On 110 billion of product. The apple watch among products subject to the new levy. China responds with incremental duties on 75 billion of u. S. Goods. Official pmis for china show a Manufacturing Sector that is still in contraction. The u. S. The u. K. Labour party readies legislation to prevent a no deal brexit as Boris Johnson pledges billions in domestic spending when parliament returns tomorrow. Good morning. Welcome to bloomberg markets. Im looking at bones. We are seeing that actually the yield is coming back up. Investors are not as worried as you might have thought. Take a look at futures throughout europe. We do see when you look at the futures trade still some green dax futuresexample, are up. Ftse futures are up a third percent. Open,not, at least at the turning out to be a risk off day. The u. S. Has slapped tariffs on 110 billion dollars more in chinese imports. The 15 duty came into effect yesterday. Consumer goods ranged from textiles like the apple watch to Technology Like the apple watch. Chinaal pmi data out of saw decline in china. The unofficial gauge time manufacturing expansion. Despite the escalation in tariffs, u. S. President trump says talks are still on for this month. Pres. Trump we are talking to china. The meeting is still on. We will see what happens, but we cannot allow china to rip us off anymore as a country. We cannot allow china to take our million a year out of country. We cannot do that. Let me first ask you, with this increasing these increasing tariffs, we dont see a total riskoff sentiment. Do you think the trade war is priced in to equity markets the i think thell, current maneuvers have been priced in. The risks of increased. As we move the tariffs toward consumer goods, we have a concern that some of the manufacturing slowdown could shift into the Wider Consumer economy. There are many risks that are not priced in. Matt what is your expectation for an outcome . What a trade truce make you happier or a more aggressive investor . Or do you think this is something thats going to take longer, possibly passed the 2020 elections . Truce whaty a trade at the margin make us more aggressive as investors if it was a real truce and not just some agreement to talk. Tariffs are trade moving toward consumers, there is the economic risk. Is out of tariffs. We have seen the chinese response be varied measured very measured this point. And they started to have companies slow the ability of u. S. Companies to do business in china or if the u. S. Is more aggressive on some of the tech transfer, the conflict would morph beyond simply the tariff issue. Saw the yield curve inversion, of course. I want to draw your attention to this chart on the bloomberg, which also shows if you look at the collective drops in yields for u. S. 10 years, u. S. Two years, u. S. 30 years, they are the biggest drops we have seen since 2008, since the financial crisis. We are ahead of a potential recession in the u. S. . We dont think it means a recession is on the horizon in 2020. We would say the chance of recession is around 25 . Theret does show is that is no expectation for inflation. The global fall in yields is impacting the u. S. Markets as well. That is why we think it is a Good Environment to be in credit trades and to be looking for yield. Matt where would you find yield . Where is best place to look . In europe, we still like european Ig Investment grade where you have that ecb support. We also like u. S. Dollar denominated emergingmarket sovereign bonds where you get a yield pickup. Matt matt is that trade going to start looking crowded . It sounds like a great idea. Isnt everybody else doing that as well. Course, you could say as you just pointed out, these trades are crowded. Particularly given that the u. S. Economy is unlikely to ramp up from here, we had the taxcut stimulus work its way through, now we are seeing tariffs come through. See the pickup in Economic Growth that is going to let yields run away from us. Seen opportunities do we see opportunities for European Companies for this trade war . You would expect when the u. S. And china start slapping tariffs on each other that europe can take advantage of that. These multinationals seem to be very multinational. In they too interconnected order to benefit from the trade war . Europe is kind of caught in the middle because of that reliance they have on. Broadly speaking, we are underway in european equities versus the u. S. And versus japan. Europe has had a great run this year despite earnings expectations which are not as strong as the united states. Matt we are looking at big gains on equity indexes. Cac, so european stocks have done even the ftse mid in milan up amidst the italian turmoil. What about in asia . They obviously had a huge run. Chinese stocks were up here today. They are looking at not only the trade war, but the impact of hong kong. Wein our asian portfolios, would be overweight chinese stocks versus hong kong stock, where we are seeing slowing. A lot of the trade war is actually hitting chinas partners, the smaller economies like hong kong and singapore. They do not benefit from chinese stimulus. Equities but also the highyield in asia, we think the trade for yield pickup that investors moving to yield, that is not over yet. The question of hong kong, is it big enough to affect everything . It is not a giant economy. Does the hong kong situation affect the Global Economy . Seeing capital flight out of china. We are not seeing the Real Estate Market suffer. I think to the extent some connected to the broader tensions that are out there, its just one of the factors that ways on sentiment. We are looking through the sentiment, looking through the data like the slowing in manufacturing, and that is what we are making decisions on. Matt thanks very much for your insight thus far. Aboute to talk with you more. Manufacturing pmis drop throughout the morning. We will preview what to expect next. Remember, Bloomberg Radio is live on your mobile device or on dab Digital Radio in the london area. This is bloomberg. Matt matt welcome back to bloomberg markets. This is the european open. You can see ftse and dax futures are gaining. Ftse futures are up 0. 