Transcripts For BLOOMBERG Bloomberg Surveillance 20240714

Todayreasuries are posted closed today because of labor day. If you are americans watching us, happy labor day. This is the picture for eurodollar. 1. 09. Have the german figure a short while ago that was worse than expected. The european stoxx 600 gaining but it is all about the trade war. Up, we speak to the chief economist at 10 00 a. M. London time. Lets get to first word news. It is Sebastian Salek. It forced 185 mileperhour winds and could top 23 feet. It may leave the islands devastated. Uncertain if dorian could hit makeda on my or not landfall at all. Argentina has imposed capital control. Corporations will require centralbank authorization to buy dollars in the fx market fx market. The president is trying to stem the growing economic crisis eight weeks ahead of president ial elections. Thelor Angela Merkel euro skeptic alternative to germany did not make a breakthrough in local elections. The result may save prices in berlin. Saudi arabia is putting its portfolio into two ministries. It will lose oversights of industry and mining. The news comes as oil trade comes below the breakeven level. The u. K. Parliament is ramping up for stand up standoff over brexit. Boris johnson will ask his party if they will want this want to side with Jeremy Corbyn. Italys Prime Minister says he plans to prevent a new government by wednesday. He speaks to hold together a new coalition. Five star leaders threatened early elections if his demands were not met. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. Im Sebastian Salek. This is bloomberg. Francine u. S. Has slacked tariffs on chinese imports. The 15 uptick came in yesterday and hit consumer goods. Escalation, President Trump says talks are going to still happen this month. We are going to talk to china, the meeting is to long. We will see what happens. We cannot allow china to rip us off anymore. We cannot allow china to take 500 million a year out of our country. We cant do that. Francine joining me now is michelle. Where does the latest we can in tariffs leave us . Your guess is as good as anyones. It is all up in the air after this past weekend titfortat. They went back and forth and President Trump did say the september talks are still long. We have yet to hear any confirmation. We are as uncertain as ever. The response on either side has become increasingly murky. President trump loves to be unpredictable. He met his match on the chinese side where they are trying to muddle through when and how much china response. We will see some more information on whether those talks will proceed but you saw a very interesting tact by the Chinese State media in response to the tariffs and their appeals to the u. S. Consumer. These tears hitting things like apparel and tech gadgets that are hitting a lot more closer to home. China knows and playing the long game they can target the u. S. Consumer to target trump. Francine the Trump Administration has concerns about the trade war hurting the economy could what are you looking for in terms of part of the economy where it could really hurt . Michelle globally we are watching things like the pmis. You mentioned the data out of asia not looking good. We know what is happening on the business side. We heard the Community Talk about the strategy they havent passed along the Cost Increases to the consumer. You havent seen labor market suffer. That is where some of the focus is right now especially on the u. S. Consumer. We stare down this potential downturn. We are starting to see cracks. The university of Michigan Survey was an example you so one in three consumers respond that the tariffs were becoming a negative actor in their sentiment. That was a real seachange. We saw the michigan report turned down the expert tatian for Current Conditions the expectation for Current Conditions. Policymakers have been talking about yes, it hurt business. It hasnt impacted the labor market or lead to mass firings. That could change. We will be watching the labor market developments. Francine michelle, thank you for the update. Joining us is peter dixon. Peter, i feel like we have had this conversation every two weeks. When do we know whether we can find a deal . Or if this is a projected trade war . Peter cook i dont think peter i dont think trump once a deal. This kind of rhetoric plays well with his base. 2020 he islection in making sure he can hike up the rhetoric without killing the economy. That is a dangerous game to play. Us f francine does the trump partistration is this of his campaigning for 2020 . Does he find a deal before the president ial election because hes the guy that knows how to do deals . Says heasically he continues to push down hard on the chinese. Then he will whip out the great because that is my reading of the situation. Mean . Ne what does it do you buy gold . Peter why not. I think that is going to continue for a while longer. Equities, investors are still there. They think they are getting dividend deals. Concern,e bit more little more fear in the market and you can see a bigger selloff. Francine what happens to yen . If there are no talks between the u. S. And china, for now they are so long. Our markets already pricing that in . Our markets already pricing that in . Peter it is going to take a while. A general drift. It is not something that is going to happen immediately. Marketstinue to press on a gentle basis. If you look back over the course of a couple of months, weve come in off a long way. Francine what does it mean for equities . You look at apple, tim cook went to see President Trump and cooled off because he said samsung will have it have an unfair disadvantage. Peter if you look at what has been happening to the banks over the past 12 months, they have went up and gone down. The line is flat. At the moment, we are at the stage where investors are looking at the likes of apple. They think it is terrifying, the downturn. They also look at the fundamentals of apple. That could be profitable and tech again . That is the tech. Could be bad news. Francine peter, thank you so much. He stays with us. Up next, we are live in hong kong after weekend of protests. It was the 13th straight weekend of unrest. Details are next. This is bloomberg. Francine economics, finance, politics, this is bloomberg surveillance. The Hong Kong Government will not rule out improving approving emergency law. The protests are becoming increasingly violence as it stretches into four months. Demonstrators clashing leaving 63 people arrested. Lets get out to the place where another rally is taking place. Are we getting more and more of these protests and are they trying to hit the economy . Right. We have seen after another violent weekend that more these strikes and rallies. We are staying here for the afternoon rally of students, about a couple hundred or so, to mark the first day of school. Thing. Really a we saw a right police at the School Entrance us because there were concerns there might be clashes between the student protesters and maybe even children of police officers. We are starting to see this come forward here. After what we saw was one of the most chaotic weekends we have seen now that these movements have gone on for 13 straight weekends where protesters have these running battles with riot Police Inside the stations where they were vandalized, pepper sprayed and even the airport was disrupted with several hundred flights delayed. Francine ivanka, it is also the first day for backtoschool year. Hows that likely to affect the situation . Yvonne . Yvonne they are hoping when School Starts this will start to fizzle out. The premise of this rally for the students to not give up. They are telling them to not give up. Despite what we heard from the government here, not ruling out the use of this emergency law which can make it easier to make arrests, for censorship, as well as different type of property seizures. At this point the student say those are scare tactics that are not going to deter them from coming to these rallies. You are seeing very big extremes here. Francine thank you very much. Yvonne man with updates from hong kong. Still with us, peter dixon. Policy and trade war and the hong kong protests. His hong kong protests at the top . Is hong kong protests at the top . Peter we start to get the chinese becoming much more heavy. That is a different ballgame. At the moment, it is geopolitical. I think for the world at large it is something they are keeping a watchful eye on. Francine does it change the Economic Outlook for the world . Peter i dont think so. It depends on the extent to which the u. S. Ratchets up the sanctions against china. War. T the trade that could be a catalyst. Francine when you look at Central Banks, their main concern which is the markets that they misread geopolitics or is it Something Else . Really, think it is several banks are consumed by the fundamentals. It is growth, it is inflation. Cases, in certain Central Banks on the sidelines even though they are going to be the focus of attention for the markets. They have to take a step back and say a way to deal francine if you have one scription for such a banks for Central Banks, is it what . Make a get worse so fiscal policy has to take over . Peter the general reaction is dont do things that will make things worse. Dont give markets false hope. Doing iswill end up send the markets into the stratosphere. Strategy for Central Banks is to do no harm. The ecb is likely to come in with some sort of monetary easing. Francine is there anything they rates mitigate mitigate negative rates . Peter negative rates are not good news for the european banking sector. Cutting Interest Rates isnt going to make this any better. It might offset some of the worst of the pain. , what central what wehave to stop, is are doing the right way to go . Mandates. They have do they ignore the mandates . Peter the mandate is inflation. Not suffering from deflation in the euro zone. A Central Metric is to look at the inflation in the gdp per target. And the gdp target. Rates insideerest is zero inside zero. Interest rates to me are way too low compared to where there economy really is. Francine which is what . It is a policy mistake. Peter you could say that. Saying inflation this month, inflation xmas. Whatever. Without stepping back, the economy is not where it was. Francine peter, thank you so much. We get the latest on Hurricane Dorian as it batters the bahamas. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua. U. S. Equity and bond markers are closed today for the labor day market day labor day holiday. In the meantime, dorian has crashed into the shores of the bahamas. Florida the devastation is really mounting in the bahamas from dorian, 185 mileperhour winds. Catastrophic storm surge flooding is likely occurring on grand bahama islands. Florida is not out of the woods yet. Fluctuations in weather patterns means dorian could hit florida a further up the coast in georgia or the carolinas later this week or not make landfall at all. Fort lauderdales airport is closing at noon today. Now, florida fuel supply have drained this week. Drivers are fueling up. It is labor day. As of now, about 36 of gas in miami Fort Lauderdale are without gas. That is according to retail tracker. You can track the gasoline in real time. Florida has a very unusual situation. It relies on chips to bring most of its on ships to bring most of its fuel. Weekly the last thing i am watching our bonds. I am watching our bonds. These are all the other hurricanes for the past so keep an eye on them on how this could affect them. Francine thank you so much, annmarie hordern. Up next, Boris Johnson. The parliament returns, we will preview the crucial weeks for exit and for pound. 