They are working around the clock to get these machines online. Juliette the u. S. Announces a trade deal with japan. The boe stays cautious as the brexit outlook remains uncertain. There is such a long way to go. Juliette plus a special bloomberg series highlights Climate Change. The average global temperature is going to go up a lot. We have to take global warming, have intensive Climate Change policy. Policy shifts being made are creating new markets. Juliette it is all straight ahead on bloomberg best. Juliette hello and welcome. This is bloomberg best. Your review of the most Important News and analysis from around the world. Lets start with a look at the headlines. The week began with a geopolitical shock that jolted oil markets while raising tensions in the middle east and beyond. Saudi aramco, Oil Facilities hit by an airstrike. They have cut saudi arabias will production in half. It hit the worlds biggest will production facility. Rebels in yemen claimed credit for the attack. The u. S. Is blaming iran directly. What we are hearing from saudi aramco is supplies are continuing. They are meeting customer commitments and are able to do that from oil and storage. No one expects saudi arabia to respond with a military attack against iran. President trump said they are locked and loaded based on who actually did that. If the saudis come out, they have not blamed anyone yet. If they blame iran, that is basically the end of it. The press agency, speaking of iranian weapons being used. What is notable is what they did not say, direct blame on the Islamic Republic for instigating the attack. The Trump Administration wants to put the blame on iran and Marshall International support to present a unified front. The international immunity, even u. S. Allies, not willing to go that far. Oil surging the most in a decade after an attack highlighted concerns about instability. I dont think that was a very severe reaction in the market. There are a lot of stocks out there, inventory, Strategic Petroleum reserves. The administration mentioned the Strategic Petroleum reserve early. It is what comes over the next few days. One, is it iran fingered by the saudis . The other is how long does it take to bring me supplies back in . The Saudi Arabian client has restarted and is processing about half the output lost. The kingdom expects it may take until november to restore full production capacity. By the end of september, it will be at capacity. You were able to meet shipments to International Customers . Whats we are able to meet shipments to International Customers. The overall message is one of reassurance. The goal was to get across to the market, we have suffered. There is some damage. As for customers, we will deliver what was promised. That is one of the things we took away from the ministers press conference. We are going to deliver the full contracted amount. We may not get it from the facility that was affected. We are going to get it from some of the stockpiles we have on hand. We are going to make the customers whole. The market, not too freaked out but there are larger risks. Money markets have been ravished by funding cuts. Forcing policymakers to step in for the first time in a decade. The new york fed injected 53 billion dollars into markets and said it would conduct an operation wednesday. What is this telling us about the fed and its control of shortterm rates . A lot of people are telling you the fed is losing control. If you look through a lot of their communication, everything is about controlling shortterm Interest Rates and they are slipping. People are getting nervous. When the fed loses control of Interest Rates, that is the ballgame. That becomes a credibility issue. It is going to test the efficacy of their policies. Whether people believe it is going to work. Market affected, 25 basis points. Also paying attention to future easing. The fed cuts its benchmark rates. It appears to go on hold. Three voters to dissent. The dot plot shows no cuts. However, seven of the 17 members still think another cut is needed. Five think no cuts should have been made at all. If the economy does turn down, a sequence of rate cuts could be appropriate. I am disappointed by what the fed has come out with. The market is priced for more action. One and a recovery made in the last hour of trading. Now it feels as though the market is not quite so worried about what can be deemed a hawkish cut. Intensifying trade conflicts have momentum tumbling. Governments not doing enough to prevent longterm damage. That is according to the latest outlook, coming from the Global Growth forecast. Are we heading slowly towards a recession . What we are seeing we are heading toward Slower Growth. Beyond that number you have quoted, it is a very low level of growth. Our message is to hold this uncertainty. Rely on the low rates which remind visibly low, lift the world out of this low growth danger. A third day in a row. What is there to learn about the repo market . Is this now a permanence to the new york fed . . The fed will have to implement a full allotment repo facility. A buffer they will have instead of these oneoff operations. It worked the way one would expect. We have some balance street constraints. The fed is the only Balance Sheet elastic enough to fund the dealer community. It has worked, quite frankly. Chancellor Angela Merkel pulling to get Climate Policies back on track. She says, we have to do more in climate. She talked about the potential for green bonds. Lets see how it plays out. If this is the first of several physical things germany is going to do to stimulate the economy. Right now, the German Economy has had a rough couple of quarters. The risk of recession is real. Lets see whether this package is something that will stimulate the economy. Oil prices had a wild ride. There are reports saudi arabia looking to buy super light. Iran is continuing to deny involvement in the attacks. Officials have made it clear they are