The nikkei 2251. 9 down. Have a look at those currencies. Ave a look at the yen. The situation with regards to the japanese currency. A quarter of 1 up there for the dollar against the japanese currency. On friday there was a warning there would be excessive volatility on Exchange Rates and stock markets as well. Bloomberg u. S. Dollar pretty much flat, after that fix. We head over to new york for a look at the news. We start with the heads of the feds. The last four heads of the Federal Reserve are joining the calling for independence for the u. S. Central bank. They together penned an oped in the wall street journal. They also criticized recent threats to remove fed officials for political reasons. The latest escalation in the ade war has pushed a key treasury indicator to its highest warning levels since 2007. Almost erased the surge that followed President Trumps election. At one point they yielded 32 basis points. The most extreme yield curve inversion since the leadup to the 2008 financial crisis. U. K. Opposition leader Jeremy Corbyn is saying he will call a vote of confidence in the Boris Johnson government when parliament returns next month. He says johnson is trying to slip a nodeal past lawmakers and voters. They return from recess on september 3. China is expected to comment again later tuesday on the widening protests in hong kong. They will make only the Second Public statement since the andover in 1997. Antibeijing demonstrators fought late monday after a general strike disrupted business and transport operation and Police Arrested six people and said some have links to gangs. Powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. David the u. S. And china trade war. Lets brink in tom mckenzie. Lets start off with the currency manipulator tag and progress from there. What do we know . Tom that was the latest major line coming out of the u. S. Treasury earlier this morning saying they were going to be labeling as you said china a currency manipulator. President trump said on the campaign trail in 2017. Rishaad we have a problem with your mic. Well get it sorted out and get back to you. David the chief economist and thank you so much for joining us of course. Quite a morning. Lots of news flow as well. Im sure you heard everything that has happened. What do you make of all of this . You know, this is very serious. It is going to have damaging impact on not just the global appetite for risk which you yield en manifest in curves all over the world. It will have an impact on the environment. Despite ample liquidity and low rates, we dont have investments picking up. You cant have investments picking up if the two largest economy ms the world have hurling greppeds at each other on a daily basis. They in some parts, are right, arent they . Absolutely. If you think about when was the right time to call china a manipulator . That was probably seven, eight years ago. When the pboc intervened on a regular basis to pick up reserves. Talesigns. E tell the bbc is not intervening and it is depreciating a lot in the last year or so. To come out now for the u. S. Treasury now to argue that the manipulation is because china is not intervening opposed to the past when they used to intervene is rather rich and doesnt satisfy the feds own criteria. David i have one last question. When it comes to the pboc, do you think policy makers in china are engendering weakness or putting a floor on the currency . Frame that for us in the context of where you think values should be . So we have been calling for it to it seven for a while. We suggested for the slowdown in the chinese economy. This is taking place almost independently of the madness around trade wars. The trade war rhetoric and action by both sides ompiled this matter. Rishaad i hope your outsidio is sorted out. Audio is sorted out. Investments being manipulated, china being labeled a currency manipulator. Start from that point. Tom yeah, absolutely. Of course partly or largely someone argued this is a symbolic move by the u. S. Of course it was something that President Trump campaigned on in 2016. He said he was going to label china a currency manipulator his first day in office. Of course he did not do that. Saying china simply did not meet those three criteria. They still dont and if anything they have been supporting the currency to ensure it doesnt depreciate and cross a certain level whilst the trade talks have been ongoing. Now you have china going on the offensive in terms of the trade relations and trade relationship. They have run out of patience since may and particularly when they were taken by surprise when President Trump just in the last few weeks said he would be looking to impose additional tariffs of 10 on 300 billion worth of chinese goosed after negotiations in shanghai last week. China seems to be taking on a more robust stance. That also may be largely more symbolic than material. It has a Material Impact on the market. Some analysts dont think they can allow a rapid devaluation of the currency Going Forward because of the concerns around capital controls and flights and corporates in china that have the u. S. Dollar denominated bonds and debt that they will struggle to pay off. David thank you. Tom mckenzie. Lets bring back our guest from singapore. Im going to read to you one of the headlines. The pboc sent two warning shots that the currency is not a one way bet. They were the stronger side of seven. They plan to sell 37 billion worth of renminbi. They