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. 110 billion in products, apple watch is affected. The fate of the uks exit from the eu and Boris Johnson hang in the balance. After another weekend of violent protest Hong Kong Police and radical behavior they report more than 1100 arrests since june. Good afternoon if youre watching from asia. This is interesting in the context of brexit. The pmi falling to 47. 4. Anything below 50 is a contraction. They were already expecting contraction at 48. 4. Now, lets focus on brexit. The weeks that could determine when and how the u. K. Leaves the European Union are about to in an interview, the Prime Minister says colleagues has to choose have to choose between his vision and Jeremy Corbyns takeover. Lets speak to terrazas rafael. Thank you for sticking around and welcome to the program. The concern is it is unclear whether he will go the full mile and give us a nodal brexit. I think Boris Johnson would like to meet on its terms. That is highly unlikely now given the redline that Boris Johnson has set. It is clear that the administration have to leave on october 31. His own political future in the future of the entire breast the tears rest on that deadline he is endears setting up to scapegoats. Itself, whoament will get the blame if they do not allow him to negotiate with eu. The other is the European Union. That is what we are seeing, johnson preparing the ground for notlection saying, if im allowed to press my case with European Union, this is what i am going to say. Francine the exit will be after a nodal brexit . No deal brexit . For johnson it would be a new deal brexit. Itll make a threat like that unless you are preparing for an early election. It seems to me that the administration is keeping a lot of options open including an early election. Dealine a possible no inglot . No deal being blocked. It is a very occult route to get legislation to the house. Then on the statute books in time. As you said, what we have never n up to now francine peter, this is an exciting week for brexit. You dont believe that a no deal will happen . We will not be a no deal brexit. The threat of legislating mps have ratcheted up the tension. There is no real sense that the opposition to no deal is sufficiently unified. The risk therefore that a no deal brexit happens by accident. I think it is now getting critical. Francine is it by accident . If you take them to the word, they say theres a small theres a small chance for no deal. Is it ise simple truth not a good look to crash the u. K. Out of the eu when the likes of operation yellow , pretty bank of england much anyone on the street has done the same. Maybe johnson gets away with it if he holds an election sometime soon. Economic costs. Francine if we are going to have an election before october 31. We find out very soon if parliament did succeed in trying to thought a no deal brexit. That is when johnson would it is interesting that the government is spending 100 Million Pounds on this Advertising Campaign telling people to get ready. The perforations the government is making the preparations the government is making. Us we arelling gearing up toward an election more than they are gearing up toward a no deal brexit. Francine if we get a if we get ready for no deal brexit, are the stocks cheap and u. K. . Peter they are cheap if you look at the prices. They are still potentially can come out of the u. K. Market. Stocks which are exposed to , there isnal trade potential upside. It is not a risk which a lot of estors francine how do we get ready . ,orres stock up on olive oil. Book holidays to cornwall and not italy. I dont know. That is the whole difficulty with brexit. It is hard to prepare. That is what we see in the markets and what we see company saying to the government. That is what makes this week so fraught. Lets get straight to the bloomberg first word news here in london. It is Sebastian Salek. The u. S. Slept tariffs on chinese imports yesterday. The 50 hit consumer goods. China retaliated. Trump told reporters facetoface talks that is still on. Police are patrolling key hong kong subway stations after calls for more protests. It follows another weekend of violent clashes between demonstrators and police. The top officials have not ruled out emergency law. Argentina has improved capital hasnt posed capital culture has impose capital control. Except in the case of international trade. The president tried to stem the growing crisis in the country eight weeks ahead of president ial elections. In germany Angela Merkel the euro skeptic alternative to the result may stave off a crisis in berlin. Have pushed it to leave. Saudi arabia is spinning its industry is splitting into two ministries. It will lose a fight over industry and mining. The move comes as oil trade is breaking below the level. Tolys premier says he plans present a new government by wednesday. He seeks to hold together a new Ruling Coalition. Italys markets for unsettled on friday. Policy demands global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. Francine . Francine lets check in on the biggest stock movers. I want to start with this taking stake around autos around town. Discussing combining the two businesses. Up nearly 2 this morning. It is rated from neutral by Credit Suisse and astrazeneca near 2. 5 after the third trial of one of their drugs that could help reduce heart failure. It is now headed for rapid uptake given the stellar results. Annmarie hordern with your main stock movers. Stay with surveillance, plenty coming up. Discuss what is sustainable next. Macri fighting to survive. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua. Lets get straight to the bloomberg this is flash. They keep the boeing 737 max grounded according to dow jones. Officials across europe, brazil and u. S. Complaint boeing failed so it is a question about the jet. In macau, but casino revenue dropped. Highrollers have been cautious. News fort is bad macau. Bank. S biggest emirates says it seeks approval from shareholders. Foreigners currently hold 5 . Shares are surging on the news. That is the Bloomberg Business flash. Francine lets focus on Sustainable Investing. Bal this is leaders business leaders, one of the key topics on the agenda is disclosure. What sustainability measures do investors need . Joining us now is frances way. Taking action for a sustainable economy. Still with us is peter dixon. Thank you, peter, for sticking around. Frances, this is important. Cf. Dt has done a lot of work on it. Our Companies Taking it on board . Francisco we are frances that was in december. The Financial Disclosures help mainstream that with key figures like Michael Bloomberg sharing it and mark carney. I feel that we are seeing it what we need but is an understanding. Francine is it incentive that you need to get to companies or investors . It is taking a little bit longer than expecting. Frances it has been slow. Companies benefit when they start doing it themselves. Investors are increasingly taking notice because they are beginning to see the financial implications. China, we have friends, germany and the u. K. We are stunning to see regulators beginning to see climate risks. Francine is it expensive . If you are a small company, do you have to give 1 of what you make to have the right people in charge to count these things . You need to have an understanding. It is a different skill set. The financial sector. Francine does it make a difference to your world, peter . Peter ultimately, it does. Requirements requires more on this. Companies which dont get on ,oard with this kind of program will be left behind. Sustainability is the key. They are just not going to survive in the longerterm. The pressure is requiring them to get on board. Francine is it social pressure . Is it Business Model pressure . Frances a lot of this is going out whether the Business Models are going to be fit for purpose or not. We know it is happening and we know it is going to change the makeup of the market cap in our economy. The pressure has helped in terms of changing consumer preferences, changing Market Dynamics in that way. Francine thank you for joining us. Us. R dixon stays with coming up, will argentinas currency crisis spiral out of control . We will have that next. This is bloomberg. Francine economics, politics, finance. This is bloomberg surveillance. Lets get to the latest on argentinas financial crisis. The central bank will set a deadline to repatriate foreign currency in the institution will need authorization to sell pesos on the foreign market. Joining us now is our managing editor, justin carrigan. This is quite a change from macr i. Why the reversal . The country is steadily running out of cash, running out of foreign cash. Thursday and friday alone, the country burned through 3 billion of its reserves. Obviously they cannot sustain that kind of a haltm without putting on them somehow. What does this mean for Foreign Investors . Think, the fact that macri and the position where he didnt have any choice. Pragmatism to prevent the crisis getting any worse. Are a other level, if you foreign investor, you are not going to be wanting to put any money into argentina for fear of not being able to get your cash back. We are already in a stage where the country is in the early stages of defaulting on its status of trying to lengthen the payback dates on shortterm debt. It is asking Foreign Investors to enter into a voluntary repro filing a foreign debt. You can see how these are coming together to stem this crisis on the ground. Francine justin, thank you so much. Dixon. Back with peter it is something only for argentina. I think it is symptomatic that emerging markets are not the safe haven that they once would have been. To iscs is up upending investors concerns. The question as you said, where next . Andworld looks at brazil thinks it is not a particularly great country. I think there was a sense that investors would start to look at the certain emerging markets. Quite get the same domino effect, you will get the pressure as a consequence. The business i would be looking at, i think it is a simple one. Hedge funds maybe it is different. I think there will be restrictions placed. The problem here is once you are in, how do you get your money out . When they start to impose capital controls, it is always a red flag. Onncine are you cooler emerging markets then you have been in the past . Peter it is a process that has been crumbling. Certainly since the early summer. A sense that emerging markets latin america has had a pretty good run for quite a time. I think it is time to rethink the strategy. Do we want to be in the em . Yes. We will certainly be neutral now. Francine is this a dollar call . Where d. C. Dollar from here until the end of the year . Peter the dollar seems to beginning momentum. And pullingoing up down on emerging market currencies. It is a slight toward safe havens. The dollar continues to rise. The euro, 1. 