Raised substantially. Anna hong kong protests smashed the hang seng. Trade is prepared for volatile results. Capital is set to make a bid as the burger king owner looks to diversify. Welcome to the program, 20 minute 20 nine minutes into the start of the trading day. On teachers we are expecting to follow asia to the downside. On futures we are expecting to follow asia to the downside. The Asian Session has dominated more than the u. S. Session last night on what President Trump had to say on the gloomy side around trade and the possibility of higher tariffs. The psyche inated asia. The protest activity in hong kong, we see futures in the u. S. Going weaker. We have selling more broadly even in hong kong, but that is down by 32 . Further disruption in hong kong. Is this something we can move on from at some point . This is the impact from hong kong, and also what President Trump had to say. He said there could be a deal but also about the possibility of tariffs going higher. New zealand assets on the move. This after we saw a drop in the new zealand dollar. Inflation lettuce to believe we might get a cut, but we did not get a cut. We also see moves in fixed income in new zealand. Our bloomberg market life managing editor joins us from singapore. I want to ask about risk appetite. A lot of confusing signals recently. We hit all time highs and there seem to be a rebound in expectation, looking at germany and japan, pointing in a positive direction. At a Consumer Confidence survey that was week. Survey that was weak. Money inrall there is the pipeline that could come into the market. People have been nervous. We are seeing a climb to record levels, but it is a climbed to worry. We have threats in the recent months. They culminated in october. We dodged the other side and now we are seeing that money wants to come in off the sidelines. There is more money to come into the markets. I think that will be the theme at the end of the year, but i do not expect a powerful rally but a rocky slow one. Reserveat the federal has to do or does not do might be part of the story. That brings us to the question of the day, how far do treasury yields rise on powells pause . 1. 5 to 1. 9n up from on 10 year treasuries. Where do we go from here . Mark they can probably go higher as we get broad optimism, curve tonot expect the steepen anytime soon. There is demand at the long end for the yield that is offered by u. S. Markets which is a premium compared to other markets in the developed world. The curve will stay relatively flat. In rateugh he priced cuts, no one is expecting rate hikes. That means there is nothing to drive up the kurds. The yield might edge higher a little but not much more from here. The markets are on the wrong foot by what in the end are unfounded expectations of rate cuts. It is a broader message about the idea that the fed is on pause and maybe other Central Banks will change, and there is an idea that more Central Banks have said they do not like the idea of negative rates. There is this theme that Central Bank Policy around the world has not evolved. Usingnot aggressive about rates. They are pumping liquidity in various forms of qe, but the rate policy framework is shifting. Sentiment in asia mattered more than the trump story. It really says nothing new. It was more the fact that hong kong turmoil continues. New zealand scared the markets. Then you have the trump element, but that was a tertiary angle. About something that will happen later on in the u. S. , chairman powell will be speaking . What should we look out for . Are we expecting him to say anything that moves the dial . Expecting him to influence markets much at all. He said policy is in a good place. It is so soon after the recent meeting where he indicated a pause, but i think it would be a hender of communications if sends a strong signal that policy is out of place. I think this will be a nonevent for markets. It was a month ago that i thought he would say nothing interesting, and he shocked markets. I am hoping this time i will get it right and he will not surprised the market. Nna thank you, mark cudmore you can join the debate and get involved in the question of the day. How far do treasury yields raise on powells pause . Reach out to us and the markets live team on tv on your bloomberg. Lets get a first word news update. President trump is ratcheting up pressure on china by warning he will substantially raise notffs if trade talks do produce a deal. He said beijing is desperate. He also renewed his assault on hurtingsaying it was the economy my not deploying negative Interest Rates. Tosident trump it is going 15 soon, and i tell this to larry and everybody, if we do not make a deal, we will substantially raise the tariffs. That will be true for other countries that mistreat us. Hong kong has announced a suspension of all schools in the city on thursday as security chief warns about unthinkable consequences if violence continues. Commuters packed onto the first trains amid calls by protesters over anger over police tactics. The International Energy agency says Global Oil Demand will curtail in 2030. It says the growth rate will hold for the next five years. The iaea sees lower demand in the 20 30s. In the 2030s. Public anger by calling on demonstrators to give up and go home. His comments saw a new surge of unrest which claimed the first death. That if protests continue, lebanon could die. Protesters set fires across the country. They