U. S. President donald trump says the fed should cut rates by a full percentage points. Im not saying there are not circumstances in which i would be willing to ease. I just want to see evidence we are going into something that is more of a slowdown. Growing at 2 , im not as worried about that. Another reprieve for huawei. Riskon sentiment for stocks. Mark mobius says it is better to go for gold. I think you have to be buying it frankly. The gold longterm prospect is up and up. The money supply is up and up. Matt bhp investor bonanza, the worlds biggest miner boosted its dividend while warning on raw material prices. Mckenzie says it bhp can weather any storm. Ready for whatever the road might throw at us. Downturn,fit from a lot moren also get a cash in an upturn. Matt a halfhour away from the start of European Equity index trading. First, u. S. Treasury yields continue to rise. This is up 1. 59 . Over three days, it is rising. Today we see from yesterdays close, a couple basis points dropping off, but over the last three days, you can see the trend is for lower prices, higher yields. Take a look at futures right now in terms of European Equity indexes. A mixed picture there. We do see dax futures unchanged, cac futures now falling. We did see most asian stocks posting gains in todays trade outside of china. This comes as investors digest a slew of government reports. Stimulus maybe coming to shore up economic growth. As we just show you. An interview with the boston fed president Eric Rosengren, he butw yields questioned the need for further cuts. Forecasters expect reasonable growth over the second half of the year. Rates are low, but it is reflectiveness global conditions. Global conditions are weak. Im not saying there are not circumstances in which i would be willing to ease. I just want evidence we are going into something that is more of a slowdown. If im growing at 2 , im not is concerned about that. Of the twos one dissenters at the last meeting. We also saw george dissent at the last meeting. That is the first time fed chair stayed twohas dissenters. Tomorrow we are going to get minutes from the fed meeting. We will get sentiment tomorrow. Thursday and friday we have the jackson hole meeting. Friday, jay powell giving his speech, possibly opening the door for more cuts. The 100 basis points donald trump is asked for . Maybe that is part of the deal. Deal. T of the art of the a new effort at dialogue. That is what carrie lam is promising to try to bring in and to more than two months of protest. The Demonstrations Begin over opposition to controversial extradition legislation, but have since morphed into a wider Antigovernment Movement, including calls for lams resignation. Allialogue with people from walks of life. This is something we want to do in a very sincere manner. I and my principal officials will listen to what the people have to tell us. Hundreds of accounts have undermined the hong kong protest. Twitter took down 900 accounts that originated within china. It says they attempted to manipulate the perspective on the demonstrations. Facebook acting on a tip from twitter has announced similar operations on its network. To prevent a hard border on the island of ireland. That is what Forrest Johnson wants. In a letter to the European Council president , johnson says he is looking to replace the socalled irish backstop. A legallye sees binding commitment not to carry out checks at the border. Epstein just before his suicide. He placed half 1 billion in assets in a trust could, get the effort to collect damages of women who say he sexually abused them. Investigators will continue to investigate others involved in the alleged rhymes. 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. Thanks very much for that. Lets get into the markets. Singapore. Eld out of let me kick it off with the sort search ford duration. Are we going to get 100 year data out of the u. S. . Hasnt make sense germany 30 year bonds at 0 . If you are a government and you need to borrow money, it is a great time to be doing so. When you recently had the yield going below 2 , that is extremely attractive. We saw the austrian 100 year bonds below 1 last week. A good time to lock in longterm rates from a Government Point of view. Im not sure how investors feel about this. There is still uncertainty around. A lot of people looking for bond duration, bond yield. Maybe Insurance Companies in particular have enough trouble trying to meet their targets anyway. They will probably consider it. Im sure there are a lot of hurdles still to get through before the United States could issue 100 year bonds. They would need to get wall street on their side. It will be crucial they play the game. Certainly there is a way to go. You can see why there is a lot of discussion. Governments are very interested in wanting to issue longterm debt. Leastwe dont see at in europe, we dont see Companies Taking advantage of these low yields. A number of them have said they dont want to binge on debt right now because they dont know what they would do with the money where are you going to put it . If you cant find any place to put it into your business. Flipside for the major company. If they dont see the need for expansion or the potential for that is just eating away at their Balance Sheet. It is a bit of a catch 22. You might have on the one side people that want to issue these bonds, but that could be a reflection of a very low yielding environment where growth is slow, inflation is low. That is not necessarily what Companies Want to sing. We may have gone past the point where we are getting inflation which is too low for too