In the midwest. Cbs and viacom finally reunite. Wereer parade of earnings at revenues declineocus is on the in online ad revenues. Not a lot of great news lately. Suggest ae does not session, but these factors, keep an eye on them. It is ahead on bloomberg best. Hello and welcome. This is bloomberg best. Important of the most news and analysis from Bloomberg Television around the world. Lets look at the top headlines. We begin with investors jolted political shocks. Hong kong protesters forced the airport to close down. And in argentina, a result in primary reactions a set off a chaotic election. Argentina is at the crossroads. There is a massive roadblock. Alberto, grabbed the momentum and came in 15 Percentage Points ahead in the pole. Pol; l. Many analysts would say it is insurmountable. They like his policies. They are market oriented Everett Fernandez oriented. Fernandez, it is not clear what he would do with the imf. Today could be carnage in the argentine markets. Has plunged to a record low against the u. S. Dollar. What happens in the next months, that is the big question. We have not seen the opposition candidate. It seems like they are both comfortable, maybe a little bit of chaos can help them toward the election. That is a dangerous game. We could be in a full on crisis if we dont have reassurances of what a government will look like under fernandez. There you have it. For theday of losses s p 500. Second day of declines. The new bricks in the wall. Argentina added. My not toample buying mention the saga of italy, trade, brexit added to it. Not to mention the saga of italy, trade, brexit. We think it is slowing growth that is winning the battle now. Standoff at hong kongs airport. Protesters forcing a Service Outage for the second day. This as carrie lam says the city is in danger of sliding into chaos. They were climbing up the walls, using umbrellas to cover the security cameras. Police officers arrived here. Tried to dispel these crowds. They were able to retrieve the man protesters had tied down earlier. They allege he was a mainland Public Security officer. They tied him down. He was beaten up. Up. Lly Police Showed there were clashes between tourists, trying to climb over and make it to their flight. We have heard from President Trump tweeting china is mobilizing its troops to the hong kong border. What do we know about the beijing response . We have seen a hardening of the rhetoric out of beijing. We have heard from officials in in kong and Macau Affairs office eing signs ofre see terrorism. The question is whether this is an intimidation tactic or whether they are laying the groundwork for some sort of intervention in hong kong. Chinesetariffs on some consumer goods have been postponed until midseptember december. Price increases for the holiday pricing season. It happened after the u. S. Stock market opened. It looked like we were set for another down day. U. S. Trade representatives did something rare. They announced after the market opened, a move designed to try and cheer the market up a little bit. They would be separating september 1 tariff increases into two separate legs, with the biggest hit moved to december 15. That was for toys, laptops, smartphones. Are more talks happening in two weeks. The fact that they are talking is good news. They have an enormous issues they have to sort out. They could not sort them out a couple of weeks ago. I am not sure they are going to be resolved in a couple weeks. July industrial output posted the weakest growth china, that means they are going to have to drill off some of their domestic demand. Numbers pointing to an ongoing slow down. Part of that is slowing tariff sales. That means china is going to have to support its own economy. The German Economy shrank in the three months. Trade tensions could have weighed in export heavy manufacturing sector. That is what we saw. Politicians to loosen the fiscal purse strings. They came and as expected. In as expected. The export sector, a crucial part of the German Economy, has suffered in the Second Quarter. That is piling on more pressure to the government to do something and terms of a fiscal stimulus. Another recession warning is glaring. Timeting for the first since 2007. This as the yield plunged to a record low as well. When you break through levels that have never been rogan before, that is an indicator there is a reach for yields. We might not see yields this high anytime soon. Inversion hit the level it did in 2007. There was a chill going up up my spine. I have this reaction. I am sure a lot of the reaction is emotional. Lacks the market believes the fed is no longer preemptive. The midcycle adjustment is not enough. They are only going to cut two or more times. They are signaling a recession, i kinda believe it. Chinas state council responded to chinas plan to impose more tariffs on imports, saying it would violate and understand with china and they had no choice but to take necessary measures. Then the ministry of Foreign Affairs said talks were ongoing and they hoped for a negotiated resolution. We have heard contradictions from the trump administration. China usually has a clear message. Today was different. China will move forward with retaliation in these 10 tariffs on the goods that are coming and september and december. Even though there has been a delay. China saying, we are going ahead. We dont know what the targets are. They have hit things like farming goods. We will have to see what they come up with this time. They might be able to meet the Administration Part of the way in a deal. Trade concerns driving me 10 year treasury below 1. 