Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240714

Nejra good morning, everyone. Welcome to daybreak europe. Its 6 00 a. M. In london. Will powell spoil the . Policy the s p 500 gaining 1 at the height of its rally. We are flat on futures today, the 10year gilts up a basis gont, yesterday we saw it toward 2 . Will we break through that 2 level . What will powell have to say for that to happen . We saw the impact can bull markets in europe, hitting negative territory for the first time. Lets look at what were looking at elsewhere. Emerging markets, a little bit of weakness in the lira, suffering from fresh potential sanctions risk. We wait to see if it lasts. Wti crude on the front foot today as well in todays session. Lets check on the markets in asia, Juliette Saly has more. The rally were seen in global in europe ases well. Jumpre having the biggest since early january, you can see the nikkei up by 1. 8 in late trade. Its really hong kongs market, jumping the most since september of december of last year. Austrian share market getting close to alltime highs, the strongest level since december 2007. And a big surge coming through in indonesia as well. Lets look at some of the stocks in detail. Casinos getting the optimism talks do seemxi like theyre going to happen, and youve seen mgm china as much as 11 rise in hong kong today, now up by over 7 . No mirror has been one of the stocks hit hard in the tokyo session so far this year, down 19 . Rising the most today since november 2016 after it announced Share Buyback of ¥150 billion. And a lot of Property Developers in indonesia look solid after the luxury tax on condominiums u. S. Aised to 2. 1 billion dollars, tripling from the 10 billion that it was at. Its hard to find losers in the session in fact today. Saly inuliette singapore, thanks so much. They will meet for extended talks. Here is what trump had to say about it as he kicked off his 2020 Reelection Campaign in orlando a few hours ago. , i spoke to president xi terrific president , a great leader of china. I spoke to him this morning, and we will see what happens. We will either have a fair deal or we will not have a deal at all, and that is ok. Simon,joining us is great to have you here. We saw the rally in Global Equities as soon as we saw the tweet from President Trump. Overdone . Little should not be over interpreted. We are just as likely to get a followup tweet throwing the toys out of the pram. This was the start of the Reelection Campaign, undoubtedly the president wants a economy to. E running as hot as possible when does he calculate that he needs to step back from trade and try to get some momentum going back into u. S. Households by pulling back the tariffs . Thats what the market is having to calculate right now. Nejra doesnt give the fed a little justification to be dovish . Simon it gives all the justification you need to sit tight and wait more data and more signals out of the white house on how broadbased the trade conflict is going to be. Theres u. S. Mexico, u. S. Europe, u. S. Canada and japan. Theres a fairly low cost of waiting at this point for further information before making the next move on policy. Nejra i did talk about equity organs but were seeing it elsewhere as well. Are markets pricing at the moment in terms of the outcome of these trade talks . Simon i think its difficult to say. They are hedging their bets because they cannot predict this one. We have confidently believed that there would be a resolution dependency between china and the u. S. , and particularly u. S. , based on the political cycle, the president will want his cake and eat it. He will want to talk hard totoric but also not want tax households and businesses in the u. S. With higher tariffs. He will want to step back and provide that momentum going into the second half of 2020. I think markets should price in some stepping back from the harshest rhetoric. Ofra we are seeing a lot concern from businesses around the trade wars. Consumer sentiment is holding up ok. Who should the fed pay more attention to at the moment in regard to the trade war, businesses or consumers . Consumers can be a lagging indicator. Simon archly Consumer Sentiment comes down to wages and employment. There we have not seen the effects on u. S. Employment. The Federal Reserve like the rest of us are not really sure where the natural rate sits or if we have gone below the natural rate. Consumers are rightly saying were going to be fairly confident. We have to be mindful that the people who have their finger ghtly better on the pulse the Business Confidence has rolled over. Word on this,al it is from a very high point, this confidence. Most u. S. Metrics have bumped their longterm average. Nejra in terms of kneejerk reactions, lets talk about the yuan as well. A lot of market watch are saying as going to stay steady for of days in succession. Thend the g20, do expect yuan to break through seven . Simon we do, but from the perspective that there are signals that the monetary loosening and the fiscal stimulus in china has reflected the domestic economy in the most Interest Rates stimulus sensitive sectors. But it is insufficiently broadbrush. Tiny authorities want