Lender could cut more jobs. Adding to those already announced in august. Manus good morning to you, monday morning. Sentiment being driven by the chinese. They think they have President Trump on the run. The oil market. We dropped by 5. 5 last week and we are adding to that momentum. And the positioning is aggressive when it comes to the oil market. Wtabullish positions on brent. Storming for the exit door. By 32 . Positions down we will bring you the oil charge. Let us take a look at dollaryen. This is a look at the bond market controlling. This is dollaryen. The bandwidth negotiations between china and the u. S. There is a hesitancy to break low work, the dollaryen. This position is under positioned. Because you see an aggressive repricing last week. Is ready to think about adjusting her position. She dissented twice. She is ready to reconsider the position based on the data. We will talk about that with our guest host in the next 45 minutes. Between chinans and the u. S. Are preparing to restart. Long stalled talks in washington. We have learned china is going into the meetings with a reluctance for a broader tree deal. Larry kudlow told bloomberg on friday that the u. S. Is openminded to going into these talks. All of the issues, the , thedities, the tariffs ownership, the Forest Transfer of technology, the cyber hacking all of that will be on the table and china has been buying some commodities with a goodwill gesture. Let us leave it open. I do not want to forecast. This is a good thing. Manus for more, let us get to beijing. Tom mackenzie is there. What do they what to keep off the table in these talks . Tom we have been hearing the industrial policy. The made in china 2025 plan where they want to elevate manufacturing and robotics and biotech. That will not be on the table nor is the subsidy regime. Discussnot want to that. And this is according to some of the u. S. Dignitaries that have been here for the last few weeks talking to chinese officials. It should not come as a big surprise. It dovetails with the positioning of the chinese. We are seeing a Market Reaction and maybe it is because it seems to eliminate even a faint hope you will get a comprehensive deal even in the short term putting both sides at loggerheads. President trump wants a comprehensive deal, a real deal with china but it looks like beijing is not prepared to go that far at least at this stage. Manus if you think about this about top story talks nothing but subsidies. Thoughs the whole reason that we went into a trade war. An outlandish. An outlandish thought. The idea that the impeachment risk is playing into the chinese hands . Tom they always take these things with a pinch of salt and with cautioned cautiousness. There are analysts out there that we have been speaking to. Ncluding jude lunc donald trump has a weaker hand because he is embroiled in this impeachment inquiry. And then the president came out saying he wanted china to investigate joe biden and his son. China will not became to do that and be dragged into u. S. Domestic politics. It is akely though that factor. Both sides, and this is the argument, both sides do have incentives to get some sort of nominal deal. They wont want to avoid any additional tariffs. They will want to avoid any additional tariffs. Friday is when they meet in d. C. Mackenzie, thank you. Our china correspondent and anchor. Joining me now is geoffrey yu. Take on theyour state of play regarding these discussions. What do you make of this point if government subsidies are not on the table and the commitment to 2025 is not on the table, what is a win . Far as markets are concerned, a win is no further escalation. There is an upper limit to the tariffs you can impose on a trading partner. A partial deal or a partial ceasefire going into the christmas season, something to not add to market worries, that would be considered a win. Manus in terms of the actual global economy, you see miracles in the holidays. We are going to put up a charge. I want your opinion. Let us say it is a mini win. This is the exports for south korea, taiwan, and singapore. It is not working. Bottom line. Look at the export numbers from south korea, singapore, taiwan it looks like we are almost just at the bottom. Do we need a win on the trade deal to put a floor under the global Recession Risk . Would it stymie that risk . Geoffrey i think it is not enough. You will need the u. S. Consumer which will be driving Global Demand heading into the christmas season. They will need that stability. The fed will be looking at that carefully because the u. S. Economy is not driven by trade but i domestic sentiment. To see where we need stabilization as well. Including the job numbers and the consumption numbers. Those are key. Those conditions need to be satisfied, if anything, more so on the u. S. Economy. Manus you write a cracking paper on 10 key questions for the market and you say is it time to underweight equities . Differentialield between bonds and equities and it is still quite a considerable margin of stocks over bonds. When you go to tactical underweight, how does that play out . Geoffrey it depends on where we see the bulk of the underweight has been. For example, europe is underweight and the u. S. Is a bit less concerned. Trade context of the issue, you will want to identify the high beat in markets. The emerging markets in the eurozone that is where we would want to get a bit of a tilt in terms of underweight. But as you say, the differences marginal. Bonds are relatively overvalued in their yields. That is where we need to