We are not a leading not letting people vote or coming it was strange governments. We just want people to vote. Nejra tense weekend of protest. Hong kong takes another violent time. We are live from the city police headquarters. And saudi aramco releases earnings for the first time. We will hear from the cfo later this morning, dont miss it. Matt good morning from the german capital, lets take a look first at a couple of the market prices, you will see the influence trade. You might wonder why asian markets are gaining right now. Thanuan fixing was weaker some may have expected and it does look like the chinese are indeed holding the yuan steady around seven. Right now we see the offshore trade at about 7. 1 you want to the dollar. Thats why youre seeing futures up in europe and the u. S. Taking a look at your stocks futures. Is . 93 and change. Taking out the highs we saw in 2016, and the next move up would be the highs we saw in the financial crisis. Europound at a strong level. Nejra its great you have the yuan up there. You have x central bankers from the pboc saying there could be a long currency war with china. This is driving a lot of traits at the moment day today. Treasuries are closed. 175 on friday and we were lower on the s p 500 by almost 7 10 of a percent after a wild week in u. S. Equities. Ont drove equities lower friday were comments from President Trump saying the september meeting may not happen. We look ahead to key data in china this week in terms of fix assets, retail sales and investments among others. Coming off some of the highs from earlier, the yen is big along with fake havens. Safe havens. It seems like even though we dont have any big news on trade today, there was a lot happening over the weekend and a lot to look ahead to him and the fixing to talk about as well. Matt it is interesting to see 105 handlestrong, there. You dont see the bid on other safe haven assets as much. The 10 year yield is knocked down to the lows from last week, gold is not up to the highs from last week. Maybe you see some more dollar weakness. You certainly see the euro and the pound stronger against the greenback right now and that could be why you see more yen strength and more of a safe haven bid than in other safe haven assets. Lets get to the latest on the trade dispute. On friday, donald trump said planned talks with china in september could be called off. Gains andts spurred the japanese currency, as we said. His words came shortly before the release of the imf annual report on china, which suggested asian should keep its Exchange Rate flexible. A added the yuan value is broadly in line with fundamentals. This morning, Chinese Media pushed back against trump labeling the nation as a currency when you later, citing the imf report in various applications, including the financial news, which is published by the peoples bank of china. Nejra the market fallout continues. Goldman sachs cut its earnings shares estimates for the msci china index. Jpmorgan said investor flows show the country stocks are overbought. Goldman also highlighted the knock on impact to the u. S. Yesterday. They raised concerns of a u. S. Recession, saying it no longer expects a trade deal before the 2020 president ial election. It also lowered its fourthquarter growth forecast by 0. 2 Percentage Points. We still await the publication of a fresh list of chinese imports to be hit with tariffs as of september 1. Joining us is a senior economist. A lot to digest from over the weekend. Im wondering if you think the tone in markets has shifted to win might they reach a deal to how bad could this become . I think thats a sensible way to look at it. We had long thought that eventually after all of the rhetoric had built up, they would get behind the table and agree on trade. Probably ise that not going to happen at least in the near term. What we are learning is the trade dispute is actually kind of euphemism for a broader geopolitical conflicts between china and the u. S. Knock on wood, it stays with trade. I think the very most, we may get some token agreements on soybeans, natural gas, Something Like that. But ip and the serious stuff i think is here to stay. When trump became president , he was wanting to own the trade war and now it is contentious across washington. The idea that he could go and this would go to, i think it is now hit to stay here to stay. Matt we are getting headlines from south korea, the trade minister giving a briefing and saying the country is ready to have talks with the japan on export controls. We have seen the tensions ratcheted up the past couple of weeks as well. Are you concerned about trade wars raking out all over the place breaking out all over the place . We are to have a brexit, you will have more contagion with italy, you have south korea and japan. Will this be the new normal . Kallum i hope not. What worries me is that Central Banks are still pretty constrained. They can help markets out but cant stimulate the real economy much. Straight inies are many places and there could be pressure on governments to protect the people. You dont do that with trade wars, but as you have seen in the u. S. And a bit in the u. K. , it can work. I think this is still a u. S. China issue and if we are unlucky, a u. S. Eu issue. We have to keep an eye on it. Theres a downside to the Economic Outlook and it comes at a bad time for china and other asian economies already slowing. Nejra on the effect of stimulus, what would be the most effective stimulus for china to employ now with the yuan weaker than seven . Kallum what china needs to do is hurry up with its shift toward service and domestic spending. Get out of the capital intensive growth model. The problem is, it is constrained by its own growth target. The 6. 