5 since august. 30 year yields, record low, before 2 . How much further can we go with. We are in uncharted territory. There has been some technical analysts. We are looking at 1. 9 . Suggesting that is a line in the sand. We will see if we get there. If markets are anxious, it may not take a lot. Powing tov retaliate to looming tariffs. Too pushing back on efforts link the trade war with the terminal in hong kong. I dont think they will retaliate. If they did, we have the ultimate form of retaliation. Inre are very few jobs left china. Mixed signals. Hearing from trump china is desperate for a deal. Chinesehearing from the side, despite retaliating, they are planning to send negotiators to washington in september to continue talks. Mixed messages from both sides. The messages by trump, linking hong kong and trade, suggesting i meet with investors, not welcome. China has said repeatedly it thinks the u. S. Is hoping ferment the unrest in hong kong. There is a lot going on. He is going to have a phone call with president xi. Is digging in for the long haul. Still ahead as we review the week, John Chambers talks about the latest twists and turns in global trade. Assessing recession risk. Insight from the bank of america ceo ryan moynahan. We have nothing to fear except the fear of recession. Shifts toe focus earnings. There is uncertainty. Kailey this is bloomberg. Kailey this is bloomberg best. Lets continue our global tour of the week. Starting with alibaba. Us urged in new york after posting better than expected revenue. That is despite geopolitical headwinds. Quarterly revenue rose 42 . The secular drivers are well understood. Digitization. That drives the core business. At 26 . All of the commerce businesses, the company had 33 growth for the year. Really drove the growth over the top is their investments in local services. These things are growing at more than 100 sent. Have been spending a lot of money these investments. Now it is coming down to returns for them. Reported Second Quarter revenue that missed estimates. While the Chinese Company beat expectations, online ad revenue grew worse than expected. What are investors focused on . It seems to be a mixed bag. The focus of israeli on the decline focus was really on decline around online ad revenue. It getstarting to see hit by broader Economic Issues in china as well as competition. What was interesting was where the company pointed out the slowdown in advertising ad sales buys. The real estate sector, not a surprise, given a string of Economic Data out of china. Crude oillds largest producer will own a part of the biggest will refinery in the world. Saudi aramco will buy a stake in what is estimated to be a 15 million deal. Anthe company is ready for ipo. The timing of the ipo will be determined by our shareholders or the owner of the company. In thethink of investing ipo, do you worry about the fact it is not diversified enough . Or do you wait to see how they price the ipo . Of the the perspective ability to generate cash, it throws off a huge amount of cash from oil production. The bigger question for the Equity Investors is how much can it produce in terms of a dividend for Equity Investors. We saw and the financial this is a 20 billion special dividend paid to the government. It still bell paying out that money to investors . Or is this a oneoff that has gone into the budget to help prop up the economy when they have been trying to boost spending . Miss. Ys big thelowest we have seen shares since 2010. What is worrying is that 10 tariffs that have been delayed, they are not in the your forecast of macys that they already downgraded. Factis is based on the they were struggling to sell clothes in the Second Quarter. The tariffs, we have other discouraging signals today. Thatprevious batch affected houseware, furnishings, they tried selectively raising prices and it did not work. With the ceo said it was consumers do not have the appetite for these price increases. That looks worrisome. Walmart sitting a high bar for other u. S. Retailers setting a high bar for other u. S. Retailers. That may sidestep concerns about the trump administrations tariffs. Up of more than corporate sent 4 . Are they trading down because they cannot shop at other stores . We saw it in 2008. Are we seeing a repetition . What we saw from walmart today, broadbased strength. An increase in traffic and basket. That means essentially