Debt default in argentina hit 75 as all the nations assets plunge in value. The embattled president warns against a return to the previous regime. The greatest problem we argentines have day is that the alternative to the government doesnt have international credibility. Ive been saying this for three and a half Years National investors dont trust us. Protest fallout. Hong kong stocks lead declines tearfully the ceo decries the chaotic situation in the city. And lower for longer. U. S. Bonds hold onto Massive Gains as the spreads hit their narrowest since 2007, negative rates coming to america. Good morning and welcome to bloomberg. First off, i have yield on chinese tenure debt falling to read percent, the lowest weve seen it since 2016. Ats not just europeans negative, u. S. Debt is falling to record lows. Lows the likes of which we havent seen in a few years. Futureseuropean reporting down across the board and right now we are looking at dax futures down. 4 , cac and after we sawis drops in the cash trade yesterday, lets get into the markets with our mliv strategist in singapore. What is behind the bond rally, first of all it is pushing u. S. 30 year yields to 2 . Yeah. Hey, matt. We just have a full on flight to quality. We have the protests in hong kongs, the vote in argentina, the trade war in the background, hearing more and more buzz about a recession that may or may not be coming. It is off some good yield, the highest available on the curve, higher than negative rates in germany or japan. Its a Good Alternative to golden bitcoin, which dont pay any interest at all. Ubs securities is saying the rally has further to go and it revises yield forecasts lower. We are seeing some inflation reports we already have germany out. What are you focused on in terms of inflation reports . Today,pi is coming out the overall number is supposed 2. 1 basedfor june, on the bloomberg forecast. U. S. Cpi, pardon me. One thing to taken note of for both of these numbers, speaking of the 10 year u. S. Treasury yield, thats 165 at last check. Both of these numbers will be higher than the 10 year treasury yield, so thats the negative real yield weve been hearing so much about. If these numbers come in as expected, 10 year treasuries are , i ameping up inflation not going to be the one to call an end to this rally because it seems to be unstoppable, but it never hurts to look around and find things that show bonds are expensive, things that show demand may taper off this is certainly one of them, negative real treasury yield. What messages are japanese bonds ascending as the yield moves outside the central bank target range . That is one thing we are keeping an ion. The japanese 10 year yield was outsides points, down the boj range of 20. Nobody has ever said this range was set in stone, including the members of the boj who said it should be viewed flexibly. Said theess, people fed,rs were leaving the they would push yields down in anticipation of a fed rate cut until they pretty well had locked the fed into a rate cut. I think the same thing is happening in japan. Yields have fallen and traders are pressuring the boj to ease. Inmay just do a rate cut september, or afraid yields are following maybe even in between meetings. Thanks so much for joining us. Wes goodman, are bloomberg mliv strategist. Lets get the bloomberg first word news with olivia hows in london. Thanks. Hong kongs airport is resuming operations after protests cause the cancellation of flights yesterday, the biggest disruption to the economy since antigovernment protests began in june. Carrie lam says hong kong is descending into chaos. I urge everyone here to put down their prejudices and try to calm down emotionally. Use a minute to think clearly and look closely at the city, our home. Do we want to see hong kong fall into an abyss . Savini will have to wait before consolidating power in rome. Senate leaders have failed to agree on a confidence vote in the populist coalition, but discussions in the Upper Chamber will continue. If there is a new election, his lead in the polls means you will likely be the next Prime Minister. The u. S. Fiscal deficit is already exceeded the for your figure from last year. The gap grew to over 850 billion after spending growth outpaced revenue wider than last years shortfall, already the largest deficit since 2012. Singapore cut its forecast to almost zero after the u. S. Chain state is nowity seen at 1 this year, and the trade war has raised the prospect of a recession and job losses. John bolton made the comments london,is johnson in who said washington is ready to get a sector by sector deal to offer no deal exit from the deal. 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. This is bloomberg. Thank you. Olivia hows in london. Coming up, it takes two to tango, both argentine bonds and stocks are sent tumbling after the president unexpectedly lost a primary vote by a landslide. More on argentinians assets next. And remember, Bloomberg Radio is live on your mobile device or on dab digital in the london area. Tune in. This is bloomberg. Will come back to Bloomberg Markets. We are about 18 minutes away from the start of cash trade across europe futures are down across the board after a selloff yesterday, it looks like we could have a negative open today as well. Argentina suffered the secondbiggest market selloff of any stock market since 1950 in thehe president lost weekend primary to his populist opponent. The markets followed suit. The peso tumbled as much is 33 to a record low 60 pesos per dollar. The stock index lost the most ever in intraday trading. In a press conference the president placed the blame on his populist opponents. The greatest problems we argentines have today is that the alternative to the government doesnt have international credibility. Ive been saying this for three and a half years. It is