5 to hit target. If you dont do that, you risk political unrest. The best thing china can do is let the economy soft and on capital and investments and then try to reform its Consumer Services and household spending. That takes time. Again, the whole trade war issue comes at a very bad time, especially when you have lots of households in Industry Sectors that are export related. Matt you are here to stay with us, we have a lot more to talk about. A lot going on for monday morning to kick off the week. Protests in hong kong continue for the 10th straight week as clashes between police and demonstrators became increasingly violent. Hong kong police fired tear gas and rubber bullets to clear the streets. Our chief north asia correspondent Stephen Engle is at police headquarters. What is the latest . Stephen there is a tense standoff between the hardline protesters who have taken to the street for the 10th consecutive weekend. The numbers have belittled a bit. Maybe some of the protesters are doing the peaceful side of the protest at the airport. There was a three day sit in at the hong kong airport this weekend. Many more numbers there than on the violent streets of hong kong. Maybe they are worried about being arrested or being hit with tear gas canisters or pepper spray. Guest earliere this morning suggested, that strategy from the Hong Kong Government, the hardline strategy, perhaps is dwindling the number of hardline protesters on the streets. However, their resolve has not dwindled. Kong police side, their tactics have escalated as well. They have been using more rounds of tear gas, they have been charging the protesters on a quicker basis and trying to quell any riots i dont want to say riots, unrest before it escalates further out of control. We will get a press conference later this afternoon to find the actual tally of arrests from this weekend. It is a tense calm right now. On the economic front, it seems clear the Hong Kong Government led by carrie lam is trying to appeal to those over the heads of the protesters. To parents and Business Leaders saying the hong kong economy is suffering. Carrie lam said a small minority of people do not mind destroying hong kongs economy and have no stake in its society. To thell only add fuel fire for the hardline protesters who say we do care about hong kongs future and it is not true that we have no stake in the society. Again, further widening the rift. Were looking at the stock markets today, Cathay Pacific is a specific victim right now, on friday we heard from the Civil Aviation authority of china basically cracking down on the likes of Cathay Pacific, saying they are not going to allow staff, whether it be pilots, flight crew, or ground staff for any manifest flying into the mainland or across the airspace of china if they has been involved in protests or supported the protests. That is hurting the sentiment of Cathay Pacific. 1 5 of their flights go to Mainland China and half of the revenue come from hong kong in china markets combined. We are in a tense standoff with no end in sight. Nejra our chief north asia correspondent Stephen Engle. Thank you so much. But skip the first word news lets get the first word news. Argentinas opposition has grabbed some momentum in primaries this weekend. Took it 47 toez 32 . That gives them a lead. He might have a trouble overcoming a margin of more than seven. Least 32 people have been killed and 16 missing after a typhoon struck china. It struck the an eastern coastal province toward shanghai. More than a Million People were evacuated as the storm approached. The damage could be over 2 billion. Jeffrey epstein was found dead in jail this weekend. The former financier was accused of molestation and sex trafficking. His apparent suicide prompted outrage among those seeking justice for his victims. The deal he was being held as down the target of tubing separate investigations. U. S. Attorney general william barr says his death raises serious questions. Prime minister Boris Johnson is being accused of rush spending promises. The institute for fiscal studies said it is a little reckless to commit to big spending increases as the same time you promised to cut taxes. It says those things and brexit could lead to a big increase in borrowing. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thank you. Boyng up, italys beach launches his bid to become a countrys next Prime Minister from the seaside. We will hear exclusively from the League Leader on his election plans next. This is bloomberg. Nejra this is bloomberg daybreak europe. Matt lets check in on the markets in asia this morning. Juliette saly is standing by in singapore. We have nine markets close in asia today, including japan, but we have been watching Strong Movement and the japanese yen, higher against the dollar or a fourth session in a row, premuch on haven demand as we heard the commentary from President Trump that perhaps the next round with stocks of talks with china might not go ahead. Also the iron or and gold space is affecting the fx 200, having a big drop in singapore and Morgan Stanley saying the flight to gold stocks has been overdone. 300 looking good in late trading china. The pboc setting the yuan six sayer, and most analysts this shows that authorities are keen to make sure this is a targeted and delivered appreciation of the currency. Stocks in hong kong weaker in late trade, off by a 10th of 1 . This look at what is happening with Cathay Pacific. This stock has fallen the most in three years. If we can look at my chart. Also a decade low on concerns that the hong kong protests, now entering the 10th week in cracking down on Cathay Pacific staff. You can see it is moving further away from the 12 month the median target price. Also a big drop coming through in Swire Pacific in hong kong, a drop of more than 5 . That is the Parent Company of Cathay Pacific. Juliette saly in singapore, thank you. Lets get the Bloomberg Business flash. Annabelle thank you. Black rocks private equity vehicle has struck its first deal. It is backing authentic brand groups, the company that manages sports illustrated, marilyn monroe, and to seek a tour. The entity invested 875 million, becoming the largest shareholder. Values its valued at more than 4 million. After one of its tshirts itrked online controversies, shows hong kong and macau as independent nations and lost its spokespeople. For such a has said it respects chinas sovereignty. An executive is leaving after a most a decade in the top job. He says he will continue at the Swedish Defense company until a successor is in place. He is in place. Hes looking for another challenge in his career. Saab shares have