long. Biggertually need a fiscal stimulus from people. A 50ny is looking up billion euro stimulus to its own economy. Maybe that will inject a bit of life into bond markets and the point of view of corporates having a reason to borrow so they can do takeovers and expansions. Matt seems like a case of if we talk about it enough, they will do it. Im not sure the German Government wants to go that far or if they are legally allowed to. We do talk about it a lot. Where is the floor for commodities after they touched a three year low . What are you hearing . Not if we listen carefully. Australia interviewed the bhp boss. It was a discouraging view for the commodities. Bhp had good results for now. The outlook is not that great. Thinking of pulling back in some areas. He sees lower demand as a big risk. The outlook for one of the key players is not that good. If Global Growth commodities could fall even further. For joining so much us. Mark cranfield, bloomberg mliv strategist out of singapore. You can watch his work and the rest of the team at mliv on the bloomberg terminal. Next, bhp plays out on solid results. Is this the best it will get for going toiners . We are hear from our exclusive interview with ceo Andrew Mackenzie. Bloomberg radio is live on your mobile device or on dab digital in the london area. Tune in anywhere in the world. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. Not a lot of movement. We had a positive day in asia. The gains are petering out for the end of the session. We still see ftse futures gaining. Cap and dax futures will change. Lets talk more about the worlds biggest miner. Cooling growth in china and trade tensions are key risk to Raw Materials prices over the next year. Dhp despite that boosted its final dividend payout to a record high. Andrew mackenzie told bloomberg the min can stille profit in any downturn. We are ready for whatever the world might throw at us. We can profit from a downturn. Drop a lot more cash in an upturn. Is the dividend sustainable . We dont have a progressive dividend. Early in my tenure we changed to a flexible dividend. It is based on a payout ratio of 50 on underlying earnings. It will go up and down depending on how markets deform. We have a portfolio that smooths our cash flow. If markets turn down, of course earnings will go down. Payingidend we commit to , one of the many tools we have to sail through what might be choppy or waters. That is why we are very comfortable paying this. That was Andrew Mackenzie speaking exclusively to bloomberg. Joining us for more is our metals and mining editor. How are investors going to take the results after digesting the payout . Great question. You are clearly seeing them trade down. The future earnings paid out a big dividend to shareholders. The future picture looks quite weak. Last majorsof the to report. They made a lot of money on iron ore. There is a big china question for the year ahead. Matt what is the outlook for metals and the big miners . So far we have been talking a lot about the trade war. You are starting to see that impact chinese growth. That is a big factor for commodity prices. If we see demand slow, you could likely see prices keep moving lower. Iron ore in the past month is coming up really steep highs. Matt thanks very much. Our metals and mining coverage out of london. Now lets get to the Bloomberg Business flash. Should shareholders come first . Not according to the latest from some of the worlds biggest companies, including jamie dimon. They want to abandon the longheld view. Business roundtable released a statement saying the purpose of a corporation is to serve all constituents. That includes employees, customers, investors, and society at large. Scoop. Berg rival bankers seeking a role in our emcos ipo seek and advisory mandate. With advisoryo mandate. Out itsans to roll Subscription Service by november, part of the tech giants drive to reach 50 billion in Service Sales by 2020. The company will introduce a small selection of shows over the next few months. It could be a trial period as apple builds up the services library. Matt thanks very much. 10 minutes away from the open. We are going to look at your this iso watch, bloomberg. Matt lets get your stocks to watch from around the newsroom. Dani burger is looking at osram licht. Annmarie hordern focusing on pandora. This is, i assume, the jewelry maker . That is right. Had 2019 guidance they kept in line, and while they did report operating but was it declined, better than expected. Lots of calls to the upside. The first report under the new ceo manus caught up with earlier this morning. We should get each of friendship bracelets. I would love that, matt. Matt charm bracelets. Paul jarvis, what is the story with casinos . Casino has announces the second phase of an asset disposal program. You will recall this company has been beset by high debts. As a result of that, has announced the plan to raise two and a half billion euros by the First Quarter of 2020. It wants to raise an additional 2 billion euros on top of that by the end of the First Quarter of 2021. That is mainly coming from its businesses in france. It has already said its going to cut its dividends. This is going to be taken very well this morning. Shares already 20 off there may low. Has been inlicht the spotlight in the mende spotlight. Whats the latest . Are continuinge increasing their offer if rival ams goes ahead with a formal bid. The current bid is for 3. 4 billion euros. That is 35 euros a share. Ams considering 38. 