to be from when they attempted a similar thing. We obsess somewhat in this market about the cross rate. I think it will breach that simply because in order to hit the compete target from the they will need all the ammunition firing at this point in the cycle. Nejra simon french stays was stays with us. Lets get the first word news with debra mao in hong kong. Closec and its allies are to the timing of their extreme. The compromise option is a summit in vienna on july 1 and second. This is the third set of dates to be considered after russias initial request to shift the timing from june to july. It could end with the feud on when they should discuss output policy for the second half of the year. President mario draghi is set on pushing the limits of the ecb firepower right up until he leaves office. It could include both Interest Rate cuts and asset purchases. Turns to who will replace him after october. Nationalist it should not matter at all. These things matter, obviously. Confidence and good communication are relevant. Concern about the impact of a prolonged trade war. The value of shipments abroad fell 7. 8 from a year earlier, slightly less than. 4. A trade deficit of 8. 9 billion. Europes richest man has just joined the exclusive billionaires club. He joins the only people in the world worth more than 100 billion. 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. This is bloomberg. Debra mao in hong kong, thank you so much. Up next of the fed debates the merits of rate cuts as the president ways to legality of pushing jay powell out of the chair. This is bloomberg. This is bloomberg daybreak europe. The Global Equity rally is alive and well in asia, fueled by news that President Trump and xi will be meeting at the g20. About the g20 meeting the tenure japanese yield dropped by two basis points. You can see it deeply negative territory along with a number of european bond markets. Future splat after we saw u. S. Equities jumped more that 1 yesterday. Back in a Holding Pattern ahead of the fed. Potentialeakening on sanctions. Today were asking the question, the drop on the treasury yield yesterday. What will it take to push it below 2 . What will Jerome Powell have to say about it today . Bloomberg business flash from debra mao in hong kong. Boeing comes back with the showstopper deal. A letter of intent for 200 of the grounded max jets. 24 commitment is valued at billion dollars. It gives boeing and opportunity to turn around the narrative concerning its biggest source of profit. The ceo said he would get on board the max tomorrow. The Deutsche Bank chief executive is planning sweeping changes for top management. He may take control of the Investment Bank on an interim basis while the lender searches for a permanent successor. For new plans cryptocurrency are facing angry pushback from lawmakers. Chairman Maxine Waters urged Halting Development of the token until regulators can examine it. Others question if the coin called leeper would have appropriate oversight. That is your Bloomberg Business flash. Nejra the white house is said to explore the legality of promoting Jerome Powell soon after President Trumps news about firing him. We are told the white house came to the conclusion it would be questionable to fire him without cause. The president was asked whether he still wanted powell demoted. Lets see what he does. What is going on with the euro, they have a much different sense than our folks do. Frankly, it helps that part of the world. We will see what happens. They will be making an announcement pretty soon, so we will see what happens. Nejra conviction the people cut rates this year. Investors are refreshing their portfolio to prepare to return to global dovishness. The pile of negative yielding debt grows larger. Here is dani burger. Weve seen this return as weve been talking about the ecb yesterday, policymakers saying the cut would be one of their first moves for added stimulus. Where are we seeing investors going to for the qe trade . Are bond fromes italy, spain, france, french 10 year yields hit 0 for the first time. But the shape of the bond trade the gleick curve flattening. Longduration is a performing because longerterm securities, the ecb still has room to buy. This time its the american credit edition. Investors overseas, its almost a necessity to move into u. S. Credit to look that income, that yield, according to bank of america. Helping golden generally of sectors are doing better. Lets say the fed clears the way for some rate cuts, maybe not today but in the future. Playbook, isis era it necessary . History might suggest so. When weve seen cuts from the fed just as the economy looks to be getting light cycle, soon after we do see a recession. Context,ut it in yesterday we saw the latest bank of america survey. That we are ins the light cycle of the economy right now. Nejra great work. Simon french is still with us. The cutst deal with first. Normal people are saying we could get the double whammy in one go. I want to ask if that is a possibility maybe in july or september. In the past, the fed has opted for a half percent move in the from 20012007, as you can see from the chart. It may be possible. I dont think it is