Moments about why they might be. Restarting qe and continuing it until necessary. Now for thetiers pointsand further basis into negative territory in terms of the key interest rate. In the United States, we are up three points for the s p 500. N activist story is doing well value act getting in on carport stocks, up about 8 now. The 10 year yield at 1. 70 . Crude is lower. We will be examining why later on. Just want to point to a strengthening china renminbi as well. There are marginal headlines on china. China is trying to tier talks and negotiations into two tracks. Google is up 0. 75 . We have a settlement in europe, 500 million on the part of google. We will talk about what that means for the company. Right now, investors rewarding the company. Coming up, Marathon Asset Management chair and ceo Bruce Richards will join me. An exclusive conversation coming up in one hour. The European Central bank cutting Interest Rates tend more basis points below zero to 50 now, announcing plans to start openended bond purchases. Ecb president mario draghi spoke about the risks growth. Mr. Draghi the risks surrounding the euro area Growth Outlook remain to the downside. These risks mainly pertain to the prolonged presence of uncertainties related to geopolitical factors, the rising threat of protectionism, and vulnerabilities in emerging markets. Vonnie we are joined now from frankfurt by bloombergs matt miller. Some announcements today, not just a policy decision in three parts, but also Forward Guidance from mario draghi. What were your Key Takeaways . Matt an explicit request to government to step in with more fiscal accommodation. I thought it was interesting when we first got the headlines because a survey of economists had set out the expectation for 30 billion euros worth of assets per said his of asset purchases for one year starting in october. Draghi came out with only 20 billion euros not starting until november 1, but that could go on theoretically forever. It is openended initially, there was a little bit of disappointment, and then i t somof the market started reading that as more dovish maybe than they had initially expected. Then cameas up, and down. German yields were up, and then came down. In terms of the key interest rate, it was widely expected he would lower that 10 basis points to 50. This is somethingthis is somethe been really concerned about for a long time. Markets dont believe that the tiering set out in todays press conference is really going to do a lot to help banks. If you look at the euro stoxx banks index, it is down substantially, and almost every bank in it is a loser today. The market is concerned that negative rates are going to have a negative effect, or continue to have a negative effect on banks, even with tiering in this third rate of tltros. Vonnie it was interesting because, obviously, it was his last press conference, but he was very muted when it came to responding to the president s tweet. But when it came to the banks, he said youve got bigger problems than just negative Interest Rates. Matt right. This is his second to last press conference. He has one more. His response to President Trump, hes had this response always it comes to trumpstweets, since tweets about draghi are always about the possibility of moving the currency. Draghi has a standard answer that he doesnt target the currency. Hes only concerned with his one mandate, which is price stability. I think his response to banks was really interesting, and youre right. He took a swipe at the banks ratio, that it is too high, and they need to get it under control. I dont think markets would disagree. Deutsche bank, the markets have always had an expectation for more cost cuts, and it looks like they are delivering on that now. But the question is, how much damage can these negative rates do . Draghi said he thinks negative rates have been very positive in terms of spurring growth and boosting inflation. The problem is when you look at growth and inflation, they are both too low, certainly lower than the ecb target. Vonnie matt miller, think you for that. We will be back with you in frankfurt in just a little bit. For more on the ecb rate decision, we are joined from San Francisco by axel merk, Merk Investments president and cio. The euro is trading stronger right now, but there was a period of weakness with a definite whipsaw to the market action. Why is that . Axel the market shall be excused for being a little confused. It is considered very dovish that qe restarted and is openended, but finally, central banking is no longer data dependent, so the guard gets a chance to define how it so lagarde gets a chance to define how it evolves. I dont of the risks, think Monetary Policy helps. Surveys asking whether any of this action would help inflation or growth, and both said they wont. Trump should be excused for thinking this may be targeting the currency. Im not suggesting that is the intent of the ecb, but it is hard to see how this will really help. Clearly, draghi himself says he has