working around the clock to try and get these machines and the infrastructure back online. We have sanctioned the Iranian National bank. That is their central banking system. It is going to be at the highest level of sanctions. The president says he feels like he has a range of military options. The actions to date suggest they are looking for a diplomatic way out of this. The new york fed will continue to a series of repurchase agreements amid signs of investor apprehension about funding levels. Can we trust they have figured out the right level . Today was an important today. Not only are they going to continue going over the 75 billion they are doing daily, they are going to do some 14 day long repo. Three overlapping allotments. A total of 90 billion at various points of new money coming into the market. Quite a step up from where they have been until now. Juliette still ahead as we review the week, conversations from a week long focus on Climate Change including thoughts from bill gates. Plus blackstones tony james ways and in the feds repo operations. And an exclusive conversation with malaysias Prime Minister and waiting. There is clear definite decisions being made. Juliette up next, more of the top business headlines. The election leaves israel more unsettled than before. There is a chance we go to a third round of elections. Juliette this is bloomberg. Juliette this is bloomberg best. Lets continue our global tour of the weeks top is in his stories. While the u. S. And china prepare for their next round of negotiations, the most recent data show the trade dispute is taking its toll. The data shows more weakness in the economy. Industrial output on the way up. Way below outputs of 5. 2 gain. An expansion of 7. 5 . It was quite a week across the board. Industrial output, the worst reading since 2002. Confirming a lot of it is due to a slump in the market, the feeling consumers are starting to crack, that is a key pillar. We saw the private sector, lagging government spending. It sets up the economy for a slow and to the year. President trump says the u. S. And japan have reached an initial trade accord which will be finalized. The president told congress the government will be entering an executive agreement with tokyo on digital trade. He made no mention of the threatened duties in Japanese Cars and he is set to meet Prime Minister abe next week. It appears this is headed to the done stage. The uncertainty hanging over the relationship. For the president , it was important to get a win. It looks like he is going to sell something and say he has negotiated a trade pact. Apple said they were unfairly painted as a tax dodger. The company is the worlds top taxpayer. They are urging that Eu General Court to overturn a ruling they pay back taxes to ireland. They say they pay the most attacks in the world. They claim the decision lacked logic or sense. They believe the numbers were tweaked in a way that presented apple in a bad light. The goal was to portray the company as paying no taxes. They have set out to pay the least amount possible. They believe if the arguments are validated, they can continue to get tough on american tech companies. Boris johnson meeting with european officials and luxembourg. The Prime Minister ended up skipping a press conference. The brits wanted to have a little side. You had an empty podium for the united kingdom. Venting against the u. K. , saying, this is your mess. The European Commission president things a brexit deal could be reached by october 31. The irish Prime Minister i would expect him to be honest. He says a deal is possible. When you look at the nittygritty, meeting the chief negotiator, if you look at the details, there is a long way to go. In israel, Prime Minister netanyahu backfired with deadlocked results. There is uncertainty about who the next leader will be. Netanyahu did not get the results he hoped for. The best he can hope for is returned to office. That means now we turn to political gamesmanship as parties work to build a coalition and secure the president s not is to lead the next government. We could see a National Unity government. There is even the chance for a third round of elections. Making a Rate Decision this month. They held as many anticipated. Governor kuroda saying his team is paying closer attention to inflation. Could we argue the change in guidance, particularly along longawaited acknowledgment their Movement Toward the inflation target, is all but a mirage . There is no doubt the impact of the trade war has been heavy in japan. Exports down nine months in a row. The labor market is still strong. We are talking about reexamining the economy and prices. Being ready for the next policy meeting. Norway central bank moving further away from the pack. They raised the benchmark rate. It is the highest level in almost five years. This is going against the wave of what many are doing. Is it immune to the Global Economic downturn . Overall, that is the background for the decision. Increasing policy rates. Overall, employment is very low. Inflation is at the target or slightly below. There is a time to make one further step towards a more normal policy rate. The boe is on hold. If exit uncertainty persists, inflation likely weaker. Any surprise for you . They talked about rates potentially going up. This is an economy close to potential if not past that. We are not seeing productivity growth. We are expecting to see that coming through. We are focused on the brexit date. They reiterated it, if you had a no deal scenario, rates could go either way. Everybody assumes in the end, they would cut rates to support the economy. Juliette you are watching bloomberg best. Malaysias Prime Minister took office last year after forming a Political Coalition with a onetime opponent. The 94yearold said he would eventually step down. But the timing of the transition was not set in stone. He said the plan for him to juliette coming up, more compelling conversations. How