National Investors that dont trust us. Ouroining us now is managing editor for Global Emerging Markets, justin carrigan. Why are investors so and hisout by fernandez return to power . Because they see that the prospect of a fernandez government might bring with it protectionist policies, populism, and ultimately, potentially, an attempt to renegotiate argentinas debt, certainly if the peso keeps selling off. It is going to make it much harder for argentina to meet its debt commitments and we see this a lot in the bond market as well. That is the worst case scenario. Everyone is now watching to see what he is going to say about the way markets have reacted and whether he can offer some sort of self to investors to demonstrate a willingness to address argentinas economic difficulty in a way that appeals to them, that makes more sense than doing what the ordinary people might like to see. That said, thats where all the suffering is going. The austerity that the administration has brought in during his three and a half for years in power is clearly hurting people on the ground which is why we saw the shock election result. Of course, this shock election result is going to prompt a lot more suffering in terms of currency devaluation, in terms of inflation, in terms of paper losses, hopefully not realized immediately in the markets. Our the market reactions going to change anyones minds . That was just a primary vote, right . It might change one or two minds, and certainly he has already tried to make mileage out of this and is already referred to the selloff is much to say this is what you voted for. Votedted for chaos, you for a and markets. People ordinary really care about bond prices remains to be seen. They probably care about the stock market but ordinary people are more worried about keeping bread on the table and getting and thatxt day or week is why a lot of people are pretty pessimistic outside of argentina that he will be able to make up the difference and unload this extraordinary margin that the camp has built up ahead of the october election. Thought when iy woke up to this news famous for cutting his teeth in the argentine debt crisis. If i look at the bonds, this is the century bond, which was such a newsmaker when it was first issued, and it was so popular we see now the price falling to . 55 on the dollar. When do you think we will start hearing these distressed debt people start to talk about trying to catch falling knives . Probably another 10 or . 20, i think we were down to . 57 on the dollar yesterday. Theres a little bit further to go before we see those ways is pipe up but we are now seeing at least in the credit default swap arc it the 75 chance or probability of an argentine default. It was less than half, 49 , for all this happened. People are beginning to become worried about this possibility, but that history is in very friendly to argentina stop it has been a recidivist default over the years and that is why we are seeing it turn up in the bond market this way. All right, justin, thanks very much. Our managing editor for Global Emerging Markets. Lets get the Bloomberg Business flash with olivia hows in london. Thanks. It seems that 40,000 restaurants isnt enough for some. Yum brands is looking to grow even more. The owner of kfc and taco bell is talking about partnership signed investments, according to the income chief executive. The Company Announced yesterday he will take over the top dog from january 3. Cbs and viacom are keeping investors waiting on murders sure news. That the current recession would value viacom at the current level investors may not get the premium they would have liked. The u. S. Judge has reinforced in order for American Airlines mechanics to end alleged slowdown. The carrier says it has a devastating effect and americans a suit of the union in may, arguing the labor group was doing it to pressure the airlines into a contract agreement. It is time to consider shorting u. S. Tech stocks according to socgen which cites increasing regulatory scrutiny. Last month u. S. Justice department sent its strongest signal yet it is prepared to take on facebook and google. And thats your Bloomberg Business flash. Thanks very much. Olivia hows in london. Minutes away from the open. Up next, the stocks to watch, including the maker of the personal laundry detergent, cutting its 2019 guidance as quarterly profits missed estimates. This is bloomberg. Welcome back. This is the european open. We are just about eight minutes away from the start of cash trading. Protestant hong kong are weighing down on Investor Sentiment, the unrest has sent the hang seng slumping to a january low. Thishief executive said city was in a chaotic situation. Here toridge everyone put down their prejudices, trying to calm down emotionally, using minute to think seriously and look closely at our city, our home. Do we want to see hong kong fall into an abyss . Stephen engle joins us now from hong kongs airport. Whats the latest on the airport . It seems like nobody is backing down, both sides firmly entrenched, even though there was that multiple thousands of protesters at the airport that managed to shut down the airport. They did withdrawal late last night but many have come back. The airport has not been shut down but it is filling up with more protesters, calling for people to come back at 1 00 in the afternoon it is now approaching 3 00 in the numbers are increasing. We heard from the Airport Authority that they have limited train frequency to the airport, to use that as a crowd control measure, but they are vocal and chanting and they are not heeding the warnings that we got from carrie lam this morning. You heard her comment about the threat of falling into the abyss but she also repeated her pledge and said we cannot have dialogue with the protesters until the violence stops. There has not been violence at the airport a few skirmishes here and there, but for the most part a peaceful protest. I will reiterate this we have no indications from either side whether there can be a resolution. Thanks very much. Stephen engle at the hong kong out, still a lot of flights that will be canceled or delayed, so if you are preparing to go there, clearly you should beware. Lets get your stocks to watch Annmarie Hordern from our scoutes team is covering 24, which helps you to buy real estate and cars. Lets start with you on the travel agent what is the story . They missed estimates, 2. 