Transcripts For BLOOMBERG Bloomberg Markets Americas 20240714

It slightly lower and above seven again. Guy italian btps firmly in focus. A big selloff in italian bonds. The british pound also under pressure. When do we go through 1. 20 . Vonnie lets take a look at the week that was through the numbers. The numbers that have moved the markets most this week is seven. Chinas daily currency fixing became a closely watched event. Monday triggered the biggest loss in the yuan since 2015, and a tumultuous week in markets as well. The episode leading to the u. S. Labeling china a currency manipulator, the latest escalation in the trade war that sent investors rushing once more toward haven assets. 15 trillion is the world stockpile of negative yielding bonds. , gold futurese hit a sixyear high wednesday. The precious metal has been one of the chief beneficiaries in the trade dispute between washington and beijing. To unpack all of the reaction, we are joined from st. Petersburg, florida by james , with about 10 billion under management. James, what was your week like . How are you invested, and what did you make of the moves, particularly in u. S. Yield . I think the week was because we introduced another policy discussion with the currency giveandtake. What we look at is weve gone through the first half of 2019 with really all of our main Asset Classes doing extremely well. That includes the Equity Income producing securities and the u. S. Treasury market. For us, it is to take a pause. We happen to believe the bond market usually gets things right about global growth. We are more aggressive with our cast allocation with our cash allocation then we have been. Cash yield has been more generous stateside, so it is our perigit returns in polio. Lets take some chips off the table and see which market has which market has this right. Vonnie with the 10 year yield at 1. 752 right now, what do you make of this weeks moves . A lot of confusion it seems like in the treasury market, or was this an actual considered move . James i think it is the flight to quality trade, and the dollar is the state haven is the safe haven value. We are the cheapest sovereign debt instrument out there. If you look at what happens in the treasury market during these moments, it is the beneficiary economiccal and uncertainty. I certainly love to treasury market last fall, when most of the world was telling us for percent or 5 is next. Eclipsed at 2. 5 right now. We are probably near term a little overbought, but not massively so. Guy james, what a repricing in right now . What are we pricing in right now . The week started with the chinese pushing through seven, massive moment for the market. Overnight, the u. S. Administration going back after huawei. Again, something that really and always the chinese. They are not talking to each other right now. They are trying to antagonize. That certainly seems to be the case at the moment. Is the treasury Market Pricing the fact that we are seeing these trade war drag on for a very long time . James i think it absolutely is. I think the big take away from the continued escalation is this idea that there was going to be some neat, whether it was cosmetic or other, victory for the trump administration. That seems further and further down the road. We are pulling back all of the confidence numbers, both at the consumer and corporate level. We are slowing capex, which was actually leading to a nice productivity acceleration in the u. S. , which is keeping labor costs down. Policy mistake that could have been the fed, we are meeting at the policy mistake that is the fiscal and political side. I think that is going to hit confidence and capex, and i think real Economic Growth u. S. Is going to be under strain just like overseas because of these events that dont seem to have a nearterm resolution. Guy that is a pretty bleak list of things you just laid out. Where does the fed end up going if that is the scenario we find ourselves in do we get another 25 . Where does the fed a out, do you think . Where does the fed bottom out, do you think . James i think the fed was trying to set up the u. S. Economy as best they thought they could with more rate increases as some ammo for what is going to be an economic slowdown 2021, 2022. What i think happens is the fed is going to be less accommodative relative to markets and trade uncertainty then they may otherwise have been. I dont expect massive said easing. I think they have to get the yield curve confederation yield curve configuration somewhat right. Right now the market is forcing the feds hand, so i dont expect massive rate moves regardless of what happens with trade. Vonnie talk to us a little bit about your Strategic Income doing in what youre those. You mentioned that you are allocating a little more to cash right now to give a little firepower at the ready if necessary. Where else are you invested, and where you putting chips in the table and taking them off . James the basic idea in the globally isbably that yield has created the need for what i think are more capital structure agnostic products. Tohas been very enabling american corporations in terms of buying back stock, reengineering and balancing levered sheets. For our needs, we like to have the