There is no evidence of a crime. This isolation has been used [inaudible] mark whelan who holds british, irish, and Canadian Citizenship was arrested in moscow of december of last year and charged with espionage which carries up to 20 years in prison. He has complained about poor conditions and said his life is in danger. Nebraskas highest court has lifted one of the last major hurdles for tc Energy Policy keystone xl pipeline but challenges remain for the 8 billion project which has been on the drawing board for a decade. The project is tied up in a legal battle in montana over itmits and tc energy says has already missed the window for beginning Major Construction work this year. Environmentalists claim the pipeline would contribute to catastrophic climate change. David cote him an industrialist libertarian and philanthropist is dead, according to the bloomberg billionaires index, he about 59h of billion, tying him with his brother as the worlds seventh richest man. Coke industries, which has revenue of 110 million, was the Biggest Company you never heard of. David coke was 79 years old. Global news 24 hours a day, onair, and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Live from bloomberg World Headquarters in new york, i am vonnie quinn. Amanda live in toronto, im amanda lang. Welcome to bloomberg markets. Shery china strikes back. Announcing it will impose retaliatory tariffs on 75 billion worth of american goods. President trump promises a response today. U. S. Autos may one sector hit hard by the terrace with the duties that can reach high as high as 50 . How manufacturers are taking the news. Jay powell in jackson hole saying there is no rulebook or a trade war. The u. S. Economy faces significant risk. We will get some insight from wyoming. Lets get a quick check on the major averages and the intraday is where you see the story of what is going on. Markets reacting very strongly to not just jay powell, but tweets from President Trump about responding to those 75 billion of chinese t arriffs. Tech is leaving at 2. 5 . Consumer discretionary down. Weighing on both the s p and dow, apple down 4 at one point. We are definitely seeing a strong reaction. Seen this happen lately, we have also seen reaction in the treasury market. Already seeing some weakness and that was probably related to the weakness of the yield. Related to the tariffs coming on board. You see at 10 00 they really collapsed. Back down at 1. 51 on the 10 year. China im looking at the you want because we really saw the results of the tweets. Four a little7. 12 bit, and then suddenly we have hit 7. 13 and change because the president promised to retaliate this afternoon. We will see whether we get that. We already had a reaction this morning from the china side of things and now it looks like we are on the u. S. As well. I cannot remember the last time we saw the offshore yuan trading above 7. 13. Amanda it is just a ramping up of the ongoing trade war. President trump really bearing down, a series of tweets that got a lot of Market Reaction, including a fresh round of potentially retaliatory tariffs. Lostys, our country has stupidly over years with china. They want to continue even i will not let that happen. I will be responding to chinese tariffs this afternoon. We have with us now rory green, a chinese economist. I dont know him great opportunity is the way to put it here. Obviously, there is a strategic game being played here. In the shortterm, risk assets suffering. At one point does this cause more economic pain for both sides, more than it already has . Already causing a lot of pain on both sides, and we rumpsee from the way that t has delayed the final round of terrace, splitting it into two tranches, he is trying to save christmas by delaying the tariffs on the final round of goods. Here and the fact that he admitted that it will have a damage on the u. S. Consumer has backed him into a hole in terms of his response to the latest chinese tariff hike. Dont believe the offshore yuan has ever traded above 7 13. 7. 13. What does this mean for Financial Markets . It is bad for Financial Markets, particularly in east asia. You are looking at korea, taiwan, these countries that depend on china, and the u. S. , and technology for their growth. These are the ones that will suffer badly, should the trade war continue to escalate, as it is doing now. Timea escalating at a when global economies are already showing signs of weakness. For china, do you think we should expect to see a move to stimulus here because of the impact this is likely to have . Rory absolutely. Hike will trigger stimulus from beijing. We already saw one form of stimulus through the currency channel. That should help chinese exporters. Another round, we will see clause i fiscal stimulus. We already saw fiscal stimulus in the first half of the year largely on Balance Sheet by local government bonds, Central Government tax cuts, spending coming into the second half we will see more of a cause i fiscal. Financing vehicles will be allowed to ramp up riskier offbalancesheet debt. We could have a chilling worth of renminbi through this measure. On the credit side, we expect reserve ratio cuts of 150 basis points to get rid of that credit slowing into the real economy and even a cut to the mlf rate as well. Have fiscal and half credit stimulus. Certainly more to come from china. The other side of the world, i wonder if you anticipate anything out of the g7 this weekend . Rory not really. There is a lot of conflict even within the g7. Conflict between the european leaders, trump has not made a great deal of friends there either. Is distracted and asia with his own trade war with korea. It will be hard to have something come together with all of these conflicting demands, competing interests. Vonnie