5 euros a share. That is according to people familiar. We are already seeing shares higher by 3 on trade they premarket. Matt thanks for that. Each other get friendship bracelets from pandora. Thank you for joining us. You can get stuck stories from the equities team. Just type first go under bloomberg terminal. You can get it anytime on the mobile app on the first word to have. Coming up, the dust the first word tab. He first volatility overnight. Ftse futures up 0. 1 . Cac futures down. The open on the other cited this break. 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 one minute from the open of cash trading for equities. Lets look at the markets with Annmarie Hordern in london. Lets look at the msci asiapacific, a gain of. 5 , seeing reprieve for huawei, boosting optimism on the trade front. The u. S. Dollar reached the highest level this year yesterday. Ascent is unstoppable even as President Trump laments about it strength. Eurodollar, Prime Minister conte will speak to lawmakers and this could lead to a confidence vote. Iron ore, bhp, we could be set for another ride in the volatile iron ore prices. This is how futures are stacking up ahead of the market open. Ftse futures are up but we have. Eakness in the dax and the cac a mixed picture ahead of the European Market open. A bit of a dull morning, even with macro news. We have the market opening up. Spains ibex opening down. 3 this morning foots 100 with a bit of a gain in the relatively flat and euro stoxx 50 is flat. In foreign exchange, we have the british pound under pressure and a stronger with swiss franc, eurodollar and bloomberg dollar index fairly unchanged. Netherlands opening to the downside. A bit of a mixed picture which is interesting given the fact we had a higher close in the u. S. And a bit of gains in asia, while modest. It is a mixed picture across the industry. Financials to the downside, industrials have some weakness as well as consumer discretionarys. I want to see how miners are going to do today given bhp reported earnings today. They were saying there is a cooling in china, the trade war risk and all of this means a risk terminal materials. In individual names, what are you seeing . How is pandora doing . Have you ordered my bracelet yet . Matt i am looking at stocks, 245 up, 283 down. I see glencore as a big gainer here. On the see bhp billiton top 10 screen and i have it arranged in terms of adding points to the index. We see astrazeneca, glaxosmithkline up there. All of those Companies Make stuff that you need, for the most part. It depends on your personality and genetics. We saw glencore at the top. Look at the losers. Or two biggers losers. Bhp billiton is down 2 right now. You can see it is taking the secondmost points off the stoxx 600 index and youve got some others, Royal Dutch Shell, total, some Oil Producers as well as big banks like hsbc. Evenoften appears there with small moves because it is such a heavy stock. European markets are opening pretty mixed. Modestian stocks posted gains exchina. Investors are showing signs of progress on trading ocean nations or maybe they dont see them in such an optimistic light. There is also a lot of speculation of government stimulus shoring up economic growth. There is a lot of talk about what could come out of germany just because the finance minister mentioned the figure they spent last time during the initial christ. Joining us to talk about this is the global head of flow strategy and solutions at socgen. Let me first ask what is your take on the sort of should we see a global stimulus rally . Will we see tax cuts in the u. S. . More spending in germany . 100 basis point cut from the fed . Clearly, monetary stimulus has run its course. Negative in most European Countries so clearly there is pressure, particularly with germany, to think about the skill fiscal stimulus because they are rendering massive surplus from a budget perspective. The path of least resistance will need to see more fiscal stimulus but the clear problem is the level of debt to gdp ratio for some of the countries where things will be more difficult. This is why germany has an easier option, if you will, to get the country out of a recession. Matt we are looking at less than 60 debt to gdp in germany which is a pretty astounding figure considering it was over 80 10 years ago. Allowed to doally very much unless we hit a real crisis. Are you concerned hopes are getting too elevated for german stimulus package . Kokou well, clearly germany has had a culture of being very cautious when it comes to debt but this was at a time when it benefited from a currency it did not deserve because had the deutsche market existed, it would be at a much higher level versus the dollar, for example, and it also benefited from a level of Interest Rate that was not consistent with the strength of its economy. Fast forward a few years with the trade war and pressure on Global Growth, clearly it is easier to justify fiscal stimulus today, but the ultimate problem will be that the amount of spending you need when the economy slows and goes into recession is much higher than you would have had to spend had we just had a slowdown in growth. This will be a very difficult situation and question for germany, and the amount will be want tof you really have a proper impact on the economy. This morning, i was pushing back. I hate when a headline has the words what if at the beginning but i have to ask. German recession and know the character of german consumers, are you concerned about what that would do for european stocks where we still see doubledigit gains on the cac and dax, both up 10 year to date. Kokou it will depend on the response from the Central Banks and what the market will expect Monetary Policy to be because we are hearing things like the ecb helping banks survive never you have rates negative rates. If germany went into a recession and we dont hear so much from the fiscal front, markets would expect the central bank to do more and you would get a pressure for yield and equities with decent dividend yield will outperform and the more mining and gdp exposed sector will underperform. You are likely to see more diversion or dispersion within the equity market as a whole. Matt you will stick with us. Our guest cohost for the hour, kokou agbobloua is the global head of flow strategy and solutions at socgen. Up next, stocks on the moving including bhp billiton, moving lower as its ceo warns the outlook for metals is weakening. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. We are 10 minutes into the trading day, looking at European Equity indexes that are turning slightly positive. The cac is barely above zero right now. The dax is a. 1 and the ftse is a. 2 . Donald trump has been calling for rate cuts for some time but is now urging the fed to cut by at least 100 full basis points. Trump says a percentage point cut would greatly and quickly enhance the global economy, while complaining the dollar is so strong it is hurting other parts of the world. Renewing his attack on the fed and its chairman, trump said the u. S. Economy is very strong despite the her and the slack of vision by jay powell and the fed. Not everyone agrees rate cuts are warranted. Voted fed president against cutting rates at julys meeting. Yesterday, he spoke exclusively with our own kathleen hays. That Economic Conditions are still pretty good, 3. 7 unemployment is still a low rate. Solation is a little bit low if you look at the core measure, it is 1. 6 . If you take out some of the outliers using dallas, it is closer to 2 . My own view ones that we have to be careful not to ease too much when we dont have significant problems. The focus is not to do something that affects the Exchange Rate or something that necessarily takes care of the world economy. Focus onpposed to unemployment and inflation in the United States so we are in a pretty good shop spot right now and there are costs to easing when you dont need to. What are the costs . One of the ways Monetary Policy works is it causes people to buy houses and cars earlier than they otherwise would. You choose to make an investment now because Interest Rates you think are going to be temporarily low, so you make expenditures you might not otherwise make. A second is when we lower Interest Rates, we make the cost of that lower. That means households and firms are more likely to be leveraged and if they get leveraged right before we have more significant problems, they are in much worse shape. We have to think about the Financial Stability characteristics and by that, it is thinking of how much we want households and firms to be leveraged going into when we do have a significant downturn. Kathleen how concerned are you about a significant downturn . The signs from the global economy, from the bond market in particular, even signs from wall street banks that have cut their and indicators suggesting the Recession Risk is rising. Is it rising in your eyes . Eric many of those indicators are tied to financial markets. Lets start with what most economists think is the likely outcome. One way is to look at the bluechip forecast. We came off real gdp at being 2. 1 . The bluechip forecast for at roughly 2 wth for the third and fourth quarter, same as the second. That is continued growth at a moderate pace. They also have Unemployment Rate at basically where we are right now. Economic less in the forecast. Has people really focused on whether we will have a recession is the combination of volatility in stock market we had a big movement a week ago when we lost 800 points on the but in subsequent days, we have moved back up and if you look at the long bond, it is very low, around 1. 6 . One of the reasons is the global weakness but the cure for look global weakness is for countries around the world to expand either with fiscal or Monetary Policy in their own countries rather than just the United States doing the easing. Matt that was boston fed president Eric Rosengren speaking exclusively to bloomberg. Kokou agbobloua is still with us, the global head of flow strategy and solutions at socgen. Let me ask what you thought about trumps tweet. Is this just part of the art of the deal . Is he asking for 100 and hoping to get 50 . Clearly given the election in 2020, having a Strong Equity market and economy is very important for him, but i also think he has been successful thus far by increasing the trade war rhetoric. He was able to get the bond market to price and interestrate cut, which was ultimately delivered by the fed because you have to remember at the beginning of the year, a rate cut was clearly a remote possibility or not really in the cards of any economist. Will be argument today whether a preemptive strike by central bank against the recession is the right thing to do and whether this will create more distortions and an increased leverage on corporate Balance Sheets and for us, this is the major concern. The highyield and weakening of Balance Sheets in the u. S. , particularly the triple b rated companies. , quoted did see a paper a paper in one of his stories last week showing a rise in the dollar because so much business around the world is invoiced in dollars correlates with a drop in global trade, so it does seem trump is onto something. If we had a weakening greenback, would that be good for Global Growth . Kokou clearly it will be a positive for emerging markets. A