need to isolate development from the last 48 hours. Easier policy and additional liquidity. Even if the developments of the last 72 hours or so did not take place, i think we would have predicted a gradual osition of the renminbi. It is coincidental that some of these events are taking place at a time when the u. S. Is imposing additional tariffs. A case pass been made for a while around the chinese economys weakness. Rishaad what is the likelihood or is there a possibility in your view they come out and start selling u. S. Bonds that can be damaging to them as well. They dont have to go the whole way but selling off some of the three trillion they own. Right. It has been talked about in the last 24 hours, not buying u. S. Agriculture products. That hurts Donald Trumps base in the midwestern district. It may backfire too. I think that has more immediate pain for u. S. Than the idea of selling treasuries at a time when curves have inverted and treasury yields re at an alltime low. I dont think for china it is that big of a deal. It is one more tool in the trade war and currency war that china is willing to play which could also be seen on he other side. David this is purke investors into the likes of gold. The yen is a very good example as well. It has blown through its median consensus target for the year. At kind of pickle is the b. O. J. In now . I think for once they are in a relatively comfortable spot. When you look at the outlook for exports in taiwan, korea, japan is somewhere in between. And not asas korea ood as taiwan. Prime minister abe up doesnt have a an upper hand. The yen is depreciating by a tad. It is not something that is going to undermine the outlook for inflation for the time being. The ongoing spat between south korea and japan are bigger issues in my view. Rishaad the yen sees the yen going to 100. Is that when the alarm bells go off and do you believe it would go to 100 or would we have the bank of japan stepping in before then . I think they would step in before then. 100 is a long ways. That would have an impact for japanese imports. They are casting a shadow on it. Lets put all of the pieces together. Were basically in the middle f an unprecedented g3 china currency war. Everybody will intervene and as a result i dont think were going to see massive movements in any direction in any of those major currencies. They may show considerable volatility. It is difficult for me to see. Everybody wants to weaken their policies. David you guys put up research yesterday that the won do you still hold that deal . Or is it now the renminbi . I think the distress from weak exports is far more immediate than the transition from the overall macro outlook to the renminbi. Ly bearish for the time being. Rishaad well have more from you. We have more of course on the mayhem facing the markets of course on the way. Looking at whats going on at the market. There is a sea of red. There you go. The hang seng once again leading that charge to the downside. David korea is down 6 year to date, dollarchina back below 710. It has been quite a 2448 hours. Well be back. This is bloomberg. Very busy across these markets today. A number of Central Banks will be on the move. With rate cuts expected, have a look at the numbers out of new zealand. R. B. A. Is up later today. Economists expect to keep rates unchanged for now. Rishaad who is the most needy of a cut here amongst those five . India would be top of my list. There are all kinds of global things happening which are making global bankers dovish. They have issues to deal with as well. I think r. B. I. Not only will cut this week but probably has much more to do both in terms of liquidity and rate cuts the latter part of this year independent of whats happening with the global Monetary Policy outlook. David i want to ask you about the philippines now. The Central Bank Governor came with a big surprise and came out with a Rate Decision this week and said 50 basis points of cuts. Are you surprised he is almost putting himself in a corner here . Yeah, central bankers are putting themselves in the corner all over the world. In india they talked about the volatile monetary cycle. In the case of philippines, there is ample room to cut. There were concerns about inflation a year ago. Now concerns are about slowing of growth. M sure they would not mind on the back of rate cuts. If youre worried about the trade outlook, why not start front loading some of these cuts. Liquidity is not something oure worried about. Everybody wants a Weaker Exchange rate and wants to guide markets toward a weaker Monetary Policy stance. Rishaad absolutely. Real rates are just about 1 . Looking at inflation, 3. 