Getting a boost from the gdp boost print which was something. 1. 8 growth. Shanghai, doing well. Lets look at whether the currencies are playing out in this because when we see the japanese yen appreciate, we tend to find exporters are under belowre but it is still 106 and doing ok on the nikkei 225. The euro, fractionally moving to the upside at 1. 12. This, despite what has been a bit of a fallback but it looks salvinis government is on the verge of collapse. Meanwhile, we had the fix early in onshore yuan, below seven against the dollar. Lets carry the position we have on these markets. Lets look at the first word news with su keenan. Governor has told ready to that he is reduce australias record low Interest Rates further, although he indicated the economy may see the worst of the slowdown. The rba undertook back to back rate cuts in june and july to a record low 1 as it stopped to revive a decelerating expansion and drive down unemployment. Inflation will be below the target for some time to come, and the Unemployment Rate will remain above the level we estimate consistent with full employment. All that remains the case, the possibility of lowering Interest Rates will be on the table. Su the japanese economy grew more than expected in the Second Quarter, softening concerns about the rate of the slowdown. Gdp expanded at an annualized 1. 8 on the prior period compared with estimated growth of. 5 . Consumer spending and in not enoughrose but to help the economy revise a 2. 8 expansion in the first quarter. There are increasing warnings of a downturn in the worlds leading economies as the escalating trade war. The probability of recession in the u. S. In the next 12 months has risen to 35 , up from 20 at the end of last year. That is the highest. Among the 20 nations and only matched by japan. Goldman sachs is telling investors not to hold their breath for a trade deal. It no longer expects an agreement before the u. S. President ial election next year. Goldman is trimming its earnings per share forecast for Chinese Companies and lowering chinese index targets, but it is still overweight on chinese stocks saying Growth Prospects are decent and evaluations are low. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Seems to be holding off a decision to grant huawei the retaliation for halting u. S. Agricultural purchases. The latest comes as the Trump Administration works on chinese imports with fresh tariffs that start at the start of next month. David Jodi Schneider is here to brief us on this latest titfortat. Kathleen it looks like this is in response to china not buying agricultural purchases. It has been back and forth really since june, when the u. S. And china announced a trade truce in japan and they basically have both said the other broke the truce. The u. S. Saying china would buy more agricultural products, saying it didnt do that and then the u. S. Going ahead and saying it will have higher tariffs and china saying now it will not buy more agricultural goods. This has been an escalating trade war. Wilbur ross, the commerce secretary, says there have been 50 companies that have apply for these licenses. U. S. Companies need a special license to do business with huawei, given it is on a trade blacklist in the u. S. They havent said these will mop he granted but said they are halting it for now. How does japan figure into all of this and can they reverse decisions about huawei . Jodi the u. S. Said japan was able to go ahead. President trump said japan could go ahead and have its licenses with huawei. Theres been no word on whether that has been changed and it wouldnt necessarily be affected by this, so neither the state department nor Commerce Department nor the white house has commented on that. David what is the argument of companies that have argued for licenses . Why would they do that . Jodi huawei is one of the biggest in this field. They are really crucial for all kinds of companies on both sides. Say, first of all, these products are available elsewhere and by really banning them from doing business with huawei, its ineffective and harmful to companies, the companies that are supposed to be helped by the u. S. Being tough on china. They are becoming victims in this and it will hurt the economy overall, and it will hurt innovation. That is their argument and it is an argument that seems to have a fair bit of credence with the white house. The white house saying, well take a look at this but given the escalating trade tensions, it looks like it is caught up in the trade battle with china and the back and forth in terms of each time one does something, the other retaliates. David Jodi Schneider, Senior International editor. Speaking of caught up and the fallout from tech to agriculture, trading for you. Premium, argentina sees a premium surge. Blue circles indicate the first is the double trump tweet in may, leading to the premium and the second blue circle is the latest reescalation. That premium is essentially back to the highest level going to the start of the year. Rishaad soybeans. What do you make of all of this . Im sure youve got an glowistic go about you about you. That is six inches of makeup. Weve been talking about this for some time. Im glad goldmans is of the view that trade war has no end in sight. Ive said the same for two years. This isnt even a trade war. It is above