Breaking into a Legislative Council building. They threw a chair against the door and tried to break it. It looks like they succeeded. Toy still want carrie lam resign. David the chief executive went to give a speech and it did not go so well. They are not very happy. Alix the Legislative Council issuing a red security alert according to local tv. These are protesters in hard hats. Staggering images when it comes to hong kong. David a lot of unrest. Alix we will be speaking on the ground to our reporter. She will be later on in the hour. In the markets, it is trade deal optimism. It looks like we will have the s p open at a record. How long can this risk on rally rally last . At one point did hit another record intraday low. And crude really popping up over 2 . But what does it say about demand . We will examine that over the next couple of hours. David we will look at the entire week ahead. At 10 00, we will have manufacturing numbers for the month of june. Tomorrow, u. S. Automakers release figures for last month. And eu leaders continue negotiations to determine leadership for the top three jobs. They did not get it done over the weekend. Wednesday has u. S. Trade balance numbers. And on thursday, it is fourth of july and the u. S. The country around for the nations birthday with alix steel and the Bloomberg Team traveling north for the traditional boston pops fireworks spectacular. And we end the week with a different kind of fireworks. The most important Economic Data. Will it is time for bloomberg first word news. Lets go all the way back to saturday with what President Trump said. Trump we are going to where we lefta off to see if we will make a deal. Being, we will not be lifting tariffs on china. Adding a tremendous amount. David explain this to me. Going forward with markets this morning . What happened . Alix it looks like president demandelented to chinas awei out of negotiations, which he agreed to. He got severely criticized by his own party in the form of marco rubio. To gettrump wanted something done. He is a transactional president. And he got something done. Alix where does that leave the hawks . Arent they upset about what happened . It is donald trump decides trade policy, not bolton, larry kudlow, or anyone else. Unless donald trump says this is what we want to do, it is meaningless. Gotd when marty says he something done, what did he get done . He gave in on some things but what are we getting back . Soybeans, maybe . Im not sure they will wind up eating a lot of soybeans. An economict is, on level, he did not move the needle that much. Still pricing in about three rate cuts by the end of the year. That did not change even with a more sanguine backdrop with an easing of the tensions. And markets are seeing a pop of risk assets and it is not dramatic. It is not a Game Changing type of pop. People are somewhat tempered in their reaction to these meetings. Pc the gap that were dealing with today. But it could be more. And might be another bull market, but can it be sustained . To what thedown talks will be. Can President Trump put out something that is consistent and feasible and works for xi jinping . And will the chinese president reciprocate . From nonofficial numbers for china, we have shown the economy is moving faster than the official numbers are reporting as they expand the shadow banking system. If they areto think in a strong economic position, they might feel like they have more leverage in these talks. I wonder if the president really had it is all about , its not about the fed. I do really think that the United States has a pivotal role in deciding what happens on the economy. And donald trump ties his own personal achievement to the stock market. As long as the markets are going up, hes going to be happy. David einhorn. Remember talking about that . Goodto the point of how the first half of the year actually was. On every level for stocks and bonds. It seems unsustainable because at some point, there is a question of where they stock market is sending a bearish where the stock market is sending a bearish message. Reserve takes a look at possibly easing trade tensions, we dont want to use up our ammunition now. We are not going to cut as much as people expect. Then you get a real shift in the market. Alix lets get to oil. Over the weekend, russia and saudi arabia talked about a six month to ninemonth extension. Now it feels like other delegates are getting on there. Marty, i am interested to get that take on the internal politics. It feels like russia is ruling the table and iran knows that. They are not happy about it. It is also interesting what the saudis are doing. Donald trump is clearly signaling that he understands that the studies are important to the United States. Up and ices are going am waiting to see if donald trump has anything to say about the saudis agreeing to these production cuts that are affecting the oil market. David how will this affect the Central Banks . You have not seen a direct correlation over the last month or so. Have been talking about the price of oil going up or down. And you havent seen a direct shift. It will only matter if it starts to be a reflection of Global Growth. I wonder how much it will reflect the supply demand dynamic on another level. I will say this about opec. You talk about how opec might be concerned about Vladimir Putins role. They have to be concerned about the u. S. s role. It shows to me that show producers are at a record. And i really have to wonder how much that swing factor will close a real reality check to the production cuts. They say i dont want to lose market share anymore. Most delegates favor ninemonth extensions. To wonder how much it has to do with demand. If youre worried about demand, youll probably want a cut. That is probably more the story than any supply issue. And is there going to be a recession in the near term and what is that due to oil prices . Alix i really appreciate it. Coming up, hitting the positive not the trade war. The u. S. And china hitting the pause button on the trade war. Agree to ad china truce. As we had to break, a live look at the protest in hong kong. An unbelievable amount of people breaking into Legislative Council. Breaking windows, wearing hard hats. Carrie lam, chief executive officer of hong kong, they are calling for her resignation. This is bloomberg. Viviana this is bloomberg daybreak. Deutsche bank is preparing for as largest makeover in years. The german lender may reduce headcount by more than 1 5. That is up to 20,000 jobs. The ceo may prevent his latest restructuring present his latest Restructuring Plan as early as this week. It is likely to hit the Investment Banking division the hardest. Agreeing to buy a Railroad Operator including debt. That includes a 12 premium to gmc and wyomings crisis. The company will become privately held. About a dealrned valued at 2. 