thrown in the kitchen sink. He didnt use those words, but he said he got everything at it, so what is next . We should focus on what lagarde can and will do down the road, but these are fiscal issues we are facing in europe and the world, actually. Vonnie and mario draghi definitely making that point during the News Conference as well, but theres only so much he can say about fiscal policy or so much he can urge fiscal policy makers. Do you believe that Christine Lagarde will somehow change or tilt policy . Axel we will have to see. One of the things she has said in her confirmation hearings is that agility is going to be her theme. She defined that as all the she defined that as all the extreme reactions. One thing the extraordinary actions. One thing i would like to point out, she was nominated july 3. Ever since, spreads have come down quite radically. We are seeing good policies in greece and italynd todays action, but i would not underestimate the impact that lagarde has. I think we will move more to the next phase in the euro zone when the debt will be more socialized, meaning or the germans will be more liable for italian debt. Canourse, how much she influence on that, that will be the path she is on. That has several implications. It is good for the spreads, but not necessarily good for the euro versus the dollar and other currencies. I do think we are entering a new era for the euro with lagarde coming in. Vonnie i want to ask you your forecast for the euro. Perhaps you give us that first . Axel i can give you a forecast, but i would not be surprised if the euro were to weaken over overme play bogus time, simply because lagarde has a very activist approach. Running forlied president , she gave quite a socialist agenda of wealth readers to be should. Minister, she has policies that will all lead me to believe she will be in the dovish camp and be very creative. When she uses words like agility and embraces these policies at the ecb in the past, i think it is an open ended policy shes going to have, and we are only starting to see the creativity at the ecb to coerce things moving forward. In that context, the euro will hold together, but the euro may well be weaker. Vonnie lets talk about the program. We have an extra 10 basis points into negative territory for the main interest rate. We have qe basically at infinity. We have tiering for the banks. Do you believe any of these will make a marginal difference that will boost inflation . Axel my twitter survey says no. Do you believeclearly, the lowet have a little bit of an impact. The challenge is that every day, under the yield curve and Interest Rates. To give you my outlook, we already saw yesterday President Trump tweeting that some tariffs be postponed for two weeks. We have a window between october and december where we can ease tensions on the trade front. That would be very good for european exports, notably german exports. Clearly there are other headwinds, but turkey, brexit, those sort of things, all these we have the glass halfempty right now. I think the glass will be halffull on some of those. We have a u. S. President who wants to get reelected. In order for that to happen, he needs to resolve some of the issues he can control. Back to the Interest Rates, they might have a marginal impact, but remember, the transmission channel is not broken. That is what people were concerned about. Were announced, we shod question how much demand there will be. Theres plenty of credit available. None of these are really the issue. It would be very helpful for central bank to just admit that, that there is only so much they can do. Draghis playbook has been he will do whatever it takes, he will cut rates. I think he has a very liberal interpretation of what the mandate is. We will have to see what lagarde is going to do, but it appears we will get more of the same. Vonnie axel, i want to break some news right here. Trump advisors are apparently considering an interim china deal to delay tariffs. Discussions are preliminary, and the president has yet to sign off, according to people speaking with bloomberg. Once again, advisors are considering an interim china deal to delay tariffs. They have discussed limited trade agreements, and even to roll back tariffs the first time in exchange for chinese commitments on intellectual property and agricultural purposes, according to people familiar with the matter. We did see strengthening for the yuan earlier, and that continues 7. 