thank you so much for your time, rory green. Sticking with increased trade tensions, jay powell calling President Trumps trade war unprecedented in his prepared remarks. Bankers gathered in jackson hole, wyoming. Joining us now is megan greene. It was such a site today to see Jerome Powell coming out with mark carney, while at the same time President Trump was reading about which was the greater enemy, Jerome Powell or premier xi. It was really unbelievable. What are you hearing at jackson hole, what are people talking about . Megan a lot of people are talking about trade. I thought the message from jay powells speech was that the fed does not set trade policy, and there is no precedent for how they should respond to it. They will do their best but they dont really have a framework for how to think about this. The strongest pushback we have seen from the fed in terms of trade. That being said, i dont even think jay powells speech will make the front page of tomorrows paper. It will be about trade. Interestingly, the more important place to be right now is the g7 meeting, rather than jackson hole, although im not particularly optimistic about any action being agreed upon there. Amanda it is so interesting because we are worried about Central Banks at their limit in terms of their ability to help economies, so that the talk turns to fiscal. Not a lot of physical capacity for governments around the world. Do you think there will be some sort of agreement in trying to help the World Economy . Washington put the Global Economy on the agenda at the last minute. The idea is they would talk about the fiscal stimulus they have provided to help the u. S. Growth above potential over the past two years. That being said, i dont expect a lot to come out of other economies. The eurozone is the big risk here. There is some talk of a german fiscal stimulus, but i dont think that will happen until unemployment spikes pretty significantly. An economic recession is not enough. I dont think it will be macro economically significant. Germany will not be able to act, so that will drive european policy. Everyone is absolutely right in suggesting that Central Banks are at the limits of what they can actually do, and Fiscal Authority needs to step in, but im not optimistic we will see that. Heard from the fed chair they are committed to economic expansion. How possible is it if there is no fiscal stimulus, whether germany or asia or here in the u. S. . Megan i think what we are seeing is borrowing costs are not constraineds on growth across the developed world. If the fed goes ahead and cuts rates, is it really going to help . There are questions about that. Only 2 of Small Businesses report difficulty in getting access to capital, so will lower rates do anything . Then there is the risk that we know a recession is coming at some point. When it comes, if the fed is cutting now, not only will it have less room to cut when it needs to, but no one will believe that rate cuts will do anything, so the fed may not have any credibility left. The fed is in a tough spot. It has to act, but in acting, could set up more trouble down the line. As you note, businesses have been able to borrow. We have a high level of uncertain he right now. What do you think the g7 conversation will be around trying to settle these trade tensions between these two economies, even though the rest of the g7 has zero power to actually affect it . Megan trade will be front and center at the g7 and im not at all optimistic about anyone coming up with any way to deescalate on the trade front. It will be all anyone is talking about, but the u. S. And china are stuck in a protracted dispute. At the heart of this is who will be the biggest economy, and neither economy is incentivized to back away from that. Thatdditional tariffs china announced was interesting because of the timing. I thought it was a pretty effective middle finger stuck up in trumps direction and now he is retaliating. We are escalating at this point. I dont see a deescalation on the cards. You have seen investors coming around to that idea as well. Curious if people there in jackson hole see pressure points in the u. S. Economy or even the Global Economy . What are they talking about mostly . Anan there is acknowledgment that inflation has not been hitting the feds target. Not just the yield curve inversion, but that it has shifted down so significantly, particularly relative to the fed funds rate. Today we saw it shift down even more. That titan financial conditions usually, so that could prompt the fed to act when it meets in september. Generally, everyone is worried about global growth, so when you talk to regional president s who spend their time talking to ceos in their districts, you hear stories about businesses not being willing to invest, but not actively cutting either. They are in wait and see mode. As long as that is the case, its hard to manufacture imagine the manufacturing recession we are seeing leader into an economic recession. For all the negativity in the markets, you are hearing a lot about solid economic fundamentals, particularly when it comes to the consumer here. Amanda megan greene, thank you so much for that. Coming up, wall street caught in the crosshairs as the u. S. China feuded deepens. Reacted after china threaten that additional 75 billion in tariffs on u. S. Goods. This is bloomberg. Amanda Market Reaction today has been severe to the news of the day, including tweets from President Trump. Is with us now. You wonder if it amuses the president to see how he can make the markets jump. This is a repeat of what we saw on wednesday. Is this a rational move . I know that is a tough question billion, should you be taking some of the value out of these markets . Luke in terms of the composition