3 . That is pretty much i suppose something they look at. It was negative for a while. Those real rates, for quite a while. Yes. That is the interesting part because a couple of years ago, economies like india, independence nazia, philippines would have consideration of their Interest Rate in making monetary positions. They would not take the Interest Rates down substantially. Now those considerations have gone out the window because they are not that worried about the funding requirement. Ields very attractive in indonesia and the philippines. Emerging asia bond issuers are in a sweet spot. They can talk about things rather cavalierly in terms of policy stance. Rishaad looking at the interest Rate Decisions today. We have the r. B. A. Bond yield there is. 10year yields falling below 1 for the first time ever. What does that tell us . We know there is going to be an Interest Rate cut probably sometime but not today. What is your view . Is there a danger australia falles into a contraction . Not necessarily a recession. That would be the first one i think in 30 years. Right, i was going to say two decades. Two decades, no recession for australia. I think the framework underscores this. The change in wind globally. The conventional toolbox of conservative Central Banks are at the time. The user traditional in targeting, responsible central banking, they probably would not be cutting. Now with risk of a global slowdown, a risk of a china slowdown paramount, regardless of how much easing, i think the short end of the curve is very much in play. The r. B. A. Will take its time. They have followed a very consistent set of tools and instruments for many decades very successfully. Sooner or later they will join the ranks of another central bank knowing that it does not get in the way of monetary responsibilities. David thank you so much for making time to come and talk to us from our singapore offense. Disturb office. Coming up, bling is back up. How far the gold rally can actually go. There are your prices now. Futures, spot markets. Also bitcoin. This is bloomberg. Rishaad youre back with bloomberg markets. The banking group. Inquiries of misconduct in the inancial sector. Employees replaced with an incentive. Staff would still receive individual bonuses. David the Bank Following the loss of 4,000 positions. The chief executive stepped down at 18 months. The cuts are expected to take a year to complete. Lets very quickly have a look at this Cross Section of hong kong staff given whats happening not just in hong ong but risk aversion. Ong kong exchange. 1. 7 to the downside. The hang seng has erased gains for the year, 2019. Rishaad we saw 170 Flights Canceled yesterday. This is a roisk what is going on globally. It is a sea of red. You can see all of the Global Equity markets. That is venezuela. David you see those arrows, that is a 2 drop across that specific index. This is bloomberg. It is 10 29 in hong kong and shanghai. Im su keenan with the first world headlines. The u. K. Be join an International Mission to protect shipping in the gulf. As tensions rise with iran, the government is encouraging watch the strait of hormuse. Trying to preserve the 2015 iran nuclear deal. To north korea now. The country has launched more rank rapping up the pressure. The latest test comes as south korea and the u. S. Begin military drills which pyongyang described as a violation of an agreement struck between kim jong un and President Trump in singapore. To Corporate News now. Googles former head of h. R. Is joining calls for the company to end its reliance on contractors. He says there are occasions when workers should start on a contract but then in general people should be employees. We reported google has more people through vendor and contract agencies than employees directly. Google has been told to respond to senate calls on employment terms. I can see situations where you try before you buy. You dont know if the person is going to work out. You dont know if youre business is going to invest for the long term. I think if youre going to employee people, you should employ them. Wall streets biggest fall of the year has seen the wealthiest 500 people on earth drop tragically into the not so wealthy losing more than 2 of their net worth. 21 members of the bloomberg billion air index each lost a billion or more. Using a lot of photos of jeff bezos, because he lost the most. Amazon shares tumbled. However he is still pretty well off with a fortune of 110 billion. Global news 24 hours a day on airpowered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. David i think he will be fine with that. Lets have a look at precious metals. Bitcoin in the risk aversion were seeing. It might be a safe haven bet. Down 1 . Roup up 1,200 yesterday when all of this was kicking off. One has to think about capital flight. Ow does one do it . 21. 8 as these tensions around beijing, tokyo amongst others. It is also about golte gold. Our next guest expects the precious metal to average 1450 in the next quarter. Where do we go from here . After is a safe haven being reignited recently. For much of last year the dollar was the key driver. The fed is back in focus. There are expectations for further rate cuts. There are trade tensions and political tensions that have exacerbated golds risk. We have seen institutional investors, tactical investors. David just to confirm your target for the year is 1450. At what point would you revise it up from 1450 . We had our target an average of 1450 which we had in place a few months ago. There is the potential for prices to hit 1,600 but now that likelihood has risen given the escalated tensions that we have seen recently. There is not a clear point right now. Prices are not necessarily looking oversold. It is not looking overcrowded at the moment. There is more when it comes to investor positioning. The physical market is a little bit softer. The growth and investment, the next target that were looking at this the near term. Rishaad is it better to buy the physical stuff or a good dea to be gold miners . It depends on what your strategy is. When were looking at gold, it is a safe haven a real hard currency. When you look at the it is you believe the miners are going to continue to act when it comes to their cash margins. It is a different play in terms of what your exposure is. Safe haven, david is gold becoming more expensive relative to silver . I would imagine that ratio comes into play. Were at 90. I think near the highist since the early 1990s. Why has silver been left behind . This is an interesting ratio. Historically we have tended to see when the ratio is stretched trading above 7 5, 80, even, we tend to see a reversion that is driven by silver prices driven higher rather than gold prices falling. We have not seen that this past year. Trade tensions, gold doesnt have that hanging over it. On one hand silver can play catch up and it would not be surprising to us if it moves higher in silver, taking prices much higher than 16. 