Debt default in argentina hit 75 as all the nations assets plunge in value. The embattled president warns against a return to the previous regime. The greatest problem we argentines have day is that the alternative to the government doesnt have international credibility. Ive been saying this for three and a half Years National investors dont trust us. Protest fallout. Hong kong stocks lead declines tearfully the ceo decries the chaotic situation in the city. And lower for longer. U. S. Bonds hold onto Massive Gains as the spreads hit their narrowest since 2007, negative rates coming to america. Good morning and welcome to bloomberg. First off, i have yield on chinese tenure debt falling to read percent, the lowest weve seen it since 2016. Ats not just europeans negative, u. S. Debt is falling to record lows. Lows the likes of which we havent seen in a few years. Futureseuropean reporting down across the board and right now we are looking at dax futures down. 4 , cac and after we sawis drops in the cash trade yesterday, lets get into the markets with our mliv strategist in singapore. What is behind the bond rally, first of all it is pushing u. S. 30 year yields to 2 . Yeah. Hey, matt. We just have a full on flight to quality. We have the protests in hong kongs, the vote in argentina, the trade war in the background, hearing more and more buzz about a recession that may or may not be coming. It is off some good yield, the highest available on the curve, higher than negative rates in germany or japan. Its a Good Alternative to golden bitcoin, which dont pay any interest at all. Ubs securities is saying the rally has further to go and it revises yield forecasts lower. We are seeing some inflation reports we already have germany out. What are you focused on in terms of inflation reports . Today,pi is coming out the overall number is supposed 2. 1 basedfor june, on the bloomberg forecast. U. S. Cpi, pardon me. One thing to taken note of for both of these numbers, speaking of the 10 year u. S. Treasury yield, thats 165 at last check. Both of these numbers will be higher than the 10 year treasury yield, so thats the negative real yield weve been hearing so much about. If these numbers come in as expected, 10 year treasuries are , i ameping up inflation not going to be the one to call an end to this rally because it seems to be unstoppable, but it never hurts to look around and find things that show bonds are expensive, things that show demand may taper off this is certainly one of them, negative real treasury yield. What messages are japanese bonds ascending as the yield moves outside the central bank target range . That is one thing we are keeping an ion. The japanese 10 year yield was outsides points, down the boj range of 20. Nobody has ever said this range was set in stone, including the members of the boj who said it should be viewed flexibly. Said theess, people fed,rs were leaving the they would push yields down in anticipation of a fed rate cut until they pretty well had locked the fed into a rate cut. I think the same thing is happening in japan. Yields have fallen and traders are pressuring the boj to ease. Inmay just do a rate cut september, or afraid yields are following maybe even in between meetings. Thanks so much for joining us. Wes goodman, are bloomberg mliv strategist. Lets get the bloomberg first word news with olivia hows in london. Thanks. Hong kongs airport is resuming operations after protests cause the cancellation of flights yesterday, the biggest disruption to the economy since antigovernment protests began in june. Carrie lam says hong kong is descending into chaos. I urge everyone here to put down their prejudices and try to calm down emotionally. Use a minute to think clearly and look closely at the city, our home. Do we want to see hong kong fall into an abyss . Savini will have to wait before consolidating power in rome. Senate leaders have failed to agree on a confidence vote in the populist coalition, but discussions in the Upper Chamber will continue. If there is a new election, his lead in the polls means you will likely be the next Prime Minister. The u. S. Fiscal deficit is already exceeded the for your figure from last year. The gap grew to over 850 billion after spending growth outpaced revenue wider than last years shortfall, already the largest deficit since 2012. Singapore cut its forecast to almost zero after the u. S. Chain state is nowity seen at 1 this year, and the trade war has raised the prospect of a recession and job losses. John bolton made the comments london,is johnson in who said washington is ready to get a sector by sector deal to offer no deal exit from the deal. 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. This is bloomberg. Thank you. Olivia hows in london. Coming up, it takes two to tango, both argentine bonds and stocks are sent tumbling after the president unexpectedly lost a primary vote by a landslide. More on argentinians assets next. And remember, Bloomberg Radio is live on your mobile device or on dab digital in the london area. Tune in. This is bloomberg. Will come back to Bloomberg Markets. We are about 18 minutes away from the start of cash trade across europe futures are down across the board after a selloff yesterday, it looks like we could have a negative open today as well. Argentina suffered the secondbiggest market selloff of any stock market since 1950 in thehe president lost weekend primary to his populist opponent. The markets followed suit. The peso tumbled as much is 33 to a record low 60 pesos per dollar. The stock index lost the most ever in intraday trading. In a press