Buy greenland. In majore are off 1. 5 indices. The s p quelling back to 2900. The 10 year yield off its lows at 1. 8 . We did get Consumer Confidence data from the university of michigan that was a little disappointing. The 2 10 spread widening, although it is still narrow. Nvidia the best performer in the h p former 500, vying wit ge. Provides trips to game makers. It is bouncing back after an incredible decline yesterday. Guy lets talk about the incredible week we have just had to pay a tumultuous is one way to describe it. Entare joined by ubs investm bank Global Markets strategist. We will correct that in a moment. The week we just had, what is your perspective . I think the bond market is not giving us a signal on u. S. Growth. The biggest question we have 2 10 inversion, is recession in the u. S. This is a global fear of liquidity trap, making a bigger comment on europe and china than it is of the u. S. The fact that the u. S. Is the highest nominal yields aaa asset is the reason why the yield is getting it. But the twoyear belongs to the fed. The 10 year belongs to the world. Envision in the u. S. Is not a signal of a u. S. Recession. If a u. S. Recession comes through, which we are not accepting, if a recession comes through, that is apart from to theeurope, and then u. S. The problem here is weak growth and a lack of policy in europe. Consider the fact that germany is about 20 basis points, and at 88 points on the twoyear. That is a much bigger concern. We have not actually been able to create higher inflation asportations. Guy lets talk about germany. Two competing headlines. Little bit of a reaction over comments coming through, promising everything. The ecb will do everything. The market moves kind of a little bit. El,comments from der spieg saying germany would be prepared to deficit spend in the event of a recession. Monetary policy has hit the end of the road. What is your reaction . Bhanu two points to make. 1, this is a textbook definition of a liquidity trap. When you go to school, these people teach you fancy things like the curbs, and in a liquidity trap, the only thing that works is fiscal policy p of that is why it is no surprise that fiscal news is getting the greater reaction. Point 2, are they going to get fiscal spending anytime soon . That is the bigger question. It is possible the market may be talking itself into creating hopes of fiscal easing in a more imminent and larger fashion that is than is likely. The german on appointment rate can go up but has not gone up as yet. The next step is fiscal policy, but we will have to be more patient than the market leaves. It is not time to buy euro stocks because of fiscal policy. The causality may be exactly different. Vonnie exactly. We also have a change of chancellor to go through at some point. Take us through a potential timeline, if we were to see this goal stimulus, eventually, in germany. See signs of this coming through in the next few months and humbly in the context of a Climate Change package. That will be at not enough to move the needle for the european complex. If you thing about the amount of liquidity or funds that have from last year, so i am talking the federal government in germany, that will not be enough to move the needle. You would need to see come across the world, a pattern where trade and investment is weak and consumption and unemployment are strong. The space we want to watch most carefully without changes as europe, particularly germany, where our evidence lab work suggests we are seeing early signs of weakness in manufacturing and unemployment in southern germany. As that ratio changes and the Participation Rate in germany may decline the next few years. But as employment in germany weekends weakens, that is when we see a more fiscal serve. That will be in a matter of quarters, likely next year. There is a lot of wood to chop. Vonnie david westin of bloomberg spoke with Brian Moynihan about that earlier, and moynihan talked about how we need a framework for trade deals, not just with china but so on. The u. S. May be the biggest economy, barely, but it is still 20 if you take all economies together. How important is it that that happens first before we get to titfortat tariffs . Because that is coming, too. Bhanu this is a really important point. What we have seen is not just an isolated trade war, but what we have seen is global trade institutions being compromised. It is important we see chinese trade with the rest of the world, european trade with the rest of the world, remain strong. As you know, the u. S. China trade war is not the only trade war. There is a parallel trade between korea and japan. It is import for the Google Global it is important for the Global Economy that trade discussions remain robust. Tweets can go on and off two or three times a day. Business confidence will not trumpe, even with you get and xi jinping becoming friends. Business confidence will not improve right away, because they businesscipate that improves. Institutionally, you need to set up for trade. Baweja will stay with us. We need to talk about hong kong. We need to talk more about the ecb. Vonnie tech markets now. The dow up 1. 25 percent. The s p up 1. 5 . The nasdaq up 1. 