3 billion. They make mobile phone and wireless equipment. The material is the biggest maker of the machines used to make the semiconductor. David President Trump came away from thedavid osaka meeting saying that he would hold off on more terrace for the time being and even relax restrictions on huawei. They admitted that there were wide differences remaining. Even though washington agreed to postpone tariffs on chinese goods, things are very much up in the air. Parsed n widely parted on the conceptual level. Joining us is the author of red flags. Thank you so much for being with us. About that last mark, there are big differences on the conceptual level. What are the conceptual differences between the u. S. And china . David, those conceptual areerences as described really about essential beliefs in how industrial and trade policy should be conducted. If we think back to the talks that were brokered at the g20 and when osiris in one osiris year,buenos aires last President Trumps tweet indicated they broke down. But now it appears that xi jinpings view about what the u. S. Was demanding is not acceptable in terms of its in terms of the way they felt the u. S. Was asking china to make changes. To codifynot prepared them in ways that they thought were intrusive. The bad experiences with foreign powers. I think these things will continue to be that. Huawei was a big deal. The chinese would not be interested in a handshake with President Trump if it werent for that. Talking about a conceptual difference, huawei seems to be a conceptual difference. President trump says it is a question of National Security and is now ready to negotiated away. This is what larry kudlow said about it. This is not general amnesty. On the list. Ain the National Security concerns will remain paramount. David does that make sense . It seems that it is relatively blackandwhite. But it isld think so a bit fuzzy. Or can be made to be a bit fuzzy. Were watching this to see if the president s position is a little bit more fungible than maybe those in congress or the National Security advisers. People may remember last year that there was a ban on another wasese tech company that basically relaxed, a monitoring crew to make sure that they were forfeiting that modus operandi. That was using the company as a bargaining chip. I think some people are either worried or optimistic depending on your point of view that it might be a bargaining chip. But the president does face a lot of opposition. Alix coming back to china, we learned over the weekend that pmi unexpectedly fell in april. You can see the bloomberg continuing decline. Can china afford to look at these conceptual differences . That is a great question. There is no question in my mind that both leaders would like this trade war to go away for a while. But maybe not more so than president xi jinping. I would not say the economy is in bad shape, but its not responding in the way that they hoped it would. To the kind of stimulus measures they announced last year. Then, it is kind of advanced leading indicators of export orders. Even the nonmanufacturing pmi which is usually in expansion territory and kind of slipped to the last several months. View,n economic point of they would like this to go away xi jinping would like this to go away. They would like to freeze the trade war for the next few months. Washingtonas much as , i am not very optimistic that this is going to hold. Orill see later this summer early fall that we may be back in the position that we were looking at. We certainly havent done away with uncertainty. Thank you, george. , ax look at the s p futures bit higher since friday. It will probably open at a record high. Joining us is chief work is strategist art. Are you buying into the rally . This will price and a lot more good news than what we just got. This is very much consensus. Is that of relief consensus is probably getting ahead of ourselves. There is still a wide gap between the u. S. Coming into the Second Quarter earnings. As thenot be as good First Quarter. The First Quarter was just ok. This is a market that needs to spend time retrenching a little bit. I think it is great that we did not get the worstcase scenario. Go well. D not we are putting tariffs on the additional 300 billion, that was the worstcase scenario. It does not take much to get to either side of this argument. It is nice this it is nice to sit back and enjoy july 4. David the one thing we learned is that we should be paying more attention to the Economic Data. President trump gets to the brink and then backs out. Really a question of what is going on in the economy. He looks at how the market is doing. I am emboldened by the fact that the market continues to rally. And we still have a pretty big. Ifference alix looking at the global pmi, all with the exception of the u. S. , it is right there. Lets pretend that things are ok and we will take the good news. How long before it filters into the data . That is the Perfect Question to be asking. It is not the order of magnitude in terms of the number of they disrupted the decisions made by Corporate America up until this point. And how many decisions have been in off . How is confidence that is the bit and how is confidence . Even without the additional tariffs, the confidence is kicked in and the damage, to your point, has already been done. David stay with us. Coming up, who will take europes top jobs . They have failed to reach an agreement thus far. More on what is at stake. That is next. This is bloomberg. Alix area factories remain stuck in a slump. The new order sliding as confidence remains subdued and the week data comes as it as europeanders leaders fail to reach an agreement. Europe, has itt bottom . Or is there more Downside Potential . Art such a great question because valuations look so compelling. Continues toncern be twofold. Brexit has been a train wreck that has been going on for three years. And how contentious do things get between london and brussels . Italy could be really disgruntled this time next year. David look at the pmi. Does it make a difference who then a messy president of the commission, european union, or counsel . Art not at all. Structurally, that is not what the problem is. That is not who is running the show. The demographics work against them. Alix it will be a woman, right . They do note says know who it is, but they want a woman. Alix there are three candidates, and it has to be a woman, but we wont tell you who it might be. When you talk about opec, macron says if two people cant decide then commission, david maybe that is the point. They cant get their act together to decide the process. They failed to come back and Angela Merkel doesnt have the authority. Nobody seems to have the authority. About the fact that they could not get this simple process done over the weekend. This is the problem with the eurozone. So negative basis points on the german bund yield . Legit . Art and that is why we have a 2 yield. Were always going to look attractive. Alix stick with us. As topping a fiveweek high russia and saudi arabia agreed to extend output cuts. All ministers approve the ninemonth opec extension cut. We will break it down on the ground with a chief oil analyst. This is bloomberg. Alix this is bloomberg daybreak. Welcome to the monday risk on rally in the equity market. You dont get anything worse in a tray talk between china and the u. S. , therefore, you have a rally. Futures up by 1 , probably opening at a record high. Young performer is the dax that benefits the most with trade with china. The most from trade with china. Down. 2 . Market the german bund yield hitting an intraday record low. L 33 basis points. With cuts this year. They have different forms of qe coming as well. It does not bode well for the economy in europe. 2. 