Investors await the final pricing for the asia operation. They hope the Chinese Market will help drive down debt. Shery lets get you started with the quick check of the markets. Close of the thursday session. Reaching record highs with the doubt surpassing 27,000. S p 500 very close to the 3000 level. We have financials and industrials leading the gains. We got the tweet earlier in the session from President Trump saying china is letting us down. Bit. Took markets a little they were able to recover as we are focused on chair powells second day of testimony talking about the fed having room to ease and ties between the Unemployment Rate and inflation. Yields have 10 year reaching one month high as we got u. S. Inflation numbers coming in the hotter than expected. This friday we are facing a modest retreat in asian stocks after a two day gain. Hares flipping at the closing chinese trade headlines the agenda which comes after trump complained. Malaysia,e gdp plus japan, and india. Theill be watching for japansouth korea talks on export curves. Japan said on thursday it expects doesnt expect any sales to be hurt. The Hong Kong Ipo of its asian is 11local reports a it times oversubscribed with 44 billion hong kong dollars worth of price lockup. Lets get a quick check on bond markets. 10 year yield adjusting as much as 10 basis points. And jcp features having a further retreat. One contrarian from Franklin Templeton said treasuries can jump 3 to year end. Paul lets check in on the first word news. Fed chairman Jerome Powell has reiterated that policymakers have room to cut rates. A link between inflation and unemployment has been broken. On the second day of testimony he stressed the u. S. Economy is in good shape and the fed will use our tools to keep it there. They say at least a quarterpoint cut in rate. Central banks around the world are seeing weakness everywhere and they are also providing more accommodation. We have signaled we are open to doing that. You are seeing that in the curve. You are seeing that embedded in the United StatesInterest Rate curve. House Speaker Nancy Pelosi says she is committed to raising the debt ceiling. Saying there must be no doubt about the credit of the usa. Theral funding expires on first, Steven Mnuchin says he wants congress to increase the bar before the sixweek reset on july 26. A powerful weather system in the gulf of mexico may put 70 of u. S. Lng exports at risk. Tropical storm barry is churning towards louisiana threatening facilities. Surgedn lng exports have with the three plants coming online since december. People living on the coast are bracing for potentially the biggest storm since hurricane katrina. President trump has abandoned his quest for a Citizenship Question on the u. S. Census. He will now seek the information through other means. Cities, counties, states, and immigrants Rights Groups challenge it, saying it could stop them from responding. The latest opec forecast says the oil market faces longer and tougher challenges. It estimates it is producing barrels 1 million more than will be needed next year. They say it will grow more than twice the anticipated Global Demand. Day onnews 24 hours a air and on tictoc on twitter. Powered by more than 27 hundred journalists and analysts in 120 countries. This is bloomberg. Today,to our top story President Trump is renewing his attack on china. Just as talks get back on track and beijing prepares to release trade figures. He is complaining china has enlisted American Farm products. Editor sarahade mcgregor and our china correspondent selena wang are watching this hour. President trump claimed this was a big win for him. We are not seeing china by more, they are buying less, if anything. Trumpxi meeting we didnt get a lot of details. One of the things he told us was that china had apparently agreed to buying more agricultural goods. That is sort of the smallest point that the Trump Administration is trying to deal with right now. Things like state subsidies, the harder issues. This would be a win for farmers. That is a politically Sensitive Group for trump as he heads into reelection campaign. As you mentioned, the data shows dipped prices have purchases have dipped since the meeting. We have trump questioning himself whether china is committed to the purchases. Shery every time President Trump has been very optimistic about progress in the trade talks, the response from china has been pretty measured. What are they saying about the agriculture goods . We are hearing some misalignment. On the china side we are hearing they claim they didnt make any specific commitments and that this is contingent on how the talks progressed. Bloomberg reported several weeks ago they were considering this as a goodwill measure. Are alsome time we hearing from the ministry of commerce here in beijing that talks will restart. But on the basis of mutual equality and respect. The assumption is that when trump makes tweets like this it thousand help that cause that china is hoping for to be on this level playing field. Despite some of these early indications that the phone calls are starting and negotiations may continue, there is a lot of pessimism here. They really see both of these conditions of the countries