and beyond that. It is about something more existential if we are all honest and there is no easy resolution. Is a leadingrade expert in that area and argentina will benefit from that and so will brazil that all we will have is a reshuffling around the globe and everyone spends more. Repackaged and sent back on. Michael exactly, but that is a subset of the larger process taking place and it is clear we are seeing a gradual stop, start disengagement of the u. S. And chinese economies. Huawei, im not an expert and wont attend to be but do you think two or three years from now that the economies will be more tightly integrated or further apart . Start from that assumption and work backward from there and i think theyll be further apart. Rishaad it depends on how far apart they are. I would think pretty far apart if you look at the Political Tension at the moment. We are nowhere near a conclusion to this. Do you think we are further away than may . Michael from what . David from finding some Common Ground . Simply this rhetoric to get us somewhere closer . Michael i think the rhetoric is catching up to what the underlying reality was. Piece, or aendly friendly war where there was a lot of saber rattling but not a lot going on. We are now seeing a lot actually going on. Up they have to pick press and see supply chains are rapidly shifting out of china. Below the headlines, you are seeing further disengagement, and that is why it isnt a big gamble to say the u. S. And china will be much further apart a few years from now. Rishaad the question is, does this narrative continue . Is it an electioneering . This othere where piece Gains Traction where the chinese are waiting it out and waiting to see the back of the current incumbent of the white house . Michael both are true. I can imagine a scenario in the runoff to the election, trump announces hes close to a deal or something is wheeled back temporarily to give the stock market a lift into november 2020. That is part and parcel of the trump magic, the cheap showmanship. But i think china is taking every step it can to wait this out. 2020, ision is beyond it really going to change anything . Our analysis suggests no. This is the underlying reality what you change trump as a figure of not. David we have 10 trillion of negative yelling that, basically levels before trump was reelected. Breakevens are falling all over the place. Would you recommend going low on treasuries and bonds given those statistics . Michael absolutely. Maybe not tactically, but strategically that is where you want to go. Atwe are talking treasuries 1. 7, how long before we are talking 10 trillion of negative yielding treasuries . David rio tinto said they were ready to go out negative rishaad what would precipitate it . Michael a continuation of what we are already in. Any chart of bond yields is clear where the direction is. We heard in the news a 30 chance of a u. S. Recession next year on one indicator. Modeln has model house has 80 . Is it a global recession or just the u. S. . It depends on the model but nothing argues bond yields should be going higher from here. Until the how long u. S. Has to get to the same level as everybody else . David if you want more positive commentary, stay with us because this is bloomberg. Michael every will stay with us from rabobank. Also, living in a tinderbox. How hong kongs troubles are hitting the Property Market. Address. Modis kashmir this is bloomberg. Rishaad the philippines delivered a quarter percentage point rate cut thursday. The central bank governor, citing slowing Economic Growth and inflation drivers and sees another rate cut this year. Right now what we are contemplating is another rate cut of maybe 25 basis points. It could come as early as september or in the fourth quarter. Cut our reserve requirement. 30 to 18d easing from and then 16 now. Another possible 100 basis cutts of requirement ratio before the end of the year. David that was the Philippine Central Bank governor. Michael every still here out of rabobank. Very simple question. My savings are in hong kong dollar. Where do i shift that . Currency protects my wealth . What currency do i put those in . Michael my answer to that is put it in u. S. Dollars and dont hold it in hong kong. Move it offshore into u. S. Dollars. You have to look at the tail risk. Im not afraid to say that if you look at the situation playing out in hong kong, can you 100 say with not a shadow of a doubt when you are talking about my wealth, your wealth, corporate wealth, there is no risk to the peg in the future given the political situation playing out . The answer is no. In the u. S. Dollar, what could possibly happen . There is no risk of capital controls in hong kong should a which is notfold, my prediction but people are talking about it and there is a risk of that happening. There is no risk of that with u. S. Dollars offshore. It is a nobrainer. If you deposit u. S. Dollars offshore, you can pick up some 2. 5 for u. S. Dollar cash. Why would you get a lower pickup to keep it in the currency which has a Downside Risk even if it is a small one in a location which has a Downside Risk . It is a nobrainer to shift to another currency and move it to a safer location. I cant see how that is any other trade than one way. Rishaad there is so much going on. Weve got trade tensions with japan, south korea, the north seemingly testing Ballistic Missiles on a daily basis and you look further afield, brexit, venezuela, the Italian Government on the verge of collapse, and cashmere which is a powder keg. Iran is another one. The list goes on. David why not the yen, then . Why dollar over yen . Michael you explained it. Yen is a good choice but you will not earn anything. 