Ankara. Manus warm welcome to the show. A lovely piece written this morning. What is the scale of the handshake we have had over trade . ,t is a handshake, irregular good oldfashioned handshake. There is still a lot of work to be done and i think that is what the market is waking up to this morning between u. S. Sino relations. Questions and criticisms over this partial deal. The tariffs still on the cards. We are getting a little bit of a lift in the markets. Getbig question, if we do any kind of resolution on trade or brexit, what does that mean for the bond markets or money coming in this year . Manus we will talk about that in just a moment. 10 year Government Bond futures. Some would say irrational exuberance. Secondbiggest rally this year. Morgan stanley really did warn, trade war pause, uncertain rather than durable. Plays fast with the lira. It goes3 last week, down again. The u. S. Is ready to go fullscale. Going against turkey in relation to their position against syria so the bears likely have every license to thrash the lira. Quite a rampup on friday on trade and geopolitics. Again, a little bit of a drawdown this morning because the world is beginning to consider a world where china grows by less than 6 . Nejra markets still considering this market trade deal today. Japan is closed. The index excluding japan firmly in the green. Gains in u. S. Equities even if they are looking a little bit muted. We dont have a lot of details at the moment. You are seeing cable pullback a little bit. Targeting 1. 30. Manus stocks are higher in the asian session, the u. S. And china highlighting this partial deal, phase one being the language used. Agricultural products and agree certain ip measures. Agreed to delay tariff increases this week. Phase one of the deal is said to be signed soon with the possibility of a broader agreement. Nejra the latest data out of china shows a bigger than expected slump. 8. 5 fs contributed to an decline in imports while exports decreased. Joining us, colin pickering, senior economist at baron berg. Way to actually look at it even though we are seeing risk assets rally today . Colin i would see this as a gesture from both sides that they dont want to see this as an escalation in the near future. It doesnt cover all the sensitive issues like ip, but heading into retail sales in the u. S. , you dont want to put extra pressure on the consumers. Sides tose for both ease things up a little. This is a gesture rather than a breakthrough. Manus i looked at the bond market specifically but do you think there was a slight . Rrational exuberance overzealous . Le bit kallum that has been the big risk now for a good two years. Of course, market psychology is just like that. Probably we overreact a little bit on the bad news and now we are overacting a little bit on the good news. Of nocould get 4, 6 weeks surprises on trade, that could lay the basis for confidence. If trade could stabilize, that would make for a bunch better 2020. Because wee reserved have had many surprises mostly to the downside on these so far. Nejra those tariffs are really the ones that will hit the u. S. Consumer. Kallum were talking about donald trump. Anything could happen. That theuld be u. S. China trade will be with us for the foreseeable future. The republicans and democrats kind of both agree, heading into would be good for markets, would be good for the economy. Want escalation of tariffs. If we get a little progress, that is good enough. The trade data, we will get to shortly. Highest that it has been. Shortlived pauses in trade tensions. Spread, they of you avert tofore 710. Yuan in the on the next three months . Kallum probably. This is mainly an economic story. Increase in unit labor costs. That is iny to sort the short run. It has to be a formal devaluation. You on agine that yuan devaluation the stronger need to devalue comes at a difficult time with trade negotiations. The big step down that will probably help the economy will not happen for the foreseeable future. Nejra it might not have that much impact on business confidence. At the very least, do you think further escalation is off the cards for the rest of the year . Kallum i think it is fair to say that we can expect tensions to stay at a similar level or down a bit. History we have had so far between both sides, and you can see why the political and economic logic points toward a continued devaluation. Breakthrough,a that is what matters today. Manus i popped this in from the dtv live, imports contracting the most in years. Here lies the risk. Trying to think of a world of sub6 growth in china. Would that role us to the first 2009. Acession since china growth story below 6 . Kallum i doubt it would put us into a world recession. Perhaps a few of the more export oriented economies are in a technical recession. It is mainly driven by political factors, the two big ones, china and europe. And trade downturns. You could point to why you could get to the recovery today. If you make any case for Industrial Production in the Global Economy. If we get some good news in brexit, that would lay the groundwork. 