japan increases the pressure on south korea. europe braces for announcements on trade from president trump today. trade pains and job gains. report is expected to be a takedown from the june number. after the release, we will hear from larry kudlow. matt: good morning. is bloomberg daybreak europe. i am live from berlin. se are looking at allianz' earnings coming across the wire right now. companyres to the compiled estimate of 2.9 9 billion euros. it is a leading on -- it is beating on the second quarter. seen a range of 11 billion, 12 billion on the year. if they hit that number bang on, it will be no change from last year. we are going to speak with the .llianz cfo do not miss that interview at 7:00 a.m. london time. in about an hour. nejra? nejra: i have numbers coming in from credit agricole. the context is it is joining fox capital.listing the second quarter ratio, 11.6%. second-quarter revenue coming in t on -- meeting the estimate. if we take a look at some of the other numbers coming through, second quarter french retail bank revenue. versus the estimate of 875 million. that is what we are looking at there. the context -- revenue gaining. in the about a rise ratio further securing the dividends. the key return on equity. that is what we are looking at. markets,ntext in around trade tensions. absolutely. we are getting more from south korea's president moon talking in a cabinet meeting right now saying japan's decision is reckless. action clearly intended to block korea's growth and japan is fully responsible for what will happen next. japan removing south korea from its trade white list. a diplomatic row we will follow closely. take a look at the affect prices. there have been wild swings. it surely has been difficult for traders to keep up. 1.09.n yesterday was over --n it dropped to one point 107 and change. yesterday's move was the biggest move we have seen in the yen in two years. bids in thehaven yen. not so much in gold. not moving out of the range we have seen in the last few weeks. watch gold. if the tensions continue. i noticed yesterday in the s&p financials, they were the of all ofsing group 11 industrial groups on the s&p 500 index. you can see the drop in the last two days, 2.3%. watch banks today in europe for sure. the s&p 500 down for four days. a bit above average. equities taking a hit. looking here at a 10 year yield at a 2016 low. the two-year yield has hit a 2017 low. in today's session, curve flattening. there are expectations around fed rate cuts changing again. higher chance for a fed rate cut in september. and it is pricing in more than 50 basis points of cuts from the fed in 2019. the timing of president trump making this announcement after jay powell's announcement. and oil slumping the most in four years that we do see a bounce back today. checking in on the markets in asia. asia.ally has more from -- juliette saly has more for us from asia. seeot very well as you can from the red on my screen. index --asia pacific stocks in hong kong hitting the hottest. over 2%.i is off by korea doing better than it was earlier in the session after we heard japan had removed it from its trade list. still off by 0.7% on the kospi. in china, you are seeing the telco and tech stocks hit the hardest. rare earth players rallying. could be a potential weapon in the escalated trade dispute. industry inuctor taipei down for the sixth session in a row. in the yuan -- one month implied ,olatility in the offshore yuan 5.3% come the biggest one-day since august 2015 when china unexpectedly devalued its currency. onshore yuanand trading at its lowest level since august 2010. hittings of the yuan is likely to keep the yuan strong, under seven if the talks continue. matt: thank you. juliette saly in singapore. iskorea, the president speaking right now and talking about japan's decision to remove south korea from its preferential trade list, the white list for export status. south korea is saying it will take corresponding steps against japan. the trade war continues between the u.s. and china, we see the trade war flaring up between japan and south korea. urges japan back to the negotiating table but says -- moon urges japan back to the negotiating table. talk trade more and talk about what donald trump did yesterday. he says he is going to impose a 10% tariff on 300 billion further dollars of chinese imports. of the imports escalating the trade war with china. these import taxes will come into effect september 1. told bloomberg exclusively that the u.s. once a deal with china. secretary pompeo: the president is determined to achieve this outcome. the chinese walked away from the deal. we want evenness and reciprocity. these are core concepts. when that happens, asia will thrive. this latest escalation brings a surprising end to the trade truce in play since donald trump's meeting with his counterpart, xi, in june. markets responding tumbling with asian indices down more