conference the president placed the blame on his populist opponents. The greatest problems we argentines have today is that the alternative to the government doesnt have international credibility. Ive been saying this for three and a half years. It is National Investors that dont trust us. Ouroining us now is managing editor for Global Emerging Markets, justin carrigan. Why are investors so and hisout by fernandez return to power . Because they see that the prospect of a fernandez government might bring with it protectionist policies, populism, and ultimately, potentially, an attempt to renegotiate argentinas debt, certainly if the peso keeps selling off. It is going to make it much harder for argentina to meet its debt commitments and we see this a lot in the bond market as well. That is the worst case scenario. Everyone is now watching to see what he is going to say about the way markets have reacted and whether he can offer some sort of self to investors to demonstrate a willingness to address argentinas economic difficulty in a way that appeals to them, that makes more sense than doing what the ordinary people might like to see. That said, thats where all the suffering is going. The austerity that the administration has brought in during his three and a half for years in power is clearly hurting people on the ground which is why we saw the shock election result. Of course, this shock election result is going to prompt a lot more suffering in terms of currency devaluation, in terms of inflation, in terms of paper losses, hopefully not realized immediately in the markets. Our the market reactions going to change anyones minds . That was just a primary vote, right . It might change one or two minds, and certainly he has already tried to make mileage out of this and is already referred to the selloff is much to say this is what you voted for. Votedted for chaos, you for a and markets. People ordinary really care about bond prices remains to be seen. They probably care about the stock market but ordinary people are more worried about keeping bread on the table and getting and thatxt day or week is why a lot of people are pretty pessimistic outside of argentina that he will be able to make up the difference and unload this extraordinary margin that the camp has built up ahead of the october election. Thought when iy woke up to this news famous for cutting his teeth in the argentine debt crisis. If i look at the bonds, this is the century bond, which was such a newsmaker when it was first issued, and it was so popular we see now the price falling to . 55 on the dollar. When do you think we will start hearing these distressed debt people start to talk about trying to catch falling knives . Probably another 10 or . 20, i think we were down to . 57 on the dollar yesterday. Theres a little bit further to go before we see those ways is pipe up but we are now seeing at least in the credit default swap arc it the 75 chance or probability of an argentine default. It was less than half, 49 , for all this happened. People are beginning to become worried about this possibility, but that history is in very friendly to argentina stop it has been a recidivist default over the years and that is why we are seeing it turn up in the bond market this way. All right, justin, thanks very much. Our managing editor for Global Emerging Markets. Lets get the Bloomberg Business flash with olivia hows in london. Thanks. It seems that 40,000 restaurants isnt enough for some. Yum brands is looking to grow even more. The owner of kfc and taco bell is talking about partnership signed investments, according to the income chief executive. The Company Announced yesterday he will take over the top dog from january 3. Cbs and viacom are keeping investors waiting on murders sure news. That the current recession would value viacom at the current level investors may not get the premium they would have liked. The u. S. Judge has reinforced in order for American Airlines mechanics to end alleged slowdown. The carrier says it has a devastating effect and americans a suit of the union in may, arguing the labor group was doing it to pressure the airlines into a contract agreement. It is time to consider shorting u. S. Tech stocks according to socgen which cites increasing regulatory scrutiny. Last month u. S. Justice department sent its strongest signal yet it is prepared to take on facebook and google. And thats your Bloomberg Business flash. Thanks very much. Olivia hows in london. Minutes away from the open. Up next, the stocks to watch, including the maker of the personal laundry detergent, cutting its 2019 guidance as quarterly profits missed estimates. This is bloomberg. Welcome back. This is the european open. We are just about eight minutes away from the start of cash trading. Protestant hong kong are weighing down on Investor Sentiment, the unrest has sent the hang seng slumping to a january low. Thishief executive said city was in a chaotic situation. Here toridge everyone put down their prejudices, trying to calm down emotionally, using minute to think seriously and look closely at our city, our home. Do we want to see hong kong fall into an abyss . Stephen engle joins us now from hong kongs airport. Whats the latest on the airport . It seems like nobody is backing down, both sides firmly entrenched, even though there was that multiple thousands of protesters at the airport that managed to shut down the airport. They did withdrawal late last night but many have come back. The airport has not been shut down but it is filling up with more protesters, calling for people to come back at 1 00 in the