The United States has basically shot itself in the foot. Conversations about the Global Economy from the g7 finance meeting. I think we need to be thinking about what happens, if there is more than a showdown. You need a country that had fiscal space to simulate stimulate their economies. Welcome im abigail doolittle. Your weekly review of the most important Business News, analysis and interviews from , Bloomberg Television around the world. Lets start with a day by day look at the top headlines. On monday, investors divested a slew of Economic Data from china. Chinas economy is continuing to slow with sluggish domestic output and trade tensions pulling growth down to the weakest pace since early 1990s. Gdp grew 6. 2 , matching estimates, but below the 6. 4 theme in the previous quarters. How bad is it . It is slowing on a quarterly basis. The take away from today is the activity numbers for june. We saw a pickup on the retail side of things, industrial output all headed in the right direction, all beating analyst estimates. A pickup in cosmetic sales, a hint of a turnaround in the car sale sector, it all points to an economy that clearly there is a long way to go before it is truly out of the woods, but it hints at stabilization after a rocky period. Citigroup taken off the busy week of earnings, topping analyst expectations, reporting profit and revenue gains despite a 5 loss in trading revenue. What struck me was the praise citigroup got for costcutting. How is citigroups costcutting better from other banks we have seen . For one, there is costcutting to improve efficiency and the amount of money you have to invest. Citigroup is benefiting from the fact that they are becoming more efficient in some areas and that is allowing them to continue to invest. The bottom line is they reaffirmed the common equity targets. That is a key metric for the company, despite the fact that they have these revenue headwinds, they are cutting cost. Earnings week for the big u. S. Banks underway. J. P. Morgan snapped streak of quarterly increases. Wells fargo posted its lowest lending income as the pain of Interest Rates hits revenues. Powerhouse balance sheets, but still problems with margins. We are 33 in terms of the bigger u. S. Banks. J. P. Morgan bringing down their guidance. Wells fargo which had already brought down their guidance couple times missing that estimate. The more negative than from wells fargo is on the expense side of things. They are coming into the higher end of the range, then flat expenses next year. Goldman sachs is a different story. The equity trading revenue for the business coming from. Coming through, as well as better fees. Wall street fell from a record and the offshore yuan weakens after President Trump reminded us that the trade war is far from over. President trump we have a long way to go in terms of tariffs. We have another 325 billion we can put on if we want. This confirms that a clear path to a deal is nowhere in sight. You heard from trump there is a possibility of raising tariffs further, but a precondition for beijing in talks to take all we hear china is prepared to whether this storm, the Global Growth slowdown, and are prepared to adjust fiscal and Monetary Policy as appropriate. Bank of america reported a record secondquarter earnings, missed on the Interest Income despite a beat on trading revenues. Fixed income trading revenue is unchanged from a year ago. That is surprising, because all the other banks that have reported, including goldman, they have sizable declines in fixed income trading. Bank of america held on to its revenue. That is a good sign. Equities is down, but everybodys was down. We knew net income would be under pressure. The fed has signaled it is going to cut rates. Longterm yields have already dropped because of that signaling. The numbers maybe didnt shock people as much. They were expecting it. The surprise was fixed income trading. Morgan stanley is among the last of u. S. Banks to report earnings. They beat of course. We have all six banks out. What is your biggest take away so far . Muted trading environment, overall muted revenue environment. Estimates coming down out of this quarter. We got a little bit of excitement at the end of the quarter, but that immediately faded, so not enough. We have had estimates come way down. The whole global macro Geopolitical Uncertainty because that tends to be an indicator for deals. The key concern is will that , feed into the u. S. Economy . Global stocks are rallying today after dovish comments from the Federal Reserve and new york fed president. At a speech for the Central Bank Research association, williams said it is better to take preventative measures than to wait for disaster to unfold. His comments posted Market Expectations for a 50 basis point cut this month. Speaking with fox news later, the feds number two said you dont need to wait until things get bad to have a dramatic series of rate cuts. A new york fed spokeswoman took the unusual step of clarifying williams remarks, saying they were, from an opening speech on 20 years of research. It was not about potential policy actions at the upcoming fomc meeting. They must know this is just before the quite period, that the end of the month is an important meeting. Are they trying to send that kind of signal . The markets heard it. Traders dont read their speeches, they just trade off of the headlines. John williams was going to make an economic speech about how an academic speech about how people make policy when you are close to the zero lower bound. It was, as the new york fed tried to later clarified, a summary of 20 years of academic research. A