4 , thatld hit 3 or is good enough for a recovery in trade so long as the recovery goes the right way. Lets get the first word news. Prime minister Boris Johnsons brexit plans are not good enough. The u. K. Leader told his cabinet that a deal could still be reached by the end of the month. This comes as both sides have to finalize a deal starting thursday. Meanwhile, the u. K. Government will lay out its policy agenda later this morning. President trump says he is ready to go with more sanctions on turkey in response to his incursion into syria and after the u. S. Withdraws troops from the north of the country. It pushed American Allies in the region into the forces of assad. The son of democratic president ial candidate joe biden has broken his silence after unsubstantiated allegations of corruption from President Trump. Hunter biden is stepping down from the board of a chinese backed private Equity Company and is promising to forgo all foreign work if his father becomes president. Hunter biden has reiterated he never discussed Business Activities with his father. Bailout froma softbank, one of the options to rescue the coworker giant. They are convinced they can turn around the cashstrapped company. Jp morgan is leading discussions about a 5 billion debt deal. It hong kong, a Police Officer is in hospital after being slashed in the neck. Yesterday saw crowds blocking major roads, vandalizing shops and subway stations. They are worried the violence is alienating ordinary people. In poland, the ruling nationalists are heading for another four years in power after winning sundays election on a vow to increase welfare. They are known for vilification of the Gay Community and a rejection of multiculturalism. Global news 24 hours a day on air and at tictoc on twitter ,powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Short,coming up, falling the eu says that the u. K. s plan isnt good enough to reach a deal. We are live in westminster for the latest. Manus if youre traveling to work, Bloomberg Radio is the destination. Digital radio in the london area. This is bloomberg. Nejra this is bloomberg daybreak europe. Your asians check markets with Juliette Saly in singapore. Even though there are signs of an agreement with china not even calling it a deal, we have japan closed today. Happeninghing what is with taiwan getting close to record levels. The 300 tracking at a twomonth high. Trade data coming out of china today. The trade balance was better than expected. Offshore currency of about a third of 1 . Goldman says dont get too excited about fed upside. They are seeing the yuan weakening to 7. 2 to the dollar in 36 months. The central bank easing for the First Time Since 2016 and suggesting more could be ahead. A had singapore narrowly miss technical recession because we saw thirdquarter gdp actually 0. 6 on the quarter. When you look at your on your numbers, it is up 0. 1 of 1 . That is when we saw the contraction in the previous quarter. It is still very much on thin ice. We know they are in a manufacturing recession. At the moment it looks like singapore dodged the technical recession that so many were worried about. Upside to the dollar today. Thank you so much. Turning to brexit, the eu saying that Boris Johnsons plans are not yet good enough to be the basis for an agreement. Johnson told his cabinet on sunday that a deal can be achieved. That was followed by a slide in sterling. Anna edwards joins us now from westminster. Even though the eu was saying that this is not good enough, what we know about the potential for any kind of compromise . I was reading about a Customs Partnership over the weekend. Anna we are not there yet and the sounds do not appear to be all that promising this morning. But really, the key Sticking Points from last week remain and we are hearing little by little, small nuggets of information about what is being decided or updated. One is customs, customs checks across ireland. Extent to howhe authorities in ireland will have a veto or consent. The Customs Partnership, perhaps there is room to maneuver if Northern Ireland leaves the Customs Union and yet stays adhering to the terms of the Customs Union with the eu. That is the customs signed. On the others, a veto. The dup not happy with that. Barnier saying that a lot of what is being proposed is untested. We are waiting for any details around custom and consent that is new here, whether key participants will be on board and talks continue as the clock ticks in brussels. In northern work ireland last week. Tell me this. It is about the contestability, therein liesand the point, it is about the robustness of the proposition. The goodn regards to friday agreement. Anna the dup had been pushing back over the weekend, the Italian Press saying they dont want anything that distances them further from the Customs Union. There is some pushback. It comes down to the details, the untested nature, and the short amount of time that remains. Remember, a deal has to be done by wednesday because thursday and friday is when the eu leaders meet. They wont have to be going through the actual legal text themselves. A deal would have to be made monday, tuesday of this week. Achieved,at is Parliamentary Support could still be elicited. We have fed pushback from the dup. We have heard from the label party the labour party that they seem unlikely to support Boris Johnsons plan and obviously the liberal democrats feel the same way if not stronger. Want a vote ofy noconfidence in Boris Johnsons government. Despite the pomp and ceremony we will see today with the queens speech, this is not a government with a majority. All of that is still possible as we have just two weeks or so to go until the brexit deadline. Pump as you said, more and ceremony today in the theater of westminster. Sticking with this overall theme and the story, the socalled