justified, but it doesnt matter what i think. The problem with the 50 basis point mood move, in those moments, the economic deterioration was very clear for all to see. If you look at the underlying data, particularly the u. S. Economy, it suggests that kind of policy action is justified. I think markets would interpret the fact that there is more than they are letting on around the deterioration of the conditions. Traditionally its been nonfarm payrolls, the added amount of jobs per month has gone below 100,000 per average. We saw 175,000. Norm lee the first normally the first cuts come months later. Be too much of a preemptive action . I think that is the point. Labor market doesnt justify a fed cut at the moment. What about inflation . Simon right to say the inflation isse for a stronger case for the fed to stack up. 10 prices down more than versus the march forecast. Youre going to start to see potential longterm under shoot. One of the things you simply do not know is whether the hawkish news regarding our man, the policy action from opec, how that will move the dial. Also core inflation in the u. S. , still on an upper trajectory. The fed wage tracker is still about 3. 5 year per year with no signs of starting to plateau. 50 basis point at this point, i dont think its justified. Nejra based on the feds mandate, you dont think the cuts justify it. Not,er it is justified or what does Jerome Powell have to say to stop volatility in the markets and stop the backup it treasury yields . Heon first of all, shouldnt be guided by that unless there is a rich risk to financial stability. Youre right to point that the market has positioned itself are multiple rate cuts in 2019. If hes not going to deliver those, he has a difficult communication challenge on his hands because he will have to disappoint the markets without thatng the downward spiral is possible. Is totally out of kilter in terms of pricing for the rest of the year. Nejra allocation to equities dropping, allocation to cash rising. The most powerful trade is not treasuries, then worry about the trade war is the primary concern. Our question as, what could push the 10 year treasury yield this low, 2 . Could powell say anything today that could push that teen year yield below 2 . Think he can push it below 2 simply by effectively guaranteeing a july move. Those in the market who are skeptical the fed will follow through with multiple rate cuts, if he signals a july move is , then youve got to move below 2 fairly readily. Whether it will remain below 2 is an interesting question. Ifmuch of it is linked to the trade war deepens and becomes more protracted or do aer both president s deal at the g20 and then you can see a rapid reversal out of the crowded trade at the long end of the treasury curve. Nejra would that solidify the case that the fed should not be show a lot of people recessionary signals on a formulaic basis because the shape of the yield curve will signal or has historically signaled reliably a recession. I more skeptical. Trillion dollars of quantitative easing over the last decade. Thinking about what the yield curve tells you, it tells you a lot in terms of its shape. It doesnt tell you a lot around what wall street is able to finance which ultimately is where the yield curve normally tips the economy into recession. There is skepticism as to whether the signals are still valid. Nejra coming up, live coverage of the feds latest policy decision at 7 00 p. M. London time, followed by Jerome Powells announcement. This is bloomberg. Nejra this is bloomberg daybreak europe. Word newsthe first with debra mao in hong kong. U. S. And china say there president s will meet in japan next week. The summit is aimed at restarting trade talks after a month long stalemate. They will hold an extended meeting at the g20 in osaka. President trump had repeatedly threatened more tariffs if president she spurned the opportunity to talk. , i spoke to president xi terrific president , a great leader of china. I spoke to him this morning at length and we will see what happens. We will either fair of either have a good and fair deal or we will not have a deal at all, and that is ok with the compromise option is a summit in vienna on july 1 and second. The first set of dates to be considered after russias initial request to shift the timing from june to july. It could in the dispute about when to discuss output policies for the second half of the year. Boris johnson has extended his lead in the race to become the uks next Prime Minister. He looks poised to pick up more votes as the hardest brexiteer in a contest has been eliminated. We will see the field whittle down from five to the final two. They will then be voted on by Party Members to determine the winner. Japans exports fell for a six consecutive month in may at into concern about the impact of a prolonged trade war. The value of shipments the broad fell 7. 8 from a year earlier, slightly less than forecast. Ofleaves a trade deficit 8. 9 billion. 