3 right now. We see the pound gain at the same time. Some real strength coming out of the u. K. Its labor day in the u. S. Close markets. Data galore out of europe this morning. We get manufacturing pmis from italy, france, germany, and the euro zone. Are these signs pointing to pain ahead for the eu economy . For the preview, dani burger. September 12, thats the date the ecb will decide policy. The reason these numbers are important is because it is the most uptodate data the central bank will have to decide on policy and adjust their forecast. E did get numbers last month preliminary numbers. We are likely to see the trend remain the same. That trend being ever so slight improvement. For france, which is in the yellow here, theyre manufacturing coming out of a contraction. Germany slightly better. These numbers still do not look good. We are not heading toward a recession yet, certainly. Because the business manufacturing sentiment is down, the ecbs is still likely to keep their plan or what is estimated by analysts as them cutting their weight, but not seeing anything major. Another reason is we have not yet seen manufacturing weakness spill into services yet. Euros a manufacturing we get euro zone manufacturing we get in just a few hours. Continues to be week. Services in the white not getting dragged down. Risks of contagion are still there and we might see todays numbers confirm that. Matt thanks very much for that. Dani burger looking at the pmis we are expecting to get out of the major european economy. Now lets get the bloomberg first word news. Good morning. Hurricane dorian has made landfall in the bahamas. The most powerful storm to come ashore anywhere in the atlantic. Feet. Surge could top 23 it may leave the island devastated for years. Dorian could hit florida, georgia, or the carolinas later this week. Or not make landfall at all. Police are patrolling hong kong subway stations after calls for more protests to disrupt the citys transport network and another weekend of clashes between demonstrators and police. Argentina has imposed capital control. It is a policy reversal aimed at containing the countrys financial crisis. Corporations will require centralbank authorization to buy dollars in the fx markets except in cases of international trade. President macri is trying to stem the crisis weeks ahead of president ial elections. May keep the boeing 737 max grounded into december according to dow jones. Boeingls have complained failed to answer questions. Toy report boeing will have resubmit documents on the proposed software changes. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Its getting harder to ignore the esg in the investment world, according to a report by the Global Sustainable investment alliance. Almost 31 trillion dollars is now held up in esg funds, up 34 from 2016 after the vast majority of evidence is showing Investment Companies that manage their environmental social and government issue does not negatively impact returns. The question is, can these stocks the first question is, can these stocks actually outperform nonesg stocks . We have found certainly you dont lose performance in an esg portfolio and in many cases you can do better because single equities can be derisk. Sincewho you have seen the financial crisis is what we have seen since the financial crisis is they can be punished by markets and regulators with huge fines. That is one aspect of what makes esd attractive. Esg attractive. Matt i pulled up british petroleum. We see in terms of governance, bp does not hold up to its peers. In terms of social issues and environmental issues, it holds up better than its peers. Be one of the biggest sinners should be an esg stock . How do you find them . You go right to the heart of the biggest debate around esg. What do you place your emphasis on . We have taken a simple approach, which is to let clients decide oft by providing that kind transparency to the data and allowing them to lineup their is cleans, whether it water, clean air, with their portfolios. Thinknly, thats were we this is going. When you talk about the growth of esg, this is coming from our clients. 