demand the removal of corrupt leaders. Global news, 24 hours a day on air and at tictoc on twitter, powered by 2700 journalists and analysts in more than 120 countries. Anna thank you very much. Ceoext, we speak to the next, this is bloomberg. Anna welcome back to Bloomberg Markets european open. We are expected to follow the asian markets into the red. Business tracking toward the top end of the new Profit Guidance range. This comes as the airline reported firsthalf profit up. Joining me now is jozsef varadi, ceo cofounder, wizz air holdings. Clarify for us what you are trying to communicate with this push higher in the guidance . Jozsef one is that our business is on a strong footing. We have outperformed our own expectations. Some of it we are investing into the business, but overall we are and raised our guidance. You fromt separates other Lowcost Airlines . They are thinking whether to expand. Say at least two things separate us from the pack. Airline we are operating from a better market with more disposable income into the market, and we are seeing more demand. Anna one of the ways you are driving on costs is moving your these seat more people than your average european lowcost aircraft. What is the max behind that . A 239 we are deploying seat aircraft compared to the average of 160. Benefits, and it is about the environmental impact. Our impact is significantly lower than any other airlines. Do you think other lowcost operators do not move to a larger aircraft as you have done . Jozsef you can make strategic considerations, but today the aircraft are not available. All aircraft manufacturers are struggling to supply this to the market. We are wellpositioned because we have 270 of these aircraft on hand. There has been pressure on the sector, the flight shaming phenomena in spreading. Do you see impact of that on your business. Do customers talk to you about it . Jozsef you can imagine [indiscernible] keep adding new technology and that will just keep improving. We are leading the industry. Anna do you think the sector is thaty of pricing too low drives demand and leaves you exposed to Regulatory Risk . Jozsef no, i think flying people on business class, they andas much as passengers, we are preserving [indiscernible] anna let me ask you about the london part of your operations. What are your expectations for london given the Political Uncertainty that hangs over the country . Jozsef i do not think it will change any time no matter what happens with brexit. We are keen on positioning ourselves strategically for the london market. We are the lowest cost producer in london. London might stay important as a global hub, but by those inriven europe who live in london, are you not nervous you might lose some of those passengers . Jozsef that was the early days. Today we are seeing more touriststraffic and traveling with us. Do you see expansion as an option . Absolutely. If you look at what we have achieved over the last three years, we have grown our London Business by 60 . We are looking for ways to expand the business to other airports. We remain bullish about the market. Anna where else do you want to expand . Jozsef pretty much across the world. In 14e 25 operating bases countries. The problem we have is we do not have enough capacity. Anna thank you very much for joining us. Jozsef varadi, ceo cofounder, wizz air holdings. Lets get a Bloomberg Business flash. Elon musk says tesla will round out its Global Manufacturing network with a factory in berlin. Will buildplant batteries and vehicles. The company has relied on a single facility in california, but it is on the verge of made in sales of cars its factory in shanghai. Local media in hong kong say alibaba has won approval that could raise more than 10 billion. They have been given the greenlight for the move. Alibaba is proceeding with what could be the largest Stock Offering despite violent protests gripping hong kong. Nike is breaking up with amazon, ending a Pilot Project where it sold its products on the website. The company says the decision is on direct relations with consumers, and it will invest in strong partnerships with other retailers and platforms. Nike will continue to use amazon web services. That is your Bloomberg Business flash. Anna thank you very much. Breaking news coming through on musg. Numbers from the financial business in japan. They have reported net income for the Second Quarter that has dropped 35 year on year, but no change to their guidance. Ofutes away from the open the European Equity session. We will look at stocks to watch. 3g capital is a long the bidders for its elevator unit. Am 3g capital is a ong the bidders for its elevator unit. Anna welcome back to Bloomberg Markets european open. Lets get the stocks we are watching. And record earned and bid for thede a elevator unit. It is its most valuable asset. More than 50 billion euros. The Company Looks to save money. 