That is a message to Boris Johnson if he ends up prime minister. We are seeing a bond rally across europe as well, with yields lower. All over europe, but particularly the more troublesome countries like italy and spain. This on news that the ecb might start qe again and is looking at inflation targets, having a talk about whether that can be changed. We will talk about that in a few moments. Lets have a look at the u. S. Now. The s p 500 is relatively unchanged come about whats going on. Morgan stanley up 3 10 of 1 , the final of the major banks to report. We did see some buying this morning. That has leveled off a little now. All told, Morgan Stanley meeting expectations in some areas. Wealth management the outperform or. The rails index up. We will speak with lance fritz. Union pacific coming in with a great quarter, and this defined what happened yesterday with the transports really selling off on the back of csxs news. The 10 year yield in the u. S. , 2. 06 , dragged lower by europe. European Central Bank Staff has began studying a potential rebound of their inflation goal, which could embolden pursuing stimulus measures for longer, according to officials familiar with the matter. We are joined now by vasileios odierkis, banque lombard global head of fx strategy. Should we take it more seriously now that the ecb is concretely considering changing the way it looks at its price stability mandate . All, i haveirst of to say that we will definitely have to get a bit more clarity into this and look at more details other than the headlines, but definitely we need to take it more seriously. This is not something that the ecb is contemplating. This is something that the fed is contemplating. Weve been living in a relatively low inflation environment for quite some time now. There has to be a lot of thinking, a lot of central bank thinking, about whether there should be a revamp of the inflation targeting policies. Definitely i would expect it will be on the table for discussion, but not just for the ecb, but for the fed as well. Vonnie are we looking at Central Banks explicitly adopting some kind of symmetrical approach . Vasileios it looks like we are moving towards that environment. If you look at the fed, for history,in recent whenever the inflation went above the target that they had in mind, they hacked Interest Rates. Whenever it was below, it was considered to be transitory. I think we will move into an environment where it is more symmetric. Theres going to be more allowance for inflation around the target. That is the key thing here, that we dont get a d anchoring a horing of inflation excitations. Vonnie it seems like after eight years of Mario Draghis term, there arent the tools. This is the only mandate the ecb has. It doesnt need to worry about employment like the fed. Still, it is having trouble meeting this mandate. Does it have the tools . Look. Ios well, as far as im concerned, draghi has done an excellent job. Hes done everything that could be done in this environment. Lets not forget the euro zone was plagued by the debt crisis. There was certainly a deep trust issue, concerns about disintegration, and yet draghi managed to hold the euro zone together to a large extent. But Monetary Policy is not the only game in town. It will have to be sooner or later that fiscal policy will have to assume its response abilities. As far as im concerned, Monetary Policy has exhausted a large chunk of its arsenal. It will have to be fiscal policy that takes the mental in order to assure that we dont get a inflationng in expectations. Vonnie we got a rally in peripheral bonds today. Im not sure if that is about any fiscal stimulus down the pike, but surely investors were happy today. Lets move to currencies now. We want to talk about the euro because there have been several big calls recently, not least british sterling might go to parity with the euro. Where do you see the euro itself headed versus other currencies . Vasileios i think currency right now is not so much a euro story. I think it will largely develop to be more of a dollar story. Our base Case Scenario for eurodollar is that we are going to have some small appreciating 1. 12, 1. 13 to 1. 15 by years end. Is a result again a Federal Reserve easing. The ecb will likely also be easing, but the room to cut rates by the fed is much more ample, much bigger compared to the ecb. There is going to be some movement in the yield spread, and this is going to potentially push the euro higher. For the euro to make a decisive move, a convincing and sustainable move higher, you would have to see stabilization in the data, and we have yet to see that in the regional data, especially in the manufacturing sector. In the tradelmness arena because the euro zone economy is a big economy that relies a lot into exports. Theres a lot of meaningful and important trade channels with china which have definitely been impaired as a result of these trade disputes. That has put a lot of weight on the euro. Until we start seeing that, i dont think we can expect a convincing and sustainable move higher in the euro. Vonnie i want to have a quick look at asian currencies, both remember and others was renminbis and others. The south korean won has underperformed the dollar to the tune of more than 5 . Where are your picks right now . Vasileios i think that is a fascinating question. I think the currencies that youve mentioned are very much differently exposed into the Global Growth risk. For example, if you take south koreas currency, it is very much exposed into global trade, very vulnerable to healthy trade dispute are going. Plus, we also had recently these restrictions in japanese exports to south korea that threaten to potentially block the tech value chains of south korea, which is another thing that creates uncertainty. I think