outperformed industry peers. Matt thank you. Matteo solving his bid for control of italy has started on the beach. , ais on the campaign trail sandy trail, after pulling the plug on a Coalition Government last week. He would like swift elections that would likely hand him and majority in parliament. Joining us now from sicily is our correspondent. What is the strategy he has planned . He is 100 ready for this election. He is in full campaign mode. It was a marathon day for him yesterday in sicily. He was talking to people, shaking hands, taking pictures, going into the water. He wants to present himself as a man of the people. He wants the election to take place quickly. I spoke to him at the beach. He told me hopefully we get an election in october, and then he also said investors have nothing to worry from his government. There is no secret plan to leave europe, we will not leave the euro. An exit from europe or the euro is out of the question and not being discussed. About ande discussing want to change our rules on immigration and taxes. There is absolutely no plan to exit europe or the euro. Deputythat was the italian Prime Minister, who doubled down on the idea he wants to cut taxes for everyone, get tough on migration, but no leaving the euro. Decidederesting he has to come here, it is an area where the Northern League he is looking to get more votes. He is pulling right now at 40 . Nejra really pacing himself as a man of the people in clearly wants an election, but it is not clear what it will take place. What are we expecting in terms of dates . Maria it is not at all clear and it doesnt depend on salvini. He wants election in october but that will depend on the president of the Italian Republic and he says the wheels are in motion. Meantime we are waiting for a noconfidence vote for the man who still leaves the government. That would put an end to this coalition. In octobert it because hes riding high on momentum, but others say they should wait until the end of the year and perhaps the election doesnt take place until the end of the year or 2020. Wantss something salvini to avoid and he kept repeating to supporters that we need an election quickly, we dont want any games or weird coalitions. Matt thank you very much. Maria joining us live from sicily. Um pickering is still with us. What do you make of these italian developments . It has certainly roiled the debt markets. Is it a major concern . Kallum first, it is a european issue. I would certainly outline that comes at that it time. The three risks we need to worry about our brexit, trade wars, and italy. Term, probably we have lots of uncertainty and that is bad. Lets work on the presumption that they do end up in government following elections. Euro,y will not leave the probably what we will find is a deal between the league and brussels that says if you are going to cut taxes, you need supplyside reform. That is the exchange. We will let you get away with some of that if you deregulate and make the economy more competitive, which is what italy needs. Also keep in mind that the league is banked backed by the north. Beyond the uncertainty, we might end up with something more sensible. To draw an american comparison, think about markets, would they prefer sanders or donald trump . Probably donald trump. Jump 20e saw the guild basis points on friday, but if you look at the bund spread, were still not even a 250 basis points. Is the market at the moment putting enough pressure on salvini to deliver . Kallum i think it will put pressure on him if he says we are not going to go for any supplyside reform in brussels. Will we dont want is a german finance minister to say i dont like the look of this plan out of italy. That is what markets should be worried about. But not on wood, i dont think we will get there. I think there will be an agreement. If you want to cut taxes and stay inside the euro, we need supplyside reform. Ministers before him, we had good supplyside reform in italy and it was headed in the right direction. It has gone in the wrong direction completely. Italy doesnt have a debt problem, it has a growth problem as a result of a poorly regulated economy. Tax cuts and better regulations, italy can be a better economy and perhaps maybe there is a Silver Lining in all of this. Matt does the ecb wanting to move rates into more negative territory, does that really help . Do think it will spur growth in places like italy . No, italys problems are nonmonetary in nature and i dont see what the central bank can do other than placate markets as we deal with uncertainty. Nejra and of course sparing italy from a downgrade. Oflys gdp growth forecast 0. 4 in 2019. You say it has a growth problem. Indicator,a key argentinas opposition grabs momentum ahead of octobers president ial election by beating the ruling party by larger than expected margins. We will look at market invocations next. Matt while we are traveling, or while you are traveling to work, and into Bloomberg Radio on your mobile device or Digital Radio in the london area. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its 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 preorder a new samsung note. Click, call or visit a store today. This is bloomberg daybreak europe. What aa wild nejra wild week for markets, particular u. S. Equities. We have a slightly strong affixing today, stability in the yuan, and we get stability on this fairly quiet monday otherwise in asian markets. It is interesting, donald trump with comments on friday saying it doesnt really matter if the chinese show up for trade talks in september, that roiled equity markets in the u. S. We had a negative close here on friday as well. What is more important today, the comments from donald trump that we see fixing strong Chinese Markets today and positive u. S. And european futures . Nejra you also have to wonder what it means for treasury traders. The most important thing out there is what happens to the yuan fixing on a day by day basis and treasury markets are not trading right now. It will start moving at 7 00 a. M. At the london markets with asian markets closed in japan. Lookve a lot of data to forward to this week including u. S. Inflation data and a lot of data