afternoon it is now approaching 3 00 in the numbers are increasing. We heard from the Airport Authority that they have limited train frequency to the airport, to use that as a crowd control measure, but they are vocal and chanting and they are not heeding the warnings that we got from carrie lam this morning. You heard her comment about the threat of falling into the abyss but she also repeated her pledge and said we cannot have dialogue with the protesters until the violence stops. There has not been violence at the airport a few skirmishes here and there, but for the most part a peaceful protest. I will reiterate this we have no indications from either side whether there can be a resolution. Thanks very much. Stephen engle at the hong kong out, still a lot of flights that will be canceled or delayed, so if you are preparing to go there, clearly you should beware. Lets get your stocks to watch Annmarie Hordern from our scoutes team is covering 24, which helps you to buy real estate and cars. Lets start with you on the travel agent what is the story . They missed estimates, 2. 5 missed, and they are blaming it on the grounding of the boeing 737 fleet, the ceo saying it is a big burden. What is the story on henkel . Estimatesalso missed for secondquarter earnings, and is saying revenue might not grow and it also steepened a decline forecast for earningspershare. The stock it went very sharply down in premarket. A very popular thing here in germany not sure about elsewhere whats the story . The Company Possibly having for a breakup, and Elliott Management is an investor who said we would like you to review your business and possibly what your car assets up for sale, the Company Coming out saying they will review this and up eight us clearlyn november but investors are bracing for a breakup. Thanks very much for that. You can get all the latest stock stories from our Equities Team by typing first go on your Bloomberg Team on your bloomberg. Coming up, it is the market open with futures pointing down. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Matt we are one minute from the opening of equity trading. Lets look at the markets with Annmarie Hordern. Annmarie lets kick it off with after turmoil in hong kong and argentina, weighing on risk assets. Gold is of 1500 an ounce today. A lot of anxiety in the market and money pouring into safe haven. Ubs and goldman saying we could see italy in focus today with a vote this evening. The chinese 10 year yield, falling to 3 . We havent seen this since 2016. Ftse futures are down. 3 , dax our lowers as well as cac futures. Pointing to a lower start in new york. A lot of doom and gloom in these markets. We have the european markets opening now in the city of london. The futures are pointing to a lower start here in europe. We have a lot of data to break down today. U. K. Unemployment figures as well as later today, u. S. Cpi. The ftse 100 opening to the downside as well as the euro stoxx 50, relatively flat but we are seeing breadth to the downside on markets. We also have a stronger dollar against the euro as well as the swiss franc and british pound. Spain has opened a lower. 5 and frances cac down. 3 . Picture, asr expected, a lot more red on the screen, especially when looking at Financial Staples and consumer discretionary. How luxury to see opens up as well as the likes of hsbc and Standard Chartered considering hong kong is a key market for their health care has just gone red. It looks like it will be a heart place to put your money today hard place to put your money today. Matt we are seeing more stocks down than up this morning. 400 48 losers, only 128 gainers. In terms of the gainers, we see gaining,d diageo pharmaceuticals like glaxosmithkline. Deutsche telecom on the rise this morning. The defensive stocks are what i am saying. Staples, thensumer alcoholic beverage makers, drugmakers, the telecoms. A very defensive list of winning companies. Once again,ide, lvmh, hennessy is down, hit hard by concerns about what is going on in hong kong and youve got some of the other airbus falling this morning, hsbc down 1 this morning. Most stocks are going to be losers but kering down. And asianarkets lower stocks following u. S. Counterparts lower as turmoil in hong kong and argentina had to trade tensions. Joining us, eimear daly, the mea. X strategist at Macquarie Bank i wonder if people are going into the yen, going into the swiss franc . Do you see the trend we have seen over the last days and weeks continuing or has it are they overbought at this point . Eimear we definitely think there is further downside, particularly in dollaryen. We are forecasting 103 by yearend but we think we could achieve that sooner. The real catalyst for this is u. S. Treasuries and we saw the really aggressive flattening of the twos tens in the u. S. Treasury yield curve yesterday but also the u. S. 30 year. We think the boj has very limited ability to push back against the strengthening of the yen and further Downside Pressure on u. S. Treasuries will really pull dollaryen lower so we are looking at 100 yen by phase 12020. Are you concerned about the competition from gold, the 10year, bitcoin . How much competition do these things put up there, or is the yen really the best safe haven play right now . If you are looking at the u. S. Treasury curve on the front end, it is negative carry at the moment. There is more value if you are a real money investor in the longer term. Gold probably has more upside, a very aggressive easing cycle globally with the ecb looking to ease policy and the rates market priced, more Federal Reserve easing. In