tunnel in negotiations between the u. K. And eu could sustain the rally. Despite the pound trading slightly lower, Goldman Sachs lysts believe that Kallum Pickering is our guest. The tunnel, locking everything down in writing. Do you sense that we are within kissing distance of a deal but we will see a short extensive short extension, or will we go right to the wire . Kallum that is a good question. The key point for boris is he needs to get to the 19th of october with Parliament Passing a deal if he wants any chance of being Prime Minister a week later. That is the date that parliament says, we have to pass a brexit deal. It is very unlikely he will do that, so he is working on a tight deadline. What i would expect, if we will get the deal, and i am not it adent we will, we make summit at the eu, giving a nod at the summit and thereafter, you facilitate the ratification. Boris needs to bring the deal home and it probably will be just a kind of guideline to what they will agree to. Nejra on a framework deal you just pointed to, Boris Johnson has been optimistic, and im paraphrasing, that something will be found that can make all sides happy. What does that look like . Issue seems to be how to manage the customs for Northern Ireland. Course,d veto that of that keeps the republic of irelands interest covered. Issue a technical issue. Conservatives Northern Irish partners in parliament. My hunch is they are looking for a kind of fudge where everyone can say, we can politically step down from our positions and accept this. Can we come out at the other end with something that is politically acceptable and can Parliament Pass it . This to me will still be very difficult. Think, if it all goes toward a framework and deal, do you think we still will have a election if there is a deal . Kallum if Boris Johnson has managed to bring a deal back, it is because he believes he can pass it in parliament. If he gets a deal back, he gets it from parliament and i think he wins handsomely. Nejra what does that mean for cable . Goldman seems optimistic if we get to 130. Kallum if we are getting a deal by the end of october, sterling is undervalued versus the probabilityweighted outlook. We are looking up at no corbyn because johnson would be a favorite for the election and we take the heart exit risk off the table. The hard brexit risk off the table. Sterling up probably 10 . Manus bank of england probably hike, what, immediately . Can they afford to hike in the immediate aftermath of three years of battery . Kallum hawkish, then hiking next year. Nejra coming up, violence escalates in hong kong. More protesters arrested after clashes with police left an officer with a neck wound. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of Wireless Network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Manus it is bloomberg daybreak europe. Nejra we are seeing a lift of risk assets today on the optimism that we have a partial deal between the u. S. And china. Lots of questions remain. Manus indeed. I think Morgan Stanley are raising questions about the durability. Some are saying it is a short squeeze on the currency for now. Societe generale saying they are skeptical of whether the progress is enough to strengthen the yuan in the near term. The rest of markets around the world our bloomberg partner in mumbai is standing by. Lets kick it off with you first of all, indian markets, a little bit of a green reaction across the screen pretty trade deal. You summed it up right. We started off reasonably ok. For now, in the green. Two reasons why i think this would have happened. The banks up about a percent. The best performing today, you guys were talking with the trade war or partial, and that is leading indian metal stocks to do well. Is by far theex best performing index today. Inays session as also theays sessions, all stocks in the green. And some of the heavyweights up by 3 , 4 . Traders making money in the metal names, in line probably with what is happening. Nejra i think i want to call it the progress put. A little bit of gains across the equity markets. It is entirely green from hong kong to of course csi, to sydney. As we have been talking about all morning, there seems to be a beenand it hasnt even written down, which Bloomberg Economics brought to the point that, in the past, the trade agreements were not worth the paper they were written on. Some is some ski skepticism there. The british pound down by half a percentage point today against the u. S. Dollar after it again threemonth high. This is after a warning that possibly the deal that Boris Johnson is pushing is not good enough yet. 10 year in singapore, australia. We should note that treasuries are close for columbus day. A potential phase one trade deal. I want to stay in commodities. I am looking at gold and copper. What mliv is talking about is the fact that this trade deal does not seem substantial enough to derail either gold grinding higher or copper. They say that this could continue to decline and likely both of these key metals will focus more on what is going on with Global Growth around the world. Manus thank you very much. Our bloomberg partner in mumbai. Big geopolitical stories we are keeping an eye on. Lets start with hong kong. Unrest in hong kong, a Police Officer slashed in the neck. Authorities fired tear gas to disperse crowds. Lets get to dan. Good to have you with us. Though measures, even some of that violence did sound pretty awful, this weekend wasnt as bad