5 , amping over fiveweek high. This is on an opec cut. I fear the demand story is not being taken seriously. David and we go to hong kong. Chief executive carrie lam commemorating the anniversary of the hand over to china. Joining us is Sophie Kamaruddin. Give us a picture of what we are looking at right now as we look at the live shots. The air has cooled a touch. But taking the temperature of protesters, demonstrators have not been dissuaded from their cause. The actions of a small group of protesters earlier broke through the main Public Entrance of the legislative building and are attempting to reach a metal barrier as was week with police on the other side. It has prompted a red security alert, calling on people to leave the area. Protesters of all backgrounds are streaming for that part of. He city, making their way it was the epicenter of last month historic rally. We have had reports of a lot of different numbers. We have any sense of how many people are in this protest . Is it building or diminishing . Take a look at the stream of people. It see the momentum with official estimates being tallied of how many showed up for the rights movement. Years, there were Energy People that gain from the movement of calling for the resignation of carrie lam. David thank you so much. That is Sophie Kamaruddin reporting from the streets of hong kong. On a turning now to oil fiveweek high after signaling production cuts will continue into 2020. Russia and saudi arabia agreed to keep cutting. A say they are on board for a ninemonth extension. Joining us now is annmarie hordern. Have quotes from different ministers as well as russian president vladimir putin. Is the ninemonth extension a done deal . Much its aetty done deal. We just had the Russian Energy minister Alexander Novak leave the building. For the Monitoring Committee and he said iran is on board with this ninemonth extension. That was a recommendation from the Monitoring Committee to keep these cuts into 2020. What i find fascinating about this is the russians i was just in st. Petersburg. They set a rollover was baked in. But the russians are taking a wait and see approach. They are waiting to see where the market was trading. They are giving the blessing to extend these cuts into 2020. How bad is demand looking that they are willing to continue the cuts into next year . And i am skeptical about what it means for the contamination problem. Take us a little bit behind the scenes here. How does the rest of opec feel about russia really making a call to extend those cuts . I dont think they will outright say it, but many of them are just a bit annoyed by the fact that these decisions are being made outside this building indiana before ministers even stepped foot in opec headquarters. We saw this in 2018 when they enosin when us in bu aires. I spoke to the foreign minister this morning and this is one of his biggest grievances right now. Arabia and saudi russia are continuing to make decisions outside before consulting opec members. Theeems iran will be extension for the opec deal. The group is working on this charge, really solidifying this group. Joining us now is a chief oil analyst, for National Holdings corp. Part of the question is how bad is demand. What is your take . Demand has definitely softened. Reason think that is the why the russians have agreed to a ninemonth cut. They know they cant increase production. They are proposing that we extend the cut by nine months. I think what were trying to do is [indiscernible] they dont want a lastminute meeting like this to say that it is not just the end of the year. Andill have the week q1 then they will decide for the rest of 2020. But what about the iran sanctions . You still have venezuela and libya, etc. The main takeaway is that saudi arabia is cutting well below what they are allowed to produce. Do you feel like they will increase production to meet their cap . Or will they continue to pump below the level because of the did supply disruption because disruption . Y think restarting partially, they will be able to raise production to their levels. I think russia will maintain it there. Saudi arabia is the one where the compliance level is 200 . Push toing to be a big get them to start complying. We dont expect the over compliance to be as much as each one. I think production stays. It is all Global Design points. We have problems with iran and venezuela. But this shale come on board from the u. S. . Or is it really a concern about Global Growth . Michelle increase will get even better. Problems getl alleviated to a certain extent, and we are at the 14 million level and change. And at the same time, what does the global debate look like . We are estimating how much damage has been done. Do have the u. S. Being you do have the u. S. Being that swing producer. How long will saudis lose market share to the u. S. . Its the lowest we have seen since 1991. Saudi exports to the u. S. . Alix in general. Around the world. In general, they have gained market share. [indiscernible] they believe they can cut and get prices higher. They will do it. If they think they cant get prices higher, then they will abandon the policy. Matters. Is why shale but it mattered in that context. Aboutd to be careful market share because not only is production up, but it gained a lot of market share in asia because of the drop in iranian and Venezuelan Oil production. One of the things i am curious about is the extension to which the shift and the ability of u. S. Shale to get their product to market. For a long time, there was a bottleneck. They could not get it to market. That is changing as i understand it. Amrita absolutely. The Pipeline Capacity is coming online between next month and the end of the year. It is not going to be straight away. And we have a lot more capacity coming on as well. , they will be ready to do 5 Million Barrels. It might be 3. 5 Million Barrels on a sustained basis. And what is important is that infrastructure is finally catching up. The u. S. Will become a much larger producer. However, the quality of the crude were starting to see very light crude come out of the u. S. Refineries are struggling to process that. Alix wrap this all up. What happens if the oil price does not continue to rally . What the saudi arabia and of doing . That isp doing . Amrita an interesting question. Decent physicality coming off of the high. Think that is when it becomes a question of revenues. We will go back to producing as much as possible. Decent ability to climb. Bring us back to Inflation Expectations. Oil remains subdued and they cant get the price up. How does that affect the Central Banks . The Central Banks have always looked at Energy Prices as being transitory. People are making 300 calls. I think this is not part of their calculus. I do like Energy Stocks on a valuation basis. I dont think that that is the case. Have trade, we will not investment in Energy Stocks. There is a difference between what the Energy Stocks are pricing in and what oil is trading. As a valueike that play. You offset that with Something Else . Financials is a good value play. Art you can offset it with utilities. Xlu are upside down right now. Utilities are so darn expensive. It doesnt make any sense. We are looking for yields. There is a higher dividend and that hardly ever happens. Art hogan, thank you for being with us today. Coming up, deutsche banks biggest makeover in years. They could cut headcount by more than 1 5. That is next. Alix you can watch us online and click on our charts and interact with us directly by going to tv on your terminal. Or go ahead and tweet us as well. Viviana this is bloomberg daybreak. Hour, at in the next the Peterson Institute for International Economics president. This is bloomberg daybreak. Here is your Bloomberg Business flash. Bitcoins rally this year is starting to waver. The price of the cryptocurrency is down 11 since the friday since friday. It is still up about two had her percent for the year. Up about 200 for the year. Expansion,to a huge it has not been this big since 1943. It comes as americans prepare for one of the biggest dates of the year, the fourth of july. David einhorn is bouncing back after suffering his worst year ever. Capital, they are up 18 for the year according to an Investor Update by bloomberg. The fund plunged 34 . Im viviana hurtado. Part of it is the killer rally that we have seen in the s p for the first half of the year. All top three holdings, gm and green brick that come back has helped them. David there was a terrible year last year so they have a way to go. Alix we will cover three things wall street is buzzing about. Deutsche bank returning to its roots. Putting to cut as many as 20,000 jobs in an effort to move to profitability. The Investment Firm is close to up 1 billion deal. A big donation. Warren buffett will donate 3. 