0777. Onger now at how would this change the state of play for u. S. Markets, not just currency markets, but more broadly . Bond markets and the outlook for the Global Economy . Axel just keep in mind, President Trump, like any president , would like to get reelected. Also, President Trump can control the agenda on trade. He wants trade to be in the news. I theory has been that starting in october, he will ease tensions where they matter and maybe ramp them up where they dont matter. Maybe he will impose tariffs on french wine. Difference wont like it, but it wont affect global gdp. It is in trumps interest to ease tensions so that Business Investments resume and things get more normal on that front. We have very low unemployment. We had easing trade tensions. We have Interest Rates being cut. All of that sets us up for potentially a hot economy heading into the election. A few days ago, i was the only one saying that is a risk, and it is still more of an outlier scenario, but it is certainly a feasible scenario. In the meantime, we have Central Banks trying to solve problems they cant solve. When the fed says they monitor political developments, the fed says they are tweet dependent. That makes no sense at all. They should look at the data, and yes, they will be late, but you cannot be early when it comes to trumps tweets. Vonnie we are not seeing a huge amount of reaction in u. S. Markets. 0. 3 , the nasdaq up 0. 7 . The dollar is actually weaker. Still at a strong level, but weaker by 0. 25 . We already knew that there was a twoweek delay to certain tariffs. China then did come and say, henley talk about the national say, can we talk about the National Security being completely separate from trade . Is there a separate route for this . Will trump go for that . Axel trump wants to be in the headlines an appeal to his base. Even if he says it, he might switch his mind on this again. The important thing is we will make some progress, but us we make progress, we will see some headlines going one way or the other. It is a process. We are not going to have a trade deal before the election because it needs to continue to be in the news come up so we will have in the news, so we will have an easing of trade tensions. But this is a process where we have to listen to the tweets, where we have to go stepbystep. Obviously, Business Needs to adjust as part of that world. In the goal has to be coming months to make sure we are not sliding into recession. That is an extra parameter that was less of a concern a few months ago. That is the context we have to see it in. I dont think theres going to be a clearcut answer on how exactly it is going to play out. It is a process. The folks that will benefit from it is journalists because you guys can cover it. It. Ie vonnie thank you for joining. That is axel merk of Merk Investments, the president and cio, from San Francisco. I want to reiterate the headlines crossing the bloomberg, which are not having a huge rocket reaction, except perhaps the offshore brenneman be the offshore renminbi. Trump advisors are considering an interim trade deal with china that would involve commitments on intellectual property and purposes, according to people familiar with the matter. It would be a limited deal that would consist in a delay. Bloombergs shawn donnan is with us from washington. It doesnt strike me that any of this is very new. The u. S. Has trying to get china to commit on intellectual property for so long. Why would it commit now . Shawn i think whats new here is the packaging being discussed. In may, we were talking about they wondered 50 page, allencompassing agreement that fit everything talking about a 150 page, allencompassing agreement that fit everything. What we understand is under discussion in the white house is an interim deal to freeze the conflict, if you will, rather than resolve it. That interim deal would involve some chinese commitments on intellectual property, and we should point out that earlier this year, china did pass an intellectual property law, and has promised regularly that it would respect intellectual property of foreign investors. Theres a new ip court system there, so this would probably be more focused on something that to to. As already committed again, we saw the president tweet about that this morning, and that is something he is foredibly sensitive to Rural America overall. The idea here is to try and stop deescalation. To get back to a position where they can have longerterm negotiations, but the trade deal stops being this unnerving shadow over Global Financial markets and the Global Economy. Inside the white house, there is concern that if you escalate tariffs further, there would be more economic damage in the United States in particular, and i coming into an election year, that would be a bad thing. They want to turn things around their. They want to turn the direction around. Importantly, for the first time, we are hearing people inside the administration considering rolling back tariffs. That is very different from the escalation we have seen through the summer. The direction so far over the past year has been entirely in one direction, and that has been more tariffs, not less. While we are seeing a turn up in the broader indices, i want to point to things like the european car index, for example. The stoxx 600 autos up 1. 