a severe fiscal scenario where we get a strengthening of the dollar, that could be really a hindrance to further upside in the gold price. Matt what do you think about bitcoin . It looks like bitcoin was really a go to, or turning into a safe haven play. It hasnt gained the last couple of days. Monday, almost down 4 and today, it is down. It is a currency that is far too volatile . Bitcoin has really bounced back, but it hasnt really been moving higher on these hong kong or argentinian concerns. Eimear we actually dont cover bitcoin, so im not really sure supply dynamics that would affect it and how it would perform for us, this is a Financial Market environment where you are looking for resilience plays. We are looking for security. Aregs like bitcoin, they new in the market offer investors that. Haventraditional safe plays like u. S. Treasuries, swiss franc, yen which will really come to the fore in this environment. Matt fair enough. You got older currencies in the yen and swiss franc, gold. Bitcoin, invented in 2009. At emeay, a321 xlr fx strategist at Macquarie Bank his with us. We see shares dropping 5 after the maker of laundry detergent cuts its 2019 forecast. Not a great day to do that. If any day is coming you would want to choose one the market is gaining and not for the most part falling. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. About eight minutes into the session, lets get our top stock top stock stories with an reporting Annmarie Hordern. Henkel, down 4. 7 this morning. Their 2019 guidance and had disappointing secondquarter results and are facing competition from the likes of procter gamble. Ams to the downside, more than 2 as weve learned overnight osram is in talks. It looks like it will trump the accepted bid from the vein and carlisle. Downside offon the of the value downgrade. Matt stock movers on this down day. The yield on longterm debt is nearing an alltime low. On the twos, tends spread, the tightest since 20 2007. The same phenomenon is happening all over the world from china to australia and europe. Mark said the flight to duration is due to concerns negative rates will move to u. S. Shores. ,acquarie bank eimear daly emea fx strategist at Macquarie Bank the still with us. When do you think about the u. S. Tenyear falling to record lows of below 1. 3 . I think it reflects markets concern we are going into a period of secular stagnation, especially with significant moves in the 30 year yield. If you look across Global Markets and the low level of global growth, it doesnt seem that far off. It doesnt seem that unbelievable. Certainly there are reasons the natural Interest Rate would be lower in developed markets. If you look at demographic factors or if you have an aging possibly relation population, in order for new investment opportunities, you need to lower Interest Rates. We are seeing from the market real concerns about recession but secular stagnation, particularly toward the back end of the curve. Matt we just showed the 30 year bond, clearly the yield is down now, sot 2 right nearing a record low. Longer Duration Bonds like 100 year bond out of austria absolutely sore in price soar in price. Does it make sense that investors are reaching for longer durations . Eimear people are looking for quality and when you have such demand for btps italy, we have a lot of fiscal concerns and an early general election and Unconventional Party taking over. Investors are being pushed out credit spreads as they go into risky assets to get that return. Return on their money. It is an unprecedented market environment. We are seeing investors really hunting for yield and really hunting for safety assets. Matt i want to show this price chart on the austrian 100 year bond. The price is nearly doubled over the last couple of years and it is incredible people are reaching out this far for such low yield. I want to ask you the mliv which is the day, and we have played this game to some extent but if the Global Economy is headed to a recession, which assets do you think would outperform . Tough one. Is a very on a shortterm play, i really like rushing bonds like Holding Russian bonds. They have great fundamentals and the best thing about the russian economy is it is against what is happening internationally because of the risk of the u. S. Sanctions, they want to be a more inward looking economy. In the event of a sharp global recession, there is nowhere better to be then u. S. Treasuries. Matt eimear daly, emea fx strategist at Macquarie Bank will stick with us on Bloomberg Markets the european open. 13 minutes into the session but orterms of the Industries Industry groups moving up and down on the stoxx 600, you can see we have the more defensive Industry Groups up. Real estate is gaining with food and gas, food and gas, telecoms, utilities. Those are the usual suspects for a defense play. Losers, banks, tech, and industrial goods and services are down. In this session. Delivers as senate noconfidence vote, forcing the deputy Prime Minister to hold off his power grab. We are live in rome next. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. We are 17 minutes into the trading day and looking at losses across European Equity indexes. Not big losses. Down italian stocks are more than. 5 , ftse stocks are very little changed right now. Argentina suffered the secondbiggest market selloff of any stock market in the world since 1950. Was after an unexpected result in the countrys primary election with 99 of ballots theted, Alberto Fernandez, main opposition candidate took almost 48 of the vote. After this, the markets followed suit. The peso tumbled as much as 33 to a record low 68. The stock index lost 48 in dollar terms, the most ever in intraday trading. Joining us is the fx strategist. What are the chances fernandez wins and how concerning is that for the markets . I think the probability of Alberto Fernandez is very high, given the momentum we saw from the primaries. Market inthe the market shows it is a significant concern to investors. His running, mate, investors have a bad memory of when she was the president of the country. Matt in that she restructured the debt. It was a problem for a lot of investors who got burned. How much of a problem will it be to see the currency drop 33 in one day . How difficult will that be on a local economy . Koon i think it will be very tough because we have a very Straight Path from Exchange Rate soes to local price levels, the stuff you import will suddenly jump up in price and that will have knock on effects. It is going to be tough but i tot to stress, people need understand the bad times from 2005 when the restructuring to the end of 2014, the last days of pristina, the memories of that. They are going to be hanging fernandez and christina, as well. People who are worried about the situation, it is appropriate to be concerned but people do change. Times are changing. Debt when will this stress or distressed investors will catch the falling knives . We saw the 100 year debt fall to . 55 on the dollar, a . 20 drop yesterday. At what point do we see the scavengers start to circle . Koon i think at these levels, you are already seeing the distressed investor class dusting off their calculations and starting to look at the names because people are going to be thinking in the worstcase scenario, what kind of recovery rates are we looking at . If you look across emerging markets, the average recovery rates are very high, around the mid60s. That is the bottom line price. Obviously argentina is a special case because in 2005, to recover a rates were lower so people may wait a little lower before getting in, but that was a point i made before. Distressed investors will look at the situation and go ok, i know 2005, prices had to go very low before it was appropriate to get back in. However, because the situation is changed from 2005, the argentines know if you go for a hard default and very low recovery rate, we could be in a tough situation for the next decade. With that kind of thing in the background, the calculus among investors is we probably wont we ultra low levels of 2005, wont get those bargain levels so maybe we should think about looking at prices right here. But if itget in now goes any lower, we should think about getting in. On time to paraphrase what i think distressed investors will be doing. Think willdo you happen if you get Alberto Fernandez coming out and making conciliatory market remarks . Will that help the price action . Koon he started to make some conciliatory remarks in his interviews locally. Hes saying im against capital controls, i dont want i want to work with the imf and want policies. St there is a bit of a contradiction there so he is already started conciliatory comments and there will probably be more of them because ultimately, you dont want to be a president , coming in the euro Exchange Rate is under huge pressure, your market is under huge pressure, and have zero honeymoon. I don i think he wanted little bit of time. Matt thank you so much for coming to us on shuts such short notice. Koon chow, Union Bancaire privee senior strategist em marco fx talking to us about the developing situation in argentina. In italy, deputy premier salvini will likely have to wait a week more to move ahead with his power grab. Agree leaders failed to to a date for the confidence vote that can bring down the populist coalition. E is expected to address his fate as leader august 20. Maria tadeo, do we have any clarity on the timing of the situation . Maria weve seen the crisis play out for almost a week since salvini walked out of the coalition. Lawmakers were supposed to come up with a date for the noconfidence vote that would end the coalition. The timing is very strange. This is peak summer. Understand a date will be set and it is looking like it will be august 20. A week from now is when the government will officially be put to an end and after that, it comes down to the italian president and the president of the republic will decide whether he wants to test support for another majority within the existing parliament or go to a new election. Pushing hard to get an election in october but the timing does not depend entirely on him. It will depend on the president of the republic and at this point, it is unclear if he is leaning toward a quick election or try to find another majority. That is the worstcase majority for for salvini. Matt maria tadeo, in rome covering the story in italy. Isear daly, Macquarie Bank still with us. What do you think of the euro, 1. 