Plan designed to fail. Mark britain is set to leave is n the 31st unless it it seeks an extension. Johnson says he plans to leave on that day without an agreement, the British Parliament has passed a law requiring him to seek an extension if no deal is reached. Hong kong reportedly is set to do something it has not done in 50 years, the government will ban the use of facemasks in response to the protests. It will evoke an emergency law that has not been used since 1969. Six decent 1967. Indonesia is promising new rules on indonesia and on labor and foreign investment. The president says that labor law changes will apply to new workers only, which would attract businesses who want to set up shop in indonesia. It would defuse opposition from label group. 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 Mark Crumpton, this is bloomberg. Live from bloomberg world headquarters, i am shery ahn. Live in toronto, i am amanda lange. We are joined by our audiences. Here are the top stories we are following. Been worse off on the back of another round of disappointing economic data. It has delivered its weakest growth in 30 years. Boris johnsons plan b. Theces tell bloomberg that Prime Minister has not ruled out keeping the backstop arrangement if the conditions are right. Another blow for facebook. The European Unions highest court said that the social media giant can be forced to remove posts anywhere in the world to protect users from hateful content. Shery let us get you started with a quick check of the markets trading. We are seeing a little bit of a pickup for the s p 500. This coming after the more than 1 drop after the very weak reading on the services sector, the weakest in about three years. We are seeing the dow gained ground, and the nasdaq up. 8 . Financials are weighing on the market. Rates are moving lower. It is now below 1. 6 . It is not just a treasury rally, we are seeing safe havens rally. Look at this one atf showing Software Stocks like oracle and intuit. They have seen a huge plunge since there july high their july high. This is after finishing under their 200 day moving average. A lot of people saying what do they have in common with those companies that were lining up for an ipo and we had disappointing or failed ipos from uber . The weis is calling this work flu where you see investors be more cautious about businesses with high valuations. Amanda we will talk a little more about private equities and all of that coming up. In terms of the other things worrying the markets, we have been talking about the eif at the ifn, it was going to be closely watched because of the weak post. This is below the most pessimistic projections. We do have concerns about the services and the consumer. Take a look at what that does to the odds of a fed rate cut in october. That was a moving target today. We see that markets whipsawed because we saw expectations change. Interesting to see the market start to price that in and rebound a little bit just in terms of market reaction. We will wait for the jobs data tomorrow may be a definitive marvin definitive moment. Shery with the market looking to break a losing streak. It means that growing concerns over an economic slowdown. Joining us is marcus, chief economist at pine ridge investments. Thank you both for coming in. Let us get started with mike. We are seeing a bit of a rebound. Why is this happening . Mike i think maybe at the market at the margins. When you look at the previous two days we fell 3. 5 percent in the s p 500. Even the futures market looked like people wanted to buy this dip. There is a lot of different momentum indicators. I like the bans, and when you i like the bands, and when you drop below it, it is very rare for the market to stay below that without a little bit of a rebound. So, the fact that we are rebounding, but not gangbusters rally suggest that people are buying that 50 because we were oversold in the first day of the week. I think looking at the leadership we have Semiconductor Stocks at the top, and you have to look at them as a proxy for the trade war. Some of the comments from President Trump were a little bit cryptic about china, and i think people see the glass halffull as far as trade negotiations coming up. Will this all force the feds hand . Any story that you can come up with always ends up in more rate cuts. If the economy really weakens, the pressure will increase. What can the fed do . More rate cuts. Even if the economy were to strengthen, and we see a decoupling of the treasury markets on the rest of the world, and bond yields rise, it would written the recovery of the Housing Market and potentially start the classic recession style domino effect of companies not being able to service the debt at rising bond yields an interest rates, and the default cycle starting, layoff starting, and that is the classic way of getting into a recession. Anywhere you look are reasons for offense does for the fed to start cutting interest rates. They are really not understanding the environment we are in. We have not been Start Testing the start of kiwi in europe. Amanda one of the things we have seen, and it is very different and a technical market, but we saw it in the concerning question about whether the bed have laws fed has lost control. Is there fear that we see the need for Emergency Action that it then becomes apparent that Central Banks do not have the tools they need when a recession should happen . Banks whether a central has the tools to do something, that is a different one. We have to go through it and see what will happen. It is clear that the fed has lost control of the yield curve. In order to regain control, it is almost like the usual laws of economics and markets are reversed. What we need for the fed is more rate cuts than priced