This is how it looks at the moment. Nikkei feeling it at the moment although there is a deal on trade between the u. S. And japan. Nevertheless nikkei still 2. 2 percent down. Asx also feeling its. All in the red. Everything is negative as far as the market goes. Where is the money going . Lets have a look at what is going on. On top of that the u. S. 30 year. Gold up. At levels not seen since 2013 or thereabouts. 54 accounts. At one stage yen was at 144. 45 against the dollar. We have recovered a bit, 105. 24. There are all sorts of resistance. There we go. To the downside. 97, 51 for dollar, 30 yield 9. 81 . Money ise is where the going as people seek safety. Whats move things along and look at the first word news with selina wang. Macau has chosen a pro China Businessman as its new leader after a political process that featured no other candidates. Hell be the third leader since he territory was handed back to china in 1999 after more than four centuries of rule by portugal. Unlike hong kong, the appointment caused little controversy, highlighting macaus weak opposition live movement. The u. S. And japan agreed in principle to President Trump and prime ministers shinzo abe announced the news during the g7, saying they agreed on every point of contention. Abe said there is still some work to be done but the side same to formally sign the deal during u. N. Meetings in new york next month. North korea has followed up a string of recent missile tests the what it says is a new super large multiple rocket. Kcna says the latest test was wasessful, whom on june successful and kim jongun said he was happy. They are not a trump says he expects to meet kim again soon. A Russian Rocket carrying a humanoid robot has failed to dock with the iss. The failure is because of problems with the docking system and a second attempt will be made tuesday. The unmanned spacecraft took off thursday they robot in the pilot seat. The robot was not taught how to manually conduct a docking. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im selina wang. This is bloomberg. Markets slumping after further and trump announcing a rise in tariffs on some 550 billion of goods. Some startingse october 1 and increasing a further 300 billion to 15 . David quite a series of events to where we are right now. It did come after beijing announced additional tariffs of 75 billion friday. Tom mackenzie is in beijing to help make sense of where we are. It does look like things are worse. Tom absolutely. Camehinese response through weeks after the u. S. And trump announced they would be having 10 on additional products. They announced a towards the end of the day friday beijing time they would be adding 75 billion of u. S. Goods, including Agricultural Products like autosns, beef, pork a,nd as well. That will be now reinitiated by the chinese. They will try to match the u. S. In terms of timing. They will split it up, the first heading in september 1, the second december 15, mirroring what we heard from the u. S. A sharp acceleration. Then we saw the rhetorical uptick a few hours after that. Particularly saturday when we heard from the Chinese Commerce ministry describing the u. S. Actions as being bullying. The state media saying they are prepared to fight to the end, this trade war. Andtrade tariffs escalating the question is how far does this go and whether or not these talks that were planned in washington for september will actually go ahead. The chinese president saying he doesnt think they will. Rishaad what is the narrative in beijing at the moment . Backed newspapers saying about all this . Point, thistil this is all about taking china down. Is that getting more credibility, that theory . Tom i think it is underscoring and solidifying the views of those who have been saying, look, this threat to decouple the u. S. And china is not an idle one. President trump has long said he would like to see u. S. Companies invest in the u. S. More, but this is a clear articulation via twitter from the president , for the first time really, saying he wants to see u. S. Companies divest from the Chinese Markets. They will be taking that very seriously. The supply chains have been change in the last couple years, but on the flipside you see u. S. Corporate like tesla, starbucks, ford, still investing billions in the chinese market. But certainly those officials in china said this decoupling threat is not idle. Calls toee further strengthen homegrown champions, indigenous innovation. All of that will likely move forward now on the back of this view the u. S. Is intent on trying to isolate the chinese economy. Therein lies the concern. The additional threat is the pressure u. S. Companies operating here will be under. This is the third question we put, asking whether or not u. S. Companies operating in china were facing more pressure. He did not point to any exact examples but certainly there is concern you may see more nontariff barriers and the publishing is something we are waiting for here in beijing. Rishaad thanks, tom. Guest. Ring in our are we at an Inflection Point or have we gone beyond that . Is this about new mutually assured, not destruction, but serious deterioration . Guest i think there is serious deterioration. I think we need investors. Perspective onut what happened in the shortterm. Clearly chinese trade is important. 15 of world gdp. Tariffs are like taxes and taxes tend to shift demand and supply and that is very important. What is important for investors is to understand context. Looking at italy for example, notorious history of volatility in government. Economic activity is quite good despite leadership and governments that was volatile. I think we have to separate both and really think about the end game. There are two and games. One endgames. One is restructuring. China is a very powerful nation. When you look at the next 20 to 30 years, when you think of ai the bignology, one of ones will be china. It is a longterm game. The shortterm game is the u. S. Election in november, 2020. There, you have to wonder if President Trump starts having a lot of business lobbies a very unhappy with the tweets from the administration, being very unhappy with the backandforth, and really noise from central bankers around the world saying it took us a lot of effort to get away from the last recession. Do we really want to go back or have the threat of another recession for that game around an election . I think not. So there has to be a point between now and i would say april where that timing, the timing will work in favor of xi, because trump will need to come up with a deal. He wants to show up for the next election with a deal. Between now and then will be very volatile. Of course there is risk of global recession. Is it possible . Yes. Is it probable . At this point in time, no. Because the balance of common sense would indicate he should have a shift in policy, but everything is policy is possible. David do you think we need a recession, simply to push government to do the heavy lifting . That is when you tend to get spending, when voters start complaining. Virginie it is a really interesting question. Because as you said, and i wrote a piece recently called Central Banks and the toolbox. The toolbox is shrinking given where we are. Fiscal stimulus will have to be coming to the rescue here. So, the question again, it is a shade of grey. Ofn does the threat recession enough to bring action without recession coming on board . It is a very dangerous game. And that is what the markets are telling you now, they are very concerned. If you can take a longterm perspective, there will be very interesting trades to do. In our portfolios we are quite neutral right now in terms of bonds versus equities. We have brought back some of the duration and our fixed income portfolio, because we have made very good trades there. And we are waiting for the situation to stabilize, to most likely reenter equities, because pricing will be quite attractive. Yvonne we will talk about this more