than 2% and u.s. stock futures are off a bit as well this morning. roger bloomberg's opinion trumps -- says donald took matters in his own hands and all but guaranteed that more rate cuts are on the way. and the huge reversal suggests that donald trump has gone too far. will damage earnings. we are asking the question on trumpoes fed policy or tariffs matter more? joining us now is james bevan, ccla investments. let us address that comment from roger burgess. i do agree. donenk when it is said and , the market has been moved primarily by a re-about -- revaluation. what we need is confirmation that the earnings growth will come through. earningsen looking for for 2021 which role require -- if that underpinning of earnings progress is removed, the equity market will have to trade lower. trades inou have place for a worsening trade war? we have not really gotten any positive news over the past couple of years on trade. is there only one way for this to go? james: absolutely not. if one is able to stick to quality with company setting , then one still has the basis of a well-run portfolio. for taking equity risk relevant to bonds is staggeringly high. the sorts of names i think in their should have portfolio include microsoft, sap, visa and mastercard. i think willpanies survive whatever happens on the trade side. tech and consumer goods -- what impact will that have on the breadth of earnings? james: reduce consumption in the states. the importers will seek to past to the streetong and we will likely see a reduction in consumer confidence. that will then deliver a downdraft to the u.s. economy. and hence, i believe this is trump trying to gin up the fed to commit to more rate cuts. 25 basis point cut was not widely discounted. sum this up, another shot across the bow of the fed from president trump. he wants further rate cuts and if he gets that in place, do you capitulating,not but making a deal with china ahead of the election? james: i am certain he would like a deal with china though he will hold out for fair trade versus free trade. it is interesting and perhaps constructive that we have a spat between japan and korea. they have not taken part in fair trade. nejra: the fact that we have a temper set tariff on a next her $300 billion of goods, the next step would be to increase that to 25%. beyond that, how far will that extent? extend? this in terms of huawei, you're not allowed to participate -- there is a real challenge that this may you've all from a trade war into a tech war where there is a global issue as to whose trade will win the day but also whose tech will be dominant? matt: james will stick with us. an incredibly busy friday. ccla investment management is our guest cohost. let us get the bloomberg business first word news. we go to debra in hong kong. boris johnson's conservative party lost a by election in wales. anti-brexit liberal democrats won a special ballot. the tory mp had been recalled after a conviction for taking expensive gifts. president trump has labeled recent protests in hong kong as riots signaling the u.s. would stay out of the issue saying it was between hong kong and china. blameg recently tried to the u.s. saying it was behind the demonstrations. president trump's hands off could bolster hong kong's executive. saudi arabia will allow women to travel abroad without the permission of a male guardian. and in the restriction that came under heavy criticism and led some women to flee the country. the move is part of saudi arabia's modernization. segregation and lifting a ban on women driving. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. nejra: debra mao in hong kong. coming up, it is jobs day in the usa. bloomberg intelligence says the focus should be on -- where does james bevan said on the payroll number? a view is larry kudlow and we will speak to him after the release. this is bloomberg. ♪ a nejra: this is bloomberg daybreak: europe, i'm in london. miller in matt berlin. let us check in on the markets. we are seeing the u.s. 10 year yield down well below 2%. 1.88% after donald trump onounced further tariffs china yesterday. as in p futures are off a little bit but the tax trade has been down for watcher days in a row. wild swings over the last couple of sessions. difficult to be and equities trader this year. south korean wan getting weaker and weaker. want toakes almost 1200 purchase one u.s. dollar. nejra: it is a bit of a brutal session in asia where we are seeing a lot of red on this green. the msci asia-pacific pacific index down 1.5%. underperformance in the aussie and the yuan weakening as well. let us get a bloomberg business flash. here is debra mao in hong kong. tora: citigroup has begun make cuts to its trading workforce as a lender works to call for venture people from the division. the company has dismissed dozens of employees this week including cash equities and equities and derivatives traders. citibank is joining other