ability to go back and forth and up and down the capital structure to allocate for income. That has really proven to be as great strategy over these repressed Interest Rates. Our idea now is the equity , the 10 year yield, we are sort of at a tie in terms of income generation. But right now the rates of return for the s p have been very generous. We have lost the negative correlation, if you will. When that happens to us, we take a step back. We are still in the moderately higher than s p payers. We have proven trajectory, proven payout. We are overweight the Corporate Credit market. We still think that has some room to run. For the next probably quarter, we are going to have a higher cash allocation the normal. Vonnie plenty more to discuss with you. That is james camp from eagle Asset Management. You will be back in a moment. First, lets check in on the bloomberg first word news with kailey leinz. Kailey more fallout from the Mass Shootings last week and. As an trump says congressional leadership is now having serious talks on background checks for gun buyers. The president also tweeted he has been talking with the National Rifle association and other so there views can be represented and others so there views can be represented and others so there views can be represented. Complained a contract is all that rate to pay for amazon. Today the Defense Department said contractor bids are still under review, and the winner will only be guaranteed 1 million of the possible 10 billion. In malaysia, criminal charges have been filed against 17 current or former Goldman Sachs employees in the 1mdb scandal. The government has accused goldman of misleading investors in a sale of bonds in the state investment fund. Goldman says the charges are misdirected. In hong kong, the antichina demonstrations have spread to the airport. Protesters began a threeday sit in at the arrival of the main terminal today. They are hoping to get their message across to international visitors. He hong kong airport is the worlds eighth busiest in terms of passengers. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im kailey leinz. This is bloomberg. Thank you very much indeed. Coming up later this hour, we dive into the technicals behind markets this week with Fairlead Strategies managing partner and founder katie stockton. This is bloomberg. Bloomberg markets this is Bloomberg Markets. The president speaking to reporters and talking about huawei, he says, we are not going to be doing business with huawei. He also says he would like to see a full point rate cut. The fed should stop quantitative tightening, and we are not going to be doing business with huawei. Stocks have been taking legs lower all session. The s p 500 down about six tense of 1 . The 210 spread is back below nine basis points. Guy lets get an update on where the market moves we are seeing. Emma chandra is here with the details. Down about p 500 6 10 of 1 . It is the trade war and escalation of that top of mind for investors. We just heard those comments vonnie mentioned from the president with regards to huawei. This follows news overnight that the trumpet administration was delaying a decision that would have allowed u. S. Businesses to restart business with huawei. Also, the president saying a little earlier that they are not ready to make a deal with china. Therefore, we are looking at stocks in the red. Where does this put us on the week . We should put up a chart showing you how the s p 500 be performing on the week. We are likely to end in the red after the worst day of the year on monday, followed by those three updates, two of which were solidly above 1 gains. Todays move taking us back down into the red, and actually looking for the second consecutive weekly loss. Last week was the worst of the year for 2019. It is no surprise given the news with regard to trade that it is tech leading us downwards in the u. S. , and within tech it is those chipmakers doing pretty badly, and among those, the huawei suppliers. Corning falling 4 , falling 2 . When you look at skyworks, 10 of their revenues did come from huawei. Qorvo was 22 . Lets take a look at how the pound is doing. It is back under pressure following that miss in secondquarter gdp, coming in weaker than expected at 0. 2 versus expectations for flat growth in the u. K. Cable rate falling for the Third Straight day, falling below 1. 21. This chart showing the pound against the euro. What we can see is the euro putting in 14 straight weeks of gains. That is a record. Vonnie thank you. Emma chandra there. , eagleith us, james camp Asset Management matching director of strategic and pump Strategic Income. We are seeing the yield curve below nine basis points. Does that give you pauls does that give you pause . James theres a lot of Financial Engineering that pushes everything into that twoyear area, so that is pretty consequential. If we see that go upside down, i think weve got problems credit velocity in the credit markets. From our way of thinking, we believe this has pretty much been a credit fueled economic or Financial Market recovery. If that spigot gets turned off because of an inverted yield curve, you are going to have real economic problems. I dont by that this time is different. If your funding