08, by the year end. , that requires this treasury to step in. Francine which we have been talking about. Peter really . This is where we are going, it would be hard not to do that. Make the fed be the condiment for a weaker dollar. It is not working so drastic ion will have to in peter dixon, commerzbank. We will be talking to the chief economist for the latest on brexit. Remember as today, lot of the u. K. Manufacturing sector has been shrinking. It has been shrinking in the u. K. Where we saw that shrinkage. And treasuries are closed u. S. Markets are closed because of labor day. 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. Iffs go livew tar and closing on the upper water affected. The fate of the u. K. s exit from the eu and was johnson hang in the balance as parliament gets back to work tuesday. Hong kong Officials Say they will not rule out including an emergency law after another weekend of violent protests. Good morning, everyone. Good afternoon if you are watching from asia. I am francine. Tom keenes offer labor day. The markets are not trading for the holiday. We are looking at brexit and the impact the tariffs have on the market. We are looking at much more expected pmi in the u. K. , pmi for manufacturing the worst since 2012. We will have more on market commentary but first, lets get to bloomberg first word news with sebastian. Sebastian one of the strongest atlantic storms ever recorded as devastated the bahamas. Hurricane dorian came ashore at 180 mileperhour winds, 2. 5 feet of rain and storm surge that could top 21 feet. It has tied the record as the most powerful hurricane to hit the atlantic. Uncertain the tract later this week. China is retaliating for the Trump Administrations new tariffs. It is on 110 billion chinese imports. China is talking about putting on 75 billion in u. S. Gods. In argentina, policy has been reversed an attempt to win reelection. Among other measures, exporters have been urged to recount foreign currency. They had abolished currency controls when he took office in 2015. A warning from iran on the landmark nuclear agreement. They say they will take a strong step away from the deal if europe cannot offer new terms by a deadline at the end of the week. Not wait towill sell its crude oil. Global news, 24 hours a day onair on tictoc and twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am sebastian. This is bloomberg. Francine thank you. Sebastian with the latest news. There is a lot going on, even if it is labor day in the u. S. Andnder for our American International viewers that because of labor day in the u. S. , a lot of the markets are closed in america. European stocks are rising. We had a mixed picture after the latest u. S. China tariff hikes kicked in. That was in asia. The Dollar Strengthening. I am looking at some of the other things here in europe. Treasury futures are steady, but treasuries are not open today. As are not u. S. Equities because of labor day. And watch out for americas southeastern coast, racing for Hurricane Dorian, supposed to be the most powerful hurricane to hit anywhere in the atlantic after the damage to the bahamas. We are getting news out of the u. K. Big week when it comes to brexit. U. K. So have data out of manufacturing pmi. My chart a little bit different to what we usually see with u. S. China. It is how cheap are u. K. Stocks . The chart gives us an idea of how much of an impact from the manufacturing is. I dont know whether we can bring my chart up or we will in a second, but certainly the u. K. Manufacturing slump unexpectedly deepened in august. Again, it is all about brexit uncertainty. The u. S. Slapping tariffs on roughly 110 billion on chinese imports. The 15 duty came in yesterday. We are hitting consumer goods ranging to textiles and certain Technology Products like the apple watch. We are joined by the chief of Asia Bloomberg economic correspondent. Great to have you on the program. Will the u. S. And china meet or talk in september or is it getting worse . The big this is question, francine. We have now had the latest round of tit for tat tariffs over the weekend with the latest round in the trade dispute. We have not had much by way of firm signal from the beijing side yet in terms of those talks happening. We did have comments over the last day or two, trying to shift the focus back on the u. S. Side of things, making it clear that s willin from the tariff be felt by the u. S. Consumer because we are not talking about tariffs on a broader range of goods than in previous rounds, when we looked at intermediate industrial goods, and of course, there are more electronic goods that will be targeted for the years and. One of the editorials today said the u. S. Has shot themselves in the foot. I think the indication is china is trying to keep their focus on the u. S. Side and keep the pressure on washington as to whether or not they will go to head, but we have not had a firm signal from beijing on the talks. Francine do you have any idea where the Sticking Point is . Is it that President Trump does not want to deal or they disagree on certain concrete things, like is it ip or Something Else . Enda well, one line of attack we have noticed recently from china, and they have been consistent on it, is around tariffs, francine. They do not want any new tariffs imposed and they went existing once removed. We know from the Public Statement of the u. S. Side that tariffs are one of their tool keys of leverage, so you have to imagine theres something of a Sticking Point between both sides when it comes to that. But the critical thing will be to see whether or not these talks do actually go ahead and the first place of september because chinas economy is obviously hurting. They say they are prepared, but nonetheless, we are seeing signs of weakness. Likewise, on the u. S. Side, you have commentators holding up but there are also signs of fragility there. Washington is asking the question of whether or not economic weakness pushes both sides back to the negotiating table, and if that results in a longer truce. Not necessarily a longlasting trade deal but something of a truce. Something i think a lot of focus is on his on whether or not talks will happen in september and keep an eye on Economic Indicators until then. Francine thank you, enda curran. Is danaes now chiefopoulou, omfif ltds economist. When you look at the trade uncertainties, is this directed at Dollar Strength or is it direct the yen strength, what is repercussion for currencies . Strength,ink the yen the swiss franc strength, and i think because it puts pressure on the Central Banks to be even more accommodating over time, it probably plays into commodity market strength. It plays intolly Dollar Strength over the renminbi, but that raises a whole host of issues about how the u. S. Tackles that particular issue. Whether it wants to tackle the issue of renminbi weakness. Francine danae, how does this end . To be know how much of an impact it has globally on the economy . President trump seems to be trying to still be tough on china while trying to protect the economy somewhat but how difficult is that to manage . Danae i think the pressure will come from the weakness in the economy, both china and the u. S. Economy are being affected by the trade war. I think that is where the pressure will come from, and President Donald Trump is preparing for reelection and i think that is where his focus will be. It is not that much about the rhetoric and confrontation with china but the pressure on americans on their wallets from the tariffs. I think that is going to affect the likelihood of a potential deal on the tariffs. Francine i have heard both. I have heard at some point he actually gains if he is really tough on china right before the election because that is his rhetoric and it plays well, or i have heard actually he will back off because the economy is getting worse. Danae i think there is a turning point and limit to which the first scenario holds that this top act and confrontation place to his face, but i think when it filters through to the economy and to how it is affecting households, it starts to turn. Until now, we had the impacts from fiscal stimulus, the tax cuts that was supporting it to an extent but that is starting to peter out. Therefore, the Economic Impact of the tariffs will become more important than the rhetoric and how it has played to Donald Trumps basic so far. Francine what does that mean for donald . Simon i think for the shortterm the dollar has higher. Willnk the broader impacts slow down in trade globally, and so they have been felt regionally. I think the focus will come on how they tackle Dollar Strength. In the environment where the u. S. Economy might be starting slow and going into an election. I do think there is a reasonable jump, and we have mr. When you the idea of an intervention. I suspect that might be more and more of a topic because that probably doesnt sound well politically into an election. Francine what is a treasure intervention know what does it mean . First, i cannot even believe i am saying that, how would the rest of the world react to it . Simon i think they would be pretty shocked but it is a question of on what . If it was an intervention against g7 currencies, and perhaps the world would scratch their head because the u. S. Would be on its own in that circumstance. If you get an actual intervention, historically, it never worked that well, and has been a long time since weve seen Something Like that. But what if it really is against regional currencies . It is impossible that we could stop to talk about that, but how would china respond to that . Francine and could we have an accord without the u. S. . Danae i think the unilateral element of a potential intervention is key. It is unlikely others would support the u. S. In such an action and it has not worked in the past. Onhink that is a key focus if the u. S. Determines that they will do that or not. In terms of a more collaborative element, what we have seen in various forms of global players, it is not something looking likely. Francine thank you, both. Simon derrick and Danae Kyriakopoulou. They both stay with us. Next, we are live in hong kong after a week of protests disrupted their transport network. It was another weekend of unrest. We will show you the details and cross live to hong kong. This is bloomberg. This is bloomberg. Ncine sebastian this is bloomberg surveillance. Lets get your Bloomberg Business flash. Norwegian eric struggles to stay alive. They are asking bondholders to accept a delay in repaying a bond expiring this year and next year. In exchange, they are offering landing and take up spots at kaplan airport. They have been raising equity and raining and expansion plans. The revenue in the worlds biggest gambling hub fell for the second month in a row. They report that gaining revenue declined almost 10 . The are facing headwinds from protests in hong kong and regulatory uncertainty over highroller junkers. In theis coming down Global Insurance industry. As much as 75 by and dollars of business is shifting to financial rival centers in the European Union. That is the Bloomberg Business flash. Francine . Francine thank you, Sebastian Payne the Hong Kong Government will not rule out imposing an emergency law to help contain protests. The unrest is becoming increasingly violent as it stretches into a fourth month with police and demonstrators clashing over the weekend with 63 people arrested. The Hong Kong Police say 1117 people have been arrested since june 9. Joining us is bloombergs asia market anger at edinburgh palace in hong kong. Where is the police calling