out of china as well. For me, the big question is hasnt now become an issue of not will they reach a trade deal but how much worse can it get for both sides . Matt absolutely. You get one indication of how the treasury trade will go i looking at the yen. Earlier,showing this one of five handle on the yen shows that investors are reaching for safe havens. You dont see it as much in gold but you could see as a result, traders looking for the 10 year bond as well. I want to point out as youre talking about the data coming up, remember we have german gdp on wednesday. This is a real question for europe. Was talking about the problems with italian growth. German growth has slowed almost to a halt. Monetary wealth isnt moving the needle and they need some fiscal spending and it doesnt look like theyre going to get it. Nejra even with not much going on in markets, look at what we have found to talk about. Lets check in on markets around the world with annemarie. Seeingrie we are lighter volumes across asia this morning, a number of markets closed as of holidays. The csi eking out again, it up a 8 10 of a percent. The japanese,s of and extending even more so as President Donald Trump said trade talks with china, he doesnt mind if they are called off, and they could be called off. Sovereign years, china and australia 10 year yield coming up treasuries are not open just yet. In commodities, were seeing some demand picture, iron ore down. Incredible story considering weeks ago we were closing in on 120 i want to look at gold. , trading justoday 1500 per ounce, but i am looking at an index that tracks responses to gold, and it has reached a fourmonth high. This has to do with the trade war saga, what does that mean for Global Growth and volatility in currencies . Also, Goldman Sachs, ubs, citigroups much they all say we will see gold at 1600. As a haven, it is certainly shining. Matt thank you for joining us. A look at your haven trades. Lets get the first well in first word news. Violence intensified as hong kong faces its 10th week of protests. Last night, demonstrators held projectiles including petrol bombs. Some police were filmed beating protesters. This follows three days of protests at the citys airport on friday. Protesters were denied police permits. Areu. S. And world economies at their riskiest moments since the financial crisis according to former treasury secretary lawrence summers. He told cnn about what he calls the sadomasochistic and full is trade conflict of the u. S. Is wish fo full olish trade conflict. Easternn swept to the and eastern coastal province of china. More than one Million People were evacuated as the storm approached. China state tv puts the damage at over 2 million. Epstein was found dead in jail this weekend. The former financier was accused of molestation and sex trafficking. His apparent suicide in federal custody prompted outrage among those seeking justice for his victims. The jail he was being held is now the target of two separate investigations. The u. S. Attorney general says the death raises serious questions. Boris johnson is being accused of rash spending promises. The institute for fiscal spending says it is reckless to commit to big funding increases at the same time as promising to cut taxes. It says the accommodation of those things and brexit could lead to a big increase in borrowing. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thank you very much. Your first word news. Argentina is at a crossroads. The president is looking to secure a second term in elections this october, that his path to the residency hit a massive presidency just hit a roadblock. For the top job has grabbed momentum and is 15 Percentage Points ahead in the nationwide poll. Takenthe president has office, argentinas borrowing costs have soared. Nejra joining us from dubai is our managing editor for emerging markets, great to have you with us. How bad could the Market Reaction be when the markets open . Are we expecting a deep selloff . Justin very much so. We are looking at anything between 20 on the argentine peso which is already the worlds worst performing currency this year. About thattalking magnitude of selloff in the bond market as well. This was a scenario that the market really did not expect. I was looking at research by one major bank just before i came on air and this was not even among the scenarios they predicted it is off the scale predicted. It is off the scale. It is bad and practically wipes out the sense that the president can hold onto government. The question is what happens between now and the october election, and which government will take up the reins. Vote, is it in the bag for the opposition or does the president have a chance . Thein if the results of primary are reflected in the election, there will not be a runoff. The magnitude of the fernandez triumph is such that there wouldnt be a need for that and he would automatically be elected to government. Then of course, we are back to the fernandezf government, if it is the government of the day, starts to reenact the populist and protectionist policies that some might say put argentina in this position in the first place. That is the big question on everyones mind at the moment and is likely to dominate trading when argentine assets start trading later today. Nejra thank you for joining us, Justin Carrigan out of dubai, managing editor for emerging markets. Allum pickering is still with us. I want to show you this chart hillary put together for us showing argentine borrowing costs. In white, you can see the argentine spread and in blue, other emerging markets. Obviously it has been nuts. What do you think about argentina versus other emerging markets . Very important that argentina quickly signals it is on a sustainable economic path. This is a very risky time for emerging markets generally. Growth ins drive emerging markets. First, global demand, principal he how the big players are doing how is europe and china and the u. S. . Secondly, how is Global Sentiment . Risk on or risk off . Emerging markets too well when Global Markets are doing well and we are risk on in the western world. We send money in that direction buy their stuff. If just one or two emerging markets start to look iffy, expect markets to treat them very severely. Nejra is there any part of the emergingmarket space people say dont look at it as one bucket is there any part of the space that in this environment, you would pick out as being able to whether this better . Kallum what you need to look at is economies with good characteristics. Do you have a good domestic demand element . Countries that run surpluses tend to be safe. Deficit countries tend to be penalized, thats part of the reason china is struggling at the moment. We are in a mixed bag. Matt i wonder what you think of the turkish lira. I have a chart, a basic price from may showing eveninue strengthening i as the Central Bank Cut by 8. 