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. This is bloomberg. Mao in hong kong. Thank you so much. Today marks the end of a forum followed by the end of Mario Draghis tenure as president of the central bank. Though he is on the way out, he has not been holding back. In the absence of improvement, such that the sustained return of inflation or is threatened, additional stimulus will be required. We remain able to enhance our Core Guidance by adjusting its bias and its conditionality to account for variations in the adjustment path of inflation. I just said a moment ago that we are ready to use all the instruments that are necessary mandate, andthis we dont target the exchange rate. Mitigating measures to contain any side effects, looking at the indicators we see the path of inflation is converging more slowly than expected. We will use all the flexibility within our mandate to fulfill our mandate. Miller, some stunning moves in the bond market yesterday. An inflection in those Inflation Expectations. Mario draghi certainly has the words of whatever it takes, but does this show that investors have faith that he will deliver . Is the most important question, certainly. As you mentioned, the Inflation Expectation did finally bounceback up. It was that drop that likely drove the ecb and mario draghi to make these bold statements. The other question is, what kind of bold moves will follow . Equity markets have taken quite well. We saw the rally yesterday of more than 2 in most of the major european averages. What could he do besides that . How difficult will it be for him to restart asset purchases . He will certainly face legal challenges from germany, if not others. And how much time does he have left . Hes only got until november and hes followed by a new ecb chief. Its going to be difficult to continue on this kind of dovish program with a hawkish replacement. Ofhink there are still a lot questions open in the process but the market certainly shows you they stand behind the ecb or at least they didnt want to get in the way yesterday. Coverage from you yesterday. What are you listening for today . Jeanclaudee juncker coming to make a speech today. It is fascinating because theres the question of whos going to replace mario draghi, and also the question of who will replace juncker. They may trade that position for the head of the ecb. The other question is, what about fiscal stimulus . They made a bigger call for it yesterday. Any comments from juncker about fiscal stimulus and could we see some government shift toward that or changing the rules allowing mortgage from countries like italy, for example. Theres a lot to talk about. I will speak with the head of Finnish Central Bank and the portuguese central bank. That should be interesting, all this afternoon. Nejra so much to look forward to, i hope the weather holds up for you there in portugal. Simon french is still with us as well. I mentioned the stunning drop in , arst renewals going below zero as well. Hismario draghi going to in tenure with a cut . Simon i think he may well do. He would want to ensure the thatssion is done in a way isnt going to be disorderly for markets, that the markets could be softened by a cut, then he will i guess thats the best chance of achieving that. I will go back to comments around what is this trying to achieve. It is not clear to me that the typesm here is one of two , a lack of credit and liquidity in the eurozone economy. The problem is not political. Fiscal union, more political , and ill pick up on matts comments. The fiscal challenges not one of capacity. Politicalnes of horsetrading that needs to take place to expand the fiscal envelope. Very difficult politics in italy at the moment between italy and the commission to be able to say we was take a more accommodating fiscal stance. Refer torio draghi did that in his speech as well talking about the common budget of the euro zone. Just on the crisis in the playbook coming about now, in relation to the fed as well, we are seeing the curve flattening nurse in those countries that would benefit from more qe. A bloomberg reporter saying the first move from the ecb according to officials would be that cut and were talking about a 10 basis point cut. What drove bond yields lower was talk about taking away the selfimposed limits around qe. Would you expect the ecb to actually deliver on that . Simon there are two parts to your question. Deliver . Cb would it be effective . It comes back to the transmission mechanism. Is the weakness in core inflation stuck stubbornly or falling below 1. 2 , is getting that higher going to be addressed by reducing some of the rigidity around the qe program . I find that very unlikely. Ultimately, what mario draghi and the ecb need to calibrate is when they are giving policymakers political decisionmakers more time to get their house in order, is that going to be effective . Qe a. Schu time but nothing more. Time inhat about conjunction with the fed . I know you dont think its justified, but if we were to get that this year, does that put upward pressure oh on the euro via a weaker dollar which might mean the ecb has to follow on the fiscal side . Thingsit would, but all are not equal. Part of the dynamics on the crucial dollar euro cross rate will be the trade war discussions. Therefore, yes, the Central Bank Divergence or deconvergence toward coordinated cuts is a race to the