be a bit more cautious as well. Though, there is no global recession or at least not according to our base case but we will see where the u. S. Consumer will go. That is key. Manus that is the driver of everything. The pboc pboc purchasing gold for the 10th month in a row. You talk about the relationship between the dollar and gold. Dollar is skimming off the 100 level on the ds why. There is a momentum behind gold. Where does it play for you . Geoffrey going back to china being a gold reserve. They are updating that more regularly. From three years to a higher frequency. Secondly come i think it is an technology meant far as gold. If real rates are going to be futures were the nominal bond yields low . Be picking up especially if Monetary Policy works. That will be a Good Environment for gold. Are worried that things will go wrong including geopolitics, there could be a shortterm reaction. You do not want to get allocation on a collective risk aversion of events. Wanted to identify why you to own gold and if it is a real rate story or eight dollars story, that is conducive to gold in the short term. Manus do you really think the chinese feel the threat of impeachment hanging over donald trump . Geoffrey i would agree with the view that china does not want to get embroiled in u. S. Politics. That is something that chinese diplomacy is quite straight about. Depending on where china feels its hands are, the deal on the could be ay shortterm settlement. As you say, it is the quality of what that shortterm settlement might look like and how victorious donald trump can present that to his base. My guest host this morning. We have more from the team in beijing. Reporter hsbc may cut as many as 10,000 jobs as a part of a cot cutting move. Cut cutting move. They are questioning why there is so much staff in the region when they have doubledigit returns in parts of asia. Hsbc declined to comment on the report. Prospects for a brexit deal are fading. An agreement can be reached before the october 31 deadline is cast in doubt. Boris johnson struck a defiant tone saying the u. K. Will leave with or without a deal. He is prepared to launch legal action to to prevent a brexit delay. The u. S. Will not stand in the way of turkish operations in Northern Syria. This comes after president erdogan signaled an imminent move against kurdish forces. Useey is prepared to military force against that. In the u. S. , a second whistleblower may be ready to emerge. The law firm representing the first says it is acting on behalf of multiple whistleblowers. Abc news early reporting saying the second whistleblower has not yet spoken to the Committee Investigating the president. The white house says this does not change the fact that donald trump did nothing wrong. Global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Manus it is bloomberg daybreak europe and i am manus cranny in dubai. It has just gone 9 17 in dubai. It is good to Juliette Saly in singapore. Reporter hong kong and china out of action today for Public Holidays but the offshore yuan is at a onemonth low on this group that china could be narrowing this go ahead of the trade talks in china this in washington this week. Day, the asxof the 200 tracking higher. Thin trade because of the Public Holiday. Justospi looking flat with a 0. 1 gain. Onant to focus in more singapore. We are awaiting samsungs earnings. We have seen a hiccup in the share price today. Let us look at what we can expect from the third order. We have started to see a downtick coming through but some that there suggesting chip market is near a bottom. Estimates are at about a 60 plunge. But samsung shares have rallied about 24 since earlier this year. Manus . Manus thank you very much. Keeping the pundits allied there in singapore. We have more from beijing. Hkx will raise its nearly 30 Million Pound bid for the stock exchange. This report comes after they receive Additional Support from some shareholders. The deal would have to be raised to be taken seriously. Lse rejected the initial offer last month. Its new plans to have plastic ready by 2025. After growing criticism regarding the Environmental Impact of its packaging. They plan to reduce the amount of plastic used by 100,000 tons annually. A resolution to the threeweek strike at General Motors, hopes for that are fading. Commitments on job security. Labor bosses say talks have taken a turn for the worse while gm says it will continue negotiating in good faith and is committed to finding a solution to the strike. And that is your Bloomberg Business flash. Manus thank you very much. G in beijing. To hong kong which is reeling from some of the most violent protests. Bank atms have been knocked out. Joins us from outside the admiralty subway station. Whatou run me through differed this weekend versus the previous three months . Irreconcilable interests are even more between the government and the hardline movement of the protesters. The colonial era emergency provisions that give the chief executive and the government here sweeping powers to contain unrest they did not invoke all of the powers. They still have those at their disposal. They did ban the wearing of facemasks and that was intended to get the anonymity out of the way but it did the opposite. Any of the protesters were this move with and they came out with more force on friday. With gasoline and matches torching a number of shops. Atms were damaged. Cityf the atms in the were damaged over the weekend. And sunday was a nasty day on the streets despite the driving rain and holiday. That is where we