Carlo Ancelotti's Everton can become "the next proper challenger" to Liverpool in the Premier League, says Reds manager Jurgen Klopp.
The Toffees top the table with four wins from four under the Italian, who was appointed last December.
They host champions Liverpool in the Merseyside derby on Saturday.
"What I think about Carlo Ancelloti was never a secret. I couldn't respect him more. He's a wonderful human being," Klopp told BBC Football Focus.
"When I heard he was going to sign for Everton I thought 'Uhhh, the next proper challenger in line'.
"They did the perfect business in the summer. They found exactly the players that they needed to improve an already pretty good football team.
"Together, getting more used to what Carlo wants them to do makes them a pretty strong team."
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Ancelotti succeeded Marco Silva as Everton boss, having won league titles in Italy, Germany, France and England, with Chelsea in 2009-10. He also has three Champions Leagues to his name as a manager.
Everton, 12th in the Premier League last season, have not finished higher than seventh since 2013-14.
After strengthening their midfield this summer with the signings of James Rodriguez, Allan and Abdoulaye Doucoure, they have a 100% record from seven games in all competitions this season.
They have scored 24 goals, with newly capped 23-year-old England striker Dominic Calvert-Lewin netting nine of them, including two hat-tricks.
Klopp said: "Calvert-Lewin, I really expected him to make big steps in the next few years and he did," said Klopp.
"He has everything you need in a top striker: size, mobility, speed, desire, technically really, really good, in the air, finishing with his head, both feet.
"And now it all works together - both wings have top-class players with James and Richarlison. Midfield, Allan plus whoever plays there, if it's Sigurddson or whoever.
"So it's a really, really good team and the last line works better because in a good team it's easier to defend. That's what you see when you watch Everton, so it will be a really interesting game."
Watch the full Jurgen Klopp interview on Football Focus on BBC One on Saturday at 12:00 BST.
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