3g is known for buying consumer companies. It is known for aggressively slashing costs. Up in seeing it trading germany. Sectorader industrial after recent comments from President Trump saying he will increase tariffs on china if there is not a deal. Annmarie a tough quarter in hong kong dropping 45 . They were to offset some of that on the mainland china. Downside. To the dani profit is slipping 24 for net income in the quarter, but the concern is the uncertainty caused by an unexpected into a mishandling of suspicious accounts. A say this means they do not know what costs will be, a lot of uncertainty. You. Thank you can find out all the stock stories by going to first go on your bloomberg. Look out for arista, no Capital Increase reported. In terms of downgrades, something that could be on the move. Futures suggest we will be weaker at the start of the trading day. There are comments from President Trump who said tariffs could go higher if no deal is done. He has said that kind of thing before. The market was caught off guard by the new zealand central bank. We are expecting weakness to come through into europe. European open is up next. This is bloomberg. Anna one minute to go until the start of cash equity trading. A couple of factors the stabilizing things for the market. One is the ongoing tension and disruption on the streets of hong kong. 2 are down today nearly after dropping 3 monday. We did not get a cut in Interest Rates in new zealand. We saw the news even currency heading higher. S p futures suggesting we will see weakness at the start of the trading day as we factor in destabilizing factors. President trump said a deal could come soon, but he also said there is a probability that tariffs could go substantially higher. Expected toures give us a negative start to the european trading day. European markets expecting to see some red. 0. 3 straightown out of the block. We have the british pound fairly flat. Recent polling data suggested Boris Johnson and the conservative party is increasing their lead over others, with the brexit party dropping back. That is one of many polls conducted at this point. The spanish ibex down around 0. 5 . The dutch and french markets are down 0. 3 . The bloomberg dollar index is fairly flat. Perspective, we will not see a lot of direction. Health care looking mixed, utilities mixed. Financials are alarmingly red. That is what we have here at this point. A bit of a bias to the downside. That is the case, 373 stocks on the stoxx 600 headed downward. 146 moving to the upside. If we pull out some of the we have some u. K. Names in there. Santander bucking the negative trend. Nothing really that has reported this morning, i do not see many of the names we are looking for. We do see weakness in the spanish banking sector. Of the voteresults on sunday into monday and delayed reaction on politics, but a downdraft for some of those banking names in the spanish market. To the downside as President Trump threatens to increase tariffs if the phase one deal with china is not reached. Is going toump it 15 soon, and i tell this to larry, if we do not make a deal, we will substantially raised the tariffs. That will be true for other countries that mistreat us. Anna President Trump talking about how tariffs can go substantially higher. Joining us now is Peter Toogood, cio, embark group. Let me ask you about the tariffs. Do you think we got any news from President Trump that is good . Peter he is having an economic war with someone, it is a strongman act, america first, and he is an impatient person. No change. Anna do you think markets are rallying on the prospect of a phase one deal . They are rallying because 50 billion is put straight in the market, it is a liquidity game. The fed is denying qe is back, but it evidently is. It is a case of the liquidity once again, flushing into the system. Did they lower the numbers . Yes, as usual to beat expectations. There are thoughts about the trade story and where it goes . Peter china is doing what it is doing anyway. Not going to be 10 anymore, 5 to 6 . China consumers are reorienting what they are doing, and they will play a long game. Trump has 1 to play with. All there is left is the trade deal. China can procrastinate and ignore him for the next 12 months. Yesterday he was asked about what this is doing to the economy, and some are saying this is a trump put and he will keep, playing this game as you describe it. Tack, and hechange has room to move. Peter he also looks weak if he backs down. He key is the ip effect are the chinese addressing that . No. What is his brandnew deal . It is not even exciting. Anna you ask yourself whether the story being told is what lies underneath the hood. Peter the reality is the Global Economy is having a manufacturing recession for the last 12 months. Anna i have this chart which shows expectation indices. Lobally rebounding we have moves to the downside and manufacturing recession taking place in japan, germany, the u. S. But there is an uptick in tensions. Market wants to think that, and you have a massive rotation to value stocks and banks and industrials. In october you have a reversion peace going on. Put 250 fed will billion in and share buybacks keep going, your gap between roth ability and rating on the stocks is expanding rapidly. Way, the same as there was in 2000 between profitability and ratings. The stock market is almost as expensive as it has ever been. Anna why do we trade with alltime highs and expectation indexes bouncing . There is a lot of money in cash. Levels,f you have cash that is not true. Margine is massive and is nearly the same high as it was in 2000. Looking at a chart suggesting money was going into cash. Peter lets counter that with the margin debt, the second highest in the last 20 years. Anna Peter Toogood, cio, embark group stays with us on the program. Find out why the unicredit ceo has something positive to say about negative rates. We bring you that exclusive interview next. This is