costs are higher than your lending advantage, you are not going to do it. Velocity will stop. We saw that in december, when the fed said it. Credit markets will be affected by an inverted yield curve, and i think it is very consequent show. Vonnie do you look outside the u. S. At all . If so, where is attractive right now . Our focus really is domestic, and i think we have been served well by that as of late. In terms of growth and sustainability, i still think the u. S. Right now has a positive growth trajectory. I was very heartened that we had some Significant Growth in productivity that i thought could move gdp somewhat higher, but right now we are evergreen a u. S. Based investor, and i think that is probably wise, especially what is given especially given what is going on with commodities. Guy lets talk about the dollar. President is trying to talk the dollar down. Hes not having much luck. Do you think hes going to take a more aggressive stance and try to do something more structured in getting the dollar down . Why is he wrong that a lower dollar is a bad thing . People put all kinds of scorn on the fact hes trying to talk the dollar down, but why wouldnt that be a great thing for the Global Economy . James i dont know that they are i dont of that he would have so much success, but as you know and as you seen with the yuan devaluation earlier this week, and oil is essentially in a bear market already, emerging markets will struggle. Weaker dollar helps exports. That is a policy that is very thin official very beneficial both in the u. S. And internationally. Whether this president can make that so or not is very doubtful to me. Guy i appreciate what you said about not covering markets outside the united states, but yesterday there was the first hint that germany might be fiscal policy. In thed both the bund treasury market. How big a game changer would it be just in terms of sentiment if berlin turned around and said, you know what . We are going to spend some money now. James i think that is the right policy, quite frankly. German bunds are largely negative. Pmis. Very poor ive always believed at this phase of the economic recovery, the acute phase where we have to recapitalize the banking system, at least in the u. S. , the Monetary Policy is not only diminishing marginal returns, i think it is diminishing absolute returns because it is modifying capital budgeting and economic behavior to the detriment of the real economy. If the German Government decides to pick up the fiscal baton, i think that is very welcome, and it would be interesting because it would be sort of coincident with what we did if use ago. That did a few years ago. I think that would make a lot of calendar cents and a lot of economic sense. These zero bound Interest Rates, i cant stress enough how behavior modifying they are. Both the investor class and incorporate behavior. I think that the time is well past where wel should see such a move out of germany. Vonnie thank you for joining us today. That is james camp of eagle Asset Management joining us from florida. Aill ahead, etfs looked like smash hit last year, but things have changed in light of falling yield. We will take a look and our friday etf segment. This is bloomberg. Live from new york, im vonnie quinn. Guy in london, im guy johnson. Is is Bloomberg Markets the president has been speaking over the last few minutes, talking to reporters at the white house. Hes been talking about huawei, the dollar, and the fed. Hes been moving the market in the process. The s p trading at session lows as a result. Weve seen equities come down as the president has been speaking. We will bring you those comments as we get them over the next few minutes, and bring you the take of that press conference. We are down by 8 10 of 1 . Tough week, volatile week, for global equities. Lets talk about what is happening in etf land. Interest rate hedged etfs looked like a potential smash hit product in 2018, but that growth quickly evacuating this year in light of falling yields. Here to tell us more is tom psarofagis. This kind of makes sense. If i want to hedge rates, i dont want to do it on the way down. You want this product when rates are going up. Athanasios there was a very different tune last year. From 2017 until last year, the 10 year peaked at 3. 2 . These were getting really popular because you wanted to be hedged. It sort of looked like these were going to take off. Then Flash Forward to 2019, the rug got pulled out. Anyone who was buying that product has actually been hurt this year because we have a completely different rates story this year than last year. Everyone was coming out with a Big Marketing push, saying you should be piling into these types of products. Vonnie so what is happening now that turned investors away . Think one of the struggles these products have, they were taking in some assets, but theres a lot of options when it comes to how you are going to play rates. What really happened in 2018, it was sort of the year of the short duration product. Anyone who had that type of product last year was doing really well. Now we are seeing the opposite. People have taken money out of those short products and gone really low on Something Like tlt. It seems like