12 in dollar terms. Does it continue to get weaker because of issues like italy, brexit, especially as the ecb is looking to cut further he into negative territory further into negative territory . Eimear i think it goes lower. I dont think it is based on what is happening politically or brexit. It is a fundamentally macro story. German gdpeve got and Investor Sentiment survey. That will reinforce what we have seen from recent indicators, which that oriented side of the economy is facing the heat from trade tensions. The eurozone is vulnerable to what is going on between the u. S. And china. From the pmi indicators, that weakness is starting to infiltrate into the services sector. The one thing that has been holding up the eurozone economy is retail sales and consumption. Once you see that hit the labor market in the eurozone, youve really got concern so we definitely see the ecb has to come out, be aggressive in the september meeting, reinforced further rate cuts, possibly layout a framework for more qe. We think that will weaken the euro. Matt eimear daly, emea fx strategist at Macquarie Bank. She continues the conversation on Bloomberg Radio at 9 00 a. M. Tune in on london dab or sirius xm. You can listen on your mobile device on the web. Lets check on the markets quickly across europe. We see losses, although they are not huge. You see bigger losses in spain and italy then you do in the core of europe. Nonetheless, after a day of losses yesterday that spun around the world through the u. S. And asia, they are back here in europe. An equity index selloff amid concerns about what is going on in hong kong, what is going on in argentina, and what is going on with global trade. This is bloomberg. Matt lets get your top headlines off the bloomberg terminal. Debt economics, fears of a default in argentina hit 20 75 as the Nations Capital plunging value. Embattled president warns against a return to the previous regime. The greatest problem we have today is the alternative to the government doesnt have international credibility. Ive been saying this for three and a half years. InterNational Investors dont trust them. Matt protests, fallout. European stocks were cheered retreat on protests in hong kong in argentina. The chaotic situation in the city is decried. Lower for longer come along dated u. S. Bonds hold on to Massive Gains as the twos tens spread hits its narrowest since 2007. Are negative rates coming to america . Welcome to Bloomberg Markets the european open. Im matt miller in berlin. We are 30 minutes into the trading day and lets see how things are shaping up in terms of the individual movers on the stoxx 600. Almost 500 stocks down, only 100 are gainers and the one gaining with the exception of the oil producers, bp and total, are all defensive stocks. Sanofi,gains in glaxo, nestle, novo nordisk, deutsche telecom, vodafone are up. Very defensive sectors rising along with the oil producers. On the downside, you see pretty much everybody else. 5 kel is one that is off because it is warned on 2019 profit but you also see the luxury goods, lvmh and kering falling as well as novartis, prudential, Banco Santander and hsbc. Lets get the first word news with olivia hows in london. Olivia Italian Deputy premier salvini will have to wait before consolidating power. Senate leaders have failed to agree on the day for a confidence vote in the populist coalition but discussions will continue tonight. If there is a new election, salvinis lead in the polls mean he will likely be the next Prime Minister. Singapore cut its growth forecast almost zero as the trade war dampens the regions mode trade reliant economies. As city state is seen growing north of 1 this year. The trade war has erased the prospect that raise the prospect of recession and job losses. Vicene president says she wouldnt have run if she didnt feel ready for the top job. She told bloomberg she doesnt want the philippines to take side in the u. S. China trade war. Friendlywill be more with to be more friendly with china would mean decreasing our friendship or relations with the United States and i dont believe in that. I dont believe that the philippines should choose between the u. S. And china. Olivia it seems 48,000 restaurants is not enough for some. Yum brands is looking to build more. The owner of kfc and taco bell is looking for partnerships and investments. That is according to the incoming chief executive. He announced he will take over the top job from january 1. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Matt . Matt thanks so much. Olivia hows in london with your business flash. Argentina suffered the secondbiggest market selloff of any stock market globally since 1950. That was after an unexpected result in the countrys primary with 90 of the ballots counted, the main opposition candidate to nearly 40 of the vote to 38 for the sitting president mauricio macri. The peso tumbled as much as 33 to a record low 60. 48 inck index lost dollar terms, the most in intraday trading. Our managing editor for Global Emerging Markets is justin carrigan. I wonder if this kind of market punishment can move the needle at all in terms of voter sentiment. Depends ont really how the two main contenders play it. Saying this isri what you get if you vote for populism. You can see how it is graded internationally and it is not being greeted well at all. On the other hand, you have fernandez saying mr. Macri, all of this is your fault. The market is selling off because they dont trust what you are doing so go and fix it. That is the kind of deadlock we are in now. It is a very difficult situation for argentina as we head toward the october president ial election. Matt are you hearing about investors who say the 100 year bond has fallen to . 55 on the dollar, for the drop in the peso is so severe ive got a chart of the peso dropped which goes up when it loses value because these are how many pesos a dollar can buy, that the peso drop is so severe i will go in and try to buy these distressed assets . Come i yes, that will suppose if the market continues to sell off. If you get to . 