5. But having said that, i think the industrial component, there is perhaps more upside risk for gold in the environment. Rishaad how does the Federal Reserve play in all of this . And the efpklating trade war and what we have been seeing . Between exin ping and donald trump of late. Trump says the u. S. Should retaliate against the latest actions of the chinese and how can they retaliate . I think with the fourth of july meeting, the focus has come on the negative sides of yield. Now that the fed has cut, there is more interest or more speculation when the fed will cut again and when that timing will be. I think at the moment what is driving investors into gold is debt has continued to grow on a global basis and there is a great deal of uncertainty surrounding tensions between china and the u. S. That uncertainty is weighing on global growth. It is one of the biggest factors making gold competing now. There is much more chance for appreciation when it comes to gold. The escalation is weighing on gold price because it was the dollar that was befingt other safe haven aspects but now the current environment, gold has seen prices rising. David would that mean then, and you tell us, would that mean gold might be overstretched because the dollar is not exactly falling . Area i think what has been important is the gold has seen levels we have not seen since 2013 with the dollar weakening. It has been a range of macro factors and that has pushed gold Prices Higher and it hasnt been the weakness of the dollar. To see the dollar weaken further, you could see more upside risk for gold prices but at the moment the combination of factors, ranging from brexit and tensions between the u. S. And china pushes gold Prices Higher. E. T. F. s, they have not been in one particular country. We have seen it in europe, china and the u. S. Fairly evenly split now between the u. S. And europe where previously it was the u. S. Inflows that were dominating. Rishaad everything out there seems to be gold positive. Including if we end up with not just a trade war which we are in the midst of but a currency war. There are a number of macro factors that look positive for gold. As were seeing gold prices hit the high estelle vated levels of record prices. It is actually weighing on physical demand. We have the increases starting to weigh on indias gold demand already. Over the course of many demands are so strong, it started to soften in june and have come up again in july. We are in the midst of a slow eriod which called could cancel soft strength. We have seen weaker monsoon seasons and prices and some of the demand coming off. It hasnt been offset. Going forward, what is interesting is in september we start to see a return of seasonal demand and that demand may remain under pressure. Weaker investment has not come into the market just yet. David thank you so much for staying upandcoming into our studio. It is a very big day for precious metals. At update of course. Risk aversion were still seeing this tuesday. A v a look about markets. Hong kong now down for 10 straight days. The longest losing streak since 1984. I believe were still near ession lows. Back up at one in australia. 170 is your u. S. 10year. German bunesd closer and closer to the earths core. Rishaad one stock is up on the hang seng. Assessing beijings options for ending the chaos. That is on the way. David lets talk about whats happening here in hong kong. Were bracing for chinas official response. We saw lot of violence and a string of arrests. At least 80 people were arrested after unrest. Ophie is out for us. Whats happening now . Well, yes, im in front of the Police Headquarters just as were waiting for a string of events today. No protests have been scheduled, a Media Briefing will be held not only by the police but also by the office in beijing. At 11 00 a. M. , they also get a presser for protesters. Earlier, on the other side of the lease headquarters, there was a presser held by the d. A. B. Party. The Democratic Alliance for the betterment of hong kong. As you can see, just outside the headquarters, we have barricades that have been erected for sometime. They have not been taken down yet perhaps in readiness for more protests. Tomorrow there is likely to be protests held. A lawyers march is also planned to request an independent commission of inquiry while were seeing a calming down and return to work after mondays strike, this doesnt mean there is an ending in sight for hong kong. Rishaad that was yesterday. In anticipation of this briefing in beijing too. A lot of anticipation as to what they will get from china. Ahead of that, the mouthpiece of the communist party in a recent front page commentary as chief. China looking for ways to address the issues here in hong kong. The