bloomberg. President trump many are actually getting paid when they pay off their loan. Negative interest, whoever heard of such a thing . Give me some of that money. I want some of that money. The smart people are clapping. That was President Trump speaking about negative Interest Rates. We also spoke about negative Interest Rates with the unicredit ceo. Francine lacqua asked him if anything good can come from them. It is good for nonperforming loans, negative rates are something which hedge the economy. Say negative rates are bad, but at the same time as is pointed out, negative rates help the european economy to stay at a relative growth. The banks have been decent performers. You might get an impact on banks. Francine does tiering help . Does, and i think the ecb can do more of that. Francine when you look at how you can deal with negative rates, you said you will pass it onto your wealthiest clients. Have you had any pushback . Have said we need to pass the impact of the negative rates to the client. 0. 41 of our client base , so 99 are not impacted. You do not push them to change their allocation. That we arents the money market fund. S a target, no commission and for liquidity we discuss with them if we can charge them some kind of commission. Francine do you worry they will go elsewhere . Us and weents like find an agreement that is mutually beneficial. Describe how would you the relationship between european banks and european Central Banks . It works very well. It is the regulator. With theatter supervision side that we interact with the most. It is a lot of trust. Together. Ou can benefit the ecb has made a lot of progress. If you look back in five years, we did something super good. Unicredits ceo. Episode ofcoming leaders with lacqua. Still with us is Peter Toogood, cio, embark group. Current s a net what planet does negative Interest Rates were . Planet does negative Interest Rates work . Companies need much cash. The german reaction to negative rates is to save more. Concept of why they think negative rates so close ,aturally drains will be useful there is no credit cycle created by this. See japan for reference, it did not work. There are more savers and borrowers. Anything positive you can say about negative rates . Peter no. Juliette one trader when trump is calling for negative Interest Rates, he is devaluing the currency. The dollar is showing heights. Up have the currency going at some point, that will change. That is bad for the dollar. It is another way of introducing protectionism. That economy is relatively strong. Anna he will not get the negative it just rates he wants. What will the fed do next . Peter who cares . You said it is explainable by the cash washed into the system by the fed. Peter 1 yield. You get a mortgage, 99 of it is capital payment. He just rates are not going to change the bond yield curve. It is almost irrelevant, that will not change because trump and powell, or powell cuts when you are already at 1 . It will not change the dynamic of spending. A trillion dollars of fiscal spending, i thought it was a strong economy. Anna do you think we will see much more fiscal spending . Qe for 10 years, anna where will they spend this money . Peter if you think about it logically, we will be carbonized, that is the most obvious way. That is not yet. Be a wayious it will to change the dynamic. A lot of the stocks have gone up a long way. You have to balance how you are logical about how you invest in this rather than overemotional. Anna they talk about the Green New Deal in germany and the u. K. Peter it is a great way of selling the peoples bank. Wayre leading the successfully and fiscal prudence is gone. Anna story for the last 10 years. Thank you so much, Peter Toogood , cio, embark group. Up next, the stocks on the move. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Stocks down 0. 3 on the stoxx 600. U. S. Futures point lower by 0. 1 . Annmarie we have a host of movers this morning. Absolutely plunging, down more than 18 . This has to do with issues arising with their wells in ghana. After j. P. Morgan downgraded, and it has to do with the sales profits. It has everything to do with satellites and the 5g network. Ferragamo came in 3 . They were able to make up in midland china. Anna a couple of corporate stories where the micro and macro intersect in an interesting way. Let me get back to Peter Toogood , cio, embark group. We are hearing about profitability from european corporates. You cause fores concern. We have marked the recessions over years, and we are dropping down on the corporate line. U. S. it is telling you corporates are not very profitable, that is the reality. Profitse call this real as opposed to the made up fairy stories . Earnings,at reported profitability, think of the five earnings number. Years. For two then tax cuts and nothing this year. How is that going . A lot of u. S. Corporations are not very profitable. You have dividends and buybacks which is where it was in 2000. Most important, the margins are slipping for 18 months. On. Cannot pass those costs in the amazon world we are of a global marketplace, try pushing prices up in the u. S. Anna is that trade tensions . Peter 3 is impacted by trade tensions. That was 18 months ago, not trade tensions. There are challenges. Anna looking at your chart, doesnt it suggest we are heading into one . 