Conversation with the chairman of estee lauder about sustainability. This is the picture for your markets. Bonds, edging low. The dollar is dipping. Treasury ahead of the federal reserves last meeting. When you look at the euro, its mainly drifting on the back of what investors proceed as a possible risk of catalonia. You can see the common currency in europe gaining for the Third Straight day. Lets get the first word news. The u. S. Has blamed turkey for the instigation of the crisis between the two countries and a resolution will be needed on why americans were detained in this year. The u. S. Ambassador to turkey issued a video statement on youtube. The embassies stop issuing nonimmigrant visas which prompted a metallic terry retaliatory response by turkey. Theresa may has one support. Gois johnson and michael praised her strategy after outlining contingency plans to leave the eu without a deal, asking businesses to prepare for the worst. May said it was in the eus court, although that has been rebutted. As election campaigns get underway in japan, the labour party is not sure if the Donald Trump Administration is stable due to the many personnel changes. The tokyo governor comments came even as she affirmed the importance of the u. S. Japan alliance. She also criticized Prime Minister shinzo abes economic policy. Economics is not sufficient. I believe further boosting the engine of the economy for the private sector standing on our own feet as a much healthy weight rather than relying on extraordinary policies of fiscal packages. Global news 24 hours a day in more than 120 countries. This is bloomberg. Francine thank you. Government determination to break from spain faces its day of reckoning. They need to consider a declaration of independence which make cause backlash and economic isolation. Lets go to barcelona where maria has the latest. Where the possible scenarios today . Maria good morning. Regionalon the catalan president who is meant to address parliament at 6 p. M. He could go for a symbolic declaration of independence where essentially he says the valid and will work towards a republic. However, no deadline, no unilateral declaration. That is what the platform wants because they fear it will create economic chaos. On the other side, we know he can also go and press ahead. The unilateral declaration, catalonia becoming a republican the next 48 hours. Francine what does madrid do after that . Is it a done deal they declare unilateral independence . Maria absolutely. They have made it Crystal Clear from the beginning. Yesterday, the deputy Prime Minister and the Justice Minister said if we get anything that remotely looks like an article of independence, we will invoke the article 55. Its clear that a lot will depend on what is being said here but if they have to invoke the article, they will. Francine thank you so much, maria. Joining us on set in london is the Unicredit Bank head of strategy research. Welcome to the program. How do you trade on the back of catalonia . Do you wait on something to happen or hedge . Guest i think the two messages that the market has sent first of all, i dont think they are perceiving it as a broadbased think that will have any effect. You can actually see that. Outside those in spain have barely been affected. Even spanish assets have not penalized extremely. If you take a look at spanish spreads, they are trading in the middle of this years range. I dont really think there is a i amere other than optimistic that in the end we will not have chaos in catalonia and albert any potential avert any potential independence in which i think spanish bonds will become quite attractive. For the moment, largely because there is a lot of Headline News francine what happens if there is chaos in catalonia, worstcase scenario . Vasileios i think than the natural thing to expect would be significant selloff in spanish bonds. Potentially the periphery will send off, but i think i will expect the spreads not just against germany but also portugal will widen. Francine does it actually impact ecb policies . This is a simple chart looking at the spread between spanish and german bonds. Does the ecb run out of options . Vasileios this is a simple charg i dont think that under reasonable set of assumptions that this will impact ecbs policy. At the end of the day, we had another a number of businesses that have precommitted with i dont movi. In the end, there is likely to be a disruption in the fastestgrowing economy in the eurozone right now, but it is unlikely we will have a meaningful slowdown. Perspective, i dont really see it as a game changer for the ecb. Francine what is a game changer . Is it euro level . Vasileios they look at it, but there are number of things. We have to realize ecb is not potentially glued to the bloomberg screen they should be. Francine that is a mistake right there. Vasileios i think what matters for the ecb is trade with europe. This year, we have seen a significant divergence between gains and trade in bureau and trade in the eurodollar, because of that has depreciated. I dont think 1. 20 represents a line in the sand for the ecb, to the extent that trade euro depreciation does not get out of hand, i think the ecb will remain relatively comfortable. It is about 4 daytoday which is still a but nowhere near the gains we are seeing in the eurodollar. Francine do you think trends in European Growth are Strong Enough to put one side to the populism . I dont know if you call it populism or extreme parties that have not had a huge impact simply because the dont have their economics in line. Vasileios i will take a step back. I think that there has been a rise in what we call either populism or extremism, or far right parties. I dont think it has been such an increase to the extent that it advertisers are communicating the media by analysts. I have think the potential consolidation of the forces that were there in the first place and they simply gathered the forces together. To the extent that this consolidation was the result of