in general, and not just for asian currencies, i think we are living in an environment where the fed is cutting rates, is going to start cutting rates, and therefore theres going to be reach for yield. In that environment, i favor higheryielding currencies with credible Central Banks and relatively ok balances. I think they will stand to benefit from that. Us for as they were nimby is concerned, i think as the rent nimby as far as they as far as the re think its concerned, i has really gone out of control. Vonnie our thanks to vasileios gkionakis, Banque Lombard Odier a bobblehead of ethics strategy globalue Lombard Odier head of ethics strategy. Of ethics strategy. Of fx strategy. This is bloomberg. Vonnie live from new york, im vonnie quinn. This is the european close on bloomberg markets. Lets get the first word news with cory donahoe. With courtney donohoe. Courtney the Treasury Department has said that unless congress acts, the government could run out of money to meet their payment obligations this september. Inkyoto, 33 people died suspected arson at an animation studio. Three dozen others were injured. A man burst into the studio yelling, you die, and then set a fire. The Trump Administration is sending more troops to the border with mexico. They will have a number of duties that include being stationed at ports of entry and working at migrant holding camps. President trump is deciding whether to intervene in the pentagons giant Cloud Computing contract. Amazon is the favorite to be awarded the deal, which could be worth about 10 billion. Republican lawmakers have complained that some companies such as oracle have been frozen out of the competition. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney donohoe. This is bloomberg. Vonnie thank you. Lets get a check of Global Markets now with abigail doolittle. Abigail we are looking at a bit of a risk off tone in europe and the u. S. The s p 500 basically flat, down just fractionally. The stoxx 600 down a little bit more, but also fractionally. The asian session, the shanghai composite down more than 1 , down another day in the row. The nikkei weighing the trade tensions between china and the u. S. Plus, we had a big negative report from netflix. Those were the equity markets to open first, so that perhaps affecting the mood. Down moresix days, than 11 today, since 2016. This comes on their big subscriber shortfall, 2 million less subscribers signed up than expected. In the u. S. , they also lost one have their 30,000 they lost 130,000 customers. Investors clearly not liking it. We have some weakness for the commodity complex. The fact that oil is down 2. 6 , down for a fourth day in a row, perhaps also reflecting the trade tension. The dollar certainly not weighing on it, but despite the fact we have risk assets selling off, we also have haven bonds selling off. Morgan stanley was the last of the big banks to report. Shares are up, but on the year it is a different story. In white we are looking at the financial sector, in blue the s p 500. The s p 500 up about 19 on the year. Morgan stanley up just about 10 , so some ahead of that report being able to augur the fact that there was going to be some weakness, especially for the equity trading business. Vonnie abigail, thank you. Are upof Union Pacific more than 5 today, the rail reporting boosted efficiency boosted efficiency. Joining us is lance fritz, ceo of Union Pacific. Thank you for joining. A tough quarter for coal. Grain is experiencing uncertainty. You said yourself that carloads were down 4 , and will be down another 2 in coming quarters. Are we heading into another recession . Marketplacenk the has some global, largescale issues that are facing the railroad. Ne is relatively loose trucks we compete quite a bit with trucks for freight. Then there are some things happening unique to the railroad. You mentioned coal, the tariff impact on grain exports, and another is the fact that we had someusiness placing display meant by local sand in texas predominantly. You wrap all that stuff together , theres some railroad unique impacts, theres some more global impacts, but i think the economy overall is still reflecting a good jobs market, wage growth, generally a positive environment when it comes to consumption and industrial production, so when we look forward, youre right. We talk about the second half being down 2 volume, but our Business Model still looks quite healthy even in that environment. Vonnie csx terrified the market yesterday, wiping 7 billion off of your market capitalization alone, 20 billion off of rails in general. Yourpetitor basing competitor basically saying they have no visibility. Did you have any visibility . Lance i think we have adequate visibility for what we are trying to accomplish. We are in the process of transforming our railroad by what we call unified plan 2020. That changes our transportation model and makes a more consistent, Reliable Service product for our customers, and one that is more. Efficient. We think that positions that is more efficient. We think that positions Union Pacific quite well. As we look to the second half of the year, we are confident we can still keep key pieces of like an operating ratio for full year that is sub 61. There are key pieces of guidance we are retaining that show the confidence we have, even as the marketplace isnt quite the one we would hope for. Vonnie you know, it is quite well known that you adopted precision scheduled railroading, and you will be finishing out year in thatl this quarter. Do you still see that to be a reality . How far can you push costcutting . Lance the short answer is that we are not focused first and foremost on costcutting. We are focused first and foremost on a consistent, Reliable Service product, and excellent Customer Experience overall. That does