first and foremost, the currency run is taken a huge hit on the turkish denominated paper. that's the main concern at this point given the size of the move we see. 56% depreciation this year. the pain is still concentrated their and that's why it's so crucial for monetary policy to step up and for orthodoxy to return. francine: when you look at the contagion, we saw a move in korean won. if you don't handle turkey correctly, how much will the contagion be amplified? fortunately, we have seen somewhat of a decoupling between turkish assets and other e.m. assets over the past several months. there is lower correlations and low linkages. certainly there is some measure of contagion but it's not as big as it was in the last decade. we have all been saying with the president of turkey should be saying. is it going to be a domestic audience? it's such a tough balancing act because he has received so much popular support from the population in standing up to the

and turkey. they believe it might spread over into other european markets as well as emerging markets. what that does is it hits the euro currencies. the euro currency makes up to birth -- two thirds of the basket. that weighs in on gold prices. when there is a crisis out there of any kind, investors flock into gold. you have to watch the dollar index, the gold market, you have to look for cues as far as interest rates starting to rise back up again. drop below that, i think that is when you are going to have your capitulation point. julie: talk to me a little bit about mood as well which tends to be important in these situations. is sort of animal spirits idea. -- the sort of animal spirits idea. not necessarily close to home for us in the in that it states, is there a panic field to -- feel to any -- 1.5 zero, --wn 150, crossing over that 200 level. we were trying to talk about back in february when the dow fell over 1000 points. it is going to feel like that again. you have to watch those cues

i want to focus on turkey. and how they have handled the situation. -- especially way over the last 24 hours, what can they do now? to regain credibility. >> they are really running out of options. they don't have credibility. looking at currencies, you can see there is a lot of fear and uncertainty. it is also an important country in terms of geography, relationships, and trade. for europe in particular. at some point, a solution must be found. >> looking at the situation right now, is the management a crisis for the crisis at the moment? fragile to begin with. because of the large current account deficits. since the election, since the change in the federal bank, you have the lack of credibility of compounding it. they don't have a lot of good options. they can raise industry very steeply. they can tighten physical -- fiscal policy. none of those are palatable. to the administration. >> they are not asking for help. the united states is equivalent of having jared kushner as the finance minister -- minister. i

he is under house detention in turkey. turkey said he had links to a 2016 coups. this follows the sanctioning of other officials. the u.s. is ready to escalate situation. an appeal court is ready this week which could lead to a de-escalation. yvonne: the you see this latest diplomatic spat affecting other foreign-policy issues? >> absolutely. i think it already has some ways. turkey's president said he will seek to forge other alliances amidst this bat with the u.s. -- with the u.s. he reached out to the french president and angela merkel. they will not comply with u.s. sanctions on iran that supplies oil to the country. turkey is a nato member. it is astounding that there is this risk. -- rift. we already see the shifting alliances are you this will only further that. yvonne: thank you. let's bring back oliver. is it time to move on from watching turkey when it comes to the em? it iso not know whether time to move on, but it will take longer to lay out. the question is how does europe behave? will they counter the u.s.? i think that is doubtful because they are t

turkey moves to ward off a financial crisis. we will talk with fidelity manager paul greer about the impacts on emerging markets. the ecb game of thrones, we get an important clue about who could be replacing this man as head of the central bank. have a look at european equities. the picture as good as anything. the cac 40 down by 2%. a similar fall in germany, portugal, finland, and london for the ftse 100. it is the turkey spillover. we are seeing all sorts of industries and assets decline today. a selloff in commodities. her of these are falling against the dollar. the british pound is down for the ninth day in 10. we are seeing a flight to safety. that is the evidence of the decline we are witnessing in the metals space. aluminum down 3% today. insurance your final column on the gmm function. this is dollar-layer us since monday, the three-day chart, the lira rising for a second day after it soared 9% yesterday. we are seeing a massive today rise in the lira, the biggest increase since 1994. the nation's regulator limiting .