the weekend unrest catastrophe . Doesnt mean they will ratchet up the force in which they deal with it or is it just rhetoric . Of hear you can kind the government supporting the Police Efforts here to defend their actions over the weekend. It was a very violent and chaotic 1, 1 of the most chaotic they have seen since the Movement Began in june. Justu mention since june, this weekend alone, up to 160 people were arrested. The youngest protester, which was 13 years old, he was in Juvenile Court this morning for possession of a weapon and some of the subway stations. So there is a focus on the youth especially here today. That is why they are hosting some of these rallies. You are seeing a lot of student protesters to mark the first day of school. Some are still wearing their school uniforms. They have been handing out gas muskets and helmets. But there has been a concern that this is going to be disrupting their Everyday School life. They fear that there will be clashes between student protesters and children of police officers, as well. The message has been very peaceful and they are saying, do not give up the fight at this moment, despite the fact that we see the government continuing to defend police with no resolution to ease the tensions. Yvonne, how have the protesters changed in the way they either how they deploy themselves, how they demonstrate . Are they now try to target the economy to continue being mainstream news . Yvonne yeah. Tactics aeen those little more aggressive and police described them as radical and irrational behavior, but both sides at rashid it up tactics. Ratcheted up from subway stations, we have seen one third of them vandalized, all the way to the airport, where we saw cancellations and flights delayed on sunday. And the police, as well. They took out the Water Cannons over the weekend. Also, at one point, they were firing spray inside the trains. So we have seen after a couple of weeks of calm, we have seen things fire up once again. Francine thank you, yvonee man, and the music there in the background. Stay with bloomberg surveillance. Plenty coming up, including how can Companies Better report on their environmental records . We will discuss Sustainable Investing in the next era of surveillance. To survive. Argentinas president imposes capital controls as he tries to contain an escalating financial crisis. We will bring you the latest on that. This is bloomberg. This is bloomberg surveillance. I am Francine Lacqua in london. Tom keene off for labor day. While markets are closed in the u. S. , europe has a slew of grim manufacturing data across the board. Markets have largely priced ecb missed one the most of all was pmi off of brexit. Danae kyriakopoulou and Simon Derrick still with us. Bade, we have some pretty german data, but the Angela Merkel coalition seems to be catching a break as it extended the advance over the weekend. How do you view germany . Danae i would not say it is a break for the german coalition. If anything, the results of the election over the weekend have shown it is nothing but grand coalition we have in germany. I think it was a wakeup call to an extent because you have german parties being locked into this very difficult position, where on the one hand, the effect of quantitative easing by the European Central bank, the side effects of that are affecting the way german voters are behaving. On the other hand, the economy withtting, flirting recession, the manufacturing pmi showing weakness in germany. The answer to that could be some fiscal stimulus. Bond investors are sending a strong signal to germany with negative yield to encourage and spend more on the fiscal side. Markets are also, as you said, have priced in more quantitative easing and more easing past from the ecb. Failure to deliver their could upset markets, so it is a delicate balance of factors weighing in on the German Economy, affecting europe as a whole, being europes biggest economy. Francine germany is not doing great. Simon no. Francine that is probably the easiest thing to say right now. What does it mean for europe . Simon well, i think to a degree, i think what it really means is there will be an intense focus on what the ecb does to the exclusion of almost anything else. Focus in italy, for example. It has all been ecb. Therefore, the risk, if anything, is does it miss that from the ecb . Do they not give the markets what they want . Then you end up with a result where you start to see a negative impact in equity markets. That is where i think the risk lies. On the whole, i think this will be a market that focuses on Monetary Policy to the exclusion of almost anything else when it comes to the euro. Francine does the ecb have the right to do anything more or do they stand back and let fiscal finally do something because they will not step in . Simon it should be fiscal. It is as simple as that. Mr. Draghi has argued that all the way through, and no doubt Christine Lagarde will argue the same when she steps in. The reality is, other Central Banks are leading the way in terms of what can be done. I think the bank of japan is always you example. If they were not of bonds, then the buyin and the equity market will be focused on. Francine how worried about yo e ecb already . Danae if something were to happen, a risk, i think it is part of the discussion around the ecb. It is of a worry in the european context but if anything, the toolkit of the ecb has been strengthened with a lot of innovation. Yes, there was less room to cut, but lets be honest, if they had increased rates throughout this time, they would have had to cut little anyway. We are seeing this with a fed that has been very much ahead in the process. It would be more qe, and that would be the way to react to any italian francine but qe would work because the markets are testy . Danae it is all about physical and we look at the impacts on the economy, but i dont think the ecb has the luxury to step back. Market expectations are very high. It is unfortunate we are locked into this situation with the ecb has to react in other policy leaders, as a result, have complacency not to step in when they really need to. There were so much need francine Simon Derrick and Danae Kyriakopoulou. They both stay with us. Latest on Hurricane Dorian as it makes its way toward the u. S. This is bloomberg. This is bloomberg surveillance. I am Francine Lacqua and london. Tom keene off for labor day. The week could determine when and how u. K. Leads the European Union leaves European Union is about to get underway. Rebel conservatives are bowing to join opposition parties to block a no deal brexit. Times, forest johnson said colleagues had to choose between his vision are allowing Jeremy Corbyn to take over. Was eat of d selection of deselection was opened. Anding us is Simon Derrick Danae Kyriakopoulou. Great to have you on the program. Isst of all, Boris Johnson telling his rebels to fall in line or else. Will they say will they do what he says . Danae this is the crux of what is happening this week. It could go three ways. Byis johnson could win, and friday, he couldve thwarted any attempt for no deal, or he couldve lost and the labour party would have won, or we could be heading for general election. First, johnson asked to do everything in his power to convince that small group of potential rebels, former justice minister, to back him, and he tried being nice last week and they said, look, we are close to getting a deal with the eu. This week they are using their wits and saying, if you do not back us, you could potentially lose your space. Francine does Boris Johnson actually want a no deal brexit if that is the only way to deliver october 31 . Jess Boris Johnson wants to deliver brexit with or without a deal, so he is pushing hard to get a deal, so he is playing up ideal. Spects of there was a sunday telegraph that said, we are not so optimistic about a deal, from the u. K. Government site, they are trying to show that a deal as possible and Boris Johnson is saying to the rebels, if you vote against us, you are wrecking any chance of that. He does not want to leave without a deal but he says he will at that is the case. There are people and his government who do want to leave without a deal. Francine one more politics question. What are the chances of success for the people who do not want a deal you do not want a no deal . Jess based on what has happened earlier this year, it looks like there is a high chance of success because we know that there is a majority in parliament to thwart no deal, so what we are waiting for is the wording from labor, what will that statement be, and what we understand as they are trying to make it as vague as possible in terms of a time extension for brexit two allows many people as possible to allow as many people as possible to back it. Francine this chart looks at Consumer Sentiment hitting a six year low with pretty dire august manufacturing pmi. Is it all just brexit uncertainty . If brexit uncertainty is removed, do we go back to normal . Simon no because we are in an economy that is slowing steadily, and it is not just with what happens with brexit but we have global sloth. Even without this, i think you would have that pressure. If you go out on any streets at the moment, and it feels like a tumbleweed is blowing down. It feels as though a recession is already here. Soont will not go anytime with uncertainty, so i think downward pressure on rates and the pound will continue. Francine if there is a no deal brexit, and i dont know if there is a probability of 70 or 50 , there are people same it becomes an emerging market because it gives a shock to the economy, and they knew lower rates, but because of inflation, you have to hike them quickly. Danae it would be a difficult position the bank of england would be in. It could go either way. Boris johnson has locked himself in a difficult position by making it about the backstop. On the one hand, that means other elements of the deal could be acceptable to his party, but europe has been clear that they would prefer no deal to adjusting the backstop. I think if we were going to go down that route, yes, it is not all about brexit, there is downward pressure on the economy from other areas, as well, but the six year low in Consumer Confidence is driven by brexit. I think the bank of england would be in a difficult position in terms of having to ease on the one hand to support the economy, lets not forget inflation is its primary target. Francine what happens to the pound and all of this . Simon first of all, i think that coming out of summer recess, you always get volatility, more than any other end of summer recess, that will come back. Think it depends when the recess takes place because that matters when they talk about what the outcome will be and it is usually very volatile. Think of 2010. Francine it doesnt seem Boris Johnson is repairing for an election. Is it before or after a no deal brexit . If it is before, we have to find out in the next two days. Jess we are looking at this week if the brexit actually takes place. Boris johnson is fighting as hard as he can that it does, but it looks like opponents want to have an extension of a few months. Francine all right, thank you for joining us. Reporter jess shankleman, and we will get back with Simon Derrick and Danae Kyriakopoulou. In the meantime, lets get to bloomberg first word news with sebastian. Sebastian china is striking back at new u. S. Tariffs, rolling