Lacqua in london. Stoxx 600 gaining. Optimism on the u. S. China trade war truce waning. Focus onear yield, Central Banks in the fed. President exclusively on surveillance tomorrow. The cut extension. Crude oil 59. 08. We will hear from irans oil minister. We focus in on iran and sanctions from the u. S. Opec extending production cuts into 2020, as the worlds , talks inporter vienna were wrinkling. The commitment to a ninemonth extension is solid, strong. Not only are recommitting to individual commitments to conformity from all countries. Tariffsd trump says against mexico are off the table, after the country stepped up efforts to stem the flow of migrants from Central America to the u. S. Trump said mexico is doing a great job and having a big impact on migration. Australia cutting the key rate for the second straight month. Policymakers attempt to provide support to a slowing economy. The Bank Governor lowering a key rate to 1 . Italys government lowering the deficit in a bid to comply with eu rules. Rome is hoping to avoid sanctions for failing to rein in their debt. It is expected to be over 2 of output, much lower than the 2. 4 seen in the april draft budget. Deutsche bank discussing reportedly with regulators about lowering the capital buffer to help finance impending restructuring. The german lender talked to the ecb about the reduction. Authorities are positive about the plan. Accused u. S. Aoc Border Agents of using psychological warfare against detained migrants. She said they were told to drink water from toilets if they were thursday. She took part in a congressional visit to facilities in texas where undocumented immigrants are being held. 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. Im viviana hurtado. This is bloomberg. Words fail but we understand there will be an investigation. Airbus and boeing dispute leading to more tariffs. The u. S. Published a list of more than 4 billion eu goods, including meat, cheese, cherries, olives. The eu has a similar case against boeing. The latest punitive measures will add to strained ties between washington and brussels. What does it mean for the markets . Jackie. Nd us. K you both for joining we had optimism about the trade truce between the u. S. And china. The next day we focus on europe and the markets do not know what to do. Trevor that is a good setting up. We are always nervous when President Trump starts tweeting about alltime highs. It is almost like he uses that as an opportunity for something that would push stock prices down. Startede g20, tweets coming out. He surprise people by being conciliatory with china. We are starting to see messages again. Political risk at the moment affecting stock markets. Francine how should we deal with the Political Risk . Jackie the Global Economy seems to be balancing on a knife edge, precipitated by u. S. , and any question a more tariffs coming into play increases the risk of recession or the risk of recession around the corner. That is impacting market nervousness. Francine is there a modus operandi of President Trump . He goes to the brink. Even with china, expert saying yesterday, what we could try to understand is that this is not a superior, state or country in the next 10 years. This is more immediate. Operandirumps modus is to manufacture many crises and then solve them by backing away. Crisis, he solved it, crisis, he solved it. The massive tax cut helping corporations and billionaires, he has renamed that, that is the legislation. Francine if you trust that, and it means he would always solve the crisis, so we shouldnt worry about eu tariffs, or should we . Tariffs havehina not stuck as far as he was threatening at some point. Real things are happening which are adding sand to the World Economy. Trade tensions and the many trade war, negative for the World Economy. You have to set it against the fact that you have lower inflation than people were expecting at this stage in cycle. China having stimulus. That does not feel like we are close to the next recession, as it felt like last year. Francine what do eu tariffs mean for europe . These are not carmaker tariffs. This is cherries and meat. It will increase prices for consumers. The bigger economic repercussion is more protectionism generally as retaliation or reciprocal tariffs come into play. Economyct on the global is physical. Trump has been vocal in his bashing, persuading Interest Rates to go lower. Im not convinced that will happen to the extent that the market is expecting. That would be a risk for global stock markets. If they say, dont cut. Are expectations to entrenched . We are expecting a cut this month. I think it is important that the fed wants to maintain expectations, keep the door open to further cuts. What seems to be happening go is to be happening, is that they are rethinking the inflation target. Growth is slowing. Global pmis were quite low this morning. It is a rethinking about whether the fed should have an inflation target or average inflation target and as it changes in structure of the way they are addressing inflation, which says to me the rate cut, whatever happens to growth. Francine thank you both, jackie and trevor. Staying with us. Up next, live in hong kong after protesters smashed their way in. We speakext and later, to the vicechairman. We talk all things coffee, italy and trade in 30 minutes. This is bloomberg. No doubt, it has a negative impact. We dont resist sanctionsis unfair against iran from the United States. Francine that was the Iranian Oil Minister speaking to bloomberg a few minutes ago. More of that exclusive interview later. Saudi, asews out of the opec plus holding on, extending