stand right now. The station behind me is at the epicenter of many of the clashes. In the 120 days since the protests started on june 9. This has been shut down all day 6 00 p. M. , all of the subway stations will be closed. Manus far from normality. Thank you for keeping us appraised of what is going on in hong kong. George says she dissented against rate cuts at the past two fmoc meetings. This comes after fridays jobs report was somewhat of a mixed bag. The Unemployment Rate is at a 50 year low. Geoffrey yu is still with me. Show they said it was a mixed muddle. On moreet is betting rate cuts. Do you think we had a seminal moment on thursday with the Services Data . Geoffrey i would say it may you vogue i would say it may evoke a rethink. If that comes off the ball, we will have to reassess. It is data dependent. Is it beyond easing and beyond cuts . What else is there . Will be administration start to talk about some kind of stimulus again . There is talk about global stimulus here and in the eurozone. As draghi said, fiscal is the next move and that is why i think Monetary Policy needs to be a bit careful as well. Manus what is the biggest fiscal trade i should be trying to engineer . Time to deliver a fiscal response on a global level, how do i engineer the portfolio that tracks that in the median term . That global level is really important. A multiplier effect. Are we looking at haphazard or selected individuals where you identify the countries which are more flexible and nimble at pushing through fiscal stimulus or will we see, either by other, a coordinated response . Coordinatedve seen responses before. I look at the g20, fractional eyes to at the moment at the moment. Is there a possibility of a Global Response . Geoffrey i think you may have answered the question yourself. Let us just say we get a negative gdp from all of the Major Economies and the week one from china, that might trigger a coordinated response. But i do agree that that chances of that are a bit lower right now. Suspending driven response where the fiscal multiplier is high. , thee watching the u. S. Emerging markets, and the eurozone i think that is where the skepticism is right now. Manus i want to show you the empiric research you have done. Do beforeuity markets an inversion and after an inversion . Your take on that. Give me the data on why i would want to be long equities. Geoffrey let us take a step back. Given where Monetary Policy is if it works, and i hope Central Banks believe that, doesnt that imply that we will get Inflation Expectations . And then we will rip p. Think that is one matter that will need to be taken into account and that may also involve the gold price. And then what you do with equities there . If there is a position driven steepening without the growth to back it up or the earnings, i would be a bit more cautious. And we could see a market selloff. But hopefully we will see earnings lift in the next will18 months. Manus let us hope there is not an earnings recession. We will have a little bit of exit next. We will have a little bit of brexit next. Manus it has just gone 6 30 a. M. In london. It is daybreak gear. We have just chimed 9 30 a. M. In the markets around the world are coming this monday morning. In london, we have Annmarie Hordern. We are up and running in the indian market. We are a little bit higher. What is the sentiment there . Manus, good morning to you. After a brutal last week, and i use that word on purpose because of four Straight Days of falling. Inht now, we are flattish trade. We started off lower and then moved about 0. 5 . There is a 50 day moving average. We talk about moving averages all of the time. Back, they do not ounce each of the last two times or three times we are at the very bottom level. But does see how the rest of the day shapes that. Back to you. Manus thank you. We have one top story trending on the bloomberg. Sway ofbc joining the other Financial Institutions with potential he more job cuts. Story. Would be a huge i want to start off with what is going on macro. Biggeste war is the stories this morning. And that will be for the week as we have beijing in washington having high level meetings in d. C. We are not seeing an impact across the equity markets. We do have china and hong kong markets closed today. We could see more movement tomorrow. Drop lower. Took a based on that skill. And the aussie dollar is down. Money moving out of the offshore yuan. Yields drop. S. Lower. Commodities copper is up 10 but oil is still lower after last weeks loss. The worst week since july. What im looking at is where the job numbers are right now. Since june 30, staff around the is 238000 and they are looking to cut 10,000 jobs. Many wonder why they have so many people hired in europe where they are getting doubledigit returns in asia. The profit for the first half of the year came from asia. Europe may be hit the hardest with these job cuts. Manus to understand the total scale of hsbc is amazing in terms of the number of people they actually higher and the double digits. Great work, Annmarie Hordern in london tracking the story. Those are your markets. Let us move the agenda along for the first word news with selena in beijing. China appears to be reluctant to agree to the broad trade deal that President Trump wants. Is range of topics china willing to discuss has narrowed in recent weeks. It will not make commitments on government subsidies. Core issue for the u. S. The u. S. Will not stand in the way of turkish operations in Northern Syria according to the white house. This