as some previous ones, but there are some events this week that could ramp up the protests, arent there . We saw similar scenes of violence we have seen since early june. Overall, the numbers were down over the past weekend. They were not as bad as the previous weekend. Essentially paralyzed. The Main Operator here said that they will close the station at 10 00 p. M. Tonight some are calling that a de facto curfew and business is still down. It is not as bad as it was previously. Tell me, what is next . Isthis week, the big event carrie lam, the leader of hong kong, giving a policy address. She will give the new measures but also people are looking for any new solutions that could finally end this protest. Just looking for any reason to come out on the streets. They might vote on legislation that could boost sanctions on chinese officials in relation to the protests. Thank you very much. Moment onsight at the those protests. On another political front, turkeys incursion into Northern Syria with the risk of an escalation as syrian president Bashar Alassad sends troops to the area. Meanwhile, President Trump and the eu have warned turkey of sanctions over the offensive. We are at maximum pressure, the latest rhetoric coming from the United States of america. They have abandoned the kurdish ypg to the north of turkey and we are talking about maximum sanctions. It is very distorted signals, isnt it . They are trying to balance between President Trumps desire to pull the United States out of what he calls the endless wars in the middle east as we enter the next election cycle, and also trying to ward off bipartisan criticism after he decided to pull troops. Remember, he has been trying to pull troops out of syria for some time now. Some were saying this was a bad move because it could pave the way for resurgence in that part. Criticism, then goes back on the offensive and says, if turkey goes off limits, the u. S. Will impose sanctions. The key, what is off limits . Nejra the fact that we are talking about assads forces moving north, just talk us through the steps of that risk of escalation . Ofbasically, the area Northern Syria has been more or less semiautonomous since the time of the syrian war in 2011. The kurds have had that more or less autonomy. Now, because the u. S. Is pulling out and turkey is moving in, turkey is basically a mortal enemy from those forces as well. When we talk about a risk of escalation, we talk about the risk of a military confrontation between Syrian Regular forces and the turkish army. Noted, of the experts without some promise of u. S. Air cover, the effectiveness is likely to be limited. We need to see whether this is just rhetoric basically from the syrian president , just moving troops as a show of force, or whether there will be another twist in this conflict by pressure moving in against turkey. Much, ournk you very managing editor for the region in dubai. Lets talk about the guardians of the Global Economy. They had to washington this week. Of ames under the cloud slowing economy. Nejra the imf gdp predictions from july are out of step with latest economists from bloomberg. They have hinted they will cut projections for Global Growth this week. We have asked a lot of people but i really want to ask you, how worried are you of the spillover leading the Global Economy into potentially more of a slow, even a recession . Kallum i am am quite worried. It is a political bent that the accidents dont happen. If the downturn in Industrial Production and trade were to persist, eventually, you would see that in the unemployment data, that would have spillover effects on consumption and Domestic Services in major economies. That is a risk but it is not the base case. We will probably avoid a hard brexit. That will lay the basis for recovery sentiment and, knock on wood, services and domestic consumption will mostly avoid the worst of it. Manus the question is the policy responses. Onammed put this article out his linkedin, quoted larry summers. Japan, having engaged in a black hole in Monetary Policy without continuity. The u. S. Is one recession away from entering the same blackhole and we need a huge rethink as we did in the 1970s with regards to policy response. From enteringaway the same blackhole in the u. S. Would you agree we are that close . Kallum i wouldnt. This secular stagnation hypothesis comes up every time the Global Economy enters a slump. Growthent slow economic leading to product have any problem. The most bearish stories always occupy our mind. Where we are in europe and japan. What worries me about this kind , which i dont think is the recipe. This is the issue of productivity growth, a little bit linked to tax, but not something you can fix. Nejra so many people are shouting for fiscal, fiscal, fiscal, but you dont think it is the answer. Areum of course, there political consequences from slow economic growth. Littlecan afford a fiscal stimulus here and there when the economy slows, of. Ourse you should go for it spontaneous human ingenuity, we need more innovation and big innovations that completely transform the capital stocks. The transformation of the the bige in the 1980s, 3dt, robotics, big data printing. All this potentially could be the next productivity boom. Manus what fills that cap . Call me oldfashioned, it takes a little time for greenspan. Alled it a new paradigm what fills your gap . Try to what we can do is improve the efficiency with which we use the existing capital