more of the market just prefers to switch the duration based on all of these different products. Guy i guess the take away from this is that it is really hard to create targeted products. I think you can kind of guarantee some degree of longevity. Athanasios it is hard, especially in a competitive space. You need all of the stars to align. We saw this was currency hedged products we saw this with currency hedged products. The default was to go hedged, but now that has changed. It is hard to have this one strategy that is going to hold on for the longterm. Guy nice work, tom. Tom psarofagis joining us from newburgh intelligence. Vonnie checking u. S. Markets from bloomberg intelligence. Vonnie checking u. S. Markets now, the s p 500 is down by 3 4 of 1 . Just four stocks in the dow are , mcdonalds, travelers, and johnson johnson. The nasdaq is down one phone percentage point, primarily on one full percentage point, primarily on chip stocks. The Philadelphia Semiconductor index has only one stock higher, and that is broad, up 2. 6 on broadcom, up is 2. 6 on the tentative symantec deal. Equities are lower after the president said, we will not do business with huawei. Also said it is going well with china, but the u. S. Is not ready to make a deal. That is also weighing on sentiment. Spread is around nine basis points again today. 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. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is Bloomberg Markets. Time now for the bloomberg first word news. Heres kailey leinz. Kailey President Trump says every thing is going very well with china, but the u. S. Is not ready to make a deal on trade yet. The president spoke to reporters at the white house. He said the tariffs imposed on china have been amazing. One measure of wholesale inflation in the u. S. Unexpectedly fell last month for the first time in two years. Excluding food and energy, Producer Prices declined 1 10 of 1 in june, the slowest since 2017. It is a blow to newly installed Prime Minister boris johnson. The u. K. Economy unexpectedly shrank in the second quarter. That hasnt happened since 2012. Gross to domestic product fell to tenths of 1 . British Gross Domestic Product fell 2 10 of 1 . Walmart is taking down displays of violent video games at its stores after two deadly shootings at walmart in mississippi. Espn has delayed this weekends schedule broadcast of a videogame competition that includes gun violence. President trump said video games glorifying violence could be contribute into a shooting epidemic. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im kailey leinz. This is bloomberg. Vonnie thank you. Global equities ending the week still struggling to recover from a plunge over tensions between the u. S. And china. Lets bring in now katie stockton, Fairlead Strategies managing partner and founder. Since this president took office, have we seen trends emerge in equities or bonds, and all of the air there all of the other areas you look at, that we might not have known exist . Katie the equity market has a longterm uptrend, but just over the past week or so, weve had a pretty significant pullback that has people on edge. It is very natural. At the same time, we have Treasury Bonds extending their already steep uptrend, while yields still move lower. We saw the treasury yield on 10 year take out very important support on the charts, right around 2 . That is a very significant breakdown in yield terms. It put that support around 4 based on the 2016 lows, so definitely an extension of that trend. Levels youse are the are levels you are watching for treasuries. What are you watching for equities . Katie for the s p 500, there is support around current levels of the 2850 area on the chart. We have seen a very strong shortterm, oversold condition logged at that low we saw earlier this week. Sentimentlow, we saw get overly bearish by some measures. That tends to be a contrarian positive. We also have measures like the percentage of stocks above the 50 day moving averages. The last time we saw these extremes is right at that june low, so i think it enhances the possibility that the 2850 area will hold and provide support going forward, and we will look for the uptrend to resume. Guy where do we end the year, katie . , i wish i had that crystal ball. For me, the longterm target that seems realistic is about 3280. That is based on a measured move projection from the breakout we saw in 2016 into that nice 20. Uptrend. That target really takes us that nice body 17 uptrend. That nice 2017 uptrend. That target really takes is past year and. Ive been watching the dollar index in particular. It has been fighting with this resistance that a very strong on the chart, right around 98 to 98. 