6 billion in shares. Us is and joining bloomberg Investment Banking reporter. We kind of felt it was coming. 20,000 is a lot. It will not be right away. It will be over time. 20,000 is a big deal. And beyond that, when you cut jobs, you save cost. Do you affect the topline . The tricky part, how do you cut costs without affecting the topline . And remember when youre cutting jobs, it is costly. And so bank of america is seeing that. David particularly in germany. Alix germany needs to raise 5 billion euros. It is something the ceo does not want to do. Upwill see how they end maneuvering without raising any money in the meantime. ,avid i think the positives there will be major structural changes. Deutsche bank was dragged kicking and screaming to restructuring. Sonali it has been a year since he was in charged and since he has been in charge and people have wanted to see decisive action. Alix i wonder how many jobs will be in germany. David good call. Considering eliminating it across the board. Alix ok. The next story is blackstone. They are trying to sell their portfolio for 1. 1 billion. Sonali they are betting on a recovery in spain. It has more than one dozen potential bidders. Goldman is one of the potential bidders as well. It is looking like the portfolio might go to a 10 billion fund at carvell. Up in thisrew business, ceo and president of blackstone. The other reason is, it shows a more ease of terror one of the business esoteric part of the business. How private equity firms are taking over where banks used to be. Right now, it looks like a smart bet because it is coming back in the way they anticipated. They turned around the business and made it work for them. Are they getting out on top . Isx how much of this strategically needing to be out of the investment . Sonali it is fairly competitive. And Warren Buffett is giving away more money. He does not sell, he gives it away. The bill and Melinda Gates foundation he has given a lot to already. The other four are all related to his children. Go to his you website, there are letters to each of his children and the bill and Melinda Gates foundation about why he is giving money. 10 years after, he will give away all of it. David he says im not going to make them rich. They wont be starving, but i wont make them rich. They will need to do what ive been doing. Sonali he is holding them accountable. And each of his kids has a different cause. One focuses on womens and it womens equality. Do they sell at . Are they allowed to do it . David it is given to their foundation. They can sell, but it goes to their foundation. It is the Second Generation of Warren Buffett changing the world. And they have about 200 people on the board as well. Being withk you for us. President trump makes history as the first sitting u. S. President tim to set foot in north korea. Alix and Bloomberg Radio is hurt across the u. S. On sirius xm radio. Or on the bloomberg app. This is bloomberg. Alix breaking news concerning iran. According to the iranian student news agency, iran is said to have surpassed the enriched uranium stockpile cap. We knew that was coming. Iran said it could have happened last thursday. We have officially the headline. David it is not used for weapons, but the limit was set as part of the nuclear deal. The question is really thrown to europe and what do they do . Are they looking for ways to trade with iran . It does not mean that they will stop trading altogether but the ball is in europes court. David this is what im watching. It trump and north korea. President trump met with kim jongun once again. You can see them there with a flag of the u. S. And north korea. One of the things that struck me, this is really amazing. Sitting as coequals. Gdp according to cia estimates, it is 40 billion a year. All of north korea. Rhode island is 50 billion a year. The leader of the western world meeting with the head of north korea. If you have nuclear weapons, you love attention. Alix he is the only one that got a lot of attention this weekend, a dictator of sorts. David president duda one, he said he was president erdogan , he said he was a tough cookie. A tremendous discussion he had with putin. One of thent xi, great leaders in 200 years. And kim, a handshake means a lot. Alix its hard to tell if it is a negotiating tactic. David and getting great results. But it is pretty ironic the way he treats Angela Merkel. Alix or just letting dictators be dictators. A fascinating weekend. Program, adamhis will be joining us. Mobiles for the fed and echo what it means for the fed and Global Economic growth. This is number. This is bloomberg. When you rest on a leesa hybrid mattress, bedtime is no longer simply the time you go to sleep. Its time to switch off and catch up. Enjoy me time, and we time. 40 winks or 8 hours solid. The leesa hybrid mattress combines two technologies to give you deeper rest and rejuvenation. 1,000 pocket springs provide edge to edge support, responsiveness and comfort. While premium foams relieve pressure, keep you comfortably cool and limit motion transfer. Leesas hybrid mattress is not only recommended by experts, experts choose to sleep on it too. Try it yourself in any west elm store. Or order online and well ship it to your door so you can try it risk free. The leesa hybrid is american made. Built to last. And, because Everyone Needs a place to rest, we donate tens of thousands of mattresses to those in need. Live healthier, live happier by resting deeper. Get 15 off, and 2 free pillows. Go to leesa. Com today. President trump we had a great meeting. And we will be continuing to negotiate. Trading security for soybeans. President trump takes tariffs off the table and opens the door for u. S. Companies to do business with huawei. Strategists say it is not good enough. Rove forecast shows investors growth forecast shows investors may be worried as trade issues linger. And oil may have a deal. Studies and russians agreed to a production cut. What it says about demand and the future of the cartel. David welcome to bloomberg daybreak. You just broke the news a few minutes ago that according to one report from iran, they have officially gone past the agreedupon limit to their enriched uranium. Alix they have surpassed their uranium stockpile cap set in 2015. 3. 