stock. Supplyside is important for that. We saw huge gains in productivity. We used the capital we had, supplyside reform. France and europe can help with that a lot. They dont have any Major Political issues, a little more competitive taxes helps, but actually, this is pretty much it. If you have slow productivity growth, you cant really buy your way out of it. You have to wait for innovation to get your way out of it. Manus patients might be the word. Thank you very much. Lets get a check with the first word news headlines. Prime minister Boris Johnson s brexit plans are not good enough according to the you negotiators. Both sides look to finalize a deal before the eu summit starting thursday. Meanwhile, the u. K. Government will lay out its policy agenda in the queens speech later this morning. The u. S. And china have reached a partial trade deal but it is just a handshake agreement. Tariff increases on china and beijing will more than double farm goods. A more comprehensive agreement remains elusive. A number of analysts are noting that tensions are unlikely to ease anytime soon. Democratic president ial candidate joe biden has broken his silence after unsubstantiated allegations of corruption from President Trump. Hunter biden is stepping down from the board of a Chinese PrivateEquity Company and has promised to forgo any foreign work if his father becomes president. He has reiterated he never discussed business with his father. Theary, victor orban opposition in local elections managed to capitalize on a sex scandal with orbans allies. In poland, the ruling nationalists are heading for another four years in power after winning sundays election toa valve to on a vow increase welfare. The law and Justice Party is then for vilification of Gay Community and dislike of multiculturalism. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Nejra thank you so much. A big week ahead. Here is a look at what is coming up. Russian president Vladimir Putin is in saudi arabia. He is signing agreements and meeting both king salman and crown prince mohammad bin salman. Manus wednesday, we are going to keep an eye on the developments in hong kong. The chief executive carrie lam is due to give her annual policy address. Thursday sees the start of a twoday summit in brussels. Day two of the imf meeting. We will be talking to the key figures included the eu commissioner. Coming up, the great divide. The split within the European Central bank continues. Who is the latest to break ranks . That is all ahead. This is bloomberg. Manus this is bloomberg daybreak europe. Nejra lets get the bloomberg is this flash. It inlle droulers has hong kong. Work ise we considering a bailout that would hand control to softbank. The japanese conglomerate is convinced it can turn around the cashstrapped company. Jp morgan is leading discussions about a 5 billion debt deal. Indias gas company, a 37 stake. Expandrgy giant looks to its presence in one of the Fastest Growing natural gas markets. It is the latest in a string of investments looking to beef up totals investments in lng. Dennis is being replaced on the board as chairman to better focus on returning the 737 max to the air. Prepares for ae crucial appearance before congress. Boeings reputation has been hit since two crashes killed nearly 350 people. Manus thank you very much. The spook within the European Central bank over the reintroduction of qe continues. The Austrian Central Bank governors told the nations public broadcaster that Mario Draghis goal to increase liquidity could be productive. He criticized mario draghi say in his behavior was not that of a person inclined to consider divergent views. Nejra we will get further evidence over the shape of the euro area economy this morning. Industrial data for august comes out. Analysts are expecting a rebound but. 5 month over month output for the sector is still expected to contract. We get a couple of the hawks coming out and making comments, most notably holtzman saying that mario draghi was not a person inclined to divergent views. How important is it for there to be a real convergence of views for the ecb . Kallum it is important because the last thing you want is for the euro zone economy to enter a more protracted downturn and the ecb did not turn up. You cant reason from the price change. Growthe to growth and expectations. They have here a Currency Union with a low potential growth rate and Monetary Policy must reflect that. Periodicget these downturns cost downturns, it is important to single to markets that they will keep the long end of the rate curve down. If the ecb did not meet monetary expectations, and you had the downturn, policy would be getting tighter in the euro zone. That you make the point the center of gravity was for a 10 basis point cut, but you would also make the point that deeper than normal rates has negative feedback on the economy. Is that . On, where kallum i dont see any major problem with credit supply. It is mainly a Credit Demand issue. I dont think it makes sense to bring the rate down anymore. It is not a 20 percentage point difference, holding back french and german firms from investing. It matters a lot what the firms do on the liquidity side. The asset side of the economy matters a lot. It is important that markets do not completely panic when we go through these periodic downturns. Not liftingn by demand in the euro zone. That is traditionally the function of the central bank. Here you have a central bank that is promising the market liquidity. That in effect provides a financial backstop. You have a generic problem in the real economy. Financial markets panic about it. If that route is not stopped in Financial Markets, you have a reverberation into the real economy. If the ecb can limit the downside by providing the Financial Market backstop. Nejra so that is working well enough and you dont think the ecb needs to do anything differently as of now . Kallum correct. Nejra clear and sharp. Manus thank you very much. Guest who hasnly ever managed to answer a question in one word. Well, maybe not the only one. It is a partial deal as we know it. The u. S. And china could sign a phase one deal very soon if we get more on the details. Remember that bloomberg users can interact using gtv go. 