banks in a limited and hundreds of jobs. boeing is redesigning the flight control system of the grounded 737 max 8. it is still aiming to represent the software to regulators by september. the timeline could slip. after it changes, the system will read inputs and outputs from both of the computers. cisco -- and unusual catch. it must succeed at its ipo next month. banks will have to make good on renders $3ents if it billion if it goes public. that is your bloomberg business flash. matt: debra mao, thank you so much. first, the rate cuts and then the data. we will get an update on the world's biggest economy with nonfarm payrolls for july. due out at 1:30 p.m. u.k. time. bloomberg survey suggests 165,000 jobs have been added in july. keep an eye also on the average hourly earnings which are bumping up against cyclical highs. the pace of hiring appears to be stabilizing. if you look at all of the revisions over the last three months. the trailing average. data will shed some light on jay powell's rate cut and his decision to signal he is not embarking on an extended easing cycle. james badge -- james bevan is still with us. what do you think of the underlying u.s. economy? more thanee growth of 2% and core cpi of more than 2% and average hourly earnings growing by more than 3%. it does not seem that bad. james: it is not that bad. there was a time when 2% in seen as a stalled speed. now, i would regard to present as the new normal. i do not sign up to the expectation that we are dealing with a u.s. recession anytime soon. and i think the u.s. yield curve will normalize in the months ahead. jobs: even with a strong report, will that stop the fed from embarking on its efforts? issue i think the trade will dominate the thinking of the fed. the last time we had a serious policy and now met for mr. powell prior to the fmoc, he mentioned "trade" eight times. trump knowsat mr. which buttons to press to get the outcome that he wants. matt: what is the outcome you are investing on? to thei am ascribing expectation that we will see further rate cuts in the united states. we will not see a recession. the only signal that most pundits will seize upon in describing a rising probability of recession is the inversion of the yield curve. the cutting of short rates will help. rates well long normalize up in due course. and against that backdrop, reasonable corporate earnings will drive the s&p to new highs this year and i expect the index to reach 3100 points this year. nejra: as we hone in on wage growth, and we see a break even in the u.s. collapsing -- are you worried about inflationary pressures to the upside? held backee inflation by four critical factors -- globalization which is inherently disinflationary, high ,evels of indebtedness deteriorating demographics which .re clearly a real challenge one only has to look at japan and germany. and finally of course, we have the whole issue of disruptive technology which will keep prices lower. interesting to see the --artment of justice james bevan from ccla investment management will stay with us. coming up, we speak to white house advisor larry kudlow after today's job report. do not miss that interview. it will be interesting to see whether there will be the same sort of difficulty and services jobs as there has been with manufacturing and the lower pmi. a fascinating report that could not come at a more interesting time. you are off to speak to a finance chief at a bank we are looking forward to hearing from. nejra: there will be a big focus whether there will be an announcement from a dividend. i will be speaking to katie murray. you can catch that interview at 8:00 a.m. london time. this is bloomberg. ♪ >> i think he wants to make a deal but frankly, he is not going fast enough. he said he was going to buy from our farmers. he is not doing that. we are losing thousands of people to fentanyl. it was president donald trump has abruptly escalated his trade war with china announcing a will impose 10% tariffs on further 300 billion dollars on chinese imports. it was a good time for my min togue haslinda meaa speak to mike pompeo exclusively. agreed to ite had at one point and then walked away from the deal. we want fairness and reciprocity. happens, asia will thrive. you morewill bring from that exclusive interview with u.s. secretary of state mike pompeo. or after tariffs hit the announcement hits, we will bring you that through the program. joining us from our bloomberg is ourent in mumbai, reporter and annmarie hordern. our markets to the trade rhetoric from u.s. president donald trump? you and irning to think the last few days india has been hoping for some support at that has not come today. for the banks, a percent and a quarter, they are down. this chart will give you a picture of what has happened in indiana. fallout frome yesterday, the nifty 50 has wiped out all of the gains it made so far. we did very well in the 15ctions but in the last