hardening. Brokeally after talks down and they are still on disagreement about who walked back on terms, why they broke down. Agricultural purchases only being one of them. There is still tariff enforcement, huawei, and nobody will see how it law lasting deal can be made on this point. Paul we are awaiting some hard data out of china. Fair to say we are not expecting great things really, are we . Economists are expecting a pretty bleak picture with the decline in imports and exports. That will reflect the tariffs as well as weaker domestic and Global Economy. On the imports front that is expected to be down because many imports are used in the manufactured exports. On that side it has been very weak from early indications. Fellxport orders component in june from the month before. Weak external demand. We saw the pmis of chinas main training part trading partners fall. Wepite the temporary uptick, did see that increase. The expectation is that would only be temporary as temp these companies front load before the arrival of new tariffs. The expectation is it will be weak all around. Paul just wanted to check in on the western front. Taken another step towards taxing facebook and google, what could that mean for Transatlantic Relations . Sarah yesterday we had the big news that the Trump Administration was planning on opening an investigation into the digital tax on companies that would hurt the facebook and google of the world. Today, Frances Senate passed that. The french president is expected to pass that. That would make france the first eu country but definitely not the last to pass this law. Countries like the u. K. , czech republic, all looking at this. The big concern is the idea that they will have double taxation. If youre based in the u. S. You are paying Corporate Tax and then you will have to pay more tax on your revenue across the other parts of the world. Have back to the Trump Administration investigation, in this case they definitely seem to want some action. Paul bloomberg senior trade editor seen them Sarah Mcgregor and china correspondent selena wang. Asia couldtations in price its Hong Kong Ipo towards the low end of the market range. Is there demand in the Public Market . Shery next, jay powell amplifies his rate cut signal, suggesting there is room to ease. This is bloomberg. Asia this is daybreak im shery ahn in new york. Paul jay powell continue to push the case for a rate cut during the second day of testimony on capitol hill. Are we seeing other Bond Investors are starting to push back . Kathleen hays the story. Lets start with jay powell. He didnt really deviate at all from the message that a rate cut is coming. Kathleen the door is as wide open as ever. Jay powell spoke to the he is concerned about a Global Growth slowdown. In large part because of uncertainty caused by the trade war. The link between unemployment and inflation appears to be broken. All these different factors, particularly around Interest Rates and expectations, maybe the fed has inadvertently kept policy too tight. The neutral Interest Rate is lower than we thought. I think we are learning the natural rate of unemployment is lower than we thought. Monetary policy hasnt been as accommodating. We are learning all of those things. At the end of the day there has to be a connection. Low unemployment will drive wages up and they will drive inflation. We havent reached that point. Of then this is one linchpins for jay powells arguments. Cutting Interest Rates in july could be warranted. The fed president , John Williams in a speech said the argument for easy policy has strengthened. Again, backing up the fed chair. Two other fed Bank President s indicate they are not as ready to cut as powell appears to be. Not as much consensus around this as we think . Kathleen so many people said there will be a debate on july 30 and 31st. A lot of people are assuming powell has the consensus. The president of richmond said speaking at the rocky mount conference, a mixed view of the economy. He told reporters that he doesnt think there is a need for the fed to step on the gas. Askedn Michael Mccabe about the message from jay powells testimony. He said he thinks the message really hasnt changed from the message we got in june. Lets listen. He said the same thing yesterday that he has been saying for the last month. Guidancehave forward anymore on the memo. We are watching very carefully what is happening in the data. Atare looking very much upside risk and downside risk. At this point we are little more tilted to the downside. Kathleen the president of atlanta also spoke today. He is skeptical of the need for july rate cuts. He thinks Inflation Numbers arent as weak as have been saying. This comes after the cpi was stronger than people were looking for in june. Shery you see the fed chair powell turning more dovish and you get these numbers. Kathleen the monthly number was up 0. 3 . This is very important. You see the yearoveryear turquoise line. It is down to 1. 6. The core cpi is the one that jumped to 2. 