it is getting harder to find opportunities. Plus, the repo rate problems can be solved. And many guests discussing Climate Change. Solar and wind is helpful, but the sun does not shine 24 hours a day. Welcome back to bloomberg best. Time now to revisit some of the weeks most interesting interviews on bloomberg television. Howard marks had plenty to say about distressed debt. His hedge fund has been scooping up nonperforming loans in china has dozens of companies struggle. To repay what theyve borrowed he spoke exclusively to bloombergs lisa abramowicz. Everything is risky, if you cant figure out what youre doing and you are paying too much. The other thing is when there is too much demand, you cant get great bargains, and if you succumb and participate and pay too much, it is risky. Do you expect to see another 2008 type opportunity, which is one of the years i imagine youre talking about, in the next couple years . I dont think we are in a bubble, i dont think we are going into a bubble, comparable to 2008. Theres no reason to think we will have the panic in the Fourth Quarter of 2008 following the bankruptcy of lehman brothers, another Global Financial crisis. There has been a great deal of debt issue that has been a battle to be the person who buys that debt. The battle has taken the form of bidding down the quality and safety, so there is a lot of risky, aggressive debt that has been issued in the last five plus years, and when that collides with a weak economy, i think there will be great opportunities. That was howard marks on bloombergs money undercover. The show puts the spotlight on the world of alternative investments with a new episode every week on bloomberg television. The feds decision to inject billions of dollars into u. S. Money markets this week sparked large discussion on wall street. The blackstone vice chairman appeared exclusively on daybreak asia, and says he doesnt think the intervention is a big deal. I dont think the repo market is broken at all. These kinds of things used to be common. They havent had to do it in a long time but it is important to remember that the rate spike looks very scary but it is only overnight. It is more of a concern, a technical problem in the shortterm that the fed is addressing. The fed wants stability above all else, so im not surprised they stepped in. We can accept that the fed got into this by purchasing two point 5 trillion worth of treasuries in the wake of the Global Financial crisis. What is the plan of getting out again . The plan for getting out is the big unanswered question. The winding down of that balance is a whole other issue. My idea is that will be with them a long time. And the longerterm, does the fed need to come out with a more permanent mechanism . We really dont have something to address liquidity shortages here in the u. S. You need to stay do you need to see a standing repo facility . It may be beneficial but i dont think its necessary. There are periods of time, measured in days, when that liquidity is sometimes stressed. A lot of the banks these days dont carry the inventories or have the liquid capital available that they once had crisis. I think the fed has the tools as it sits today to solve the shortterm problems, and i dont think they ripple through into the basic trading markets in real economy. This week, bloomberg took part in covering climate now, a global collaboration of more than 220 news outlets to highlight Climate Change and its impact in the lead up to next weeks United Nations climate summit. Here are some interviews in that series, starting with erik schatzkers conversation with bill gates. He has invested billions into clean energy and other projects to counter Climate Change. His latest strategy is not to try to prevent it. He says he wants to help those hit hardest by Climate Change to adapt. We are not going to have a year where the world is cooler than it is today. The average global temperature is going to go up a lot and in the next 50 years it wont go down. Deciding how much it goes up two degrees or three degrees or four degrees that is in our hands. If we ignore the problem, you are going to head to Something Like a four degree scenario, forest fires, days that humans cant go outside. It is a pretty extreme case. Knowing how seriously people will take it and what innovations will come along will determine whats in that two to four degree range we are by the end of the century and i certainly hope we dont run any experiments but it will take a lot of commitment and a bit of luck on the innovative breakthroughs to be able to get there. There are number of different ways for fighting Climate Change. Renewable energy is clearly one of them. Do you think government should subsidize global energy, or should take up be dictated by Market Forces . The cost of wind and solar has come down dramatically. Some of that subsidization has driven that volume down. Now they are going to come down. The tax benefits should be shifted into things that are more limiting, like energy storage, offshore wind, with the huge premium price, lots of places that we need the market to get going. The progress with solar wind is very helpful, but the signed but the sun doesnt shine 24 hours a day. In the winter you cant get as much. And that is just for the electricity pieces, only 25 of emissions. We need a lot of efforts, that accelerated rollout it is less than 10 of all energy generation. The Global Economy has a lot of energy generation. But it is one of the good things that is developed. Is europe prepared for something that could look like a supply shop to energy . Well, as you know, we have an import dependency of 90 in the european union, and we have primary Energy Consumption we are still highly dependent on oil. Even if we become a Carbon Neutral economy by 2050 and our dependency will be much less. But we also have directives that regulate i suspect it will become normal, the sooner the better. Commissioner, do you see a lesson to be drawn from the european policy mix because of what is happened in saudi arabia . We already have learned a lesson. We have to have Climate Change policies. That means getting out of fossil fuels, development of clean energies in renewables, increasing efficiency. That is why we have put in action all the inflation in that direction and that is why we are working on 2050, to develop sustainable energy. It would require huge financial flows, and we have to deliver the private sector. 