25 . Does this make any sense to you . Kallum it is hard to say. Turkey is a very uncertain place to look at as an economist or investor. It is ideally positioned between big asia and big europe, but you have an economy that is slowly but surely im doing a lot of the reforms of the last 30 years , which led to it being a good place to invest in the first place. Turkey is notly quite as the bottom of the pack and benefits a bit from that, that if things got really weird with the central bank, say Interest Rates got cut a lot or we saw the president with a big fiscal stimulus, markets could turn on turkey quickly. Nejra back to argentina, the central bank has managed to stabilize the peso with ultra tight policy and interventions in pesos futures. That get the selloff justin was talking about, 20 or whatever, what in theory could the central bank to . Kallum you cant defend the indefensible with Interest Rate hikes alone. ,ou would need capital controls and any whiff of that, the market will panic more. It is very dangerous for a central bank to be in this position. The best thing you can do is commit to a credible strategy on inflation and hike Interest Rates as much as you can without completely killing the domestic economy. That is always the tradeoff. If you try to defend the currency through Interest Rate hikes, what you are doing is raising borrowing costs in the domestic economy and essentially committing to higher unemployment in order to control inflation and keep the value in the currency. Nejra we are talking of an inflation rate of more than 50 . This is a look at what you should be watching this week. Tomorrow, an update on u. S. Inflation, the Consumer Price inflation index picked up in july. Core prices are seeing rising. Gdp, theday, German Economy probably shrank in the second quarter. Contraction. 0. 1 matt on thursday, Central Bank Decision from mexico. Forecast a 25 basis point cut, 8 . Also, u. S. Retail sales for july, forecast is a 0. 2 increase their. On friday, indonesias president presents the annual budget for the country. A lot through this week. Coming up, the rich get richer. The worlds 25 wealthiest families added 250 billion to their fortunes the past year. We will break down the winners next. This is bloomberg. Bloomberg is daybreak europe. Matt President Trump isnt the only one worried about the dollars rise. The greenback has had a remarkable decade, trouncing every other g10 currencies along the way. Some are worried the ascent could be a catalyst for a global recession, with Morgan Stanley and brandywine among those sounding the alarm. Kallum pickering is still with us. From anteresting, american perspective, growing up in the u. S. , we have always heard from economists that a strong dollar is a good thing. How is it affecting the Global Economy . Kallum a good question. A strong currency tells you that the Global Markets like whatever it is you are doing with your domestic economy or that on a relative basis, you are in better shape. The rise and the dollar is not the issue. It is the fundamental changes which are causing the dollar to rise. Mainly that we are becoming gradually more risk off and investors are seeking safe haven u. S. Assets. Put this in context of what donald trump says, and with the fed. If the fed were to cut Interest Rates and go further man that, consider the circumstances. That would be a weak Global Economy. Circumstances, the demand for safe u. S. Assets would be even higher. Weirdly enough, what we actually want is to be thinking about rate hikes because of that would signal the Global Economy is improving and probably investors would move away from safe u. S. Assets into risky assets. Consider 2017 versus 2018. On a 17 had hikes, the u. S. Economy is doing well. 2018, the fed is still hiking, the economy still doing well but the dollar is strengthening because everybody else is doing badly. That while that mean the dollar remains strong and is a fed easing cycle will not be able to begin the dollar to dollar, that it will be ineffective in offsetting the trade war will be ineffective . Kallum you cannot offset the effect of a trade war with monetary policy. The other thing to keep in mind is if i am an investor, i see 10 year u. S. Yields, they have fallen a little bit but still high on a relative basis. If we become much more risk off and we think that the fed is about to cut Interest Rates, my bet is i buy treasuries. The dollar goes up as a result. T if the dollar goes up there was a paper last year from harvard, and princeton saying if the dollar rises, everyone percent against a basket of other currencies, global trade declines by 6 10 of a percent. A strong dollar is really bad for global trade. Do you buy that . Theum i would say that conditions which lead to the strong dollar are bad for global trade, mainly that sentiment in the Global Economy is weak and as a result we trade less. Nejra is there any prospect of there being a bearish turn in the dollar . In this story we have been discussing, they are also saying the dollars multiyear run is likely to approach an end as on the length of the three most recent bullish cycles. Not only of story Interest Rate differentials but concern about the u. S. Economy. Do you buy that . Kallum in an extreme scenario where we had a black swan event in the u. S. Economy where something is going on under the hood that we currently dont spot and the u. S. Economy turns a south quickly, that would probably the catalyst for a weak dollar peered but