6 of and percent is the level they had to watch out for. Is the level they had to watch out for. Just took one step. They have other steps they can take. They can increase pressure on europe if they want to. Alix they dont like russias power at the opec less meeting. They did not like that mr. Putin and mohammad bin salman chatted. David it was a done deal before they ever asked. Like that did not very much. But more on that later on. It is a riskon rally. Welcome to another record high opening by the s p. The euro a little bit weaker. Equities are stronger. Continuing to roll over and complete this function, china to choose a new leader of the European Commission as well as the head of the ecb. And it makesyields sense if you have a risk on rally. And we will get back to that shortly. We have the entire week ahead. And theusi sm automakers released for the last month. They will try to come up with some leadership for the top three jobs. U. S. Trade balance numbers and the jobless claims numbers, thursday is a big day. Celebrations around the country of the nations birthday with alix steel and the Bloomberg Team traveling north for the traditional boston pops fireworks spectacular. And we end the week with the most spectacular number before the next fed meeting. That is payroll for the month of june that everyone is waiting for. And what happened between President Trump and president she xi. President trump talked about what a big success it had been. Committing to render talks and backing down an array of threats. President trump the g20 summit has been fantastic. We had a great meeting and we will be continuing to negotiate for at least the time being. We will not be lifting tariffs on china. Additional be adding , you know, tremendous amount of where we are going to work with china on where we left off. To see if we can make a deal. They will be consulting with us. Evenwill be spending money during the negotiations to our farmers and the midwest. Great companies in Silicon Valley and other parts of the country that make extremely complex equipment. We are letting them sell to huaw ei. Posen and jim polson. Welcome to both of you. President se accomplish over there . Thank you for having me, david. They accomplished what everybody expected, which is very little. Things escalated a bit too much. Neither of them have an interest in overt trade wars going further. The fundamental issues of negotiation are still not resolved. China is happy to buy a bunch of stuff from the u. S. I think the democratic willdential candidates attack trump are being soft on china. Im not saying thats right, but i think that is the forecast. David do we have any hint of where the offramp is . Response to this meeting, china says there are big conceptual differences. Suspect they are talking about they want President Trump to redo the economy. Those twony way that positions can be reconciled . Adam i dont think so. They can be reconciled in the same sense of the soviet union and the u. S. Made deals that you agreed you would Work Together and live and let live, frankly. And that is essentially where the u. S. And china offramp has to go. The u. S. Does not have the traction to force china to completely change. But again, in the background, much more important are the restrictions on the crossborder investment of Technology Transfer between the u. S. And china. We saw the president back off on huawei. That is where the real economic value is, in this technological exchange. Jim, do you agree . Does that mean you want to be selling the rally . Jim i dont know. Im not inexpert. But my take is that it looks bye a big blank blink President Trump to me. Has been sot aggressive that if he doesnt get his way, he raises tariffs. He blanked blinked. He blinked pretty big. He blinked on huawei. He does a lot of things that tells china that they are looking for an agreement here. Even if it doesnt accomplish much, it feels like were headed toward an agreement. Help us understand if thats what markets are reacting to, it would imply that you want to buy equities. If you look at economic forecast, they are pretty sanguine. His Morgan Stanley downgrading Global Growth . It is not very different. You should stop worrying about trade. Which side you come down on . I think there is more going on in trade. If we just dont make more pressure on the Global Economy and if we come to an agreement that is worth less, but we move on, that would be a positive. Around the trade negative is a lot of policy stimulus. We have growing money supplies, we have falling yield. We are doing it not only in the u. S. But everywhere around the globe. And we have only been doing this since the here and. It will start to help things up. It will overwhelm the negative trade. I think that is what the stock market is telling you as well as cyclical parts of the stock market, that we are en route to economic momentum pick up. It is more important to look out the windshield in the rearview mirror. Adam, talk to me about Global Growth. The u. S. Is the best, but down to 50. 1. Do you see it the way jim does . As jim see it largely does. Think and if we agree to let things slide, it will not be a stable outcome. There will be additional attacks by trump, democrats, or both. And more importantly, hes right. There is a lot of stimulus. Reason the yield curve is collapsing is that the yield curve is complete. That a look ater payrolls this week, that is telling you something. Most of the economies outside germany, manufacturing is not as much of a leading indicator. Posen and jim polson will be staying with us. We want to go back to hong kong where new protest have been hitting today. Chief executive carrie lam commemorating the anniversary of the handover of china. , as we reported earlier, what is going on right now . It has been five hours and still have as fairly steady stream making their way toward the center of the city. Protesters young and old are taking part. And a stark contrast early this morning by protesters trying to disrupt the annual flag raising ceremony. And a small group of mass protesters are trying to break through a second barrier. Behind which, police are lying in wait. They will sound a rent security alert around ground zero. Invoice for the Central District and there is minimal Police Residents with protesters staying there until sayingt with organizers t there are [indiscernible] david thank you so much for reporting from hong kong. Now we will get an update on what is going on outside. Viviana hurtado is here with first word news. Viviana the foreign minister confirming that the country exceeded limits on enriched uranium. The european nations that signed the deal have not lived up their pledge to deliver economic and if it. Meeting withmps kim jongun shows how little north korea has conceded on the nuclear program. Mr. Trump becoming the first sitting u. S. President to step foot inside north korea. Then can that at the Demilitarized Zone and agreed to restart nuclear talks. The talks have gone nowhere since the president walked out of a meeting with can in february. And over to the an hour and opec plus Committee Recommended extending output cuts for another nine months. That is a victory for saudi arabia and russia. Now they need to debate the plan. They are expected to endorse it. Global news 24 hours a day onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im viviana hurtado. This is bloomberg. Coming up, u. S. You choose in the green looking to open as u. S. And china reach a truce on the trade war. We will break it down. This is bloomberg. Alix President Trump and xi reaching a trade war ceasefire. What does it mean for the fed . The fed fund future is the white line and the blue line and the blue line is for december 2020. You can see how expectations appeared back in the next couple of days. Joining us is adam pozen and jim polson. Adam, what does this do for the fed put . Does it make trump more aggressive or does the fed not need to cut . Adam i think the decision whether or not to cut was not going to be affected very much by the trade stuff, alix. A blowup in trade is very obvious that it would change how the fed looked at things. It is much more domestic policy. Does trump get more aggressive because he thinks he has a fed put . The chart indicates that is not what is going on. He got less aggressive, as jim said, right when everyone was sure the fed was going to cut. David when we listened to chairman powell, he talked about trade. And the extent to which it is creating uncertainty about trade. That really goes through. Is the uncertainty as good as last week . Were looking at shortTerm Investments and it is a bit of a boost. Trump administration has, by its own desires, undermined a lot of the certainties of the trading system. And so that is ongoing. Ornk