people were buying more things per order. Buying pricier things per order. That is a good sign this is just folks out there spending and enthusiastically as opposed to trading down. That is something we have to watch for. As these tariffs kick in. Biggest shifting Group Shipping group mayor they realized one billion dollars in synergies faster than expected. Give us a sense of how concerned you are about global uncertainty for the rest of the year. I would like to say trade tensions have been manageable for us so far. Grew 2 onsumer demand in the Second Quarter. Around 7 ay down, from china. Goods coming to the u. S. From many other places. That has allowed us to manage the situation quite well. We also readrd, the papers and hear the news. There are a lot of uncertainties. The trade tensions between china and the u. S. Will be resolved or not. Believe it is right to reiterate our gardens for the year. They were out guidance for the year. They missed for the last quarter. They took it down and said they got a look at fundamental restructuring. The results reflect the degree of uncertainty farmers are facing in the midwest. Time withallenging the trade uncertainty which has been compounded by the report we got this week. Where we saw higher than expected acreage planted, yields, production, which are going to weigh in corn prices in the near to midterm. Backdropa challenging going into 2020. Ailey you are watching are best. You are watching bloomberg best. What happened to the bond market . We have the 30 year that set a new record low and yields. Any number of indicators suggesting there is something wrong. What caused this . It is largely outside the u. S. Concerns around trade and manufacturing. You look around the world, there has not been a lot of great news. The brexit situation, which does not seem to settle down. Down every the impact of the trade war across the regions. The need for companies to restructure their supply chains. They are spending money to move things. That debate and more importantly, the debate about the debate. Fear about ang to recession right now except for the fear of recession. That is what is going on. You are seeing people look ahead and say if trade war continues, if that does not get solved, it finally gets to the Consumer Confidence in the u. S. Has comeconfidence down. They are more worried about what is going on around the world. What should the fed do . Why dont you join that chorus. What should he be doing . One thing he does not need is one more piece of advice in this. He has been clear they are thinking about this in the s of the 90s to make financial conditions a bit more accommodative to accommodate the longest growth time. They dont see anything we do not see. What they should do next is watch the data. People are over reading the negative sides of what they see. Need to prolong and create accommodation. This is the longest recovery ever. Keeping it going in the economy takes help. Kailey coming up, more of the weeks compelling conversation. Perspectives in the u. S. China trade war from the Vice President of the philippines. And work for the fed as markets try to stave off a spiral that is downward. Feds no longer have the ability to suppress financial volatility. Bloomberg. S is welcome back to bloomberg best. The push and pull on trade between u. S. And china continues this week, with headlines driving Market Sentiment up and down on a nearly daily basis. Meanwhile, businesses are trying to set longterm plans in an uncertain environment. John chambers, the former chairman and ceo of cisco, shared his perspective on the situation. Is not i tried to do look at the individual moves in the chest came but look at the big picture. The big pictures the relationship between the u. S. And china, and i have been in china over 40 years. It has developed into winlose with the u. S. Losing. There is not a level Playing Field, this is how American Companies are treated in china, the industrial espionage is at an unacceptable level and we have to get back to a better balance. I do agree that the u. S. Had to address this. In both, it is countries best interest that we get a resolution. Im more optimistic than others that the resolution will curb, but the right way to ask it is not about delaying tariffs. The resolution on the election property protection, a level Playing Field between the businesses and the countries and do it in a way where both countries win. I am probably more optimistic this will be resolved over the next week. One of those stories connected with this is how invent tech made hp equipment and is shifting its operations so in thatwan, environment that you described, the ongoing battle with no end in sight, if you are diversifying your supply chain, doesnt make sense to go back to china . It will always make sense to be in china as long as its a reasonably level Playing Field. They will be the second largest economy in the world, so it will be the u. S. , china, and india. I think it creates opportunities for