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. Good morning. I am marin cilic. Nejra cehic. Debris is bloomberg europe. These are todays top stories. Signs of a thaw. Export data highlights the risks of a full agreement if a full agreement is not reached. Not enough progress behind drops as the e. U. Ago shooters worn the brexit plan is not good enough yet. The Prime Minister says there is a way forward. We are live in westminster. Tensions mount. Syrias president sends troops to the northeast in response to a turkish offensive. The lira slips as President Trump says he is ready with more sanctions. Nejra manus has been calling it a phase one progress put for risk assets. We are seeing them react to the partial trade deal between the u. S. And china. The other big risk that seems to have progress to it is brexit. The e. U. Might have said it is not good enough but we have some signs coming through other people. Manus the Irish Foreign minister speaking in luxembourg. He said a brexit deal is possible. There are tough issues which would remain. The site the need for caution on any brexit deal. Have we been irrationally exuberant . On friday. A flutter nejra we were looking at u. S. Futures, looks like they were. Ointing at four day gains we had three days of gains in the stoxx 600. Dekes and cap coming in negative. We solve Global Equities with that gain, monday looking mixed, the ftse 100 flat but you have got to take in dynamics of the from falling on that high the comments about whatever deal we have at the moment not being good enough. Manus lets look at the bond markets because futures markets are open, treasuries are higher, but a smaller amount. It was the second biggest rally in yields this year. Was that the beginning of a onrating in the bond market the prospect of a trade deal and why are we going back in to bonds . The prospect of an october hike is dissipating. You see futures dropping back in terms of the propensity for a cut from the fed this month. The curve, 310year, recession , inverted, saw, sought go back into positive territory. Lets see with the view is on the bond market. The market is trying to grapple with the probability of a durable trade deal. Phase one mode at the moment. How do we get to a substantial deal . Lets get the rest of the markets in perspective. Juliette saly is in singapore. Ambiguity but certainly it has given a good boost to investor sentiment. Japan is closed, msci put pacific seeing very solid moves in the fifth0 and china up for a day. That is a two month high. Trade data coming out of china. Imports and exports shrinking not more than was expected by the trade balance better than expected which gave boost to sentiment and the currency market. You have got the offshore yuan trading higher against the greenback. Goldmans saying that get excited about the yuan moves. Tangible deal between the u. S. And china. They think the yuan could drop to 7. 2 to the dollar. Watching the sing dollar, which is rising against the greenback. We had gdp data out of singapore showing singapore missed a recession. We did see a bit of movement in the sing dollar on the back of the fact the central bank eased for the First Time Since 2016 and suggested further easing. I want to look at this chart which is showing what we are seeing in car sales. I mentioned the trade data, looking ahead to gdp friday but this is showing how the consumer is faring in china and auto sales were down in september, the 15th month of declines out of 16. The only time we have seen an carease since mid2018 sales was in june. We saw discounts offered to consumers. This despite of course the fact the government is trying to boost consumption. Asian stocks higher after the u. S. And china agreed on the outline of a partial trade deal. Purchaseset to double and agreed to certain ip measures. Washington pledged to delay a tariff increase. President trump said the phase one of the deal will be signed soon touting the possibility of a broader agreement. That is the latest data out of china showing a bigger than expected in the exports. Tariffsts contribute contributed to a decline. Lets get to the beijing bureau chief. She joins us. I suppose the difference of language first of all, the United States with a phase one deal, chinese do not use that language and are more cautious. Tone can bese noncommittal. They have seen this before. They has seen trump hype something that is agreed upon and they have seen him back out of things and escalate abruptly. Any mention ofn a deal in Chinese Media especially the 40 billion number trump said the chinese agreed to make in agricultural or juices. The chinese have not corroborated a lot of what was agreed to in