4 . Several commodities are also adding to gains, as well as the offshore renminbi. I want to bring in Michael Mckee , who joins me in new york. It doesnt seem like chinas overtures were met with a little bit of optimism on the part of President Trump and his advisors. Michael i think theres a couple of things you have to keep in mind. Our story says trump advisors are considering this. The president hasnt signed off. We have seen this tugofwar within the white house going on for two years now, where you have the china hawks and the more practical advisors to the president. At any one time, one is above the other. It looks like at this point, we are seeing the practical side come through. That may be because weve seen a in the pollsws recently for donald trump, in ts recently for donald trump, with six in 10 americans saying they expect a recession next year. Shawn did a great story going out to the manufacturing states that trump narrowly won in 2016, and he is losing favor there. It appears to be a pragmatic wing in the white house that has gone to the president and said, look, you are only hurting yourself here. If you can concoct some sort of interim deal to take the pressure off, youre going to be much better, and you can always come back to this later. I suspect that is kind of where we are. I sort of been waiting for this, and i imagine shawn has been as well, that the president could come up with something that doesnt need a whole lot in the shortterm but can be packaged as such. Vonnie i want to turn to my terminal. One day, you can see that all of the emergingmarket currencies, with the exception of the argentine peso, having its own problems, are higher. This is obviously on the ecb to theut also a reaction idea that we might be getting somewhere on trade. Next . T happens will the president keep this story out there for a while, or will he actually make some kind of positive statement . It does feel like it is being floated. The president has not fully decided. Is there a response from china necessary before the president says something . Shawn the first thing is we need to focus on what is actually happening inside the talks. We still have the chinese who will come here next week for working level talks ahead of higher level, ministerial talks in october. Those still have not been scheduled firmly, but there is expectation that it will happen after october 1, after the move that we saw on tariffs last ,ight from President Trump obviously between october 1 and october 15. There is tension inside the white house between the hawks and the pragmatists, if you will , and that is a tension that is here more broadly in washington. President trump is going to be watching carefully the reaction from capitol hill to news like this. There ares up increasingly worried about what is happening in hong kong and shenzhen, and they are not in the mood to give china very much. So donald trump has a tough political alley to navigate here, and that is what hes been doing all along. This is not the end of it. Vonnie michael . Michael hes also going to be watching the wall street reaction. We have the best trade reporting team in the business, but this is kind of the way things happen in washington. You get a leak of Something Like this because somebody is floating a trial balloon. Trump advisors who want the president to make a deal like this are looking to the reaction that youve been talking about in the markets, generally positive. They can go to him and say, if you do this, it is going to be seen well. Your barometer of how the economy is doing is going to go up, and maybe we see some dollar pressure taken off, and this is going to be good for you. It is another argument that they are making, and part through us. Vonnie is the timing a little bit odd . A few minutes ago we were talking about the ecb, mario draghi, what was changing and europe. Tweeted, and it was a little bitter. Look at what they are doing in europe. Michael but is that his expectation, or did they actually agree to something . I dont think it was specifically tied to the ecb. I think this is something that has been in the works, particularly as they saw what has been happening with the economy and the public reaction to it. One of the most important aspects, as someone pointed out, is they are talking maybe about rolling back some tariffs. That was a chinese precondition with going ahead precondition for going ahead with any kind of deal. This may be a sign that the president is considering that. Vonnie im glad you mentioned that because that is it would be a walk back on the part of the administration, right . The administration doesnt tend to walk things back easily. How much would this be a signal fire to china that we are ready to do something here . Shawn this is not an administration that admits any mistakes, but there is also a need, and they recognize that, to extend some olive branches, throw some carrots to the chinese. What we are hearing is that there is a view inside the at 250ration that billion, the 25 tariff, they think that is a number that the u. S. Economy can bear. Once you start getting higher than that, and that is where weve been going, things get worse. A lot to watch here, but tariffs is the news. Vonnie thank you for joining us from washington, d. C. Shawn donnan, trade reporter, nationalel mckee, our economics and policy correspond in. Now for a look at markets, heres abigail doolittle. Abigail some of this has to do with headlines that you all were just discussing that President Trumps advisers may be considering an interim china deal to delay tariffs, taking stocks towards session highs. The bullish attitude really started in the asian session. The shanghai composite up about 0. 