30 on the dollar, i was looking at bonds a moment ago and it looks like they are rising a little bit today so that suggests maybe the market thinks this is fully priced in. It has had its chance to reflect on the negativity of the Election Results and now maybe people will see this is a chance to pick up something cheap. It is a dangerous game because we are still in this kind of no mans land period in which we wait to see how the two main contenders will play it ahead of the election. Matt ive got the century bonds pulled up in a chart. I want to point out that users of the bloomberg terminal 10 use these charts. You can see the huge drop in the price. Butally will look at yield, this is the price. We had a little gain. You can see we have at least bottomed out and approximate be inching up a little bit as distressed debt investors go and look. Is there something investors could hear from fernandez that would make them even more comfortable to buy these assets . Weve heard a little conciliatory talk from him but could fernandez say we will not let any a default happen again . Would that assuage fears . Justin yes, anything of that nature would soothe nerves to some extent at the moment, the market is very interesting of the fernandez camp because of the record of cristina kirchner, s running mate, is one of populism and protectionism and it was macri who turned the story around when he enabled through showing his good faith to the international community, he enabled argentina to reaccess the global bond markets in 2016 after a 15year hiatus following the fall in 2001. Matt justin, we appreciate your time this morning. Theres a lot going on for you as managing editor of Global Emerging Markets with all of these stories. Justin carrigan with us on argentina. Next, some of the stock movers the morning including holiday companys earnings beat despite a 737 max 8 inflicted profits slump. You can see the shares up today. I guess no one is worried about tourism to hong kong faltering. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. We are down across the board in europe. 42 minutes into the trading day and looking at not huge drops, committed but this is the second day in a row we have been down after a global stock on yesterday that rolled around the world. Really due to the protests in hong kong, weighing heavily on Investor Sentiment. The unrest had sent the hang low. Slumping to a january ro carrie lam said the city was in a chaotic situation. I urge everyone here to put down their prejudices, try to calm down emotionally, use a minute to think seriously and look closely at our city, our home. Do we want to see hong kong fall into an abyss . Man joins us from hong kongs airport and we know the airport was closed yesterday. Hundreds of flights were canceled. What is the status now . E in terms of the airport, it seems operations are getting back to normal here. Most of the Flights Canceled on monday have been back online here although we are seeing some cancellations today. Than 200ying more flights in and out of hong kong were canceled yesterday and they are working still to reschedule some of those and are expecting some days of instability or disruptions when it comes to some of those flights. What has happened the last couple of minutes, weve seen more commotion where protesters have spread from the arrival hall here to upstairs departure hall where they have sat in on some of the gates outside to prevent people from walking in and passengers from getting in through the gates. Doy are still able to so but the counters have been slow and we have seen passengers climbing over protesters to get through. We are seeing disruptions today. Traffic control with airport express have been trying to crowd control this morning, and slowly returning to normal. Speeds ofreduced the trains from 10 minutes to 15 minutes and the fact down to 12 minute intervals. Slowly but surely, they are trying to resume but the situation is still quite fluid. The big question is whether the airport will have to shut down again if things escalate further, that no sign of that yet and no sign of police presence, either. Matt is there anything that carrie lam can say to calm the unrest . If she said i resigned, im leaving, put everyone go back home and get back to work . That certainly would help but that is just one of the five key demands that protesters have been voicing for 10 weeks straight now. We heard from the press conference from carrie lam where she offered no signs of any whichsions in that forum, probably angered a lot of these protesters even more that she did not for anything now. Was talk about her continued support for Police Officers and how they responded to these demonstrations and the violent clashes and continued to paint a rather dire picture of the economy if this drags on theyer, talking about how dont want things to fall into an abyss. Reports of how the economy could enter into a technical recession. The opposition lawmaker in response to the press conference today, here is what she had to say. Carrie lam has basically who ised to the press actually running the show in hong kong, and that is beijing. Three hours into this planned protest and things are getting a little more busy. It seems at this point, both sides are not backing down. Weve heard another march is being planned this sunday, matt. Matt yvonne man at the hong kong airport. Lets get to our top stock stories. To that come we go to london and Annmarie Hordern. 3 . Arie tui is up bookings were in improvement and that is taking well taken well. They had an impact on their 8 lanes from the 737 max being grounded, the ceo saying that as a burden for them. Kering, one2. 8 and point 5 . 1. 