60 in the u. S. Is consumer spending. It is always margins. We are in an industrial recession already. Up of mostly retail investors. Profitability is falling away. More importantly, margins are falling away. This is a midcycle adjustment . The fourth rate cut will make it not a midcycle adjustment but the end of the cycle. If we saw on aboutface from President Trump, and he calls off the attack dogs on trade, do we see upside potential . Peter i do not believe he will do that. I am quite bearish. It is stupidity based on people pushing it up. Another 50 billion in the next quarter, maybe we just carry on. But do not depart your brain from reality. Every day the s p goes up, you are moving further away. U. K. Domestic cyclicals are cheap thanks to brexit. There are certain parts of asia that could be compelling. In china there are some possibilities. You have to think seriously about the implications of hong kong because it is getting out of control. You cap attend that is not a genuine source of concern. Pretend that is not a genuine source of concern. Imagine that the u. S. Stock market is going to catch a cold and we do not all get influenza, because we will. At the moment pump up liquidity and everyone is in. Rubbish. Anna thank you, it is like a mental workout. Peter toogood, cio, embark group. Up next, 3g capital is said to be among bidders. We will bring you details next. European market weighed down on the nervousness from hong kong. U. S. Futures point lower. This is bloomberg. Anna 30 minutes into your trading day, good morning. Stocks take a hit as President Trump says the u. S. Will increase tariffs on china if a deal falters. If we dont make a deal we are going to substantially raise tariffs. Kong protests smashed the hang seng once again. Traders prepare for a volatile set of results from tencent. Capital is said to make a whopper bill bid. Good morning, welcome to Bloomberg Markets. I am anna edwards here in the city of london. This is the stoxx 600. 414 stocks going on down. A bias to the downside. Ambu, a Danish Health care business, up by 4. 2 . The property sector in germany is topical, including what is going on with berlin and rent control. Bottling lene up helena bottling is up. We spoke to the management of poly metal yesterday. , not proving as lucrative as anticipated. They had to cut back on expectations. That stock is down. Out has a note out on this french business, suggesting it might not benefit as much as previously thought. The stock is down by 11 . We have numbers out of prison in prysmian and abm amro. Numbers out of spain, in particular. Perhaps it is the nature of the government weighing on the spanish banking sector. Lets get a first word news update in hong kong. Hong kong has announced a suspension of all schools on thursday. This as the security chief warns of unthinkable consequent is if consequences if violence continues. Early commuters pack to trades amidst calls to impede rushhour traffic. The International Energy agency says Global Oil Demand will likely plateau around the year 2030. It says the current growth rate will hold for the next five years. But they see lower demand growth in the 20 30s once the use of oil based fuels in passenger cars has peaked. In lebanon, the president has sparked public anger by calling on demonstrators to go home. His comments saw a new surge of unrest which claimed the first death. He urged to stop the negative, warning that if protests continue, lebanon could die. Protesters reacted across the country, restating demands for removal of corrupt leaders. New delhi is choking once again. The air quality reading rose above 400 on tuesday, eight times the internationally accepted safe level. Winds from the northwest have brought smoke from burning fields in nearby states, pressuring the government to find a solution. World Health Organization data showed india had the 10 most polluted cities in the world. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thank you very much. Just me today, matt will be back next week. Sources say a suitor submitted bids by last weeks deadline. It could fetch more than 15 billion euros. Joining us is our Global Business Senior Editor. Why 3g . They are better known for burgers, why get into lifts . That is a very good question. What is the link between burgers and elevators. Really, there is none other than a good investment. They have put this asset on the block. They need the money, because this is a company that is struggling with its established businesses of steel, automotive components, and so on. A couple suitors have been sniffing around. Companiesivate equity and so on. E have rivals looking at this and, 3g. Waythem, it is arguably a to diversify away from businesses they are known for. Fast fooddustry is an industry they have struggled in. This is a new industry that is growing and would offer interesting new avenues. Anna interesting if they bring their costcutting to bear on the sector. Why is thyssenkrupp selling the elevator unit . Remind us. Thyssenkrupp is historically better known as a steel company. Twos a combination of historic german names but they have had a hard time. They merged in 99 and tried to set up big plants in the u. S. And brazil. That really backfired. Demand was not what it was supposed to be and they had to write off the businesses. That is a company that has struggled to find its footing and now are looking at selling off businesses. The elevator and escalator business is their most prized asset. That has ainess value of 15 billion and an industry that