moves against turkey. the foreign minister ruled out talks with american officials at the you when general assembly next month. washington's ambassador is calling on the u.k. to support president trump's sanctions on iran rather than stand with the eu in backing the nuclear deal. china's cfpb will take aftere in a project renewed u.s. sanctions. a news agency says it will become the lead partner in the project. it has spent millions of dollars on the project by men when it would have -- by may. probeas launched a space that aims to fly closer to the sun that any mission in history. the solar probe lifted off atop mission to touch the edge of the sun's corona. it will make 24 close approaches to the sun over the next seven years. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: thank you. more now on turkey and the worries there. deepening turmoil, the lira fell down. mliv strategist mark cudmore joining us from singapore. w

turkey has overplayed its hand. that's why the united states decided to slap sanctions on a nato ally. shery: given the president's evangelical base, how important is this issue for the presidency? >> it is quite important. again, there are many other issues, but i think president trump and the u.s. administration are willing to compromise on those issues, but not the release of pastor andrew bronson. that's why this is critical. decision to put sanctions on turkey is a symbolic decision. it won't have large economic impact on turkish economy, although the turkish lira has suffered its biggest loss since 2001 after the u.s. decision. but i would argue that the sanctions are largely symbolic, targeting two turkish ministers were close to present and one -- president erdogan. if the u.s. does not follow up ,ith further sanctions president erdogan will not change course. david: they may have been symbolic, but they came at an unfortunate time. the lira was already weakening. the bond yield was already going up. let's a

turkey is pushed to the brink. on friday, president trump added on with additional -- steel and aluminum. he threatened over the weekend to find new friends and allies. -- that he doesn't see a role for interest rates, that the exchange rate in the u.s. dollar is going to go back on a level of his own, and turkey is under siege coming from abroad. turkish assets to sell off. additional liquidity, staying away from interest rates hikes. it has been interesting to watch shoppers. they are able to lock in great deals but the fundamental question. how this will trickle through into inflation and ultimately what this means in the wider standoff between the u.s. and turkey. the question is who is really -- bloomberg news. more perspective, a professor of columbia university and the author of the new book, crashed, how a decade of financial crisis change the world. i read your book on vacation last week and it does a remark ,ob putting all of these events the eurozone crisis, u.s. banking crisis, into a cogent narrative.

the turkey story, today is all about turkey. sebastian, i'm going to say you definitely win this battle of the charts. we are watching these assets very closely. i want to just ring everyone's attention back to what we are seeing as far as the lira goes. even with the recover we have seen a fast recovery we have seen, there is still a massive drop on the day from the turkish lira to the dollar. right now, we see it trading at 5.83. that is a six .87 drop. it is also amazing that you see turkish stocks trading little changed. the istanbul 100 that you see their was down at one point almost 2% at the open. it has never covered to a loss of almost nothing. that is especially fascinating when you contrast it with the massive and accelerating losses that we are looking out across europe. may be isn't the right word, but we are to looking at a drop of 1.2%. 1.4%.x in germany down we are looking at the ibex down 1.3%. the ftse mib down 4.9%. across europe, we are seeing big drops. we see european stocks accelerating and worsening into

turkey, if we see hard lending in turkey, that will hit european companies and that will be the back door. we will fear from a lot of companies late in the reporting season that they are not able to deliver the numbers we expected because turkey has not delivered. is putirst of all, it your hands in the air like you just don't care. that would be a mistake, you say. what should investors do? should they do the research and look at the companies, and just sell everything that has too much of a link to turkey because government turkish isn't going to give in to investor demands. it isn't going to listen to the u.s. president, right? about i'm not really sure that thing. at the moment, there are two parties that don't talk to each other. in the same way as the united way toexpects an honest discuss, the turkish people expect that. the issue is that if two people are not talking to each other, that is not the best thing. that is the first thing. givee end, if both parties a little to each other, there will be a solution. matt: you are not worried about a total breakdown of communication,

or turkey and wants this to come to an end. mark: a court in turkey is considering his appeal. italian prosecutors are increasing -- focusing their investigation into the genoa highway bridge collapse on possible design flaws or inadequate maintenance. at least 37 people were killed when a huge stretch of the bridge collapsed, sending more than 30 cars plunging 150 feet. the bridge built in 1967 was long due for an upgrade. plans for the upgrades had been approved. the british foreign secretary jeremy hunt says it would be a " is notrategic mistake deal is struck before britain leaves the european union in march. hunt said that would be in the best -- would not be in the best interest of any european country. visiting several european capitals to discuss the latest in brexit negotiations. students at marjory stoneman douglas high school in parkland, florida are finding beefed-up security as they return for the new year. 17 people were killed in february when a gunman opened fire. the new measures will cost more than $6 million, including 18 safety monitors, classroom locks, and