days, it has all come crashing down and we lost all of the advances that we have made so far. bowl, thisn indian has been lasting for a while. matt: thank you very much. annmarie hordern, you are looking at the dramatic risk of reaction to the global markets. marie: the selloff is severe and broad it. hong kong's hang seng is down more than 2%. really see here how the moves have been so dramatic. in foreign exchange, the currencies are down. bonds -- all green. a rally in bonds. asia yields coming down. australian five-year and japanese five-year. let thedities, do not fool box on brent crude you. yesterday, oil was hammered, the worst in four years. a concern over oversupply for next year. yen -- this morning, this is where people are going for safety. the yen is acting as a haven. markets have been severely hit this morning. matt: thank you for that. annmarie hordern in london. and our reporter out of mumbai. let us get to the bloomberg first word news and for that we go to debra mao in hong kong. debra: an escalation in the u.s.-china trade war, president trump announcing another 10% tariff on $300 billion worth of chinese goods starting september 1. this has the potential to head to american consumers more directly. it will impact a smart phones, laptops, and children's clothing >>. for decades, china has taken advantage of trade. taken advantage of trade versus versusted states and countries in asia and southeast asia. it is time for that to stop. president trump has said we are dong to fix that and to that, it requires determination and that is what you solve this morning. the uk's new prime minister has seen his parliamentary majority cut to just one. that is after boris johnson's conservative party lost a by election in wales. democratsxit liberal one bank a special ballot. for the tories has been recalled. koreahas removed south from a list of trusted export destinations of amidst as collating tensions that are threatening global supply chains. the move is reckless according to south korea and said it could rethink security cooperation between the two allies. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. matt: thank you. it is expected to be a grim quarter for major european banks. negative rates. the struggling economy. in trade.ts setting a negative tone. now that most lenders have reported, the results were not that bad. here are the details from bloomberg's dani burger. cuts and a poor macro environment. this was actually though quite a silver lining when it comes to the european bank earnings. as you said, the u.s. not looking very well. some thought europe would be worse. when we look at the range of results we saw this quarter, the u.s. being down 14%, 6% for equity trading, europe fits within that. not as poor as many expected. perhaps estimations from analysts were too low. this does exclude deutsche bank whose trading fell by about 31st -- 32%. fixed income looked even more strong for a lot of the european lenders. here is the u.s. average, -7% but many wereg able to beat this handle a. credit suisse and bmp, strong when it comes to ficc trading. credit suisse had some people saying maybe the banks have turned the corner. 8% trade in their ficc trading. strong results. we had such low expectations. there is a fly in the ointment. a looming threat -- the ecb's coming decision. thanks ceos are trained to get more vocal about this. we heard from the ing ceo who isd a decreasing rate hurting consumer confidence for the future. they're not complaining about the margins and how much they are hurting bank revenue but how they might affect clients and traders and the impact on the banks. matt: dani berger looking at the bank performance in this earnings season. with more of the major lenders are recording, the results out. bringing a flurry of warnings, misses and a handful of surprises. here is the head of bloomberg intelligence, european strategists. james bevan is still with us. what are you seeing overall in this earnings season? this, youour take on pushed it forward correctly. broadly speaking, there has been a bit of a disappointment. lukewarm expectations going in but if we look across sectors and countries, we have not made those estimations. calculate, wewe are about 75% done with the reporting period. a lot of the big guys are done. growth going into the quarter was expected to be high for percent range. almost 5%. what we have seen is more along the lines of 4.5% or a little less. the positive-negative surprises are pretty balanced. 41% on the positive. 