comes after president erdogan signaled imminent operations against kurdish militants. Turkey is prepared to use military force to prevent that. In the u. S. , a second whistleblower may be ready to emerge in President Trumps impeachment saga. The law first the law firm representing the first is now representing both whistleblowers. The second whistleblower has not yet spoken to the committee seeking the impeachment inquiry. This comes as the president insists he did nothing wrong. And Nuclear Talks in sweden broke down after the top. Egotiator from showin and in portugal, the socialist Prime Minister won this weekends election with his party gaining more seats in parliament. But reports show he will fall short of an absolute victory. Global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Manus thank you very much for the roundup. Leaders on both sides of the atlantic face serious political troubles. Protests over the deal in the u. K. Is are fading. Boris johnson is striking a defiant tone. Meanwhile, mr. Trump faces a new to this the impeachment in great with a second whistleblower in the ukraine investigation may be ready to emerge. The whistleblower came forward with the complaint. His law firm is now representing multiple whistleblowers. Deal, weon the brexit are joined by maria. On his has doubled down promise to leave by october the 31st. What is the mood in brussels and what is the view regarding an extension . Maria good morning. You can see why this is getting complicated. The Prime Minister has doubled down on the idea that he will leave the European Union on october 31 and he will not extend. The problem here and it became obvious in that phone call with the french president macron is that he will not go for a no deal. This is a binary choice where one contradicts the other and he will have to make a decision. From the european perspective, they see friday as a way to get more detail on the proposal put on the table last week. And in the Single Market and pulling out of the customs market. There are many question marks regarding that. What is clear is that many think it is too little, too late and there is not enough time to get a deal done in two weeks. The scenario is likely that there will be another extension and this is still very much a political, domestic story in the u k that needs to play out before a final deal can be reached. Manus thank you for thats a t update. That succinc kathleen is joining us. How likely is the prospect of multiple whistleblowers coming out against donald trump . Reporter the issue he faces is that he has been portraying this as a rogue person out to get him and maybe in league with the democrats. The more people that come forward, now we had the second whistleblower potentially backing up the first whistleblower story, the more credence it lends to the democratic arguments. It couldhat potentially be very problematic for the president. We will have to wait and see what the second whistleblower has to say. Whether there are new facts or allegations that can emerge from the second whistleblower or if it is just backing up what the first whistleblower complaint said but it is certainly problematic. When it comesthat to the republican response we saw over the weekend particularly from mitt romney who is now engaged in a pretty with donald trump over his allegations regarding donald trump. Manus thank you, kathleen hunt in london and maria in brussels. Still with us. I would like to get with you on the brexit issue. A hard brexit is the consensus from the survey that we have done. 5050 inability is a terms of a leaving without a deal. Is that still your base as you listen to the rhetoric from the french president macron over the weekend . Geoffrey if i had to pick between the two, an extension and elections after, that is still the most likely outcome. The view, the no deal that you mentioned, probably on the lower end from where we think things might go. Question, you will get thin liquidity. You probably own the volatility. The market though is bracing for volatility possibly. Maybe neither. They will just have to take the trades as they come along. Manus can i take you to the math you provide. If the u. K. Leaves without a deal, 5 Million Pounds of tariffs. And i am rounding. 13 Million Pounds. This is the data. This is the push and the paul. This is the push and the pull. This is about the integrity of the Single Market and that, i put to you sir, is worth more than the 13 billion euros. Geoffrey absolutely. I think it could have been two years ago but it is all about the politics and it will always be about the politics. That is what we have to bear in mind as we go through the process. General election comes, we may be able to get more clarity and find a way ahead. But i do believe that it is about politics and not about economics. Anus i want to take you on 39,000 foot ride into the air. Wehe bank of england say the bank of england is dusting off its wargame if the no brexit deal becomes a reality is this a 70 basis point cut . Is it a qe phenomena . What does this look like if we go into an air pocket if we do . Geoffrey three things. Financial stability. If we get that wrong, anything else is academic. Secondly, monetary. We will get cuts. One if not two. Optimistic. Too there will be a wargame on that. And maybe qe to back it up. And thirdly, coordination. Backing the individual sectors. We will see how they can assist with individual agreements. In times of crises, resolution works best when monetary, fiscal authorities coordinate. Hopefully, we will get