out 75 billion worth of tariffs on u. S. Imports. Those are aimed at farms and factories in the midwest. Beijing retaliated after u. S. Tariffs on 110 billion of chinese products to quebec. China is reaffirming for support for the hong kong executive and police force after another week of protests. There was an unauthorized march. Protesters disrupted traffic from the airport yesterday. In texas, Authorities Say the man who shot seven people to death was a truck driver who was fired from his job a few hours earlier. Police killed the suspect after he terrorized two towns with an assault style rifle. It began when they tried to pull him over for a traffic violation. The two main parties were challenged by the farright in germany and for now, that may stave off fiscal crisis in the 17monthold coalition government. Global news, 24 hours a day onair on tictoc and twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am Sebastian Salek and this is this is bloomberg. Francine thank you. Hurricane dorian has crashed into the bahamas and is the most powerful storm to hit anywhere and atlantic. It brought 180 mileperhour winds, while devastation mounts in the bahamas. I threat to florida and the u. S. Coast remains uncertain. We are joined by our bloomberg executive editor, thank you for joining us. When do we know how much of an impact this has on florida and the east coast . Within the next 48 hours is the most sensible answer. In the moment, it will either hate florida and go past the east coast or go further out. We are in that stage of development where the changing i wall of the storm gets bigger, slower, but there is uncertainty about where it will go. The middle point of this cone of uncertainty takes us up to outside of the east coast and that will still be pretty damaging. Remember, you have storm of swells and none of that is good in florida but it is a better scenario than if it hits directly. Francine give me a sense of exactly how fast we can assess the damage to the bahamas. We understand there is damaged property, infrastructure, but is it more than a week after you understand how hard they have been hit . Stuart it is really hard to tell. We are piecing things together from local media and twitter, and some is unreliable, so we are being cautious. Pretty devastating and incredibly high floodwaters are just about everything damaged. We are going to be super cautious because the storm is still over the bahamas and it will probably be another day or two before it moves away and we get a better sense of the damage done. It is still happening right now. Francine what are we worried hitting . S hurricane i was worried there is a Nuclear Power station. That what we should worry about the most . Stuart no, by and large those facilities should have contingency plans in place great that does not always guarantee it, so if you build anything in florida, you have to have hurricanes in mind in florida. We are worried about numberlife, clearly one, but then you have a lot of other citrus crops coming up for florida and then the power networks. To what extent can they survive . And some pricey real estate along the east coast. Francine thank you, stuart wallace. Coming up tomorrow, we are joined by the rbs chair, howard davis. That conversation is at 11 00 a. M. In london, 6 00 a. M. In new york. We will talk about brexit and banks. This is bloomberg. This is bloomberg surveillance. I am Francine Lacqua in london. Tom keene offer labor day. He was a look at what you should be watching today and this week. This morning, the u. K. S Manufacturing reading shows it slumping at the fastest pace in seven years predespite weakness in august for the pound, we will get the services pmi on wednesday. Thursday, we wait for german manufacturing orders to give us another snapshot of how deep the slowdown in europes largest economy rents. And it is a double whammy to end the week. A right decision from Europe Central Bank and u. S. Job data before the fed meeting this month. We will have elevated Economic Uncertainty weighing on unemployment. We have Simon Derrick and Danae Kyriakopoulou both still with us. Danae, when you look at the concern of the u. S. Economy, what do you worry about . Is it centralbank independence or the data turning . Danae i think it depends on the horizon you look at. The centralbank independence issue is a grave issue for the longterm and sustainability of u. S. Recovery. In the shortterm, yes, looking at the payrolls and what we see that with the weakening, i think trade wars attracts a lot of attention from the underlying Economic Performance of the u. S. Economy. It is also about the currency and investment wars and the blocking of Chinese Investment into the u. S. That is affecting other investors into the u. S. Because when you have Foreign Investment screening roles, they cannot be applied just in time, so state australian public asset owners who want to invest in the u. S. , they are also affected by this. That is quite important because all the attention is on the trade wars. That independence issue is quite concerning and it is building a trend for politicalization of Central Banks and lowering barriers with Central Banks and other politicians and other parts of the world and that could be a big war in terms of economic stability. Francine if you do not have a trade war, with the u. S. Economy actually warranted lower rates . Probably no. Danae the data depends on the fed, but the way the economy is reacting, it is affected by the trade wars of the tariffs, so it is interlinked. Francine how would you describe the u. S. Economy . When you look at the data points, it is holding up quite well, apart from some of the other ones. Simon it is a bit remiss around the cusps. The data is mixed. ,ou do not want to argue great but nevertheless, you get the feeling that you hit the point where there is concerned. Im not quite certain i really believe that what is happening in the u. K. Is a signal of recession head, but i think we have got an economy losing heat. The problem is the fed is already expected to make some moves. We already have the policy impact from the tax cuts but what else is there . Isne so does re the risk of recession closer or is there trade war changing what we see in the economy . Simon i do not think it is changing anything yet, that i think the risk is you could hit a brick wall and you could see that trade war Holding Material impact. China has been quite careful in the way that they are putting the tariffs in, but if those go into the christmas season, consumers will slowdown spending. Thank you, Simon Derrick and Danae Kyriakopoulou. They both stay with us. Coming up, argentinas currency crisis spirals out of control as Mauricio Macri is forced to impose capital controls. We will have more on that next. This is bloomberg. Sebastian this is bloomberg surveillance. Listen one to the tax extension for the electric carmaker in china and it looks like the risk has paid off. He promoted his ground again boeing company project. They have stopped work on one of the largest airport construction activity. It is halted as finance expansions have been frozen. Take sincer first 2010. And American Airlines has removed the boeing 737 max 8 for another month. American has canceled 140 daily flights through december 1. Dow jones reports regulators may keep the mics crowded into december. They report there have been complaints about no answers to questions about the planes modifications. Francine argentinas currency crisis is deepening. They are imposing currency oftrols to help outflows dollars. There have been a deadline set for foreign currency. They have said that institutions will need authorization into the Foreign Exchange market. The imf called it Capital Fund Management and pledge to watch it closely. Joining us now is our bloomberg managing editor for global emerging markets, justin carrigan. This is quite the change for president macri who thought about dismantling capital controls when he took office. This reversal in policies, how should investors be taking this . Justin i think investors will look at this and think this is not the time to get any closely involved in argentina, simply because with capital controls coming into effect, you may not get your money out very quickly if you put it in. This is another sign that very serious some financial flow problems at the moment. It is not much fun for argentines on the ground, either because naturally if you want to turn your savings, your peso savings into dollars, or whatever they might be, and protect your wealth that way, you cant significant degree. So problem for Foreign Investors and local people. Francine will the capital controls help drop . Justin they probably will for a time. This is probably the only measure argentina could take under the circumstances. It was burning through its foreign reserves too fast. Some 3 billion or so was spent on thursday and friday together and it is now down to 14 billion to net reserve. There will be a certain amount of calm. I think the authorities will allow the banks to stay open for and thisertainly today week, to allow a sense of calm to reign on the ground. Ultimately, not a Good Movement from argentina at all. Francine president ial elections are eight weeks away. President macri is really trading. Can he change anything . Can he get ahead of that . Justin well, i think he has been put in a position now where he is trying to save potentially himself and his own administration as we approach the elections at the end of october, but also, argentina. The irony is, of course, is that he is introducing the kind of measures that probably the next government, the fernandez government, if it is to be that, would impose under these circumstances. At the end of the day, we will likely get a change of government, a change of administration, but the policies will not change at all. In fact, the new government may or may not come into being at the end of october and will preside over the very kind of situation that it probably would anyway,ught into being but the conditions on the ground, the economic and financial challenges, remain the same, francine. Francine thank you, our managing editor for global emerging markets, justin carrigan. We are back with danae and simon. Danae, when you look at argentina, is it linked to the dollar or does it mean you are more hesitant with emerging markets . Danae i think it is idiosyncratic to the larger extent. We were seeing the confidence macroacri had underlying weakness still there, and now the reserves adequacy of the central bank in terms of defending the currency has to resort to capital controls as a measure at this stage, and whether housing we can see these lifted. It could take a long while. We saw this coinciding with the lifting of capital controls and greece, which were imposed in 2015. They could be in place for quite a long time. I think it is the underlying weakness of the argentina economy, and what crisis Defense Mechanisms we have on the global stage to deal with other emerging markets where it could also be idiosyncratic factors leading to this, but then how do we react . What is the Global Financial safety net . Are the regional arrangements . Who can react to that . What scale do we have to support countries like argentina that all into this problem . Francine this is one of the questions we are asking, and as an investor, you could think twice but is there anything that could