60 of clients are telling us this is going to be the norm in the next 10 years. Another reason to invest in this is flows into the sector. Boomers are obviously us,ring or no longer with pulling their money out of markets. The millennials i feel like are trying to get their heads around who they want have a bought a car . To they feel like moving out of mom and dad yes yet . Dads yet . Millennials have a real affinity for sustainable investing. When you have 60 of your clients telling you it is going to be the norm over the longer term, it is a broadbased trend. Matt pleasure having you with us. Thanks for dropping by. We are minutes away from the open. We will take a look at your stocks to watch. Hurricane dorian batters the bahamas with winds up to 220 miles per hour. Matt wematt are six minutes away from the start of cash trading across europe. Stocks to watch. Dani burger looking at air france. Annemarie, what is the impact of dorian on munich re . Swiss re, hannover rueck, european insurers are once to watch. Dorian makes landfall. We are not sure what is going to happen in florida and the rest of the u. S. East coast. Says thirdquarter catastrophe budgets could be at 50 due to dorian. These are once to watch at the open. Matt what is the story with around town . German Real Estate Company, ppg is buying a 10 stake. Morning. 7 here this always interesting to watch german real estate stocks. What is the story with air france . The ground crew from klm is on strike today. That is likely to disrupt flights. Theyre going to strike at 8 00 a. M. For two hours. The airline and airport are signaling some issues there and some flights that may come under pressure. It is not just klm, but air france as well. Their share likely to be under pressure today. Thanks all of you for joining us. Viewers, you can get your latest stock stories by typing first go on the bloomberg terminal. You can also get first word news on your bloomberg mobile app. Coming up, the market open in just four minutes time. Futures are mixed today. Interest we have strong green arrows in the u. K. As the brexit wait continues to build. The open is next. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. In honor of my dad, who was alzheimers. I decided to make shirts for the walk with custom ink, and they just came out perfect. [announcer] check out our huge selection of Custom Apparel for every occasion. Youll even get free shipping. Get started today at customink. Com. Matt imminent away from the open of cash equity trade. For that we go to Annmarie Hordern. Annmarie lets stop start with the asiapacific. The tariffs kick in, as well as manufacturing data weakening. The csi 300 actually higher. Authorities saying they are going to provide ample liquidity. Also look at the pmi index. That showed trade war excavation escalation underlying fears of growth. 61 ony as she goes, 121. The handle. Ftse 100 is to the upside, 3 10 of a percent. The dax relatively unchanged. Cac 40 in the red. Mixed futures ahead of the european open. He are in the red and equity markets are shut for labor day. 8 00 in london. We have the markets opening up. Ftse 100 opening to the upside. Its going to be a big week for the u. K. , determine the fate of Boris Johnson and brexit itself. Euro stoxx 50 relatively unchanged this morning, a little bit to the downside. The foreignexchange, stronger bloomberg dollar index, straight slightly stronger pound. The ibex opening up relatively flat, as well as tech run. The ftse up 2 10 of a percent. We could see more impact tomorrow in the markets when u. S. Comes back online after the labor day weekend. This is the sector picture. We are seeing a lot of green on the screen. One thing is the financials. Its the insurers. Swiss, theyout the could be hit as the hurricane hits. 50 of Third Quarter catastrophe budgets are on on european insurers could be hit. We are seeing some red there and i wonder if its the luxury companies. They are not going to be hit just from the trade war, but the hong kong protest and weaker manufacturing data out of china. Matt absolutely. A lot of headwinds. No pun intended. The Hurricane Dorian apparently right now crawling over the eye of the hurricane, westward over grand bahama island. Updated onyou everything that has to do with doreen and the destruction in dorian and the destruction in its path. One green arrow story in turkey, the economy grew 1. 2 in the Second Quarter from the previous quarter. The estimate was 0. 4 . The turkish economy is growing much faster than had been anticipated. Dollarld see the u. S. Priced in. The turkish lira is getting stronger. It continues to look like cutting rates in the face of soaring inflation was, at least for now, the right move for both the strength of the currency and the strength of growth in gdp. Now lets get to european markets, just opening up. Getting,ing 434 stocks 153 stocks down. The breadth is widely to the upside this morning. We are seeing astrazeneca, diageo, and esther greg leading the charge here. Asml is a gainer, as well as roche holding. Take a look at the downside. Novartis is a loser, down 1 . That drags the most points over any other start. Sap and wirecard are falling, as well. European markets are opening higher. Thats after the u. S. Imposes tariffs on 110 billion of chinese imports yesterday, beijing beginning its first stage of retaliation, as well, on 75 billion. Hitting farmers very hard. Joining us is simon french, chief economist at penn mayor gordon. Let me first ask you about your take on the trade war. Tariffsseen the titfortat as it stands now, priced into markets . Fully i dont think were priced in because its a brave investor that knows what escalation we get after thanksgiving is over and the u. S. President looking more strategically at that relationship rather than just the impact on u. S. Consumers. I think there is still far more to run in