that quickly and then they can find their way forward versus the case of 2008. I am sure the relative parties are all talking to one another. But that does need to be executed quickly. Manus it is amazing how groupthink has taken over. Many are saying rip off the bandaid. But many others are talking about a cathartic moment. That is for greater minds then i have to debate. The fair value ftse will slide over the next 12 months in a hard brexit scenario by 13 . Oil Asset Management says that tip royal Asset Management says that dip will break down. What do you make of that . Geoffrey it may break down in the shortterm because so many are concerned about the uncertainty. There could be capital fright or liquidation. But that will be shortterm. Once we get at there is value in certainty. U. K. Ill know where the stands. A wto membership up and running as quickly as possible. There is a playbook about how to deal with this. We would know where we stand. To have the shortterm shock would pave the way for the longterm. In or than this are we are we out . I think the uncertainty will be far more damaging. Shorter term, a tactical shift at of the u. K. But that could be filled up very quickly. When we think about 57 your allocation, some might inc. This will never be resolved and so i will go away from the u. K. For the time being. Manus that is the argument with a longterm injury to investment. My guest host this morning, geoffrey yu, head of u. K. Investments at ubs wealth management. He will continue the conversation on bloomberg radio. I had, we have a conversation with the strategist at net wealth management, former advisor to boris johnson. That is coming up at 2 00 p. M. London time. But first, the brexit deadline is quickly approaching and london may still be the vast Real Estate Market to park your cash. We speak to one of europes Real Estate Investors on opportunities. That is up next. Daybreak europe and i am manus cranny in dubai. Let us get a business flash from beijing. Hsbc may cut as many as 10,000 jobs as part of a costcutting drive according to the Financial Times signaling that europe may have the initiative. The bank is questioning why it has so many staff in the region when it has doubledigit returns in asia. Hkex will raise its bid for the London Stock Exchange according to the times. The move comes after they received a conditional vote from some shareholders. The deal would need to be raised up to 90100 pounds to be taken seriously. Lse rejected the initial offer last month. Use of newll have plastic by 2025 as the industry faces criticism of the negative effects of its plastic packaging. They will reduce the use of plastic by 100 tons annually. And that is your Bloomberg Business flash. Manus . Manus thank you very much. A top european city for real estate occupancy demand according to the new research lasalle south indent investment management. The 67 billion dollar firm is among the largest Real Estate Managers in europe. It sees up eternity it sees opportunity in the u. K. Despite brexit. Dani burger has a guest. By simon marx. Ed first off, thank you for joining us. Manus start with what just mentioned. London is the number one city. Is it an attractive city despite the uncertainties . Ison that is what the index saying. Onxit uncertainty does weigh all cities in the u k and even outside but what we are found is london is a much more diverse and dynamic city it is london is a much more diverse and dynamic city then it is given credit for. What we have is if we look at the amount of space that has in the heart of the financial district, the square mile in london leading up to the Global Financial crisis in 2009, what we have is one in let touilding has been Financial Institutions but now it is one in quach or. Close behind, one in five buildings is a technological company. Resilience since the referendum and we expect that to remain going forward. There any change from the brexit issue that could knock london from this spot . There will soon be an impact but here is where we benefit from having a 20 year history of renting which looks at the relative performance. Dani you are speaking of that european index. What we know is how cities perform during times of crises. In 2009don for example, it fell from number one to number eight in europe but by 2010 it was number one again. And same with the european referendum. In 2016 and was number one again in 2017. We dont know what the aftermath of a no deal brexit will entail given the politics but what we do know is that london is incredibly resilient. Dani how much is that popping up the propping up the current market . Since it has fallen away 2018 and a lot of that is due to brexit despite it being a weak currency. Thelso note given attractive incomes that real estate offers and the likeparency that somewhere london has in terms of its global status, there are accused of investors waiting to go at the right time. Tech you mentioned matters. A rise of these kinds of spaces. Trends areorking here to stay regardless of the companies that stay for the long term. As investors in buildings, we have to understand how to work with that kind of tenant or risk profile. Though we do believe it is here to stay. If you look at the coworking offices of today, they are entirely unrecognizable from those when we started the index 20 years ago. And i imagine they are different from what we will see in 20 years time. Buildings will always be flexible. Demand wille tenet demand willant be trending. But we may need to repurpose the buildings. Dani thinking of modern