is relatively small in terms of rivals. One from finland is one we have mentioned, there is schindler from switzerland, but thats really it. Its an industry spread among less than a handful of big players and it can play a big role. More highrises, airports and so on. There is a demand for this kind of product. Perhaps thats why its an attractive business. Anna thanks so much about bloomberg Global Business Senior Editor with the latest on thyssenkrupp. Lets talk about breaking news from cathay pacific. They are saying secondhalf results will be significantly below the first half. This is a airline based in hong kong. The destruction is obviously a key part of this. Advance bookings continue to show weakness and say the shortterm outlook remains challenging. This is the latest update as to how the levels of disruption impact business. And to update you on hong kong, the police have been doing a briefing. They do these fairly regularly. Force. Ice but to use they are also talking about how many people they arrested on tuesday. Just bring you uptodate. Tencent released thirdquarter earnings today. It is expected to report barely any growth. Spending outpaces revenue growth. A number of concerns have snarled what was supposed to be a year of recovery. This includes a sharp chinese economic slowdown, competition from rivals, and a political parade involving the nba and protests. Protests our editor is here. What are investors going to be focused on . You mentioned the gaming portion. Nnline games is then a important aspect. Investors will be eyeing that number for a sign of demand. Advertising is another key sector for them. Together, if you combine advertising and online games, that a 72 of profits. Those are the main numbers investors will focus on. But this is a very broad based company. Have beentioned, they investing and spending a lot on ai and retail. Has been dragging down margins. Investors will be paying a lot of attention to that. How numbers look from those businesses the company is investing in. They will also be looking for indications of Going Forward about the nba streaming, if theres any news the Company Expects to report. If the company itself estimates what that is costing them. Anna let me ask you more about that. Cathayedom cafe stuff staff were given was part of the story with that business. With tencent, the nba line in the protests, how big of a hit is tencent likely to take on this nba row . Estimates have been all over. Commentany may not because this represents earnings for the quarter ending in september. The actual cost may not be something they would give an estimate for but it could be billions of dollars. This is a big investment for tencent and in a key sector. It does not contribute a huge amount to profits but it is one growth area where they are not dominant. The baiduowned rival is the dominant streaming company. Tencent is aiming to make inroads it had snag the nba, a growing, highprofile franchise they need to get back on track. Thing a big blow this exploded seemingly from a single tweet. But again, this is a complex company. They are dominant in a lot of sectors and growing fast. They are investing in highgrowth sectors. That may wind up getting more attention and how those various sectors are doing. Tokyoour editor david in on tencent. Up next, we when you stocks on the move. This stock is falling after missing estimates. This is bloomberg. Anna welcome back to the european open. 43 minutes into a negative trading session in europe. Lets get your stock movers. Annmarie a lot of these movers are to the downside. We are seeing more to the downside than upside. Prysmian down more than 5 . The italian Cable Companies earnings came in below the lowest estimates. Morgan stanley said it is just a small step back. Abn amro to the downside, more than 3 . The dutch bank described it as a mixed quarter. They are flagging this uncertainty regarding the target of a criminal probe. That warning is casting gloom on the stock. Ambu to the upside, more than 7 . They revealed a bleaker forecast than expected. Chairman, soew possibly the change in leadership is moving stock. Anna Annmarie Hordern with your movers. U. K. Inflation is out this morning after gdp on monday saw growth return. Less than economists had forecast. One team that got right was hsbc. Our guest is a senior economist at the bank. Liz, good speak to you. Let me focus on the growth story. The underlying trend, you see it looking weak despite a bounce in the last quarter. It is soft. The economy fell by. 2 and rest by not. 3 in the third quarter. 1 growth over the whole period so underlying momentum has slowed distinctly. With the third quarter, we did not see evidence around brexit volatility so we cannot contribute it to that. It was actually just slower momentum and general softening. Anna i have a chart showing inflation low bank of england targets. We have left those heady highs hunt behind. Is this an area of inflation that would worry the bank . The expectation is it comes down further, partly due to the price cuts. They then expected to rise back up do to domestically generated inflation pressures. Interestingly, you dont get those pressures if momentum is as weak as it is. Yesterday, we had labor market data that was interesting. The biggest fallen several years and labor below expectations. Wage growth is higher than a lot of other markets, that should be inflationary, but actually it came back down again and that could pose risks further out. Anna what is weighing on the wage story . We had decent recovery, as you said. Not too much to worry about at this point. I dont think anywhere else in the developed world can boast 4 wage growth so that has been strong and we have corrected back from that. But you might also say companies are finding wage growth painful. It is great news for employees but not for employers because they cannot pass higher costs onto customers and thats why we see wage growth at 3. 