1 . You have a very divergent picture. The stage forset a really terrible 30 year bond option. Investors are just uncertain and dont want to load up on more 30 year papers. The price anden what it looked like and the actual price coming out. Thise are saying maybe week, they are starting to hedge their bets on inflation. , our thank you so much Global Economics and policy editor. Capitalus now is Kramer Research cio, hilary kramer. We are talking about inflation. Or strong. Ery high it is still higher than was expected. We still havent seen any run through because of the tariffs that were already imposed. The president not too happy with china. Accelerate more than we expect . Hilary yes, if we have inflation like that it is a real problem for the Federal Reserve. Their biggest concern is inflation. Int is what the big elephant the room is. If you really think about it, it isnt being discussed. We have full employment right now. The jobs report came out better than we thought. Powell had to quickly jump to a reason why we had to cut rates. It is a global slowdown, it has to do with tariff concerns. Shery where do you see inflation going and what is your expectations . Hilary i think we could go to 2. 5 or 3 . Rates, the fed can cut nine. That is still a moving target and i think what we all is see the main reason the fed is cutting rates is it would be too expensive to pay back all the debt. All is why we keep hearing of these excuses as to why we have to have these cuts. Said, as long as we see rates low, what does it mean for me as an investor. That is my job. They should be investing in the financials. They are doing much better as the curb is deepening. The sort of expectation that this is where we are going and maybe a lot of this is built in. Could goachs certainly back to the 200 75 alltime high. See my favorite bank, fhp, which is first hawaiian, bond. Ave a for 4. 1 they are not so sensitive to rates. They really kind of own the market. As long as there is a lot of money cheap there will be a lot of borrowing on the commercial side and the individual side. Expect these big investment banks to do great. Wants to makeone their money. Paul if we look ahead to the fair to season, it is say that the expectations for the coming quarter are not particularly fantastic. Im getting the message that you need to be very selective going ahead in 2019. Hilary we have to be selective and look at credit losses. What are the credit losses these banks are experiencing . Also, what are their opinions of the economy . I want to know what jamie dimon has to say about the economy and i find there is a lot of depth to that kind of guidance that we get in the macro picture. We have to be careful here. As long as the curve is steepening, which is why financials were there today. We saw utilities tank. They are a bond substitute. Now the expectation is that we are going to see rates go higher. Look at what is happening with the 10 year. There are specific places. The question about being selective is a very good point. Take a look at retail, for example. Everyone is crowding into walmart. Which is trading at 23 times years earning. You could own a company like big , a diversified, low price, markdown retailer trading around seven or eight times. Name of the the game. There are great opportunities. You have to be careful when you see Companies LikeProcter Gamble or general mills. 52 week high, no. You have to wait for some of these to come down. Of these are very price sensitive, commodity driven companies. It is all about being sensitive and careful. Also trying to look for pockets of opportunity. Facebook always seems to pull it out of a hat, maybe you want to be in some of these new ipos. The nasdaq stocks or tech. I love chewy. The pet food online company. Retailer but online really giving a run for their money to amazon. It is a stock pickers market. Going forward you will not make it by being in nasdaq. Paul we will have to leave it there. Thanks for joining us this morning. Perimeter kramer capital research. Daybreak,ition of bloomberg subscribers go to the terminal, also available on mobile and the bloomberg anywhere app. Customize your settings so you are only getting views news you care about. This is bloomberg. Check lets get a quick of the business flash headlines. Delta is boosting its profit forecast with lower fuel costs allow it to command higher fares. 7. 25 perects to earn share above the initial forecast. Ae increased estimate comes day after rival american boosted its own outlook, citing the same market trends. Paul worldwide shipments of personal computers raise 1. 5 in the Second Quarter, lifted by businesses upgrading. The number oneto spot despite the ongoing trade war. More pcs and taking one quarter of the Global Market. Shery nike is going ahead with the new factory in phoenix despite local opposition to its decision to allow its controversial sneakers. It will generate 500 fulltime jobs and investment of 180 million. The stake Commerce Authority welcome the move in contrast to previous caused by the governor. It pulled it socalled betsy ross sneakers. Paul coming up next, it is counting on demand from chinese as it prepares for the years biggest ipo. We will expend how we grew into a blockbuster deal. This is bloomberg. Rg. I dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. Were all done. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. 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