inhabitants like an amazon looking for lastminute logistics. Simon they are not a key player are todayere where we in terms of a company that is trailblazing as a sector but not making any profits. What we have to be sure of is that we are in locations, regardless of the success of the building, that will always have demand. We are looking at consistent cities that always perform. We will have to keep an eye on those spaces including amazon and wework. Thank you for being with me, simon marx. Manus great conversation there on the changing landscapes of properties in london. We will beutes time talking about factory orders. We will also look at the production weakness and whether what we saw in july has continued. And the queen is set to give her to reopener speech that venerable institution. Wednesday, the minutes of the fed meeting. And the chinese bys premier will be in washington on thursday. What is on the table . Friday, the Nobel Peace Prize though i am not on the list. This is bloomberg. Good morning from bloombergs middle east headquarters. U. S. Futures fall as chinese officials show reluctance to pursue a broad trade deal with america. Negotiations start in washington on thursday. Hong kong faces one of the most violent weekends since the protests began in june. Another protester is shot. Train travel is halted on the island for the first time in 12 years. We are live in hong kong. Hsbc cuts deeper. Couldk. s largest lender slash 10,000 additional jobs. Welcome to daybreak europe. By 0. 6 . Obs decline the market estimated expansion sorry, contraction of 0. 3 . Immediate reflection on the euro at the moment. The dollar is the more dominant story. A decline of zero point 6 . The market had a drop of 0. 3 . Manufacturing orders declined by 0. 6 . This has aggravated the industrial slump in europes largest economy. Business expectations fell to the lowest in a decade. Manufacturing is shrinking. A great personification of end of cycle, trade wars, a multiple effect coming through on the market. Let me take you to the markets. The scope of what is potentially on the table between donald trump and the chinese vice premier is narrowing. That is causing a bloombergs group. Everything you thought might be on the table is probably not there. We are talking about factors like making china the dominant Economic Force in the mid20 20s. Thats off the table. Futures in london down 0. 4 . The dax ever so slightly dropping. We will see how it opens today. Hsbc, thent story is potential for 10,000 job cuts. He interim ceo we will have a look at the bond markets and lets roll you through those. The positioning on 10 year treasuries is interesting. Net shorts have fallen four consecutive weeks. We saw yields drop on the u. S. Side for seven days in a row. To that end, we are just seeing the bond market really control the dynamic. It will be the minutes from the fomc that are the dominant theme for markets this week. There you go. German bunds a little bit higher. Morgan, morgan stanley, say you want to trim your shorter end of the curve, your exposure there. Those are the markets. Lets get to Juliette Saly in singapore. A market check for asia. Chinahave hong kong closed today for Public Holidays. The offshore yuan trading at a onemonth low and the japanese yen on a one month high. China could be narrowing its focus ahead of key trade talks. The nikkei closing the session weaker by 0. 2 on yen strength. The nikkei certainly off the lows of the day. Japan had a good session. A Public Holiday in a couple of states. The kospi closing higher by 0. 1 . Getting higher toward the close. Samsung certainly in focus ahead of its Third Quarter numbers tomorrow. I want to show you this chart. We have been looking into a number of indices to show whether there has been a socalled run on the hong kong banks amidst all the protests that are continuing in the city. Three out of the two indices we have been looking at show nothing to see here, but this is an interesting one to watch because this is Bank Deposits in the trillions of hong kong dollars. That was last updated in august. It was pretty stable with the number of deposits. We dont have september data just yet, but there has been fewer deposits going in in terms of an increase in deposits. If we see that drop, they could that could show a version of it, but no sign there has been a run on the hong kong. Thank you very much. Chinese and u. S. Negotiators are preparing to restart longstalled trade talks in washington. We have learned china is going a broaderngs with trade deal. Larry kudlow says the u. S. Is openminded. Issues, the tariffs, the ownership, the forced transfer of technology, the ip theft, the cyber hacking, all of that will be on the table, and china has been buying commodities. Thats a goodwill gesture. We keep an open mind. I dont want to forecast. Im just saying this is a good thing we are going into these negotiations. Lori heinel is global deputy cio at here we go. Sounds like the chinese might have the americans on the ropes, or slightly on the run. Your take on the latest salvo . Thank you for having me. There has been a cat and mouse game going on. Ou will have an olive branch. I dont think this is difficult different than the rhetoric is the had manus bastion for you long american equities come along the dollar rather than the rest of the world the alcove we are hunkering down for a longerterm lori the u. S. Economy is doing well relative to the rest of the world. That is reflected in capital flows being interested in u. S. Assets. , anything that continues to weigh on that, that suggests this is turning into a broader global recessionary impact which ultimately pulls the u. S. Down with it, any of those are things that are going to make investors nervous. Manus have a look at this. Undoubtedly, bond traders had the narrative, didnt that . The bonds were winning control of the narrative. The yields were beginning to turn. Next in the story in regards to the bond market . Do we see lower yields in the near term . We think the bond market in the u. S. Has it wrong. Yields on the 10 year are not consistent with an economy that is still growing north of 2 . Our forecast is 2019 will be 2. 