a little later on. Still ahead, violence returns to the streets of hong kong as we can protests culminated in the firing of a police weapon. We bring you the latest the filaments. David and later, macrons g7 gamble on iran met with mixed results. We will saw how the surprise took shape. A bad day on friday and still a bad day as far as futures are concerned. Have a look at where we are here on european contracts. Everything from equities. When things open in germany, rest assured of things do not change it will be close to the earths core when it comes to sovereign yields. This is bloomberg. S is bloomberg. David here is your damage report across china. We are off of lows from the day but off highs from Exchange Rates but we still have record lows in dollar offshore. We are closing back to 3 on your 10 year yield. Looking at hong kong, another reason markets remain fairly riskaverse. Police drawing their guns and even firing a shot as demonstrators turned violent. Perhaps itsgiven strongest signal yet it may have to intervene. Coming out of the staterun news agency. Stephen engle is with us. On what happened and what was a threat. Stephen thats right. That respite if you will from violence did not last very long. Basically just a couple weeks. The previous weekend was fairly peaceful. Even friday night of this weekend was pretty peaceful with that human chain across hong kong, people linking hands and solidarity to hopefully get their message to the Hong Kong Government to meet their many demands. But things started getting more frustrating for both sides friday and when the weather turned really foul yesterday, the mood went south as well. Sixavid just mentioned, different officers pulled their sidearms and pointed live guns a t protesters. One officer did discharge his sidearm into the air. Now, we did have an Early Morning press conference with a super soon your intendant from the police super senior intendant from the police. She said it was justified. But it was another escalation in this tense sand and standoff which doesnt seem to have any solution. Carrie lam is suggesting talks. Stop being violent, then we can have further dialogue. But the protesters do not see any movement on the part of the government to even add any concessions. So that is where we are at with the standoff right now. Basically the police we are at the headquarters here. The police said the use of force was indeed necessary and reasonable, and also the Hong Kong Government put out a statement earlier this morning saying the violence of the protests have now put hong kong to a dangerous edge. Yvonne phil us in on what beijing is saying right now. Perhaps this is the strongest wording we have seen from china on possible intervention. Stephen it was from late last night but we should take it quite seriously. Oftentimes officials will convey their messages through the staterun news agency. I will read it verbatim. They say it is not only chinas central Governments Authority but also there responsibility to intervene when riots take place in hong kong. They use the terminology Color Revolution. It has the hallmarks of Color Revolution, which is often used for protests like the fall of the soviet union, and in the balkans. So they said this had the hallmarks of a Color Revolution aimed at overturning hong kongs constitutional institutions. Saying thisatchers is a signal that beijing may take extra steps. Yvonne thank you, stephen engle, joining us outside the streets of hong kong. Still with us is virginie. Yourre talking about holding a neutral position when it comes to stocks. Is hong kong part of that as well . Are you concerned about the political situation impacting the economy . Virginie definitely. We have seen the impact in the last quarter numbers. The question is what happens for the rest of the year. If you look at it from a bottomup perspective, some stocks are looking very attractive. And of course china and hong kong mandate, we are looking at them. Looking at fair trades in particular. With regards to the longerterm picture, it is really what we need to wonder. What is the place of hong kong in the Greater China situation . I think that is where the Growth Potential of the stocks on a longterm basis be devised from. David many people talk about how if you bet on the chinese consumer, in the long time longterm will never be wrong. Do we need to rethink that assumption . I agree with the longterm prospects of the chinese demand being very attractive. I think the matter is depending on how your portfolio is positioned. What is your entry point . Are you adding to a position or are you starting a position . If you are not those names given the current prices, i would definitely add a starter position, yes. Rishaad if you look at the strength index, we are not oversold yet in hong kong. We are just about hitting neutral. But how badly damaged is the product . Virginie well, what i thought was real interesting was this sudden resurgence of promotion of shenzhen. And of course we have known about the and shenzhen being promoted and i was watching some promotional videos which were quite well done. Of showingstioning in macau hong kong and how shenzhen is today versus then it is in a way perhaps for china, a way to diffuse, when you look at it from a global perspective, the potential negative impact that hong kong has on china. So, that is the chinese perspective. And also bringing one piece as part of the bigger puzzle. I think this is something we must really watch. And the competitive advantage of shenzhen is growing very rapidly. Yvonne i talked about earnings as well, you have been watching this as it gets closer to the end for secondquarter earnings results. What have you seen so far . Is there any kind of upside to save the sentiment right now . Virginie really interesting, korea, negative surprised. As we know, a lot of industrials. You expect that. 80 of companies have reported, 42 were worse than expected and only 35 what i think was a bit surprising was how well some of the internet china stocks did versus expectations. And taiwan as well. So, those were some of the bright stars. The rest is really linked to the Global Supply chain rebalancing that we are seeing. And we will have to see how the next couple of quarters pan out. David we are going to have to leave it there. Thank you for staying with us today. Have a look at where we are in hong kong about 15 minutes into the session. Quite bad. 900 points is the damage right now. Ooh, look at that. Up 30 . This is bloomberg. You are back with Bloomberg Markets. Kee leading challenges to ni in china is lying idle. That as trade war forces top labels out of the country. The exodus is making factory discounts as 10 told bloomberg that factories are under enormous pressure. David lets have a look at sino tech. And rising Competition Among refiners. Net income dropped to 4. 5 billion down from 6 billion. Operating profits slumped to 2. 7 billion. They are the most exposed among chinas oil companies. Doubling dividends to cents a share. An outlier. Beat estimates. U. S. In 123 billion months through june. Billion. A record 6 yvonne lets take a look at how currencies are doing. Stronger six certainly helping the renminbi and reversing earlier losses. Still around 716 for offshore renminbi. 714 for onshore. Of course a lot of pressure is on these traderelated currencies like the yuan. Bok meets this week. A lot of pressure on them. Recent trade tensions at cut rates once again. Aussie dollar at 0. 67. Rishaad you have thought we have seen a better performance from japan even the possibility of a trade deal. David given where the yen is, that does explain your 450 point drop. About 150 minutes into the session heading into the lunch break. Looks cheapd, 26 compared to japan. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. This trade war is triggering other actions around the world, other countries thinking about reevaluating their own trade relationships, so this could easily get out of control. Businesses do is become more cautious. Business leaders expect a fair amount of uncertainty and concern, about knowing where export markets are going and what their opportunities are going to be. We have to keep monitoring whether firms will continue to react the way they have and, with caution, whether it will begin to spill over into their hiring plans and spending plans, which will spill into the consumer sector. Those were the feds key voices, a message from policymakers, pretty clear Central Banks do not have the tools to deal with the trade war. Have a look at the quote from jay powell over the weekend, sounding the alarm on a recent guide, that Monetary Policy can work and cannot provide a rulebook. Our guest joins us now. Hes talking about the inefficacy of Monetary Policy to deal with the problems. Do you think you will do more or do less . I think they are in a conundrum in the sense that trump would very much like them to do more. Powell is more in favor of a cautious approach to the Interest Rate hikes. A lot of them are looking for signs that they are going to do intermittent cuts, because of the reference to the midcycle adjustment. I think they delivered that message. It is clear that we now have Interest Rate cuts penciled in, and i would say they would wait and see how the situation with the trade war develops before they decide anything. It has been completely overshadowed by the fact that what . Ssage was the message was that they would deliver shortterm liquidity but globally they are very aware of the risks of the trade war on a medium to long term picture. Morgan stanley came out with a call here, saying that if we see tariffs from the u. S. And china, and they last for four to six months, they are pushing their forecast forward for a global recession. Is that what we should be pricing in . The threat of this . We are not pricing in a global recession as of yet, we are perhaps a little more financialan other institutions, but we are going to see a deceleration and there are black swans on the horizon so we have an escalating trade war that could get much worse. Protests in hong kong, any misstep could lead to further action. We have brexit and italy, a series of risks that could potentially lead to that global recession, but we are not in a position where we see the recession yet. Individually, do you see certain economies in a recession or close to it, if we cross the technical definition . Absolutely. Individually we do have markets that are under pressure germany is a great example. We downgraded our risk for germany as a result of everything that is happening, but we think the situation will deteriorate. Economies example of that are very trade oriented and exposed to the downturn in global trade. We do expect a contraction. The likes of hong kong and singapore do have a lot of exposure, in the case of hong kong or singapore, they are starting to feel the squeeze and they might enter the session in q3. You come from a different are you analysis seeing a fallback in the number of contracts . Lead timesing a long before invoices are paid . What are you seeing . We see a deterioration in payment trends, which Means Companies in markets, particularly in asia, are taking much longer to pay, and when they are defaulting we have seen an increase in payment delays. We have seen an increase in payment defaults as well. Traditionally a lot of the risk has piled up in markets, weaker domestic activity, china and even india are great examples. We have seen a deterioration in payment trends, particularly on the trade side. We are seeing global trade contracts definitely, we do a survey of 3000 companies, and theres a lot of pessimism, 60 of respondents in hong kong and china thinking the situation will deteriorate. We see a lot of pessimism that is leading to a deceleration inactivity. When it comes to developed markets, fiscal stimulus it is tough to come by. Monetaryhaps, has more and central policy. Will that keep up asia growth, that have tried to go both sides of this . Asian economies have been a little better at delivering the combination of monetary and fiscal. In china, fiscal policy is pretty much on track. They did increase a target earlier in they have been sticking to that quite well. Monetary policy in china has been more delayed and we do see that coming into its more robustly. They are cautious because they are tackling goals that are contradictory. They are currently reforming but the latest is the and continue to andct a lot of liquidity that translates into pressure for smaller enterprises. It could be the one that struggles with cash flow risks. They see a lot more monetary policies and they have to be cautious about it. All right. Stay with us. We will have more from him. Lets get to the first word news with selina wang. Thanks. Hong kong police are defending an officers decision to fire his gun at the best option,as protests escalated. Police said the action was necessary as protesters were charging them. Police say theyve arrested 36 people following the sunday protests, including several violent clashes in the western new territory. Chinahas chosen a pro businessman as its new leader after a political process that featured no other candidates. He will be macaus third leader since the territory was handed back to china in 1999 after more than four centuries of rule by portugal. The appointment because little public controversy, highlighting macau cows week opposition movement. Global tech and potential duties on french wine or on the menu as the g7 wound up in the ritz. The proposal to impose taxes on Tech Companies that make substantial revenue and france has infuriated the trump administration, prompting threats of 100 tariffs on wine imports. France insists the tax plan doesnt specifically target u. S. Firms such as google, amazon, and uber. French president Emmanuel Macron also raised some eyebrows at the g7 by inviting the Iranian Foreign minister for a lastminute sideline meeting. Tonce said the meeting was deescalate International Tensions with iran. They met firmly 30 minutes before he left. The french team said the other g7 leaders were told in advance that he was coming. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im selina wang. This is bloomberg. There is plenty more ahead. Heres the state of play across the currency market. Brent crude paring back, futures Still Closing in on 15. 60, the highest level since 2013. More coming up. This is bloomberg. You are back with Bloomberg Markets. Haset up on carrie lam, who been Holding Meetings with former hong kong officials and other partners over the weekend as protest violence returns once again to the city. Local reports show she is being urged to meet some of the protesters, but the former chief secretary says she sees little hope for dialogue with protest leaders at this point. Theres not much point in setting up the socalled dialogue unless and until this is carrie lam is prepared to seriously consider the publics demands. Notsnt as if she does know where these protesters are coming from, what are their main worries and their public demands, but she has so far adamantly refused to a seed to any of them. It is all very well to have a dialogue but if the dialogue leads nowhere then this will just add to the increasing frustration and anger filled on the part of the protesters. See on the screen a list of the protesters key demands. The top of the pile is the withdrawal of the extradition bill. Considering that has been shelved anyway, does it strike it as a fairly low cost, goodwill move, and why hasnt it happened . Nobody quite understands why the chief executive refuses to when the word withdrawal she herself has conceded that the bill is all but dead. That being so, why dont you just complete the formality of withdrawing the bill, which then would satisfy the community, that it is well and truly dead, and that is the next time the government proposes to put forward similar proposals and they will have to start afresh. The