75 . 0. 4 percent. X up investors going into stocks for the fourth day in a row. Lets take a look at well. The commodity at oil. The commodity complex showing it a little further. Oil falling at one point 2 to 3 on the news that President Trump was considering somehow delaying or lifting iranian sanctions on oil. We see here on those china headlines a little bit of a lift off the bottom. It had been down 2 , now about 1 , but over the last two days, pretty bearish, down 4 . This is influencing thethis is , the sector composition for the s p 500. As for some of the top movers, amazon in that Consumer Discretionary space, along with starbucks. We have a few other names higher. Overall, a risk on session. Vonnie thank you for that. Up next, and exclusive conversation. We have universal investments spitznagel on the current market conditions. Discuss the ecb and more. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Vonnie this is bloomberg markets. Im vonnie quinn in new york. Lets check in on bloombergs first word news. Heres viviana hurtado. Viviana we will begin with that breaking news a moment ago about Trump Officials considering an interim trade deal with china that would rollback tariffs for the first time. In exchange, china would make commitments on intellectual property and agricultural purchases. The talks are preliminary, and President Trump has yet to sign off. Negotiators will be resuming negotiators will be resuming trade talks in the coming weeks. The u. S. Core inflation rate rising more than expected to hit a oneyear high. From the previous month, the gauge increased to 0. 3 . All of that is a signal inflation is firming up. Maytariffs on chinese goods push Prices Higher for americans. The European Central bank is taking steps to reflate the economy. Draghiesident mario got the bank to start openended bond purchases. The ecb also cut a key rate further below zero. Incoming information since the last governing Council Meeting indicates the more protracted weakness of the euro persistence ofhe prominent Downside Risks and muted inflationary pressures. Viviana draghi has one more policy meeting next month before his term ends. The National Football league putting up 3 billion to find out who can build a better helmet. The 18 month long contest comes at a time when football is under fire for the risk of repetitive head trauma. Manufacturers, engineers, and unterman orders are expected to take our and entrepreneurs are expected to take part. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im viviana hurtado. This is bloomberg. Vonnie thank you. Opec and its allies met in abu dhabi to discuss output cuts and the strength of demand. The Saudi Oil Minister sees supply and demand pretty fine right now, but any further discussion of cuts will wait until december. Joining us from london is bloombergs Stuart Wallace. Obviously the oil trade is being affected by the ecb today, and the trade story as well, but bring us up to date with opec discussions. Stuart this was the new saudi arabia and Energy Ministers first meeting. The first big take away for the il market, as youve previously signaled, is there is no immediate change in the opec policy. But the real problem they face was revealed in a report this morning from the iea that said next year, they will have a mountain to climb. Youve got demand growth softening, a trade war going on, economic concerns all over the place. At the same time, output continues to expand from outside the opec grouping. Opec is going to probably have to come back in december and react more strongly, or at least make the right noises. Above all that is the ongoing problem in saudi arabia, effectively having to do all the running. They are cutting 500 million saidls more than they they would. Vonnie what do you went is up right what do you anticipate oil prices will do . We are between 52 and 58 this week, which seems a rather wide range. We got inventories, and we were at 58, 59, and now on this news we are at 52 and change. Stuart i think you are right, the price has swung pretty wildly this week. The thing i am pointing to to explain at least some of that move is the firing of john bolton. Between when you had the announcement of his firing and revelation yesterday that actually that was about the u. S. President seeking to pull back at least some of the sanctions on iran, we saw the reaction in the oil market. Basically, john bolton was worth about 4 on the oil price. So that really is telling you to be a little bit concerned about what might come next. Over the next several