still be attractive . Simon i would argue no. Thing aboutsible this is they do not have a choice. I think at least he Shows Government that is making sensible decisions now. Thatould have been a while ago. I want to pick up on the idea of capital controls. Over the course of the last 20 years to 30 years, investors have talked about that as a risk. Years,e course of five argentina has this idea that they can be reintroduced. I think that will actually act as a brake on investors as they towardsards not only them but as a way to invest. They will see extreme politics emerge on whether that can come up. Francine this is, at the end of the day, just investors chasing yields. Simon yeah, and i think that argentina is the perfect example of this prey two years ago, we had the 100 year bond trading 50 on the dollar now. To me, what you are seeing is the hard reality that when you get high yields, there is good reason as to where you are getting them. Francine thank you for joining chiefmon derrick, bny currency strategist and danae chiefopoulou, omfif ltd strategist. Coming up, the u. S. Hits china with tariffs with products like the apple watch. We will discuss that next and we are looking at your markets. Markets are stabilizing somewhat trade this is as the dollar is rising. Treasuries and u. S. Equity markets will be shut for the labor day holiday. This is bloomberg. Francine new tariffs go live. The u. S. And china 110 billion of product, and the apple watch is affected. Big week for brexit. The fate of the you ks exit from the e. U. Parliament gets back to that from the the fate of the u. K. s exit from the e. U. Parma gets back to work on tuesday. Good morning, everyone. Good afternoon if you are watching from asia. This is bloomberg surveillance. This is Francine Lacqua from london. Tom keene is off. Markets are not trading for the holiday. Expected,rse than manufacturing pmi also worse than expect it. Lets get to first word news with london. Sebastian one of the strong gust atlantic storms recorded, Hurricane Dorian came ashore in the bahamas. Storm surges could top 23 feet. U. S. Isat to the uncertain. Dorian could hit further up the coast later this week or not make landfall at all. China is retaliating for the Trump Administrations new tariffs. Beijing responded by imposing tariffs on 75 billion of u. S. Goods. Theories and farms across midwest and south are being affected. Inri has rivers policy attending to win reelection. He has reengaged capital controls. In order to repatriate foreign currency. He had abolished currency controls when he took office in 2016 to a warning from iran on the land mark nuclear agreement. Strongit will take a step away from the deal with global powers. Cannot be terms offered, the country wants to Sell Crude Oil Sell Crude Oil e open market. U. S. Sanctions have altered have halted those sales. 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, i am Sebastian Salek, and this is bloomberg. Francine . Francine thank you so much, sebastian. This is what your markets are doing. U. S. Equity markets, treasuries are closed today for labor day, so happy labor day to all of you out there watching us. U. K. Manufacturing sector shrinking at the fastest rate since 2012, having an impact on the pound. But overall, european equities are gaining. Shares in asia were a little bit mixed after the chinese tariff hikes kicked in, and we are looking at gold. Bitng if there is a little of a risk off mood. I am looking at the pound sliding against the dollar, as the e. U. s chief negotiator said he was not optimistic about avoiding a no deal brexit. This is the one thing i am looking at. The impact of the terrace between the u. S. And china, and the fact that we do not know of the tariffs between the u. S. And china. Frome seeing higher costs the supply chain and onto the consumer. Hittingrices have been categories such as auto parts, jumping this year. You see thehat, Consumer Price index in blue, and the u. S. Consumer price that is the way they have been going for the last three months. The u. S. Is slapping tariffs on 110 billion more in chinese imports. The 15 duty came in yesterday, hitting consumer goods ranging from footwear to Home Textiles and certain Technology Products like the apple watch. Joining us from faang for it is Christian Scholz joining us from frankfurt is Christian Scholz. Thank you both for joining us. Let me kick off with you. When you are looking at the u. S. China trade war, does it escalate . We are none the wiser on when the talks take place or if they take place in september. I think unfortunately the risks of china spinning things along at this stage and waiting for a more benign or less volatile u. S. Administration, that risk seems to be rising at this stage. That means it is really if we are looking for a trade deal, it will probably come from capitulation on the u. S. Side. Most of that would happen behind the scenes, but they would have to be some kind of a rollback on tariffs put in place already. That is clear from the chinese side, definitely one thing. But from the chinese side. The economy is weak, yes. The economy is weak, but we think they are still looking for the stemless coming through, waiting for the effect of that stimulus, and really that is in the pipeline. So we probably are expecting not a massive recovery, but for the economy to be stabilizing around the end of the year and starting to recover into the beginning of next year. For them to lock in what they see as perhaps as subpar deal at this stage, rather than just wait it out, would be perhaps not very farsighted of them. So the fact that stimulus probably will be coming through is a factor pointing toward the chinese just waiting. I am not writing off a trade deal completely because i think mr. Trump will be facing a lot of pushback from his own party against consumer goods, tariffs on consumer goods. We have seen that with the uturn he did on tariffs against mexico and the delay of the tariffs coming into the full effect of the range of tariffs on consumer goods that were supposed to come in on september, taking account of the Holiday Season on account of christmas shopping. We cannot write off a deal yet, but it is looking that on the chinese side they are willing to spin that out a bit more. Tom chris francine christian, how does this titfortat work for trade talks . It sounds very possible. The likelihood that a deal will be struck this year seems to be waning because the u. S. Is escalating and china is not moving enough, so we think the election, the u. S. Election is really probably a necessary threshold for them to get to some sort of deal, perhaps afterwards, shortly after that election. From a european perspective, that is not good news. We are already experiencing a lot of Collateral Damage from the u. S. China trade war. China is the most important trade partner for european countries, including germany, the chinese slow down, which is partly closed cause rebalanc. One of the sources as the downturn of that we have had. Near recession in germany. Francine when you look at the month ahead, where do you see signs that the u. S. China trade developments are weighing on data . What data points do you think will be a good indicator . The key indicator i look at for the economy overall is the leading indicator is monetary conditions. It is a very banking centric economy. If there is not enough cash flowing around in the economy, there is not enough liquidity for people to go out and spend. At the moment liquidity conditions are too tight for recovery. I think the trade wars have fed into that because this time around he pboc is relying much more on the private sector to go out and borrow, and in the face of trade wars, and Producer Prices in deflation, that is not a great process that is not a great prospect. They have relied on in the past to strive to stimulus the economy. Already tight monetary conditions on perhaps the excessive tightening have undertaken in the years before the beginning of last year. So to see where the recovery might come through, we are really waiting for that turnaround and monetary conditions to take hold. We are seeing the beginnings of green shoots, but has come up again and again against this the terrace being hiked, and the onagainoffagain trade deal, trade wars. We are dealing with month were waiting for monetary conditions to improve in a sustained way to the pmis of some of the shorterterm indicators of coincident growth at the moment. We see that in a downturn, the data that was released over the weekend and this morning. Even with the uptick in the pmi, they are still broadly in that downward channel. We are looking for the authorities, the pboc, and the fiscal authorities to be making some adjustments to try to boost the stimulus a little bit more. But it is really to do with adjustments on top of the stimulus that they have already done, and they think that is in the pipeline and the recovery is on track. Francine thank you so much. That is Freya Beamish and Christian Schutz. Stay with us. A are in hong kong, after 13th straight weekend of unrest. Details are next. This is bloomberg. Francine all right, sebastian, thanks so much. We will get back to sebastian because i think we are having issues. The discount carrier sebastian was talking about is one of our top focuses. The Hong Kong Government will not rule out imposing emergency law tell police contain protests or the unrest is becoming increasingly violent as it stretches into a fourth month with police and demonstrators clashing over the weekend with 63 people arrested. The Hong Kong Police say 1001 hundred 17 people have been 1117 peoplece have been arrested. , andas the mood changed how much do we know about these protests escalating in the coming weeks . Ever since this weekend, i think everything has gone up a notch now. This all started because of several protesters and activists who were arrested late last week, which provoked a lot of protesters to come out this weekend. It was probably one of the most violent weekends we have seen since june. Or than one people arrested since the Movement Began. Nearly 160 arrests were made over the weekend. The youngest of which was a 13yearold boy. So there is a sense that things are getting a little bit more ratcheted up now. Violence between police and protesters. There is quite a bit of rain coming down right now, so we are still seeing hundreds if not thousands of people here. Overall, it is the first day back at school. How does that impact things . Yvonne what we have been hearing is that there is concern about students boycotting school. So that was a worry here. The first day of class today was planning these rallies around the city. Organizers say up to 10,000 students were going to be skipping class today. We have seen several hundred show up at these rallies as well. Beijing is betting on the fact that once schools start, student protesters will not be taking part in the protests. But we still see a group of defiant demonstrators out here today, saying that even though school has started, come out in the afternoon and keep things going. At this point, still no resolution. They have been dealing with this for weeks now. It sounds like a broken record, but the government today once again defending the polices action. Francine thank you so much. Anchor yvonne man. We are back with Freya Beamish. I dont know whether we have seen a change in protesters targeting the economy to make