5, 10 years ago, a lot of the philosophy around climate was either take action on climate or promote growth on jobs. What weve seen over the past few years is that was a full choice, that a lot of investment will result in new jobs in new Market Opportunities and considerable Economic Growth. You look at china, major investor in renewable energy. Germany doing the same. In no small part because they realize that the policy shifts that are being made are creating new markets around more energyefficient homes, around more fuelefficient vehicles. That these are multitrillion dollar opportunities where they are seeing massive opportunities to invest. Im glad you brought up germany. The auto sector is the primary example. They have all the standards for Renewable Fuels which is killing the automakers, and having them retrench. Thats not a good thing for the German Economy. Who pays for all of this . I think it is important when one looks at the jobs created by a clean energy economy, that we look at this both in aggregate and what it means for specific communities. In the United States there are over 3 million jobs in the Clean Energy Sector in renewable and silver and wind efficiency stop thats three times as many jobs in the fossil fuel sector. The problem that you rightfully point out is for those people that may lose jobs, we need to invest heavily in those types of retraining programs to ensure they are able to capture the benefits of the greater jobs we will see in the clean energy economy. You are watching bloomberg best. Lets resume our roundup of the weeks top stories in business, finance, and politics. With the latest setback for wework on the bumpy road to its initial public offering. Wework delayed. The Company Pushing back its ipo as concerns mount over valuation and business prospects. Who is calling the shots . Are the bankers saying suddenly lets go back . Is it softbank . Adam newman . We are looking at the timeline and we reported last week that its a very observant orthodox jew, Rosh Hashanah is next sunday and to get an ipo out the door they would have had to launch the roadshow yesterday and go public next friday. The timeline was too tight. The Corporate Governance changes they made it takes time to reeducate investors and get that demand. I think they just came up on a time crunch, they put out a statement saying they intend to go public by the end of the year and i guess all eyes are on that. United Auto Workers Union leading its first strike against General Motors in 12 years which means nearly 50,000 workers walked out today. Gm offered 7 billion as an investment in eight u. S. Plans and 5400 jobs. The union says the proposal fell short in key areas including health care, use of temp workers and the length of time it takes shorter members to get to the top scale pay level. What gm offered was to a certain degree job security, or you pay off 7 billion in investment at eight different plants in four states, up to 5400 jobs coming in and even the battery plant would rehire some workers who lost their jobs. But we still month some of those entrylevel workers to get a quicker ramp up. Probably the Biggest Issue is temporary workers. They want some sort of set path to become a permanent worker. Gm wants more attempts, because well they have 7 of their workforce, gm has as many as 20 . The royal bank of scotland has appointed a new chief executive officer, making her the first woman to head a top u. K. Lender. She will take over from the outgoing chief executive. She has been groomed for the job for quite a long time and is taking over november 1, the day after the brexit deadline. Although it is still one of the top u. K. Lenders to have a female ceo and a female cfo, but yes, brexit obviously looms large in the bank is grappling with competition in the Mortgage Market and uncertainties in the small and mediumsized corporate sector. The Hong Kong Exchange outbid the London Stock Exchange hitting another roadblock. China is voicing opposition to the move. They said this weekend that there are persistent worries about hong kong, given the unrest. Looking at the share price it is down just a touch today. There have been a couple instances in the past that shows the deal is suffering setback after setback. We had the offer rejected, a scathing rejection, more intense than weve seen in a long time, and the official mouthpiece of the communist party this week came out and almost solidified that, praising them in their decision. I think it is too early to say whether it is dead but it is certainly suffering setback after setback. Purdue pharma filing for bankruptcy to protect itself from more than 2000 lawsuits accusing it of fueling the opioid epidemic. The maker of oxycontin has a settlement plan valued at more than 10 million. The owners would hand over the company to a trust by counties that have sued the companies. We have known this was coming for a long time, we have seen them in talks, and there are certainly some disputes about how much they should pay. I dont think this filing is by any stretch of the imagination the end of this discussion, it will probably be a long discussion in Bankruptcy Court over what exactly happens with these assets if this proposal goes ahead. Shears a fedex falling in afterhours trading citing worsening trade tensions and a weaker Global Economy. 