growth in the eurozone and to the extent now that we are coming back into far more whichnable growth importantly is the case for pretty much most eurozone countries, i think yes, it does a blowe power to dent into the consolidation of powers. Francine because we are still waiting on the answer from the german finance minister, will you be buying any bonds or is that shaken at the moment . Shortterm, you can stomach some of the volatility, i am still very optimistic in the eurozone and therefore i dont exclude from optimism peripheral bonds. Francine thank you so much. He stays with us. You should also stay with surveillance because we have plenty coming up, including theresa may outlines her contingency plan for brexit. Later, we will go live to johannesburg to speak with a inding candidate to replace the African National congress. This is bloomberg. Francine good morning, this is bloomberg surveillance. Lets get straight to the Bloomberg Business flash. Kobe steel has released an industrial scandal that has reverberated across asias secondlargest economy. Falsifying data related to strengthen durability due to aluminium products used in cars, planes and maybe even a skate space rocket. They used materials from kobe steel that were subject to qualification. Boeing said nothing to date races any safety concerns. Deutsche bank ceo john find is losing the support of some investors seven months into his turnaround plan. Of the banks of three largest stakeholders said they want to see a turnaround in the next three quarters to continue to back cryan. An external candidate may be the best option to replace him. A spokeswoman declined to comment. Sheresa may kicked off thi years luxury rebound is set to continue. Sales grew 10 on an organic bases helped by an increase in leather. News. E on the francine thank you so much. The u. K. Prime minister theresa may will outline contingency plans for leaving the European Union. She made enough overtures to brussels and that the ball is in their court. Referring to the eu demand, the Eu Commission says that the ball is in the eu k court. I dont know how to cut through the noise to try to understand exactly what is going on. Can you . Vasileios i will try. Francine please say yes. Vasileios i can say we are definitely trying to do that. I think at the same time we have to acknowledge that over the past six months that we had a number of backing off as far as the u. K. Is concerned. Initially, we had the acceptance of the sequencing. Right now, may is talking about money settlement, settling the amount of money owed to the eu. I think gradually, potentially at a slow pace, it is becoming clear to the u. K. Government that they will be the one that will have to make potentially all of the concessions as we go forward. I think this is what the market is doing to a certain extent. We have the dollar rebound in the september 7. The only currency that has stayed flat and slightly appreciated has been cable which has been supported by the bank of england expectations for november rate hike. I think from a market perspective, it is very difficult to trade cable, sterling against the dollar. It will be subject to a lot of headlines and it also has a lot buthe dollar attached to it i remain bullish. Thecine this is eurosterling and the money chart we are looking at and you can see that. The question is if theresa may, if she needs to negotiate and actually lose out and give in, does she stay in power . If she does not, what comes after . There seems to be a million scenarios. Vasileios absolutely. You have to ask yourself the lose out,f she does job . Anyone else want the Francine Johnson wants the job. Vasileios it will be an job . Awfully difficult situation and a big burden politically to carry on. Basically being the one that proclaims defeat as you go into negotiations with the eu. I dont know how the Political Landscape is going to pan out. All i do know is i still maintain the view that on one an economic perspective, the u. K. Is the one that will lose eventually at all these negotiations unless we get a second referendum or whatever. Then u. K. Stays within the eu. At the same time, sterling will be subject to a lot of headlines. The problem we have with sterling fundamental models thrown out the window we dont have a fundamental output because we dont know the extent of the damage of the u. K. Economy. Eurosterling will remain appreciating, largely because uncertainty will generate a coming out, close of the u. K. Close to the eurozone. Thecine thank you so much, unicredit head of strategy research. Thank you for being with us. We will bring you an exclusive interview with Charles Evans tomorrow at 1 30 p. M. U. K. Time. Anstill to come, south african secession. The leading at candidate to take over as head of the National Congress. This is bloomberg. Francine this is bloomberg surveillance. Lets turn to south africa and the developing race for head of the countrys ruling African Congress party. The successor will be chosen at the National Congress in september and become the partys president ial candidate in 2019. Joining us live from johannesburg is one of the leading candidates. Thank you so much for joining us today. You have announced you are running for president in december, why . Guest well, i have been indicated theyey want to see me occupying that position. I have to indicate my readiness and acceptance of that. Playieve i have a role to in assisting the organization to rid itself of divisions, infighting and build unity, but the unite everyone about organization so we can deal with problems of irregularities and fight corruption. Ensure there is a clean government and building the economy. I believe there is a huge contribution to be made. Francine your competition includes the current south african deputy president. Who do you think can win . Do you really think you can win . Mr. Mkhize well, i believe that i have the right qualities to be able to make it on the job. I have given the anc the opportunity to select the best amongst