other countries throughout as india, such as vietnam to benefit from the changes. But to the endgame, in the end it is in chinas best interest to have free trade on a global basis. I think we will move back toward that but unfortunately i think the Current Issues were necessary then hopefully we will arrive at a winwin solution. Another perspective on the trade war came from the philippines. A Southeast Asian nation that found itself caught in escalated tensions between the largest economies. Interview, thee country was told it didnt needed to pick sides even as the current u. S. Administration feuds with beijing. I dont believe that the fed is going to choose between the u. S. And china, in the sense that friendships with both countries will be beneficial to the philippines. I understand why the new administration has chosen to be more friendly with china what why therederstand is is no clear line between giving we cansovereignty maintain economic relations with them, but there should be a very clear line. As far as protecting our territory is concerned and preserving our sovereignty. This hasritics say been a lot of pushback when it comes to china and the South China Sea why do you think that is the case . Some others went as far as saying that the philippines is selling itself to china do you agree . Yes, because of the way our administration is responding to threats to our territory. Inverted yieldn curve mean for global banks . These wereiling up, among the topics Francine Lacqua tackled on thursday in an exclusive interview with the blackrock vice chairman. The yield curve metals a great deal for banking no matter how you look at it. A wealth manager can be a way to diversify away from some of the risks of having a flat or inverted curve, but we are not going to see booming banks in an environment where we have the yield curve the way we have today. It almost weekly, but it just keeps on going up this is the value of negative yielding bonds, topping 16 trillion. Are we in a bubble overall . There are reasons why the haven andseeking safe its where you go. I wouldnt say this is a bubble this is a consequence of, on the one hand, a cyclical slowdown which we are now delayed, risks of recession are increasing, but most importantly it is also a consequence of the governmental policies, particularly the populist policies weve seen in so many countries the notion that this will not harm the Global Economy is simply a fallacy that is now revealing itself. Leadist economic policies to bad economic outcomes and markets are expecting that. Ands global stocks plunged yield curves inverted on wednesday, elians chief Economic Advisor in Bloomberg Opinion columnist spoke to chief executives about the bigger economic picture behind the turmoil in the market. He said the Federal Reserve rate thatwas a policy mistake will have longterm implications. The fed has lost credibility in the last nine months. It had to do a massive you turn and the market is both holding the fed hostage, asking for more and at the same time not believing the fed can make much difference. The abilityr have to repress financial volatility, which leads to the third issue of what is next. The answer to all this is not the fed reducing interest rates, that is not going to help Economic Growth in europe or in china. The answer is more progrowth and unfortunately that is unlikely to materialize, and thats the big concern looking forward. How worried are you about a recession . I will put a graph up they are showing a chance at greater than 30 , the highest since 2007. Since 1967 every time that number has done over 30 , we have had a recession. How worried should we be . I have been wearing i think europe is approaching stall speed in which growth of just under 1 isnt enough. Here, it is hard to trigger a recession based on how strong the household sector is. If you get a recession, it is one of three things. One is a self fulfilling issue. We worry about the inversion of the curve, we dont realize it has to do with distortions, particularly coming from europe and policy, and then we get ourselves in a self filling cycle. Thats the first risk. The second risk is a policy mistake. The third risk is a market accident. These are risk factors its not the baseline. The baseline doesnt address recession. But these risk factors, keep an eye on them, because they are becoming more important. This is bloomberg best . Lets resume our roundup of the worlds top stories. Italy seems to be getting closer to an early election that could reshape the country governing coalition. Foratteo savinis bed control of italy has started. The League Leader and deputy Prime Minister is on the campaign trail after pulling the plug on the Coalition Government next week. Swift elections would likely hand him a majority in parliament. Election was a strategy that got planned . He is 100 ready for those elections and is in full Campaign Mode stop that was a marathon day for savini in sicily, he was talking to people, shaking hands, taking