11 to 13, that is quite a drop from the previous year. It is, and it comes right after they reported their yearly earnings in june and brought down Expectations Quite a bit. They are bringing them down a big chunk. Definitely the macro picture is weighing on them, but they have this european operation that is not doing so well. They got a company in 2016 that they are still having problems integrating, and on the home front they are trying to reengineer, so to speak, their domestic ground operations so they can be more efficient for ecommerce delivery. As you know, they pull back from amazon and are doing all kinds of changes that cost money at first, but in the end should save money. They call it bud light, ab invev is brewing again, but in a scaleddown version. They are sent to raise slightly under 5 billion usd, roughly half its earlier target. Why are we suddenly hear again . The market hasnt changed fundamentally since the previous was pulled, but what has changed is that ab invev sold off the Australian Unit and australia was seen as the Slower Growth business, more mature, but a drag on faster growing regions like china, which make up the bulk of the asian units. What has changed is that they now have an investor from singapore which should hopefully instill some confidence in other investors that they can come in, whether there was a cornerstone previously. This morning, they took cyclical measures to revise Economic Growth from a six year low. They are cutting tax on local businesses, the effective tax rate being lowered by nearly 5 . Its a 2 billion stimulus, one of those Desperate Measures for the economic slowdown with one of the Fastest Growing economies. Effectively they become about 25 , setting up manufacturing facilities with a much lower tax rate of 17 . Jump into the Bloomberg Library with me. Right in the middle, five officials have said with a are happy with the cut today. There are seven who see one more this year. Nobody is arguing for two more cuts, five who were against it. There are about 30,000 functions on the bloomberg and we always enjoy showing you our favorites on bloomberg television, maybe they will become your favorites. Heres another function youll find useful, it will lead you to our quick takes, where you can get important context infested light to timely topics. Heres a quick take that is especially relevant to this weeks work us on covering climate now. At its worst, beijings air quality looked like this. In 2013, the air quality was deemed unhealthy or hazardous for over half the year, peaking in beijing at 35 times the World Health Organizations recommended limit. It was so bad that premier declared a war on pollution at chinas annual highprofile National Peoples congress. Five years later, in march 2019, as the premier again open the npc meetings, the smog outside was still 10 times worse than what the who defined as healthy. Even as china cracks down on pollution like never before, the country remains one of the worlds worst polluters. This is your bloomberg quick take on chinas smog. China overtook the u. S. Is the worlds biggest source of Greenhouse Gases in 2006, helping put the globe on a path to miss United Nations targets aimed at stemming the rise in the earths temperature. The cheap power from coal and cheap Factory Production powered by coal has helped china turn into this economic giant that has helped produce cheap goods for the rest of the world and drive the world economy. To an extent, Chinese People are paying attacks and breathing bad air for the benefit of consumers all over the world. The who estimates that more than one million chinese died dirty aaron 2016. Another study puts it even higher at 4000 deaths per day. Pollution is said to have been the main cause of social unrest in recent this, but social media is helping to amplify complaints. On chinas twitter like online platform, people blamed factories for polluting the air and the government for not doing enough. In february 2015, a chinese investigative journalist published a selffunded documentary about the Countries Air pollution problem. More than 100 Million People watched under the dome before it was banned from chinese video websites six days after its release. Shortly after, president xi jinping pledged to unleash an iron hand to punish environmental polluters. In the last few years, the government has spent billions tightening environmental regulations and scrapping coalfired power plants, switching millions of homes and businesses from coal to natural gas. The regulations and policies have worked but the u. S. State department monitors these recordings say that 2018 was the lowest level in a decade and the winter of 2017 and 2018 was one of the best. It is not perfect but it is much better than the heyday of the 2015. China is now the worlds biggest investor in green energy. If spent over 100 billion in 2018, which was 56 more than the u. S. Initiatives include its support in the electric vehicle industry, providing subsidies for easy buyers and helping build out infrastructure that allows electric cars to charge around cities. It is the biggest market in the world for electric vehicles. It is not just cars electric buses are a huge deal in china. China is betting big on solar energy as well. In 2019 over a third of the worlds of solar panels are estimated to be installed in china. But the war on pollution promises to be long. For decades of breakneck Economic Growth has turned china into the worlds biggest carbon emitter and it is still going to depend on coal for years to come. That was just one of the many quick takes you can find on the bloomberg. You can also find them at bloomberg. Com, along with all the latest Business News and analysis, 24 hours a day. That will be all for bloomberg best this week. Thanks for watching. Im juliette saly. This is bloomberg. Nejra wall streets big win. A 40 billion reprieve from regulators. The fed steps in for the first time in a decade. Rules and regulations as the show where we delve into the challenges and opportunities for markets around the globe. Lets get a roundup of this weeks news