months, if we see a watering down or pull back from those sanctions, that potentially means a lot more barrels on the market, and that is an even bigger headache for opec going into next year. Vonnie will there have been an impact on opecs thinking on the amounts that Oil Companies can drill for after todays ecb announcements . Stuart to some extent. There was a really Interesting Data point in june that really only came to light today, where the u. S. Overtook saudi arabia in terms of oil exports. We dont expect that to persist forever. It is a little bit of an anomaly in the data, although they are tracking pretty closely next to a next to one another. Another. I think anything that comes from the Opec Plus Group that reassures the market they will continue to try and control supply just adds encouragement to all the private companies, particularly in the shale patch. They can still get financing. Theres really no reason for them anytime soon to curtail supply. Vonnie what do you anticipate the spread between brent and crude will do . Stuart very difficult. Between the u. S. Contracts and brent, weve already seen a very strange couple of years. About 25of my career, years covering oil now, the u. S. Contract always trades at a premium to brent, and that has really reversed in the last couple of years. That is about shale. There is no sense that is going to go away anytime soon, so i am not expecting a big reversal over the next few months, but it is something to keep an eye on. With iran potentially coming back into play in the oil market, that is going to have a big impact on brent in terms of competing grades. Vonnie bloombergs Stuart Wallace from london, thank you for joining us today. Once again, brent crude trading at 59. 94, down 1. 5 . 54. 81, once again. Off the lows of the session universal investments is best known for its black swan approach on hedging market downturns. Erik schatzker sat down with Mark Spitznagel, the universal founder and cio, to ask if it is still possible for bonds to offset the risk of an equity slide. Harder today,lot thats for sure. Bonds are complicated by the fact that they have these crosscurrents going on. When rates are low, they raise the value of things like stocks. At the same time, there is historic flight to quality in bonds. There are these informational crosscurrents, and it is not clear what we are going to see, but the rates where they are today and the negative rates throughout the world are an abomination. I think it is pretty plain to see that bonds are not a safe place to be. Certainly not a good risk not a good Risk Mitigation strategy. Erik what about all of the strategies that are built on the notion of bonds being a Risk Mitigation strategy, specifically risk parody specifically risk parity . Mark it is a big problem, especially when it is done in a levered way that risk parity requires. We have these sort of statistical hedges and more mechanical hedges. Hours fall in the category of a statistical hedge. We can extrapolate that to this insanity, where we can take such a value that this is going to such a view that this is going to devalue our portfolio. Credit has to go out in a crisis. Low vol has to go out in a crisis. Bonds are not clear. We dont even know what the sign of that correlation could be in bonds versus stocks. That is how bad it is. Erik from an investors point of view, there are a number of ways of looking at this. You should be concerned about the risk you are taking relative to the reward you might get, but some people are just looking for returns, and they say a year ago the 10 year treasury was yielding 3 . Today it is yielding 1. 60 . Some people think it is headed negative. That is the case, i just need to hold and mike a lot of money. Mark i cant argue with that. You make a great point in that we need to think about a trade like that. We need to think about bond investing is much more of a technical allocation as opposed to a strategic one. , youhnical one would be got to make this call right. Youre making this macro call. You better be right. A strategic one would be more about how you structure your portfolio for the long run. How you raise your compounding based on how all of these pieces move together, visavis each other. I think people understand that when they are putting all this money in bonds, it is no longer a very good strategic allocation. But it might be a good technical one. I dont know. Erik what if it is a strategic allocation and you need to hedge that . Where you had your bond risk . Mark we need to hedge the hedges, and then we need to hedge the hedges of the hedges. Once you ask those questions, it is plain that this isnt a very sound, safe Risk Mitigation strategy. Erik you called the situation we are in insanity. That is a bit of a judgment, dont you think . Mark negative rates is insanity by any objective standard. Erik 17 trillion of negative yielding debt. Mark it is insane, and over 1 trillion of negative yielding corporate debt. How do you justify that with rates that are