strong dollar tends to correlate with weakness in the emerging market but it is interesting that when you have a period of uncertainty, the dollar tends to strengthen theuse it is perceived as currency of last resort or safe haven compared the other global currencies but ultimately yes, a weaker dollar should be a stimulus for Global Growth. Matt what do you see in terms of currencies . The safe haven trade has been great for the yen, although it hasnt got the strength you may have expected because the dollar acts as a safe haven. Where do you see the big Currency Pairs going . Kokou this is an interesting question because we have the trade war on one side but there is a currency trade war where you have this preemptive strike by the fed stopping the unwinding of its Balance Sheet and cutting rates, which reduces the interestrate differential between the dollar and the euro, but you have the ecb launching a third tltro and china letting its currency weaken. Ofimately, there is a lot volatility across Asset Classes noti think currencies might as much as the equity markets because they are ultimately a relative value trade between one country versus the other, and the trend is for weaker and either more easy Monetary Policy. It is a tricky argument but ultimately, we see weaker euro. The sterling will be under pressure with brexit and the dollar could just be stronger than the other currency because the economy is simply stronger than the rest of the world. Matt in a related story, i love is spending over 3 billion to buy british pubs because he know the brits will keep drinking beers and eating pies. Kokou agbobloua, global head of flow strategy and solutions at socgen. I want to get to our talks top stock stories with Annmarie Hordern. Annmarie bhp is to the downside, down 1. 8 . This as they missed estimates even though their final dividend payout was the highest on record. They are also sounding the alarm saying cooling growth in china as well as the trade war could be risk for these raw material prices. Of the biggest gainers, nearly 8 this morning. This as they reported a decline but less than expected. It also kept their guidances. s to the downside, although it was one of the highest gainers at the open on the stoxx 600. Private money, bank capital coming they seem to be going in with a higher bid as asm goes for their formal bid. Seems on the cusp of a bidding war for this german company, matt. Matt very interesting bidding war and weve got an interesting outlook. A rather pessimistic outlook from osram licht at the last earnings report. Next, 0 . Is that the new highyield . Germany is said to test haven demand with a 30 year bond that pays 0 coupon. We will talk havens and making money from negative rates. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. We are 22 minutes into the trading day and looking at some slight green arrows across equity indexes with the ftse doing well as the pound falls under a dollar 1. 21. Yields arer bond leading issuers to test uncharted waters. Germany will sell a 30 year bond with a 0 coupon for the first time and the u. S. Treasury is taking the chance to gauge interest in ultralong bonds, 50 years and 100 years. Mark mobius told bloomberg at the moment, investing in gold is a better play than government debt. To bei think you have buying at any level, frankly. Prospect is upm and up. Money supply is up and up. , globalkou agbobloua head of flow strategy and solutions at socgen is still with us and it makes sense, especially if germany is going to issue a 30 year bond at 0 coupon and investors bid it up, they are getting negative yields on that and gold doesnt give you negative yields orchid eaten by mice. What do you think of the precious metal . Kokou i think gold is an interesting situation particularly when it comes from the perspective of multiasset and investing, because the total supply of gold is something that is clearly less than the supply of currencies and the price of gold has gone up in 50 years because of the amount of dollar bills printed has increased. King a negative yield environment, holding gold is not as expensive as it used to be and it is acting as a safe haven as a hedge against geopolitical risk and the risk of inflation Going Forward. It is an interesting asset class. Are there other assets you think mimic gold or give you the same kind of safety without eroding your capital . Kokou well, i think the other issue is clearly the nature of its link with other currencies because clearly, there is no printing of gold, if you will. It also has a negative correlation with risky assets. Inn you have an increase risk aversion, gold outperforms. One thing to bear in mind is even though gold looks interesting, it is important that negative yielding bonds not necessarily trigger losses at the current level simply because what matters is more the yield curve of these markets and the carruy because a lot of these negative yielding bonds have carry because they roll down in yield. Even though they are negative, they are generating hefty returns. The question Going Forward will be whether that is the case and is it going to be more difficult, therefore gold is something that will be interesting as a diversifier and adding to multiasset portfolios. Matt john authors has a piece on our opinion page showing the stocks to longterm debt and also stocks to gold right now is down and he is arguing this is an inflection point. Either we made to break backup or it will be a longterm unload for stocks globally. What do you think about that . Kokou it is an interesting point and this is why we talked about the argument that you are getting close to 17 trillion of debt carrying negative yield. In this environment, it is very difficult to see this trend ending anytime soon and it is clearly quite a good case to be e that there is a i think these are stretched valuations and it is unlikely to change in the shortterm. Matt thanks for joining us. Kokou agbobloua, global head of flow strategy and solutions at socgen. He will continue the conversation with us on Bloomberg Radio. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its 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 preorder a new samsung note. Click, call or visit a store today. Matt 30 minutes into the trading day and your top headlines. Staying on message. Donald trump says the fed should slash rates a percentage point but we get the case against the cuts. Im not saying there arent circumstances in which i would be willing to ease. I just want to see evidence we are going into something that is more of a slowdown. If i am going at growing at 2 , im not as worried. Matt another reprieve for huawei has the United States is sanctions for another 90 days but the stock rally stalled in europe with equities fluctuating between gains and losses. Bhps investor bonanza. The worlds biggest miner boosts its final dividend while warning on Raw Materials prices in the coming years. The ceo says bhp can weather any storm. We are ready for whatever the world might throw at us and we can profit from a downturn but we can also throw off a lot more cash in an upturn. Good morning. Welcome to Bloomberg Markets the european open. Lets look at what the individual stocks are doing in terms of the stoxx 600. A pretty even split, 369 up to 216 down. Breadth more redth to the upside. Winners, astrazeneca and novartis, glaxosmithkline and novo nordisk holding up the index. So very defensive stocks gaining. On the downside, bhp billiton is the biggest loser, down 1. 5 , taking the most points off the stoxx 600 but you have Oil Producers total and rexall down as well as Royal Dutch Shell dragging the index. Lets get the first word news with annabel drillers Annabelle Droulers in hong kong. Elle a new effort that dialogue has put hong kongs embattled leader carrie lam is promising to bring an end to two months of protests. The demonstrations began as the opposition to extradition legislation but have morphed into a wider Antigovernment Movement including calls for her resignation. A we will start immediately dialogue with people from all walks of life. This is something we want to do in a very sincere and humble manner. I and my principal officials are committed to listen to what the people have to tell us and we want to reach out to the community as soon as possible. Ready to cut again. Thats the message from the reserve bank of australia. It says it will loosen policy even further if the evidence to just sit will boost the economy. The central bank noted few signs of inflation pressures and warned expectations of weak wage growth could hit household spending. Will twopstein wrote a days before his suicide. He placed over half 1 billion of assets in a trust and it could complicate efforts to collect damages by women who say he sexually abused them. Manhattan prosecutors will close the sex trafficking case against epstein but will continue to investigate others in his alleged crimes. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more. Han 120 countries this is bloomberg. Matt . Matt thanks very much. Annabelle droulers in hong kong with your first word news. From the worlds biggest Corporate Leaders saying creating shareholder value is no longer their main focus. The Business Roundtable led by Jpmorgans Jamie Dimon says it will leave behind the investor centric model. Instead, ceos like jeff bezos and larry fink say they will serve all constituents. Employees, customers, investors, and society at large. Here with more is dani burger. Dani the group led by jamie dimon released a statement saying while each of our companies serve its own corporate purpose, we share a fundamental commitment to all of our stakeholders. Now would be a good time to do a check in on where the state of shareholder reward stands. Looking at buybacks, you can say the message is starting to take hold. Yearoveryear in the Second Quarter, buybacks have declined by 10. 4 , but this is probably not any altruistic reason. Instead last year, we saw the tax cut bonanza. Corporates returning, money giving buybacks but according to S P Global Company might have overstretch themselves and are likely to pull back for quarters to come. If they are going to pack pull back because the effects of tax cuts are fading or economic concerns, we are likely to see it in buybacks because there is more to cut their. Companies spend 77 more on buybacks and dividends considering s p 500 companies in the Second Quarter. Dividends themselves are nothing to sneeze at. So far, theyve reached a record 4. 24 14. 24 a share. A lot of this is investors hunting for yield. An example that the story is well and alive, look no further than bhps record payout. Matt thanks very much. Bloombergs dani burger looking at shareholder rewards. U. K. Prime minister Boris Johnson wants a new way to prevent a border on the island of ireland. In a letter to the European Council, president johnson is looking to replace the socalled irish backstop as the u. K. Steps up preparations for a hard brexit on the 31st of october. One foreign investor just made a big that on the longevity of a particularly british institution. Assets agreed to pay 2. 