d. C. Ahead to aipacok , what is likely to be the next step from china . Seeon we probably will more talks. Nothing set in stone yet area if both sides stone yet. The issue of the december tariffs hikes large, that will be the major issue, whether the u. S. Will delay or miss those will be a starting point for discussing whether xi jinping could sign an agreement. The u. S. Has not made a decision. That would be the first thing we would expect to hear if there was going to be a real deal signed. Inus it is a difference language. The bureau chief in beijing on the details of a potential trade deal. Jordan rochester is our guest host. Good to see you. Shortlived causes in trade tensions have in the past been a way to renewed escalation rather than rolling back the trade war. Disagreements have spread, ramps up to deescalate is harder. You are in for a bumpy ride and 7 20. Yuan to is it a durable agreement . What do you make of the past 48 hours . I know zach, so it is hard not to disagree with that. We have seen similar stories like this. December last year, the selloff in the s p. Trump started escalating and then did a peace deal. Here is another one where the details are not clear, nothing set in stone and Chinese Media not reporting it. It makes everybody less optimistic on the news of that and you should think about what will happen again. We have had a mini piece deal. What peace deal. We are not having the increased tariffs. The december taxes are still going ahead. If we see nothing and the december tariffs go ahead, optimism will be shortlived. So take the trade war out of that story, the volatile stuff you cant stick all the time. The macro story in china, things are slowing down, so they need a weaker currency. Things are slowing down so you should see a stronger dollar. Shortterm we have done long renminbi, but when it comes to the longerterm, medium term story all of the issues remain and i agree with that note he reported on that is more likely [indiscernible] nejra you talk about certain traits you would want to chase. One of them would be if we got a trade deal because we have seen a bit of a rally and risk assets other than the renminbi. Are there other things he would want to chase for the shortterm . Manus i have tried buying jordan i have tried buying scandinavian currencies. It is hard to know what the story will be but there is value to trade. So norway, sweden, keep an eye out for those. The european story improves, those are the ones i would like to be long. Manus what about eligibility . Volatility . Yuan volatility spiked ahead of this. Eo you play this through pur crosses or do you play this through tougher times ahead in the yuan . The trade stories have implications for not just emerging markets but if you have a strong china trade you should do it in renminbi because that is when you are getting bank for book. Buck. Nejra what is your target in we are looking for 108 but for the economies that needed the eurozone needs a weaker currency. Growth is poor. The data gets worse. There are positives which is perhaps the ecbs monetary easing package which provides data boost. If that happens i am wrong because maybe the efficacy is getting limited. 108 is my target. 105 if we talk about recession risks. It is building up to that story. Manus one of the data pieces is gdp from china on friday. We are expecting 6. 1. There is a risk this economy is below 6 . Do you think you will see much more aussie response, substance more policy response on a Slower Growth bigger and in what way . Growth figure and in what way . Jordan we are looking below six. That is when things are getting slower. The policy response, we have seen rrr cuts, we have seen fiscal stimulus in terms of vat cuts. It is not the big bang infrastructure package. We have not seen infrastructure bonds and issuance picking up and away that would rescue china and the rest of the world from this cyclical slowdown. Potentially it is linked to the politics of the u. S. Bailing out the Global Economy here and boosting growth is not what you want to be seeing. Lets see how the trade war goes. Lets see if the pace deal sticks the peace deal sticks. Nejra it makes sense as to why. You are fully committed to dollar strength. Staying with us. Lets get to first word news with annabel. President trump is ready to go with more sanctions on turkey in response to the incursion in syria and after the u. S. Withdrew troops from the north of the country. That pushed American Allies into the arms of america Bashar Alassad. People are returning to the northeast for the first time in years. The democratic president ial candidate joe bidens son has broken his silence after allegations of corruption. Hunter biden is stepping down from the board of the chinese backed private Equity Company and is promising to for go his foreign work if his father becomes president. He never discusses Business Activities with his father. Policeman in the hospital after being hit in the neck after protest. Crowds were blocking major vandalizing shops and subway stations. This is despite some protest groups easing back. They are worried the violence is ordinary hitting ordinary people. We work will work with softbank. It is one of the main options being discussed to rescue the coworking giants. The japanese conglomerate is convinced it can turn around the company. Wework is looking at a number of options. The e. U. Is appealing to the u. S. Not to impose tariffs over airbus. Washington is planning to hit 7. 