2 if you lockin now into the u. S. Dollar. What you are seeing overall is the Global Political economic architecture we have sat on since when were two very comfortably and the markets have traded on the back of is fracturing. We can discuss why. There are various factors that feed into it but it is fraying around the edges and these are the points where it is fraying. When something finally snaps completely and that hasnt happened yet, even in the case of brexit, you will see wild swings in markets when it finally does. Rishaad is the relentless pursuit to gain inflation in your economy doing more harm than good . Michael i think we already have inflation. We have inflation in some areas. Look at health insurance, rent in many places still going up and up. Generalized inflation we dont have because of globalization but trying to pursue inflation, Central Banks have blown asset bubbles. Weve argued for years you will not get generalized inflation without higher wages and you wont without breaking globalization and that brings us back to the fraying points or tectonic plates we were referring to. Of obviouslack inflation, is that still a good measure of Economic Activity because that is essentially what the central bank does . It look at inflation as a gauge of other things. Michael i dont think it is and if you want an answer as to why that is the case, look at every central bank. Cut cut cut, six months after almost all of them were talking about hike hike hik e. What has turned in the inflation dynamic in the past six months . Very little. Show me anything that shows a shift in what we are looking at. Simply there is something playing out that they cant reveal. I think what they are actually targeting is frankly not fit for purpose. Youaad this is an argument could have weve almost been trudging through sludge ever since the gypsy gfc. Michael the wrong kind of sludge. Rishaad i know it is a horrible thing for people to enjoy on a personal level, but do we need a recession . Michael if we are going to go down that school of thought, that is the austrian school. We have all the imbalances, the system needs to reset. Logically and i stress rather than politically you could make an argument for that. The we saw post gfc is real economy experienced that but Financial Markets didnt. Rishaad and you are talking about asset bubbles. Michael if we are going to see asset prices reset the way many peoples wages did, we are no longer in an asset rich, income poor economy. We are in an asset poor, income poor economy. I wonder if politics can survive that reset. Michael when we werent talking about yuan, you said 7. 4. Michael 7. 75 12 months. David that is almost parity. Michael every, i feel much better moving into the weekend speaking with michael. You can catch up with our interviews including the one with michael. Go to tv. If you are a bloomberg user, dive into bloomberg functions we talk about. You can also become part of the chat. This is bloomberg. This is for bloomberg subscribers. Rishaad lets look at the business flash headlines. Ubs may be set for a shakeup. It would involve hundreds of job cuts. Once to sharpen focus on serving richest clients. The advisory unit was a standout success in the Second Quarter after slumping to almost 50 in the previous three months. Have ansbc is said to internal candidate in position to become the new ceo, chief financial officer. Joined in january but sources say he quickly established himself as a leading force and has forged a Strong Partnership with chairman mark tucker. Hsbc has been shrinking its International Footprint to cut costs but the strategy has paid off for investors. To raise moreng than 270 million from a share sale to institutional investors. 6 res 83 rupees, giving a discount off the last close. To reduce capital ratio and refinanced here one and two to tier 1 and tier 2 bonds. Resort plans a 1. 2 billion investment after allegations organized crime laundered money at casinos. There will be investigations linked to drug traffickers to attract wealthy chinese gamblers to its casino. Crown says it is fully cooperating. Story, we have another lets look at what is going on seeing gains. Nikkei up 146 points at the moment. Weve got Companies Making waves. Softbank on the way up despite what happened with uber, falling in extending trading. Second quarter missing estimates. David the vision fund, the the income they booked from the vision fund offset some of these losses. Shinsei bank 11 . Rishaad selling most of its stake in the lender. His reputation may have taken hits in the financial crisis but he was the man who invested in the bank. It was the first foreign taken over of a japanese lender and his sale is not a vote of confidence. We will come to that later on but we are heading into the lunch break and there is the imperial palace. Su 10 29 in hong kong and shanghai, 10 29 p. M. In new york. Im su keenan. We start with the latest with President Trump and what he is doing to the u. S. Currency. Hes taking fresh aim at the u. S. Dollar, moving a step closer to scrapping longstanding white house support for a strong dollar. He tweeted he is not thrilled by and saysncys strength it is making hard life for Corporate America to compete. The comments come days after brandon china a currency manipulator while saying he may intervene to weaken the u. S. Dollar. Philippines, they have cut their benchmark interest resuming policy easing after Economic Growth and inflation slows. It will reduce the overnight borrowing rate to 4. 