about either usmca brexit. Nobodye situations where wants to do longTerm Investment, but daytoday business goes on as usual. I think that will happen with china. Alix can you still have stocks and bonds and rally together . You had a great chart that showed there were times that they have rallied together. And after the fact, the s p continued to rally. I think we have been worried about stocks going up and bond yields going down. And really it has happened a lot. And every time previously since 2013 that this has happened, ultimately, stocks were right. Bond yields eventually lifted. If the fed does cut interest rates, bond yields will start to rise a little bit. Market withy bond even a 25 basis point cut by the fed, you will probably see the 10 year rising a little bit as well. Have, to adams point, it is mainly domestic. Would take the fed off the table is if we got a really strong payroll report on friday. And the idea that the job market hasnt weakened at all. It might give the fed some positive. But barring that, i think you will see the fed followthrough because the thing biggest risk is less about fundamentals than it is about fear. There will be more investors like myself that will start to get more nervous about the recession and could cause a panic freeze in the Financial Markets that would shut the economy down. I think that is the feds biggest risk. Is so out of bounds right now to any other interest rate. It is way out of bounds. The fed will bring it back closer and they will probably go ahead and do that. David take us through what would happen if the fed cut rates. What would be the beneficial effect on the economy . It might reassure investors that might otherwise be afraid. Usuallyt as much as it would. The reason a fed rate cut helps is the direct cost of investment conveying information about what you think the fed will do in the future. And something about the outlook. In terms of investment, it will help some of the shorter Term Investment directly. Mortgage rates are very low. It is not hard to get funding in the market, for example. Ofre is a question confidence. And we dont have much in the way of investment. I dont think trade solely is to blame. And third, you have the international side. If the fed moves, the ecb will follow them. The traditional banks, not bank of england, but traditional banks will follow them down. So the international differential i think will remain. Alix but will it make a difference . Central banks will support the economy, but it needs to come from fiscal policy that will give the Global Economy the next boost. Iix i usually adam usually disagree with a lot of stuff on this but i think they have a point. Well keep talking and fiscal policy needs to be in charge and do the main lifting, especially if there is going to be ongoing growth. And secondly, that there is an argument that you dont use up all your ammo right now. That is an unpopular argument. But when the Unemployment Rate is where it is, the growth rate is where it is, there is other stimulus going on. And you are still cutting rates, that is kind of scary. David jim polson and adam posen, they both will be staying with us. Deutsche bank cuts the head count by more than 1 5 as part of the overall plan by the ceo. This is bloomberg. David time now for the bottom line where we look at three Companies Worth watching this morning. Brooke yield is by buying brookfield is buying genesee. They do not compete with the big guys, but it was pointed out that they do a lot of their business in coal. Alix really . David 11. 5 of their business. Alix cole didnt die. David President Trump promised it would not. Alix alternative energy is not yet cheaper than existing coal plants. Im looking at nokia and ericsson. If we had a situation where u. S. Companies can sell to huawei, what does it mean for the guys that got the boost . Nokia got a gain of over 1 . Im watching that for the read on the reality from huawei. Where the company will switch where they get their products from or not. David on the brink of death, and then not so much. For the samehem reason, breathing a sigh of relief. David the third story we are looking at is deutsche bank. Taylor riggs joins us now. 20 more or less cutting their headcount. Bankr when you look at a with 90,000 employees, for size and scope, jpmorgan has 250,000 employees. You wonder how you can compete. Interesting enough, we talked about how these are global cuts. But regionally, where do you focus . Deutsche bank has a huge presence in germany. The reason shares are rising is that people are hoping that for some of the unprofitable areas, u. S. Investment thinking, it could be back to european or asian operations. It is about 7 of revenue. Not a huge country bitter. So cutting back on that not a huge contributor. So cutting back on that is perhaps the smarter idea. David the Retail Banking business, that is very laborintensive. Im not sure they can cut back a lot on that area. I cant believe it is tens of thousands. Taylor i dont think so either. When we talk about their presence in germany and Retail Banking, they want to focus on wealth management. This comes down to cutting your way to growth. The efficiency ratios, it is nowhere near where they need to be. In 2019, 10 in 2021. Bank of america is 17 . You cant compete with that. But even to mention the negative rates discussion. Be interesting to see have a position going forward. Alix they have to raise money, david. You have oil popping a fiveweek high. Iran is set to reach the Nuclear Enrichment deal. Breach the Nuclear Enrichment deal. This is bloomberg. Alix this is bloomberg daybreak. I am alix steel. Market. Optimism in the s p futures open at a record, around the highs of the session. We are now the longest expansion since the 1800s or something . David the 19th century. Alix a huge rally underway. The question how wrong how long can it last. The dax outperforming in europe levered to trade. In other asset classes, equity stronger in europe but not the currency because manufacturing data continuing to roll over. We are off the lows of the session. 33 basis points in bund yields. Hitting an intraday low. Crude up almost 3 as we continue to grind higher on the fact that perhaps opec will cut production. Highng to oil, a fiveweek. Opec plus ministers signaling production cuts will continue until 2020. Russia and saudi arabia saying they will keep cutting. The question being what is it wind up meeting for the overall economy . Still with us is adam posen and jim polson. I want to show you a chart. Correlation over the last 60 days between oil and twoyear breakevens. If you get to one, that is a pretty high correlation. Help me. If we get 70 oil what does that do to Inflation Expectations . Adam you have to hope there is a positive feedback loop. We are looking for anything that will raise expectations. That is what has the fed spooked enough to worry about cutting, the lack of anger on Inflation Expectations. Everything opec does now, even if saudi and russia agree, has to be suspect. There are so many alternative sources of supply. More concern that the iranian production will go offline or be constrained. That will push up oil prices. The effect on inflation will not be big. Why is it that we are having so much difficulty with an nation . What has with inflation . What has changed structurally. Adam that is the right way to ask it. There was this long period where economists and central bankers assumed the determinant of inflation was Inflation Expectations circular. As long as debt inflation was something people believed it would be, it would be that. We had several years of Central Banks not delivering on it nation target. It looks like a combination of