this, but i think markets this morning is very much on the basis of a decent print out of china on the pmi, suggesting the Stimulus Program is managing to lean against trade war concerns. Matt have we seen any sign that European Companies have been able to take advantage of this . From a simplistic perspective, you see these tariffs going back and forth in the u. S. And china, europe is a big export economy. Are they able to give the chinese or u. S. Economies things that they will now have to pay more for if they order them from each other . Simon i dont think its a simplistic question at all. I think its a good question. What youre alluding to is that the enemy of your enemy may be your friend when it comes to trade conflict. And we have seen, over the last six to nine months worth of data from exports to china, the deterioration and quantity from the u. S. Is much greater than the euro zone. Is weak,de generally it appears theres more diminished impact on the euro zone economy with trade with china. So yes, if we see the upswing, i expect the euro zone to be the higher beater than the u. S. , given underlying concern going forward. Matt what do you think about im going to pull up this chart ive been looking at a lot, six ash 6930 on the bloomberg 6930 on the bloomberg. Three year yields, 10year yields, and 30 year yields on a monthly basis. You can see the big drops means august was the biggest drop for yields in the u. S. Treasury market since 2008. War,ly due to the trade but is this signaling that we are looking at another crisis to come . Simon not for me. I actually thought the u. S. Treasuries looked out of kilter with the rest of the world. If you look at the real yields available in japan, euro zone, the u. K. , in most develop markets, he find they were negative. The u. S. Last year, heading into this year, was the aberration. It was the outlier. The readtnt overstate across from contractions in yields straight to an economic downturn. Ivef the big criticisms had about lazy analysis, it doesnt take into account businesses and households across the world have pulled back considerably since december. That should be stimulative. There are trade war concerns, but lets not lose sight that financing conditions are not easy for most agents in the economy. Me ask you a quick one on hong kong. Its been an incredible protest to watch over these last three, three and a half months now. Clearly its a huge equity market, the fourth biggest equity market, the hub for asia, but not a huge economy. The mliv question of the day, how does hong kong impact the Global Outlook . Is it important enough to sway the Global Outlook, or is it still too small in the face of the giant trade war . Simon this is a really good example of something that is not, in and of itself, macro significant. You rightly point out the hong kong economy is not macro significant enough, but it is often with these geopolitical events, what it tells you about the read across into other relationships. How bullish will china be with systemsg over the two that are currently in place . Will that tell you how bullish, how aggressive they will be in the trade conflicts with the u. S. , which is macro significant . That is the relevance of the hong kong issue and how it may translate into macro significant issues. Matt all right, simon, youre going to stick with us. We have a lot to talk about. Its not just the trade war, although that will touch everything. Up next, we bring you the stocks on the move, including around town. We talked about the driven Real Estate Company a few minutes ago. It is gaining after plg takes estate and starts merger talks. We also cover more of what the trade means for europe, what brexit means for europe, and what problems are facing the european economy. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open, 12 minutes into the session. Green arrows across indexes. Not huge gains on the continent, and the core at least. You do see the ftse mid,. 5 . 16 year to date. Outperforming in italy. All of the other European Indexes across the euro zone and into the u. K. A slew of numbers are due out of europe this morning. Spanish manufacturing pmi is going to dropht now. Then we get data from italy, as well. France and germany follow. Markets are watching carefully for read through, weaker data could have for ecb policy easing. Its not like we dont expect them to ease already. The question is how much and how. We are looking for signs of the global trade war pain showing through in europe. , if you listen to mario draghi or european leaders, youve got to think thats happened in a big way. Simon is still with us. What do you expect from the ecb . And clearly, mario draghi into christine lagarde, is going to blame the Trump Trade War for the biggest headwinds on the european economy . Simon yes, they are, and it appears from Christine Lagardes comments that theres going to be continuity, which will provide some level of insurance in terms of investors pricing in further easing package from the ecb. Pmis,s of this weeks what is key for the ecbs is to see whether the week is in the Manufacturing Sector, which is largely due to trade war concerns, but not exclusively, there are specific issues, whether that is spreading into the services sector, which across all european economies, is the largest a of output growth. And its that contagion that will spill over into jobs, which is