other public demand that has received 80 support from the community is to establish an independent commission of inquiry under the chairmanship of the rep eatable judge to get at the facts surrounding this Current Crisis that we are facing, because until and unless you establish the facts in the truth, it is very difficult to take the first step, to heal this very serious risk we are seeing in Hong Kong Society today. Is the withdrawal enough for will carrie lam have to go . I think there will have to be at least two demands entertained, which i just mentioned. But i also feel that if the chief executive is not willing to take some of the very difficult decisions that will need to be taken in order to allow hong kong to move forward, then she should move aside and make way for somebody else. Hong kongs former chief secretary. Still with us, our guest in asia economist. Looking at hong kong from your level in an of analysis, i go bk to the idea of invoicing and what you see on the ground. What are you seeing, in light of whats going on in the streets . In line with that deterioration in activity, we have seen a decline in payment trends, we have seen Companies Taking longer to pay entire delays. This reflects data from the first and Second Quarter, predominately related to the trade war and the role that hong kong plays with chinese exports to the u. S. How bad is it . It is a significant deterioration. It is enough that we are advising our Risk Assessment and we will likely implement a move in our next quarterly assessment and we are looking at q3, which will be exacerbated by a decline on the front. We are showing this chart of retail sales coming out later on this week, even the fact that mainland tourists thats the big risk, if they fear for their safety. Can hong kong ever save itself from its reliance of mainland tourists . We are seeing this correlation quite strong. Yes, and if you look at previous incentives, retail sales did drop significantly in the months after all this uncertainty, maybe something that will not disappear, and even if theres a resolution, it will continue to impact the economy, and of course deterioration is more prominent and sectors that are more exposed to tourism spending, which includes everything from luxury goods to all the entertainment options. We will see a decline in sales in coming months. Thank you so much. Carlos casanova. Lets turn to some of those business flash headlines, mastercard suffered a data leak which could put a large number of people mostly in germany. European rules required them to if theropean regulators leak poses a threat. Regulators tolow find companies for serious violations. Areuto thailand says they planning to create a Southeast Asia electricity super grid, with proposals to triple the amount of power from hydro projects and then resell it. Thailand has been pursuing the idea for 20 years but has struggled to achieve enough Regional Government coordination. Tesla has been scouting western germany for a factory location in europe. Back in june, e line musk described it as the ideal place, by the french border. Europe is projected to be the world secondbiggest driver of electric cars in the next decade, trailing only china. The foreign minister of iran bit a surprise visit on sunday, arriving as g7 leaders were finishing their lunch. He made the trip on the invitation of president macron, who is encouraging a detente between iran and washington, resolving an issue that has divided the g7 ands President Trump pulled out of the nuclear deal last year. Jodi schneider is here with us in studio. It has been the reaction to this move . Thought of the something of an overreach by mr. Macron, that it was in the face of President Trump. He had met with President Trump earlier and had given no indication of this. Of course President Trump has been very opposed to the nuclear predecessord by his and this is what was the target for him, he went back and did not reemerge until they had left. Way by other that aides and other people attending the conference, that it maybe was an overreach in terms of trying to get more support for the accord and also support to the sanctions that the u. S. Has been heightening. Wondering, what are the implications of this move . Especially when it comes to the u. S. It seems that this would hard the resolve of President Trump ,nd his advisors regarding iran the goal had been to try to get the u. S. To support more diplomatic ways of dealing with iran rather than continued threats of tightening those tariffs and possibly the threats there were military threats but the president seemed to step back. This is certainly not been viewed as a way to profit, and of course theres the larger issue of how the g7 will Work Together moving forward a lack of communique, that kind of thing, coming out of the g7, also thought to be a concern for some about whether they will be able to get much done going forward. Thank you. Damagehneider, and the we are still on track for a very bad day. Movementsrd deviation , something you rarely see in these markets. Much more coming up. This is bloomberg. It is time now for the monday edition of the battle of the there, not therat should be any difference per day. We picked the best charts against each other, you can see them on the bloomberg, bottom of your screen. We kick things off tell us what you have. I am going to talk about the taiwanbased strength in the economy which has outperformed singapore and hong kong. Output thery most bullish economies are because ofn july, the double digit growth in the has helped taiwan more than offset contraction in the yellow. Asian equities are in a sea of red and taiwan equities have no extension, but this output and export data is emerging as the main benefits of the trade war, and that means taiwan equities will break to the upside. Interesting if any were put through taiwan. The company is restructuring the Global Supply chain. Lets move things on. Andrea, what have you got . Well, after that sharp dive in the s p 500 on friday, it is now teetering just points above lows set earlier this month, which we know has been a very volatile month. What this chart shows is how the s p 500 is fixing for a third time, shaping up as a key support level. Of course the big question today is whether it will hold, given the very sharp escalation in trade tensions since friday. While it has managed to bounce back twice this march, there is now a pretty good chance it can break out of that range as early as monday in the u. S. , given the sharp drop of u. S. Futures in asia. S p 500 futures fell as low as 28. 10, a key traders are watching for. There was an intraday low twice 2800 becomes the to watch. We know how unpredictable things are and things can change in the space of hours, but what is certain is that if we see a break in those levels, it will have broad ramifications for equity markets around the world. And because of that, andrea, i am picking yours. Leave anynot impression everything will likely fall with it. I learned something new today. Export numbers are going up. Ive going with andrea, just because last year was all about u. S. Versus the rest of the world and now things are converging. I think it shows the bright spots, which is very good on the risk off day like today. Congratulations, both charts very good. Gtv is where you are going to go to access those charts, as well as all those weve shown you throughout the day. Lets check those and save those charts for your morning meeting. Lets take a look at markets before we go. Oncontinue to see red, japan lunch break down about 2 . The hague said the hang seng, no let up. The hang seng is interesting because a bounceback might clear the path from mliv and position it cleaner for a downside thrust. 28. 41. Nothing changes. 