of the move, are we throwing out the baby with the bathwater dynamic still not really present when you look at u. S. Stocks with lots of sales exposure to china, those are the ones that are underperforming dramatically today. However, if they are going to have one of their worst five days of the year and i would say today is then there is still probably have a set of data percent of bleeding yet to go. ,f you look at across the board reasonable, what is interesting, you see this in equities. Is a macro risk. We are worried about recession still. Has widened 60 , as much as august 5, whereas u. S. Stocks have sold off 75 of the move they had on august 5, which was the worst day of the are so far. Interesting to see that credit still holds up better than stocks relatively speaking. The president promised retaliation today, so if you are a traitor, you will want not want to go home long if you make that announcement around 4 00. How about the 10 year . 1. 5115 now. Luke that is the story that megan greene was talking about. People are worried about the long end. People are not just worried about the inversion of the curve, they are worried about the levels of the 10. It suggest not only are we worried about the cyclical slump, but also the secular slow down. To your point, could be a longer later traffic jam on the way to the hamptons tonight. Vonniesin terms of point, we may not have an answer by 4 00, but what do you think about some thinking this is overdone . Job we had done a good being bounded in u. S. Futures by the 50 and 200day, so we are still pretty far out from the 200day. That could be potentially if things get hectic in the near term. What im looking at in markets, what i find interesting as it relates to the trade war, u. S. Currency. The sp why etf is underperforming. Msci by the most this year. Trade war met u. S. Assets outperform the rest of the world. The dollar today is playing a role in that, but thats a problem. That is a big reversal. Vonnie watching all the declines, thank you. This is bloomberg. Amanda this is bloomberg markets. Im amanda lang. Vonnie im vonnie quinn. Stocks are plummeting on chinas latest tariff threat and President Trumps threat to retaliate. One of the hardest hit sectors is automakers. Ford and General Motors down 2. 5 , tesla losing as much as 4 today. European automakers were down as well. Lets bring in our Detroit Bureau chief with the latest. Overreaction or will he get enough tariffs to impact these carmakers bottom lines . It depends on which carmaker you are looking at. This feels like groundhog day. Either trump or China Threatens tariffs, and stocks are hit. The fact that tesla is down 4 is reflective of the fact that they export everything they sell from the u. S. To china right now. Tariffs on their cars would certainly help them, especially if they are trying to ramp up sales of the model three. They are building a plant in china and supposed to have it up and running in the second half. The problem with tesla is they are always behind in getting production up and running. To play inriffs came december, it would certainly hurt them. Definitely hurts the german automakers. In u. S. E a lot of suvs plants, exports been to china. Ford is growing in china with the lincoln brand, and that is a worry for them. While there will be a plant running in 2020, they would feel some pain. General motors does not send much over there, but all of the automakers face this underlying risk, they rely on china for sales. The market and the economy are already pretty weak. If this trade war to hurt the economy, it does affect a pretty important market, regardless of where they build the vehicles. Amanda give us context on how automakers are doing separately from this . ,here is already a slowdown they are past their peak moment for the cycle. Inthe u. S. Market peaked 2016, still at a strong level now, but it has been slipping. The Chinese Market has been doing poorly. Is actually losing money over there. There is already some weakness for the Auto Companies in terms of global demand. Then you throw in one more wrench in the works like this, and that really tells investors may be they need to put their money somewhere else until all of this clears up. Vonnie there is a bit of a difference between the tariffs that will be put on suvs and regular cars. Does that mean automakers may swap production around a little bit . They are going to have to build what is selling, and try to deal with the tariffs. They cannot switch up the mix of what they are loving and selling. That is the position they are in. Longerterm, this is the toughest in for them, they cannot plan. Amanda david welsh, thank you. Just as a reminder, you can catch everything that you missed here on g tv. This is bloomberg. Mark im Mark Crumpton with bloomberg first word news. President trump is blasting the fed today, suggesting its german could be a greater enemy of the united dates than chinese president xi jinping. Following a speech by jay powell at the kansas city feds annual symposium in jackson hole, wyoming today, President Trump unleashed a string of tweets bashing the fed and powells leadership. He said the u. S. Economy is in what he describes as a favorable place but faces significant risks, as growth abroad slows because of trade uncertainty. Protesters are gearing up for a 12 straight week of demonstrations. Thousands trying to form a human chain around the city. Protests were originally aimed at a controversial proposal to allow extradition to mainland china. Now demonstrations have widened into a Broader Movement against beijing increasing grip. Russian president Vladimir Putin has ordered the countrys military to respond after the test of a u. S. Missile that was banned under a nowdefunct arms treaty. The missile