7 billion pounds for the pub chain greene king and gave it a premium of 51 to its share price at the last close. Joining us, the senior Portfolio Manager at coutts. What do you think about this investment . It is fascinating because at you knowide the u. K. , people are always going to go and drink pints and he ties. Eat pies. The pound has made it more attractive. Absolutely and we have always thought on a longterm view, sterling is cheap and sterling assets for International Investors are attractive. For the hong kong investor, it is not just cubs that real estate because we see a lot of hong kong and chinese investors you interested in what they can get from it. Matt does this mean maybe we have hit a bottom in terms of cable rate and in terms of u. K. Real estate . Monique i think in terms of sterling, i dont know if we have reached the bottom because it will be vulnerable over the coming months to the sentiment and the talk and noise we are hearing about brexit. If the Prime Minister continues to bang the drum in her term in terms of a hard brexit, i think sterling and the pound will continue to experience levels of volatility but i think on a longterm view, sterling is cheap and if you look at the speculative positioning, it is an extreme short at the moment. Kate has been an incredibly popular trade to sell sterling and at a point, if anyone sells sterling, who else is there left to sell . Matt what do you do . Obviously, you are at coutts so a lot of your assets are in sterling but does not mean you like domestic facing u. K. Stocks . Monique we like u. K. Assets. We are overweight sterling assets. We like u. K. Equities. The survey showed us investors are macs underweight u. K. Equities at the moment. They are, as i always characterize it, unloved, underappreciated, and under owned. The ftse 100 is largely made up of Global Companies that derive their revenue from overseas. At the moment, it has a brexit discount, but we know markets dont like uncertainty. I think you can make the case that if you have brexit on october 31, whether it is with a deal or no deal, businesses can get back to doing business as usual and dealing with whatever form of brexit that is. Deal brexit, the no we are talking about on october 31 will look different than it might have done at the end of march. We are talking about a managed no deal where the government is planning for it as we saw in the dossier that was leaked over the weekend. They will be managing for a no deal brexit with the objective of minimizing economic disruption. Another ine ask you issue, although in those kinds of concerns, weve seen low rates and a flat and inverted curve in the u. S. At the u. K. , as well. Do you expect us to see a bounce back from that soon and what how would you qualify that bounceback . About 17ots of talk trillion of negative yielding debt in the world. Lots of talk last week when the u. S. Twos tens curves inverted for a half minute. It is more significant in the u. S. In the sense the broader yield curve has already been inverted since may. In the past, it has been a reliable indicator of recession 18 months out. We have to be careful about jumping on that signal to early. We have seen instances in the recent history, notably the beginning of 2006 and at the end of 1998 where if you jump on a signal to early, you would have had to wait more than two years for the recession and you would have missed out on a sizable equity market rally. Up in thet was a 16 following year and in 1998, it was up 30 . Matt so you do expect the curve to start steepening and you are putting on trades to profit from that . Monique maybe not immediately. What we do have in the portfolio is a recession hedge. A yield curve steepener and the u. S. Treasuries tuesday tens steepener. Twos tens steepener. Oure are wrong, because base case is not for a recession in the u. S. But if we are wrong in a recession comes upon us, i think what we will see is the Federal Reserve cut rates more aggressively than is currently priced in the market. You will see the yield curve steepening fairly swiftly on the back of the. If you look at the history of the twos tens curbs, you have to go back 40 years and you can see what i am saying. The risk return profile is asymmetric. The yield curve could flatten and invert in the near term but oryou have cycled rate cuts if we are wrong and in a recession and the fed has to cut rates more aggressively, you can see the yield curve will steepen and normalize quite swiftly through the course of a recession. Matt thanks so much for your time this morning. Monique wong is the senior Portfolio Manager at coutts. She will continue the conversation with us on Bloomberg Radio. Tune into Bloomberg Radio at 9 00 a. M. U. K. Time on london dab digital. Coming up, we will speak of philipy to the coo morris international. The tobacco giant, facing stiff competition in the vaping sector but putting up a fight. Next, stock movers this morning including astrazeneca. Shares are on the rise as the drug added to the standard treatment of diabetes has reduced the risk of death. This is bloomberg. Matt this is Bloomberg Markets the european open. 45 minutes into the session and looking at increasing gains in terms of major equity indexes, the ftse mib in milan is barely underwater. Lets get our top stock stories with an reporter. Annmarie hordern. Annmarie 1. 55 for John Wood Group to the upside. Firsthalf revenue missed estimates but they maintained it will reach their outlook for the year and Goldman Sachs says it is positive they sold this business unit. Astros and it to come also higher up 1. 6 . A new study says a product should help with heart failure. It opens the door to possible using the drug for other types of treatments and Ryanair Holdings to the downside, down 1. 