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 buy a new samsung note. Click, call or visit a store today. It is almost 11 00 here in singapore, 8 30 a. M. In mumbai. Im juliette saly. Im rishaad salamat. Entering the last hour of the morning session in hong kong. This is a look at our top stories. Markets slumping. President trump ramping up the trade war. The white house says he regrets not hitting china harder from the start. Hang seng index falling in asia, facing its biggest decline since october. The yuan its a record low. Tensions attending gold toward 1600 announce, rallying almost 2 of the highest level since 2013. This is Bloomberg Markets. Good monday morning. Seeing red across the board, the nikkei down over 2 in the morning session. Hong kong hang seng index hitting its lowest level since october. 3. 3 ,ned lower by about so we are slightly off the lows of the day, with a lot of money going out of the currency. We had a strongerthanexpected fix from the pboc, onshore yuan at an 11 year low. Quite a bit of move as you would expect going into the dollar, and other havens that have a look at the impact. The yen is off the highs of the day after we saw a breakthrough that 105 to the dollar. We are continuing to rise by. 8 , with big moves coming through in the u. S. 10 year yield, at one point hitting its lowest level in three years. Then we are seeing big moves coming through on australias tenure yield, which hit its lowest heading back to 1969, dropping the most in september 1982. Going into safe havens today. Newsst need to get to some , china opposing trade protectionism. We have him also saying they are willing to resolve a were spewed via dialogue, saying china opposes the escalation of this trade war. Position,rrently the as we had the weekend, donald trump really upped the ante in regards to the trade war, announcing more tariffs 30 . Just have a look at india, about 43 minutes away from the start of the session in mumbai. It has been a situation where weve seen money go into the haven. That certainly doesnt seem to be the case here with the indian rupee, which is at the moment appreciating. 10 year yields backing up slightly at 6. 57 . A long time ago, with regards to bonds, it was in place. Mind you, the nifty was down 1. 6 , futures moving to the upside quite considerably, really bucking the regional trend. Lets have a look at whats going on with the first word news as we head over to beijing and join selina wang. Thank you. Macau has chosen a pro China Businessman as its new leader after political processes that featured no other candidates. He will be macaus third leader since the territory was handed back to china in 1999 after more than four centuries of rule by portugal. Unlike in hong kong,s appointment because little public controversy, highlighting their week opposition movement. Attacks on global tech and potential duties on french wine were on the menu at the g7 which wound up. A proposal to impose taxes on Tech Companies that make substantial revenue and france has infuriated the trump administration, causing threats of 100 tariffs on wine imports. France insists the tax plan doesnt target u. S. Firms. President Emmanuel Macron also raised some eyebrows at the g7 by inviting the Iranian Foreign minister for a lastminute sideline meeting. Was a bid to deescalate International Tensions with iran. They met for 30 minutes before they left again. The french team says the other g7 leaders were told in advance that he was coming. The u. S. And japan have agreed in principle to a trade deal that would include higher purchases of American Farm products. President trump in shinzo abe announced, saying they have agreed on every point of contention. He says there is still some work to be done, but they aim to formally sign the deal during u. N. Meetings in new york next. 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. Wang. Lina this is bloomberg. Chinae coming through, firmly opposes the escalation of , as response to what we had for donald trump. It has been putting up tariffs of 30 . Lets get straight to tom mackenzie. Tensions escalate very quickly here, dont they . They do, indeed. Weve been hearing from the vice premier, a summit. He says china does oppose the protectionist measures, no big surprise. He also says he thinks that china has the tools it needs to sustain growth, and that is key, because there is a sense among officials that they have what is needed to sustain and weather the storm, despite weak data and the increasing pressure. This all comes from the back of what happened on friday. China outlined its retaliatory measures of 5 billion worth of tariffs on u. S. Goods, and then you have the trump tweet storm, saying he would be raising additional tariffs on china. But from the chinese perspective, they are looking once again at the farm states in the u. S. , some political pressure on President Trump, so they will ramp up tariffs on things like soybeans no big surprise. And reinstating additional tariffs on u. S. Autos. Bmw and mercedes make a lot of their cars in the u. S. , shipping them to the Chinese Markets, also ford and gm and tesla. In terms of what we are seeing it with the rhetoric, we also heard from the vice premier in the Commerce Ministry on saturday, accusing the u. S. Of trade protectionist bullying. But the rhetoric has also been u. S. Y strong, accusing the of going too hard on these lines and saying they are prepared for the chinese to exacerbate tensions with the u. S. We also spoke to the amgen china president a couple hours ago. He said that he thinks these talks were penciled in for washington in september and are now unlikely. Take a look. It is looking really hard to see how they can, because if you are a trade negotiator walking in under the current circumstances, you will wonder where it will lead. The u. S. Is wondering whether the chinese are ready to put something on the table, and the chinese are wondering if they are considering the best offer. There were a lot of confused calls from chinese counterparts, saying that if trump is serious about decoupling, that is going to accelerate the switch up in supply chains, very damaging. How seriously do you think beijing is taking those threats, to force u. S. Companies out of china . Well, i think it will thengthen the hand, that threats of decoupling are not idle when it comes to the u. S. Sayingsident obviously he wants to see u. S. Companies pull out of china and establish some legal means, which would be hugely damaging and have massive ramifications for both economies. Certainly there have been those who are saying we need to step up support for state champions, step up for indigenous nations. Those calls make it louder. We are looking out for any signs that china will be publishing its unreliable entities list, this is something that would give us a clue as to which other u. S. Companies might face additional sanctions here in china. That is something we are watching very closely, and other nontariff barriers doing business here in china, how much pressure they will come under. The trade tariff war continues to escalate. Tom mackenzie in beijing, thanks as always. Our next guest thinks the uncertainty implies more downside for risk assets. Lets bring in michael price, with me here in singapore. It has certainly escalated since where we were on friday. At this point, do we even think china could walk away from talks . Trust is damaged on both sides but people always underestimate the impact of trade negotiations. It is not about trade it is about the fundamental currency question and more importantly with ahe rising power very different view of how the world should be run. Theres a misunderstanding on both sides and different worldviews. Into how itit moves plays, and weve seen a big move coming through in terms of safe haven assets. I have a chart showing getty for gold, and so are you. It is ultimately a currency question, gold could be the winner. If the trade war would really escalate, the only winner in the trade war is inflation, so from that perspective gold could also do well. I think as we have other risk assets it is important to remember that most banks officially had overweight or at least constructive