Struggles, spooked by the rumbling trade war. Sherry later, we will discuss. Uawei with jun zhang lets get a quick check on market close in the u. S. It was a bit of a mixed picture with the dow outperforming, up. 10 . Earningsh its announcement on tuesday. The s p 500 and nasdaq falling from record highs. Other tech heavyweights weighing on the market, amazon, netflix, facebook dragging the benchmarks. Also the 10 year yield falling for a second consecutive session ahead of the fomc meeting. Focused on the resumption of trade talks between the u. S. And china. In the meantime we have futures unchanged in early trade. Lets see how asia is shaping up, paul. Paul new zealand has begun ,rading on this Tuesday Morning , mixed picture for futures futures traded out of chicago for the nikkei currently looking kind of flat. A different story for so, up. 25 . A big day in terms of news out of japan, a big earnings week with jobs figures expected to hold steady. The big one, the bank of japan meeting. In sydney, meanwhile, currently trading higher by. 5 on the futures market. Closing just shy of a record on monday. Lets get the first word news. Trade talks resume later tuesday after a twomonth pause with little expectation of anything other than a framework for further negotiations. The two sides are holding their first facetoface meeting since may but key differences remain and neither side shows any inclination to compromise. China describing the u. S. As the black hand behind the unrest in hong kong. Early indicators suggest the chinese economy we can further this month, reinforcing the case for more stimulus to shore up growth. The slowdown is seen in a Bloomberg Economics gauge aggravating the earliest available signs on Market Sentiment and business conditions. Smallcompany peers have deepened, the measure exports is worsening and falling Producer Prices are squeezing profits. President trump is back on the offense of ahead of the fed meeting, complaining that the banks will probably do very little to counteract anticipated rate cuts in europe and china. He tweeted that a full rate cut is not enough, with the fomc widely expected to lower rates by a point a quarterpoint this week. He said the fed made all the wrong moves, but we will win anyway. Prodemocracy leaders in hong in an dismissed unvested unprecedented briefing to the media, saying violence will not be tolerated and blaming foreign interference for stoking tensions in the city. Some politicians in the western countries have made unwarranted remarks. At the end of the day, there purpose is to turn the city into trouble for china, in an attempt to contain chinas development. Such an attempt will lead nowhere. 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. Paul the u. S. And china are set to resume trade talks later on tuesday in shanghai but neither side is showing any real desire to compromise. Last friday, President Trump seem to indicate that a deal would be some way off. I think that china will , letsy say lets wait thatf one of these people give the United States away, lets see if one of them can possibly get. I will tell you what, when i win , like almost immediately, they will all sign deals. Angelests head to los where Sarah Mcgregor is watching all of this. What can we expect from these talks . We will dont think expect a lot of substance from these talks. We certainly dont expect a deal to come out of it. This point, just to go back a little bit, the talks collapsed in may, and there has been no facetoface talks. This will be the first time the real top negotiators have sat down and had a chance to try to solid way forward. The u. S. Wants to start were things left off in may. That leaves the big question of where is the wiggle room, the u. S. Insisting on deep Structural Reforms and china insisting all tariffs be removed that were put in place during the trade war and for balance agreement. So it is hard to see were either side will budge. I think the big outcome from this meeting is for any sign each country will give a little bit of wiggle room. Shery can there actually be a deal without lifting those tariffs on chinese goods, and also some relief on huawei . Are the Big Questions right now. Neither side has given any indication they are willing to give up, that they will stand down from their position. If anything, things have worsened in some respects. Trump raise those tariffs on 200 billion of goods. Recently weve seen the u. S. Naming chinaort of as a developing company that gives it special privileges in the trade realm, the u. S. Has given a 90 day window as of last it thinks the time has run out for china to be labeled a developing country. We see them in a more hardened position on chinas side, we saw them said the u. S. Might be involved in the hong kong protests. As much as they say they want to get along, we see the sides a little further apart in many respects. Shery thank is so much, Sarah Mcgregor. Bloomberg has learned that citigroup is preparing to cut hundreds of jobs at its slumping trading division. The latest thing to take action following a rough first half. No comment yet from citigroup. What do we know about these cuts . The cuts are pretty broadbased. We are expecting hundreds of job cuts across the fixed income and Equities Trading divisions. Its like you said, its been a tough first half are trading across wall street. This is the latest thing to take this action. Paul so how does this fit in with other costcutting measures citigroup was warning of . Jennifer they are in a rare position. They have set some pretty lofty the return on tangible common equity. Its a key measure on profitability. Usually in the first have its the best time for banks, when we didnt see that materialized this year it means for city to meet the target they really have to cut cost to achieve those goals. Shery we have seen in drastic overhaul for deutsche bank, announcing 18,000 job cuts as well. It will be