headline comes out saying williams as you have to act quickly. Clara was asked late in the interview, would you consider 50 . If we needed to, we would. The headline says, fed would, and everyone trades on that. It is irritating as a former practitioner. Liability went from roughly 40 from when williams spoke to 60 after he spoke. After the clarification, was down to 30 . It may be an academic exercise for mr. Williams, if you are a sucker that had to pay out, your loss is real, it is not just something you learn in the classroom. Still ahead as we review the week on bloomberg best, an interview with the foreign minister of iranian, plus conversations from the g7 finance gathering in france, and more highlights from a whirlwind of reports. European banks reassure investors they are moving on from moneylaundering scandals. It is important for us to be viewed as a safe bank. This is bloomberg. This is bloomberg best. Lets dig deeper into one of the weeks biggest stories, corporate earnings. Our round up of the weeks results continues with some european banks. Square bank have beaten the streets. It slashes payout policy to 50 of annual profits. Moneylaundering probes continued. This is a massive headline. You are cutting the payout rates to 50 from 75 . Is that in any way tied to your concern about Money Laundering investigations and what you might end up having to face in charges . The change in dividend policy is on the backdrop that swing back will continue to be square bank will continue to be a low risk bank. We have seen in the past 18 months that longterm Interest Rates and the fx, together with increased Capital Requirements coming for swedish banks in september pushing down the buffers to levels we dont find acceptable. It is important for us to be viewed as a safe bank, but you have to recognize we are in a special situation at the same time and you have to take that into consideration. To be responsible and build a safety buffer. Secondquarter operating income missed the lowest estimate. The biggest nordic bank by assets is under pressure from investors to improve revenue after years of focusing on cost cuts. They say they need to review capital and dividend targets. Should investors prepare for a dividend cut . I am not going to comment on right now. When we look at where we are in recent years we have derisked the bank. We have invested heavily into digital and complaints and compliance platforms. We concentrated the business into the nordic markets. We are in a new phase of customer focus. We expect soon to have better clarity on our Capital Requirements. It is in that context our shareholders and investors ask for this. I think in the fall is the right time, because we have the visibility from the Banking Union and requirements we get from there. Scandal plagued Deutsche Bank is in talk with denmarks regulator. Thanks as extra Compliance Costs and a tougher trading extra bank says Compliance Costs and a tougher trading environment forced it to lower its outlook this year. Dont the bank has been in survival mode since its estonian Money Laundering scandal erupted last year. Let me ask you what you expect as far as Capital Needs for the remaining year, for 2020. So the dialogue we are having with our local regulators is about some of the complaints issues we have found. We do anticipate the midsingledigit billion range is what we write in our report. That is what we are disclosing. This is not something that will come out until we have firm notification of this. Given that we want to open up anticipation we are coming out and getting this message to the market so they dont get surprised when we get the actual midsingledigit range billions. Ericksons earnings have missed analyst estimates for the first time in six quarters as it says the rollout of 5g mobile networks in asia will weigh on profitability. The Swedish Network equipment vendors adjusted from the profit rose earlier. Results below estimates. How far away are you from completing the turnaround plan . We continue to execute on the plan we put out our focus strategy, where we invest in technology to have products and achieve cost structure. We are delivering according to that plan. Ourselves on plan for the targets we put out for 2020 and 2022. That is what we manage for and drive the business for. On that we are on track for that with another solid corner under the belt. The trenchcoat maker is up to the most since 2012 after new designs went well with the chinese market. A rebound helped store sales grow four percent, double what analysts expected. Should we still be calling for as aerry burberry trenchcoat maker . It is known for forging alliances with popculture icons. In paris, he really opened up this parisian couture house to people like kim kardashian, who has millions of followers on instagram. He brought some of them to burn to burberry. His designs are bringing attention to the house, but that message is being amplified on the internet. The worlds most comfortable distillery beat expectations profitable distillery beat expectations with net income growing 27 in the first half. Revenue was up 17 . What stood out to you . The revenue numbers. By any measure this kind of Revenue Growth in the first half would be impressive for most companies but weve come to expect more. If you look at the revenue for the first half this level is actually is lowest since 2016 and well below its 10 year average. Perhaps we are seeing weaker Consumer Sentiment at play especially at the lower range. This company is in a league of its own that analysts are saying they are not too fazed by the fluctuations. A lot of people are fixated