44% on the negative. minus 2%is a plus or of change relative to expectations. if you think about that, that means only 20% of the companies or a little less actually hit expectations. if you look at that in the u.s., it is far more skewed toward positive and in-line results which gives you a tone for european earnings this quarter. know -- the u.s., i there is a cynical take that the analysts tried to push and then try to beat them. is that different in europe? tim: it is. there is no doubt that is part of that underlying institutional structure and the u.s. market. it is incredibly transparent. there is a bucket load of expectations that is very visible into future quarters. it is much more ok in europe. there is not as much of that sandberg estimates or guidance for well insured . beat.ll insured complicatinga factor in that not everybody reports every quarter. thirdalf report first and quarter us. we get when of those rare instances this quarter in seeing -- in that we see everyone. matt: what have the outlook's been like in the most important parts for stock investors? tim: no doubt. we have seen a modest ratcheting down of numbers. if you look over the course of rightst four weeks, before the reporting period and through, 2019 expectations have come down about a percent. the 2020 estimates are down a little bit more than that. as we look forward, on our quantitative modeling, the 2020 estimates have upwards of 5% or more of risk from the current stance. the revenue picture broadly speaking is clearly difficult. fromow what is going on the standpoint of global macro and mr. trump is stirring the pot as august starts and there has been a lot of cost reduction activity already taking place. you mentioned banks earlier. we have been through a couple of through a couple of months of cost cuts. it is hard to push the stone of the hill further in terms of restructuring costs. matt: james, would do you think of tim's report? do you see if the same way? james: i would take a different macro approach. i think there is an indigestion reported with the inventory estimate. the european paradigm however is deeply troubled by the evolving demographics. with germany, we have had for an extended period a high and rising savings rates. and companies are also retrenching and that speaks to me to a difficult european domestic situation that is difficult. deflation in order to become cost-effective. europe -- markets in china remains very tricky. i think the u.s. will trump the european earnings season for the rest of the current year. matt: i see what you did there. craighead, thank you for joining us. if you type ea , it you can see a fantastic snapshot of earnings that we rely on every day. let us take a look at what you should be watching today. we will get an update on the world biggest economy, the u.s. with nonfarm payrolls for july due out at 1:30 p.m. u.k. time. secretary of state mike pompeo seann thailand for the aussi foreign ministers meeting. ministersnion finance will be voting on who should take over the top job at the international monetary fund. and last but not least, we will get a slew of european economic data per usual. coming up on bloomberg, rbs and -- we speakbanking with katie murray come the cfo of rbs. out to do that interview and you can catch that at 8:00 a.m. u.k. time. this is bloomberg. ♪ matt: this is bloomberg daybreak: europe. i am matt miller in berlin. what language should a car speak? the answer could determine who will lead the way. billions of dollars are at stake. could thousands of lives be as well? bloomberg's ed ludlow has the story. ed: cars that can talk to each other, interact with traffic lights and even see around corners. the advent of the 5g could make this real. it is not the only option for connecting cars. it is up against a more established wi-fi-based technology. there is a debate about which is better. the choice between existing b2x whichndard or c would eventually use 5g networks. the first to make the decision favoring cellular technology. ,ith recent developments in 5g that could be handing the advantage to china. >> they will be saving hundreds if not thousands of lives sooner we try toll as determine which standard is best in the western world. mandated the use of this technology. in u.s. and europe the spectrum there isunresolved and a split on which technology to use. if the federal government mandated a technology today, it is estimated up to over 8.1 million car crashes could be prevented. how would the technology differ? both are designed to connect the cars to other vehicles and the infrastructure around them. delay inne millisecond 5g to let your card know there is another car coming around the corner will be critically important. beay, with 4g, that might 10, 20 the list seconds. ed: the wi-fi-based standard also has low latency. the technology has matured and is ready for deployment now but supporters of the cellular tech says it has superior range and is more secure. willis a startup that build its car in china and bring it to market with a sick self driving capabilities. vehicles tonable talk to different infrastructure and to talk to each other. autonomous driving could use up to 1.5 terabytes of data per hour which needs to come intoe the vehicle and leave the vehicle. d: starting with 5g. it would be as simple