cuts. The Saudi Oil Minister says he is 100 competent on the deal today, that he Sees Oil Demand picking up. They need to minutes apply in the wake of trade tensions, possibly having an impact on World Economy. Straight to the Bloomberg Business flash. Viviana frozen Flagship Fund still waiting to access the money. The fund will remain locked. There is not a timeline to reopen. That could take one for more than one year to liquidate half of the portfolio. Was to protect interest of investors and to give the time to execute the strategy as we have outlined, a shift in the portfolio from liquid to more liquid. Ensures we protect the interest of investors. Viviana china closer to merging the biggest chipmakers. That would dwarf international rivals. Chinas shipbuilding and state shipbuilding are planning a joint strategic restructuring. They create everything from aircraft carriers oil tankers. That is the Bloomberg Business flash. Francine protesters occupied and ransacked the Hong Kong Chamber on monday, after a dramatic escalation against the china appointed government, prompting police to fire tear gas to clear the area. What is the mood today . Hi, francine. Most of business and operations of government resumed normal although the government headquarters remains shut. We have the Legislative Council president today saying, after the storming of the chamber, it remains a crime scene. The council will not have meetings for the next two weeks. Repair work will take a while. All in all, business back to normal, traffic back to normal and we will wait to see what else is coming from the government for the rest of the day and the next few days. Francine i have heard various aspects of this. Does this feel like a win to beijing . Fion we talked to some of the analysts. In the short term, some of the moderates in hong kong could gravitate to the government. They may have more sympathy for the government given what they have seen last night here, however, again, this is really about trust in the government. The fundamental issue is whether people trust the government, trust the institution and whether the government will resolve some of the issues, the demands of protesters. Francine thank you to our bureau chief in hong kong. China will scrap ownership earlier than planned, according to the premier league, the latest up by policymakers to open up the 44 trillion financial industry to competition. This comes after the u. S. China trade agreement. It remains on course despite broader political tensions. Im notnd jackie, exactly sure how we should do reforms in china and how we should view debt, cracking down on capital outflows . Trevor but im focusing on is the degree to which china is easing policy to offset the slowdown. As a global investor, it is critical to work out whether the economy will it celebrate or not accelerate or not. You have heard about micro easing here and there, in terms of the ratio cuts another stimulus but we are not seeing a big easing a policy. There is irony. The more difficult the trade talks are, the more likely it is china will use policy more forcefully monetary side to offset potential damage. The fact that we are seeing piecemeal easing and the trade friendly, may delay potential recovery in chinese economy. If they overall, stimulate internally, what does it mean for the rest of the satellite, em countries . Do they suffer or benefit because supply chains moved to them even if pboc is inward looking . Trevor they benefit from a stronger chinese economy. When they were in City Building phase, there was a more direct exporting. Now we are seeing more targeted stimulus. Australia specifically and cutting Interest Rates. It is a different kind of stimulus. Money aggregate in different pieces, there is easing on the way. It was massive. Chinese slowdown, 2015, led us to think the World Economy was going into recession then. 2018 was again causing recession fears. China is pivotal for the World Economy, even if it is not building cities. Francine is china the number one financial risk . Market,in terms of the it feels like it is a oneway transfer of intellectual property and the announcement about access to the Financial System it feels like a gesture in the right direction. I would still question whether we have a real intention of access for western businesses to go to china. Francine do you think the intention is to open . Consumption is picking up. Trevor intention to open up in a limited way. The world is watching hong kong closely. Hong kong was set up as a one country, two systems framework. Protesters are worried it will be two countries, one system. The way that is done will affect the likelihood of Hong Kongchina generally becoming the Financial Sector generally. Francine thank you both, staying with us, jackie and trevor. Next, pay to lend. Yields on twoyear bonds drop below zero. This is bloomberg. Francine this is bloomberg surveillance, im Francine Lacqua in london. Twoyear italian bond yields have dropped to zero for the first time in more than a year. Italys deficit is now expected to be over 2 of outputs, much lower than the 2. 