05 . All socks on the dow higher except for chevron, dow 9 10 of 1 . Alt stocks on the dow higher except for chevron, down 9 10 of 1 . This is bloomberg. Live from new york, i am vonnie quinn. Guy from london, i am guy johnson. This is the european bloomberg markets. Lets get a check the uber first word news. Familyigrants and a member were rescued from a spanish rescue ship anchored near Southern Italian island, but more than 300 others remain stuck on the boat. Armsumanitarian ship open rescued 100 47 migrants in the Mediterranean Sea near libya two weeks ago. This ship had been stuck in the anditerranean due to a b imposed by the deputy prime minister. The u. S. Says it is gravely disappointed with the u. K. After a Gibraltar Court allowed the release of anna rainey and tanker, iranian detained after being suspected of hauling oil to syria. Washington says this decision could put the u. K. s hopes of a trade deal at risk. President trump is weighing in on hong kong protests. The president suggested that president xi jinping meet directly with protesters. He said he had no doubt that meeting would defuse tensions. This comes after days of protests at hong kongs airport. Opec says oil markets face a bearish outlook. This comes among a slow economy. Cuts arabia has deepened in july. Saudi arabia has shouldered most of the production and cuts. Global news 24 hours a day on air, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney donohoe. This is bloomberg. Vonnie lets get a check on Global Markets. Here is abigail doolittle. Abigail the rebound rally continues around the world. The s p 500 and the nasdaq at session highs, of at least 1. 4 or more up at least 1. 4 or more. It is only the best day since tuesday. Big down days and big up days. We are ending the week on a green note right now. The german dax up 1. 4 . Most of the asian indices higher as well be the shanghai composite up a modest 3 10 of 1 . But on the way, most of these indices are lower, especially for the emerging markets index. Sincea longest streak october of last year. Over that time period, down 3. 8 . It tells you investors have been shining em before they happen shining other global indices, which have been down three weeks in a row. A bit of a warning tell. But if we go into the bloomberg and look at the s p 500, there could be more bearish action. This is a yearandahalf long chart of the s p 500 in relationship to its 50 Day Moving Average in yellow, nearterm buyers in a blue, longerterm buyers we see the s p 500 would drop below the 50 Day Moving Average, but longterm buyers would step up. Not so much on the fourth quarter. Buyers disappeared. In may, on trade concerns, the s p 500 moved below both of those trading averages. The suggestion of prior. Is that the s p 500 would drop down to the 200 Day Moving Average, somewhere around 2800. The bigger message is we could see a drop down to 2700 or 2600. Supporting that possibility, a risk off week. You can see there risk assets, stocks, and commodities down on the week, while haven bonds up for a third week in a row, with 17 basis points. Ind up 2 for the third week a row. August shaping up to the risk off. Guy lets talk more about what is happening in hong kong. Big development today. The ceo of Cathay Pacific resigned. Rupert hogg faced pressure from china after some of its employees participated in an antigovernment protest. Resigned following responsibility from recent events. Still with us is bhanu baweja. China come at the moment, is trying to sit this out. Is that the best that markets would hope for . Bhanu it is exactly what markets would hope for. Had protests in the past. These ones are much more serious. Been managedhave locally in hong kong. If we did not have that, if we had this escalating further, that opens up another chapter in risk, not just for asian assets but more broadly. With taiwan watching, with their election, there is the risk of what happens to capital in hong kong and how that capital behaves in china and whether flight ases fears of well. Guy another protest or not today, which does not appear to be getting out of hand at this point in time. The danger has to be with President Trump linking hong kong to the trade talks. That is a concerning overlap. Bhanu it is. I do not think china would be enjoying any comments, friendly or unfriendly, from the u. S. On hong kong. But china has dealt with this wisely in the past, and i am confident that is what we should expect for their future and hope for in the future. Vonnie it seems like things have calmed down, at least on the currency, on and offshore yuan trading around 7. 04 and change. Do you see that staying the case . Bhanu we think there will be weakness in the renminbi. I do not think it will be uncontrolled. The chinese wanted to make a point on the renminbi as well. But chinas balance of services is not fundamentally Strong Enough for china to weaponize this currency. To 7. 1thinking it goes over the next few weeks and months, but we do think this is a strong dollar environment. When Global Growth is as weak as it is, the dollar is likely to remain strong by default. China is where growth is extremely weak, also because chinese authorities are not pumping the system with liquidity. On the that will weigh currency modestly. Longerterm, i think the renminbi has greater issues of whether china can actually balance, between the 3 trillion in reserve it has an. 7 . 5 had and the 7. 5 trillian it has. Vonnie there are a lot of people who would bet against it. Bhanu i would love to say we all think anticonsensus, but i am happy to say i am part of the consensus, and we think the hong kong peg will hold. I have been through the asian crisis, and things are much more dire than they are today, and the hong kong peg held. There is no reason for us to worry about the hong kong peg for the foreseeable horizon. People will bet that other people will bet that the currency will go. That is trading tactics. Outside hong kong, given the trade backdrop we are living through, it is difficult to see how their currencies appreciate materially. The question is whether they appreciate slowly or appreciate quickly. The emerging markets problem is not one of massive deficits anymore. They do not have a Balance Sheet problem. But they have an income state problem but in a matter which is slow depreciation pit as respect for the renminbi, we will see a similar pattern in korea and singapore. Vonnie thank you. Baweja, ubs global head of strategy. This is bloomberg. From london, and guy johnson. Vonnie from new york, i am vonnie quinn. Argentinas critical moment. The argentinian peso plunged 3. 