3 in the u. S. 2020 looks good at 1. 9. It seems as though rates at one and a half are lower than they should be. On the other hand, what you have in other geographies around the world, the u. S. Is pretty much a safe haven. You get at least a little bit of return. That is a lot of whats driving the lower yield. Versus the long end. If you look at that slate of data last week, manufacturing, services, a less effusive jobs report. Wages were dubious. Was a Pivotal Moment on thursday. He said it might have been a Pivotal Moment in terms of the fed shimmying them along. Case tell me how you think the case is building. We think the fed might move one more time this. We dont think its going to be october. We think its going to be december. He fed has said repeatedly when you look at the data, the Consumer Health is quite strong. About 70 of the u. S. Economy rests on the shoulders of consumers. We have an employment number they came in not knock your socks off, but it was also a number that had reasonable backing, improvement in the past jobs growth, hours worked being pretty good. There doesnt seem to be anything on the horizon that suggests the consumers going to crack. Theres no reason for the fed to get into an emergency mode here. You have technical calls in terms of credit versus duration. The scale of taking those duration trades has been quite substantial. When you say you prefer credit to duration, walk me through that. Views are that 10year is that 1. 5, it does not seem consistent with broad growth factor that we have in the u. S. On the other hand, even though we are late cycle, we believe rates and enable companies to continue to have their operations do well here. At the margin, we think Investment Grade looks better than treasury. There is income at the margin. We like certain sections of the highyield market. A balance between a large overweight equities versus highyield credit. We are trying to be selective. We are trying to stay focused on quality. We are looking for places to get incremental return. Thank you very much. Lori heinel of state street Global Advisors my guest host. Prospect for a brexit deal has faded after talks stalled with eu leaders casting doubt an agreement can be reached before the deadline. Johnson struck a defiant tone. He repeated the u. K. Will leave with or without a deal after reporting johnson is prepared to launch legal action to prevent a brexit delay. The u. S. Will not stand in the way of turkish operations in Northern Syria according to the white house after president said entered against kurdish militants. Turkey is prepared to use military force. In the u. S. , a second whistleblower may be ready to emerge in President Trumps impeachment saga. The law firm representing the first one said it is now acting on behalf of multiple whistleblowers. Abc news reporting the second whistleblower has not spoken with the Committee Investigating the president. Trump didhouse says nothing wrong. Mostng kong, one of the violent weekends since protests began after the government imposed emergency rule to ban facemasks. Saturday, all trains were halted. Services remain limited today. For the second time in a week, a teenage demonstrator was shot. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Manus thank you very much. May cut as many as 10,000 jobs to save costs. The 4700 announced in august. The bank is questioning why it has so many people in europe when it has a doubledigit return in parts of asia. The cuts were announced on the same day the ceo left after 18 months of leaving the bank. Report,g to an internal analystenior banking for Bloomberg Intelligence joins us now. 15,000 at the at moment. To potentialg right side in your mind . [indiscernible] manus we are going to have to come back to you. We are going to get jonathan back on a good oldfashioned landline. They are very robust. Ceo is the man in focus. Businesses move on day one when he sat in the seat. Another 10,000 job losses. We will get back to jonathan very shortly. Next on the show, the noise in recent u. S. Data with signs of slowdown in the worlds biggest economy, up next. Manus 7 18 a. M. In london. Its daybreak europe. Here in dubai. Selina wang is with me in beijing. A bid for the London Stock Exchange. Conditionales after support from key shareholders. Raised 90 and be 100 Pounds Per Share to be taken seriously. Hopes of a solution to the strike at General Motors are ask fors Union Leaders more investment into american factories and commitment on job security. Labor bosses say talks have taken a turn for the worst. Saying it will continue negotiating in good faith committed to finding a solution to the strike. Thats your Bloomberg Business flash. Thank you very much. The very latest on the numbers there in asia. Factory numbers broke at 7 00 a. M. In germany. 1. 