4 seen in the april draft budget. What do youackie, do with italian yields . Yield to bea lot of had in european government markets, on a twoyear basis, you are buying a bond which the ecb will buy off of you if necessary. Years, people will be watching closely to see what the deficit turns out to be. Forecasting a deficit of more throwing anort of insult to the face of the eu, because of the budgetary rules. You can seekhing forgiveness for after the event. Francine great chart. Most of them are negative. There must be a better bargain. Jackie trevor said, there really is a hunt for yields across european markets. There is nowhere to look. That is why there are a lot of bond investors, Fund Managers looking for alternatives where mandates allow them to do that. Available ining this market, even unto years. Francine we talk a lot about leaders having to find people to fill the top jobs, possibly a female as the head of ecb. Does that change your outlook . Trevor i dont think it does. You can analyze things to the hundredth degree and work out differences but whoever takes over at ecb will be aware of the sluggish growth, the need to keep stimulus going and the need to keep the eurozone together. Those things are firm. Crisis situation that is where it comes out. How towill be pushing ou cope with the italy debt problem. Francine thank you both. Jackie and trevor, staying with us. We just had a summit update from eu leaders saying they seek to break the impact. Ca, one of thebi bestperforming commodities of the last quarter. This is bloomberg. Francine taxing eu goods, the u. S. May add tariffs on whiskey pasta. Hong kong with protests, the political crisis here opec extends output cuts. We will speak with an oil minister. This is bloomberg surveillance. I am Francine Lacqua in london. , we have the contenders trying to figure out how it changes at the dynamic of brexit, how they can differentiate themselves, Boris Johnson against jeremy hunt. Pmi falling to 43. 1. Uch lower than expected having an impact on pound. Lets get straight to the market moves. Big drops from Funding Circle , shares tumbling 18 , the ipo last september, the biggest drop on record and their lowest price on record. They have their outlook for the year with Revenue Growth at 40 , slashed to 20 . Ab inbev on the rise, shares up nearly 2 . Unit,ipo in asia beer said to be the biggest ipo of the year, they could raise as much as 9. 8 billion, putting it at a bigger Public Offering been uber. N wpp, they had been talking with private equity firms including apollo, but the pain capital billion by the 4 issue is without competing bids, perhaps investors are disappointed and wanted a higher number at the evaluation. Francine thank you. Lets get to the bloomberg first word news in new york city. The Trump Administration is turning up the heat at the eu, adding 4 billion worth that eu goods of a list it could hit with tariffs as a longrunning dispute between boeing and airbus with the u. S. Trade representatives estimating each year eu subsidies to airbus cost 11 billion of economic harm to the u. S. Hong kong embattled leader condemning demonstrations and the storming of the citys legislature, tear gas was fired at hundreds of people flooding into the building and the chief executive says protesters used excessive violence. Violence and vandalism by protesters who stormed the Legislative Council building. Over some time. This is something we should condemn because nothing is more important than the rule of law in hong kong. Ownership limits for Financial Companies one euro event planned for china, the 2020. R says by in ownership of Security Firm teachers, businesses, and Life Insurance companies will be allowed. The next round of trade talks between the u. S. And china is already underway according to donald trump, stopping the stalemate between the countries, washington announcing it would hold off on imposing new tariffs as talk with beijing restart. Cortezria across your accusing u. S. Border Patrol Agency of using psychological warfare against detained migrants, saying they were told to drink water from toilets. Visitth a congressional where an document immigrants were undocumented immigrants are held. 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. Opec will extend production cuts into 2020 and attempt to boil oil prices is Global Demand falters, after theings ministers confirmed agreement for a ninemonth extension with the Saudi Energy Minister says support came from all members. The commitment to a ninemonth extension is unequivocal, very solid, very strong. But ily are we committed have heard individual commitments to conformity from all countries. , our opecannemarie reporter spoke to the iranian oil ministry. Discussion weg in ad on putting resolution that clearly shows and declares this framework, this charter has no impact on based on its statute and mechanism which has a decision, it was very important for us. Another thing was some countries , we believe needs to receive a commission from their government and we mentioned it as a resolution. And we agreed that the presidency and presidency of this new charter should rotate annually between the member countries. These were the main changes in the charter. You are under a lot of pressure at home from hardliners. Are you confident the iranian government will back this charter . Yes, i do not think we face difficulty because this is a nonbinding, not Organization Corporation cooperation between the member countries are voluntary. I want to move on to iranian oil. You have said you will not address export in production levels but can you give me a sense of how dramatic they dropped since the sanctions . Open and disclose the way and manner we are doing this. The United States could put more pressure. Have you seen an impact on the iranian economy . No doubt. It has had a negative impact on our economy. Against thisist legal, you legal you. Estin we are finding ways to turn the sanction and export our oil. Reports you are still selling to china and even europe, you cannot name names but can you confirm you are still selling to some customers . I cannot say anything. The Oil Market Want