25 as predicted by almost all economists surveyed by bloomberg. The governor says there is room weakurther easing as global prospects. Su it is ready to stimulate its economy in the face of weakening Global Demand and the u. S. China trade war. It warns the threats posed by uncertainty could be longlasting. HisPrime Minister used National Day Message to reassure his audience that singapore has experienced slowdown before and the government will launch the newest is necessary. The man who was once the countrys richest person has been arrested for market manipulation and money laundering. It is the second time he has been defamed. Is former mining tycoon serving a 30 year term under house arrest and being investigated on large sums of money in an artificial bank based in panama. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more. Han 120 countries im su keenan. This is bloomberg. David thank you so much. Lets talk about what is happening in hong kong. For proteststainty and global trade tensions, all of those things taking their toll on many of the cities listed blue chips. Engle,ring in stephen chief north asia correspondent who will go through a long list. Stephen ive killed a few trees printing this out but weve also comment from the Hong Kong Government about tourist arrivals down 26 in july yearoveryear and those numbers continue to fall. Move back toters the airport today and through the weekend, disrupting or at least holding rallies there to plead their case to the International Community as they come in and out. We are also hearing now, 22 countries have issued travel warnings to hong kong including the united states. That is the backdrop. We know close to 10 weeks of unrest. Lets get through Swire Pacific, one of the oldest trading houses in hong kong, talking about stronger headwinds, net income fell 41 in the first half. Arecally, they fundamentally confident in hong kong and have been here 148 years. The company, which also owns cathay pacific, is seeing headwinds. This is a company in retailing and airlines. Sectors that have been hit hard by protests. Here is the chairman of Swire Pacific as well as swire properties. Global trade tensions and protests in hong kong are having direct and indirect effects on demand and a number of our businesses. Current challenges from a position of financial strength. We always take a longterm view and we have confidence that hong kong will remain successful over the longterm under the one country, two systems framework. Stephen but stuck about wharf. The full year outlook will be uncertain in hong kong. We demand has been weakened by economic slowdown, contracting exports, reexports, falling retail sales, stock market jitters, and the threat of unemployment. They through in everything except the kitchen sink. The company that put signs out of harbor city, a Shopping Mall across the harbor from where we are. This is at the front door of the mall, basically saying we will do our best to ensure customer safety in the mall. Police, please do not enter unless crimes happen. R, big Property Company that runs the subway system, we had a property warning from them but underlying profit fell 26 . Theirof provision for that is noten for a global audience but they have been hit by protests, social disobedience as well as property and retail. China mobile, not really related profit dropped the most in 17 years. Basically 3g cost. 5 g. 5g cost. David stephen is staying with us. Lets talk about how this affects property. Rishaad midland holdings, the managing director is one of the largest real estate Broking Companies in the city. Provides services not just here but in macau and mainland china. You have the first question. David have prices come down . In july, property prices fell about 1. 1 . Also in the meantime in july month on month. July, the transaction in the primary market was 30 down from the Monthly Average in the first half of the year and the secondary market has come to a standstill. Rishaad we are talking purely residential. Orthe residential sector commercial sector has been under for forming underperforming through 2019. Of change in the expectation Interest Rate environment provided relief to the Residential Market in hong kong. Transactionll activity fell 40 during the first half of the year. A correctionhis that was can a come anyway because in the last decade, Residential Property was over 200 up. The seems to be a lot of overheating in this market and as mainlanders pullback, the yuan is weaker, is this the perfect storm . Say we expect to see some concentration of slowdown in the Property Market in the Third Quarter of this year because property prices in the first half of the year a creased about 8. 