the key concern perhaps to the degree of ammunition that needs to be deployed to address this slowdown. Matt we definitely saw the w ltp Test Procedure that came into last year, affecting the Auto Industry in a big way. Thats been the biggest problem. Im sure that schultz and alton meyer would also reference the trade war as a headwind. In jobs are Still Holding up a big white. Is that the case across the euro zone . The Unemployment Rate is still very low. Simon correct. We need to be conscious, unemployment is a lacked indicator. It doesnt give us a timely signal of the health of the economy, which is why it needs to be seen in the context of pmis. But youre right to say that the spillover into jobs, into services, into what is for most of the euro zone economies, 70 of output. And you look at the german Auto Industry, 13 of german output and therefore a much smaller issue. But it is the spillover that leads to reversal, principally in Business Investment and eventually into hiring. It will be the principal concern for the ecb and they dont want to be behind the curve in terms of trying to support a jobs market that has held up incredibly well over the euro zone in recent months. Matt i want to bring up a spanish pmi number, 38. 8, still a contraction, still a pretty awful number for spanish manufacturing pmis. It was for 38. 5, so they are doing better than the economists expected on average. Ill draw your attention to this chart, which dani was using, holding up fairly well. But the manufacturing pmi has really cratered. I wonder what you think the ecb can do about it. Cutting rates to a more negative level doesnt seem like it would move the needle too much, at least from the people we speak with on a daily basis. Back,inging the program unless you go to to corporates or consumers and throw out helicopter money, i cant imagine how it will move the needle otherwise. I think youre absolutely right, and one of the challenges for the lagarde administration over the draghi administration, everyone knows how draghi edits his statements at the Committee Press conferences. He says we need to continue Structural Reforms and consider what fiscal response can be done to stop Monetary Policy being the only game in town. Its that ability to influence fiscal policy, and germany that will define the first year or two, i suspect, of her tenure and there in lies the incredible tech away from the ecb. If it can simultaneously provide a stimulus package over the nearterm, but show it isnt just easy words, but limited action on the fiscal side, which if youre going to be hypercritical of the draghi era, has been a lot of talk but not a lot of delivery. From his partners. Yourelright, simon, going to stick with us. Simon talks to us when we come back from brexit. Sure,han 60 days now, for until halloween night. The halloween night event. Lets get to top stock stories now. , for that we go back to Annmarie Hordern in london. Annmarie i want to start with one thats close to you in berlin, germany, nearly 2 this morning. Stake in ang a 9. 99 larger german real estate revel rival and starting to combine the two businesses. Adecco to the upside. It was updated tamper form from neutral. Marks and spencer down to the downside, also off of ratings, Goldman Sachs reinstating the company, a sell rating now. They say the joint venture is complete, but little impact on the cash flow. Matt . Matt thanks for that. Up next, buckle up. The week is shaping up to be one of the most significant and recent political kurdish history. Its crunch british history. Time. Runch we look at the risk as Boris Johnsons opponents try to stop a no deal brexit. This is bloomberg. Matt welcome that to bloomberg markets. This is the european open, matt miller in berlin. We are still seeing equity indexes climb on this labor day holiday. At least, its labor day in the u. S. Right now. You wont see those indexes open until tomorrow. But we do see gains in europe today. Set to be an eventful week as u. K. Lawmakers return to parliament. Boris johnson faces pressure from the labour party, which presents deal. Boris johnson has suspended parliament until september 12. They will meet tomorrow until then. Simon french is still with us. What do you think about the odds of a hard exit now heart brexit now . Simon rising. I have been reluctant to try to put a quantification on that, for the simple reason it gives an impression that we can quantify such things. There are a lot of feedback loops that occur in u. K. Politics that mean trying to ascribe a 30 have is 50 probability 3050 probability gives the impression you can beat this probability. Since the Johnson Administration has come into office, the likelihood has increased materially. Matt i was able to get my hands on your latest research this morning. I thought it was interesting you kick it off with an estimate the u. K. Equity market is at a 25 discount to what it could have been without these brexit headwinds. How do you come to that level . How much of a bounceback do you expect if we get a smoother transition than is likely with a heart brexit . Hard brexit . Xit simon if you look at the u. K. Equity market, its an open, integrated market. Lots of Companies Sell revenue. Normally, it rewrites nd rates in tandem with the global markets. But after the brexit referendum, it began to d rate while the rest rerate it. And those jaws are equivalent to 25 . If thes