henry: the real question in my mind is thinking about turkey g8 -- turkey geo strategically. it puts turkey in an important point from a western standpoint. you have seen it back off from nato and is turkey's overtures toward russia, arms purchases come a step in that direction or is it going to remain western focused? marcus: turkish lira gaining ground. authorities making it more difficult for banks to shore the currency. they have done a de facto rate hike, but gone around it by making it more expensive to borrow against the lira. if they did hike interest rates properly, it would be a major step forward for turkey and we would see a wider e.m. rebound. scarlet: u.s. stocks on a broad-based selloff domineering declines around the globe, commodities as well. materials and energy stocks are the worst performers because we are seeing weakness and metals. romaine: when you look a lot of the base metals, copper and even the precious metals space in gold, you have to wonder what it is telling you about the economic picture globally, particularly in emerging markets nations and i

turmoil in turkey. each day brings new twists as investors looked on with alarm. >> the market reaction tells a powerful story as to the insufficiency of the latest move. >> turkey is trying to rewrite the practice management chapter in the playbook for emerging markets. >> the u.s. and china resume talking about trade talks. cryptocurrencies go on another white knuckle ride and elon tesla plan to take private puzzles the market. >> the sec is taking this to the next level. it has become a more serious investigation. >> tencent and walmart lead a parade of earnings reports. >> we are seeing this first profit drop in a decade send shockwaves. >> this is likely the earnings peak in retail earnings. >> the challenge of getting excited about equities, all the investing in e-commerce. >> it is all straight ahead on "bloomberg best." welcome. i am david westin and this is "bloomberg best," your weekly review of the most important business news from bloomberg television around the world. in the market -- momen

we will continue our discussion on turkey in a moment. we talk about how the crisis is spilling over to the eurozone and emerging markets. ramy: if you need your campaign -- crafting six, the ceo of coffee box. taking on starbucks in a booming market. this is bloomberg. ♪ mberg. ♪ ramy: we are counting down to the sydney open. there is the sydney opera house you are looking at on monday morning in the asia-pacific. futures slightly higher, up .2%, but lying what we saw in the -- belying what we saw in the red. with the geopolitics moving around the world, you look at china, turkey, russia, i am ramy inocencio in new york. haidi: i'm haidi stroud-watts in sydney. we want to get back to the topic of turkey because the question is if it is in the us and credit -- if it is idiosyncratic pace, stop these,oved to stemming the bleeding for now. tensions with the u.s. show no signs of abating. they are escalating. joining us is a managing director. happy monday. here is a chart to start our conversation. this is looking at correlation risk be

be to turkey. with bulgaria being at risk to --key, the ecb has a trichet tremendous amount of incentive to provide some liquidity. >> let's talk about what this means. i keep getting told every time we break up and emerging-market will just spillover remain contained. is today different? have things changed? >> today, your seeing more of a tone. that makes sense because what is happening is for those funds exposure, they're going to want to make sure that they have enough liquidity. so you go to the most liquid country to raise that liquidity. we are seeing some selloff in the local markets. i do not expect that to last for long. this is not the currency crisis. we now have floating exchange rates. most countries have reduced their external debt. your seeing weaker players, argentina, south africa selloff. that is where they will continue to be some worries with the dollar rallying. idiosyncratic, not just a class that is going to be at risk to further contagion. >> i will take the other side of t

give turkey the weekend? >> turkey is under intense pressure. steven mnuchin saying to that the trump administration is considering additional sanctions against turkey. they've got them ready to go. the s&p is going to take a look at the credit rating of turkey. there are other factors besides of the release of this pastor. you have got a deteriorating economic situation, the threat of syrian refugees going across the border. let's bring you into this conversation. angela merkel is going to be i amng vladimir putin and curious about where the risks and opportunities lie. what is her objective? she is worried about turkey, the relationship across the atlantic , the president of the united states is not keen on the north atlantic to project. what is the objective of this meeting? side has, the german been reluctant to define any clear goal. first of all, what they say is it is good they talk with each other again on this high ranking level. progress in the ukraine conflict would be much desired. the minsk agreement has to be fulfilled. of course,

scarlet: more on the market acted in turkey -- action in turkey and contagion, we are joined by michael harris from london. great to have you join us again and thanks for staying up late in london. your message when it comes to turkey is that it represents perhaps the end of our tolerance for more risky investments. you could see the turkish financial crisis as perhaps a leading indicator. but a leading indicator for what? turkey has all his been perceived as the canary in the coal mine for global risk. ,t grew up before the peso did before nasdaq. it's a risky market. the thing is, we cannot definitively say this. usually if it blows up -- by the way, there was a lot of pressure in 2006 that preceded the global crisis. it starts to tell you -- there is some jittery components associated with global risk appetites. one of the things that always supports turkey is global risk appetites so when it's not working, you know that there is some weakness there. that said, because they have done nothing to try to calm down the markets, it's too much to read into this that it is just a global ris