come with it, in the way weve designed the network, touching the cars fewer times and using fewer assets because we are building bigger trains. That means less work on the network, and that then means lower headcount and cost savings. The cost savings are coming in all kinds of ways in addition to labor. Labor is a big piece, but weve got cost savings in fuel consumption rate. We are more effective in our fuel utilization. In rent that we pay for equipment, leases we are paying in the material we are using for maintaining a smaller locomotive fleet. Theres a whole host of benefits that come from the way we are running the railroad. Vonnie how much further will you run share buybacks . Youve definitely been goosing certain metrics, im not saying on purpose, but that has been the result. How much more do investors have to look forward to in terms of share buybacks . Lance the whole reason we do share buybacks is to return capital efficiently to our shareholders. The way we think about this is from the first dollar of revenue, the first thing we do is pay all of our bills. Great wages, great jobs, all the material we have to do. The second thing we do is invest in the railroad, so there is utilization in our capital. The last thing is whatever is left over in leverage that we can do from the cash generation we are doing, we give back to the shareholders. The shareholders tell us they want that both in dividends and share buybacks. We anticipate as we look forward that we will continue to do both. Vonnie congratulations on a second great quarter in a row. Lance fritz, ceo of Union Pacific. That stock is up 4. 4 now. Remember, gtv on the bloomberg allows you to browse all of the charts featured here on bloomberg television. Save your favorites for future reference, even. This is bloomberg. Vonnie live from new york, im vonnie quinn. This is the european close on bloomberg markets. Lets get back to our interview now with irans foreign minister, who said the u. S. Has shot itself in the foot by pulling out of the Nuclear Accord with the wrong. He spoke to bloomberg editorinchief john micklethwait. Javad it is a multilateral agreement, and no multilateral agreement can be implement it unilaterally. Everybody has to tipin. The europeans believed that this was import for their security. You invest in your security. You dont just get security about praying for it. You must invest. Necessary, what is and the europeans need to take the necessary action. The United States has basically, in my view, shot itself in the foot by withdrawing from the agreement. John so what is the necessary action the europeans need to take . What is the way out of this . Lance it is up to themlance javad it is up to them to decide. They made the commitment after the United States left the deal. They knew that the u. S. Was leaving. They knew the u. S. Impact on their economy, but they committed themselves to allowing iran to sell oil, repatriate its money, have shipping, have insurance, and we have none of that. So they need to live by their commitment. If they dont, we dont have a quarrel. We have a mechanism within the jcpoa. Data weated this negotiated this deal with open eyes, without trusting each other. Our is why we reduce commitments until they comply. Once they comply, we can reverse. But if we go beyond certain limits, the reverse would be much more difficult and costly. John so unless they comply, you will continue . Javad we will continue the steps, and these steps are legal. They are in line with the agreement. We are not going to build Nuclear Weapons. If we wanted to build Nuclear Weapons, we could have built them a long time ago. John you think you can build Nuclear Weapons tomorrow . Javad very rapidly. If we wanted Nuclear Weapons, because have built them when we would not have paid the price of building a new their weapon. Vonnie that was irans foreign minister speaking with bloomberg editorinchief john micklethwait. A few minutes before the close, the dax in germany is a leg lower, down 8 10 of 1 . Sap the worst performer in the dax, the Software Maker having a really disappointing quarter. A handful of stocks higher, including merck up 1. 8 . 0. 5 , and theown cac 40 down 3 10 of 1 now. And the cac 40, we have some of the cigarette makers rallying, but several stocks lower as well. We will get the details as markets close in four minutes. Vonnie stocks finishing up the day in european trading. A down day for the most part. You can see italy in the green with a few seconds of trading to go. Many of the rest of the countries are in the red. The major indices are down. The cac 40 down. 33 . The dax in germany down. 9 . A Software Maker had a disappointing quarter and it is dragging down several indices and having an impact on stocks in the u. S. The stoxx 600 down. 2 . Lets look at individual stocks moving. F18 down 5 . Mattel is the worst performer and the cac 40. The outlook for aluminum. Another Mining Company in london is down 8. 5 . It is listed on the london stock exchange. British American Tobacco is one of the better stories, up 6 thanks to Philip Morris international which is the best performer in the s p 500 after a positive outlook for the tobacco product maker. In terms of other asset classes, yields are lower across the peripheral countries in europe a cross all of the countries, on speculation the ecb might continue easing or change its inflation mandate. We saw 10 basis point drop in the greek 10 year yield and that was only the beginning. If you list by change in yield you see a couple of the European Countries among countries like south africa, which had a central bank move today. Gold futures up. 2 . The ray dalio comments that did not hurt things. Also all of the uncertainties giving a little bit to gold. Atrling is moving, it is 1. 2487. A far cry from below