5 billion of e. U. Goods with es over illegal brussels is warning of economic hard times for both sides. The e. U. Says it would be forced to retaliate in a parallel case with aid to boeing. 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. Thank you very much. The e. U. On the show, says the uks plan is not good enough to reach a deal. We are dry in westminster. Live in westminster. This is bloomberg. 7 19 a. M. In london. This is bloomberg daybreak europe. I am nejra cehic. Manus i am manus cranny. Back to brexit. Says u. K. Prime minister Boris Johnson, his plans are not yet good enough as a basis for agreement. Johnson agrees a significant amount of work is still needed, he also told his cabinet a deal can be delivered. That is what followed from a threemonth high. Lets get more to our european anger. Anchor. The Sticking Point in this forgery, good morning. Sticking point remains until they have become unstuck. But is, they are around customs checks. Process by which Northern Ireland would say its willingness to stay in alignment with the e. U. We have had a number of voices playing down expectations a deal can be achieved. Maybe those in the process, mindful of the soaring of sterling and maybe the markets running away with pricing this in or short recovery. We heard from the foreign minister in ireland. He has been talking up various issues. Know this remains difficult. Not much progress was made as was wanted. Is interesting because that uptotheminute, this is looking back at what was proposed, talking about what was happening on the face of these. A lot of what the u. K. Is proposing is untested. Also what is being proposed could leave the Single Market vulnerable to fraud. We have got what seems like a softening in terms of their stance and added complexity around the union. What more can we expect . Manus we are looking for details on those Sticking Points. As we get towards saturday it is a busy week. Those leaders dont want to be going through the legal text themselves. Wednesday, you can see it to be rubberstamped. Essentially rubberstamped by the leaders. Even then we are not through. People meeting on saturday which is in itself very unusual, and that is with the intention of getting whatever Boris Johnson comes back from brussels with, getting it approved by parliament, it looks to be a tall order. The labour party suggesting they will wait for details but are. Ot inclined to back his plan the s p and local democrats are asking for the pomp and ceremony of the this is aech, but government that doesnt have a majority so it looks uncertain. Nejra thank you for joining us. Sticking with this story of the negotiations between the e. U. Over brexit, could they sustain the rally . Goldman sachs says yes. If more progress is made, cable could reach 130. More commentary from your friends. Table pushing up against the 200 day moving average, how clear is the past 130 . If you go from a place where hard brexit was possible, the place where you are neutral and maybe a deal gets done, that is getting you to 130. Looking at data last tuesday, net short in the pound around 6 billion. This is a drop in the ocean in terms of the trillion dollar moves tot if that neutral, that could get you to 130. There is good news it could go higher. We should essentially ignore this story about weaker sterling because they are in the tunnel. Who knows what compromises can be made. By the end of the week a deal is done. We have got thisbecause they twe process, positivity, reality check. That is why it will be so important. Manus lets say we get some kind of framework. That is what the last last guest suggested. A little extension. Do we then see election risk hit the top priority . Would boris go to the country in a car key style election . I am delivering brexit . Jordan on friday i would have suggested no, the Opposition Party would delay and try to avoid election. But the team is not so warm to the idea of peoples votes. It is not up to Boris Johnson. It requires leader of the opposition to agree. Lets see what happens sunday because it is if an election is rejected it means article 50 extension. The u. K. Will ask for january but we have heard from e. U. Sources they will not do january. They will do june. We have seen this in the past, theresa may asked for extension to june 2019 and twice the e. U. Gave her something different. Nejra you have canceled a canoeing trip because you are watching these. You say it is important. Talk me through. The outcome you outlined, what traits you are putting on monday. If you have all of the parties agree, it is all three of them backing those deals, it goes through, that is it or not. If a deal goes through, the future of trading relations, minor detail, but if it is a deal, 135 over cable. If we have a field deal, election, that is the negative scenario. The extension by law has to be done anyway. If we have election call, it is sterling lower, and we have to watch polling. Manus thank you for sharing your thoughts. He will be logged in and ready to go. That thisisk off on morning. Nejra this is bloomberg. The European Union is up next. The European Union is up next. Togood morning, welcome bloomberg markets. I am anna edwards alongside matt miller in berlin. The markets say is this the real deal or is it just fantasy . Stocks rally in asia after a partial u. S. China trade handshake agreement but europe points lower as skepticism grows. The cash trade less than 30 minutes away