bottom. Its clear from the president s comments that he would like to but thatker dollar heaps pressure back on the euro to follow suit in a sort of race to the bottom. I dont think that is healthy for the markets but it may be where we find ourselves within a matter of weeks. Simon french stays with us. Lets check in on the markets around the world. Great to have you both with us, as always. Indian stocks higher for a second day, how much of a gain backed by this optimism around trade, now weve heard of the meeting between trump and xi . Morning. We badly need the world to do well. Markets have risen but not as much as the screen shows you. I must tell you i think after Mario Draghis, came out, the bond market came off quite rapidly. To 2017 those. E equity markets are a bit more tempered. Nejra thank you so much. Powering risk assets higher throughout most of the globe. A bit of a pause in u. S. Futures. What sort of investors positioning for, the question is can powell spoil the party . Quickset is the big question. Rallying. Ties are is the trade glimmer of hope we have, President Trump and xi meeting at the g20. Japans nikkei up more than. 7 . Really a strong rally. Lear is down. 6 after president fresh sanctions on turkey. Taking up thes global rally were europe left off yesterday. Dipping into negative territories and commodities, brent crude is slightly higher. Opec and friends are gearing toward having a consensus. Cut, it a production seems like the fourth time is the charm. They would likely meet the first and second of july in vienna. Liquefied Petroleum Gas is used in things like cooking fluid, lighters and plastic. Looking at chinese imports of it. This is an Energy Tracking Company Based in paris, saying that china is still importing from our brand. We cannot track iranian flows but we can show that the chinese total opg imports havent really changed except for one thing. They are not bringing anymore in from america. Many say they are continuing to import, some supertankers the company was tracking in may and june loaded lpg that would equate to about 100 million. Great to have you with us , thank you both so much. Here is a look at what you should be watching today. Inflation data for the u. K. Is expected come in soft as brexit uncertainty continues to hit the economy. For, Jeanclaude Juncker speaks this morning at 9 30 a. M. Followed by Closing Remarks from president mario draghi. The u. S. Energy information weekly report as opec is close to agreeing to the timing of its next meeting to discuss the extension of production cuts. Newshairman jay powells conference, the central bank is expected to be dovish but probably will not catch up with the rate cut expectations. Stay with us for coverage of that meeting throughout the day. This is bloomberg. Nejra this is bloomberg daybreak europe. Jetng and its troubled max scored a big win at the paris air show. British airways signed a letter of intent for 200 of the planes in a deal valued at 24 billion. What the problems are not over yet. Expect tomething we happen before the end of this year. We are making steady progress but i wont give you a specific timetable. We will take the time necessary to make sure the plane is safe. Nejra the boeing ceo there. Inedikt kammel is with us berlin. This is a significant order for boeing, isnt it . Absolutely. If you look at some of the choreography of the show, this is not the way it shouldve happen. If you think about it going into the event, the max has been grounded for close to four months now. Airbus had the upper hand going into the event. They have a lot of orders pentup. Its not like that choreography ,ould indeed play out that way we didnt see anything from boeing. These companies came to the event not really to take orders but with the tone of humility and learning, putting safety first and all that. The ceo being somewhat cautious in his outlook on the playing. Then suddenly this happens. Nejra according to people familiar, negotiators really came down to the wire. It wasnt clear until tuesday afternoon that boeing would deal. The boeing is huge for because it is not a u. S. Company, its not an upstart. Its a very established airline. A former pilotis and he personally vouched for the plane. He said i would not get on this plane if i didnt think it was safe. Indeed, i would get on it tomorrow if it flew. We dont know when it will come back into the skies. Formalr this is not a order, it is a letter of intent. They probably got a very good price for it, but 200 planes, it isnt airbus customer. This is huge to switch over to boeing. On many fronts, a great day for boeing and something that can be very proud of. Nejra benedikt kammel joining us from berlin. Thank you so much. Boris johnson has extended his lead in the race to become the u. K. Prime minister. He picked up nearly three times as many votes as the runner up with 36. When asked about an exit by october 31, neither candidate could guarantee it. Simon french is still with us on set. You watched the debate. What was your take away . Simon underwhelmed. U. K. Dentity of the next Prime Minister looks an almost certainty that it will be boris johnson. Brexit, perspective of which has