5 . Dutyfree shops ing, a the world and ker top luxury brand and hong kong is a key destination for all of these luxury makers. Lookingnmarie hordern, at the stocks for us in london. Italys Senate Delays the noconfidence vote, forcing the deputy Prime Minister hold off his power grab. We are live in rome with maria tadeo next. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. We are 50 minutes into the trading day and still looking at drops across the board. The dax down 46 points and the off less than 20 but it is the third day in a row for drops after bigs lines on friday and a reversal yesterday. Deputy premier salvini will likely have to wait a week to move ahead with his power grab in italy. Senators failed to agree on a date for the confidence vote. Maria tadeo, do we have clarity on the timeline of events to come . Maria good morning. There is a lot of confusion in italy. The government crisis that is lasting nearly a week since salvini pulled the plug on this coalition. Yesterday, lawmakers were supposed to come up with a date for a confidence vote. That is the first step to putting in the coalition and trigger an election but they cannot agree on it. Today, there will be a date and it is looking like august 20, a week from now. Will likely step down as Prime Minister and after that, it comes down to the president of the Italian Republic to decide whether he wants to trigger an early election, which or findwould love, another majority in the Italian Parliament and everyone here except salvini has an incentive to delay the vote. The opposition is divided. The only vote that wasnt early election was matteo salvini. Matt what is the incentive for salvini to get these elections done quickly . Maria he has strong incentive because he is polling close to 40 . Ed into migration. He has promised to bring down the number of migrants, which is already falling. Is promised to cut taxes. He has said he will implement a budget with a fiscal shock but it is unclear how italy will fund this given the high level of public debt. If he waits longer, the concern is that he would likely lose momentum but for the first time willlong time, salvini have to give details about the plan he wants to put forward and he has never been in a situation where hes had to really explain himself. That is something the league fears. As i mentioned, the timing will depend on the president of the Italian Republic and at the time, it is not clear where we go from here. Like ane, salvini would early election. It is not clear if you will get it. Matt bloombergs maria tadeo covering the italian story on the ground out of rome. Joining us on the phone from milan, raffaella tenconi, chief economist and founder of ada economics. What do you make of this new development and what are the chances salvini can still win . Raffaella good morning. Is not overly surprising in the sense that first of all, it is highly unusual for parliament to get together anyway in the summertime. I can tell you from the ground that although the news is all over the story on elections, most people on the ground have not cared the last few days. As youvetantly, seen, the opposition is very fragmented. Although the democratic party, the fivestar movement have sufficient mps to take over, neither of them know what to do to revive growth so taking over now is a shortterm gain for parliamentarians, that it is a very high chance of complete devastation in terms of popularity in the medium run. Salvini is going to win. It is only a matter of when. He can win now, relatively soon with an early election, or he can win even more in a year from now. One thing that i think people completely underestimate is the fact that there is a constitutional reform that the Northern League has accepted, together with the fivestar movement and this is one of the things the fivestar movement is trying to push for approval. This constitutional amendment ld very easily send eventually give a stronger mandate to salvini. It is not a being obvious why they are insisting on getting this bill approved and avoiding elections because quite frankly, they have nothing to gain from it. Matt what, in your opinion, should be done to improve the economy in italy . Are there any clear and concise fixes . Well, there are fixes. None of them are mainstream. Certainly continuing to consolidate the budget deficit is detrimental to growth on a cyclical and permanent basis. The economy has underinvested for almost two decades. It is plainly not competitive. And this is actually the biggest of a government led by the league, it will run fiscal policy too tight and undermin debt sustainability. This is the first thing you can do in the near term but in the longterm, italy, just like the rest of europe, but more acute, you need to rethink the way you because weial policy are structurally supporting very Large Companies and in italy, there are just not enough of them. The whole economy is based on Small Companies and you need to readjust the services of the state and the taxes in a way they can flourish. If you dont do these two things, that is not sustainable in the long term. Creative thinking on industrial policy. Matt we appreciate your time. Raffaella tenconi, chief economist and founder of ada economics on the situation in italy. A check of the markets and we will see risk assets around the world are falling as investors bid up debt, the 30 year yield 2. 1 . That is it for the european open. This is bloomberg. Is bloomberg. Francine into the abyss. A fifth straight day of protests. Triggering the secondbiggest stock slump. The Senate Delays a noconfidence vote in the government and italy in italy. Welcome to bloomberg surveillance, im Francine Lacqua in london. Stocks