the opportunity, u. K. Economy goes through brexit and suddenly investors go i see a pathway here to more stable governance, and im going to take off my underweight that for twon inexistence or three years on valuation grounds. Matt are there places you think have been hit exceptionally hard . Thats an average, right . If you look at supermarkets or banks or minors, are there some that you think have been hit too hard . Simon absolutely right. We looked at three parts of the equity markets. The consumer space, consumer discretionary. Uncertainty on how consumers will respond in terms of which growth. Implement picture means consumer stocks have been sold off. Theres a bigger disparity between global stocks and consumer stocks. Some of the concerns of political unrest will lead to a labor government that might look to nationalize. Some of the u. K. Space has led to a discount emerging there. The third part is the financials. I wouldnt say the discount on banks. Low,ugh the valuation is thats in tandem with the banking sector. Its more on the real estate side and global lending site, whether big gaps emerged between u. K. Companies and global companies. Those are the subsectors that represent the biggest opportunity right now. Matt great to get time with you. Hes the chief economist. Im going to speak with him later on and a half hour at 9 00 on Bloomberg Radio. To infer that. Tune in for that. Rising,verything is with the exception of real estate today. It is a risk on session. This is bloomberg. Matt 30 minutes into the trading day. Stormy relations. The u. S. Hits china with tariffs on china response with incremental duties on u. S. Goods. And official chinese pmis show Manufacturing Sector that is still in contraction. Plus, hong kong is hitting up. City officials dont rule out an emergency law is the weekend season some of the worst violence since the unrest again. Began. Welcome to bloomberg markets. This is the european open. Im matt miller in berlin. Lets look at how things are shaping up in the equity indexes across europe. The stoxx 600, we see 422 gainers, 162 losers its very much to the upside. Were also seeing equity indexes rise. In terms of Companies Adding to the most, you can see astrazeneca, diageo, and linda in the top three spots. Loreal are adding considerable points. On the downside, novartis, hsbc, and sap taking the most points off the stoxx 600, but not enough to turn the index around. We are seeing the broader European Index rise more than one point. Lets get bloomberg first word news with leanne garins in london. Good morning. Hurricane dorian has made landfall in the bahamas. The most powerful storm to come ashore in the atlantic. It brought 185 mile per hour wins and storm surge that could top 23 feet. The island may be devastated for years. It could hit florida, georgia, for the carolinas, or not make landfall at all. Ruledmany, Angela Merkel the euro skeptical tentative did did not makeative the poor showing by political partner may push her to leave the government. Italy plans to present a new government by wednesday. Together a newd ruling coalition. Markets were unsettled friday when luigi dimaio threatened early election when demands arent met. Global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Matt . Much. Thanks very leanne garins with your first word news. China has shrugged off as the tribes latest trade war shrugged off President Trumps latest trade war negotiation. Meanwhile, hong kong is reeling from another weekend of violent protests that disrupted the airports and train lines. Joining us is Derek Wallbank in singapore. And yvonne man is in hong kong. Derek, chinese stocks rallied. Why were investors optimistic . Think there has been a lot of happy talk that has gone on recently. One of the things you get is the idea there is not a furious escalation. Youre not going to escalate into contagion. All of that is seen as a good sign. This wasnt as bad as it could have been. Although if you look at currency markets, you saw some of this trade implementation of these tariffs were not priced in. There was some movement there, not as bad as probably could be. Matt now yvonne, lets go to you. What is the latest in hong kong . Whats the latest as far as the emergency law that could go into effect . Heard ight, where we well we heard from the number two, saying the will not oppose the emergency law. It goes back to the colonial era, which makes it easier for police to contain protesters, whether easier arrest, deportation, censorship, as well as property seizures. That hasnt been ruled out as we saw on other violent weekend, where tens of thousands of protesters took to the streets with running ballot battles with police. They stayed inside some of these train stations. They block traffic. A third of the subway stations were damaged. Teargas. Demonstrators set fires up through barricades at several parts of the city. No let up insight. Were seeing afternoon rallies, which students have decided to boycott the first day of school and come out for afternoon rallies. Some of them are still in uniform, to identify themselves as students. They are saying they are not giving up the fight after this point. Matt derek, what are we expecting in terms of talks . Theyre still on, although it seems the administrations are hitting themselves back and forth on titfortat tariffs. Derek this is more uncertainty i like to say on your