clearly weighed on both sterling and starling denominated assets, he represents something of an unknown quantity regarding brexit because although he supported it in the referendum, it isnt clear how hes going to renegotiate or if his European Partners will be up for negotiation. Will he take it down to the wire on october 31 . You are right, none of the cabinet has guaranteed it. This bringing back the economics, they spoke about additional public spending. U. K. Inflation, part of the issue, weve talked about more dovish Central Banks. Its where we see the bank of england perhaps take a hawkish pivot. Accommodatingore fiscal envelope which may mean it will be quite constraining later in the year. You cannot totally dismiss that. Nejra we talk about Inflation Expectations, weve got a bit of an inflection after mario draghi yesterday but u. S. Inflation expectations coming down also. The u. K. Has been rolling over a little bit but it was on an upward march until a little earlier this month. What do you expect to hear from the boe tomorrow . Is it going to be a bit of a nonevent for you . There is a small possibility that we will get one of the voters going for a rate hike. One may potentially break ranks and signal that he thinks its time with u. K. Wages growing at almost 3. 5 , unemployment down below 4 , he may think it is time to get out the problem is that the word, brexit. It sits in the background with a lot of uncertainty on the physical path and the brexit path. Will the whole Committee Want to commit to the policy, i think it is unlikely. But i dont think it will be a nonevent. Nejra would you be shorting starting right now . Simon i would be on the nearterm. On a purchasing price parity level, it looks like sterling is undervalued to the turn of 115 . Therefore it remains an attractive opportunity. We have to be prepared to see it go lower and potentially double down because the political headlines will be destructive for sterling. Nejra we talked about brexit, mario draghi and the ecb, we talked about fed and the trade war. I think there is a potential come one thing we havent spoken about is oil. Potentially some bull in that market. We havent heard too much this week from iran. It has been pushed out of the headlines in terms of the Iranian Nuclear deal. I think there is a possibility that if the oil market starts to inflatione, all those expectations will have to be recalibrated and there will be repricing of a whole wave up asset classes. Simon thank you so much, french. Great to have you with us this hour. The chief executive of blackstone rupe has an interview 6 30 newlondon time, york time. Weve seen stocks rally on trade optimism. Powell spoil the party in these risk assets . Thats after trump and xi confirmed a meeting at the g20 summit. Bond yields hit fresh record lows in europe. We will look at european bond markets as the cash markets open up in just a few minutes. You can track us all on charts. N tv this is bloomberg. Morning. These are the top stories. Markets rally as president s say they are going to sit down at the g20 summit. Trump versus powell. The white house explores the legality of demoting the fed chairman. And votes of confidence. Boeing wins a 200 plane order. Good morning. Hour from the start of cash trading. We saw the s p 500 jumped more than 1 , within touching distance of a record. Global equities continuing to gain. A little bit of a pause when it comes to u. S. Futures. Spoil the party . European futures, looks like we could take a pause as well. Dax futures turning negative. To the bondt markets. Talking about rate cuts, qed. Perhaps even being able to change parameters. A dovish signal and the markets took it. Intoia yields going negative territory as well. Could we see a bounceback . We saw treasury yields heading toward 2 . Up 10 year treasury yield one basis point. Judging by the futures in europe, it looks like we could see a bit of stabilization today as well. Lets check in on the markets. Good to see you, following everything i have said about global markets. Asia following a similar trend. Absolutely. It is amazing what a tweet can do. President trump kicking off his president ial campaign, giving more praising comments to xi. Sident the csi up 1. 8 . A Third Session of gains, the biggest jump. Australia, holding at the tooths 2007 highs. By nikkei closing higher 1. 7 . Broad gains across asia. We are of course watching the other assets as well. Yuan,nshore you in touching the highest level since may 27. Optimism over the fact the chinese president and president are expected to meet. Also, watching what is happening in japan. A three year low. Tilt, pointing to price action. The boj turning more dovish. Aussie. K, shorting the 1. 