5. We saw a move above that come up with a very quick pullback that essentially led the breakout to fail. To me, that resistance is still very much intact. Until it is broken, we are really in a range for the dollar. Vonnie measure the volatility. What are you looking at, and does it tell us anything about the Broader Market . Katie for sure. The vix to me as a measure of sentiment, a transactional gauge. To me that is more important than the investor falls. The vix did see a little spike as the equity market pulled back. It is very natural. We had, along with that, oversold in the s p 500 and overbought signals in the vix. Vonnie in the move index of course is pretty high as well. What about gold . We thought bounce about 1500 announce. Bounce above 1500 an ounce. Vonnie you can get targets katie you can get targets pretty close to 1600 an ounce. Breakout a number of different times during this conversation already. The last week in terms of the price action, how significant has it been . Katie for gold prices in particular . Guy no, more broadly across assets. You seem treasury yields coming down, 60 on german bunds, the dollar recently stable, the yuan has gone for seven. The list goes on and on. Curious how important this has been. Katie it is incredibly important. Are in play,vels we always want to make sure breakouts and breakdowns are confirmed. By that, i mean seeing a security above for a couple of weeks, below for a couple of weeks. That is where we get that confirmation. Just one week into this pullback, we dont have a lot of breakdowns in equities and vice versa. Guy im just trying to figure out where the market looks stretched. You already talked about the dollar a little bit. The market doesnt look positioned for dollar weakness here. Im just kind of wondering what the catalyst could be to change things. If you want to see the dollar move significantly, what are the ripple effects on some of the other charts . Katie, we are going to leave it there. The president has just been speaking. Lets listen to what he has to say. Pres. Trump we are talking to china. We are not ready to make a deal, but we will see what happens. Weve been hurt by china for 25, 30 years. Nobody has done anything about it, and we have no choice but to do what we are doing. Its working out very well, as you know. Manipulation, on and they brought their numbers back, and they brought them back rapidly, and they were able to do that because they manipulate. Thats called monetary manipulation. Not good. But what happens and what is happening with china now, we have an open dialogue. We will see whether or not we keep our meeting in september. If we do, thats fine. If we dont, thats fine. But its time that somebody does what we are doing. The american taxpayer is not paying for it. We had a big day in the stock market yesterday, but the american taxpayer is not paying for it. What china is doing is by depressing their currency and pouring tremendous amount of money into their system, they are paying for it. The prices have not gone up. In fact, and some cases they have gone down because of devaluation, plus the money supply, the amount of money they pour in, which is a form of manipulation, has more than compensated for an increase in price. So as i said, and everybody questioned it, in the case of china, the tariffs have been amazing. We are taking in billions and billions of dollars. China has had their worst year in 35 years now. It was at 26 years, but now it is 35 years. I want them to do well, but as of this moment they are having the worst year theyve had in many many years, and decades. Really, we are just bringing the system back into order. We have all the cards. We are doing well. Our country is doing fantastically well. You look at europe, theyve got problems. The biggest problem we have is the fact that a lot of other continents, frankly, are not doing well. But we are doing great, and we continue to do great. Our companies are poised. They have a lot of cash. Our system is beautiful. [indiscernible] mr. President , the nra has been a strong supporter [inaudible] pres. Trump i think i could come up but i dont think ill be there. I have a great relationship with the nra. They supported me very early, and thats been a great decision they made. We have justice cavanaugh. We have justice gorsuch. Vonnie President Trump speaking moments ago at the white house. He said that things are going very well with china, but the u. S. Is not ready to make a deal. He says we will see if the september meeting will take place. We are not quite sure if the said temper talks will take place. If the september talks will take place. He also made mention of other countries, and said that relative to other countries, the u. S. Is doing very well. The president talked about the Federal Reserve once again, calling for a full point rate cut. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is Bloomberg Markets. Time now for a Bloomberg Business flash, a look at some of the biggest business stories in the news right now. The historic slump in chinese auto sales isnt over yet. The market resumed its downward trend last month after a brief uptick in june. Retail car sales fell 5. 3 from a year ago, the 13th decline in 14 months. Global growth is fragile, according to the latest report from the iea. They say they slowdown that is becoming enhanced is squeezing consumption. Growth during the first five months of the year came in at the weakest in a decade. The worlds biggest maker of insulin released its Sales Outlook for the year, boosted by its nextgeneration diabetes drug. Still, they expect lower prices due to changes in the u. S. Medicare program and market weakness. Thats your Bloomberg Business flash. Downe uber shares are more than 7 now after a sales mess, and 5. 