globalization, technological shifts, which is hard to deliver amazon,lization, think and the fact that commodities like oil are having less of an effect on the overall economy. You put all of that together, you are right to think about it as a structural shift. We are more like the 1970s in things other than what the central bank says. David pick that up in terms of what it does in the marketplace. If we are not believing what the fed has to say the way we used to, if oil is not driving the way it used to do, how does that affect an investor . Im i think i agree with adam a lot of structural forces. One other is demographics. Aging demographics in the developed world is the biggest cause because we did not develop the emerging world fast enough, which has younger demographics and we are suffering from week Global Growth and i think that continues for a while which is flatlined inflation. Investor is not just that inflation does not come up, but what if you going to Global Deflation . That is frightening. I think as an investor i would like to see the fed err on the and get someease inflation back in the system, some higher rate levels before the next recession. I would much rather going to the next recession with a 4 10 year treasury that i would a 2 in this country. I think it would create greater confidence if we had some sense that the easing delivered some growth and some inflationary pressures, as bad as that sounds compared to where we were in the 1970s. As far as oil, i would at one other thing to adams point about oil. I think a lot of what is going on with oil has to do with the dollar. The dollar has come off. It has come off more against emerging currencies. I think that is a big part of why the Oil Prices Going up in addition to the supply restrictions. If you can get the dollar down, that will be a big lift to Inflation Expectations. It will be a big lift a Commodity Prices and would put some inflation back into the u. S. Economy. Watch that dxy if it breaks below 95, you will see a lot more attention devoted to that not only by investors but also the effect. But also by the fed. Alix does that happen . Do we get a weaker dollar sustainably . Adam i dont think so. Jim is right to at demographics. Is g20s biggest success they got china and japan to stop doing manipulation of the currency. We can see that. You have reported that china is not intervening to drive down the value chinas currency against the dollar. In that sense you have stabilization. Ultimately, we are still winning in terms of growth, policy, and in terms of dollar. Where else we put your money . Look at hong kong and europe . I do not think we will see a weak dollar. I do not think the dollar is that strong now despite people whining about it. David i think that follows what you said about the differential between the u. S. And the ecb. If the that goes down, the ecb down, it, the boj goes will drive it that way. Will we havent other any other way will we have it any other way . Dont we want them stimulating as much as they can . Adam i completely agree with you. Want the other economies when they have a problem, especially given the risk of Global Deflation, but also politically. Where not want to world you say other countries, you have to sacrifice doing what is right for your own economy in order to play games with the dollar. That is the issue for the u. S. We want to be a will pursue our own best interest. It is a total slamdunk that everybody will ease once you start. Alix put that into the investor perspective. How do you play a potentially weaker dollar but might not be as weak as other currencies, and that . Rap in oil to jim let me say there is a path to the lower dollar. I think if the stimulus works and we get a global pickup, the spread between u. S. Growth and abroad will narrow. It happened just recently. If you look at 2017 and 2018, the dollar came down. That was because the growth spread in the United States to foreign growth narrowed as the Global Economy picked up and it was because Inflation Expectations went up which reduce the value of the dollar. I think both could happen again. I am playing the idea of the weaker dollar and the balance of this recovery overall because i think stimulus will work. If that happens, it means you toward weakilted dollar place, which include energy, materials, industrials, which have been pretty beat up. It also means you want to play international markets, rather than the United States, particularly in emerging markets, which are already sewing signed to pickup as the dollar to the emerging currencies is weakening. That is one thing you could play. Maybe adam will be right and the dollar will not come down, but i think it will over the next couple years. Thank you both very much for being with us today. Now lets get an update of what is going outside the Business World with fujian of hurtado and bloomberg first word news. Viviana in hong kong, another sign of the problems protesters breaking down the door legislature. Beginile, thousands more marching in opposition to hong kongs beijing backed government. Carrie lam began her office by promising to be more open. Critics say trumps meeting with kim jongun shows how little north korea has conceded. President trump becoming the first sitting u. S. President to meet inside north korea. He and kim met inside the Demilitarized Zone. Thosegreed to talks but talks have gone nowhere since february. It is g20 that has gone viral. It shows the ivanka trump trying to get involved with a conversation with world leaders, including emmanuel macron, justin trudeau, and the head of the imf. The video was released by the french government. Global news 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 viviana hurtado. This is bloomberg. David it did go viral. I cannot help feeling a little sorry for ivanka trump. It felt like she was the kid at the table trying to press her weight in. Maybe reading too much into it. Christine lagarde, her expression priceless. Alix did not even look at her. David ivanka starts to talk. Alix do not even look at her. Who tapes this . David someone had to be in that conversation taping it. The french government released it. Alix what is that . Bromance there was a between president macron and President Trump . What is this releasing a video about his daughter . David i felt sorry for her. Alix coming up, flashing warning signs about the economy. We will get a read on the Trucking Industry and what it means for the economy. This is bloomberg. Viviana this is bloomberg daybreak. Coming up the next hour on the open, mohamed elerian, Bloomberg Opinion columnist. This is bloomberg daybreak. 3. 6n buffett is donating billion in Berkshire Hathaway stock to five charitable organizations. One of them is the bill and Melinda Gates foundation. Since 2006, Warren Buffett has given away 45 of his holdings, about 44 billion. Prices are at their lowest level for this time of year in a decade. That is thanks to huge expansion in the u. S. It comes just as americans prepare for the just grilling day of the year, the fourth of july. A Brookfield Asset Management fund has agreed to buy Railroad OperatorGenesee Wyoming for 8. 