5 missed, and they are blaming it on the grounding of the boeing 737 fleet, the ceo saying it is a big burden. What is the story on henkel . Estimatesalso missed for secondquarter earnings, and is saying revenue might not grow and it also steepened a decline forecast for earningspershare. The stock it went very sharply down in premarket. A very popular thing here in germany not sure about elsewhere whats the story . The Company Possibly having for a breakup, and Elliott Management is an investor who said we would like you to review your business and possibly what your car assets up for sale, the Company Coming out saying they will review this and up eight us clearlyn november but investors are bracing for a breakup. Thanks very much for that. You can get all the latest stock stories from our Equities Team by typing first go on your Bloomberg Team on your bloomberg. Coming up, it is the market open with futures pointing down. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Matt we are one minute from the opening of equity trading. Lets look at the markets with Annmarie Hordern. Annmarie lets kick it off with after turmoil in hong kong and argentina, weighing on risk assets. Gold is of 1500 an ounce today. A lot of anxiety in the market and money pouring into safe haven. Ubs and goldman saying we could see italy in focus today with a vote this evening. The chinese 10 year yield, falling to 3 . We havent seen this since 2016. Ftse futures are down. 3 , dax our lowers as well as cac futures. Pointing to a lower start in new york. A lot of doom and gloom in these markets. We have the european markets opening now in the city of london. The futures are pointing to a lower start here in europe. We have a lot of data to break down today. U. K. Unemployment figures as well as later today, u. S. Cpi. The ftse 100 opening to the downside as well as the euro stoxx 50, relatively flat but we are seeing breadth to the downside on markets. We also have a stronger dollar against the euro as well as the swiss franc and british pound. Spain has opened a lower. 5 and frances cac down. 3 . Picture, asr expected, a lot more red on the screen, especially when looking at Financial Staples and consumer discretionary. How luxury to see opens up as well as the likes of hsbc and Standard Chartered considering hong kong is a key market for their health care has just gone red. It looks like it will be a heart place to put your money today hard place to put your money today. Matt we are seeing more stocks down than up this morning. 400 48 losers, only 128 gainers. In terms of the gainers, we see gaining,d diageo pharmaceuticals like glaxosmithkline. Deutsche telecom on the rise this morning. The defensive stocks are what i am saying. Staples, thensumer alcoholic beverage makers, drugmakers, the telecoms. A very defensive list of winning companies. Once again,ide, lvmh, hennessy is down, hit hard by concerns about what is going on in hong kong and youve got some of the other airbus falling this morning, hsbc down 1 this morning. Most stocks are going to be losers but kering down. And asianarkets lower stocks following u. S. Counterparts lower as turmoil in hong kong and argentina had to trade tensions. Joining us, eimear daly, the mea. X strategist at Macquarie Bank i wonder if people are going into the yen, going into the swiss franc . Do you see the trend we have seen over the last days and weeks continuing or has it are they overbought at this point . Eimear we definitely think there is further downside, particularly in dollaryen. We are forecasting 103 by yearend but we think we could achieve that sooner. The real catalyst for this is u. S. Treasuries and we saw the really aggressive flattening of the twos tens in the u. S. Treasury yield curve yesterday but also the u. S. 30 year. We think the boj has very limited ability to push back against the strengthening of the yen and further Downside Pressure on u. S. Treasuries will really pull dollaryen lower so we are looking at 100 yen by phase 12020. Are you concerned about the competition from gold, the 10year, bitcoin . How much competition do these things put up there, or is the yen really the best safe haven play right now . If you are looking at the u. S. Treasury curve on the front end, it is negative carry at the moment. There is more value if you are a real money investor in the longer term. Gold probably has more upside, a very aggressive easing cycle globally with the ecb looking to ease policy and the rates market priced, more Federal Reserve easing. In a severe fiscal scenario where we get a strengthening of the dollar, that could be really a hindrance to further upside in the gold price. Matt what do you think about bitcoin . It looks like bitcoin was really a go to, or turning into a safe haven play. It hasnt gained the last couple of days. Monday, almost down 4 and today, it is down. It is a currency that is far too volatile . Bitcoin has really bounced back, but it hasnt really been moving higher on these hong kong or argentinian concerns. Eimear we actually dont cover bitcoin, so im not really sure supply dynamics that would affect it and how it would perform for us, this is a Financial Market environment where you are looking for resilience plays. We are looking for security. Aregs like