so low and a yield curve that is so flat . It is dignifying panic and a coming recession. Erik at the very least, the right market here in the United States is still positively yielding. But as we just discussed, elsewhere in the developed world , it is mostly a situation of negative yielding sovereign debt, and in some cases, if you will, crazier things. Negative yielding danish mortgages. From a mechanical standpoint, what does it mean when assets are liabilities and liabilities are assets . Mark again, its insanity. Its part of this Rube Goldberg world we are in, where you got this strange interconnectedness and they start liking meaning. I cant even answer that question because there isnt any meaning to it anymore. But i hear what you saying. Is it a bad tactical play to think that bonds could even edge higher, and rates are going to go lower . I do think there is going to be endless accommodation by Central Banks, and the fed specifically. Erik so it might not be a bad tactical bet. Mark im not even in that business. I dont want to make these macro calls. I think longterm macro calls and trades like that is a fools errand. Vonnie universal investments founder and cio smart and cio Mark Spitznagel speaking with bloombergs erik schatzker. Coming up, the democratic president ial candidates set to debate in houston tonight. Joe biden and Elizabeth Warren facing off of the first time. Lets check bond markets now. This is where we saw the must reaction following the ecb policy decision and Forward Guidance. Italys 10 year yields down 14 basis points. Plenty of buying in italy, spain, portugal, greece. Not so much in germany. It is going to have less of an impact on germany. The german 10 year yield move already happened before today, trading at 55 basis points. More on the ecb trade maneuvers and everything else. This is bloomberg. Vonnie live from new york, im vonnie quinn. This is bloomberg markets. Lot going on a lot going on that has markets moving today. We had the ecb meeting earlier today and News Conference. We saw a rally off the back of that, particularly in european bonds. The euro is stronger against the european dollar by a move of almost a full big figure in the last few hours. Continued strength and more strengthening offshore for the china yuan. It is now stronger by 0. 7 versus the u. S. Dollar. Started off the session already stronger. We are now at 7. 05 and change. All of this is good news for u. S. Equities as well. Incremental moves in china go incremental moves in china go she in china negotiation setting the s p 500 up. The banks in europe are experiencing a little turmoil today, down 0. 2 . Mario draghi offering them a gift in two tiers in the new tltro 3. Also saying banks have structural problems, so bank stocks taking a bit of a hit. The democratic president ial hopefuls gathering in houston for termites for tonights debate, with former Vice President joe biden leading in national polls. Senator Elizabeth Warren has announced a plan to expand Social Security benefits funded by a tax on the wealthiest americans taylor joining us wealthiest americans. Joining us from washington is numbereds Kevin Cirilli is bloombergs Kevin Cirilli. Whatever looking for tonight . Kevin front runner joe biden is going to be going headtohead against senator Elizabeth Warren and senator Bernie Sanders. The predebate jabs have already been exchanged. The Biden Campaign calling her a hypocrite, criticizing Elizabeth Warren for how she would not fund raise come but then fund raise with big donors if she were the nominee. Surrogates i talked to say they want to have that debate every day to contrast themselves with the Biden Campaign on policy. Ive got my eye on tariffs. How will the economics fight play out among the progressive and centrist candidates on that stage . Elizabeth warren and Bernie Sanders have long called for tariffs to be utilized as a tactic from an economic standpoint when negotiating with other countries. Centrists, along with beto orourke and joe biden, have been more brains of have been more apprehensive. Which candidates try to make this a fourway or five way race . So much of this has been biden, warren, and sanders, but look for a breakout moment that could propel any of them into the top tier. Vonnie speaking of the top two, is this a make or break moment warren . N or boren or kevin i dont think it is a make or break moment, but it is an opportunity for the Warren Campaign to show they can go headtohead with the formidable front runner like joe biden on a mainstage and draw that contrast and win. Remember, if you look at all of the polls, local, state and national, democratic polls all suggest that democrats want a win against donald trump. That is one of the biggest driving issues. Warren has to prove she can go had to get she can go headtohead against trump in a debate and win. Vonnie Kevin Cirilli in houston there. Lets check some reaction in commodities markets to the incremental moves in the china trade story. President trump apparently considering measures that would restart talks, including walking back some tariffs and delaying others. This if china would agree to some intellectual property moves. This is being considered, according to sources familiar with the matter, but the president has not made a decision. Have futures moving pretty substantially on the promise of china purchases. This is bloomberg. Vonnie live from new york, im vonnie quinn. This is bloomberg markets. Bloomberg has learned google has reached an agreement to pay 1. 