use on china and the base case was that there will be a trade deal. That assumption is now being repriced. How much of a risk are you viewing whats happening in hong kong with what we are seeing with the u. S. China dispute . The hong kong situation further complicates the trade talks because this is where the misunderstanding comes and also the lack of trust. And that to some extent makes it difficult to get an official agreement and with the waslopments, the position always to keep these very strong agreements private, and now increasingly we have seen much more public statements that will lead to people changing their assumptions. View withto get your the families that are most concerned about preservation, and also this search for yield. Where do they feel comfortable . What are they looking at in particular . If you think about italy, irrespective of the trade war development, Global Manufacturing data increases and we could see more weakness in the global economy. The real question is whether supply Chain Disruption could add further complications to this. I think the preservation of wealth, they seem to realize that gold marries a high allocation. Is it too late . Carrying a yield with negative rates around the a yield now, has doesnt it . Thees, and dont forget very important words by j. P. Morgan. In a world where we have too much debt and 16 trillion and negative Interest Rates, gold has increasingly a more meaningful position. And dont forget, technically it is now turning to a yearly upturn. The trend is always your friend. Up, chinas strongest warning yet, and intervention as the violence returns to the street. More on that shortly. Plus, india announcing a slew of measures to support the trade economy. Is it enough . Analysis comes later. This is bloomberg. This is what we have, futures contracts showing more the german missing tenyear bond futures, gain falling further into negative terrain. 1 ,september contract down the dax also under pressure when the session kicks off. Also about the Italian Government and brexit, but in this part of the world we also have protests in hong kong which take an ominous turn for the worst. Asice fired one shot demonstrations turned violent once again, beijing giving its strongest signal yet that it may have to intervene. Stephen engle is on location for us. Walk us through the weekend activity. It started off calmly and then all bets are off. Thats right. Its a dangerous standoff because we thought there was a respite last weekend there was no teargas last weekend, but after friday night with a human chain, linking hands across the territory, it was a different story. There were another 29 arrests, teargas fire around eastern calhoun, and then as the weather mored sour, the mood got entrenched and frustrated on both sides. We saw the police and the protesters clashing with metal bricks andng with throwing pencil bombs and police are responding with the most force they have used to date. With Six Police Officers pulling their sidearms, one officer discharging around into the sky, and the water cannon trucks were brought out for the first time on sunday. There was an escalation on both sides and the Police Senior superintendent and Police Headquarters behind me justified the police behavior. She said that it was necessary and reasonable, saying that the officers lives, the officer who fired the shot, felt his life was in great danger. The Hong Kong Government putting out a statement saying the violent acts put hong kong to a dangerous edge. Reasonable, and perhaps the strongest wording yet on possible intervention from china. Yeah. Again, its the threat that overhangs hong kong in the protest movement, the buildup of soldiers and military hardware across the border in shenzhen, for what has been described as sizable exercises. But will those exercises be used to quell the unrest . Let me read you the statement overnight, saying it is not only chinas Central Government authority, but also its responsibility to intervene when riots take place in hong kong. That might be the final solution but the former chief secretary of hong kong thatthe first government the standoff has been exacerbated by chief executive carrie lam not giving in. Far, adamantly refused to proceed to any of them. It is all very well to have a dialogue, but if the dialogue leads absolutely nowhere, this will just add to the increasing frustration and anger filled on the part of the protesters. We are on another monday morning, dissecting what happened over the weekend. Things turned south, and another protest is scheduled for next weekend, august 31. All right, our chief north asia correspondent, thank you. Lets bring back the executive director of client investment, here in singapore. He also used to live in hong kong. I want to get more of your thoughts. Did you think we would be in the position for a 12 week . Felt that theys underestimation of resentment is a mistake, especially from the investment community. Everyone should refer to the ccp document, which was in a nutshell outlining the philosophical debate in the issues that are the core issues. That is why i think it is beyond the trade war. Hong kongs role as an International Financial center in Capital Raising for mainland china. That really is the important question. For example, will it need to change the role of hong kong . It cant happen overnight. But has hong kongs reputation been tarnished for good, or is it going to clawback . Thats a good question. Hong kong has always been resilient. The hong kong people have always been resilient. But the development of the trade dispute it is ultimately the clash of civilization, a very different worldview. Increasingly a lack of trust on both sides makes it difficult to come to an agreeable solution. You were saying that china could use the rmb as a political card. Hashe chinese leadership always kept it stable for political reasons and also for macroeconomic stability. In order to offset the tariffs there is a high probability that the chinese currency will be allowed to slow which will get some headwinds to asian currencies and overall with dovetail with the goal. Gold is one of the better investments in this environment. Thank you very much indeed. Lets have a look at some of these markets, see how they are doing. Down,karta composite weakness across the board, the taipei market which sees some decent economic exports. Dayrally speaking, it is a where the bears are out and people are not prepared to take risks. This is bloomberg. You are watching Bloomberg Markets in hong kong. Im rishaad salamat. Im juliette saly. A quick check of the latest business flash headlines. Fortescue metals is doubling its final dividends as for your profit more than tripled. The surgeon iron ore prices helped them Beat Estimates with more than 3 billion u. S. Record 6at a billion. Fortescue is the worlds fourthlargest iron ore exporter. Fell amid a few will glut in rising Competition Among refiners, 4. 5 billion in the six months until the end of june. It made 6 billion in that timeframe the year before. 51 ,ting profits slumped 2. 7 billion. Sinopec is the most exposed among the top three oil companies. A leading challenger to nike in china says the corner of chinese capacity used by global footwear brands are lying idle as top labels are forced out of the country. The International Chairman says the exodus is making factories offer discounts of at least 10 to companies such as his to use their dormant production lines. Factories are under enormous pressure. Lets have a look at the Chinese Markets heading into the lunch break. Have, anothere not quite asnday, pronounced as what we are seeing elsewhere. That the yuan is trading down. Thats the position as we had to lunch, shanghai ands engine. 