interesting to see how this plays out. The cuts are really broadbased. It will be interesting to see what we see from other wall street banks. Are they cutting more of these front Office Clients or are they focus on consolidating , orations from the back end will we see more things Like Deutsche Bank where they are getting out of businesses . I think we will see different approaches from different banks. Paul thank you for joining us. Still to come, will take a close. Ook at blacklisted huawei we will preview the numbers. Stock of next, we take. He markets with mark eibel this is bloomberg. Paul im paul allen in sydney. Shery im shery ahn in new york. Youre watching daybreak australia. Talkssumption of trade and corporate earnings, our next scs only limited upside for stock. , great to have you back. Are you only seeing limited upside for the s p 500, given that the cuts were expecting this week from the fed have already been priced in . Be 25i think there will basis points followed by another 25 basis points in september. They will move once and then wait and see how trade plays out which is what everybody in the world is waiting for. We see limited upside from here, simply because it is so late in the cycle, earnings or flat yearoveryear. The gdp number of 2 was fine but we think it will trend a little bit lower. Its hard to see a real catalyst to take the u. S. Market up much higher from here absent a trade deal. Shery does it mean you are positioning more defensively, and what does that mean if were going into a longterm cyclical downturn . Ank fixed income is not asset class that will give you great returns. We think it will protect you on the downside. We are underweight the u. S. , and for some of the things i just mentioned, continue to have a little more exposure in international markets, looking for resolution for not only international development. I dont know what the brexit solution will be but we will find out at some point this year. Upside, you see limited its probably safe to say you are not the only one. Do you see some declines from here . Trend oras said the bias has to be looking to the downside. What an exceptional year it has been. I dont think on new years eve any of us would have thought that nearly seven months out we would see this kind of return, in virtually every asset class in the world. In a multiasset portfolio, its been a good year for investors already. Being a little bit more defensive, maybe taking some of those gains off the table is a prudent strategy from here, since the fed action is pretty well priced into the market. Earnings season is over. I dont expect too much excitement out of the jobs number coming up. Wait to see what the next move might be. Some so youre taking profits off the table. Where are you able to invest, do you like emerging markets . Mark we have a slight overweight to emerging markets. They will be the most likely to benefit. All none of us know the timing, if you assume there will be a deal at some point, they should get a nice move off the bottom. A little underweight in the u. K. Because they have more to lose with brexit. A trade deal with certainly hurt certainly help germany. Brexit, there is some upside to Continental Europe and emerging markets. Defensive, does that mean you also like safe havens like the japanese yen . Ark we are overweight from currency standpoint to the japanese yen. Weve had some nice placements, level reads, commodities, infrastructure up nearly 20 year to date. Clients have benefited from being diversified into those areas. Its been a little longer in duration with the recent move down in yields. Class has done well this year. Youve been absent get nice returns for client portfolios without having to take more equity risk. Shery we had the boj policy decision today in asia. You, since iter to have not been able to boost inflection Inflation Expectations . Mark everybody is trying to boost Inflation Expectations. I dont know the market will move on the news. I think if it is 25 basis points, it wont. I think it will move if it is something other than that. All eyes are on the fed this week for market direction as we move throughout the rest of the week. I know you see an elevated risk of a recession sometime in the next 12 months. What would be the key risk factor that would set that off . Mark as with most recession, starts with a catalyst. Its probably trade tariffs. Seeing theart employment numbers dropping, the monthly numbers. Maybe we will get an indication of that on friday that will lead into if people are not being andd into Consumer Spending the consumer will determine what happens. Weve had two or three of those posts. I dont think we are in a recession camp yet, but in the u. S. We will start slowing below 2 growth. It might not be recession, but it will start feeling like on and that will be the area we will all be looking for, certainly as we move into 2020. Paul thank you, mark eibel. You can get a roundup of the stories you need to know to get daybreak. Ing with you can customize your settings to the industries and assets that you care about. This is bloomberg. Paul this is Bloomberg Technology global link. m paul allen in sydney emily chang is in san francisco. Lets take a look at the top global tech stories of the day. Uber is cutting about 400 jobs around the world on concern the business is slowing down. Memoeo told employees in a that many are too big, creating overlapping work and leading to mediocre results. Yft shares fell the most in one month after announcing departure of its chief operating officer. Spent 2. 