2 million of losses in the second quarter, much of that due to stockbased compensation associated with the ipo in may. Ubers tried to reassure investors, saying losses will come down the next two years. Lets bring in Bloomberg Technology startup reporter eric newcomer. They didnt really offer any excuses to are they performed so poorly. Had a key excuse, that they had this driver compensation package tied to the ipo, and that that brought down their adjusted revenue, which is what analysts are modeling. Theres also this huge stockbased compensation package that hurt them. I think the real thing to consider is that uber had moved performance,ts and investors hoped that uber would perform just as well, but the stock seemed to be more disconnected. The price diminishing didnt help uber as much as they thought, so uber was a total miss. Guy im kind of wondering whether you can compare these two very different businesses. But that is not what i want to talk about. The Analyst Community love these numbers. Ive seen upgrade after upgrade after upgrade overnight. Why am i getting a very different response in the Analyst Community to the market at this point . Eric i think it is a perplexing that perplexing dynamic. We saw analysts last round of , the price war does matter. Theres a lot of excitement from the analyst class who clearly believes in the business, but shortedis a heavily stock. Last time i looked, 19 of the flow was shorts. Clearly there are people who disagree and dont accept the conventional wisdom that it is just about executing their existential question. I think it is one of these divisive stories and stocks. Vonnie do analysts believe things like uber eats make up for a of other divisions . We also had that story yesterday where it is going to holland to try to get a tax deduction. Eric right, that is the 6. 1 billion tax benefit it has down the road. There are a lot of these losses that will help uber avoid taxes. Thats part of it. On the uber eats side, uber eats , the ceo is clear they want to use the ridehailing to help fund uber eats. It has this problem where lyft just has to show the past to get ridehailing to work. Uber needs ridehailing to work to the extent it can fund other moneylosing projects. Yes, it has this great story that we will keep doing new things, but those new things are almost always worse than the Business People already have questions about. That is the challenge it faces. Guy people keep comparing lyft with uber. Why do they keep doing that . Lyft is a north American Business model. It doesnt run any of the risks associated with uber. It is basically in a much Smaller Group of businesses. And yet, uber is this Global Business that faces Foreign Exchange risks, trying to build a genuine ecosystem. People compare these two. Why . Eric i think there is this sort of assumption that the u. S. Ridehailing business, if this whole thing works out, should be a good profit generator for either company, so ubers ability to beat lyft and hold its ground seems important for funding the whole endeavor. Ono think people are fixated trying to sort out u. S. Ridehailing, so i think that is a piece of it, but you are totally right. Numbers, even the performance or misses, can have a lot to do with the mix. Investors will say part of the problem is we are growing somewhere else. Theres just a lot of interplay in ubers numbers that you dont have on lyft bank have on lyft. Is it because they are doing worse in the u. S. , or doing work somewhere else . Ber could release numbers to more directly comparable with lyft if they wanted. Vonnie uber down 7 now, but it rose percent yesterday. Our thanks to you. The dollar index actually unchanged now. President trump just saying he wouldnt devalue the dollar. We dont have to. Once again, President Trump says he wouldnt devalue the dollar. To. Ont have thats coming on the heels of remarks about china, about the nra and gun control, and lots more. We will bring you more of the president s comments in a few moments. The s p 500 right now is down i was 9 10 of 1 . We are close to session lows, with the dow down 3 4 of 1 . This is bloomberg. Vonnie lets take you back to the white house now, President Trump continuing to speak to reporters. Lets listen in. Pres. Trump it has gotten so strong because other countries have problems. It makes it harder for our manufacturers. So if we lower the Interest Rate by the Federal Reserve, that would automatically bring down the dollar a little bit, and it would make it easier for caterpillar and these companies. But we have the greatest currency in the world. No, i wouldnt do that. Youre using killing are thinking of canceling the trade talks next month with china . Pres. Trump china wants to settle this deal. Theyve had the worst year theyve had in many decades, and it is getting only works. Thousands of companies are leaving china. They would like to make a deal. Im not ready to make a deal. But are you going to cancel the talks . Pres. Trump maybe. Im going to see what happens. Right now the talks are scheduled in september. Whether or not we are talking about china, we will see. Look, as i said, our people are not paying for these billions and billions of dollars that came in, 