pictures, he wants to be a man of the people and for this election to take place quickly. I spoke to him at the beach and he told me hopefully we get an election in october, and then that investors have nothing to worry, there is no secret plan to leave the euro. What we are discussing about, find wrong, and want to change, or rules on immigration and taxes. Absolutely no plan to exit europe or the euro. Matteo savini will likely have to wait weeks in order to get a power grab in italy, Senate Leaders failed to agree on a date for a confidence vote that could bring down the populist coalition. Yesterday italian lawmakers were supposed to come up with a date for a confidence vote, the first step to bring an end to the coalition, but they cannot agree on a date, and it is looking like it will be august 20. After that, it comes down to the president of the Italian Republic to decide whether he wants to trigger an early election, or try to find another majority seat in the italian parliament, and everyone here has an incentive to delay the vote. The opposition is very divided. The only one that wants an early election is savini. The longawaited deal news, cbs has agreed to merge with viacom and 11. 7 billion transaction. Theyl ignites first proposed this combination in 2016. What took you so long . Management. Who is going to run . A post of them as their own agendas and visions, it took a while to work that out. Both of them are now gone. Then it was what is the price of , and it should be tied in with slower growth. You ended up striking a deal did you come down . Conducted by special committees and independent directors, what you need to focus on is the Value Creation potential. A very significant partner with ads and distributors and huge content suppliers. Strategyting growth and people will see the material value. We work has applied for an initial Public Offering with a net loss of 690 million in the first month of this year. It is testing appetite for the fall lifting. What are they thinking in this market environment . Are they afraid they will end up like bloomberg back in may . That is potentially why they rushed out this ipo it is something people knew was coming but it seems like the date has been getting closer. This is an example of a company that loses a lot of money while having really fast growth. It has been growing quickly and expanding overseas, and yet its expenses are growing almost as quickly. It is one of these companies where it is not turning a profit and is morning investors thats what they should expect st. Hong kong announcing a stimulus package and they say this economy will struggle to grow. 10 weeks of political protests taking a toll on the economy, putting the squeeze on businesses and tourism. A 2. 5 billion fiscal stimulus to try to boost the economy, this after they cut their growth forecast for hong kong from 0 to 1 . Still struggling to grow amid political unrest, and they say the measures are not related to the protest, the city waiving fees for small and mediumsized companies, also giving kindergarten and secondary School Students handouts of 300 usd, and getting oneoff electricity subsidies for households. The key question is are these measures going to be enough to prevent hong kong from entering to a technical recession as these protests continue for an 11th straight week, continuing to squeeze the business and tourism sectors . Its not just hong kongs economy in the doldrums. Singapore isnt faring much better. It is cutting its growth forecast this year to almost zero as the escalating trade war dampens the outlook. This is the second downgrade for the year. Theres been a slew of that news but in the last few months exports have plunged for the First Time Since 2016 and for now they are not pressing the panic button, and they are not considering a policy meeting they will meet in october and their Monetary Policy remains unchanged. We have Energy Ministers telling us that he is quietly confident and they are not expecting a recession last week the minister said that the hement the economy warned that the economy is facing a different future and called on the citizens to prepare for that. A key measure of u. S. Consumer prices unexpectedly accelerated in july, signaling that inflation could be following is it . Doesnt care much for cpi . Its not the measure of inflation they focus on they focus on personal consumption expenditures. , so tend to track together we had 2. 