economy may be used as one lever to encourage support from the public but as we have seen in recent weeks, it is on the back burner. One of the demands of protesters has yet to be arrested. Lam during her briefing has not announced any concessions. Ishaad thank you. Indian equities are raising their 2019 gains as we have also seen here in hong kong. How is it looking for this session tuesday . Not all that great. Of now, all of the 2019 gains have been wiped off the record highs for the index. The currency dropped, which has been the worst in 16 years. Interestingly, overweight in ndia, indonesia. . Four companies have managed to beat expectations. The outlook still seems to be pretty grim. The structure was weak. There has been a bigger selloff that were seeing in the equities. Both of these come up with esults in todays session. The high gold price could affect the market. Rishaad thank you. A runup to the start of the trading day. The governments move strips people of long held rights to employment, land and ownership. Not just local residents but neighboring pakistan. Their hindu nationalist led muslim nt, the only majority state in india. David he has stayed on the show. Thank you so much for sticking around here. We have already talked a little bit about the Monetary Policy here for the r. B. I. How does this latest geopolitical twist change the map, if any for you . It doesnt. It has been challenging for a while. This development does not help. But we have many other factors in india from slowing growth to not quite independent r. B. I. And all of those issues on the radar screen of investors for a while. Not the most constructive backdrop in any case. This of course doesnt help. Rishaad a war over this. The pakistanis are threatening. All options are open and on the table right now. Right. I cant imagine wartime situations. Saner heads have prevailed in the past and hopefully will do so again. This is not the most conducive time for people to worry about india because there are plenty of worries to go around. In any case, we have been following indian consumption for a very long type. I cant remember the last time we saw such weak consumption coming into the First Quarter of the fiscal year. David in terms of the target for the currency, if this doesnt move the needles for you. We talked about the r. B. I. Already. Were at 70 here. So we have been forecasting 71. 5 as a 2019 target for a while. For the better part of the narrative. Despite the fact that oil is low which is normally a bullish indicator, we have not seen any positive capitalists to prevail their currency in a stable territory. We see further weakness ahead. The negative earnings surprise, poor consumption that i talked about as well as a critical situation are ample reasons to stay away from india. Rishaad the recent bond rally , quite a bond rally. Yielding 7. 4 in may on the 10year in india. It was 6. 3. Is that the principle reason we have seen the recent strength in the currency there . Right. You know, a week ago that was the key question. We have all of these negative macro developments take place and were seeing weak portfolios in those numbers. Several things have happened. Donald trump broke the market on thursday with the terrorist tweet. I would say that the the governor of india did on thursday. The vestige of the constructive view on the rupee will be strong. I think that has been shattered over the last 48 hours. David thank you so much. Joining us out of singapore. Have a look at the markets toh the yuans correlation e. M. Currency. Inflation out of the philippines after rising pretty much every month after octobernovember last year has fallen since then. That is the state of play across currency markets. Rishaad futures under pressure of late. The fear that infrastructure could be hurt by all of this. Moving the opposite protection now. 10year yield 1. 71 there on the u. S. This is bloomberg. Rishaad taking a look at the latest business headlines. Steel down again in tokyo. A First Quarter loss. The oneyear profit will collapse. Sinking the most since 2017 on monday. Lost more than 11 billion in the three months since the end of june. Income dropping. David amazon is letting users opt out following a criticism that a program violates policy. Allowed users to remove recordings. Amazon has a team of thousands listening to alexa audio requests. Some of the reviewers had accessed it for personal data. Rishaad expanding his reach to take on amazon. He will pay 42 million for a controlling stake in retail nd technology. Be a National Retail powerhouse. Avid the indian open should be in one hour. 1. 6 trillion u. S. Dollars from yesterday was wiped off the index. You see a red arrow down. That was down 2 . Rishaad there was one green one in venezuela. The benchmark rising 6. 8 . I dont know what exactly happened there. The country is in political crisis. David i wonder what the return is in dollars. Stocks reacting globally. Is it actually time to buy . This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Morning session in hong kong, this is a look at our top stories. Grows ly january, fear and currency war. And currency manipulator looking for an edge, president rump wants the fed to take ction in response. And this is blook berg markets. And down time into a currency war and does look like a full trade on. Look where we are in the asia asian 1. 6 , benchmark in negative all sectors are also down. And all giving up the gains. And lools lower by