program. But we dont know when the talks are going to be. We dont know who is going to be in the talks, and we dont know what they are going to accomplish. Other than that, were doing great. Theres a certain amount of clarity to come in terms of what these talks will be about, or if they are just been about getting on the same page. The big deadline is summer 15th. Thats when more december 15. Thats when more of these tariffs are set to take effect. Ill give you another date to watch for, october 1, when existing tariffs ratchet up five percentage points. That was put on by President Trump in the tweet. It came out of nowhere when he tweeted it out. If it came by tweet, it could go by tweet. Im going to say thats a big thing to watch for going forward. Matt but a lot of uncertainty is the bottom line there for foreign investors. Inek wallbank, Senior Editor europe. And yvonne man in hong kong. Bahamas,tters the record strength wins, alltime record straight strength of wins devastate the islands. Florida isnt out of the woods yet. Were going to talk hurricanes next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open, 40 minutes into the trading day, looking at strong gains, certainly in milan. You can see the italian index up nine tens of 1 , the ftse 100 in london up 6 10 of 1 . Lets get over to continue our coverage of Hurricane Dorian. It has crashed into the short in the bahamas, tied as the most powerful storm to hit land anywhere in the atlantic. Florida is not out of the woods yet. Henry hordern is here with the details Annmarie Hordern is here with the details. Annmarie its absolutely devastating. Catastrophic storm is likely occurring and the National Hurricane center called it a lifethreatening streets which in. Florida is not out of the woods yet. You can see where we are in the eye of the storm over the bahamas. Were unsure whether its going to make landfall in florida or further up the coast or not make landfall at all. Fort the state waits, lauderdale airport is closing at noon and them editorial evacuation has been made, including President Trumps maralago resort. Drivers filled up tanks ahead of the storm. 36 of gas stations in the miami fort lauderdale, and 33 in the West Palm Beach area are out gasoline. This is according to gas buddy. Flow florida has an unusual supply situation. The state is largely cut off from supply. Im also watching bonds tied to weather risk. Each offer above market yields in terms of the principal could be wiped out by a major disaster. The index struck a tenths of a percent, the biggest since early december. You can see the impacts we had on past hurricanes, including yvonne, katrina, irene, and florence. We havent seen the moves quite as drastic as the others. We have to keep an eye on because progress, especially as this hurricane is touted as the most powerful storm to come ashore in the atlantic ever. Matt absolutely. It hit off the coast of the bahamas with the winds up to 220 miles per hour, 354 kilometers per hour. Massive and destructive winds from this Hurricane Dorian category five storm. Lets get to argentina. The currency crisis there is deepening. They are imposing currency controls as it teeters on the brink of default. The centralbank will set a deadline to repatriate foreign currency. They also said institutions will need authorization to sell into the Foreign Exchange market. The imf called it Capital Management and pledged to work closely with buenos aires. Joining us to discuss further, justin carrigan. Justin,obviously obviously its huge to see capital controls. They talked about dismantling it when they took office. Why the reversal now and policy . Is it too big to bear . Justin thats right. They have been very much the champion of a more liberal economy. He was the man who dragged argentina away from the old capital control regime of years instituted a much more liberal economy. We access to capital markets, ago,ear bonds, a few years heavily oversubscribed. Here we are really down to the barebones in terms of finances. After last weeks attempt, or started attempt to reprofile the countrys debt, is now introduced these controls to really keep hold of the foreign cash they fear is going to flow out of the country. Matt when we talk about teetering on the brink of default, i know some would call this the default when you try and change the covenants for your bonds, or move them out further. What is the official definition and how close are they . Justin the official definition is when he simply dont pay an Interest Payment or principal on the debt thats owing. But if you approach her creditors and say can we have longer to pay this back . Can we lengthen the maturities . Can we change underlying conditions on a voluntary basis . Thats the friendly first step. The question then is to what extent people except that approach. If they dont like it, it becomes a more contentious and difficult situation. Were not at that stage yet, but were at the early stages. Matt boris called this an elective default. Thanks for your time and reporting on this crisis, managing editor justin carrigan. Its m a monday, so we want to look at the details dropping markets in europe. Joining us is sarah syed. Sarah is with me in berlin. Emerging in pes looking for capital . Sarah we saw the largest region of equity firm announced the intention to float this morning. We are seeing a trend emerge. We have private equity