8 and during the first half of the year, there have been 11,000 units sold representing 74 of the primary home sales in the full year 2018. With property prices increasing so much and with a lot of demand in the first half of the year. I thought this kind of slowdown is not surprising. The protests make matters worse. Stephen the auction was also weaker than expected. Gordon thats right. Thaten field airport land the auction out to the consortium. Rishaad what do forecasts in terms of Residential Property point does it get as bad as the administration coming out and losing some of these curbs in place right now . They can manage it, cant they . Gordon well, perhaps we can focus on the Property Market first. As a matter of fact, the recenty market in the decade has already gone through several consolidations and another one significant took place in 2015 and then, property prices fell about 10 for seven months. The consolidation that took place in the recent decades hares some commonalities. It didnt last long and the correction was mild. Attributed to be a limited supply situation and low Interest Rate environment. As long as these factors are in place rishaad the government can mitigate sever forces . This is typical for me to answer because it is political issues. I havent seen that in hong kong before. It is unprecedented. However, if we go back to the fundamentals of the Property Market, we are still supported by two important factors. The limited supply and low Interest Rate environment. Stephen how about Retail Sector . Service is getting pummeled right now and companies, Property Companies are not only retail, but land. How badly is Retail Property going to be. Swire is a classic example. , then our thought transaction activity in the nonresidential sector in the first half of this year already. About 40 on a yearly basis. Because ofbehind it, the trade war hanging in the balance and because of which demand from the mainlanders. This kind of social unrest will only make the situation worse. Stephen have a lot of locals started to move out of the city in terms of people flowing in . Transactionsut falling. I imagine that might have to do with visitors from the mainland looking to buy something and holding off. Locals moving out . Gordon locals moving out . I cant in terms of the number of inquiries on the Immigration Program and have searched significantly. Whether this number will translate into the actual number gettingkong people overseas passport and moving out of hong kong, this is another question. Why . For a lot of developed countries, they have tightened the immigration requirement and for a lot of developed countries such as the u. S. , canada, the the immigrantuire to stay in the country for a considerable time. It may not serve the appetite of the modern hong kong people. Whichies like portugal, doesnt have this kind of stringent requirement. Rishaad thank you for joining us today. Gordon tse from midland holdings. David indias Prime Minister is promising a new era in kashmir after scrapping its autonomy. That coming up in a few minutes. This is bloomberg. David welcome back. Modi isrime minister promising me this new era in kashmir after revoking it special status of autonomy. He said it would rid the region of separatism and terrorism but he has drawn condemnation from neighbors, including china and pakistan, which has cut diplomatic and trade ties. Next guest is a secretary of state for south asia. Is on the council of foreign relations. Welcome to the program. This came a bit out of left field. What is behind it . Lets start with the basics. Alyssa out of left field in terms of the timing. People were quite surprised by the manner in which this took place, sunday night, monday day. In terms of priority for the , this hasty in india long been a political priority for the party going back decades. It shouldnt have surprised any of us that they wanted to incorporate kashmir with the rest of india, remove that level of economy autonomy. It was the timing that took people by surprise. David the next question, why now and are those conditions transitory or fairly permanent . Does this stay the status quo . Let me take the first part first. We have seen reporting out of india that suggests the indian their own believes security interests would be imperiled based on what they have been seeing with the Trump Administrations negotiations the the taliban and and plan to eventually withdraw u. S. And International Troops from afghanistan. Second, following the visit of s Prime Minister to washington and President Trumps offer to meet, which did not go delhi, that new was a spur for the Indian Government to take actions now rather than wait for some unspecified time. Hes been a regular saying im sure this is all politics but promising the in five years, they would be the richest state in the union. What did you make of that . Alyssa that tells what the content of the nearly 40 minute long speech that Prime Minister modi delivered on thursday. They are emphasizing and explaining this to the indian to economicpathway development for kashmiris. It remains to be seen whether this step will produce the levels of investment that they say it will. There are certainly political issues that are going to remain sticky for now. In the immediate moment, there are political leaders in prevented dissension detention, which makes it hard to say this is a step that had the full support of all citizens of kashmir. They said