dollar. But if we are going through a normal cycle and there is nothing sinister, probably i would say the dollar behaves a bit like you would expect gold to behave, which is if the Global Economy is weak, even if the u. S. Is weak too, the dollar would be strong. Matt we are seeing more indicators that a u. S. Recession may come. Last week, a survey pushed of the odds to 35 . Goldman ismatt saying it is moe likely because of the trade war. What is your outlook for a u. S. Recession . Kallum i still think the outlook is low. I worry about what the bond markets are telling us. I think we ignore that at our carol. It has done a better job than economists of producing recession. I see a specific problem in the industrial sector, which is linked to the china slowdown and trade wars. This problem exists almost everywhere else in the world. On the domestic side, the u. S. Economy looks ok. Even though we are 10 years into an upswing, i dont see any domestic u. S. E economy that would lead me to believe we are headed for a recession soon. It probably means we can live with uncertainty and weakness on the external side even if domes. Economy that would lead me to believe the and even if we get a technical recession, i think on the domestic side the u. S. Economy will do ok. Nejra we had a great note on what bond yields are doing for us. Great to have you with us. Some lines coming through from aramco. We are awaiting at the First Release of earnings in just a few minutes. What we are getting is aramco buying a 20 stake in reliance oil at 75 billion. It is to invest 20 in reliance oils chem division and they are forming a partnership. We will look at that in a few minutes when we get the earnings from saudi aramco releasing Half Year Results for the first time. We will also hear from the cfo later this morning. Lets get the business flash. Annabelle thank you. The peoples bank of china is close to issuing its own cryptocurrency. Researchers have been working intensively since last year to develop the system. Aiming toays its replace cash in circulation. China would be one of the first Major Economies to introduce its own cryptocurrency. Executive is leaving after almost a decade. He says he will continue at the Swedish Defense company until a successor is in place, but is looking for another challenge in his career. Under his tenure, shares have outperformed industry peers. Made an offer to acquire its german rival. The offer is higher than the 35 euros per shale per share of another offer. That offer was in jeopardy when it was rejected by the top shareholder. That is your Bloomberg Business flash. Matt thank you very much. Are mindboggling. Minute. Per 4. 5 million per hour. 107 million per day. That is how quickly the fortune of the walton family, the family that owns walmart, has been growing the past year. As the tophem again of the bloomberg annual ranking of the worlds richest families. It is not just the waltons that have seen fortunes expand. In all, the 25 richest families have added 250 billion to their wealth in the past year. Joining us for more is our wealth reporter, tom metcalf. What is behind these gains . What is fueling the rich getting richer this year . The most important thing is right now it is a great environment to be rich. Have low Interest Rates, stock markets moving. This list, see on like you said a quarter of a trillion dollars in gains. If you are already rich, its a good time to be rich. Any of these families wanting to return some of the wealth . One of them i saw was saying that wealth taxes would be a good thing. Tom exactly. This is all part of the debate. We have heard so much how much the waltons are making every minute of every day and is part of this intense questioning about our such differences right . And over 100 billion walmart employees making 11 per hour. Matt they are welcome to just write checks to the u. S. Treasury whenever they feel they should. We will see if they actually do that. Tom, thank you for joining us, our wealth reporter. I think we will be seeing a lot more of the story, is one of the most read stories on the bloomberg terminal. Nejra coming up, saudi aramco releases halfyear results for the first time. We will cover it after the break. The cfo later this morning. You can track all of the charts we have showed with gtd go. We will be back shortly. Good morning from berlin. This is daybreak europe and these are todays top stories. Donald trump says plans trade talks with china could be called off. This as Goldman Sachs sza u. S. Recession cannot be ruled out. Seize the day. Italys deputy Prime Minister says an exit from the eu has never been his plan. He spoke exclusively with bloomberg. I dont think is anyone is scared of democracy. We ask for elections. One should be scared if we were to say i dont want elections. We just want the people to vote. Matt 10th weekend of protests. Hong kong takes another violent turn as to gas and rubber bullets are used. Releases itsmco halfyear results. We will cover the numbers as they break and we will hear from the groups cfo later this morning in an interview you do not want to mess miss. Nejra welcome to daybreak europe. Up this monday morning, what seems to be negative is the fact that President Trump is saying about meeting with china in september could be called off. Pboc is one thing to maintain stability in the yuan. Futures are in the green. U. S. Futures a slightly positive. That is how we are set up. We will get back to those in a moment. Were getting numbers through from saudi aramco. We have these numbers just crossing the bloomberg terminal. 2019half net profit for coming in at 46. 