5 following the defeat of its president to a leftist in its primary vote. Argentinas central bank is now tweaking rules about Foreign Currency Holdings to help shore up the peso. Still with us is ubs global head of strategy bhanu baweja. Ont is the thinking argentina and latin america more argentina,rticularly which shifted to more market friendly policies and now looks to be shifting back . Bhanu not for lack of trying, but this is a game changer. The fact that the population says this is too much austerity and weakness, this is too high inflation to take, and therefore they are going back to the other end of the political spectrum, is worrying. I think the more worrying thing for the markets right now is we do not really know the details of what the opposition candidate intends. I think if there is any mitigating circumstance, it is that this is quite different from 2000, 2001. Valuever the recovery in the bonds should be much better, which is why think there is some sort of a recovery in argentine assets right now, modest recovery. I am also reasonably sure that this will not become a systemic problem across emerging markets. Not a lot of people were in there, so there will not be systemic selling. Also, as the peso sells off, you get some hit in brazil, but weakening currency does not lead to collapsing economies which lead through the passthrough to where inflation is limited. This is likely to stay broadly localized. One example of populists looking to the old regime as opposed to something new. Is this particular to argentina or is it spreading . That voters want to go back to the way things were, to less austerity . Think theot only pattern we can speak about is that come across economies and across societies around the planet, we are vacating the middle ground and are going slightly harder right or harder left. There is a sick just an of liberalism. A suggestion of liberalism. The reason why i say this goes so far is it is the exact opposite of what happened in greece. You went to the populist arena, tried it, then moved back to the center. Try it. Some will some economies are further ahead, for example greece, which tried populism and rejected that. But it is a concerning trend, that we are rejecting middle ground. Guy if argentina goes back to where it was, is a default . Almost certain . Almosti would not say certain. It would be difficult for me to imagine how the leftist candidate would be happy to lose money and then take over an economy which is effectively bankrupt. Policy,ere is a however diminishing, that there is a default. The recovery value of the bonds will be the question. Ault is not baweja will stay with us. We are down by 0. 5 percent. On the day, we are trading higher. A much calmer session. Nothing really getting in the way. It is still summer. We are still getting light volume going through. But the bounce we happen waiting for the last couple of sessions coming through today. The ftse up 8 10 of 1 . It did open a little later than most. The dax up by 1. 3 . 1. 3 percent 1. 3 . I will show you what the week looks like from the european equities perspective, coming up. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Guy 30 seconds until the end of regular trading in europe. A positive day but not a lot of headline action apart from the german news. That is probably risk as a positive. European equities on the front foot. You have the iberian market doing pretty well. The rest of europe not doing badly. What a week it has been. Decent sized swings. This is the week that was. On the week, european equities down. 5 . We have lessened the losses in this last trading session. A little bit of cap higher first thing in the morning and then it moves toward the upper end of the session. Lets take a look at individual markets in europe to give you numbers. The ftse 100 took ages to get going. Technical glitch causing the ftse 100 nearly a two hour delay. Dax up. The auto sector under pressure. The european Banking Sector under pressure. The cac 40 up 1. 21 . One of the bestperforming of the major markets, if not the best performing. Lets take a quick look at what is happening with the grr function. This is on the week. It confirms everything you need to know about these markets. Look at what is at the top of the market. The big bond proxy names. Utilities have had a solid week. Nestle has had a solid week. Those kind of stocks have done well as bond yields have continued to tumble. Taking a look at the bottom of the market, no real surprises in terms of what people have been rotating out of. The auto sector down over 3 . More and more battered. Asic resources down 2 oil and gas down 1. 78 . Oil and gas from a brent point of view about have a positive week. Those are the sectors the market has not like. That is look at the european close. Our highs ofe off the day but all of the major indices are up more than 1 . Chipmakers playing into the balance. Nvidia says it is doing well gaming wise. The s p 500 up 1. 3 . 28. 84. 2084. 1. 56 is not high, given that are low up a few basis points. Considering this is going to be a recession at some point down the road, we did get Consumer Confidence data which suggests consumers are getting just a bit less confidence. The vix is down below 19. Lets take a look at solve movers. General electric has overtaken nvidia as the best performer after a massive drop earlier in the week. The gold index is down. Gold miners are a little bit lower on gold. It is above 1500 an ounce still. Chevron is down 1 for the worst performance in the dow. Guy lets talk about next week. Central bankers gathering in jackson hole, wyoming. Investors will be listening very closely to policymakers for any hints about the outlook. Bank of america ceo Brian Moynihan talked about the fed and negative rates. Brian what they should do is continue to watch the data and make choices. I think people are over reading the negative side. It is more than need to h