they will relax the security restrictions in the coming days, but whether this will deliver the economic boost, we wont know for some time. Rishaad you are not going to get an economic boost of the territory remains in locked down as it is now. What do you think pakistan will do . Theyve ratcheted up the and havec language taken their ambassador out of delhi. Do they do more than this . The danger is this could lead to an Armed Conflict between two Nuclear Armed navies. Alyssa that is the danger but if the expression of dissatisfaction and displeasure from pakistan remains at the diplomatic level, that is a good outcome in my view. What we would like to see is a military escalation or response in the military realm or frankly, some sort of terrorism that could be launched by any of the myriad group that target cashmere and make their home in pakistan. Event like that take place in february and that led to an exchange of military action across the board. That was a dangerous moment in february. A series ofins diplomatic steps, at least that is the way countries can respond and maintain some sort of Diplomatic Exchange and dialogue about their issues. David we had a strongly worded statement out of beijing. Obviously they are not happy with it. Alyssa china believes the part of kashmir it occupies is its territory and that is what the statement from beijing was addressing. Idea that would now be the state had been split into ces quiches now pie now and the part in the high himalayan mountains also includes this component that china claims. When they said this was an issue for chinese sovereignty, that is what they were addressing. Rishaad thank you very much for your time. Alyssa ayres, senior fellow at the council on foreign relations. David for the viewers here, the kse 100 was down for a sixth day. Rishaad worst performer in asia this year. David in under an hour, we have the open of cash markets in mumbai. Devina is standing by in mumbai. Last day of the week. Where do we go . Yesterdays session, if you look at the way the stock being on the back of media reports suggesting the is the issue in the Capital Markets and could look at research in a more meaningful way and whether or not factions have taken that on but just the noise created let the index move up. It has rescaled 11,000 mark in a big way. Have been struggling for a long time and there was something expected to come out. Whether that comes or not, the auto indexes are trading almost 3 plus. , so this is a rounded moving yesterday session. Midcaps as large caps, but it was a fantastic trading session. The session looks more sanguine. Gains across the board. Whether or not we managed to maintain the gains, we will have to watch out for. Fundraisingnk plans, stocks had a horrid time of it. Does it mean better days . Evina now, we have immediate while thisuirements particular issue intensifies 1 million. It is at a discounted price. T that isier 87. 9, capital downtier 1 but in the mediumterm new term, this is a positive for them. They have been struggling on the operational side and with the overhang and whether they can raise fresh capital. Now that they are planning this, this could be the first shot in the arm for yes bank. David we will see. Devina khanna, live for us out of mumbai. Rishaad we are looking at uber earnings and mocha crown under the microscope. Details on all of that. This is bloomberg. Rishaad lets look at the latest business flash headlines , melcocrown planning 1. 2 million, under investigation of australian regulators after allegations of organized crime wandered through crown casinos. Reports of junket operators linked to drug traffickers in order to the wealthy gamblers to casinos. They say they are fully cooperating with authorities. David uber slumped after sales missed forecast and the net loss came in at an eye watering 5. 5 billion. Booking rose almost one third in the Second Quarter as uber generated 2. 9 billion in adjusted revenue. That was a 12 increase from a year ago but the low was lower than last analysts had printing penned in. Rishaad symantec adding software to keep hackers out. In january and comes less than a month after discussions about a full merger over disagreements about price. Weid in case you missed it, will recap Inflation Numbers out of china earlier on. 2. 8 was the Consumer Price inflation, highest since 2018 but ppi caught a lot of attention. We were expecting a negative read and what we got was more than usual. You have two vertical lines, this was your last period. Rishaad it went on for years. The question is and what ppi does is it dovetails into what happens in terms of nominal gdp growth. Industrial profits, what we mean is when it is negative, there is a lack of pricing power. Also, inventory buildups. David do we get back to the worst stage of the four halfing your period . Inflation was nowhere to be found until now. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Emily im emily chang in new San Francisco and this is bloomberg technology. Uber tanks, shares plummeting after hours after missing estimates across the board. What is the path to profitability . Weve got full analysis. Plus, craft landing page. Several advertisers tell bloomberg the Software System used to run campaigns on facebook and instagram is crashing regularly for hours, if not days. We will tell you what g