16 billion of which i gave to the farmers because they were targeted by china, and that is just a small fraction of what we have taken in. They are not because what china has been doing, they are a currency manipulator. They have manipulated the value of their currency, and that is where the money comes and also, they put tremendous money into the system. So if you look, prices have not risen. Our people have not paid. All of these guys that say trump, trump, trump, they dont know what they are talking about. China is unique. That doesnt mean it happens with other countries. It probably doesnt. But the prices have not gone up. In fact, we have virtually no inflation if the Federal Reserve would bring down Interest Rates over a period of time, i would love to see a point or even more of that, if they would stop quantitative tightening, we have a rocketship. We are doing well without it, but we are being handcuffed by the Federal Reserve. If they would stop that, it would be incredible. [indiscernible] pres. Trump well, i hope that south korea, and i hope that japan start getting along with each other. They are supposed to be allies. That puts us in a very difficult position. South korea and japan are fighting all the time. Theyve got to get along because it puts us in a very bad position. With that being said, i got a very beautiful letter from kim jongun yesterday. It was handdelivered. What did he say . Pres. Trump it was a very positive letter. What did he say . Pres. Trump i would love to give it to you, i really what. I really would. [indiscernible] pres. Trump i think we will have another meeting. He really wrote a beautiful threepage, top to bottom, a really beautiful letter. Release the results of the letter, but it was very positive. We are not going to do business with huawei. We are not going to do business with them, and i really made the decision. It is much simpler not to do any business with huawei. That doesnt mean we wont agree to something if and when we make a trade deal, but we are not going to be doing business with huawei. [indiscernible] pres. Trump mcguire is excellent. Highly respected, great leader. He is acting right now. Hes doing a great job. Ofhink that over a period time im in no rush because we have a great acting. [indiscernible] pres. Trump i spoke to senator burr about different people. Im working with the whole committee. I want to get somebody that everybody can really come together with. Pete a lot. Hes doing a fantastic job in the netherlands right now. [indiscernible] pres. Trump i will tell you, thats a job that everybody wants. Vonnie President Trump there speaking to reporters at the white house. You just heard him say moments ago, we are not going to be doing business with huawei. He did say it doesnt mean something wont come up when trade talks with whom trade talks resume, presuming they resume. He was also asked if they would go ahead. He said he would have no problem canceling the talks, but as of right now they are on the schedule. He also said he wouldnt devalue the dollar. We dont have to. That was a direct quote. He talked once again about the Federal Reserve, saying he would prefer a full rate cut of one full percentage point, and that would help Companies Like boeing and caterpillar, some of the major multinationals. Once again, the headlines are, we will not be doing business with huawei. We wont devalue the dollar. Stocks taking a leg lower as those headlines were crossing the bloomberg. The dow down 7 10 of 1 , the s p down 3 4 of 1 . The dollar index hasnt changed that much. It was fractionally lower. It is now at the unchanged mark. Those comments not doing much decline foreeing chipmakers in particular today. Coming up in the next hour, Christian Schulz of citigroup will join. This is bloomberg. Im all about my bed. This mattress is dangerously comfortable. When i get in, i literally say ah. Experience deeper rest with the awardwinning leesa mattress. This bed hugs my body. Im now a morning person. The leesa mattress is designed for every body. Providing strong support, pressure relief and optimized airflow to keep you cool. Hello bed of my dreams. Order online, well build it, box it and ship it to your door so you can try the leesa mattress at home. Love it, or get a full refund. And rest assured, returns are free and easy. I love my leesa. Today is gonna be great. Find out why so many people love the leesa mattress, then try it in your own home. Order now to get big savings but only for a limited time. Just go to leesa. Com today. You need this bed. 30 minutes left in the european trading day. From london, im guy johnson. Vonnie in new york, im vonnie quinn. This is the european close on Bloomberg Markets. Guy the president has been moving markets. European equities down by six tense of 1 . The italian by 6 10 of 1 . The italian markets focused on the action in rome. British pound under pressure as well. We continue to see brexit as the narrative, but a weak gdp print today for the second quarter. When do we go through 1. 20 . Vonnie in the u. S. , the s p hundred has been down all day the s p 500 has been down all day. Uber was up 8 yesterday. The 10 year yield bouncing around. The dollar index has just been fluctuating between positive