1 billion in a settlement to end. O trenched fiscal bloomberg has learned google has reached an agreement to pay 1. 1 billion in a settlement to end two trenched fiscal cases, coming after years of outrage in europe over a texas case. Joining us a taxes case. Joining us is bloomberg legal reporter tony aarons. What is this in reparation for . Tony the french government says that google routed too much money through their irish unit and didnt claim enough in france. Therefore, the french taxes were way too low, and they are paying too much in ireland. Vonnie so what does this do to the overall tax bill that google is paying . Tony you can look at this story in two different ways. You can look at it as a google specific story about all the trouble google has had in europe over the past halfdozen years or so with antitrust probes, privacy probes, and tax probes. Or you can look at this is part of the entire european fight with American Tech Companies over taxes. That is really a big deal. A week from now, there will be the first hearing at the eu 13ts related to apples billion tax bill that was assessed by the european union. A little after that, there will starbucks. Involving vonnie it is so interesting. This isnt exactly google settling all of its back taxes. It is not exactly a fine. It is a settlement, so there is really no criminal liability even though these were fiscal fraud allegations, and it was a criminal probe. Where does this come in the context of overall settlements . , google terms of google has already paid 8 billion euros in three european antitrust cases. There are more privacy cases. Ireland has a number of privacy case investigations into google, facebook, and number of companies, the really, American Tech Companies keep running up against european regulation. Seen howll going to be it all rolls out. And levies on tech revenues generate billions of euros. Tony this find today is not related this fine today is not related to that new digital tax. Vonnie our thanks to bloombergs legal reporter tony aarons. Time now for futures in focus. Is dan us from the cme deming. We could talk about Agricultural Commodities on the president s tweet. We are seeing some movement in the likes of iron ore, hog futures, copper. Dan youre seeing quite a reaction, and actually, if you look at grains as well. Soy is up 2 on the day. Youre definitely seeing positive reaction. Pronged,come with a two at least the announcement was twopronged. We will have to see if they are grouped together. Maybe this will calm down if they dont agree to intellectual property initiatives. Vonnie is there a trade therefore you guys . Dan theres been a trade across the board here. Theres no question you are seeing some of the dynamic shifting. You are seeing the dollar coming under some pressure. Looking at the bond market, theres a big trade right there. It looked like a capitulation this morning. You are seeing global rates reversed dramatically after the ecb announcement. It felt like they basically threw up their arms, and now youre seeing selling pressure across the board and yields reversing globally. Of kkm dan deming financial joining us from the cme on this very busy day for traders. Lets take a look at markets now. We have seen quite the reaction in various markets. In the u. S. , we are actually paring gains. We will speak about all of this with Bruce Richards of Marathon Asset Management. The s p 500 is up 0. 2 . We are still getting leadership from the nasdaq, but also paring its gains, up 0. 4 . As a cue sq is the highest performer on the nasdaq. The worstology is performer in the s p 500. Youre going to speak about all of the macro moves in a moment. 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 peop 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. Vonnie 30 minutes left in the trading day in europe. From new york, im vonnie quinn. This is the european close on bloomberg markets. Lets go to europe, starting with equities. Not as much of a reaction to the ecb movement in equities as and bonds, but you see the stoxx 600 0. 25 , ande dax up the euro trading stronger. Almost a big figure move for the euro alone. We do have to figure in the incremental china announcements, apparently President Trump thinking about offering an olive branch to china. The ecb announcing it is going to restart qe. We saw a big move in italian, spanish, portuguese, greek bonds. Not so much in germany, according to dense cut according to danske. When it comes to italy, we are looking at the longest period