in. That is the only way the fed can get control. For now he would like the curve to steepen, which would encourage banks to lend, but the fed is so far behind the curve that we need to see another four or six rate cuts for that to happen. Haved to shery earlier we not seen ecb qe, which will publish all yields in europe below zero and create an enormous pull on the treasury market and pull yields down here as well. Would not be surprised if the 10 year is at 1 next summer which means the fed has to go to 50 basis points to regain some kind of control. Mike from the equity markets perspective, the big question is will any rate cuts or stimulus from banks that we get turn this data around. You look at these surveys in the anecdotal quotes provided. No one is talking about the high cost of capital being the biggest problem. It is the uncertainty around the trade war, especially with Central Banks having a delayed effect. I wonder if more rate cuts are enough to keep the stock market rallying . Markus there is a two way answer. One is, will it matter to the economy, that is almost irrelevant. Just look at the act that the dax has the same performance of the s p 500. Stockrformance of the market is exactly the same which tells me that there is Something Else driving stock markets, not the economy. It is all about Central Banks. The more we see cuts and qe, the more we will see markets to rally. This is not the time to get out of the equity market. Shery we talk about qe in europe, what about with the bed . The fed . We have seen about expansion because of funding stress, could we get real qe . Markus i talked to my colleagues about this a lot because we have traders that look at this market every day, this is something that i do not necessarily get involved with, that it is important to understand the plumbing of the system. On the one hand, qe would solve some of the problems, on the other hand it would exacerbate the problem that the fed has for losing control, because it would pull yields down in the lower, which would force the fed to cut rates. I am not sure that qe is the right answer to the broader problem. It could solve the repo market issue but could not solve the problem of the fed losing control over the curve. Mike we are finally seeing a crack in the dollar rally. The Bloomberg Index was the highest in may. This data and lower yields are causing not to come off of the boyle. The spread between treasure treasuries and bonds is the lowest it has been in over a year. Is this dollar rally going to crack, and is that supportive of risk . Markus it is too difficult to extrapolate from the shortterm movement. We are more intermediateterm, which looks 18 months down the road and sees where markets are. I still see a stronger dollar down the road. You still have mower growth in the u. S. , more growth and positive rates. The rate cuts here will work, but not in europe. All of that combines and inflows to the u. S. Market. Mike the best house and the bad Neighborhood Story . Amanda great conversation. We have got to leave it there. Thank you to both of you. Markus mentioned the fed. Evans inon spoke to madrid. He says that the weakness has not commenced in that rates need to be cut again. I am openminded about the decision, and we will learn more before the meeting at the end of this month. I would say that the ism number is a negative number for manufacturing. We had received a number of reports about trade uncertainties and how Manufacturing Enterprises were cautioususpend were to expand. I believe it is more confirmation of the reports that we had been seeing. It will be very important to see the progression from here. Manufacturing is not a huge part of the u. S. Economy, but a significant part of the economy. Charles it certainly is. In my midwestern district we have more manufacturing than average so i have heard more reports about this and the weaknesses and what comes about the trade uncertainties. The thing about Monetary Policy and what the right positioning is, i definitely think that the fomc has been moving to what it one point last year look like headed for modest restriction of restrictive positions, and we have an accommodative position. Whether or not a rate cut is the right decision or not, we will have to have a discussion about that. Shery coming up, Boris Johnsons plan b. The u. S. Prime minister the u. K. Prime minister said to be considering a backup plan. That coming up. This is bloomberg. Shery this is bloomberg markets, i am shery ahn in new york. Amanda i am amanda laying in toronto. We are turning to brexit. Sources telling berdych that Boris Johnson has a backup plan ready. Johnson is trying to reach a deal to exit the block. His first option may look more like a tough initial offer. Emma is with us from london. What are we learning about this plan b . Emma this is a scoop from our colleagues in bloomberg news. What we are learning is that the Prime Minister is open to a plan b should his current blueprint, the one he submitted to the European Union yesterday and outlined to Parliament Today be rejected. That lubricant removes and replaces the backstop that blueprint removes and replaces the backstop. Plan b is except the backstop pozo with a time limit. The backstop is an arrangement that will prevent the reaver the reemergence of a hard border between Northern Ireland and the republic of ireland. The reason has been controversial at the backstop would mean that the u. K. , even after leaving the European Union would have to abide by custom rules. The sense that we are getting is that he may be open to keeping it with a time limit suggesting that he is really focused on getting a deal. Amanda ive shery i thought this whole idea had been proposed before, what changes . Emma it is it has been proposed