as switching the modem. wi-fi standards say that technology is outdated and not appropriate for the cars of tomorrow. so which will prevail? backed by qualcomm. >> makers are becoming more at thomas. in worldtart blending 5g and cameras and sensors, you will see a far more transformative experience. the door for a 5g standard supported by audi and bmw. the trump administration has put off making a decision about ford is not waiting for washington. in january, it committed to deploying the technology in its cars. bloomberg new energy finance says in the long-term, the u.s., korea, and japan will adopt the cellular option. for now, the western world has left its automakers to fight it out over which standard to adopt. very cool reporting by ed ludlow. from ccla investment management is still with us. james, what is your take on this opportunity for automakers? opportunity for automakers and it is clear to me that 5g will eventually be the dominant technology. but the problem from an investment standpoint is working out who will win? i think it is too early to determine who will be the winner. when i toss up the different companies' aspirations in terms of scale, we have a heavy number of cars sold. we have a challenge for automakers as well as telecom providers. the hidden hand are the many private companies bringing fascinating technology to the table but it is not yet available to investors. matt: the automakers have had a tough run of it in the last few years and the trade war makes a little cloudy in terms of future growth. what do you think of automakers as an investment right now? staying clear from the automakers because i find it difficult to extrapolate the cash flow. amounts ofma's investment required for automakers. a lengthening cycle of ownership, fewer purchases. i worry that the overall expectations of car what theyers exceed believe global car sales will look like. matt: do you like the tech entrance into this field -- car cars?g, self driving i am watching them but not investing at the moment. i find it difficult to see which entities will have a free cash flow yield. fan of the motorcar sector as a consumer, i am really interested in what is going on and see fascinating opportunities that lie ahead both from consumption and investment. but right now, i think it is way too difficult to tell who will win. matt: i think it is fair to say that we are both big car finance. james bevan, thank you for joining us. iag,g a look quickly at the international consolidated airlines group. second-quarter adjusted operating profit was 960 million handilynley beating -- beating the estimates. market in terms of second quarter profit. stays the same. as we head to the break, let us take a look at some of the other asset classes that moved a lot yesterday. yuan continues to closer and closer to seven. with asian stocks down across the board. this is bloomberg. ♪ >> good morning. i am at eller -- matt miller. top stories.ay's donald trump escalates the trade war with china, announcing a 10% tariff on $300 billion of imports. stocks dive. we spoke exclusively with mike pompeo. we want fairness, evenness, reciprocity. these are core concepts. asia will thrive when that happened. >> trade concerns don't stop. tokyo removing its neighbor from a list of preferred partners. it is not all about trade. well will make headlines or not. the report showing an increase for the month. down from the june number. after the release, we will hear from the u.s. economic council director larry kudlow. you don't want to miss it. the royalcross from bank of scotland. nejra headed over there to talk to the chief financial officer. profit,uarter pretax 1.6 8 billion pounds. royal bank of scotland joins a lot of the european peers beating estimates in the second quarter. 16%, below the street estimate. we are seeing an interim dividend per share of two pence. with a special dividend of 12 pence. this is something the market was waiting for. coming up on bloomberg, nejra will speak to katie murray. at futures, look preparing for the start of trading. futures across the european markets right now, you will see ftse futures, dax futures. all down. a bigger drop than 1%. drops and european equity index futures. at bond futures. you can expect to see big pops. see german bund futures they will dive even further. u.s. ten-year bonds had their move. down to 1.8. bond futures coming back down. in with bond futures in asia. >> no surprise, not a good day. the asia pacific index has moved below. csi 300.s in the down one point 7% on the increase in the trade war. nikkei down 2%. the yen has been benefiting on this uncertainty as a safe haven, ratcheting to a five-week high. japan increasing the pressure in its own trade war, removing korea from its list. seen stocks hit hard, particularly inditex sectors. off one point 7%. have seen yields and currencies fall. on and offshore you in -- yuan. levels we haven't seen