6 as the pilots union says ryan are, instead of trying to block the upcoming strike, should have gone back to the negotiating table. They say it is more likely they will have the walkout and this comes ahead of one of the biggest travel weekends for brits. Matt very busy travel weekend . Why . Annmarie because of a holiday on monday. Matt did not know that. Thank you. Annmarie hordern with some travel news for us. Phillip morris doesnt mind if you stop smoking. The tobacco giant has released a report offering smokefree product, kicking off a new campaign encouraging socalled unsmoking. Our message is simple. Dont smoke. If you do smoke quit, and if you dont quit, change. Is notld of unsmoke without hazards. A lawsuit was filed against Phillip Morris and juul in the u. S. , alleging the illegal marketing to minors and joining us to talk about this is jacek Philip Morris international chief operating officer. Thanks for joining us. Are you concerned about the dangers of vaping, maybe some we dont even know about. I spoke with a 17yearold High School Student from new york with me almost all of his friends use juul and almost none of them have ever smoked a real cigarette. Jacek i cant speak for the u. S. Market. We interact operate on an international basis but i can say it is a clear alternative any alternative to cigarettes has to be regulated. For the regulators to establish a framework how they should be scientifically assessed to avoid unintended accessed by, underage people in this case. We support these measures. Absent these measures was one of the points which we discovered in this report, which has been clearing the way for change. We established almost 70 of current adult smokers had switched to the better have anive should they alternative. It was a great opportunity in the context of action the problem created by smoking but there has to be a alignment between manufacturers, how they sell the product and the regulators which give the guidance to smokers about the risk associated with the product. Risk continuum, this product is vastly better than combustible cigarettes. Matt arent those regulations a risk to investors . Weve seen at least one situation up in San Francisco where they have made vaping acyclic illegal, or the selling products illegal because they dont know the Health Effects yet, but they continue to allow the sale of cigarettes, even though we are sure that causes cancer. Well, that is unfortunate, frankly speaking. Hand, i understand the regulators in San Francisco were looking for some advice for some invention intervention from the fbi. From the fda. Was a process, the product should go through the process. They gave some sort of an understanding to the regulators and the potentials users of the product. The regulator in San Francisco electronicans instruments while maintaining the combustible product. But thereptimistic, is a report highlighting there is a lot of confusion among the users, among smokers, among countries we research and among the public, including regulators. Not necessarily the right decisions, the most logical decisions are being made but we have to go through this and the we can solve the problem of smoking faster than anyone could think we could do it. Saying these things being an executive of one of the largest tobacco companies. I do believe we can unsmoke faster than people were thinking. There is a role for the industry, a role for the vast majority a of customers, smokers and nonsmokers, who do believe there is a role for the industry, the Tobacco Industry in solving the problem and there is a role for regulators. The table together and conclude what is the best course of action . We absolutely agree, the product is not riskfree. It is not for young people, but there are a lot of smokers in the world and they need a solution. Matt thank you for your time. Jacek olczak is Philip Morris international chief operating officer. Next, we will talk about germany. To spend or not to spend . Will this country give out 50 billion euros if a crisis hits . Kenneth legally do so . We will discuss. This is bloomberg. Matt welcome back to the european open. I want to quickly talk to our politics reporter in berlin about the possibility of more stimulus, something markets are focused on. What is the likelihood berlin comes through with something soon . The key is how the economy is going to develop. At the moment, we see the Second Quarter has gone into a recession and now we will be looking at the Third Quarter but even then, economists say this is not enough to kickstart the stimulus program. If at the end of the year we still do not see growth, we will have a heated discussion about how much stimulus is needed. This is one element. Another hurdle is the political one. There are hurdles to passed in the bundestag because lawmakers have to declare a crisis. Have ars would have to big argument to basically go ahead with spending. Matt in 2009 when merkel introduced this spending package that schulz was talking about the other day, that was a 5 contraction. It is amazing what has to happen. I recommend you search the bloomberg for her stories. There is a lot investors arent aware of. Bloomberg politicsbirgit jennen. Television. Oomberg of next is surveillance. Ill be headed to radio. Hike. Ne no need for a rosengrenesident eric says hes not sure a fed rate cut is necessary. Boris bid. The u. K. Prime minister makes his first attempt to renegotiate a brexit deal. Social media spat. Twitter and facebook say they have proof of fake accounts backed by the Chinese Government meant to undermine hong kongs protests. Welcome