sure they have more of an impact than they have had so far, but how does this cross over to your world . Is it just a number box another box in the wall of worry, or with the hong kong protesters, do we need to watch out for more . Freya the hong kong protesters, if they are just another box, they are a very big box in the world worry. The geopolitical tensions in this region are really enough to keep me up at night. Nots a rising tension and in just hong kong, but also with the u. S. Sale of fighter jets to taiwan. This is seen as a redline to china as well. This could be another reason why the chinese are perhaps less trump, to do a deal with because he is so volatile and they do not want to tie themselves in to an economic deal with him only to find that he then tweets something about hong kong or escalates with taiwan or says some kind of a line that is crossed in the sovereignty field, which is viewed very differently by china than the economics and economic relations field. For hong kong, certainly the protests there is likely to be a technical recession. We have seen retail sales data in poor shape before these protests began. We have seen also from the mainland chinese retail sales data, there is evidence of mainland tourists spending much more at home than they would normally spend abroad in places like hong kong, and that would be a and in the hong kong that would be a dent in the hong kong economy. The hong kong economy has been hit from all sides at the moment. The hong how much does kong economy actually matter to the rest of the world . Yvonne freya the Hong Kong Center is it is less important than it used to be, but it still is important, and certainly it has an impact on the willingness of china to do a trade deal with the u. S. That is hugely important. I think we can also recognize that the Economic Situation in hong kong is, prior to these protests, is a contributing factor to the protests that have arisen. Hong kong certainly is on the wrong side of the distribution in the inequality stakes with a number of key metrics here. There is certainly problems in terms of poverty, especially in the oldage segment of society there there is unemployment, particularly for young males. Unemployment for the country as a whole, for the nation as a whole is not a major problem. Arethese economic problems not unique, and it is the political, the lack of a political outlet for those problems that seems to be what is causing these protests to erupt. Francine thank you so much for joining us, Freya Beamish. We will get back to Christian Schutz of citi. We will have great chart showing some of the pmis in china, one of the biggest concerns being employment. We will have plenty more on brexit. We also have Jeremy Corbyn, the u. K. Labor leader, talking live. On what will be a very crucial week for brexit. We will get plenty more on that. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua. Tom keenes offer labor day. Angela merkels Ruling Coalition catching a breather over the weekend. The narrow victory for now stands off a deeper political crisis as fears of recession in europes largest economy persist. Christian schutz is still with us. Christian, how do you view the German Economy . What is the prescription to try to fix it . Negative rates are hurting it. If we do not have fiscal spending, you know, how bad could it be for germany . Well, germany, the Manufacturing Sector is experiencing a recession. That is not unusual. We have downturns in manufacturing globally all the time, and germany is connected to that. As i was mentioning before, china plays a role in that. Brexit probably plays a role, so these are external factors. What normally happens in germany, the Manufacturing Sector starts adjusting. The potential for the economy improves. The Companies Improve and the sector thi, contribute positively again to the economy of the problem at this point is we are at the lower bout in terms of Interest Rates, so the Interest Rate so the ecb cannot save the economy. Trade wars are not going away, chinas slowdown is not going away, and who knows if brexit will go away anytime soon either. That makes it more likely than usual that thiS Manufacturing downturn turns into a broader crisis, a broader recession eerie the first signed a broader recession. Creeping up. Is greeting m that is a role risk. There was no help from anywhere else, and that leaves the onus firmly on belin with fiscal policy, in my view. So some sort of action from berlin is necessary. I hope, though, that it will not just be a fiscal stimulus as such but that it will also be accompanied by Structural Reforms with longer Lasting Impact on the german and the european economies. Francine is it time now for germany plus obsession with fiscal prudence to go . Excessive deficit prudence, h yes. The commitment not to borrow, which is not which is purely a political government commitment not to borrow, that is the risk of making policy procyclical in germany so that they save into a recession. That is not a good idea. The automatic stabilizers of an economy, unemployment insurance, the shortterm workers scheme, and others, should be allowed to work and i think the government is working toward that. In terms of the broader fiscal rules, i think those are still fine. They should not be removed, they should not be revised, but as i said, germany has spent the last 10 years gradually giving away these reforms and taking up the reforms that germany is competitive within the first place. It is worth reviewing how much has been done there, and given the economy some flexibility to adjust to this new Global Environment of uncertainty and perhaps recession. Francine christian, thank you so much. Christian schulz of the citi economics team. Were hearing from Jeremy Corbyn, the labor opposition leader, speaking in salford. Parliament in the u. K. It will be a very busy week when it comes to brexit. This is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Francine this is bloomberg surveillance. I am Francine Lacqua and london. Tom keenes offer labor day. Lets get to first word news with Sebastian Salek. Sebastian dorian pounded the islands with 180 mileperhour winds with the storm surge could reach 23 feet. There has been no reports of death. The big question now is where dorian hits next. It could hit florida or farther up the coast in georgia or the carolinas later this week. China is striking back at new u. S. Tariffs. Tariffs are at the heart of President Trumps beijing retaliated after u. S. Tariffs of 100 billion in chinese products took effect. Inther weekend of protests hong kong. Police had running battles with demonstrators after an unauthorized march. Protesters disrupted traffic to and from the airport yesterday. And in texas, Authorities Say the man who shot seven people to death was a truck driver who had been fired from his job if you hours earlier. Police killed the suspect after he terrorized two towns with a rifle. Shooting began when police try to pull him over for a traffic violation. 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, i am Sebastian Salek and this is bloomberg. Francine . Francine thank you so much. Hurricane dorian has crashed into the bahamas. The most powerful storm to hit land anywhere into the atlantic. Florida is not out of the woods yet. Joining us now is jim roemer, meteorologist an. Thank you for joining us. When do we know if florida and the coast is hit . I think it is more obvious right now that the storm is going to stay right along the florida coastline, affecting millions of residents along the east coast. There will be 20foot storm surges and wind up to 150 Miles Per Hour up to the south carolina, North Carolina coastline. There is a good bet that it will is go inland, but there still severe threating that severe flooding severe flooding. Idea of reports of instream structure of infrastructure damage . This shows you in my opinion theects of hurricane effect of global warming. Most of the models take it up east, over florida. The outer banks of North Carolina. 50 miles further west, it would be devastating to structure and causing a lot of damage. There is still going to be some, but it could be a lot worse if it went inland. Seecine are we going to many of these fluctuations of these weather patterns . Is it something that will change the coastline, and how will you react to them . Building codes have certainly changed over the last 10 to 15 years. Florida became known, unfortunately, as the plywood state. With all the homes that were destroyed. It got that nickname, unfortunately. There were four hurricanes back into thousand four. It has been changed since along the east coast in 2004. The amazon forest fires, the construction the destruction keeps going on. That brings up dust and Carbon Monoxide into the atlantic that could possibly weaken the Hurricane Season Going Forward this fall. That is a possibility. We are keeping our fingers crossed that perhaps this is the worst hurricane of the season. We are not out of the woods yet. It is only september, but the average there could be a reduction in hurricanes for the next two months. Francine thank you so much for joining us. Will have plenty more on that news throughout the news. Global business leaders, academic, and policymakers are in london for a summit. Key topics on the agenda is disclosure, what sustainable metrics do investors need and how our companies being encouraged to report them . Joining us is the m. I. T. Vice president for research. Thank you for joining us. What you look at is basically some of the preconditions that we need to tackle Climate Change or face a more sustainable planet. Tothis, you break it down technology, energy storage. What are we good at . At designing our way out of problems, ok . And there is a variety of ways to look at it. Fusion would be a game changer. The idea with fusion is that it is an absolutely clean source. It is an abundant form of energy because it uses a certain kind of water. It is technologically challenging, however, and the idea has always been years away. Changes in not the physics but the technology that is available, namely in highfield magnets, has brought this into the realm where we are talking a decade or maybe two decades, but not 40 years, 50 years, forever. That would be a game changer. Francine and that is a game changer because you have the funds to do Proper Research . Or are companies saying we want to invest in this . Maria this has been an area that has been fundamentally funded by government forever, and now m. I. T. Has a startup ampany with china to develop fusion power plant. There are other fusion startups, and they are funded by the public sector. The privates by the private sector. The private sector has decided that this has evolved sufficiently that they are in the game to invest. Francine so the planet becomes greener and more sustainable, but it is it a game changer for Car Companies . Plants would replace coalfired power plants. So this would be a infrastructure, an energy infrastructure. Car we talk about would a plant benefit, then we need to move on to transportation, and we would have to talk about batteries. Francine on batteries, there is a piece that you published looking at some of the new approaches to rechargeable batteries. We have done a huge amount of work on batteries. How will that change . Maria this is work that is done by many people in the community. Batteries, it is not one technology that