5 years as deputy to elon musk at tesla. Replacementt hire a and plans to reassign his responsibilities to other staff. Theres a lot riding on apples Earnings Results on top of its market influence. Investors have almost 60 been dollars locked up in the stock. According to a recent report, its a second Largest Holding across u. S. Etfs after microsoft. Those are the top tech stories we are watching. Shery huawei reports earnings in the next few hours. Has written extensively about the impact of the ban and joins us from huawei s home city. Great to heavy with us. Lets talk about the blacklist on huawei. They had a 90 day release for certain u. S. Based companies. How much has the temporary license helped and how big will the impact be once it expires . Good morning from shenzhen. First we look at smartphone ts, after the huawei man ban, it was affected especially in the european markets, but quickly after huawei found some , shipments recovered. The huawei ceo had an raisingw talking about output to 270 million. I think the huawei strategy is to focus more on the 5g smart phone. I think the impact on the smartphone unit is very small. Mostly from the android support but huawei will be able to find around downloading some google apps inng the european market. They used to use a lot of u. S. Components, but right nowh [indiscernible] there are some other solutions they can work around to solve the ban. Emily meantime, your time in china you have trade talks between the u. S. And china restarting today, though neither side has shown much interest in compromise. How well is huawei positioned longterm if the issue doesnt get resolved in the near future . Jun i think there is a lot of concern around the trade talks between the u. S. And china, obviously right now its moving toward the positive in and the two countries resumed talking again. The ban remains, they have to work on the solution to replace most of the u. S. Components. There are couple of choices, they can switch to japan, south korea and come and european suppliers. The u. S. Components can be replaced by chinese local components. Have the ability to do internal i. T. Impact of the u. S. Think huawei dont will heavily rely on the u. S. Supply chain going forward. Emily we are also waiting for apples Earnings Results. Obviously china is a huge part of the apple story. How much do you think apples loss or weakness in china could are youis gain, and seeing evidence that consumers there are opting out of American Brands like apple, in favor of Chinese Brands . Jun i think in the last two quarters, i think huawei actually took some shares in the highend. My concern is that huawei has active in high end smartphones, those they launch in the second half will be 5g. Their prices very competitive. I think with a competitive continueawei 5g will to taking shares in the highend market. Im only concerned about apple market share. Apple is talking about launching a 5g smart phone next year. Cheaper and i think it will be very competitive with other smartphones. Rosenblatt securities. Anaging editor jun zhang thank you for joining us. Plenty more to come on daybreak australia. This is bloomberg. Morning30 a. M. Tuesday here in australia. Its raining for the first time in almost three weeks. Futures pointing higher by almost. 5 after mixed close. Shery im shery ahn in new york courts 6 30 p. M. Youre watching daybreak australia. The u. S. Treasury is thing to double expected borrowing in the third quarter, issuing 433 debt, morenet market than was seen in april. It comes after the bipartisan deal to suspend the debt ceiling the senate is expected to vote in the coming days. And falling to multiyear lows and Prime MinisterBoris Johnson stepped up plans for a no deal brexit with just three months to go. The pound fell the most among g10 currencies as johnson warned he wont resume talks with eu leaders unless they agree to renegotiate the deal struck with theresa may. Brussels has so far refused to reopen talks on the deal or the irish backstop. The imf says been as well as economic declines in 2013 will reach 65 , one of the steepest fiveyear contractions of any country around the world over the last halfcentury. The fund said the fall is unprecedented in the western hemisphere and is one of the where contractions unrelated charmed conflict or natural disaster. The imf adjusted its forecast for venezuela to a contracted 35 . Unlike double 07, you only live once so heres a chance to imitate the worlds most famous five. His classic aston martin is being sold next month with an expected price tag of 6 million. Had 13 original gadgets, including retractable machine guns, a nail dispenser and rotating license plate for the u. K. , france, and switzerland. 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. That. Thanks for lets get a quick check on how things are shaping up on asian markets. Weve had new zealand trading for a over 30 minutes now and currently higher by just over. 10 . As i mentioned, the bank of japan makes policy decisions in the next few hours. Were expecting no changes, despite inflation remaining far from the 2 target and with the trade war taking its toll on exports. Instead, governor kuroda and his team are awaiting the Federal Reserves expected rate cut later this week. Kathleen hays is at the bank of japan. What is the governors thinking here . Is obviously thinking about the state of the japanese economy, the u. S. Ongoing u. S. China trade war. The Federal Reserve is just going to start its twoday meeting later today and we wont know what they are doing until wednesday afternoon. In the meantime, the boj is expected to wait and see, 25 pointven though a , what if thecut Federal Reserve comes out with a more dovish policy statement than expected . What if it is something that could lead to a series of rate cuts . If that were to weaken the dollar and boost the again, that could reverberate through markets for the boj. They will just now watch and wait and see what happens, our Economics Team say the boj can definitely tolerate a spike in the again up to about 100 on the dollaryuan rate, but its something that could give them pause. The ongoingabout trade war and weaker asian demand . Is that expected to factor in . Kathleen is certainly true that Downside Risk to the economy seems to increas