2 5 at the moment. A number of Central Banks have gotten ahead of the fed rate australia. Also, india and chilly. First word newss. The u. S. May impose sanctions in turkey for buying a Russian Missile defense system. They are considering three sanctions packages. The idea with the most support is to target several Turkish Defense companies. President erdogan it is expected to ask President Trump to back down. Opec and its allies are close to agreeing to the meeting of their next meeting timing of the next meeting. This is the third set of dates to be considered after the initial request to shift the timing from june to july. President mario draghi is set in pushing the limits right until he leaves office. It could include interestrate cuts and asset purchases. The focus will turn to who will replace him after october. Former chief economist about the tussle for the top job. It should not matter but do you think it would . In europe, these things matter. Communication,d that really matters. Boris johnson has extended his lead in the race to become the next u. K. Prime minister. He looks poised to pick up more votes. The next few days will see the field whittled down. The candidates will be voted on to determine the winner. Global news, 24 hours a day. Powered by more than 2700 journalists and analysts. This is bloomberg. Washington and beijing say xi willnts trump and meet at the g20. Here is what President Trump had to say about it. Spoke to president xi, spoke to him this morning at length and we will see what happens. We either are going to have a good deal or we are not going to have a deal. Ofjoining us is the head global union equity. Thank you so much for joining. We have seen a rally in Global Equities. Does that suggest the rally was getting ahead of itself aced on what we heard about trade talks . Was twofold. One, helped by mr. Draghi. The continued expectation the language the fed mating will provide today will probably also be dovish. There does seem to be some expectation trade talks can be more positive than we have seen. The market is perhaps sending a signal these are the elements they would like to see to maintain confidence and a slowing economic environment. Will Jerome Powell potentially spoil the party . Think he is bound to collect a lot of pressure. Not something i particularly liked. I would like to see them being independent and making decisions based on sound economic fact. Nevertheless, he is likely to have a language not dissimilar to what we saw from mr. Draghi get to a if things do , the fedten situation is there to support the u. S. Economy. If wed be surprised really did see a rate cut. The doorrobably open to allow himself to do so should conditions demand that of him. They may not be quite that bad. That is forlowdown, sure. Markets certainly not pricing that rate cut. That would be the shock of all shocks for the markets. Guidanceof the forward , more and more people coming out and talking about a double whammy of 50 basis points in one go. Maybe in july or later. Sort of move, shock for equity markets, suggesting something sinister below the surface . Not to likeend change. A double whammy would probably be a little more than the market was expecting and what signal a sharper slow down. A double whammy i think would be a negative message pointing to a much weaker Economic Outlook then we would expect. Something that would come because trade negotiations had been unsuccessful. To make sure they have the tools at hand, should they need to react to an unfortunate political behavior. In the whole, i would expect they understand markets like unchanged situations and would prefer to move with smaller rate changes than larger rate changes. We get a less dovish bowel powell than the market is expecting, do the headlines in in anywayot yesterday offset the market volatility, the backup and rates, the drop in equities we might see . Understanding is all language at the moment is extremely open to interpretation. People who are talking and the interpreters of that information are trying to leave a little bit for everybody to ensure a certain level of stability. Mr. Powell, when he first took his office, did surprise the market a bit. They were not used to the way they express themselves and that because of the kind of jitters we have seen. He learned from that experience. I would expect him to be cautious. Notably because of the calendar and the g20 following his statements today. He might be very careful not to suggest anything until he has any kind of color on how those discussions are going. Global equity, stays with us. Great to have you with us. We will bring you live coverage at 7 00 p. M. , followed by chairman powells news conference. We cannot wait. A shakeup at deutsches. Purge of senior management. And he goes out swinging. Mario draghi intent on testing the limits of ecb five. Tune into Bloomberg Radio and the london area. This is bloomberg. This is bloomberg. It is 7 16 a. M. In london. Three minutes from the start of cash equity trading. We have seen a bump in Global Equities. Fueled by trade optimism. Could that take a pause . U. S. And european futures saying yes. We bounce higher today, up a base hits point. Could powell say anything that drives that yield lower . What a drop we saw yesterday. Year a fresh record low. Market, a green. Dubai flat. Higher. Ittle they might have said a date for that meeting. Today, we are asking the question, what will it take to push benchmark yields below 2 . You can join the debate, reach out to us. In your bloomberg. There is talk of a big shakeup. Since taking over a year ago, bloomberg german banks reporter joins us. Good to have you with