changes the game, it is going to be a lot of different areas. People looking at different kinds of batteries and different applications. Unlike fusion, which would be a game changer in terms of power production, batteries are going to continue to incrementally sorease in performance, and the idea is, when you can do battery in your car, when you can take a long trip and recharge it quickly, then the transformation to electric vehicles, which is already considerably underway, is just that is going to be the way we do things. Francine when you talk about fusion, it was always 40 years away. Has it been slower than you thought it would be . Been athere has always technological hurdle. It has always been more difficult than science has thought it should be. Part of it was the knowledge of the physics come of what happens when you go to higher and higher energy. Fusion has to occur at temperatures of over 200 million degrees for this to happen. That is no mean feat to achieve that. It is a combination of not knowing the physics and not having the technology to realize it. But we know the physics pretty well, and the technology has finally matured to the point where it is ready for application. Francine fascinating. We should get you on for the whole hour. Thank you for joining me. M. I. T. Vice president for research, maria maria zuber. Boris johnson will make a statement for brexit because parliament reopens tomorrow. Some people say we could see elections soon. Others say do in blocking a no deal. Boris issperson for also saying that the Prime Minister is working with great determination to secure a deal with the e. U. And that he will meet with tori mps today. We will have plenty more on the brexit and on the pound. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Tom keene has the day off for labor day. We are back with Christian Schulz of citi economics. Thank you for being so patient and sticking around. Welcome to surveillance. With johnson is working great determination to secure deals with the e. U. And will meet with tory mps today and he will make a statement to parliament on tuesday. Over the weekend, we found out that basically Boris Johnson is kind of doing a take no prisoners kind of policy, which as you are either with me or against me. What does he want . What he wants is lawmakers to do what he wants, which is to get brexit done by october 31 or go out of the e. U. With no deal whatsoever. Lawmakers, including those within his own party, are saying we get the fact that you want us to suspend parliament and we cannot go against that. But we will try to get a bill introduced it will take over the agenda in parliament and have a bill passed that will say we will get an extension of brexit rather than a no deal brexit at the end of october. So they will give more time to talk rather than having that coming at the end of october, which is no deal at all. Francine but Boris Johnson things he can get a deal with the e. U. , or will the e. U. Give him something . He does. It is a question of what he wants. Does he want a no deal brexit . Quite possibly. To comeonvince the e. U. Back on the backstop . Possibly not. Maybe there is a change in the wording on the future arrangements of the deal and that will be enough for parliament to agree. Francine a political question and then we will go to christian. If we have an election, those Boris Johnson want it before or after the august 31 deadline. Rosalind clearly he is in campaign mode. , you see the language today, we will fight them on the beaches, all that stuff, like i am trying to get a democratic process through and i am trying to execute on that and i am being stopped, that is a Campaign Tone from him. We are seeing the serum the same thing from Jeremy Corbyn. That could come at the end of the year quite possibly. We will see what happens with parliament this week. Francine Christian Schulz, what does this mean for the economy . Let me bring you to my chart, a simple chart of Consumer Sentiment, just going down and down hitting a sixyear low. Does it get worse from here . Christian indeed, Consumer Sentiment has gone down, but if you break it down into the components, what has gone down is the general Economic Expectations of consumers. What has not gone down to the same extent is the expectation regarding peoples personal financial situation that is really what drives consumer spending. What we are seeing in the gdp data so far is that, yes, investment has been weak because of the uncertainty. There has been a lot of volatility with exports and imports, but the one constant is that private consumption has been growing relatively robust, at least resiliently. Down, butentiment is when it comes to the personal financial situations, not so much. Francine what does that mean for pound . Allstian well, that depends, obviously, on the outcome of the brexit negotiations you cannot call it the negotiations anymore the brexit conundrum at the moment. In the shortterm it is focused on whether the u. K. Will leave on october 31, and if it does, it would most likely do so without a deal, or if it does not leave at all on 31 of october. If that is avoided, it could rise by 10 . If it comes to no deal, it will probably drop i the same amount. Drop by the same amount. You will probably get an election either way, and i could go both ways. With conservatives you could get a tougher line, and it can go into some there are so many components. Shortterm this week with all the rebellion against Boris Johnson, it looks to me like sterling is likely to have some sort of floor under it. There is likely to be some news that there is still resistance to no deal in parliament. Become y actually in the short run if parliament succeeds. Francine what do you see, with, with a b week a big week for brexit . Do we know if we will have elections, or will it take a couple of weeks . Rosalind it will take a couple of weeks. We will know if it cut if it takes a couple of weeks to stave off. If there is an extension, how long is that for . Boris johnson and his supporters will probably want a short extension. That will be the initial debate. Election timing will factor into that, how long that extension might before. Francine if the extension is longer than a couple weeks, is moree imp this impetus given to nigel faraj . Rosalind polling is a critical thing come as you know, in many countries, including the u. K. Boris johnson has a strong bank of support in the euro in the rural areas, those who primarily said they want brexit and they tend to be a demographic that supports him and what he is doing. That is a strong thing for him, but it depends. If they are looking at an extension in a couple of months, Boris Johnson may leave that. Christian schulz, if we have a nodeal brexit, what is the impact on the euro zone . Think it i think we will be a comparatively small compared to what will happen in the u. K. You we think that the euro zone will have a six or and impact of the impact that will be on the u. K. There will be material differences in the way the euro zone will be affected. In southern and eastern europe, they are away from the u. K. And not really trading with the u. K. As much. Others will be extremely exposed. Ireland and some of the smaller economies. These economies will probably take a bigger hit. But overall we think euro zone economy will have a much smaller impact of a no deal then the u. K. Will be. Of course, all of this happens at a time when the euro zone economy is fragile, and this will not help. Francine thank you so much, Christian Schulz citi economist. Coming up, on the brink of the currency prices crisis, it spirals out of control. Endorsesister macri capital controls. Coming up next. This is bloomberg. Sebastian this is bloomberg surveillance. The highprofile visit to china off. Like it has paid promoted his brown ging his stopping work on one of the biggest airports, construction and has been sold has been halted. Finances have been frozen or the economy grew last year at the slowest pace since 2010. American airlines has joined other carriers in removing the grounded boeing 737 max 8 for another month. American has canceled another 140 daily flights per dow jones reports regulators may keep the max grounded until december. There are complaints that boeing has not answered questions. That is the Bloomberg Business flash. Francine thank you so much, sebastian. Entina plus crisis is argentinas crisis is increasing. The central bank will set a deadline for exporters to repatriate foreign currencies from the government, and that institutions will need authorization to sell pesos in the four next change market. Closelypledges to work with argentina. Joining us is the International Government executive editor rosalind. Why this reversal . Have things gotten that bad . Rosalind it is that thing for him where it is a noninterventionist president now has to be interventionist. It tells us two things. One is, the economy is in a desperate state and they are worried about it. He is climbing and climbing uphill to try to get reelected in october. He had a terrible primary in august. He is very much trailing behind the opposition. This is him not only trying to get reelected but possibly seeing if he could stay out his term until december. There are questions about whether he can survive, not just through the election but until s. S term end francine does this change anything for him . Rosalind it does change things about the opposition. Appropriate and policies, the market friendly president appropriating policies, which are quite populous probably. They might do something of them margin with voters, but the gap at this point, for him to narrow that in october to see a second round vote for presidency is really questionable. Francine what does it mean for institutional investors, or for International Investors . There is no good that can actually come out of it. Rosalind most of it is imf debt or hedge funds. People bringing the Capital Market exposure to argentine is relatively small. You see a lot more investment into emerging markets. They may not see much of an impact on the peso when it is trading as a result because there is not that much fluidity occurring, but what it tells you again is that argentina, a country with so much promise for so many years, has again failed with repeated defaults and risk of defaults. The country was held up as a beacon of economic modernity in a way in latin america, and it is failing. As a longterm bet, you have to be balancing that. Francine thank you very much for all the updates. Rosalind mathieson. And we will have plenty more on argentina. We are also watching dorian. We are hearing that Hurricane Dorian is the most powerful storm to hit land anywhere in the atlantic. Battering the bahamas, inflicting colossal damage. We will try and see what that means for property and infrastructure across the chain of islands. 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. Alix good afternoon. 12 00 here in london at 1 00 p. M. I am anna edwards. The Trump Administration chinese 120 billion in exports. We have the latest on brexit. Hurricane dorian, one of the most powerful storms to hit land anywhere in the atlantic. We assess the damage. A very good afternoon to you. Watching a special edition of Bloomberg Markets this labor day. , much of the u. S. Market is absent. Lets have a look at the markets. This is where we are on the European Equity session. Up by. 6 on the ftse