6 . D, down compounding the concern about the health of europes largest economy. Lori heinel from state street Global Advisors is my get my guest host this morning. That greets Christine Lagarde when she arrives. By accident, we might end up with something quite radical in the form of fiscal stimulus. Do you see anything on the landscape that could deliver a coordinated fiscal stimulus . How are you positioning the portfolios are next move . Would be great if we can get coordinated fiscal stimulus. We have been talking for years about the fact the reason the u. S. Is doing better than other parts of the worlds they were willing to do that. There doesnt seem to be anything still to suggest that is imminent, certainly across the euro zone. As you say, when you have a transition in leadership, that gives you would gives you a transition in policy. We will be watching that closely. Be a reason to put capital back in the region. Is the position of some of the growth currency back at levels before the Global Financial crisis . If i look at aussie and kiwi, they are much more aggressive in their policy and they are back at levels of 2008. This fx market is really beginning to reflect, i would say, a more global recession trade. The currency markets have been the place where you have had adjustments since the financial crisis. Look at the pound, for example. It has been a major force of adjustment. Look, all of these anchor on one key theme, the strength of the dollar. Again, you have a u. S. Economy that continues to do well. You have a u. S. Fed has been hawkish, even though most recently we have been more dovish. Then you have product things. The price of oil is going to drive currencies. Em has been susceptible as you worry about Global Growth trajectory. Spats, thingsde of that nature. Ultimately, it is hard to be committed to putting capital anywhere around the globe in this environment. What what about manus about gold . The Chinese Government bought a lump of it every month for 10 months. There is this relationship between gold and the dollar. Does gold fit at any juncture as a hedge for you . We have had gold in our portfolios for little while. Its a couple reasons. Theres not a lot of opportunity cost for holding gold, especially with 10 year treasuries at 1. 5 or so. It also provides an interesting diversifier. It is a hedge against the extreme outcomes of inflation, again, not a core call, but also deflation, something that could happen. Low probability, but an event that is likely at the margin. We see gold is one of those assets that gives you a little bit of a hedge against the worstcase outcomes here. When it comes to increase volatility, what do you think is the best way to take hold of that volatility . Ubs just said we are probably going to hit an air pocket in brexit. We have done our Bloomberg Survey, our Bloomberg Survey a buck 11 on brexit. Is that one of the biggest nearterm grey swans . This trade, at all costs . Trade is thek driver. We saw it in the spring, all summer, we are probably going to see it into this fall. While brexit is also a big event on the global stage, it is more regionally contained. When you talk about global trade and some of the spats between the u. S. And china, that is a bigger story. That is are flooded in the euro zone, what is happening in germany. Manus thank you very much. Lori heinel at state street Global Advisors on the markets and how to trade them. We will see you again very soon. 10,000 job cuts are set to go at hsbc. The 4700n top of announced in august. Financial times has the story and they say the bank is questioning why it had 70 people in europe when there are doubledigit returns in asia. The cuts were announced on the same day as the ceo john flint abruptly left. Themore, lets get to senior banking analyst at Bloomberg Intelligence. We are at 15,000 job cuts at the moment for this year. You think we are at the not at the right number . You would say no. Sadly. With the head cap headcount, the industry is only going one way. This is an interim ceo. Whoever comes in is going to want to make their mark. It is a sensible midterm step, but definitely headcount is only going one way. , which tellsect it you the quantum to go. Part of the argument is return on equity in asia relative to europe. Does that back up into your mind in terms of where you would allocate resource . It makes sense. You would expect emergingmarket races to be much higher. The issue youve got is french retail is a horrible place to be. U. K. Mortgages are growing aggressively. It is a battlefield. About thehink investment bank. Its massively underperforming. Europe, the other question mark will be the u. S. Has been in pursuit for a very long time. They are going to stay there and not sell. Certainly, europe has to be the focus to start with. Briefly, is this noel quills stake in the ground . Absolutely. Given where we are, given the fact we expect rates to be capped in the u. K. , they are coming the wrong way in the u. S. , and this is a sensitive bank, you need to get completely ahead of cutting costs. You have to cut. Thank you very much. The numbers on hsbc. Thats it from me. Daybreak europe pure capped the european open is up next. We are on your radio, on your mobile. 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 an eligible phone. Call, click, or visit a store today. Anna welcome to bloomberg markets, the european open. Im anna edwards, alongside matt miller in berlin. Matt the markets say payrolls done, now want to trade. The yuan slips. China may be reluctant to dislike to strike a broader trade deal. European equity futures are mixed. Cash trade is less than 30 minutes away. Anna