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. This is serious. This is a very dramatic change in the bilateral relationship with profound impact on the global world order. If it is not serious, then why is he doing this . Theres a lot of confusion and it makes one wonder how they should be approaching the negotiations. We all understand why President Trump is doing this and theres a tremendous amount of support for his concerns, this is just not the way. What im hearing is that this is a turning point because they are so random, so large, and you combine that with a mandate to get out of china and it is not being received very well. There has to be a point between now and april where that sheng will work in favor of because trump will need to show up before the next election with the deal. That was our earlier guests weighing in on the sharp escalation of trade tensions. China has set a slightly higher level than expected in the wake of all of this. Our im live team says it is assigned the pboc isnt interested in adding fuel to the fire and will continue on slow, incremental changes. Lets bring in mark cranfield. Implied volatility will below the 2019 peak. But as you say, they are not interested in adding to this escalation. The pboc has been quite methodical ever since it went above seven a couple weeks ago, and today is different from fridays, which is a really strong signal that the pboc doesnt want to see theres enough being created from other factories and the pboc is trying to keep things steady, but having said that it is slightly surprising to see the onshore dollar is trading pretty high several points above where the fix was which is a little unusual. From the Trading Community, they dont see it, they obviously still think the path of the you and thel get weaker Trading Community sees at least one direction for the yuan. It is not one you look at normally, turkey against japan, but i want to look at high volatility with australia. The question is does this volatility stay for a while . Around it could grow. We have seen one month implied volatility jump, and the last time it happened in a big size like it is today was a december or january when equity markets had a big slump. Spike, but itity came down pretty fast afterwards, because markets started to reverse in Jerome Powell was calling everyone down. This time around it could be different. It could be the beginning of a move and equity, raising tensions between china and the u. S. , probably to a level weve never seen before. They have already been very volatile. This time around and may not receive as quickly as it has, and we may see it creep up quite a bit further. Theystorical standards, could move some distance and keep an eye on fx moves particularly. Lets ask the question of the what do we track as the trade war heats up . A lot of money going into bonds. It is hard to get away from bonds and u. S. Treasuries as a place people want to go to, even though Jerome Powell was fairly neutral in the way he spoke at jackson hole. People will still see lower Interest Rates. Bond just the u. S. Markets around the world will continue to be much in demand. Gold is obviously one of the previous cases, that is certainly there. Whether we see a rebound in commodities is the big question. They have really fallen a lot, and at some stage even the commodity market may look reasonable. Looking and bonds are shortterm. Thank you very much. Mark cranfield. You can follow more on this story on our markets live blog, on the bloomberg terminal. You can get a market rundown. Monetary analysis from our expert editors, find out how your money has been affected. The latest escalation in the trade war, moving these commodities, trading at a haven certainly in fashion. We have some of the details. Tell us about this complex in more detail. Thats right. Now,rk was saying just gold is really getting a lot of traveling further up from that six year high. Haven ands rushing to on the subject of corporate, it is very different. Copper is really starting to move away down from that 6000 level where it has been at for the past year. People were waiting to see what happened with the trade tensions, with any china stimulus. Obviously, the events of this weekend are not the kind of environment that copper will be rising in. You have headwinds to economic growth, but more serious than that, the threat of the global trade system. What about the big falls we have been seeing an iron ore, already in a bear market, falling nearly another 4 . Yeah. Iron ore has some slightly different dynamics. Iron ore went up very high through the earlier part of the year, because we had some very serious, classic commodities stories. Up to very high levels, and it is coming down as the shock eases. Dynamics he same at the same time you have this modest approach from beijing with regard to economic stimulus. They are not sending in the big guns of massive infrastructure spending, not yet much monetary easing. That is why iron ore is back down to where it was, january and february levels, despite all that supply taken out of the market. Thank you very much. Lets move things along with a look at whats happening with the first word news, as we get to beijing with selina wang. Thank you. Hong kong police are defending an officers decision to fire his god as the best option. Clashes with protesters escalated overnight. At a press briefing a few hours ago, police said the action was necessary, as protesters were charging them. Police say theyve arrested 36 people following the protests, including several violent clashes in the western new territory. Macau has chosen a pro China Business after a political process that featured no other candidate. He will be macaus third leader since the territory was handed back to china in 1999 after more than four centuries of rule by portugal. Unlike hong kong, this appointment because little public controversy, highlighting their week opposition movement. North korea has followed up a string of recent missile tests with what it says is a new super large multiple rocket. Casey in a says the latest tests were successful, kim jongun as saying it is a great weapon. President trump says he is not happy with continued weapons test, but that short range launches are not a violation of sanctions. He also expects to meet kim again soon. A Russian Rocket carrying a humanoid robot has failed to dock at the International Space station. The Russian Space agency says it was because of failures in the docking system. A second attempt will be made on tuesday. The unmanned spacecraft took off with the robot in the pilot seat. The robot has not been taught how to manually conduct docking. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im selina wang. This is bloomberg. All right. Coming up, india rolling out new steps to bolster slowing growth, but not everyone is that optimistic. Details are on the way. This is bloomberg. This is what we have with regard to india. Futures contracts are having an uplift this is the position with regards to that. We have a positive start that bucks the trend for the rest of. He asiapacific currently havens, itch for would seem that the indian rupee has not seen it. Just under five peso, thats currently what we have. The yield on the 10 year has been coming in, five basis points to the downside. Lets have a look at the latest business flash headlines. In worlds biggest banks what is said to be the worlds biggest ipo. The muchanticipated share sale the company has invited more than 20 Advisory Companies to visit its headquarters and compete for a role in the offering that could come as early as next year. Mastercard says it suffered a data leak in europe, telling regulators that it affected a large number of people mostly in germany. Rules require companies to tell hours. Within 72 the rules also allow them to oppose serious violations. Puk Guardian Newspaper says the treatment of its states in the gas project off the west coast. Reports say it is estimated more than 500 million usd and relates to almost 1. 5 billion in tax deductions. On markets in in the region. As we have been mentioning, it has been a very risk off session. The hang seng down about 2. 