and rejected by the European Union, saying that the backstop is an insurance policy and they undermine it if you put a time limit. Some are saying that it is starting to get traction within the corridors of European Union power, particularly with key Member States of france and germany. It could be as a way of getting to a deal. Both sides compromising enough. If the time limit was sufficiently long enough they may be able to come up with alternative arrangements i the time that the time limit expires. Could see that extending with a timeline that could be attractive to everybody but the irish. Do we have a sense of where ireland will fit in . Emma this is something that would be concerning most to the republic of ireland, because the idea of a time limit means that you have the sense of uncertainty that you might not have gotten to an agreement before the time limit runs out. You have the sense of keeping it sufficiently long enough that you could come towards the alternative arrangements. We also know that this could be something that those members of the conservative party who are most hardline when it comes to brexit might not like. Stillnse of the backstop being in existence, something that many conservative mps did not like about theresa may. It has a long way to go in the sense that even if we got to plan b, that being achieved and agreed upon by october 31, that is a very tall order. They when are we expecting next round of negotiations with europeans . Wea this weekend, understand the negotiations between the various parties on the european side and the u. K. Government side will go on. You have a big summit of the European Council coming up in the middle of this month. And, having some sense of where any deal might be going or proposal, or a way forward for a path to the deal. I know that the u. K. On the hope union can agree that they can agree upon. Shery thank you so much for joining us with the latest on brexit. Becomes afacebook Police Officer it never asked to be after and e. U. Court ruling. This is bloomberg. Amanda this is bloomberg markets. Hand, forcing facebooks the e. U. s top court has ruled that he can force the social media giant to pull posts anywhere in the world to protect european users from hateful contact. A reporter who has implications. The implications are huge. Facebook needs to keep in mind that wherever european users are, they cannot see speech that is not allowed in europe, and i really do not think that this will work. I think facebook already said that this goes the on european jurisdiction, this is also what happened with gdpr and when europe asked for certain levels of privacy for europeans, facebook had to implement something similar around the world. Theyit comes to content, have had this longstanding policy of only taking down illegal content in the country where it is illegal, because we have a very different idea of what we allow and do not allow in our societies. It is situational. I think that this rule could make it very difficult for facebook to comply. I do not think it is possible for them to comply. Amanda for many of these platforms, facebook, google, youtube, the argument has been that they are providers, they do not monitor the content except in extreme cases. If this the beginning of a thin edge of a wedge where we are seeing regulators saying you do need to take responsibility, and with that becomes and with that comes liability. Sarah this is an an exact response to facebooks lack of action. They do have an operation to take down content that violates ,ules, but the bar is very gray and they have contractors around the world, 30,000 contractors on behalf of 2. 7 billion users, so they do not have a system to get to all the content that needs to be taken down and to do it effectively and efficiently. And, the bias is towards keeping content up because they do not want to infringe on some of the other concerns from regulators, like regulators in the u. S. Saying that they are concerned facebook has biases that they are letting their human opinions that in the way of what should be easy rule decisions. It is a really difficult situation on both sides. Facebook clearly has not done enough, but should that be enough reason for a government to say we are going to regulate what you are doing around the entire world . Shery what will the repercussions be for bespoke within europe if they cannot compete for facebook within europe if they cannot comply . Finds, this is a binding agreement. I think facebook will fight this because i do not see it being possible. Amanda thank you for bringing this to us. Reminder to bloomberg users that you can interact with all the charts on the program with the function g tv. Recent charts are available at the data that backs them up. From toronto in new york, this is bloomberg. Mark i am Mark Crumpton with bloombergs first word news. No pentagon officials were listening inon President Trump call with ukraines president zelensky in july. The Defense Department said pentagon attorneys are asking the department for any records connected to military aid to ukraine that was delayed. Denies therump assertion by democrats that the military assistance was delayed to pressure president zelensky to seek political dirt on democrat joe biden. Bernie sanders will be on stage of the democratic debate in ohio on october 15. Despite having a heart procedure that took him off the campaign trail on wednesday. Said yesterday the senator was canceling all Campaign Events until further notice. Sanders experience chest pains at an event in las vegas tuesday. Doctors inserted two stents to clear and arterial blockage. Irish Prime Minister says that ireland may have to deal brexitno with nose aleutian for a british exit from the European Union is found. The prime