us. Francine will you be able to keep the Party Together . Mr. Mkhize i believe so. If you look at my forecast, talking about building unity, stopping the infighting, and also reviving the organization around its founding values of i believe society, that is where we need to forecast quite strongly. If you look at the similar role in the past where i worked with leadership, we were able to take a lot of lessons on how to deal with frictions, divisions and how to tolerance. One around there is vibrancy in the youctures of the anc that can criticize and criticize must be taken seriously. We can renew ourselves with our conduct with our constituents and our people. I think it is possible to do it. I like a speak about what can be done. Anccine do you think the will go on in the National Election of 2019 if you become leader of the anc, what is your mace may message . Is there an angle you need to make sure that people get to vote for you . Mr. Mkhize i think that the African National congress coming from the conference needs to reach out to all the constituents in south africa. The businesspeople, the religious community, the traditional leaders, the youth, the women, civic organizations to say to them we need to bit work together, rebuild of that vision of a broader, United Nation of south africa with a strong and vibrant economy where we can deal with the problems of jobs, unemployment. Grows show our economy but also ensure the people that have been left out, people participating, the industrialists. I think that is what the country needs. To move and ensure all of us moved together. I think we can reach out to the people to build a country through the African National congress. Francine what is the view of the government on businesses . Mr. Mkhize firstly, we want to be able to show strong action on corruption and make sure there is Good Governance in government. Stateso the issue of capture with it has been allegations of undue influence. That needs to be investigated so we can approach it and make legislation to prevent them. Also take action where people punished, punished, investigated, prosecuted. We need to work in that direction both in government and within the party. Many to take a very strong stand against corruption. I also know the anc and all of its members and leaders, everyone is serious about fighting it. We need to be optimistic. There are good people in the organization to approach corruption. Francine the president has been implicated in a multitude of scandals. Do you think he needs to finish his term and how do you rate his leadership overall . Mr. Mkhize look, i think there has been a lot of achievements, a lot of challenges that happens to a person in that position. , the anc will have to take a position on what happens to the president. Of the an course, when the matter arises, it is up for the anc to take deposition. Francine much of the talk has been about redistributing existing wealth. How would you go about it . Mr. Mkhize this is about looking at the history of the country, a lot of have been left out of the economy. Are very scarce among the indigenous people. Their access to finances, opportunities, to market is limited. Me to open that up and make sure our economy is able to grow on the basis of a broader base of ownership so even the peasants of investment must not have a new you look at the procurement reforms, open up new suppliers. That is what we are trying to do because of the stability of the country going into the future will rely on the broad participation, ownership. It will mean a lot of skills transferred, technology transfer, managerial skills transferred all of this is important. I think it is about building a more, much broader base for the economy. There are also areas we believe there have been restrictions people have not been able to participate properly and this needs to be all been up. This is about broadening the participation. Francine im looking at a chart using the bloomberg terminal and we can kind of seeing going in in a zigzag. What do you think investors want from south africa to invest safely, to go back into the country . Investors i think would like to see a stable environment politically, where there is peace, regularity of elections and everyone knows it is stable. Secondly, we need confidence in government in terms of its know whatgime so they to invest in now. The economy will be stable as long as investment lasts. Endings without any undue influence, delays. At the same time, the systems can allocate the Financial Institutions are strong, because it usually a strong. All of these are things we need to build on. What we need to correct there is a sense of. Uncertainty. What do you think needs to happen . Issue, there needs to be the ministry in the private sector, there is a lot of discussion. The idea is the use transformation at the same time they restructure. The industry must he able to manage, that is something possible between them. The courts need to intervene. There must be a cooperative arrangement that gets us to agree on what it should actually be about. Need to facilitate resolution of this matter. Were hoping its time to encourage the Mining Industry to look at. Lets be patient with each other. Much or thank you so your time. General the treasury with the amc Party Congress in africa. Thank you so much. We have some breaking news out of the u. K. Production is a little the other than expected. Construction out but is a little bit better than suspected. This is why we are not much of an impact on the pound. Private and to wait for a trend to emerge and lets get to first word news. Considersia independence spain. They have said the dispute cannot be a basis for secession. Three more companies are leaving the region. They are shifting their legal had orders to madrid. This is the only firm left in the benchmark. The u. S. Is lame turkey for it to get the latest crisis between the countries. At were to turkish employees an american outpost were detained . The white house and state department are sil