firms looking to sell stakes to increase strengthen balance sheet. They are one of the first in europe in over two decades that has defied the list on the stocks exchange. Matt talk to us about what that is. One is an anchor investor in the eq to, and this is one of the reasons eq has decided list versus selling quickly. They started very humbly as a small equity firm, focused on the nordic regions. They now manage over 60 billion in asset management. Thats two or three decades later, theyve grown significantly, invested across infrastructure, real estate, venture, and private equity. Matt they sold a big state, 23 . So will big state, and other investors in the firm. Matt what about the possibility of other pe firms following suit . Could we see them ipo . Sarah im excited to see what happens on the back of eqt. If its successful, we could see potential other private equity firms. There are requirements. You have to be diversified. It wont go down so well with investors. It could bere eqt, successful. There are a handful of firms in europe that could be potential contentious contenders for listings. Matt its a really exciting story when you look at the history of the wall and brings and the market, and the fact you could see more. Andh syed talking about eqt ipo. If you want more news, just type m a go on your terminal. Im going to give you more manufacturing pmis. We get them rolling out through the morning. We have italys manufacturing pmi, 4. 7, still a contraction, a deeper contraction. The forecast is for 48. 5. Were seeing a continuation of what we saw earlier in the manufacturing pmi, comes out a little bit better than expected right now. Were seeing that for italy, rising to 40 put seven from 40 apron five. We see big gains in the italian ftse mib, up 7 10 of 1 . 17 ,are year to date up doing better than, with the exception of the swiss market and rts, every other European Index. Were going to wrap up the data out of europe so far and look ahead to this months ecb meeting. When we come back, what will these week at manufacturing draghi in for mario frankfurt next thursday . This is bloomberg. Matt welcome back to bloomberg markets, this is the european open. Looking at decent gains across europe, with a 10 gain in the ftse mid. Is a look at what you should be watching, data galore. Weve already had pmis from spain and italy. But were going to get germany and the composite years on numbers euros on numbers. To make to wednesday, more numbers out of europe. What impacts have persistent brexit uncertainty have on the reading. On thursday, we wait for factory orders to wait how deep the european n the equity engine. Theres Rate Decision from russia central bank, and its the last u. S. Nonfarm jobs data week. The fed data this here with us to analyze the data is bloombergs mliv richard jones. Richard, lets talk first of all what markets are going to be looking for from pmis. Numbers,couple of theyve each beaten the survey, but are still deep in contraction at 48 and change. Richard i think everybody looks to the german number for confirmation of the flesh number. German manufacturing is in the doldrums. Until germany can reignite that quote, its not going to be a good thing going forward. Matt we were talking about this andier with seven french, simon french, and it is the trade war that you hear european officials and german officials blame for the slowdown. Is that fair . Richard i think it is fair. The european numbers would be a lot better. It is weighing on the german economy, a Global Economy. If we didnt have the trade war, things would be better. Handlem seeing a 1. 09 on the euro for the first time in a while. As wehe currency weaken get this bad data out . Do investors flee to the yen, to the dollar, to the frank, instead of the euro . Richard that has been a contributing factor. They have really weighed on the euro in recent times. Meet,when we see the ecb i think next thursday in frankfurt, what do you expect draghis response to the slowdown to be . Richard i think the market is pricing some easing. I also think mario draghi will probably not deliver anything qe wise, but will set it up for the coming months. This is the beginning of the easing cycle for other special banks other Central Banks. Matt weve just gotten the german pmis, manufacturing pmis, 43. 5. And the preliminary was 43. 6. So its even worse than had been anticipated. You can see the eurodollar moving down a little bit deeper. Weve seen a turnaround in a number of other indicators. The pound, the cable rate is down, as well. As we get into this week in brexit, to switch gears, do you see more weakness on the pound . Richard i think the pound will sharpen focus. I think you will get the pound trading sharper, but also more pressure on the bank of england to do what other Central Banks are doing, easing policy. Matt thank you very much. Richard jones, you can see the work of him and his colleagues from typing mliv on the terminal. Thats it with bloomberg television. Up next, its surveillance with francine lacqua. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Go live. U. S. Hits china. The apple watch are affected. Big week for brexit. The fate of the u. K. s exit and Boris Johnson hanging in the balance. Hong kong Officials Say they will rule out an emergency law after another weekend of violent protests. Good morning. Bloomberg surveillance. Welcome to i am francine lacqua