4 billion. The price represents a 12 premium to Genesee Wyomings closing price. The deal will result in a Company Becoming privately held. Im viviana hurtado. That is your Bloomberg Business flash. Alix ministers are meeting in vienna to signal rate cuts for another nine months. We want to go to the saudi Energy Minister who is speaking. We hope so. We hope it will be approved tomorrow. If there is a snag of any kind we will result in the next few weeks. By the time this extension finishes, we will have fully ratified by all member governments to have a permanent framework. Iran is accusing you of unilateralism. We are very respectful of every member country. The fact of the matter is saudi arabia and russia are the largest producers and we are delivering the largest cuts. For us to agree first and then to discuss our agreement with our colleagues from other reach theonly helps unanimous consent that we are seeking. In the last does go days, meeting in the last two days, meeting with every miniature every minister separately and briefing them and they appreciate all russia and saudi arabia are doing bilaterally. What are you doing about security concerns in the gulf . Of supply security for the rest of the world very seriously. It is unfortunate what has happened in the gulf, threatening safe passage of oil supplies. It is an issue not only for the kingdom, not only for the gulf countries, the gcc, it is an issue for the entire Global Community to Pay Attention to and our statements have been clear, calling on the Global Community to condemn the perpetrators of those acts that have threatened not only shipping, but physical infrastructure in the kingdom. Our pumping stations, the pipelines. Are you raising security . Of course. You canoing everything think of to protect our assets and infrastructure. [indiscernible] i leave that for the Foreign Ministers and the defense ministers and the concerned governments to corneille. I can to coordinate. I can tell you as the Energy Minister it is my duty to do everything i can to raise the alarm level and i think it should be raised. This is not a small matter to threaten shipping of close to 20 Million Barrels of oil going to the rest of the world, east and west. Of course, we have called in all governments. Attendedd the g20 i the g20 and esters the g20 Energy Ministers meeting. G20 ministersat have to contribute to securing their own energy. I think every country should cool should contribute politically. We have done the same when we had threats of piracy. Many countries did contribute physically to maritime security. This is no different. The actors are different, but the threat is the same. The shipping that is being threatened is oil and gas. Long do you think you will stay at 9. 7 . Commitment is not to keep a certain production at a certain level. Our commitment is to balance the market and bring down inventory. Our commitment is to call on our colleagues to do the same. This has been a strong meeting today. This is not just about saudi arabia. This is not just about a few countries. This is about 24 countries doing their part of the lifting and not leaving it to us. When will the market rebalance . [inaudible] i think russias influence is welcome. Russia is a significant exporter of oil, second only to saudi arabia. [inaudible] i dont think so. I think russia is very respectful of the collective nature of this group. Very respectful of saudi arabia. They have compromised on certain positions. They have hesitated about rolling over and they have agreed to roll over after we convince them it is the right thing to do for the global interview market. The Global Energy market. I do not think anyone is dictating. We do not dictate and they do not dictate to us. This is the sharing of different views and ultimately we and them and other countries all have our voices heard and we do the right thing. Russia only came into compliance during the contaminated oil prices. Are you expecting them to cut production now until 2020 . They have demonstrated they do cut production and the first months of this year it took them time to come to the levels, and they ever complied. They over complied because of the pipeline for the month. Ultimately, russia will live up to its word. Minister ise as a first and foremost with my counterpart. He is an honorable man, a trustworthy man. He says what he means and he implements everything he says. We trust him. I have also heard it first hand rom president putin. His support to the cuts and delivering on them in osaka in the closed meeting with his Royal Highness was unequivocal. Vladimir putin supports to implement the cut is unequivocal. [inaudible] by talking to them. That hisg assurance majesty king salman is having a word this afternoon with the prime minister. It is not just my conversation with the minister. Talking. Leadership was this is an issue that is critical. John, yes . This is you . [inaudible] [inaudible] no. We have always had challenges. It has never been a walking the talk or an escalator ride toward balance. What we started in 2016, the situation was more challenging than it is today given the size of the overhang back then compared to today. Opec has always had political issues. We have had wars, we have had conflicts, differences between different countries. We keep them outside the room. We are pragmatic. We talk about supply demand balances and how to get the oil market to stabilize and in turn lead the Global Economy in the right direction. Relaxed. You. Not hear [inaudible] i think ultimately we have to be flexible enough. I think nine months gives us enough runway to wait for the markets to balance before we deliberate for an expansion. As much as i hope we will balance by december, i think given where demand and supply our and given the fact that in the First Quarter demand will drop with seasonality and refinery maintenance, i think it is wise to extent up to the end of march. That is not a unilateral decision. Tomorrow we will make that. Extending into march is an insurance policy . [inaudible] how big are we . I think we are about 140 Million Barrels. Goingthe fact that we are to be in deficit the second half of the year with significant drop downs, we think refineries will run hard all the way to december in preparation for i am oh for imo. We think a change in the overhang will be drawn down the second half. Given the fact that demand will probably drop in the First Quarter, we think it is a wise thing to keep the production down. Alix you were listening to the saudi Energy Minister as reporters from vienna talk to reporters from vienna. He did say oil demand is picking back up, which means the rate of Energy Assets was correct and the extending into the First Quarter was because of seasonal weakness in demand you usually see in the First Quarter. That is why they were keep it for nine months and not six months. David there seems to be growing unanimity. It will be nine months. Iran saying we like Higher Oil Prices and talking about security, protecting those tankers. Alix i thought it was interesting what we heard about novak, the Energy Minister from russia, the saudi minister saying he was an honorable man, that they trust him, cementing that relationship. That does it for bloomberg daybreak americas. David you are off to the boston pops. You will be on the state. We want to see you conducting. Forever. Tripes [laughter] alix that wraps it up for bloomberg daybreak. The open with Jonathan Ferro is up next with mohamed elerian. This is bloomberg. Jonathan from new york city for our audience worldwide. Im Jonathan Ferro. The countdown to the open starts right now. Jonathan coming up, Global Equity markets rally as the u. S. And china agreed to revive trade talks. Economists not buying the optimism as manufacturing from china to europe sticks in retraction territory. A key week for Economic Data in the United States. 30 minutes until the opening bell. Here is your monday morning price action. 500,es up 33 on the s p positive more than 1 . Bonds not doing a lot. Tolds up to basis points 2. 03 basis points. And foreignexchange, dollar weakness, the euro slightly negative, 1. 1346. Lets begin with the big issue. A trade truce sparking a risk rally. The market in joining relief rally this morning