since november. lowest level since august, 2010. let's look at where they has been bright spots. in hongth materials kong and australia as well. this is as traders expect prices to rise. we had this happen a couple of months ago. speculation china could use their monopoly as a weapon in this dispute. >> juliette saly in singapore with a look at your asian markets. they havermany, confirmed their full year outlook. largely thanks to strong in flues -- inflows. saw $23est insurer billion. joining us now from munich, let me first ask you about your outlook. since you beat on the bottom line, don't you want to raise your forecast for the full year rather than keeping it the same as 2018? >> good morning. we had a very good to six months. might say why we are not increasing the outlook. we like to take a conservative stance and think about it. we see some volatility in the markets. from that point of view, we would like to take a conservative position. we feel very good about where we are right now. we like that we are going to be in a good spot. we will promise before we deliver the numbers. >> uncertainty is the nature of the business. going onso much more from trade wars to brexit to central-bank policy movement. would you say visibility is worse right now than at the same time last year? economicd say from an environment, i believe the situation is more tense right now. -- chinasee the china trade conversation, brexit which is more likely to happen than it , the few months ago interest rate level, i believe some is definitely pressure. we are cautious about the equity markets. is normal.lity from that point of view, we should not be afraid to see volatility because it is coming and going. if u.s. me about my outlook for i will beew quarters, a little bit cautious. it might be the beginning of a correction. very quickly in a few weeks. see too much complacency and too little volatility? we have been having what is termed and everything rally. fixed income and equities. >> we are not complacent at all. from that point of view, we are going to take a look at the kind of production we are putting in the books. if we need to make changes, we are going to make changes to our products. we feel equipped. there is definitely complacency. we are preparing for an environment which might be tougher compared to where we are. >> what are you expecting from brexit? you have made a couple of purchases. by will this be affected things we have seen? the drop in the pound? really pleased with our acquisitions in the u.k.. we need to see how they are going to deliver. we are totally pleased with the move we are making. term, there can be volatility. the potential, 5-10 years down the road, we believe having a strong franchise in the u.k. will be very good for the future. to sustain some volatility initially. potentialking at the 5-10 years down the road. i believe we are going to be very well-positioned. >> the worsening trade war has been cited not only by jay powell but mario draghi. rates inpect interest europe to move further negative? how does that affect your business? >> yesterday, it was that -45. 30 basis points lower compared to the japanese government bond yield. markets,look at the -75 basis points. from that point of view, they can go lower. they can go even lower. anywhere they are not going to go higher. i think they are going to be at this level. potentially lower. for our business, it means we did the right thing. stringent asset liability management. we did the right thing. this is going to serve us well in the future. at theneed to look production we are selling. potentially adjust the production to the condition we see in the market. this is nothing new for us. whetheroing to evaluate we need to do any changes. fundamentally we have the book which has been protected by our action. >> thank you soma -- thank you for your time. quickly show you some of the trades that are coming through this morning. with off, wound trading the yield moving down to an all-time low. points.s the green arrow, people are buying the bones. -- bunds. udc the yield coming down. that is an all-time record. i was looking at futures earlier. dropped by the most since 2009. the biggest drop in a decade. big stocks called downsized. down. commerce bank called down 1.7%. some big callsng in stock moves. futures down as well. expect it to be a bloody morning on the european stock market this morning. news.get the first word for that, we go to debra mao. >> an escalation in the u.s. war. trade president trump announces a tariff on $300 billion of chinese goods. they could, on september 1. the move has the potential to hit consumers more directly. include is expected to smartphones and laptops. >> for decades, china has taken advantage of trade. trade versus the u.s.. and versus countries in asia and southeast asia. it is time for that to stop. president trump has said we are going to fix this. it requires