on the very healthy profit earnings and pulled in. Johnson johnson released secondquarter earnings reporting results better than what analysts expected. Pharmaceuticals led the way for johnson johnson. Give us your top line analysis of second order earnings. I think our results solidify the first half of the first year in a strong way. Pharmaceuticals did lead the way. We continue to perform beyond the market in which we play. If you think about how we entered this year with somewhat average expectations for that particular unit given some bio similar and generic competition, most companies with a 3 billiondollar headwind will be talking about contraction. We had growth based on our strong portfolio able to bring new products to market as well as line extensions on existing product and we see improving trends so its a very good start to the year. Netflix tumbling after the streaming giant reported surprising loss of u. S. Customers for the second quarter. Important for their security. If it is, you invest in your security. You dont just get security by praying for it. You must invest. You must do what is necessary. The europeans need to take the necessary action. Has basicallytes shot itself in the foot by withdrawing from this agreement. What is the necessary action europeans need to take . You want them to buy oil. What is the way out . It is up to them to decide. They made the commitment in the deal that irans economic relations with the rest of the world will be normalized. They made the commitment after the United States left the deal. They knew the u. S. Was leaving but they committed themselves to allowing iran to repatriate its money, have shipping, insurance, and we have none of that. They need to live by their commitment. If they dont, we dont have a quarrel, we have a mechanism within the jcpoa, the nuclear deal. We negotiated this deal with open eyes, without trusting each other. Nobody trusted the other side. That is why we have mechanisms within the deal that we reduce our commitments until they complied. Once they comply, it can be reversed. If we go beyond certain limits the reverse would be more difficult and more costly. If they dont comply we will continue with the steps. These steps are legal, in line with the agreement. We are not going to build Nuclear Weapons because if we wanted to build Nuclear Weapons we could have a long time ago. The people talk about breakout you think you could ill Nuclear Weapons tomorrow . Very rapidly. Had we wanted to build Nuclear Weapons we would have built during the time we paid the price of building the Nuclear Weapon. During the Previous Administration and iran, we had all the sanctions, had we wanted to build Nuclear Weapons we would have built it. You think you could build Nuclear Weapon within a year if you wanted to . Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. You are watching bloomberg. The uncertainty is affecting corporate decisions. Hp and dell plan to move 30 of number production away from china in a bid to avoid tariffs. Cfo declined to comment, flexibility is helping we are balancing the needs of customers with the environment we are in. What does that mean in terms of adjusting your supply chains . You talk about 25 manufacturing sites. When do we have to start adjusting prices or have you started doing so . We have beenall, able to have three tariff lists weve been able to navigate and mitigate the impact through shifts in the supply chain or working with our supply base. Prices onsted certain a small minority of products as result of our ability to mitigate it. Deputy managing director david lipton has been filling in for steam the guard until the finding of a permanent finding of a permanent successor. Central banks may help counter a Global Economic slowdown. Right now the baseline is for sluggish growth, slightly stronger in 2020. Our baseline is not a slowdown to zero, let alone a recession. Is do no admonition harm. Its important that trade tensions and Technology Tensions not tip the world into recession. The reason is that we have fewer tools. Our tools have less policy space. Monetary policy is already expansionary. Harm. Rst rule is do no all polic policymakers should be responding with what comes. Central banks have to keep an eye on the circumstances in their particular jurisdictions and try to keep their economies on the right trajectory to achieve their objectives. We all need to be ready in case there is a significant slowdown much more forcefully. In the case of a significant slowdown which part of the world do specs provide the biggest downward drag on Global Growth . Say because weo dont know what shocks are coming. Where is in a situation policy tools are somewhat less ready at hand. Saying, draghi has been it is important that theyre not be an overreliance on Monetary Policy and that in the event of a downturn, especially a severe downturn that all policy levers, monetary, fiscal, and structural will be ready to be used. G7 finance ministers and Central Bank Chiefs met in france this week on a host of issues on the agenda. Trade wars, Global Growth, green finance cryptocurrencies, all are for discussion. Many of the attendees spoke of bloomberg. Here are some of the highlights from those conversations. If you dont know if you are going to be about to sell, then you dont invest because you only invest to produce, and you only produce to sell. You dont know at what tariff you will be able to sell, and therefore, you dont invest. This is what is happening. This is why we have seen the slowdown. Mostly because of trade tensions which are moving into the territory of investment in creating uncertainty.