6 and inflation at 1. 6. Anna employment looks ok. It does but actually came down, so you dont want to jump to a conclusion, but certainly, it could be a turning point. Pmi surveys are suggesting companies are starting to reduce headcount and construction. Anna interesting. With that as the backstory around gdp and inflation, where is the next move for the bank of england . It is a nightmare because we dont know what will happen the on december 12 beyond summer 12th. As things stand, the assumptions they put into the Monetary Policy report was that the deal would be passed. If that all plays out and there is global recovery, they think they might need to raise rates. Given the market backdrop and the low target inflation, we think the more likely is downward. Anna i was reading analysis talking about what circumstances the bank of england would ease. Forgetting, perhaps, the role of the Global Economy when there is so much to talk about on the domestic side. That is crucial. Absolutely. The bank of england is one of the Central Banks that has not cut yet and there is a role to play by the global environment. Theu. K. Is certainly not only country that has seen momentum fall back. Anna what are your expectations for sterling . A lot of what happens can be affected by sterling. It has acted as that buffer and we see the impact of that. Expects theg nomura pound to trade up. Are you expecting an initial rebound . I think that its right. In a scenario where we have , itainty about a brexit deal think the pound even responds well over the longterm to the prospects of a second referendum. Where sterling does not like it is continued uncertainty. You could get a Hung Parliament where we are all scratching our heads and that cant be good. Much goodk you very to speak to you. Liz martin, senior economist at hsbc. Up next, we put our market live weston mliv question of the day to Richard Jones who joins us from berlin. This is bloomberg. Extraordinarily high tariffs or create impossible trade barriers. And ill be honest, European Union . Very difficult. The barriers they have up our terrible. Are terrible. In many ways, worse than china. Anna that was President Trump speaking to the Economic Club of new york. Joining us is Richard Jones. What did you take away from President Trump . , he thinks eu tariffs are terrible but are reported suggests a decision on tariffs will be delayed. Hard yeah, i think base case, they will be delayed. The clip showst europe is very much on his radar. Away was thatake the ball is now very much in chinas court. Ante byhe raised the saying if they dont get a phase one agreement agreed, additional tariffs will be put on chinese goods. That raises the stakes. The reaction so far has been quite muted. I think there still is optimism a phase one trade deal will be struck. Latest rhetoric is not taken well in beijing, then i think we start to see a reversal of the price action we have seen in equity and bond markets. Bond yields, german, u. S. Yields, but i also think Global Equities will unwind a big chunk, if not all, of the material gains we have seen. Anna where does that leave the fed . How far treasury yields rise on powells pause. Yields does those rise, even though we have got a pause. Get the story you tell is one thee yields fall yet story you tell is one where yields fall. Richard the powell pause is priced by markets. If you look at what yields have done, they have risen quite sharply. We have 50 basis points less of kiewit of easing christ into the into thee priced u. S. Curve. They priced out a lot of the easing that was in there. So i think of powell pause is priced. A lot depends on trade. Given the way the market has reacted, we will probably see a fairly happen chairman powell content with where the Market Pricing is. So the messaging will be consistent to what we have heard recently. Anna richard, thank you for joining us. You can join the debate and get in on our question. Use. O is the function to tell us what you think they will do on a powell pause. Lets have a look at the markets as we bring this hour to a close. European equity markets are down by. 4 . I want to draw your attention to spain. The ibex down by. 9 . Some of the banks are not responding terribly well to the acting Prime Minister signing a coalition with the Antiestablishment Party podemos. Italian peers have benefited from a jump in political confidence. Onssure has just risen spanish assets and stocks. Maybe the bond markets responding in a more sanguine fashion. Thats it for the european open. Surveillance. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Francine President Trump says the u. S. Will increase tariffs on china if a phase one deal falters. Also, he says in jay powell is hurting the u. S. Economy. In the 3g capital is set to make a bid for a lift unit at the burger kingowner looks to the burger as kingowner looks to diversify. Welcome to bloomberg surveillance. These are your markets