determination. >> the uk's new prime minister has seen his parliamentary majority cut to one. this is afte the conservative party lost a by election. the area had been recalled after a conviction for faking expenses claims. a blockade of venezuela. that is what president trump is considering as it raises the pressure on president maduro. the president has thrown his support behind juan guaido. day.l news, 24 hours a 27 hundredmore than journalists and analysts. this is bloomberg. >> thank you very much. up, we see to the national economic advisor. don't miss that interview. this is bloomberg. ♪ make aink he wants to deal but frankly, he is not going fast enough. he said he was going to stop and to know from coming into our country. we are losing thousands of dollars to fund and all. hisonald trump escalating trade war with china, announcing 10% tariffs on $300 billion. colleague tofor my speak with his secretary of state exclusively. here is mike pompeo. >> the chinese had agreed to it. and then walked away from the deal. fairness, evenness, reciprocity. when that happens, asia will thrive. >> let's check in on the markets now. big movements in the back of that announcement yesterday. marketsdy had big movements from the fed. yesterday, u.s. equity index is up 1%. up 2.05.ield, to strengthen against the dollar. watching the pound. not a lot of movement. the boe did not do much to move the cable rate. question, doeshe fed policy or trumps tariffs matter more? you can join the debate and reach out to us. staying with our top story, here is the view. the move just locked in more rate cuts. trump took matters in his own hands and all but guaranteed more cuts are on the way. also commenting on the severe market reaction. the huge versatile thing to be traders think trump has gone too far and this will actually damage earnings to a degree lower rates will not be able to offset. global us now, a economist. what do you think about this piece? has trump gone too far? can rate cuts offset the damage he has done? think is the central-bank policy, sometimes they are able to support the economy when it is driven by geopolitical tension. trump has gone a bit too far. he was pressuring the fed to deliver. fed would have -- be able to support him. within the next 24 hours, he declared more tariffs on china. he is going to raise inflation and lower growth. does it raises inflation, the fed have to may be even turn around and go the other way? the idea is when you have inflation, you raise rates to combat that. >> what we get from the fed is they will allow inflation to overshift because they are looking for the symmetry. if the trade tension escalates, the fed will prioritize and easing policy rather than hiking rates. because of how high inflation is. >> what do expect in terms of the stock market? he said we may be due for correction. do you agree? are cautious in risk assets. the twist was a game changer. it is going to hurt the u.s. consumers. it seems the trade tension will escalate, persist for a while. it is not just u.s. trade tension but globally, japan, south korea. u.s. versus europe. there is some concern the central-bank mission is getting less and less. global central banks are starting to disappoint. fromn see the reaction markets. to beat market expectations. >> what do expect from the u.s. jobs number and how important is it? expect continual solid job growth. north of 150,000 jobs created. i think it is important jobs report that it is being overshadowed by the trade escalation. we think it is a very strong number. would be probably disappointed. they may look for weaker data. it will be watched closely. the trade tension is going to dominate. , gotu studied economics your mba at cambridge. most interestingly to me, you have a certificate in econometrics. when you look at the inflation numbers, the unemployment figures, the growth, what is your assessment of the strength? the solid strength of the u.s. economy? u.s. economy is pretty solid at the moment. numbers 4%. out isent data coming all very strong. that is the biggest part of the u.s. economy. we think the near-term recession is unlikely. the housing market is starting to see a bit of recovery because of the lower rates. the u.s. economy is in good shape. we are seeing a bit of a slowdown. the fiscal boost is fading. >> it has been a long expansion. pleasure having you on the program. as we head to break, 30 minutes start of cashe trading. we see big drops in futures. we don't see gold coming back. we do see that 10 year bond -- bund rising. this is bloomberg. >> does holding your tablet in bed becausebed because >> welcome to bloomberg markets. i am anna edwards alongside matt miller. say, is thiss constructive? touching theirs lowest level in three years. a european futures pointed to a bundsath as boones -- touch a record low. the cash trade is less than 30 minutes away.

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