9 billion. Just over 53 billion a year ago. One thing that could be affecting this is the opec deal saudi arabia signed up for alongside other opec and nonopec members to cut production. We have seen saudi arabia production come down at the end of 2018 into 2019. Just a few other numbers were getting. Will maintainey prudent, flexible balance sheets. One thing to keep in mind is just moments before the results came out at the end of the last hour, you were breaking those taking a about reliant 20 stake in the company. This is a done deal they have done the Due Diligence on. That will give them an extension into refinery business in asia. These are the results we have just now. The one thing to look out for later today is Bloomberg News will be speaking to the cfo and then aramco will hold its first analysts call ever. This is the highlight of the day. Aramco only has one shareholder, and that is the saudi government. That allows them to talk openly to the world to future investors. Much. Thanks very very much looking forward to that interview. Look at how bond futures are pricing up this morning. We have german bond futures down right now. You could see a little bit of a respite for the negative yields we have seen and. Germany italian bond futures are up. Those high yields and the spread to come back in. 10 year bond futures are down this morning. You could see that deal continue to recover. Lets check in on the markets in asia. It has been a bit of a cautious start to the training we care. And a bit of an auto one. We have nine markets closed today in asia. You do have a lot of money going back into the yen on this safe haven demand. We are seeing some good moves in chinas market as well. Over 1 after the pboc set the yuan weaker for the eight session in a row. Giving that column to market that it is trying to manage its currency. Hong kongs market was pretty flat. You have seen some weakness in the likes of Cathay Pacific and its Parent Company. We are seeing that big move and iron ore. This is after we saw that rational approach coming through for china in terms of stimulus. A lot of people were worried about what this would mean. No surprise that has started to hit the iron ore miners substantially in sydney. Both off today. Hear stocks in those europe sessions as well. Nejra thank you so much. Some treasury traders out there say that they are really watching the u. S. Lets talk about trade. Saididay, donald trump planned talks with china in september could be called off. The comments helped spur gains in the yen this morning. In line withe is fundamentals. Chinese media pushed back against trump labeling china as a currency manipulator. The market fallout continues. Goldman sachs cut its burning earnings for share index amongst the trade fluctuation. Goldman also highlighted the knock on impact for the united states. They raised concerns of a u. S. Recession, saying it no longer expects a trade deal before the 2020 president ial election. It also lowered its growth forecast. Amid all of this, ark its await the publication of fresh list of chinese imports to be hit with tariffs as of september 1. Calls on get into your fx, what you think of the call on a recession likelihood for the u. S. Or globally . From the economic point of view, it is very difficult to have a recession. But from the strategy side of things, all the data that im anding at in the u. S. Europe and china and the rest of the world, they are falling and they have been falling quite quickly. These trade tariffs are accelerating that fall. It increases uncertainty. Recession risks are on the rise. I think it is a serious debate we have to have. Is acting andfed doing the insurance rate cuts. To avoid the chance of this ris ing terra infirma. For me, the broader longterm story is the chinese economy is where most of the global slowdown will start. That way is on the rest of the world. I have to know what is happening in china. Matt where do you see the chinese yuan going . Do you feel the chinese would be willing to weaken their currency considering the problems they would have with outflows . That Many Companies invoice in dollars anyway . We see this as a team going to 720 against the dollar. They have to do it in a slow and steady way. That is what will pull those outflows out of china. They need to be very careful. Eventually it should go higher. All of these trade tariffs will get worse and worse. I agree with that goldman view that there will not be a deal before the 2020 election. I think tariffs will rise. If the talks in september will be called off. Nejra it really does feel in markets that we have done gone from when will we get a deal to how much worse can this get . The best traits for a trade war are dolalar yen lower and dollar swiss lower. We have this view quite a while ago. Recession risks are on the rise. The bank of japan has limited what easing it can do to soften this blow. That is a green light for yebn longs. A rate cut is needed. We are just not seeing it. Euro yen is one of those trades. We have an election in the pipeline. It will be increasingly euro skeptic. Nejra you have taken us right to our next conversation. He is staying with us. Lets get the first word news. Hong kong faces its 10th week of protests. Demonstrators hurled projectiles, including petrol bombs. The police responded, firing tear gas. Some were seen beating protesters. Of clashes follow three days demonstrations that began at the citys airport on friday. Jeffrey epstein was found dead in jail this weekend. Former financier was sick accused of molestation and sex trafficking. Sparkedide in custody outrage for those seeking justice for his victims. The jail where he was held is now the target of two separate investigations. U. S. Attorney william barr says the death raises serious questions. Prime minister Boris Johnson of being accused of rash spending promises. Institute for fiscal studies said it is a little reckless to commit to big funding increases. They say the combination of those things and brexit could turn to a big increase in borrowing. This is bloomberg. Matt thank you very much. Boyng up, italys beach launches his bid to be the countrys next Prime Minister from the seaside. We will be hearing exclusively from the leader on his election plans. This is bloomberg. We are 44 minutes away from the cash equity market here in europe. Matt lets check in at the markets right now. As we approach the open. Fixing. L about the yeuuan at ahinese fix the yuan slightly lower level. Showing that they are being conservative. The u. S. Dollar shows that investors are seeking safe haven. Ajra that is after we saw weekly loss for u. S. And european equities. Billw the 10 year treasury drop. It continues to drop today. Have data out of china this week to look forward to. Today we are asking the question, how do assets react to september trade talks being called off . You can reach out to us. Broom Bloomberg Business flash. For such a has lost its Brand Ambassador in china after one of its tshirts sparked online controversy. The design showed hong kong and macau as independent nations. For such is that it is deeply sorry and respects chinese sovereignty. The executive says he will continue at the Swedish Defense industry. If he is looking for another challenge in his career. Stock shares have outperformed and she peers. Ams has offered 3. 