us. Outline what exactly is going on here. Deutsche bank has been in a difficult situation for a long time. The ceo came in just over a year ago and tried out a turnaround plan that did not go as expected. Now he is working on something bigger. Creating an encore unit. He wants to replace top management. It is going to be a big shakeup. It is clear some big changes are afoot. You hinted at it. How big of an overhaul are we talking about . And why now . The overhaul is he is going to try to make it as big as he can. He is trying to avoid a capital increase. He is trying to avoid that. It can be. How big he does try to make it as big as thean by taking assets off Balance Sheet and replacing top management left over from his predecessor. Perhaps even the cfo. It is a big overhaul that needs to happen now. Doer the break down, they not have any other options. Bloombergs german banks reporter. Thank you so much. Lets get a roundup of some of the other corporate stories. Debra mao has your business flash headlines. Day one ofrbus stole the paris air show, boeing comes back with a stowe shopper deal show shopper deal. It gives going the opportunity to turn around the narrative surrounding its biggest source of profit. An executive personally vouched, saying he would get on board the plane tomorrow. Facebooks plans for a new cryptocurrency are facing pushback from lawmakers. Maxine waters urging the company to Halt Development until regulators can examine it. Others questioning if the coin would have appropriate oversight. Given 188 boss has Million Dollars to oxford university. It is the biggest gift in the universitys history. It will fund a new humanities project. This is the latest in a string of mega donations to hire donation education. He gave 360 Million Dollars to m. I. T. Back in october. Thank you so much. Today marks the end of the ecb though he isugal, on the way out, he has not been holding back. In the absence of improvement, such that the istained return on inflation threatened, additional stimulus will be required. To account for variations. I just said a moment ago, we are instruments the that are necessary. We do not target the exchange rate. Tomitigating measures contain side effects. Path is converging more slowly than expected. We will use all the flexibility within our mandate to fulfill our mandate. We saw a fall in bond yields across the euro area. Seeing at really bounceback today. Which maybe suggests investors do expected the ecb to deliver in some way. That is a key thing. Crisis trades the on. Curb flat nurse. Yields dropping in those areas that would benefit from qe. Given what mario draghi said, would you be looking to put on any trades in the equity market in europe . Not really. We dont necessarily use those kind of instruments and our own strategies. This is not the first time we have seen the ecb easing. We are a long way behind the fed in terms of monetary policies. Partially because europe has seen slower growth. Or that the economy is capable of doing. Maybe that is the main point. It is all very well for the ecb to say they will be there, they will ease. Is,the fact of the matter whether you deliver or not on that is more whether that will be sufficient to stimulate growth in europe and what is is not inck growth other areas of the economy, notably in terms of regulation reform, which has been holding back growth. Have quite a High Conviction around swiss equities. Talk to me about why that is. As such, they can decide their own monetary policy. Country of 8small million citizens and has a close tie with europe. Which would replace the bilateral agreement. The European Union remains an important trading partner for switzerland. The most important trading partner is germany. Switzerland is also very exposure tol, with all economic areas around the world. Also, emerging markets. It is a country which has known how to remain competitive. It has not had a large economy, a Large National economy behind it which means it could create national champions, have support for government, et cetera. Run for thes are good of their stakeholders. These Companies Know they have to support themselves in difficult situations. To lead to Strong Operational performances. A lot of people say it is an expensive market, is it better to have an active or passive approach . Would argue it is always better to have an active approach. You started referring to Deutsche Bank. There are sectors in any market which can be very difficult. You will take the full brunt of exposure to the full market when one of those sectors suffers. Switzerland, three champions. One in the packaged food area. Each one of those companies from time to time has a couple of months which are difficult. You can avoid that if you have a good, active investment strategy. Have you witht to us. Coming up on bloomberg, the chief executive of blackstone group. Do not miss that interview. The latest innovation from xfinity isnt just a store. Its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. Welcome to bloomberg markets. I am anna edwards alongside matt miller. Today the markets say, what is your weapon of choice . Qt play. Lock into the cash trade less than 30 minutes away