8 at the moment. As we have been talking, it does look like we are going to see some strength coming through in indias markets today. The sensex looks like we will open by about 1. 8 . This is exactly what we have heading towards and if we do get some positivity, it would be something given the losses that we saw. Nifty moving to the upside, 1. 6 . This is the position we find ourselves in, where acrosstheboard it is a sea of red. Another last time i checked, it was on the way up. 48 on the way down. Market which is off the lows of the day, 738 point moved to the downside, one of the worst days and months. Lets find out about Indian Markets in more detail, 15 seconds away from the start of the session. Our guest is standing by to take us through what to expect from the session. It is all down to this slew of measures announced on friday is that whats affecting the set up . Theres also been a lot of criticism here, too. Thats absolutely right. ,hile there is risk off trade bucking the trend could be india which will get for the domestic slewt and they announced a of measures to stimulate the demand, which has been weakening, and we have the opening rates on the screen, opening almost 120 points. Index, which is witnessing a lot of shocks, bounced back today up about 400 points of the opening session. The indian rupee will act as a bigger irritant because in the opening session it didnt cross that mark to the dollar. Weakened almost 4 10 of a percent and the biggest take away was the surcharge being levied on the community because we were seeing a lot coming into the Indian Markets. We can get that participation back, the measures include one of them drilling back a higher surcharge for investors. To see some green on the screen, because that is not what we are seeing across the other asian markets. , the get more from india Bloomberg Economy and policy reporter joins us now from mumbai with the details. Are the measures enough to boost growth from its five year low . These are shortterm palliatives, in response to waning business and Consumer Sentiment. They announced the withdrawal on havegn investment who pulled out and a frontloading a recapitalization and pushing government bonds to buy new vehicles. But the Auto Industry wanted more concessions and that didnt come. Struggling with falling consumption and investments, adding to the global headwinds and uncertainty. They are likely to stay away from investing given that they are hardly seeing any signs of revival. We will have gdp estimates for the Second Quarter of april and it is not expected to show much improvement. Run a government tried to tight fiscal shift. Will the onus now fall on the reserve bank . That,olutely correct on given that the fiscal levers are still pretty much tied, the onus will be on the r. B. I. To ease policy. It has already eased by 110 basis points and banks havent actually lowered their lending rates by more than 40 or 50 basis points. The government is trying to push the banks into lending more, but there is a bit of pushback from the banks. Theres a lot of problem with external benchmarking. Do ishese measures will it will help Consumer Sentiment and maybe market sentiment, but overall the r. B. I. Will have to continue to do the heavy lifting as far as to be leading the economy goes. Thank you. Lets get more on indias plans to revive growth. You. To see tell me about this is it too little, too late, or are they getting it right . I think they have begun to get it right. Of course we could have done with more. Growth needs support from fiscal and monetary stimulus, and to the extent possible, the government has begun to listen to the problems on the ground. Markets were slightly more positive in its reaction, that it means government has begun to listen to the problem of various sectors. The measures announced friday were clearly to see the down slide over the last four quarters. And june isapril likely to post even the lower number and that is what the estimate is. The government needed to do something quickly. The budget announcements were not affected positively at all and that is why the finance minister had to announce all these measures on friday with the promise of more to come. Removal,olio surcharge the recapitalization of the bank , and credit and fund issues for the medium and small enterprises, these are the two or three measures that could begin to bring in some growth multiplier. But as we said, the first half of our fiscal year has been pretty much washed away with slowing growth momentum, and how quickly we are able to recover between the october and march period, which typically doesnt have related demand picking up whichowth incentives, hopefully bring in some kind of a positive growth momentum. Addressing supply and demand factors, not really addressing the consumer threat and this is where we are seeing the pain. It is always the consumer. Unilevere boss of saying it is not taken for granted anymore. Quite right, and we have been highlighting this as well, that while supplies have begun to be addressed, what about demand . All the budget promises that were made of the cash transfers to the farmers in the Rural Economy dont need to get expedited. You put money into the hands of consumers and the supply side of measures will therefore render ineffective. It is very critical you boost throughn the economy allocation and execution of the expenditures that the government promised in the budget. We have both supply and demand working in tandem, growth will be difficult to come by in terms of the second half. The season starts between october and december, and that is going to be a very critical time for the government to dispute to the promised cash to the Rural Economy. It is going to be a bit of a disappointment because the measures will only be halfhearted and lopsided. Halfhearted and lopsided. This is a positive and obviously markets are seeing it as a positive but some analysts are saying it is short and we will need more stimulus from the r. B. I. What can the r. B. I. Do when we have this sharper than expected slowdown . I have a chart on the terminal weve seen quite a bit of contraction in the overall economy. Has think the central bank amply articulated that they need to support growth. Theyve already seen 110 basis points which has remained relatively weak, and recently the Central Banks moved to positive liquidity and the banking system. The lending rates should happen over a period of time, but from the policy side we believe that there is a growth estimate which was recently put out and looks a tad ambitious and given the High Frequency of indicators it would be said that r. B. I. Would see more room for 2540 basis point rate cuts. We believe that one such rate cut should begin through the next policy, because it is very critical and that is why there is still some headroom for monetary measures and it is more than welcome. Fiscal, we may have limited headroom, and stimulus may not but the choked funds in terms of supplyside measures, even if they alleviate those concerns, it should begin to address the down slide. Monetary stimulus up to 40 basis points alongside the finance ministers will hopefully announce the real estate sector and other sectors should together at least bring some respectability and the growth, at least in the second realm. We have to leave it there. The Group President and chief economist in mumbai. Plenty more ahead. This is bloomberg. We are back, having a look at what we are covering over the course of the day. Lets have a look at this. Andlso had a trade balance, we Business Climate survey, have the prospect of further deterioration, sentiment likely to play out and perhaps cement the prospect of germany going into a technical recession. Is quite a fluctuating data set. We are seeing asian stocks lower by 1. 5 . Hong kong stocks off the lows of. He day, now holding at levels bloomberg daybreak middle east is coming up next. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. 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