7 billion euros for an attempted buyout. That offer was accepted but thrown into jeopardy when it was rejected by top shareholder. That is your Bloomberg Business flash. Much. Thank you very a bid for full control of italy has started on the beach. The deputy Prime Minister is on the campaign trail after pulling the plug on a Coalition Government last week. He is calling for swift elections that would likely hand him a majority in parliament. Ready for new elections . Yes, he is. He is 100 ready. He is in full campaign mode. He was taking pictures, shaking hands. He was to present himself as a man of the people for the italian people. I spoke to him at the beach and one of the things he told me was he wants this election to take place as soon as possible. He also said to me there is nothing to fear from his government. He will not leave the euro. There is a secret plan. Europe or them euro is out of the question and not being discussed. Our rulese discussing on immigration and taxes. There is absolutely no plan to exit europe or the euro. That was the deputy of time am Prime Minister who double down on his promise to cut taxes to 15 . Electione wants this to take place quickly. That will not depend on him. It is interesting that he has decided to come down to southern italy. This is where the league would usually not too good. He is looking to win more votes ahead of that national election. Nejra interesting to be in southern italy and lucky for you. Im not going to lie, i am envious of that gorgeous view behind you. You pointed out he wants an election. What are we expecting in terms of dates . It is very unclear. A lot is still up in the air. We are waiting for a noconfidence vote on the man leading the coalition. It would put an end to this coalition it is very unclear. He wants the election to take place in midoctober. But it will come down entirely who may decide to wait and find another majority if possible in the italian parliament. And push the selection toward the end of the year. That is a problem. There are difficult decisions to be made. Italy has to put forward a budget for 2020. Thank you so much. Matt i was going to thank her as well. [laughter] nejra we are both just so keen to be on that beach. The euro barely budged on friday even if we saw the 10 year yield jumped 27 basis points. What is the point where you actually start to want to take trades . Have the job of Foreign Exchange is knowing what the next driving factor will be. Now it is more about the ecb versus the federal reserve. We will see rate cuts again. That is from the ecb side. The u. S. Is cutting rates anyway. We have this war of using. The pressure will be on europe. If i look at the two economies, which one needs a more weaker euro, it is the euro area. Euro, this will matter when those elections have a date. We will have to hedge our currency risk. You will see fx options start to price in a higher risk premium. Around the same time as brexit. If you see the League Partner up with a far right ring and have a coalition like that, the euro will not be able to go higher. Matt you see pressure on the euro as opposed to dollar. Im looking at euro versus pound. I have taken a long view, going back to before the euro even existed. It was still a concept. Faster sincembing the financial crisis . You put a longterm chart up. The u. K. Has a higher inflation rate. Over time, the euro gets stronger than the pound. That is a longterm trend that your plotting their. When it comes to the shortterm recent moves, it is because the u. K. Is suffering even more than the eurozone when it comes to the growth data. Suggestsng, the data we should cut Interest Rates, not raise them. We have higher Inflation Expectations and current inflation at that target. The running the value of the pound. Are yields and the u. K. Going lower and making historical lows. If we continue to see a no deal brexit preparation, it will continue to go higher and higher. Nejra that is eurosterling. Some are calling the parity and cable. I know that is not your base case. We have done the numbers and the homework. You can get parity if you imagine a world on day one of brexit you cannot trade with european counterparts. I have no idea if legally im allowed to trade with german and dutch clients. That is a scenario where you can get parity in the dollar versus pound. Matt i dont recall ever being there. We have gotten close. We just never actually have gotten their. Can get there because the current account deficit is still wide in the u. K. The fear analysis. That is why the pound has to devalue. Just think like turkey, where they had a surplus after devaluation. We would be looking for a similar thing with the pound. Much. Thank you very on a day when it is really all about fx. Great to have you here with us. We have had the first set of publicly release numbers from saudi aramco. The top line has to be what do they report and net profits 2019. E first half of it came in 12 short compared to 2018. This has to do with the price of oil. Theyre producing less in 2019 given the opec cuts. The most interesting thing will be this earnings call. They have one investor, the saudi government. Nejra thank you so much. That is it for us. Futures on the front foot after a bad week for equities last week. 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. Good morning, welcome to bloomberg markets. The european open. Today the market say the out of office is on. Asia stocks trade mixes holiday closures crimp volumes, european and u. S. Equity futures rise. Maybe because of Goldman Sachs warning of a recession stateside. The cash trade is less than 30 minutes away