2 yearoveryear , and thatthe core cpi is above 2 . We want to see what happens with the fed measure, but it does tell you that inflation is maybe a little stronger and it means that the elusive 2 target fed has been going for for like a decade now seems to be finally in sight. Widen byetail sales the most in four months after on the one hand we are seeing Department Stores fallout on earnings reports, and yet we can see in the data that consumers are spending. Was across a lot of different sectors in the only one that didnt look good was sportinggoods, hobbies, and books thats more about structural trends and buying toys online, more that than the state of the consumer we saw particular strength in ecommerce which makes a lot of sense the amazon prime day sale took place in july and a lot of retails held rival sales which became a rising tide. Ismexicos Central Bank Going to, cutting the rate to 8 . It is slowing inflation increase increasing slack. Inflation is still above targets, but it has been coming down and clearly they are more worried about the Global Growth story here. Exactly. Mexico is finally leaving a global trend, and the rates remain very high and now the question is will the economy feel benefit . And the central bank plans to do cuts for the rest of the year. I think a lot of that depends on reforms in the coming days and the central bank could get more. Orried ge plunged the most and 11 , bernie made off is taking aim at the company. The cash situation is far worse now the chair and has responded in a statement ge will always take any allegation of financial misconduct seriously but this is market manipulation. They are betting on ge shares to slide so he clearly has the motivation but he has a financial interest at stake. The issues he raised are not particularly new if youve been paying close attention, so there in theee key points first is that they are under reserving for longterm care and they are not properly accounting and are generally ok with the way they report their finances and are not giving enough detail, that there is some gap between how they get from one number to the next. The numbers are mindboggling, 74,000 per minute, 4. 5 million an hour, 107 million a day. That is how quickly the fortune of the walton family, the family that owns walmart, has been growing in the past year. What is fueling the rich getting richer this year . The most important thing is that right now it is a great environment to be rich. The stock markets are booming. It is a quarter of a trillion dollars per day, so if you are already rich, its a very good time to be rich and you are likely to get richer. Function inhe grr the bloomberg. As we come in close, you can see it is evenly split. Six sectors higher, utility and real estate, doing the best. I would like to point out that energy is down 28 , one sector in a bear market which is typically a worrisome signal. There are about 30,000 functions on the bloomberg and we always enjoy showing you are favorites on Bloomberg Television maybe they will become your favorites. Heres another function you will find useful, qic go. It will lead you to important context and fast insight into timely topics. Heres a quick take from this week. Inequality, a very disturbing rise toward income inequality. Every region in the world has seen the income gap grow which has helped you will populist political movements in places like italy, mexico, and the u. S. And while wider inequality is generally seen as a bad thing theres a debate about whether equalizing income helps the poor. This is your bloombergquint take on bloomberg inequality. Often inequality is incorrectly used as a catchall description for at related bills like poverty in Class Division and while the issues are undoubtedly intertwined the term simply measures the gap between the rich and poor. The share of National Wealth held by the richest citizens in many developed nations fell but since the 1970s it has been growing. In the u. S. , the average income for the poorest household grew to 2016. 2007 meanwhile the wealthiest 5 saw their income increased to 370 5,088 per year. The u. S. Ranks 39th most unequal among 157 nation. China has an even wider gap at 29. Xi jinping has dedicated billions of dollars to tackling the disparity although it continues to be caused by rapid urbanization. Rural chinese are just a third of their counterparts in cities. Some of those negative outcomes are greater instability, sluggish wage growth,. It has even been thought to create longer commutes and a higher divorce rate but lowering the gap does not necessarily help the poor. It is not necessarily a zerosum game after the 2009 recession that really shrunk the stock portfolio, which reduced inequality, but in that time period of the board did not get richer. People say the worries about rising inequality are overblown, that it can act as an incentive to act and take risks. There is cause for optimism despite widening inequality, more than one billion people have been lifted out of extreme poverty. The manyas just one of quick takes you can find on the bloomberg you can also find them at bloomberg. Com with all the latest Business News and analysis 24 hours a day stop that will be all for bloomberg best this week, thanks for watching. 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. Im emily chang in san chipmakerscoming up, fared just fine as apple investors seem to be celebrating President Trumps tariff delay. We will talk tech in china trade, and digital assistants. Plus, elections at risk. Struggling to safeguard systems